SELF ASSESSMENT DEADLINE IS FAST APPROACHING – Here are some tips!

If you get an email or letter from HM Revenue and Customs ( HMRC ) telling you to send a return, you must complete your SA100 – even if you don’t have any tax to pay!

Do not ignore it!

Contact us today, we are here to help.

Self-assessment tips

Before you start, do you have everything you need? The SA100 has several sections and HMRC will only send those sections that it thinks apply to you. Check if you need extra pages to give details of other sources of income. You can get more information by going to https://www.gov.uk/government/publications/self-assessment-tax-return-sa100

Other suggestions include:

  • Report everything you’ve earned: As a self-assessment taxpayer you need to report everything you’ve earned over the tax year.  This includes Income from employment, self-employment, income from property and interest/gains on your savings and investments.
  • Don’t leave it until the last minute: Once you have gathered all the necessary paperwork, put aside a day to go through the forms. The biggest mistake most people make is forgetting to sign the form before sending it off.
  • Keep accurate records: If you face a Revenue enquiry you will have to produce evidence that your tax return is correct. Around 1 in 20 returns will be subject to further investigation, ensure your SA100 is accurate!
  • Don’t throw your records away: Taxpayers must keep records for at least a year after filing. Self-employed or business owners must keep records for six years.
  • Do not round-up figures: HMRC have said this can indicate that a person’s affairs have not been properly maintained and could trigger a further enquiry.
  • Deduct all eligible expenses: HMRC allow individuals to take into account certain costs, such as student loan repayments and personal pension contributions. Are you claiming enough, or too much?
  • Start saving now: Don’t forget that you may have to pay half of this tax year’s bill as a payment on account on 31 January (i.e. the same time as you pay your 2016-17 tax bill).

Why not avoid the stress, contact us today and arrange for Tax & Financial to complete the SA100 for you.  Whether your receipts are in plastic bags or you have everything organised in excel, we can tailor a package to take the hassle out of tax.

WOULD YOU LIKE A CHANCE TO WIN £50 OF AMAZON VOUCHERS?

All you have to do is visit our facebook by clicking on this link then just like and share the post.

BEAT THE CLOCK

IT’S NOT TOO LATE – ACT NOW!

You have until the 31st January 2018 to submit your self assessment for 2016/17.  If you’d like help please get your records and figures to us before 10th January to save money and avoid the last minute rush.  From this date onwards our prices are slightly higher because it is our busiest time of year and requires additional overtime and staff.

We can still help after the 10th January but it will cost you slightly more.

 

Don’t wait till the last minute, contact us today and avoid the bottleneck!

Also if you like and share our facebook post, you could be in for a chance to win £50 worth of amazon vouchers.

 

 

 

FreeAgent Accountants Partner

Tax & Financial are proud to announce that they are now FreeAgent Accountants Partner.

FreeAgent sorts out the mess and the stress of managing business finances

Next week you will be able to find us through the FreeAgent Accountants directory, but we are able to link you into our Accountants Dashboard today.

At Tax & Financial we are determined to provide our clients with choice and flexibility.  We do not wish to restrict the important business decision, on what accounting package to use, this is why we now have the option of three completely different packages.  All have different costs, benefits and can be tailored to your business needs, more importantly you do not end up paying for more than you require.

Contact us today, just click on the link below.

Tax & Financial are proud to be Xero Partners

With “Making Tax Digital” (MTD) around the corner, at Tax & Financial we thought it was important to be able to offer or clients a range of online cloud based platforms. Every business is different, at Tax & Financial we aim to be able to support you, not try and adapt your business to what we are able to offer.

We are proud to announce that we have now qualified as certified advisor for Xero.

Xero describes their product as:

Beautiful Accounting Software

Accounting software with all the time-saving tools you need to grow your small business. Xero is secure and reliable and our experts are here to support you 24/7.

At Tax & Financial we endorse Xero, with the variety of package they offer, it is even easier for smaller business owners to get their accounts online, which in turn will give them more control over their business.

Xero is so confident you’ll love their online platform, that they offer a free trial.  Interested? Contact Tax & Financial today, and let us help you, in getting your business setup with Xero.

Sole Trader bookkeeping with Tax and Financial is now as easy 1Tap

Link to Youtube video: https://www.youtube.com/watch?v=mfSb9ZO2Sdk

 

At Tax and Financial we know that being a sole trader is hard enough without having to keep track of all your expenses. To make life a bit easier we’re now offering 1Tap, a new expense management app designed specifically for sole traders.

Your annual Self Assessment can take a lot of time and effort that could be better spent on your business. At Tax and Financial we can help you get that time back and save you money while we’re doing it.

Here are five reasons why we think you’ll love using 1Tap with Tax and Financial.

  1. No more storing paper

If you’re tired of having a bunch of paper receipts and invoices hanging around your house or car all year, we don’t blame you.

With 1Tap you can just snap a picture of your invoice, and then throw the paper away. The image of your item is fully HMRC compliant and stored safely online. It also means no more trips to drop off a bag full of receipts for your Self Assessment.

  1. No more entering data

No more Sunday nights hunched over an Excel spreadsheet entering your expense data.

All you need to do is take a picture of your receipt or invoice with your phone and the app will do the rest. The data is extracted automatically and sent it straight to us. You can also forward digital invoices to an email address.

  1. Claim your full deduction

It can be a pain to keep track of bits of paper, especially if you’re incurring expenses on the move. That means every year receipts get lost, damaged and you miss out on claiming your full allowance.

1Tap lets you snap a picture of a receipt or invoice the moment you get it, so it’s all stored safely. That means we’ll be able to help get the most from your tax return and help you claim your full allowance.

  1. Easier budgeting

Another advantage of keeping records as you go is that we’ll have a steady stream of information on your business. We can use this to update you on your tax obligations throughout the year so you can set money aside and there’ll be no nasty surprises come January.

  1. Get ready for Making Tax Digital

HMRC’s new Making Tax Digital legislation means that from 2019 all non-VAT registered sole traders will need to submit financial information four times a year to a digital tax account. This handy app provides all you’ll need to make sure you’re ready for the switch.

We know you went into business to follow your passion, not to keep books. Using 1Tap with Tax and Financial gives you the time you need to focus on your work, secure in the knowledge that your expenses are taken care of and you’re getting the best deal possible. Get in touch to find out more.

 

 

 

 

Back to Basics: Shares in a LTD

So you’ve come up with a killer business idea and have made the decision to incorporate your business, but you’ll be itching to get your business off the ground as quickly as possible.  STOP – it is so important to take some time as decisions you make now can have a massive impact on the future, especially where co-founders are concerned.  Your business structure can affect your ability to raise funds, as well as determining legal ownership, entitlement to dividends and liability should the business fail.

Where do you being?

You’ll need to nominate shareholders and directors, this should not be done lightly as the last thing you want is your business being valued under a matrimonial dispute or the financial security of the business being review due to shareholder/directors debts. So how many shares should you issues? What type? How do you do this, and how much share capital do you need?

Basically, companies are managed by directors and owned by shareholders (members) and you can be both.  Shareholders own a portion of the company limited by shares.  Each shareholder is entitled to receive a portion of profits in relations to the number and value of their shares.

What are shares and the rights attached?

A share is a piece of a company limited by shares, the number of shares held by each member determines how much of the company they own and control. They normally receive a percentage of trading profits that correlates with their percentage of ownership.

Different particulars attached to different share classes are often used to clearly define differing voting powers, share structures, control of decision making and to better reflect ownership of the company.

  1. Voting rights determine how many votes are attached to each share in a show of hands scenario
  2. Dividend rights can vary between shares classes but it is the shareholders right to receive a proportion of dividends issued
  3. Capital/Participation rights refer to the right to participate in a distribution of capital or assets in a situation in which the company is wound up

The different types of shares

  1. Ordinary Shares – This is what the majority of companies issue as it keeps things simple by offering equal rights and responsibilities to all shares hold.
  2. Preference Shares – Preferential right to receive profit before others.  Sometimes the preferential right to capital distribution before other classes. No voting rights.
  3. Non-voting shares – Enables existing members to maintain full control which distributing a portion of profits to others. Typically used as part of an employee share scheme, as this is an effect way to reward their vest interest in the company and can motivate staff to work harder.  Dividends from non-voting ordinary share can be used as a tax-efficient way to pay part of an employee’s salary.
  4. Redeemable Shares – Enables the company to buy back the issued shares after a fixed period of time, or if created for employees when they leave the company.  They are often non-voting.
  5. Alphabet Shares – Usually ordinary shares divided into different sub classes, allowing the company to vary the percentage of each prescribed particular.  Example:
    1. A company has two owners contributions different amounts of capital put both own one share
      1. One owner is given 50% voting rights, 50% dividend rights and 90% capital rights
      2. The other is given 50% voting rights, 50% dividend rights and 10% capital rights
  6. Management Shares – Carry a smaller nominal value or provide multiple voting rights and are often held by founding members as a means of retaining more control of the business than newer members.
  7. Deferred ordinary Shares – often dividend rights in that they are paid after other members.

How many shares do I need to issue?

Private limited companies must issue one or more when they are incorporated at Companies House Each member must agree to take at least one. There is no restriction to the total quantity that can be issued, unless the articles of association contains a provision of ‘authorised share capital’. This is an optional clause that allows a company to restrict how many it can issue during and after incorporation.

Benefits of issuing more than 1 share

You cannot split 1 share and if you intend to grow you business and bring in a partner, at some point in the future, you may wish to issue more shares.  Many companies issue 100 shares because each unit represents 1% of the business and gives the flexibility to issue small portions of ownership to lots of different people, that than large portions to only a few people.

Issuing a higher quantity is also beneficial for creating the image of a substantial, credible and secure business. The nominal value of a company’s issued shares represents the liability of its owners if the business is wound up or accrues debts that it cannot pay.

Where can I find out the share capital?

The shareholders and the numbers of shares each of them has taken up at the point of formation of the company must be stated in the Memorandum of Association.

However, if there have been variations (new issues or transfers), then the best thing to do is check the latest Annual Return, as a full list of members should have been attached. If you do not have a copy of the Annual Return, you can obtain one from Companies House for just £1.

 

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayers’ circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Top 10 Hilarious Excuses – Britons Made for Missing The Tax Deadline

Have you missed the 31st January deadline and need to provide a “Reasonable Excuse” to HMRC? Below are some of the top 10 worst excuses, which have actually been used  …

  1. My wife won’t give me my mail (self-employed trader)
  2. Our business doesn’t really do anything (Kent financial services firm)
  3. My tax papers were left in the shed and the rat ate them.
  4. I’m not a paperwork orientated person – I always relied on my sister to complete my returns but we have now fallen out.
  5. My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
  6. A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed.
  7. I had an argument with my wife and went to Italy for 5 years
  8. I’ve been busy looking after a flock of escaped parrots and some fox cubs
  9. I’ve been travelling the world, trying to escape from a foreign intelligence agency.
  10. I’ve been too busy submitting my clients’ tax returns (London accountant).

The Revenue said that the excuses were all declined on the basis that they were either untrue or not good enough reasons. Ruth Owen, HMRC director general of customer services, said, “Blaming the postman, arguing with family members and pesky insects – it’s easy to see that some excuses for not completing a tax return on time can be more questionable than others. Luckily, it’s only a small minority who chance their arm.

“But there will always be help and support available for those who have a genuine excuse for not submitting their return on time. If you think you might miss the 31 January deadline, get in touch with us now – the earlier we’re contacted, the better.”

What are the Penalties?

The penalties for late tax returns are an initial £100 fixed penalty, and additional daily penalties of £10 per day, up to a maximum of £900, after three months.

After six months, a further penalty of 5% of the tax due or £300 is imposed, and after one year, another 5% or £300.

There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, six months and 12 months.

How can a taxpayer appeal?

It’s worth knowing that if you miss the deadline for a legitimate reason you can appeal as long as your excuse is ‘reasonable’.

  1. The phrase “reasonable excuse” takes its everyday meaning however the courts and tribunals have their views on this.
  2. A taxpayer is expected to know which deadline applies and make a reasonable effort to meet those deadlines … they have 9 months to submit
  3. Reliance on the acts of a third party is no defence for VAT penalties, but it is a defence for direct tax penalties in certain circumstances.

What is a reasonable excuse?
“Reasonable excuse” is not defined by the legislation, but HMRC original view that an excuse is reasonable where some “unforeseeable and exceptional event” beyond the taxpayer’s control is reasonable.

These sort of circumstances that might be reasonable will include:

  • Strike Action or system failure at HMRC
  • Insufficient funds is not a reasonable excuse for a failure unless it is attributable to events outside the taxpayer’s control, which may include:
    • Bankruptcy of a major supplier
    • Sudden withdrawal or cut in bank funding
    • Government cuts if affecting a supply chain
  • Illness – The taxpayer or a close family member.
  • Postal delays – You cannot just use the excuse that the postman did not deliver the letter, you will need to provide proof of postage.
  • Accident or disaster:
    • IT failure: the taxpayer’s computer breaks down or catches a virus just before or during the preparation of an online return.
    • Electrical failure or broadband failure.

Where a taxpayer had a reasonable excuse for a relevant act or failure but the excuse ceased; he is expected to remedy the situation without unreasonable delay.

Failing to act promptly in those circumstances will deny relief on the grounds of reasonable excuse.

Making a successful appeal

Do not bury your head in the sand, act quickly, if you need help contact Tax and Financial Solutions Limited and we can work with you through the process.

If there is no reasonable excuse get your tax return submit to avoid any further fines.

 

JOB BOARD: Administrator/Accounts Assistant

UNIQUE JOB OPPORTUNITY TO WORK IN A FAMILY RUN EXETER BUSINESS

Administrator/Accounts Assistant

£23,000 per year plus company benefits

Do you have admin/accounts experience working in the motor trade? Would you like to work for a well established, growing, family run business that appreciates the value of their employees?

This is an exciting opportunity to join a local company that has recently created a new position. This challenging opportunity is looking for a confident individual who has the ability to communicate effectively with colleagues, customers and clients. Though experience is the motor industry would be an advantage it is not a requirement.

Our client is looking for the following attributes:

  • Attention to detail
  • Excel and microsoft packages
  • Good communications and organisational skills
  • Ability to work as part of a team.

Additional details:

  • 40 Hours per week 8am – 5pm (1 hour lunch)
  • Monday to Friday
  • Salary £23k per annum, depending on experience.
  • 25 days holiday a year plus bank holidays
  • Additional company benefits.

Tax and Financial Solutions Limited are advertising this job opportunity on behalf of our client, should you wish to apply and require further information, please send your CV and a covering email to anita@taxandfinancial.co.uk

Closing date for applications is 9th June 2017.

 

 

Contractors – VAT Scheme consideration

The first thing to consider is the important changes made to the Flat Rate Scheme (FRS) on the 1st April 2017.

Overview of the Flat Rate VAT Scheme 

The FRS is a simplified method where a fixed percentage, based on the trade or profession, is applied to the VAT inclusive turnover.  Under this method any VAT reclaimed is restricted.

For example, your fixed percentage would typically be 14.5%.  If you invoice a client £2,500 plus VAT you would pay HMRC VAT of £435 (£3,000 @ 14.5%).  The balance is used to offset the input VAT you cannot claim back.

The standard rate method involves calculating the VAT liability based on VAT charged on sales less VAT incurred on purchases.

Changes from April 2017 

The changes affect business with a very low-cost basis and these are classed as “limited cost traders if they spend:

  • less than 2% of their VAT inclusive turnover on goods in an accounting period; or
  • more than 2% of their VAT inclusive turnover but less than £1000 a year.

Please note that when performing this check, that there are goods which you cannot include in the calculations.  At this point it would be advisable to contact us.

The government have published a tool to find out whether you meet the “limited cost trader” criteria. Click here to access this beta tool currently published on gov.uk.

 

A  “limited cost trader”, should apply a new rate of 16.5% (2% increase) to their VAT inclusive turnover to calculate their VAT liability, instead of applying the fixed percentage based on your trade or profession.

Should I leave the Flat Rate Scheme?

So what if your are already registered on the FRS, if you are within your first year, there is an additional 1% discount. As for the practicalities of leaving the Flat Rate Scheme, it’s straightforward. Simply ask Tax & Financial to write to HMRC; it’s a quick and pain-free process. That’s assuming you’re using our online accounting software to keep accurate records of outgoings — if not, this could be the perfect (and financially beneficial) time to implement electronic record keeping with Tax & Financial.

Should you leave? The yardstick for leaving the FRS is surprisingly simple, do you spend more that 1% of your turnover on Vat-able goods and services? If your answer is yes you are probably better off moving, see the simplified illustration below:

It’s going to come down to the type of business you’re running.

  • If you’re flying close to IR35, with minimal outgoings bar mileage and sustenance, then you’re unlikely to be better off on the standard VAT scheme, and you’ll feel the brunt of April’s FRS rate rise.
  • If, you’re running a service business which looks, feels and acts like a consultancy firm, then you’re likely to be better off moving to the standard VAT scheme.

Finally!

It would pay for the Mr Hammond to change his perception of small business, in reality he is harming the competitveness of trapped small service business because he wants to tackle “aggressive abuse of the VAT Flat Rate Scheme”!

This coupled with the government’s changes to IR35 we would bet that contractors will continued to be beaten by government chancellors each and every year, it might be more beneficial for them to become consultants!!

WHAT DOES THE TAX YEAR 2017 HOLD FOR LANDLORDS?

In 2015, the former Chancellor George Osborne unveiled a shocking tax change that removes the landlords’ ability to deduct the cost of their mortgage interest from their rental income!

The changes are being phased in from 2017 and fully implemented by 2020. From April 6, only 75pc of mortgage interest can be deducted against rental income to calculate profits. This decreases by 25pc each year until none can be accounted for in the 2020-21 tax year.

  • Tax will now be due on turnover, rather than profit. If mortgage rates rise, but rents don’t, landlords are quickly left out of pocket. For some, tax rates will exceed 100pc: landlords will have to pay all of their profit in tax, and then pay more tax still.
  • Any higher-rate taxpayer landlord whose mortgage interest is 75pc or more of their rental income, net of other expenses, will see all of their returns wiped out by 2020.
  • For additional-rate (45pc) taxpayers, the threshold at which their investment returns are wiped out by the tax is when mortgage costs reach 68pc of rental income.
  • But some basic-rate taxpayers will also pay more tax – because the change will push them into the higher-rate bracket.

Those who are worst affected will see:

  • the actual tax they pay on their investment rising twofold or more;
  • the tax rate payable rising above 100pc, meaning that more than all of their profit is paid in tax;
  • a degree of tax that pushes them into loss, making their investment financially unviable and forcing them to increase rents sharply – or sell.

WHAT SHOULD YOU DO?

There are a number of strategies landlords are investigating in an attempt to limit the damage of theses changes:

  • Starting up a limited company
  • Transferring property to a spouse
  • Making additional pension contributions

It is a long list!

However, we strongly recommended that you speak to us first, as some of these actions may result in other tax implications, and it is a case of looking at your own individual circumstances, ascertaining your future goals, and mapping the most strategic path to achieve those.

Limited companies could be the way forward for landlords

“The only way of getting around the changes is to invest through a limited company.” Says Shaun Church, a director at mortgage brokers Private Finance, but it might not be that easy.

“There are fewer mortgages available to these types of investors, and they typically come with much higher rates of interest. There are also a whole host of tax implications to consider that make moving to a limited company structure far from a straightforward decision.”

For an number of landlords incorporation has been the main consideration put there are a number of pros and cons to consider:

Pros:

  1. Not affected by finance cost restriction changes
  2. Lower rate of tax, compared to higher rate tax under self-assessment
  3. Potential indexation allowance claimable
  4. Favourable rates of capital gains tax compared to 28% for some disposals of personally owned residential property at higher rate
  5. There can be benefits as far as passing on property to children

Cons

  1. Companies do not receive an annual exemption nor personal allowances
  2. For those owning property personally, there can be benefits when selling the property, if you have lived there. This is the complete opposite for company owned property, and there can be quite serious consequences if you reside in a company owned property
  3. Lower tax rates, but this is based on profits. You still need to extract this money from the company, which has tax implications, such as salary/dividends etc. Also, the dividend changes which have recently come into force may affect you
  4. Greater costs for accountancy fees and more compliance requirements
  5. Can sometimes be harder to obtain finance, although we are not mortgage advisors, and relevant separate advice should be sought here

Whilst this may be suitable for future purchases, there lies a problem in moving personally owned property into a company in potentially triggering an immediate capital gain. This is due to the fact that a company is a separate legal entity, and therefore any such transfer would be classified as a “sale”. However, the recent Ramsey case did give some landlords a glimmer of hope with regards mitigation, but again, professional advice is essential here.

To finish the section, we leave you with a brief summary on fines landlords are facing

 

Landlords face penalties of up to £30,000

The Government is introducing penalties of up to £30,000 for a range of housing offences committed by landlords, including a failure to get a House of Multiple Occupation licence and for overcrowding a property.

Housing Minister Gavin Barwell confirmed the powers will give local authorities the tools to crack down on rogue landlords who shirk their responsibilities

He said: “These measures will give councils the additional powers they need to tackle poor-quality rental homes in their area.

“By driving out of business those rogue landlords that continue to flout the rules, we can raise standards, improve affordability and give tenants the protections they need.”

The Government is also introducing powers for councils to access Tenancy Deposit Protection data to help them identify rental properties in their area, claiming this will help them to tackle rogue landlords.