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February’s Tax Tips & News Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman. If you need further assistance just let us know or you can send us a question for our Question and Answer Section. Please contact us for advice. We’re here to help!   February 2015 · Why we like Limited Companies · Supporting the Sick · Problems accessing your Acclivity datafile · Holiday Pay · February Questions and Answers · February Key Tax Dates Why we like Limited Companies top A new client recently asked me why I was unhappy for him to continue as a sole trader.  He had heard that the costs for limited companies were much higher.  Why do we prefer people to work through Ltd companies?  Isn’t there as much tax lost as gained?  Are the extra admin costs really worth it? Well this is a matter of opinion. To see how much tax you could save as a company rather than a sole trader use our tax calculator.  However even without the tax benefits there is a key reason why we are reluctant to work with unincorporated businesses. That is risk. Consider these two examples which show problems that can arise when people place their financial arrangements into a partnership or sole tradership. Client 1. A business is failing and the partners fall out with each other. One partner leaves and opens a new business, leaving the remaining partner to struggle on alone.  The business, under the remaining partner, fails.  The HMRC pursue the partner through the courts and then bailiffs.     The business declines further.  There is spiralling debt which is applied against the remaining partner’s personal assets.  We are invited to help (far too late) and advise the remaining partner to take bankruptcy.  Unfortunately the person loses ownership of their home.  They feel a terrible guilt for the suppliers and creditors left unpaid.    Meanwhile the partner that left is still liable for the shortfall on the VAT declared after they ceased being active in the partnership business.  All sorts of unresolved aggro with HMRC debt collection department.  No resolution. Client 2. A client hit serious problems during the period of a maternity leave of the main manager.  Corruption among the remaining staff, and general failure of the business leads to problems with accumulating VAT debts.  HMRC start getting nasty and there is another VAT bill to pay.  They manage to make sure that all the main suppliers are paid.  The HMRC could still potentially take away the very expensive equipment that the business depends on.    However unlike the partnership business above, the client’s business is organised through a limited company. So the client engages an Insolvency Practitioner that saves the business… though not the company.  The director owners are able to retain the equipment in a new company.  The trade is maintained. Their credit rating remains sound and they are shortly to buy a new house. Conclusion This is why we do not trust sole traderships and partnerships.  As a matter of policy we try to organise all business affairs of all our clients into limited companies.  And since it is relatively straightforward to save a business that is a limited company we would prefer to work with clients who are prepared to take our advice – and that includes working through a limited company. And don’t forget that our Business Companion Service includes all the fees required to set up your company and provide Annual Returns to Companies House.   Supporting the Sick top   Problems Accessing your Acclivity Datafile top It is such a pain when a key employee is off sick. You are required to pay that person statutory sick pay (SSP) once he or she has been absent from work for four days. To add insult to injury you can’t reclaim any of the SSP paid since 6 April 2014. Payments of SSP made for periods before 6 April 2014 can be reclaimed from HMRC where the SSP exceeds 13% of the class 1 NI paid to HMRC for the month. Read More Recently a couple of users had access problems after converting to Acclivity AccountEdge.  In both cases they were using Macs and they were unable to open their datafiles.  On investigation Acclivity advised us that file names clash with the software if they are longer than 25 characters (on the Mac OS only).  So if you have problems opening your datafile the first thing to check should be your filename length. If you still cannot get into a datafile then there could be a problem with the permissions on the folder and the datafile.  Please check you have full read write access on both the datafile and folder in which the datafile is located.  Then reset all the users (not just you) to have full read write access on both the file and folder.  Try it again. If this doesn’t work please check you have updated the program to the latest version using the online updater.  If this doesn’t work call us on 01422 847500.   Holiday Pay top   February Questions and Answers top There has been some panic whipped up in the media about employers having to pay vast amounts of back-dated holiday pay to employees who regularly get paid for overtime. In general holiday pay is calculated according to an employee’s “normal pay”, which for years has been judged not to include overtime payments. However, in a recent Employment Tribunal (Fulton v Bear Scotland [2014] UKEATS/0047/13), the judge decided that both guaranteed and non-guaranteed overtime should be included in the sum of “normal pay” on which holiday pay is based. The tribunal also determined that employees could make back-dated claims for unpaid holiday pay. In response to this ruling the Government has changed the 1998 Working Time Regulations, such that paid holiday is not a contractual right and any underpayments of holiday pay cannot be pursued as a breach of contract in the civil courts. Read More Q. Two years ago I invested £5,000 in a company under the EIS scheme, but now that company has gone into administration. How do I claim for the loss in value of my EIS investment?Answer Q. I run a small shop, which I inherited from my father. The shop has a flat above it which is let out. I’ve always reported all the income from the shop and flat together as self-employed income on my tax return. Is that correct? Answer Q. Back in 2010 I borrowed money from my company, and paid the corporation tax charge due. Business has now improved and my company can now pay a dividend to clear the debt I owe to the company. How can I reclaim the corporation tax charged?Answer   February Key Tax Dates top 19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/2/2015 28 – Talk to us about year end and pre-budget planning – First 5% penalty surcharge on any 2013/14 outstanding tax due on 31 January 2015 still unpaid   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, Yodlee or Clearbooks. ‘All clients using these software packages can benefit from our support. Visit our website http://www.simpleaccounting.co.uk for a look at the resource on offer.’   If the images do not show. If the images contained within this email do not show correctly please add this email to your safe senders list.

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