Newsletter 18.2.10       2010 / 1                  

Year End Tax Planning

The end of the 2009/2010 tax year is almost upon us and it is a good time to review your tax position to see if any action needs to be taken before 5^th April. To help with this, we have a Tax Planning Checklist highlighting some of the main areas that might need to be considered. If you would like a copy, please email nigel.herring@CheapAccounting.co.uk.

Companies House Penalties

If you trade as a limited company you need to be aware of the penalty regime which is in force for the late filing of accounts. These are substantial, and are as follows:

More than one month late:                    penalty    £150

Between one and three months late:      penalty    £375

Between three and six months late:        penalty    £750

More than six months late:                     penalty   £1,500

In addition, if you are late twice, the penalty will be doubled.

VAT Flat Rate Scheme

The flat rate scheme for VAT was introduced as a simplification measure and while those with properly set up bookkeeping probably did not need it, the scheme has proved profitable for small businesses who suffer little input tax.

The scheme works by applying a percentage (depending on your business type) to your “Flat rate turnover” – normally VAT inclusive sales - and not usually reclaiming any input tax. As ever with tax, there are complications and you need to be especially careful about what is included in “turnover”. It is not always obvious and can include supplies which seem to have nothing to do with VAT.

Flat rate turnover includes:

·         VAT inclusive sales (i.e. gross sales) and includes zero rate and reduced rate supplies.

·         Exempt supplies such as rent. Sole traders with rental properties need to be careful.

·         Sale of assets (watch the position on cars)

·         Bank interest on a business account

A VAT specialist told me he thought the inclusion of bank interest was nonsense, but it is on HMRC’s list. Be careful as well about recharging expenses (as opposed to disbursements).

Retirement Age for Women

The state retirement age for women is increasing from 60 to 65 and this change will take place over a 10 year period beginning in April 2010 and anyone born after 5 April 1950 could therefore be affected. The Directgov website has a state pension age calculator which will show you exactly when your “retirement age” will be.

Limited Companies

Limited companies are a formal legal structure and it is vital that they are administered properly. We have some useful “Housekeeping” tips and if you’d like a copy please e mail me at nigel.herring@CheapAccounting.co.uk

HMRC are changing the way that they administer VAT from 1st April 2010.

 From this date you must submit your VAT returns online and pay your VAT electronically if:

·     Your turnover, excluding vat, is £100,000 or more

·     You register for VAT on or after 1st April 2010 

Full information can be found at:

 http://www.hmrc.gov.uk/vat/vat-online/moving.htm

Deadlines

It is essential that you are aware of the deadlines which affect both you and your business. If you are in any doubt about those which apply to you, please email me at nigel.herring@CheapAccounting.co.uk

Disclaimer

Information here aims to give general guidance. It should go without saying that it is NOT a substitute for professional advice appropriate to your particular circumstances. No responsibility at all can be accepted by the author for any loss incurred by a reader of this newsletter.