Your May Q & A - Tax Assist Accountants
5th May 2015
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Gary Perrens from TaxAssist Accountants, Sudbury and Colchester, answers some of your tax and small business related questions


 

Q. I would like to encourage my customers with a discount. But which value do I calculate the VAT on- the amount before or after the discount?

 

A.  Unfortunately, the UK VAT legislation is misaligned with EU VAT legislation in respect of prompt payment discounts. Therefore, with effect from April 2015 VAT will need to be accounted for on the full invoice amount.

If the client does subsequently take up the discount, a credit note carrying VAT should be issued or you should display on the original invoice what entries the client should make to their records for the discount. 

Please note, it will apply from the earlier date of 1st May 2014 for supplies of telecommunications and broadcasting services where there is no obligation to provide a tax invoice.

If you would like any advice on invoicing or VAT, please feel free to contact us and we can put you in touch with your local TaxAssist Accountants office.

 

 

Q.  I have had a lot going on and I still haven’t got round to submitted my 2014/15 tax return. What consequences should I be bracing myself for? 

A.  Late Filing Penalties. You should already have received an automatic filing penalty of £100. But from 1st May, daily penalties of £10 will start to apply in addition to the initial £100 penalty. They will be capped at £900 but further penalties will start to apply if the delay reaches 6 months.

Interest

Interest on the late payment of any tax liability will also be accruing. The current rate of interest charged by HMRC can be found on their website. 

Late payment penalties

Late payment penalties are raised where the tax is unpaid for 30 days after the due date. A second penalty is created where the tax is unpaid 30 days and 5 months after the due date. Further penalties arise for persistent delays.

The penalties are charged at 5% of the amount of tax unpaid. 

It sounds like you’re struggling to keep on top of your affairs. If you’d like any assistance, please contact us and we can get your affairs up-to-date and explore if there are grounds to appeal against any penalties too. 

 

 

 

Q. I’m looking at getting a new vehicle for my business and I know there are some tax advantages of having vans. But what is the definition of a van, so that I know what to buy?

A. Vans have a number of benefits for tax purposes; in comparison to cars:

1.     VAT – if your business is VAT registered, you may be able to recover the VAT on a van

2.     Capital Allowances – if you buy the van outright or under a finance lease such as a Hire Purchase agreement, you should be able to offset the cost of the van against your profits. This is because vans are treated as Plant for Capital Allowance purposes, and therefore qualify for the Annual Investment Allowance which allows up to 100% of the cost to be offset in the year of purchase

3.     Benefits in Kind – Company cars can trigger taxable benefits in kind, which are based on the List Price and the car’s CO2 emissions. This can make company cars quite expensive, but benefits in kind for vans are a fixed amount; irrespective of the van’s List Price or CO2 emissions.  Furthermore, the rules for when a benefit in kind for a van arises, are more relaxed than those for a car- so a benefit may be avoided altogether

Defining a van can be tricky, as there are different criteria for different areas of tax, but try to stick to the following conditions:

  • ·         A vehicle that is not commonly used as a private vehicle and is unsuitable for such use
  • ·         A vehicle primarily suited for the transportation of goods- no rear seats/ windows,
  • ·         Has a maximum legal laden weight of 3,500kg

Discussing this with an accountant before you make any purchases, could prevent you from losing tax relief and being unable to reclaim VAT.  So if you would like to discuss your vehicle purchases in more depth, please feel free to contact your local TaxAssist Accountant.

 

 

Q. I have just started my own business and my business plan is projecting losses for the first year. Should I pay Class 2 National Insurance?

A. Class 2 National Insurance (NI) is payable by the self-employed at a flat-rate; regardless of profit levels. Class 2 NI counts towards your entitlement to certain benefits, like the basic State Pension, Maternity Allowance and Bereavement Benefit.

If you earn less than a certain limit, you can obtain an exception from paying Class 2 NICs- but you no longer need to apply. Instead, there will be a new Small Profit Threshold (£5,965 for 2015/16), and when profits are reported through self-assessment then the exemption will automatically apply.

However, unless you pay NI on other income such as employment income, you might decide to carry on paying them voluntarily to maintain your entitlement to the State Pension and other benefits. In this case, the individual can opt to pay Class 2 NIC voluntarily to protect their entitlement to benefits.

Should you have any queries regarding this or any other matter, please feel free to contact me


Q. I provide some of my sales reps with company cars and I know I have to file forms with HMRC. Can you remind me what the deadlines are please? 

A. At the end of the tax year you’ll need to submit an end-of-year form to HM Revenue and Customs (HMRC) for each employee you’ve provided with expenses or benefits. The form will either be a P9D or a P11D, depending on the expense or benefit.

You may need to submit form P11D(b) to report the amount of Class 1A National Insurance due on all the expenses and benefits you’ve provided. You should do this if:

  • ·         you’ve submitted any P11D forms
  • ·         you’ve been sent a P11D(b) form by HMRC

If you don’t submit any P11D forms but you've been sent a P11D(b) by HMRC to complete, you can tell HMRC that you don’t owe Class 1A National Insurance by completing a declaration.

The deadlines are as follows:

What you need to do

Deadline

Submit your end-of-year forms (P9D and P11D) online to HMRC

6th July 

Give your employees a copy of the information on your forms

6th July

Tell HMRC the total amount of Class 1A National Insurance you owe on form P11D(b)

6th July

Pay any Class 1A National Insurance owed on expenses or benefits

Must reach HMRC by 22nd July (19th July if you pay by cheque)

Gary Perrens would be happy to help you prepare you expenses and benefits forms. Please feel free to contact us for more information about the services we can provide. 

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About the Author

Penny W

Member since: 17th March 2014

Hello! I'm Penny from thebestof Sudbury, shouting about the best local businesses from Hadleigh through the Clare. When I'm not doing that, you'll find me knitting socks or tending to my 6 chickens

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