As 31st Jan approcahes panic sets in especially for first time user of Self Assessement.
Please note quickest way to get UTR is over the telephone – 0300 200 3310.
But after getting the UTR one has to wait for 72 hours before one can register for online services.
Good Luck !
This is one of the most common questions asked of us.
HMRC has created a simple webpage about it. Answer a few questions about yourself and your will know.
Link to the page:
https://www.gov.uk/check-if-you-need-a-tax-return
This is a simple topic for most of the businesses but has been presented by HMRC in a complex way.
Basically it’s about loans.
These rules covers the usual loans and also cases which are `deemed`. Whenever word `deemed` is used it means special cases specifically mentioned in legislation.
Recently I came across and very helpful webinar from BKL Tax (a tax consultancy), link below and I thought I should share it.
Some key points from the webinar:
• If a trade debt is released its taxable income. E.g. A Ltd sold £100 apples to B Ltd and later A Ltd forgave the trade debt for say bad debt. £100 will be taxable income for B Ltd.
• Interest expense deduction is taken on accrual basis not on paid basis. But there are some anti-avoidance rules around these – related parties beware!
• International accounting standard 23 and Loan relationships: Capitalised interest MUST be claimed in year interest arises (on accrual basis). CTA09 S 320
• Loan release not taxable in specific cases CTA09 S 322 :
1) Release is part of corporate insolvency
2) Consideration is inform of ordinary shares (debt re-structure in case lenders taking over a business)
3) Debtor company in insolvency/administration/liquidation etc.
• Pre trading LR rules also exist
Connected parties (CTA09 S466)
If companies are under the control of the same person – waivers among them are generally ignored for tax purposes i.e. for creditor company it will not be a tax deductible expenses and for debtor company it will not be a taxable income.
Webinar also mentions of a case where companies controlled by husband and wife are NOT connected. E.g. A ltd is 100% owned by Mr A and B Ltd is 100% owned by his wife Mrs B. A ltd and B Ltd are not connected. I think HMRC may challenge this.
Speakers also briefly mention Interpretation Act 1978 and its use in interpreting the term “same person”.
I recommend that you are interested please go to the webinar mentioned among above.
Another good thing that have come out of EU.
EU issued a directive no. 2012/6/EU as of 14 March 2012 to be implemented all over EU for micro entities.
UK government to comply with the above directive put in place: The Small Companies (Micro-Entities’ Accounts) Regulations 2013.
Main aim- To reduce administrative burden for small business to boost economy.
What is a micro entity?
If a company meets two of the following three conditions, it is classified as a micro entity:
• Turnover : not more than £632,000
• Balance sheet total : not more than £316,000
• Employees : not more than 10
What its use?
Mainly your accountant’s year end work is reduced thus the fee you pay is reduced.
How do we file annual accounts at Companies house ?
In the same way as you use to file, just select “Micro entity” while filing.
What is the impact for HMRC accounts and tax return?
HMRC accepts these accounts. There is no material impact on your corporation tax.
Directors National Insurance
April 2017
My client took a new employee who had worked for two months with another employer before joining him.
My client will employ this individual for a couple of months paying say £1000 per month.
After taking the last employer’s pay and current projected pay this individual’s earning was below Personal Allowance limit of £10,600 (Tax year 2015 -2016)
When I ran the payroll , HMRC Basic PAYE tool asked me to deduct Class 1 National Insurance from this employee’s pay.
I was confused as I calculated that this employee’s total pay in the whole tax year will be less than Primary Threshold of £672 x 12 = £8,064
I had been calculating National Insurance contribution like Income Tax and taking the National insurance thresholds to be same as Income Tax Threshold.
I researched and once again Chartered Institute of Tax Advisor’s(CIOT) website came to rescue. It informed me that national insurance thresholds are calculated on a weekly or monthly basis (depending on the payment cycle) unlike Income Tax where thresholds are calculated on a yearly basis.
Example of Hypothetical Emily was most illuminating. Visit the below mentioned page and
Ctrl + F “Emily” to find the example.
Link to the article : http://www.taxguideforstudents.org.uk/tax-essentials/what-is-national-insurance
Thank you CIOT
March 2019
Recently my colleague Neel took another client where the director was appointed during the financial year. He was processing his one salary payment as £8,424 the NIC threshold for financial year 2018-19 but tax softwares were asking him to deduct NICs. We tried in two different software same result.
We searched on the internet and came across another helpful guide by HMRC CA44. It reminded us that like employees , directors appointed mid way through the year will have their NIC threshold pro rated.
Roy Accountants 