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January 2022

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To January 2022’s Business Companion News.

Paying Self Assessment Tax
If you have submitted a personal tax return any balance on your 2020-21 tax is due by 31st January 2022. If your tax bill was over £1000 HMRC will also ask you to pay Payments on Account towards your 2021-22 tax.  The first Payment On Account is also due by 31st January. 

HMRC Bank account details:
Sort Code: 08 32 10
Account number: 12001039
Account Name: HMRC Cumbernauld
Payment Reference:
Use your 10 digit Self Assessment number (UTR), followed by the letter K for example: 1234567890K.
January 2022
· Our Practice, our Clients
· Christmas: how does hospitality and gifts affect the VAT return?
· Penalties from the Pensions Regulator
· Home Working & Capital Gains Tax
· January Questions and Answers
· January Key tax dates
Our Practice, Our Clients
Our clients often ask us about our other clients and the nature of our practice.  We are a specialist accountancy practice with clients everywhere between Scotland and the South Coast, between North East England, North Wales and the West Country.  

We are focussed on larger small businesses: usually companies with payroll and VAT. We specialise in those businesses that want tightly controlled books, effective management accounting and responsible declarations to tax, authorities and lenders.  Our clients include small factories, service companies and artists with specific problems such as import/export, complex VAT, reporting issues, stock control, debt control, multi currency, job costing, and royalty tracking.

We operate much more closely with our clients than other accountants do.  We act more like business advisors or as the Financial Director that the business cannot afford to employ directly.

We often support firms using software that we have installed for them including MYOB and AccountEdge alongside others.  We understand the needs of the various tax & government authorities without assuming that this means a new bookkeeping software is required.  

Despite the coronavirus pandemic our clients continue to prosper.  Our businesses now have a combined annual turnover of £12 million and we run payrolls for 182 staff. This compares with two years ago when our businesses had a combined annual turnover of £11 million. Seven years ago we were only responsible for a combined annual turnover of £6 million and 120 staff.  

We have focussed our work on supporting fewer larger businesses over recent years, and have helped our existing clients become more profitable, successful and faster growing.  We currently have just 32 firms compared to the 46 we had in 2015 and 35 we had in 2010.  

We grow entirely by recommendation.  If you know of a business could benefit from our methods we would be delighted to be asked to meet them.
Christmas: how does hospitality and gifts affect the VAT return? top
Penalties from the Pensions Regulator
The Omicron variant of Covid-19 saw new guidelines issued by the government in December. However, at the time of writing no lockdown, circuit breaker or otherwise, has been announced. As a result, many businesses will be going ahead with plans for hosting parties for staff and clients. Some may choose not to due to concerns, but may still give festive gifts, for example to the biggest spending customers during the previous year. All these things have VAT implications.

Starting with entertainment, the input tax incurred on any hospitality can only be reclaimed to the extent that it is provided to current staff of the business. Where non-staff members attend, an apportionment must be made. So, for example if a company has 30 employees, and all of them are permitted to bring a partner or other family member, only half of the input tax would be available to recover – assuming everyone brings a guest.

Note that section 3 of VAT notice 700/65 precludes recovery of input tax where the entertainment is provided solely to the directors (or partners) of the business. However, there is no problem recovering input tax in situations where directors attend staff parties that are open to all employees.
Read More
One of our clients recently received a £400 Fixed Penalty Notice from the Pensions Regulator (TPR).  This was after paying pension contributions late and then ignoring an Unpaid Contributions Notice (which allowed 25 days to pay the contributions). Do take any letters you receive from them seriously. 
TPR reports that the top categories under which they have issued penalties are

1. Failure to declare automatic enrolment compliance with TPR
2. Failure to maintain timely pension scheme contributions
3. Complete failure to carry out automatic enrolment
4. Failure to respond to a request for information under Section 72 of the Pensions Act 2008
5. Failure to carry out a particular component of automatic enrolment (other than declaring compliance)
6. Fraud

Initially TPR will issue a fixed sum penalty.  Further delay in complying could lead to an Escalating Penalty Notice with a daily rate of between £50 and £10,000, and at this point TPR will also publish details of the business that has failed to comply with the legislation.  
If you pay your pension contributions by Direct Debit make sure there are enough funds to cover the amount each month. Pension schemes (such as NEST, Peoples Pension) are required to report payment breaches to TPR.
Home Working & Capital Gains Tax
Working from home was slowly becoming more common before the Covid-19 pandemic; however, the various lockdowns restrictions meant that it increased exponentially in 2020 and 2021. Many employees have indicated that they do not wish to return to the office full-time, and employers appear to be willing to acquiesce to requests hybrid working patterns.
Read More
January Questions and Answers top
January Key tax dates top
Q1. I am in the process of buying a property that has been empty for a number of years. Extensive renovation is needed, and I have been speaking to a contractor who says that he will be able to charge just 5% VAT for the work. I don’t want to fall foul of HMRC, so is this correct? Answer

Q2. My fellow partners and I are looking to undertake some capital investment in order to expand our business activities. However, as we have left this until after the 31 December 2021 cut-off for the increased annual investment allowance, we are considering making a claim using the super-deduction instead. However, we are unsure whether this is the best option as we have heard that there can be issues the assets sold later on. Is that correct? Answer

Q3. Subject to any travel restrictions, I will be taking a holiday with my family in February. As I have a number of consultancy clients relatively near to where we are staying, I’ve decided to extend the trip by three days so I can go and meet them to discuss some business-related matters. Can I deduct a proportion of the costs of the holiday from my business profits? Answer
1 – Due date for payment of Corporation Tax for accounting periods ending 28 March 2021

7 – Electronic VAT return and payment due for quarter ended 30 November 2021

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/1/2022

31 – Deadline for electronic filing of self-assessment returns for individuals, partnerships and trusts

31 – Payment deadline of balancing payment for 2020/21 and first payment on account for 2021/22

31 – Last date to file 2019/20 return or face further 5%/£300 penalty

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, Freeagent, Xero, 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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95 Bridge Lanes, Hebden Bridge, Yorkshire, HX7 6AT
Simple Accounting is a trading name of Simple Accounting Limited
Company Reg No. 5164026. Registered in England and Wales
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