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August 2017

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To August’s Tax Tips & MYOB News.

Personal Tax Returns
If you’d like us to do your Personal Tax Return just put your self-employment and property rental details into our online tax return questionnaire
Have you made any capital gains or received other sources of income?  Are you already one of our clients?  If so, we already have the details of director fees and wages that you pay through our payroll arrangements and your company dividends.  

If you’d like to find out more about the services we offer just give us a ring on 01422 847500.
August 2017
·SA 302s for Mortgage Applications
· Guide to Multicurrency in AccountEdge
· EC Sales and Getting EU VAT Numbers
· Paying voluntary NICs
· August questions and answers
· August key tax dates
SA 302s for Mortgage Applications top
Guide to Multicurrency in AccountEdge top
HMRC have told us that from 1st September they will no longer provide ‘SA302’ tax calculations for our clients for mortgage purposes.  HMRC say that they now expect the client to ‘self serve’ using their personal tax account.

However, we (as most other accountants) use commercial software to file personal tax returns, rather than the HMRC’s own rather faulty system.  Because of this, SA302s are not available from your personal tax account.

Instead, if asked for proof of income or an SA302, please contact us.  We can then provide you with:
a) a printout of the tax computation which we email you when we submit your personal tax return for each tax year.
b) A copy of your “Tax Overview” for each year from HMRC’s portal. 
It is the combination of these two that should be treated as equivalent to an SA302.

We worry that providing information in this way could be open to fraud, but clearly HMRC don’t want to provide a secure service.

If your mortgage advisors insist they need an SA302 let us know. Apparently we have to let HMRC know so they can tell the mortgage advisor  off!
Some clients have found the idea of moving to multicurrency in the AccountEdge software a little forbidding.  It is very sensibly designed … but not immediately obvious if you are used to a single currency system.  The key is to realise that the software is permanently translating the balance outstanding in a foreign currency into its sterling equivalent.

How does the function work?  Well Acclivity have kindly issued a comprehensive video guide.   It is written from the point of view of an American retailer.  It goes through how a credit sale can create money if the exchange rate improves before the sale is settled.  It shows how you can set sales prices in particular currencies for specific customers.

If you are already using multicurrency – here are the latest rates to use to update your system.

1 GBP:    
INR:   0.01184
AUD: 0.61023
CAD: 0.61250
ZAR:  0.05909
EC Sales and getting EU VAT Numbers
If you are new to exporting to the EU we can help you submit your EC Sales to HMRC.

It is sometimes not clear what codes you should use when reporting sales.
  • S or SS if you sell to private individuals in the EU. 
  • XR if you sell to business or individuals in European areas which do not have VAT (Gibraltar, Channel Is, but NOT Isle of Man).
  • ECS/XEG or XES for sales to EU businesses.
  • XR for sales to the rest of the world 
To use these zero rated export codes you must have established that these are genuine businesses registered in an EU state.  You need to get the VAT reg no for that EU business to do this.

The HMRC helps you with this.  For example if you sell to a Romanian business it needs to be entered as ECS/XEG or XES on the sale…. but you also need their Romanian VAT number.  This should begin with an RO (see list below).  To get them to declare their Romanian VAT No you could send them this standard letter which helpfully is actually written in Romanian.

You can verify a foreign vat no you receive through this EU website.

Alternatively please use the HMRC VAT webchat facility.

The EC Sales list (ESL) is a surprisingly complicated document, see this HMRC Advice. If we are to file it we must have all the codings made accurately.  Enter all EC sales as ECS/XES or XEG.  Make sure that you have all the VAT numbers for the foreign businesses you deal with.

You must include:
•    their 2 letter country code
•    their VAT registration number
•    the value of the goods and related costs – entering code ‘0’ (zero) in the indicator column – even if you haven’t invoiced them or been paid yet
•    code ‘2’ in the indicator column if you didn’t handle the goods yourself and instead, your supplier sent them directly to your customer; this is known as triangulation
•    the value of the services you have provided where the place of supply is the customer’s country and the services are subject to a reverse charge. Enter code ‘3’ in the indicator column
We will be using code 3 for services.

These are the prefixes on the VAT numbers that you get from the customer:

Austria AT
Belgium BE
Bulgaria BG
Croatia HR
Cyprus CY
Czech Republic CZ
Denmark DK
Estonia EE
Finland FI
France FR
Germany DE
Greece EL
Hungary HU
Ireland IE
Italy IT
Latvia LV
Lithuania LT
Luxembourg LU
Malta MT
Netherlands NL
Poland PL
Portugal PT
Romania RO
Slovak Republic SK
Slovenia SI
Spain ES
Sweden SE

Sales to these countries mustn’t be included on your ESL:

    The Channel Islands
    Mount Athos
    San Marino
    Vatican City

For more information see the Export guidance in our Tricks of the Trade.
Paying voluntary NICs top
August questions and answers top
There are various reasons as to why gaps may arise in an individual’s national insurance contributions (NIC) record, for example, because that person has been on low earnings for several years, they have been living abroad, or because they have been unemployed and have not been claiming benefits. In certain circumstances therefore, it may be possible, and beneficial, to pay voluntary Class 3 National Insurance Contributions (NICs) as this can safeguard entitlement to a future state retirement pension and certain other state benefits.Read More Q. My wife has a part time job but doesn’t earn enough to pay tax. Can she get tax relief on contributions made to a pension scheme? Answer

Q. I am a qualified doctor and pathologist. I have recently registered for VAT as my turnover has exceeded the current VAT registration limits. In addition to my regular doctor’s practice, which I understand is still exempt for VAT, I also write medical reports for insurance companies. I understand that this service is standard rated. However, I have also recently been requested to carry out post mortems. I am statutorily obliged to carry out this work, but I am paid for it. Should I charge VAT on my invoices for this service? Answer

Q. I started my own business as a sole trader on 1 December 2016. Although it has been quite a slow start, my profits are slowly going up and I am hopeful that they will continue to rise steadily over the next few years. Should I use 30 November or the tax year-end as my accounting year-end? Answer

Q. Would it be feasible to make annual investments sufficient to run at a loss in one year, then sell the assets in the next. Then you make more investments before the next year end to make a loss again and continue repeating this? Can you avoid tax this way? Answer
August key tax dates top
2 – Deadline for PAYE settlement agreement for 2016/17

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/8/2017
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Clearbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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