GrowYour.Biz

Watch out! Additional pain if  your tax return is not on time

Self assessment tax returns for 2010-11 will be subject to a new penalty regime. The old £100 penalty has not proved as effective as HMRC would like it to be – too many tax payers are still filing late returns.

From October 2011, the last date for filing a paper return for 2010-11, four penalties now apply.

• From day one: you will be charged a £100 penalty even if you have no tax to pay or you have paid any tax due. Previously the penalty did not apply when no tax was due.
• From 3 months late: you will be charged an automatic daily penalty of £10 per day up to a £900 maximum.
• From 6 months late: you will be charged additional penalties which are the greater of 5% of tax due or £300.
• Over 12 months late: again additional penalties based on greater of 5% of tax due or £300. In serious cases this penalty may be increased up to 100% of tax due.

Don’t forget these penalties will be applied after 31 January 2012. HMRC will assume that you are going to file online if you miss the paper filing deadline of 31 October 2011. Do not post a paper return after 31 October 2011 as this will trigger the new penalties.

Seek advice and file your return online before 31 January 2012.

Three reasons for paying your tax on time

Penalties for paying tax late are:

• 30 days late: initial penalty of 5% of tax outstanding.
• 6 months late: further penalty of 5% of tax still outstanding.
• 12 months late: further penalty of 5% of tax outstanding.

And on top of all this:

Interest will be added to any tax paid late including interest on unpaid penalties.

If you feel that you had a reasonable excuse for not filing on time it is possible to appeal.

It’s time to renew your tax credit claim. HMRC have sent out renewal packs to Tax Credits claimants for the tax year 2011-12. If you want to renew your claims, make sure that you submit the forms before the 31 July 2011. This is the deadline, miss this and your payments may stop,and  you may lose entitlement for the period to your claim.

The tax credits helpline number is 0845 300 3900.

Claimants should make sure that the information given in their claim is accurate. HMRC may check earnings details with employers.

Information you will need to report includes:

• Working hours
• Childcare costs
• Pay
• Income details 2010-11.

Claimants on “nil awards” and those that only receive the full family element of Child Tax Credit will receive a statement setting out their 2010-11 award. If this statement is correct there is no further action to take, your claim should automatically be renewed.

Being introduced later this year are new rules requiring your solicitor, or property conveyance person, to file new forms with the Stamp Duty Land Tax Office when you buy a property.  The regulations allow old forms to be used, or the new forms, from 1 April 2011 to 3 July 2011. After 4 July 2011 only new forms can be used

Why would new forms be needed?

The new forms require that each lead purchaser provide the following unique tax identifier when completing the forms:

• Individuals – their National Insurance number, or
• Companies and Partnerships – their Unique Tax Reference (UTR) or VAT registration number.

We wonder what HMRC will do with this extra information? No doubt they already have, or will be, setting up a computer system that links a property purchase to the purchaser’s tax file.

HMRC have announced their intention to roll out a programme of Business Record Checks in the second half of 2011. At present they are consulting with professional organisations regarding the scope of their enquiries, and running pilot areas as trials.

If your business is selected, HMRC staff will visit your premises and ask for access to all your business records. If they feel that there is a significant failure to keep proper records, penalties may be charged and additional tax assessments raised.

Here’s what we know so far:

HMRC’s objectives:

* Use existing powers to check business records in up to 50,000 cases annually.
* Businesses targeted will have 250 employees or less and turnover below 50m Euros. (At present exchange rates just over £40m)
* Checks to begin in the second half of 2011.
* Impose penalties for significant record keeping failures.

Issues to be resolved by present consultation process:

* Arrive at a clear understanding of record keeping obligations; primarily what records do you need to keep.
* What level of penalty should be levied to bring about the required changes in defective record keeping, and
* Should HMRC allow a “cooling off period”, before penalties are charged, to give businesses time to remedy substandard record keeping.

The consultation is not concerned with whether HMRC should have powers to check business records, these already exist!

If HMRC are aware that your record keeping is defective this will no doubt trigger visits from a number of their departments. You may get additional PAYE/NIC or VAT audit checks for instance.

It is fairly clear that the Government expect to raise a considerable amount of additional revenue through the business record checking programme. It should therefore be taken seriously by business owners. Particularly those whose records might be less than adequate.

You can use our business record checker to review the quality of your records.

The business record checker is an online questionnaire which will create a report for all visitors to our web site so you can gauge the likely response from HMRC should you receive a visit! We do not charge for the use of this facility.

When you get your report please feel free to contact us if there are any issues raised you would like to discuss, or, if you would like our help to bring your record keeping up to scratch. The questionnaire is easy to complete, just Yes No replies. Be assured that the report you receive is provided in complete confidence. No agency or person unconnected with our practice will have access.

In these difficult economic times more than a few of us are going to find we need assistance in making payment of tax on the due date. Before you reach for the phone to extend your overdraft, or take out your credit card, don’t forget you can approach HMRC and seek Time To Pay.

Rumour has it that the taxman has tightened up his approach – credit will not be so readily available this coming year.

If you know what your tax payment is going to be and if your cash flow needs support in making the payment, call the Time To Pay team now. And of course call us if you’d like help negotiating terms with HMRC.

The Business Payment Support Line is: 0845 302 1435 – lines open seven days a week.

For your information we have copied into this article the principles HMRC will follow when considering each case:

“Time To Pay (TTP) arrangements fall within the scope of HMRC’s discretion provided the following principles are followed:

* Objective criteria are applied in each case
* TTP arrangements are entered into on a case by case basis
* TTP is only agreed where HMRC is satisfied that the customer cannot pay their liability on the actual due date(s)
* The customer offers the best payment proposals that they can realistically afford. If their ability to pay improves during the TTP period then they must contact us and increase their payments/clear the debt
* TTP is only agreed where HMRC believes that the customer will have the means to pay the taxes included in the TTP arrangement and any other taxes outside the arrangement which become due during the TTP period
* The TTP period is as short as possible
* The same principles are applied to all taxpayers, although the detail of processes can be tailored to reflect the risk/return associated with different liabilities. As a rule the larger the liability the greater the risk and the greater the need for more information.

Other guidelines

Under no circumstances can HMRC ever reduce the amount of tax due as part of a TTP arrangement.

If repayments of tax become due during the TTP period HMRC must offset these against the debt. HMRC cannot on the one hand allow TTP whilst at the same time issuing a repayment of tax.

We can only agree TTP based on the customers means to pay and can’t base it on other factors. For instance we can’t allow TTP on the basis that a business could invest this money to produce greater payments of tax in the future.

For business taxes the TTP duration should be less than 12 months. Exceptionally periods in excess of 12 months can be considered.

Applicable interest will always be charged when payments are received after the due date, irrespective of whether TTP has been agreed or not.

HMRC is bound by TTP agreements that it enters into but is entitled to withdraw if

* new facts come to light that don’t support TTP
* the customer has misled us or been untruthful
* the customer defaults on the arrangement or does not satisfy the conditions of their TTP
* any other reason comes to light where it becomes apparent that tax is at risk”

On 17 December 2010 HMRC announced their intention to roll out a programme of Business Record Checks in the second half of 2011. At present they are consulting with professional organisations regarding the scope of their enquiries. This consultation will be completed and the results published by 31 March 2011.

If your business is selected, HMRC staff will visit your premises and ask for access to all your business records. If they feel that there is a significant failure to keep proper records, penalties may be charged and additional tax assessments raised.

Here’s what we know so far:

HMRC’s objectives:

* Use existing powers to check business records in up to 50,000 cases annually.
* Businesses targeted will have 250 employees or less and turnover below 50m Euros. (At present exchange rates just over £40m)
* Checks to begin in the second half of 2011.
* Impose penalties for significant record keeping failures.

Issues to be resolved by present consultation process:

* Arrive at a clear understanding of record keeping obligations; primarily what records do you need to keep.
* What level of penalty should be levied to bring about the required changes in defective record keeping, and
* Should HMRC allow a “cooling off period”, before penalties are charged, to give businesses time to remedy substandard record keeping.

The consultation is not concerned with whether HMRC should have powers to check business records, these already exist!

If HMRC are aware that your record keeping is defective this will no doubt trigger visits from a number of their departments. You may get additional PAYE/NIC or VAT audit checks for instance.

You can use our online business record checker to review the quality of your records

The number of phishing cases involving HMRC is growing. Phishing is a way of attempting to acquire sensitive information such as usernames, passwords and credit card details by masquerading as a trustworthy entity in an electronic communication.

In other words fraudsters are emailing taxpayers and pretending to be HM Revenue & Customs. Some of their antics are becoming quite sophisticated but all are designed to encourage you to part with sensitive personal information

HMRC have confirmed that they would never email taxpayers about any of the following issues, all of which have been the subject of bogus email campaigns.

1. A tax rebate
2. Any request for bank details
3. Any request for your PayPal details

This is what HMRC have published on their web site:

“HMRC will never send notifications of a tax rebate by email, or ask you to disclose personal or payment information by email.

You should never disclose your personal and/or payment information in reply to an email that may look like it’s from HMRC, you may well be revealing your details to a fraudulent website.

If you have received an email claiming to be from HMRC that you suspect may be fraudulent, please forward it to phishing@hmrc.gsi.gov.uk.

However, if you have already given any of your personal information, for example your HMRC User ID, password or National Insurance number, in reply to a suspect email please forward brief details to security.custcon@hmrc.gsi.gov.uk.

Please do not disclose any of your personal details or information in the email report to HMRC. However it would help HMRC to investigate if you would tell us the type(s) of information that you disclosed to the suspect website. For example – I gave my Name, Address, Date of Birth, bank card details, HMRC User ID etc.

HMRC will attempt to provide a response to all HMRC related phishing emails and take action to remove reported websites.”

If your business accounts for VAT under the flat rate scheme, the sale of a second hand car creates an unwelcome complication – the car must be included in the flat rate takings for the period. This means that although there is no VAT charged on the sale, and no VAT would have been reclaimed on the purchase of the vehicle, the business must account for VAT at their normal flat rate on the proceeds of sale.

Accordingly if you sell a car for £1,000 and your VAT flat rate percentage is 10%, you will have to pay £100 to the VAT man!

If the sale price of the car is considerable, the only possible solution is to exit the flat rate scheme before sale, but this extreme step would only be appropriate if enough cash was at stake. It is not then possible to rejoin the scheme for 12 months.

If you use the flat rate scheme and will be selling a second hand car in the near future please call so that we can examine the best strategy for you.
The same problem can arise on the sale of property, if you are in the flat rate scheme and considering selling property, please ask for advice.

At Grow Your Biz, we have a team of well qualified and highly trained credit control professionals supporting businesses like yours to help their improve cash flow.

Always available, five days a week

As a business owner, chasing invoice payments from your customers can take you away from the important elements of your business which is growing your sales income. You may employ a part-time credit controller or outsource to another company, but what happens when they are not there and do they have enough knowledge of your business accounts? With Xero as your accounting system and us providing your monthly bookkeeping and management accounts, we know what invoices are due for payment and by what date. We can make and take those all important calls with your customers so that your invoices are paid in a timely fashion and the cash comes back into your business.

Resources dedicated to your accounts

All our staff are based at our office in Stockport and are dedicated to your account. Your customers always get to speak to the same person – great for building all important relationships to ensure you get paid.

Reduced bad debt risk

With our service you get access to an experienced Credit Manager who knows what invoices are outstanding when they review your Xero accounts on a weekly basis. This is a cost effective solution when protecting your business from bad debts.

Improved cash flow

With customers taking longer to pay as cash gets tighter, having us working as your credit controller is an essential. Successful credit control is all about being consistent and persistent, we have all the processes in place so that we help get it right for you and improve your cash flow.

Highly professional service to delight your customers

A professional approach is crucial to getting paid on time and building good relationships with your customers. With great inter-personal skills, our experienced commercial credit controllers will send carefully written emails through Xero that will appear as though they have come from your business email address. This way we maintain a consistent approach and we record a log within Xero against your customer’s records so that you can follow our progress as we recover your overdue invoices.

The benefits

• Adds value to your business by maximising receivables and reducing costs
• Working in your name provides continuity of service
• Informed decision-making facilitated by management information that is both transparent and reliable
• Knowledge – we have the expertise and experience to offer a service that delivers measurable results

If you would like to know more about our credit control services and how we can improve your business cash flow, please call us or use the contact form.

As a business owner, you are probably spending your own money that at some stage needs to be claimed back against the company.

Some accounting and bookkeeping systems can make it confusing on the right way to pay the money back through an expense claim.

With Xero the Expense Claim section allows you to quickly enter and manage all expense claims for your organisation. After submitting an expense claim, you will be reimbursed for your spending.

Your Dashboard will show all the expense claims currently in progress by people in your organisation. This includes your current claim and any claims by other users in your organisation.