For tax purposes, good record keeping is vital. Without complete and accurate records, it will not be possible to provide correct details of taxable income or to benefit from allowable deductions. Aside from the risk of paying more tax than is necessary, landlords who fail to take their record keeping obligations seriously may also find that they are on the receiving end of a penalty from HMRC.
A new study by IFF Research for HMRC has looked into how mid-sized businesses go about tax compliance and tax planning. Whilst the businesses interviewed described their approach to tax as somewhere on the spectrum from more reactive to more proactive, almost every business relied on an Accountant or tax specialist. The reason given was that as a mid-sized business they didn’t have the right tax expertise in-house and needed support with strategy and planning as well as one-off queries to remain tax efficient. Here we look at some of the pro-active ways these businesses manage down their tax liabilities and the tax questions that Accountants can answer to ensure compliance with the law.
The Chancellor, Sajid Javid has commissioned a review of the Disguised Remuneration Loan Charge. Led by Sir Amyas Morse, who is the former Chief Executive and Comptroller and Auditor General of the National Audit Office the review will report back to the Government by mid-November with recommendations, focusing on the impact of the new charge on those affected.
Given current tax rates, paying a dividend rather than a salary will often be a more cost-effective way of withdrawing profits from a company.
*On 1st October 2019 HMRC’s new VAT domestic reverse charge for construction services was due to come into force, as part of ongoing moves to cut VAT fraud. The new rules require the contractor receiving services and not the sub-contractor who supplied the services to account for the Output VAT due on specific building and construction services. This change means that construction businesses will need to know whether the reverse charge applies. They’ll also need to ensure their accounting processes and IT systems can handle the reverse charge. It’s also recommended that businesses estimate and plan for any impact on cash flow if they are no longer holding Output VAT.
This is worth reading if you have a child under the age of 12 for whom you could claim child benefit.
Child benefit is payable at the rate of £20.70 per week for the first child and £13.70 per week for each subsequent child under the age of 16.
The amount of tax paid by employees on private fuel provided with a company car is now running at a high level based on the cash equivalent of the benefit each tax year. Those with low private mileage may find it’s no longer a benefit. That’s why many employers have put in place different options, such as no longer paying for fuel with company fuel use reclaimed or continuing to pay for fuel but having employees reimburse them for private usage. That way, the employee is not liable for the private fuel tax charge, where this would in all likelihood be higher than the value of the actual fuel used. Should you want advice on policy decisions about employee fuel and the tax implications then we’d be glad to advise you.
1. Make use of technology
Today, businesses have a myriad of resources available to make managing accountancy records convenient and simple. I’d urge businesses to make the most of cloud computing and automation. This is especially valuable now that the Government’s requirement for Making Tax Digital is a reality for the majority of businesses, and flexible working rights have all increased the demand for secure, flexible ‘on-the-move’ cloud-computing solutions.
Setting up a small business can be exciting. So much rides on it – your hopes, your financial security and future opportunities. Yet all the costs to make it happen and then keep it running efficiently can seem daunting. That’s why you should consider whether your small business qualifies for tax breaks that allow you to save money.
HB Accountants is experienced in advising small businesses about their tax breaks. Here are our 7 top tips for you to consider:
A social gathering at work can be an ideal time for team members to get to know each other better but it can be expensive. That’s why it pays to know about Trivial Benefits and tax relief on the annual office party.