diary
By Katie Construction Industry News • Tax News 0 Comments

Diary of main tax events September / October 2019

 

Date What’s Due
1 September Corporation tax for year to 30/11/18 unless pay by quarterly instalments
19 September PAYE & NIC deductions, and CIS return and tax, for month to 5/9/19 (due 22 September if you pay electronically)
1 October Corporation tax for year to 31/12/18 unless pay by quarterly instalments
5 October Deadline for notifying HMRC of chargeability for 2018/19 if not within Self-Assessment and  receive income or gains on which tax is due
19 October PAYE & NIC deductions, and CIS return and tax, for month to 5/10/19 (due 22 October if you pay electronically)

Need more information?

A&C Chartered Accountants specialise in the Construction Industry sector. Our team are experts in helping clients from the construction and property industry with CIS Returns. We offer a wide range of services which are unique to your construction business and thorough CIS advice. Our dedicated team of chartered accountants have over 40 years of combined experience, providing full accounting services to help your construction business stay financially healthy. Our aim is to take the stress away from you to keep you doing what you do best, whilst we ensure your business complies in accordance with HMRC Guidelines.

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 sector advice from a trusted construction 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. If you require more information on deadlines and CIS returns please do get in touch with us.

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    vw kombi van
    By Katie Business Advice • Business News • Tax News 0 Comments

    When is a van not a van?

    vw kombi van

    HMRC are being urged to provide clarity and consistency on the tax treatment of commercial vehicles such as VW Kombi Vans marketed as goods vehicles. The need for clarity follows the ruling in an important tax tribunal case involving “vans” provided to employees of Coca Cola.

    The court has upheld the HMRC view that certain vehicles are not goods vehicles but motor cars for benefit in kind purposes. Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles.

    Certain vans are exempt from income tax

    There is no benefit in kind where the van is only used for business journeys or the private use of the vehicle is insignificant. Examples would include making a slight detour to pick up a newspaper on the way to work or taking an old mattress or other rubbish to the tip once or twice a year.

    Income tax definition of “goods vehicle”

    The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

    Although the VW Kombi vans failed this test the Tribunal held that Vauxhall Vivaro vans provided by Coca Cola did fall within the definition of goods vehicles!

    It is understood that this case is due to be heard at the Court of Appeal which will provide legal precedent over the tax treatment. Until then it gives employers a dilemma as to how to report such vehicles on employees’ form P11d and also whether the position in earlier years should be rectified. The tribunal had to seek evidence from automotive industry experts so how are employers expected to interpret the rules!

    What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for capital allowances and VAT.

    Capital allowances definition of “motor car”

    The definition of a “motor car” for plant and machinery allowances purposes is a mechanically propelled vehicle except a vehicle:

    1. constructed in such a way that it is primarily suited for transporting goods of any sort, or
    2. of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle.

    VAT definition of “motor car”

    For VAT purposes the definition of a motor car has been amended several times over the years. The current definition states: “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

    1. a) is constructed or adapted solely or mainly for the carriage of passengers; or
    2. b) has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

    There are several exceptions to this rule notably vehicles constructed to carry a payload of one tonne or more. A common example would be a “double cab” pick-up such as a Mitsubishi L200 or Toyota Hilux.

    Need more information?

    A&C Chartered Accountants offer a wide range of services which are unique to your business needs. As chartered accountants we have a wealth of experience in all sectors and business vehicles. 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 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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      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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          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

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            By Katie Tax News 0 Comments

            Cash Planning and Forecasting

            Cash is King! The lifeblood of any business is its ability to collect cash and pay bills as well as pay its employees, particularly its owners. Far too often small businesses are profitable, but they do not have enough operating capital to meet their current needs. Consequently, they may be forced to sell out to a stronger competitor, sell a portion of the company to investors at an undesirable price or close the doors and put the company out of business. None of these alternatives are typically what the owners intended when starting the business.

            The ability to forecast cash resources and uses is an art and is by no means a well-defined science. None of us have a crystal ball and any cash forecast which is prepared by the management of a company or their accountant can be no more than a guess as to when the customers pay and when your business will pay its obligations. Hopefully, the more effort that is put into cash forecasting the better will be the educated guess and the more accurate the resultant picture of the future operations of your business.

            Starting the Analysis

            One of the most significant factors to be considered in your cash flow forecast is the volume of sales that will be generated in the next several months and for the rest of the period for which you intend to forecast. Your sales forecast must be as fine-tuned as possible. It may be unrealistic to assume that there is a million pound market for your product in your area and you will be able to capture a specified percentage of it. A sales forecast needs to be based on specific facts. These might include your sales history, or the history of similar businesses you have owned or operated, or the competition. In your area, what has been the experience of similar operations?

            Some of the questions that should be addressed would include what other factors could I control such as adding new product lines, deleting unprofitable operations, adding a new salesperson, or terminating one that is not producing to quota? In preparing a forecast, you must also take into consideration items such as the seasonality of your business, the relative state of the economy and the period over which you will forecast.

            Obviously, your ability to forecast sales for the next month is better than it is for three to five years from now. The amount of detail that must be included in the cash forecast is really a matter of preference. It can be based on per unit sales extended out by the sales price of each type of unit or an average sales volume per day, week or month of your type of business in its current environment.

            Cash Collections

            Once you have determined a reasonable level of sales and you are comfortable with the forecast you have made, you must address questions such as: what percentage of my sales are received in cash, and what portion are credit sales for which I will have to carry amounts in debtors? For those that are debtors based, how soon is the cash collected? Do I have to wait for customers to pay me or do third parties such as Visa or MasterCard or a debt factor take the customer’s account and convert it to cash for me with an appropriate discount?

            If you are relying on customer payments for collection of debtor balances you must determine what portion of the debts will be collected in thirty days, sixty days, ninety days and thereafter, and what portion, if any, may never be collected. To assume that 100% of your sales will ultimately be converted to cash is probably unrealistic especially considering the current economic environment and the tight cash situations that may face some of your customers.

            Other sources of cash may be available in addition to sales. Do you expect to bring in a partner or other investors, or can you borrow money from a bank? When will you receive the cash and how much will you get? Part of your cash flow analysis may be to determine how much investment money or borrowings will be required to operate your business.

            Once you are comfortable with the cash receipt side of your business, and the timing of the collections of funds from your sales and other sources, it is necessary to consider the expenses and other cash needs of your business operation.

            By Katie Tax News 0 Comments

            Off-payroll working rules going ahead

            The draft Finance Bill clauses issued for consultation on 11 July include legislation to extend the “off-payroll” working rules to the private sector from 6 April 2020. These changes will have significant implications for workers providing their services through personal service companies and also the end user organisations that engage such workers.

            End users will be required to determine whether the worker would have been an employee if directly engaged and hence the new rules apply to the services provided by the worker via his or her personal service company. This will be a significant additional administrative burden on the large and medium-sized businesses who will be required to operate the new rules. The current CEST (Check Employment Status for Tax) online tool would be improved before the proposed start date.

            By Katie Tax News 0 Comments

            CGT private residence relief changes

            Draft legislation to be included in the next Finance Bill will make important changes to the calculation of CGT private residence relief. As announced in the Autumn 2018 Budget, there will be a reduction in the final period exemption to just 9 months and stricter conditions for letting relief to apply.

            Currently where a property has been the taxpayer’s main residence, the last 18 months of ownership counts as a period of deemed occupation. This will be reduced to just 9 months for disposals on or after 6 April 2020. It is understood that this is being introduced to counteract “second home flipping” allegedly used by MPs when they sell their London residences.

            CGT LETTING RELIEF RESTRICTION

            Currently letting relief provides up to a £40,000 deduction in computing the capital gain on the disposal of a property that was at some time the taxpayer’s main residence. The relief is the lessor of £40,000, the gain attributable to the let period, and the amount of private residence relief. For a couple this could potentially exempt up to £80,000 of the gain from CGT.

            The draft legislation will limit letting relief to those situations where the owner remains in shared occupancy with the tenant, i.e. has lodgers living in the house.

            If you were hoping to take advantage of letting relief on the sale of a property, you might want to consider disposing of the property before 6 April 2020 to take advantage of the current rules. Contact us for advice in this area as we can estimate the additional tax that might be due following the withdrawal of this generous relief.

            By Katie Tax News 0 Comments

            “Small” employers excepted

            “Small” businesses will be outside of the new obligations and services supplied to such organisations will continue to be dealt with under the current IR35 rules, with the worker and his or her personal service company effectively self-assessing whether the rules apply to that particular engagement.

            The draft Finance Bill confirms that the definition of “small” is linked to the Companies Act 2006 definition.

            This is where the business satisfies two or more of the following conditions:

            Annual turnover of £10.2 million or less
            Balance Sheet total of £5.1 million or less
            50 employees or less
            There will be an obligation to pass details of the status determination down the labour supply chain. The liability for tax and national insurance will be the responsibility of the entity, paying the personal service company. However, if HMRC are unable to collect the tax from that entity, the liability will pass up the labour supply chain, thus encouraging those entities further up the supply chain to carry out due diligence.

            Please contact us if you would like to discuss how the proposed changes are likely to impact on your business.