By Katie Business News • Making Tax Digital • Tax News 0 Comments

No VAT penalty if you missed the first quarterly MTD deadline

If you pay your VAT quarterly by direct debit the sign-up window has closed for the 7 August (30 June quarter) submission. Do not worry as HMRC have announced that you will not be penalised this time so you may file the old way and come back when the direct debit has been collected to sign up in time to file the next return.

Although HMRC will not penalise you, they will send a letter telling you that you missed the deadline and asking you to take action.

Making Tax Digital for Business

Making Tax Digital was introduced in the 2015 Spring Budget. The government’s ‘Making Tax Easier’ document was published shortly after and outlined plans for the ‘end of the tax return’. It also set out the government’s vision to modernise the UK’s tax system, with digital tax accounts set to replace tax returns for businesses.

Making Tax Digital for VAT

From 1 April 2019, businesses are mandated to use the Making Tax Digital for Business system to meet their VAT obligations. Under the new rules, businesses with a turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD functional compatible software.

Company officers jointly and severally liable for VAT penalty

The decision in a recent tax tribunal case reminds us that directors and other company officers may be personally liable for VAT penalties of their company. The recent case involved a penalty for late registration for VAT where the threshold had been exceeded.
Three conditions must be satisfied before the liability for a penalty payable by the company can be imposed on an individual:

1) A penalty must be payable by the company for a deliberate failure.

2) The individual on whom HMRC seek to impose liability must be an “officer” of the company

3) The deliberate failure must be attributable to that officer.

Our dedicated team of chartered accountants have over 40 years of combined experience, providing full VAT and tax services to ensure your business complies in accordance with HMRC Guidelines. A&C are experienced with the new Making Tax Digital scheme. We have already helped many clients old and new get their accounts set up and ready for the switch. Our dedicated Making Tax Digital experts ensure this is done without affecting your business in any way and a smooth transition is key to the successful implementation.

A&C Chartered Accountants are at the forefront of the best cloud accounting software to ensure the most efficient technology fits perfectly for your business. Through extensive research and training our team use Xero and Sage Business Cloud to help submit your tax returns online. Your dedicated business account manager will provide free cloud accounting training and offer unlimited support whenever you need it.

For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and one of our dedicated accountants will contact you back as soon as possible.

Need more information?

We love nothing more than learning about new start-ups and helping you get off on the right foot! We offer a wide range of services which are unique to businesses who are just getting going! As start-up accountants we have a wealth of experience in all sectors between our team. From restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant. The team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

Contact us below

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    doctor at work
    By Katie Business News • Tax News 0 Comments

    Government U-turn on pension tax for doctors

    Prior to this update, we reported that hospital doctors and GPs were lobbying the government to amend the pension tax rules as the current system of restricting tax relief on pension contributions means many doctors paying almost all of the extra salary back in tax if they take on additional responsibilities or work additional shifts.

    doctor at work

    In earlier newsletters we reported that hospital doctors and GPs were lobbying the government to amend the pension tax rules as the current system of restricting tax relief on pension contributions means many doctors paying almost all of the extra salary back in tax if they take on additional responsibilities or work additional shifts.

    This issue does not just affect doctors. From 2016/17 those taxpayers with ‘adjusted income’ over £150,000 and ‘threshold income’ over £110,000 receive a tapered annual allowance.  This taper potentially reduces the normal annual pension allowance from £40,000 down to a minimum of £10,000 which may result in tax payable on excess contributions. As mentioned in earlier newsletters we can assist you in computing the potential liability.

    The government have recently announced that it would consult on allowing senior NHS staff to select their level of pension accrual at the start of the year, to give them more pension capacity to take on additional work without breaching their annual allowance.

    The Treasury has also agreed to reconsider the “taper”, which restricts pension tax relief, not just for NHS workers but across the public sector. But what about the private sector!  Look out for possible changes to pension tax relief in the Autumn Budget.

    If you run or are involved within a clinic or surgery then you will understand that your operation needs to be as slick as possible with information at hand and ready at your earliest convenience.  It is because the clinic/surgery is so busy with a constant flow of patients from opening to close each and every day that you require software that is able to allow you to have customer notes easily to hand.  This allows the clinic/surgery to ensure they have everything available at the touch of a finger and allow the smooth running of the clinic/surgery.  Add to that the obvious requirement for quick and efficient accounting systems that allow invoices to be produced pretty much as soon as the patients treatment is complete and you will soon begin to understand exactly where Xero Cloud Accounting can fit in and improve your practice.

    Our team have a wealth of experience working with doctors and those within the clinical sector. We work with you to provide the best possible tax efficient solutions whilst ensuring you are compliant in accordance with HMRC guidelines.

    A&C Chartered Accountants are at the forefront of the best cloud accounting software to ensure the most efficient technology fits perfectly for you. We use the smartest solutions to ensure you have the right tools to maximise productivity and cashflow. Your dedicated chartered accountant offers you free cloud accounting training and ensures you are on the correct and most efficient platform for your unique business.

    For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible. Our proactive team at A&C Chartered Accountants are here to help.

    Need more information?

    Contact us below

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      environmentally friendly business
      By Katie Business Advice • Startups 0 Comments

      Become an environmentally friendly business

      There is a general increase in environmental awareness and businesses are expected to play a part in the drive for reduced emissions.  Environmental issues have moved to the top of the agenda since recent climate change demonstrations by people across the world as part of the “extinction rebellion”. This included protests involving thousands of people across London.

      All businesses, regardless of their size, have a part to play when it comes to reducing emissions, recycling and reducing waste. Society is becoming increasingly focused on environmental issues and if businesses want to attract and retain the best talent, they need to move with the times and get involved.

      environmentally friendly business

      Do a waste audit

      Before you start creating plans to reduce waste, you need to get a sense of what’s in your firm’s waste stream. By conducting a simple audit of waste across your business, you can identify the main areas that need attention and create a strategy to start tackling the biggest issues. Some waste management companies offer a service where they will assess your firm’s waste output and create a report, which you can use as a starting point for your waste-reduction strategy.

      Printing-related waste

      Most businesses produce a lot of paper from their printers. Very often, this ends up being shredded. To reduce your paper-related waste, start by encouraging your team to read emails on screen rather than print them. Where documents do need to be printed, take actions such as setting your printer’s default settings to double-sided to eliminate as much waste as possible.

      Food-related waste

      Plastic or paper cups are another culprit in the office environment. By providing water fountains and encouraging employees to use refillable bottles or ceramic cups, you can drastically reduce the amount of waste produced. If you provide paper plates, replace them with reusable ceramic plates.

      Encourage recycling

      Introduce recycling bins to your office(s). Label them clearly and consider appointing a recycling company to collect and empty them regularly.

      Cut your electricity usage

      Cutting your electricity usage not only reduces the firm’s electricity bills but has the added benefit of being good for the environment. Simple changes like switching to low voltage LED light bulbs throughout your office and using sensors and timers to switch lights off when they are not in use can all contribute significantly to reducing your firm’s carbon footprint.

      Training

      Once you have created your waste reduction strategy, it’s important to invest time in sharing the strategy with your team in order to reduce waste company-wide.

      What can businesses do who deal with so much paper?

      As accountants we used to deal with so much paper. Client papers would mount up and we knew something needed to change. Our team have made the conscious effort to move all our accounting systems online and all communications with clients through email. Using cloud accounting software like Xero and Sage Business Cloud have helped make our accounting firm become more environmentally friendly.

      Another big way is having a paper bin by each employee’s desk and in the kitchen. This means when we do need to use papers on the odd occasion, we make sure it does get recycled. We also have a plastic bin for any plastic food waste, but also ensure we keep this to a minimum. There is so much we can do as small business owners and it is so important as a business to be more friendly.

      Please feel free to contact our team if you would like to know more about what we do to stay environmentally friendly and what you can do. Alternatively, you can email us using the form below and we will contact you as soon as possible.

      Need more information?

      Contact us below

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        Self-employed florist
        By Katie Business News • Startups • Tax Advice 0 Comments

        Limited Company or Self-employed – which is right for my business?

        Self-employed florist

        Limited Company or Self-employed – which is right for my business?

        As you start on your own there are many things to consider. One of the important questions to really think through is whether you will operate as a self-employed sole trader or set your business up as a limited company. Below we will highlight some of the differences of each. If you need anymore guidance your accountant can guide you further.

        Self-employed

        Setting up as self-employed is the quickest option as it requires minimal effort as opposed to setting up as a limited company. You can do this all online and all you need to do is register for Self-Assessment. Therefore, it is the most popular option amongst new business owners in the UK. Day-to-day it is important to get into the habit of keeping accurate records of your invoices, receipts and expenses.

        The advantage of being self-employed is that you can take as much money as you want from the business. However, the downfall of this is when you are self-employed you as an individual are the business. This means if the business occurs any debts or for any reason fails, you are personally liable for this.

        If you are self-employed, you have until the 5 October of the following tax year to tell HMRC that you are trading. This means that if you began trading in June 2018, you have until 5 October 2019 to tell HMRC, should you want to. You will complete your self-assessment tax return and tell HMRC what profit you have made during that tax year and then you pay tax on this profit. You will need to submit a self-assessment tax return by the 31 January after the end of the tax year.

        Limited company

        If you decide to trade through a Limited Company, you will need to create the Limited Company before you are able to do anything. Setting up as a Limited Company is not as straightforward as registering as self-employed. Your Limited Company will need to submit its own company tax return and accounts to HMRC as well as a shorter set of accounts to Companies House both within nine months of its year end. As a Director, if your own income will give rise to a tax liability, you will need to complete a self-assessment tax return as well.

        When you trade through a Limited Company, you should not mix personal expenditure with that of the company. This is because the Limited Company is a separate legal entity to yourself. As your Limited Company will have to complete its own company tax return, it should come as no surprise that it will also have its own tax liability. The Limited Company will pay corporation tax, and this will be due nine months after its financial year end. An advantage of setting up this way, however, is that you could pay considerably less tax than you would if you were self-employed.

        A Limited Company doesn’t have a personal allowance however, so it will begin to pay tax from the moment it makes £1 in profit. But then there is your personal income that you will extract from the Limited Company in the form of a salary and dividends.

        A limited company is classed as a separate legal entity to its shareholders and directors. This is the biggest difference between the two ways to set up your business and is an important note to consider. Unless any fraudulent activity takes place, you as a director will not be held personally accountable for any financial difficulties the company finds itself in. Many businesses favour this as it helps to reduce the financial risk to those individuals involved with the company.

        Need more information?

        A&C Chartered Accountants have helped many businesses with setting up as self-employed or a limited company. We offer a wide range of services which are unique to your business and advice on the best way to set up. As chartered accountants we have a wealth of experience in all sectors between our team. From restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant. The team work hard to ensure they create smart and effective tax-efficient solutions for your business to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

        Our fantastic team at A&C Chartered Accountants are here to help.

        Contact us below

        Fields marked with an * are required





          business spreadsheets explaining VAT
          By Katie Making Tax Digital • Startups • Tax Advice 0 Comments

          The UK VAT rate explained

          Firstly, what is VAT?

          VAT, or Value Added Tax, is levied on the sale of goods and services in the UK. It is a type of ‘consumption tax’ because it is charged on items that people buy. It is also known as an ‘indirect tax’ because it is collected by businesses on behalf of the Government. However, it is important to remember that it is not charged on products of services. Duty-free goods are exempt, and this explains why it can be known as destination-based tax, meaning the tax rate is normally based on the location of the consumer and the sales price. In the UK, the tax plays a huge role in generating the third largest revenue for the government behind Income Tax and National Insurance.

          Does your business need to register for VAT?

          Business owners need to be fully aware of the value-added tax (VAT) and all other things related to it no matter what. The value-added registration threshold in the UK starts from £85,000. Therefore, when your turnover is more than this amount you need to make sure you are VAT registered. You can also register your business on a voluntary basis. It is important to remember as a business owner, that this figure is more than likely to change every so often. Businesses need to consider the great benefits that come with registering even if your VAT return is way below the threshold.

          Responsibilities for VAT-registered businesses

          • You must charge VAT on your goods or services.
          • Likewise you may reclaim any VAT they’ve paid on business-related goods or services.
          • You must report to HM Revenue and Customs (HMRC) the amount you have charged and paid.

          It is important to note that if you have charged more than you have paid; you must pay the difference to HMRC. Alternatively, if you have paid more than you have charged, you are eligible to reclaim the difference back from HMRC.

          The UK VAT rates for 2019  

          • The Standard Rate is 20% and it applies to most goods and services that are taxable in the UK
          • The Reduced  Rate is 5% and this applies to some goods and services such as children’s car seats and home energy.
          • The Zero Rate currently stands at 0%. Zero-rated goods and services include children’s clothes and most food items. Despite their being no charges on zero  rates, the sale of goods and services under this category should always be recorded by businesses.

          Deadlines for VAT 

          It is vital that you do not miss the deadline. Your accountant will ensure this does not happen. For submission, the deadline is due on the first calendar month including the seven days duration following your VAT end period. Every business is different, and your period end can be monthly, quarterly, twice a year or annually.

          Making Tax Digital for VAT 

          From April 2019, all VAT-registered businesses with a taxable turnover above the threshold (£85,000) are now required to keep digital VAT business records. Every business with a turnover exceeding the current threshold will have to now ensure that their records are kept digitally. Businesses with a taxable turnover below the threshold are welcome to sign up on a voluntary basis for MTD.

          Our team at A&C have helped many existing and new clients prepare for MTD. Ann, our dedicated client manager uses the latest Making Tax Digital compatible software to ensure you are effectively prepared for MTD.

          A&C Chartered Accountants in Manchester and London offer a wide range of services that relate to all aspects of VAT. A&C can provide in-house VAT training, alongside tax compliance visit support. The team provide a vast array of innovate solutions to give clients the peace of mind they need.

           

           

          startup business diagram
          By Katie Business News • Startups 0 Comments

          How can an accountant help a start-up business?

          startup business diagram

          When you first think of an accountant you think of them being very different to you and your business. Well that is not entirely true. Many accountants have either been a start-up themselves or have a wealth of experience helping business start-up. Accountants no longer just sit behind a desk all day; they are genuinely interested in what you do and are just as passionate about helping you succeed.

          Getting you off on the right foot from the start is crucial. Hiring an accountant to make sure you are tax compliant and have a healthy cash flow will allow you to be able to put more energy into what you do best.

          Financial forecast and control

          As a business starting up you are about to embark on an incredible journey of doing something you love. However, to keep the business alive you need to ensure you have a healthy cash flow. A financial forecast produced by your accountant will help safeguard your finances and plan a prosperous future.

          It is vital to be as realistic as possible and this is where your accountant comes in. You do not want to underestimate or overestimate the revenue your business will generate. Your accountant will work with you to create an accurate financial forecast to set your business up the right way. As a start-up it is useful to use cloud based accounting software like Xero, who can be as adaptive as you are. Having everything online so you keep all your invoices and expense claims up to date is crucial from the start. Xero also allows you to see your bank account in real time.

          Make sure you are tax compliant

          Accountants are always one step ahead of changing tax legislation’s and start-up businesses can often benefit from these. Thinking about tax is not what you want to be doing when starting up. Let your accountant take care of all your tax needs to ensure you are tax complaint. An accountant will minimise any penalties that could arise. You will never need to be concerned about submitting a tax return before the deadline!

          Construct a business plan together

          If you do not already have a business plan or need further guidance your accountant can help you. For investment, a strategic though out business plan is crucial.

          Your favourite agony aunt

          Starting up can be lonely, but it does not have to be. Alongside networking events an accountant is a great person to talk to. It is fantastic when a client can ring up and to just simply get things off their chest. Consider your accountant as your agony aunt!

          Need more information?

          We love nothing more than learning about new start-ups and helping you get off on the right foot! We offer a wide range of services which are unique to businesses who are just getting going! As start-up accountants we have a wealth of experience in all sectors between our team. From restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant. The team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

          Our fantastic team at A&C Chartered Accountants are here to help.

          Contact us below

          Fields marked with an * are required





            Construction industry
            By Katie Construction Industry News • Tax News 0 Comments

            Construction and building companies: get ready for the VAT domestic reverse charge

            What does the VAT reverse charge mean for building & construction companies?

            From 1st October 2019, VAT-registered firms who are reporting under the Construction Industry Scheme (CIS) will see a major change to the way VAT is collected. The customer recieving the service will now have to pay the VAT due to HMRC instead of paying the supplier.

            What you need to do to be ready for 1st October :

            • make sure your accounting systems and software are updated to deal with the reverse charge
            • check whether the reverse charge affects either your sales, purchases or both
            • consider whether the change will have an impact on your cashflow

            Are you a contractor?

            Contractors need to review all contracts with sub-contractors, to decide if the reverse charge will apply to the services you receive under your contracts. You’ll need to notify your suppliers if it will.

            Are you a sub-contractor?

            If you’re a sub-contractor you’ll also need to contact your customers to get confirmation from them if the reverse charge will apply, including confirming if the customer is an end user or intermediary supplier.

            How will the domestic reverse charge will affect you?

            HMRC have made it clear that for the first 6 months it will apply a light touch when dealing with any errors that may occur. Therefore, penalties will only be considered if it can be seen that you are take advantage of the new measure deliberately by not accounting for it correctly.

            Services affected by the domestic reverse charge

            The reverse charge does not apply if the service is zero rated for VAT or if the customer is not registered for VAT in the UK.

            It also does not apply to some services. Services that it does apply to are:

            • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures.
            • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours.
            • painting or decorating the inside or the external surfaces of any building or structure.
            • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure.
            • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration.

            To see a full list of services that are included and excluded from the domestic reverse charge, please visit the gov.uk website here. You will also find more in-depth information on the website. If you need to speak to your accountant please do not hesitate to get in touch with us.

            Need more information?

            Our fantastic team at A&C Chartered Accountants are here to help. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

            Contact us below

            Fields marked with an * are required





              By Katie Insights 0 Comments

              U-TURN ON SELF-EMPLOYED NICs – FOR NOW

              In his first Budget on 8th March, the new Chancellor Phillip Hammond announced that he would level the playing field between employees and the self-employed by increasing Class 4 National Insurance Contributions (NICs) from 9% to 10% from 6 April 2018 and then to 11% from 6 April 2019. His justification is that the self-employed are now entitled to more generous State Benefits than in the past, and thus NIC rate should be increased towards the 12% Class 1 NIC employee rate.

              However, this was contrary to the Conservative Party manifesto pledge not to raise national insurance contributions during the life of the Parliament and the Government have bowed to political pressure and decided not to proceed with this proposal. Look out for a possible increase after the next election, which is now June 8th!
              As previously announced, flat rate Class 2 NIC contributions, now £2.85 a week, cease on 5 April 2018.

              By Katie Insights 0 Comments

              SHOULD WE GIVE SHARES TO CHILDREN AND PAY £5,000 DIVIDENDS TAX FREE?

              SHOULD WE GIVE SHARES TO CHILDREN AND PAY £5,000 DIVIDENDS TAX FREE?

              The introduction of the £5,000 tax free dividend allowance has tempted many family company shareholders to give shares to other family members so that they can be paid £5,000 a year tax free. (Note that this allowance reduces to £2,000 from 6 April 2018).
              Such a strategy needs to be carefully structured as there can be Capital Gains Tax on the gift of shares, and HMRC may also seek to tax the dividend as employment income under certain circumstances. The dividend will also be taxed on the parents if received by a child who is a minor.