TaxAssist Sudbury owner, Gary Perrens, answers your questions
Self employed and tax credits renewal
Question
I’ve received a letter from Concentrix claiming they are checking tax credits claims for the self employed on behalf of HMRC. Is the letter legit and should I be worried?
Answer
HMRC have contracts with some private companies to undertake work on their behalf; one of which is Concentrix. If you are contacted by Concentrix in relation to a tax credits claim, you should deal with them in the same way you would deal with HMRC.
From 6th April 2015, the rules tightened slightly and self employed tax credits claimants must be able to demonstrate that their business is conducted on a commercial basis; with a view to achieving profits. These changes will not affect the rules for claiming Child Tax Credit.
The reason you have been contacted, is because the profits from your business per hour equate to less than the National Minimum Wage.
The information you may be asked to provide should be typical business records, such as receipts and expenses, records of sales and purchases, and bank statements. They may also ask for supporting documents such as a business plan, planned work, cash flow and profit projections.
If your business is in its early stages and is not yet profitable, you may have to rely more on your projections and business plans to satisfy HMRC/ Concentrix that you have aspirations of making good profits in the future.
HMRC will use the information provided to reach a decision about the claimants’ current working tax credit award. There is a risk that some claimants may lose their working tax credits if they cannot provide the evidence HMRC ask for and may have to repay any tax credits they are not entitled to
RTI penalties
Question
I’ve received a penalty for failing to submit my payroll information on time. I’ve never received one before, why has this happened?
Answer
Under the Real Time Information (RTI) rules surrounding the online submission of payroll information, you can get a penalty if:
You should pay the penalty within 30 days of getting the notice - you’ll be charged interest if you don’t.
Alternatively, you will be able to appeal online against a filing penalty, using HMRC’s Online Service. You can appeal if you think:
Penalties for late payroll information were introduced for larger employers from 6th October 2014, but from 6th March 2015 employers with under 50 employees could also be subjected to these penalties.
Therefore, these smaller employers could receive their first late filing penalty if the 2014/15 Month 12 FPS late.
Until 2016, HMRC has allowed existing small employers (with fewer than 10 employees) to report monthly, on or before the last payday in the tax month. Existing who take advantage of the temporary reporting relaxation, must remember to use late reporting code ‘E’.
If you’re struggling to manage your payroll with the introduction of RTI and Auto Enrolment looming, contact your Gary who would be happy to look after your payroll affairs.
Director-only companies and Auto Enrolment
Question
My brother and I run our own limited company. We’re both directors and we put a notional salary through the payroll for ourselves; but there are no other staff. We’ve received a letter from the Pensions Regulator with our Staging Date for Auto Enrolment. We’ve both got private personal pension schemes, so we don’t want to have one for the company as well. Is there any way we can get around this?
Answer
If you don’t have any staff other than directors, you may not have any automatic enrolment duties. You won’t have any duties if the only people working for you are:
Automatic enrolment will apply if more than one director has a contract of employment.
Therefore as you are both directors and assuming neither of you have contracts of employment in place, then you will not have any Auto Enrolment duties. If you have determined that you do not have any Auto Enrolment duties then you must tell The Pensions Regulator before your staging date. To do this, you may either:
No P11D due
Question
I have previously had to report benefits and expenses to HMRC on form P11D. This year, I indicated on my final RTI submission for the tax year that I would be submitting them as normal- but I have now realised there’s nothing to report. Can I ignore the P11D(b) that HMRC have sent me?
Answer
No. If HMRC have issued you with a P11D(b) form, you will have to tell them that no P11Ds are due and therefore not to expect any Class 1A contributions either. Otherwise, they will assume that the P11Ds are late once the deadline of 22nd July has passed and will consequently issue with late filing penalties.
To advise HMRC that no P11Ds are due, there are 2 options:
12. Complete the P11D(b) you’ve received and tick the option ‘No expenses payments or benefits of the type to be returned on forms P11D have been or will be provided for the year ended 5 April 2015. For this reason no forms P11D are attached’ or
13. Use the online form entitled ‘PAYE - no return of Class 1A National Insurance contributions due for 2014-15’
Whichever option you go for, make sure you inform HMRC by the normal deadline of 22nd July. If you’re using the paper form, make sure you’ve allowed for postal delays.
If you would like to have a chat with Gary, please call him on 01787 699141
