Category: Business News

A&C Chartered Accountants would like to advise all clients and other readers of the changes to the penalties for filing your self-assessment tax returns late and for not paying your tax on time. A very important point to note is that the late filing penalty is no longer capped to the amount of unpaid tax at the filing due date. So if you habitually file your returns late on the belief that because you are normally due a tax refund ( e.g CIS cases ) or have no tax to pay, you will not receive a penalty then you need to think again and get your returns in on time and pay on time.

Written contracts for services are not worth the paper they are wriiten on?
Following the recent Supreme Court Judgement in Autoclenz Ltd v Bellcher and others ( 27/07/2011 ) now is a time to be careful and review your working relationships and wriitten contracts. The Supreme Court has affirmed that, where a party asserts that a wriitten term does not reflect the reality of the agreement, tribunals and courts may seek to look outside the terms to determine the true nature of the agreement. This case is not a tax case but it has obvious tax implications and it is a reminder that the wording in a contract may be ignored if it is deemed not to fit with reality.
Background to the case
Mr Belcher and 19 other individuals provided car-valeting services for Autoclenz Ltd. Contracts drawn up referred throughout as them being ‘ subcontractors’ and clauses were included for substitution and stated that it was not obliged to provide work for the individuals and they were not required to do the work offered. The Court of Appeal ruled and the Supreme Court agreed that ‘ the elaborate protestations in the contractual documents that the men were self-employed were odd in themselves and, when examined, bore no practical relation to the reality of the relationship’. The individuals were therefore able to claim that they were working under a contract of employment so that they could benefit from the National Mininmum Wage and holidays etc included in the Working Time Regulations. Please follow the link for the full ruling. http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKSC/2011/41.html

A&C Chartered Accountants believe that HM Revenue and Customs may use this decision in Employment Status Cases and would urge readers to carefully consider their existing contracts and whether these do reflect the actual working practices. Please call us to discuss further.

Company cars are a perk of the job. However the tax man wants his share of the benefit.

By picking your car carefully you can minimise the cost to yourself, your employer and the environment. Basically the more environmently friendly the car the better.
The two basic factors affecting the tax cost are the Co2 emissions and the list price of the car. For detailed guidance see http://www.hmrc.gov.uk/cars/rule-changes.htm. The rules are difficult to understand and the goalposts are always changing. A&C Chartered Accountants can help you decide which car to get if you want to minimise your tax and carbon footprint.

The argument for Hybrid cars is becoming compelling. The current players in the market are the Toyota Prius 1.8 VVT-i T3, the Lexus CT 200h SE-I and the Honda CR-Z coupe, to name a few, with BMW entering the market soon with a new 5 Series hydrid. These cars carry a low taxable benefit charge of 10% of the list price due to their low Co2 emmsions.(between 89 and 117 ).

This means that for a basic rate taxpayer the annual tax rate will be as low as 2% of the list price of the car. If you consider that the employer also normally pays for the financing of the car, the insurance, service and repairs, tyres and road tax and that these are considered to be included in the taxable benefit charge, then the perk is certainly there to be had.

A&C Chartered Accountants are happy to help with the above or any other tax matters.

Inheritance tax (IHT) planning
There are a number of ways that children can help to reduce the size of your estate and in turn it’s Inheritance Tax (IHT) Liability.

Annual exemption
You can give away £3,000 a year with no IHT implications whcih means a poteinal saving of £1,200 in future IHT charges.  Mother and father can, therefore, give away £6,000 each year and if they forget one year they can double up the next year.
Gifts of interest
You can lend your children money, e.g to buy their first house, interest-free wthout having to worry about IHT on the lost interest.  Please note, however, that the loan will have to be repaid to the estate on your death.
Gifts on marraige
Parents can give £5,000 and grandparents £2,500 on your child’s marraige and this will be exempt from IHT
Small Gifts
Gifts to upto £250 are exempt from IHT.

To explore these and more ideas contact us at A&C Chartered Accountants