THE VAT CASH ACCOUNTING SCHEME

If your VAT-exclusive turnover is £1.3Sm or less, then you may account for and pay VAT on the basis of cash paid and received.

You can join this scheme at any time.

Once you are in the scheme you can continue to use it until your taxable turnover exceeds £1.6m per annum.

What this means is that you don't have to pay VAT to HMRC on invoices that have not been paid yet and conversely are not allowed to claim VAT back on expenses you have incurred but not yet paid.

ROLL-OVER RELIEF FOR BUSINESS ASSETS

Roll-over relief for business assets

It is always worth bearing in mind that when you sell certain types of business asset, it is possible to postpone the gain by reinvesting in a qualifying asset for roll-over relief purposes.

This is quite a restricted relief these days and care should be taken before relying on the availability of the relief.

The best feature about this relief is that you can claim it on more than one new purchase, and can include assets purchased one year before to three years after the date of sale of the original asset.

SEARCH FOR LANDLORDS

In our March newsletter we told you about HMRC's let property campaign (LPC) which aims to nudge landlords into confessing undeclared rental income. We also warned that HMRC is actively looking for errant landlords. We now know how those landlords will be found.

HMRC is writing to letting agents in the UK, asking them to provide details of the properties they have let in 2012/13, including the amount collected per property and the addresses of the let property and the landlord. The letting agent is given just 60 days to provide the information, or face a penalty of £300, and further penalties of £60 per day for additional delays.

The agent also can't refuse to provide its customers' details on the grounds that such personal information is protected by Data Protection Act 1998, as the tax law overrules the Data Protection Act in these circumstances.

If you have received such a request from HMRC we can help you compile the information in the form demanded - which must be on a pre-defined spreadsheet.

If you think your overseas property will never be found by the Taxman, think again. HMRC is using its "connect" programme to search holiday rental websites for UK residents who are letting overseas properties. If you live in the UK your overseas rents should be declared in the UK, as well as to the local tax authorities. Even if you make no profit from the property, you still need to show all the income and expenses on your tax return.

CROSS-BORDER SERVICES

You may have heard that the price of electronic books and music will rise on 1 January 2015. This because electronic services (including e-books and music), will be subject to VAT in the country where the customer lives from 2015. Currently large suppliers of electronic services tend base themselves in the EU country with the lowest rate of VAT, so they can sell their services with that low rate attached.

This change in the law could affect your business if you sell electronic services to non-business customers in other EU countries. "Electronic services" includes a wide range of things including the provision of software online, writing or supporting websites.

Say you design a website for someone in France (who is not a business). From 2015 that sale will be subject to French VAT rates and you will probably have to register for VAT in France, as the French VAT registration threshold is very low. Similarly you may have to register for VAT in other EU countries where you sell electronic services to non-business customers.

Fortunately there will be a "mini one stop shop" (MOSS) on the HMRC website that will allow you to register for VAT in all the EU countries in which you sell electronic services, and make a single VAT return for all those countries. The MOSS will be open to start the registration process from October 2014.

In the meantime you need to check which of your products will come within the definition of "electronic services" for these new rules. We can help you with that.

If you are selling across EU borders you also need to think about the following:

- How to identify the location of your customers, and store that information.
- How to determine if your customer is a business or not, and what evidence will you need to support this decision.
- If you sell through an agency, check what the contract says about who takes responsibility for VAT registration.

SALARIED MEMBERS OF LLPS

Do you operate your business as an LLP? If you do, you need to be aware of the change in tax treatment of certain LLP members from 6 April 2014. Members who meet all of these conditions will be taxed as employees:

A. works for the LLP as an LLP member and at least 80% of the amounts paid to him for that work are disguised salary;
B. does not have significant influence over the affairs of the whole of the LLP; and
C. is not required to contribute funds to the LLP (a capital contribution), or if he does contribute funds that contribution is less than 25% of his disguised salary for the current tax year.

From the member's perspective the easiest of the conditions to break is C - provide capital to the LLP (aka: partner's loan). Current members of the LLP will have until 6 July 2014 to contribute the required level of capital, but they must make a firm commitment to do this by 6 April 2014. Members who join the LLP on or after 6 April 2014 will have two months in which to raise the required level of capital to break condition C.

If you are caught by these new rules and become a deemed employee of the LLP on 6 April 2014, you will cease being self-employed on 5 April 2014. Depending on the accounts year-end of the LLP, you could be taxed on up to 23 months of profit in 2013/14, subject to any overlap relief. The on-account tax payment you made on 31 January 2014 will almost certainly be incorrect. Talk to us about recalculating your tax payments for 2013/14 and 2014/15.

The LLP business that has members caught by these new rules will have to set up PAYE scheme if it doesn't already have one. We can help you with that.

SALARY AND DIVIDEND STRATEGY 2014/15

As a director and shareholder of your own company you can decide how much salary to pay yourself each month in order to use your tax-free personal allowance in the most tax efficient way. Any further funds you need can be extracted as a dividend if the company is making a profit.

If you are a director of your company and you don't have a contract that sets out terms of employment with the company, you don't have to pay yourself the national minimum wage. So how much should you pay yourself?

For 2014/15 if you were born after 5 April 1948 you have a tax free personal allowance of £833 per month (£10,000 per year). You could take a salary at that level and pay no income tax, assuming you have no other taxable benefits from the company such as a car.

However, you will pay national insurance (NICs) on that salary as the NICs threshold is only £663 per month. From a gross salary of £833 the company must deduct NI of £20.40 and set-aside employer's NI of £23.46 on top. The company will have an employment allowance of £2,000 for the year to set against its employer's NI due on all its employees, so it won't have to pay over employer's NI until that £2000 is used up.

If you take a salary of just above the NI lower earnings threshold of £481 per month, you will get an NI credit towards your state pension, but you don't pay any tax or NI. However, at that annual salary level (£5,772) you will be "wasting" £4,228 of your tax free personal allowance, unless you have other income to cover it.

Talk to us about the best salary level for you, which takes into account all your other sources of income.