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Newsletter
July 2008 |
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The newsletter this month
includes an update on the new H M Revenue & Customs powers; the effect
of charging rents and claiming the new CGT entrepreneurs' relief; new
filing details for limited companies and limited liability partnerships,
and finally new mileage rates effective from 1 July
2008. Our next newsletter will be
published 5th August 2008. |
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HM
Revenue & Customs' new powers! |
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The Finance Act 2008 brings
together a number of issues that are going to affect your future
relationship with H M Revenue & Customs. In the past regular visits have
been restricted to a VAT audit and possibly a payroll check. Additionally
inspectors may have picked up on areas of concern in your annual tax
return and launched a formal aspect, or full enquiry into your
affairs. The Finance Act 2008 takes this
whole process to a new level! In future you will be penalised
if HMR&C believe you have not taken reasonable care in preparing any
information (accounting or otherwise) that underpins any return made to
them. It is likely that any under-declared tax that is
discovered will be subject to a penalty approaching 30%, and if
HMR&C can prove negligence or fraud this could rise to 100%.
The way in which these errors
will be discovered are set out in changes to HMR&C's legal powers to
investigate your returns. It is envisaged that an officer of HMR&C
might begin a compliance check in respect of any of the relevant taxes for
one or more of a number of purposes. These include checking that:
Accordingly you can expect that
future visits by tax officers will take an interest in the care that has
been taken to keep proper accounting records. In particular how these
records affect your VAT and payroll returns. Access to
information. HMRC have included changes to
the law in the Finance Bill 2008 that would give them rights regarding
access to records that underpin your returns. Accordingly there is to be no
right to appeal against HMRC seeing records. Another interesting development
recognises the use of computers in storing relevant data. HMRC are quoted
as saying: "An authorised person may, at
any reasonable time, obtain access to, and inspect and check the operation
of, any computer and any associated apparatus or material which is or has
been used in connection with a relevant
document." This would provide officers of
HMRC access to any computer which has been used in connection with the
accounting records (including supporting documents) required of the
taxpayer. This is a new development, as normally taxpayers would expect
HMRC to have access to the records themselves, but not the computers on
which the records have been prepared or maintained. The practical
implications of this are significant. You may want to ensure that no
critical business information is kept on the same computer as the
accounting records, so that risk of breach of confidentiality, or even
business disruption, is kept to a minimum should HMRC require access to
the computer during the course of an enquiry. Visits will be made in-year to
check that the record keeping provisions are being complied with during
the accounting period, and given the significant concern expressed about
the quality of accounting records by HMRC and the impact on tax take, this
is likely to be the main HMRC compliance contact that small businesses
will have in the coming years. What to
do? For most businesses the new
rules will have effect for accounting years ending 31 March 2009.
Therefore the records that you are presently updating for this period of
account may be open to inspection. Can we suggest you contact us if you
are interested in a formal review of your accounting and related
administration systems, in order to minimise any possible financial
consequences of future HMR&C visits. Click here
for a call back from our office regarding this
article. |
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Selling
business property previously rented |
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Many business owners have
bought commercial property that has been fully or partly occupied at
various times by their trading concerns, and rent may have been charged
for the use of the property; either the property owner has been paid rent
by his business, or by other third parties. This article discusses the way
in which the new capital gains tax rules apply to the disposal of these
properties on or after 6 April 2008. As you may remember, all
taxable capital gains are now subject to a flat 18% tax charge. There is
one notable exception. If a disposal qualifies as the sale of a business
asset you may be able to claim entrepreneurs' relief. If you can claim,
the first £1m of qualifying lifetime disposals are subject to tax at the
reduced rate of 10%. Generally speaking the disposal of a business
property should qualify for entrepreneurs' relief as long as it is sold in
conjunction with the sale or cessation of the business, or within 3 years
of that date. Obviously, if you have
purchased a property for the purposes of running your business you may
feel that this relief will be available to you when you sell the property.
Unfortunately the position of certain property owners, particularly those
who have charged rent to their business, may not be so straightforward.
The issues that affect the
availability of entrepreneurs' relief when commercial property has been
rented to a business, are complex and certainly beyond the scope of this
article to fully explore. However, we have highlighted below the
fundamental difference between a disposal by a sole trader and a disposal
by a partner or company shareholder. 1.
Sole
traders are treated differently to
partners and owners of limited companies. If you are a sole trader there
would be no commercial or tax purpose in charging your business rent for
the use of your property - both property and business are in your name.
There could be circumstances where part of the property has been let to a
third party. However as long as part of the property is in use by the
owner's business when the property is sold, a claim to entrepreneurs'
relief should be effective; at least to some extent.
2.
Partnerships and
limited companies. If a partner or shareholder
has purchased a property and made this available to the business for a
rental payment, the CGT position on disposal is more complex. If rent has
been charged by the owner to the partnership or company, a claim for
entrepreneurs' relief on sale may be
precluded. A final point. Relevant
legislation has not yet completed its passage through Parliament. The
Treasury are aware that a sale of a business property prior to 6 April
2008, that would have qualified for taper relief, may not now qualify for
entrepreneurs' relief; purely due to the rental payments issue. There is
therefore a possibility that there may be some relaxation of the rules in
any amended legislation. If you are contemplating a sale
of this type of property please contact us before completing the sale in
order that we can help you organise contracts in the most tax efficient
way. Click here
for a call back from our office regarding this
article. |
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Companies
House filing and other changes |
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Filing
deadlines: Companies with accounting
periods beginning on or after the 6 April 2008 should note the following
changes to the filing deadlines with Companies
House. 1.
Private companies
and LLPs - the delivery deadline has
been reduced by one month from 10 to 9
months. 2.
Public
companies - the delivery deadline has
been reduced by one month from 7 to 6 months. Consequential changes
include:
The penalties shown below apply
to late filing of accounts on or after 1 February
2009.
If company fails to file on
time for two successive years, the penalties are doubled in the second
year. Company
secretary From 6 April 2008 private
companies can chose whether they wish to have a company secretary or
not. If you decide to dispense with
a company secretary's appointment you will need
to:
A company can now have a sole
director and no company secretary. Please note that from 1 October
2008, if you do keep your company secretary, they will be able to file a
service address for the public record. Click here
for a call back from our office regarding this
article. |
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Changes
to Fuel Rates from 1 July 2008 |
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From 1 July 2008 the Revenue
have published new mileage rates that company car users can use to
calculate the fuel cost of running their vehicles for private purposes. If
this private element is repaid to employers the employees will avoid the
penal car fuel benefit charge. The new rates
are: Engine
size:
Employers can also use these
rates to calculate the VAT input tax on fuel included in staff mileage
claims - employers will need to retain fuel receipts from staff to prove
the fuel was purchased. (Obviously, it is unlikely that staff will have
receipts that exactly match the fuel element on their claim forms.
Receipts should cover the same time period and be sufficient to cover the
VAT claimed.) Click here
for a call back from our office regarding this
article. |
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Tax
Diary July/August 2008 |
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1 July
2008 - Due date for corporation tax
due for the year ended 30 September 2007. 6 July
2008 - Complete and submit forms
P11D return of benefits and expenses and P11D(b) return of Class 1A
NIC's. 6 July
2008 - Deadline for submission of
new Tax Credit application for 2008-2009, if you want to secure a full
years claim. 19 July
2008 - Pay Class 1A NIC's (by 22
July 2008 if paid electronically). 19 July
2008 - PAYE and NIC deductions due
for month ended 5 July 2008. (If you pay your tax electronically the due
date is 22 July 2008) 19 July
2008 - Filing deadline for the
CIS300 monthly return for the month ended 5 July 2008.
19 July
2008 - CIS tax deducted for the
month ended 5 July 2008 is payable by today. 1 August
2008 - Due date for corporation tax
due for the year ended 31 October 2007. 19 August
2008 - PAYE and NIC deductions due
for month ended 5 August 2008. (If you pay your tax electronically the due
date is 22 August 2008) 19 August
2008 - Filing deadline for the
CIS300 monthly return for the month ended 5 August 2008.
19 August
2008 - CIS tax deducted for the
month ended 5 August 2008 is payable by
today. Click here
for a call back from our office regarding this
article. |
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DISCLAIMER - PLEASE
NOTE: The ideas shared with you in
this email are intended to inform rather than advise. Taxpayers
circumstances do vary and if you feel that tax strategies we have outlined
may be beneficial it is important that you contact us before
implementation. If you do or do not take action as a result of reading
this newsletter, before receiving our written endorsement, we will accept
no responsibility for any financial loss
incurred. |
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Bates Weston Canal
Street DE1
2RJ Tel: 01332 365855 Fax:
01332 291294 web:
www.batesweston.co.uk BW Business Services Limited
t/a Bates Weston registered office The Mills, Directors: R J Carman FCA, R J
Smith FCA, I K Neal FCA CTA, G Evans FCA, W D Thomas
ACA Associate: M Morton
FCA Registered to carry on audit
work and regulated for a range of investment business activities by the
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