There is no VAT on printed books, booklets, newspapers, and leaflets. Well there is, - its zero-rate VAT, so the customer pays no VAT, but the supplier can reclaim the VAT it pays on purchases.
Printing businesses have to be very clear about which of their products they treat as zero-rated for VAT and which are standard-rated so 20% VAT applies. The VATman likes to come round and check. If you have classified your printed products
incorrectly, VAT on the earlier sales (up to four years ago) will have to be paid. It's unlikely that you will be able to recover this extra VAT from your customers.
In a recent case printed card document folders, which were designed to hold other leaflets, were judged to be standard rated for VAT, as was a laminated business card. However, personalised souvenir photo-books were determined to be zero-rated. We can help you decide which of your products should be zero or standard rated for VAT.
Beware; if the book, leaflet or newsletter is provided in an electronic form, standard rate VAT will apply. There is a special exemption for audio-books for the blind which are zero-rated.
Tuesday 15 April 2014
Saturday 12 April 2014
LET PROPERTY CAMPAIGN
The taxman has launched another 'confess your tax sins' campaign aimed at individuals who have failed to declare rental income they have received from residential properties.
This let property campaign (LPC) can't be used by companies that let property or by landlords who let commercial rather than residential properties.
Like other tax disclosure campaigns the taxman promises that you will pay a lower amount of penalties if you disclose under the LPC, but the tax due and interest on late paid tax will have to be paid in full.
If you want to use the LPC to declare income and gains from your let properties, you need to complete a notification form on the HMRC website, or phone the property campaign helpline on 03000 514 479. We can help you with this.
There is no set deadline for asking to use the LPC, but the Taxman is running a taskforce in parallel to the LPC which is targeting tax evasion by residential landlords. So it's a case of "confess before we catch you."
Once you have notified HMRC that you want to use the LPC, you will be given a reference number and be told to make a full disclosure of the previously un-declared income and gains with three months. You will also need to pay all the tax due within the same three month period. If you can't pay all the tax in that time period you must ask HMRC for a "time to pay" arrangement before the deadline arrives. We can help you with this as well.
This let property campaign (LPC) can't be used by companies that let property or by landlords who let commercial rather than residential properties.
Like other tax disclosure campaigns the taxman promises that you will pay a lower amount of penalties if you disclose under the LPC, but the tax due and interest on late paid tax will have to be paid in full.
If you want to use the LPC to declare income and gains from your let properties, you need to complete a notification form on the HMRC website, or phone the property campaign helpline on 03000 514 479. We can help you with this.
There is no set deadline for asking to use the LPC, but the Taxman is running a taskforce in parallel to the LPC which is targeting tax evasion by residential landlords. So it's a case of "confess before we catch you."
Once you have notified HMRC that you want to use the LPC, you will be given a reference number and be told to make a full disclosure of the previously un-declared income and gains with three months. You will also need to pay all the tax due within the same three month period. If you can't pay all the tax in that time period you must ask HMRC for a "time to pay" arrangement before the deadline arrives. We can help you with this as well.
Wednesday 9 April 2014
REAL TIME INFORMATION (RTI) PENALTIES
HMRC has experienced significant problems in reconciling amounts of PAYE due from employers, to the amounts reported under real time information (RTI). As a result some of the automatic RTI penalties which were to apply from 6 April 2014, will now apply from:
- October 2014 for late filing of in-year RTI reports; and
- April 2015 for late payment of in-year PAYE due.
However, interest for late paid PAYE will still apply from 6 April 2014. To keep on top of what PAYE you have paid, what HMRC thinks is due; you should view the business tax dashboard facility on the HMRC website at regular intervals. Unfortunately we cannot access the business tax dashboard on your behalf.
If you are late with filing your last RTI report (known as the final submission for the year) for 2013/14, a £100 penalty will apply. This penalty continues to mount-up at £100 per month, or part month, for each batch of 50 employees on the payroll, until the final submission is received by HMRC.
The full payment summary (FPS) for the last tax month will normally be your final submission for the tax year. This FPS should be submitted on or before the last pay day in the tax year, or by 5 April 2014 where you take advantage of the concession for small businesses.
You should not submit forms P35 or P14 for 2013/14 as the information on those forms is included on the final FPS or EPS submitted for the tax year.
If no employees are paid in the final tax month of the year you should submit an employer payment summary (EPS) as the final submission for the year. This EPS should reach HMRC by 19 April 2014. The EPS can also be used as the final submission if the last FPS for the year was not marked as the final submission for the year.
We can help you with the end of year payroll procedures if you are uncertain about what you need to do.
- October 2014 for late filing of in-year RTI reports; and
- April 2015 for late payment of in-year PAYE due.
However, interest for late paid PAYE will still apply from 6 April 2014. To keep on top of what PAYE you have paid, what HMRC thinks is due; you should view the business tax dashboard facility on the HMRC website at regular intervals. Unfortunately we cannot access the business tax dashboard on your behalf.
If you are late with filing your last RTI report (known as the final submission for the year) for 2013/14, a £100 penalty will apply. This penalty continues to mount-up at £100 per month, or part month, for each batch of 50 employees on the payroll, until the final submission is received by HMRC.
The full payment summary (FPS) for the last tax month will normally be your final submission for the tax year. This FPS should be submitted on or before the last pay day in the tax year, or by 5 April 2014 where you take advantage of the concession for small businesses.
You should not submit forms P35 or P14 for 2013/14 as the information on those forms is included on the final FPS or EPS submitted for the tax year.
If no employees are paid in the final tax month of the year you should submit an employer payment summary (EPS) as the final submission for the year. This EPS should reach HMRC by 19 April 2014. The EPS can also be used as the final submission if the last FPS for the year was not marked as the final submission for the year.
We can help you with the end of year payroll procedures if you are uncertain about what you need to do.
Sunday 6 April 2014
BUSINESS JOURNEY
A number of self-employed businesses have been waiting for a tax case to be decided which turned on the question of "what is a business journey?" The test case concerned a doctor who was both employed by the NHS and self-employed as a private consultant.
The Upper Tax Tribunal decided that the doctor's self-employed work started when he arrived at his private clinic, so the travel between his home and the clinic was not a business journey. This was in spite of the fact the doctor had an office at his home where he prepared his treatment plans.
So what does this mean for you as self-employed person who travels to various sites to work? The taxman will argue that your work only starts when you reach your customer's site and any business activity performed at your home-office is irrelevant. This would restrict your allowable travel costs to journeys between customers and deny a deduction for travelling from your home to the first customer of the day.
The key is determining where your "place of business" is located, and whether the activity undertaken at the home-office is wholly and exclusively undertaken for the purpose of your business. As ever it will come down to the evidence you can produce.
Can you show that the activities you perform at your home must be performed at that location? For example: contacting suppliers, drawing up quotes, or scrutinising plans. Also can you provide evidence of the time you spend working exclusively on your business at your home, perhaps by records in your business diary?
We can help you record the details the taxman will want to see in order to prove you do start work at home, and not when you reach you first customer of the day.
The Upper Tax Tribunal decided that the doctor's self-employed work started when he arrived at his private clinic, so the travel between his home and the clinic was not a business journey. This was in spite of the fact the doctor had an office at his home where he prepared his treatment plans.
So what does this mean for you as self-employed person who travels to various sites to work? The taxman will argue that your work only starts when you reach your customer's site and any business activity performed at your home-office is irrelevant. This would restrict your allowable travel costs to journeys between customers and deny a deduction for travelling from your home to the first customer of the day.
The key is determining where your "place of business" is located, and whether the activity undertaken at the home-office is wholly and exclusively undertaken for the purpose of your business. As ever it will come down to the evidence you can produce.
Can you show that the activities you perform at your home must be performed at that location? For example: contacting suppliers, drawing up quotes, or scrutinising plans. Also can you provide evidence of the time you spend working exclusively on your business at your home, perhaps by records in your business diary?
We can help you record the details the taxman will want to see in order to prove you do start work at home, and not when you reach you first customer of the day.
Thursday 3 April 2014
INHERITANCE TAX
Inheritance tax (IHT) is payable at 40% on the net value of the assets you own when you die, plus (to a certain extent) on the value of the gifts you made in the seven years before you die. The first £325,000 of assets is currently exempt from IHT in all cases.
There are also exemptions from IHT for business assets, such as shares held in unquoted companies. However, you cannot escape IHT by holding all your investments and spare cash inside your personal company. The business of the company must be more than passive holding of investments, and the Taxman normally regards letting property as an investment, but this is a grey area.
Even where your company has an active trade, it doesn't follow that the full value of its shares will qualify for the IHT exemption. The Taxman wants to look inside the company and check that each asset it holds, including cash, is used for the purpose of the trading business.
This can cause difficulties for companies which hold more cash than is needed for everyday working capital. If your company is in this position, to get the IHT exemption you need to form some plans for use of the funds within the business and document those plans.
The IHT exemption applies where the shares of the trading company are held by individuals, or where a holding company holds the shares, and shares in that holding company are held by individuals. However, where the holding vehicle is a general partnership or an LLP, instead of a company, the IHT exemption does not apply.
There are also exemptions from IHT for business assets, such as shares held in unquoted companies. However, you cannot escape IHT by holding all your investments and spare cash inside your personal company. The business of the company must be more than passive holding of investments, and the Taxman normally regards letting property as an investment, but this is a grey area.
Even where your company has an active trade, it doesn't follow that the full value of its shares will qualify for the IHT exemption. The Taxman wants to look inside the company and check that each asset it holds, including cash, is used for the purpose of the trading business.
This can cause difficulties for companies which hold more cash than is needed for everyday working capital. If your company is in this position, to get the IHT exemption you need to form some plans for use of the funds within the business and document those plans.
The IHT exemption applies where the shares of the trading company are held by individuals, or where a holding company holds the shares, and shares in that holding company are held by individuals. However, where the holding vehicle is a general partnership or an LLP, instead of a company, the IHT exemption does not apply.
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