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July 2015

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To July’s Tax Tips & MYOB News, 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 on your own specific circumstances. We’re here to help!
July 2015
· Tax Reconciliation
· RTI penalties
· Second Incomes Campaign
· VAT on Pre-trading Expenses
· July Question and Answer Section
· July Key Tax Dates
Tax Reconciliation top
HMRC has started the tax reconciliation process for the majority of taxpayers who are taxed under PAYE. This may include you or your relatives, as this reconciliation also covers those in receipt of the State Retirement Pension and private pensions.

If the HMRC computer system finds there is a difference between the tax collected under PAYE and the amount due for the tax year to 5 April 2015, it will issue a form P800 which includes a tax computation. Even if we are authorised to deal with HMRC on your behalf they won’t send us a copy of the P800, so please forward a copy to us if you get one. Read More
RTI penalties top
Second Incomes Campaign top
Employers are supposed to be warned in advance that a penalty for a late PAYE report is due. The HMRC computer system should send an electronic notice through the PAYE online system, but in some cases those electronic notices have not arrived. If you have received a late filing penalty for PAYE we need to check if any of the following conditions apply:

Three-day grace period

In February 2015 HMRC announced that full payment submission (FPS) reports could be submitted up to three days after the day on which the employees were paid. This change was supposed to apply retrospectively for the whole of 2014/15, but in some cases that three-day grace period has been ignored and a penalty has been issued. Read More
HMRC has been busy pushing its new Second Incomes Campaign. How might directors and other business owners be affected?

On the quiet. Concerned that thousands of taxpayers aren’t properly declaring all taxable sources of income, HMRC has introduced the Second Incomes Campaign. It says this is to enable individuals to bring their tax affairs “fully up to date on a voluntary basis” . There are many activities which can bring in a second income but two of the most likely sources for directors and other business owners are consultancy and training services offered in a personal capacity, i.e. not through the business.
On the best terms. Although HMRC is encouraging voluntary disclosures of this nature, it won’t assign them to the Second Incomes Campaign automatically. In order to take advantage of what it calls the “best possible” tax repayment terms you must specifically tell it that you want to participate by completing the correct notification form. Once this has been done you then have to calculate the unpaid tax that’s due and send HMRC a disclosure form. Once that’s acknowledged the tax owed must be paid within four months.
Fail to act. If undeclared sources of income aren’t voluntarily disclosed and HMRC subsequently finds out, you could face higher penalties or, even worse, a criminal prosecution. There is no end date for the Second Incomes Campaign but if you’re concerned we suggest that you don’t leave things to chance. Tip. Rather than going straight to HMRC – either for advice or to make a disclosure – directors and business owners should first seek specialist advice and, if necessary, representation. Apart from the fact that HMRC’s online calculator can only manage basic tax affairs, personal declarations made by high net worth individuals may prompt an inspector to undertake a deeper investigation.

Undeclared personal fees, e.g. for consultancy work, are being targeted. If you’re worried, don’t automatically make a disclosure under the campaign – it could prompt a deeper investigation. Speak to your accountant first. 
VAT on Pre-trading Expenses top
July Question and Answer Section top
When you register your business for VAT you can reclaim the VAT charge on goods you acquired within the previous four years, and on services provided to your business within the last six months. As long as the items were used for your business, and you still held the goods (as stock or business assets) at the date of the VAT registration, you can claim back the VAT on your first VAT return.

However, the VAT man has recently changed his view on exactly how much VAT you can reclaim in this situation. He now says that any use of assets in your business in the period before you registered for VAT should be discounted. This is best explained by an example.


Chad has a livestock transport business. On 1 April 2012 he purchased a lorry for £90,000, including VAT of £15,000, which he expects to use for 10 years. He registered his business for VAT with effect from 1 April 2015, exactly three years into the lorry’s life. Read More
Q. I personally own a number of buy-to-let residential properties. My son will attend a new school from September and it would be convenient for the family to live in one of those let properties. Can the cost of repairs made to that property while we are living there be claimed as expenses against the rental income from the whole property portfolio? Answer

Q. My company runs a record label specialising in club music. We used to produce the music on CDs, but now almost everyone buys music as a download or via a streaming service. I have a large number of CDs in stock which I am unlikely to ever sell. How should I value that stock in my accounts? Answer

Q. I am the director of my own company, which has kindly purchased new spectacles for me for £269. These include lenses specially formatted for the design work I do on screen. Do I need to include the cost of the glasses on the form P11D for the year? Answer
July Key Tax Dates top
5 – Deadline for PAYE settlement agreement for 2014/15

6 – Deadline for 2014/15 forms P11Db, P11D and P9D to be submitted and copies of P11D and P9D to be issued to relevant employees

Deadline for employers to report share incentives for 2014/15 – form 42

14 – Return and Payment of CT61 tax due for quarter to 30 June 2015

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/7/2015 or quarter 1 of 2015/16 for small employers

Class 1A NIC due in respect of the tax year 2014/15

31 – Second self assessment payment on account due for 2014/15

Second 5% penalty surcharge on any 2013/14 outstanding tax due on 31 January 2015 still unpaid

Deadline for Tax Credits to finalise claims for 2014/15 and renew claims for 2015/16

Half yearly Class 2 NIC payment due

Penalty of 5% of tax due or £300, whichever is greater for 2013/14 personal tax returns still not filed

Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

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About Us top
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