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Welcome… To March’s Business Companion News. Year-end Procedures At this time of year we are busy processing a series of client account year-ends.  The procedure that we use is given in the following chapter of our online manual: Tricks of the Trade. It gives guidance on how to prepare your books for the year end accounts to be run.  It shows the key reconciliations that we need you to perform, and the copy evidence that we try to get filed in case there are any questions about the company affairs.  We are keen on records to evidence the company value in case there is a sale.  We are also preparing in advance for the possibility that the HMRC pick your company for one of their random checks. March 2022 · Latest news round-up · Subsistence Rates for Employees · Claiming relief for an old tax return error · Trading losses and CGT · March Questions and Answers · March Key tax dates Latest news round-up top IR35 TV presenter Adrian Chiles has cleared the first hurdle in his battle against HMRC’s insistence that his working arrangements with ITV and the BBC amounted to an employer-employee relationship in all but name. The First-tier Tribunal ruled that, considering all factors, Mr Chiles was clearly building a business via his company (Basic Broadcasting Ltd). It then considered whether the activities with the two broadcasters would lead to a conclusion that Mr Chiles was carrying on a business in his own right in the absence of the company. Read More   Subsistence Rates for Employees top Claiming relief for an old tax return error top When an employee has to travel for work you can use HMRC’s Benchmark Scale Rates for Subsistence Expenses. This means you do not have to declare them on a P11D (Employee Benefits) form. These rates apply to UK travel. We suggest you reimburse staff on the production of receipts up to the maximum shown.  Alternatively you could just pay them the maximum and expect them to keep receipts. Min journey time – Max meal allowance 5 hours – £5 10 hours – £10 15 hours (and ongoing at 8pm) – £25 HMRC do not give a subsistence rate for overnight accommodation.  So we would recommend that the company pays for the accommodation directly.   You can also pay ‘Incidental overnight expenses’: eg buying newspapers, paying for laundry, phoning home. This is up to £5 per night. Qualifying conditions Benchmark scale rates must only be used where all the qualifying conditions are met. • the travel must be in the performance of an employee’s duties or to a temporary place of work, on a journey that is not substantially ordinary commuting. • the employee should be absent from his normal place of work or home for a continuous period in excess of five hours or ten hours. • the employee should have incurred a cost on a meal (food and drink) after starting the journey and retained appropriate evidence of their expenditure. Generally, the time limit for amending a tax return is one year from the due date. But sometimes, it transpires that the tax calculation is excessive later on. For example, the individual may have mistakenly over declared income. Where the deadline for amending the tax return has passed, the return cannot be amended. However, it may be possible to claim overpayment relief so that the individual isn’t penalised financially. Overpayment relief cannot be claimed in situations where a person has made a choice between tax treatments that, in hindsight, turn out to be sub-optimal. Example Simon is a sole trader who runs his business from an office in his home. Under the simplified expenses rules he used a flat rate deduction to cover the use of his home for business purposes in his 2017/18 return. After the deadline for amending his return passed, Simon realised that if he had worked out the business proportion of his actual household running costs and used these figures instead, he would have paid less tax. Simon cannot claim overpayment relief. The fact that he could have paid less tax if he had made a different choice does not mean the tax he paid was not due. Instead, the relief aims to provide recourse to assessments which are excessive. Read More   Trading losses and CGT top In most cases, it is beneficial to offset trading losses against income – whether that means sideways loss relief against general income or carrying forward to offset future profits of the same trade. However, sometimes the trader’s circumstances mean that the loss is effectively wasted. Example Sara starts a new business in 2021/22. In her first accounting period, she records a loss of £8,000. She expects to make a profit in 2022/23, of approximately £15,000. Read More   March Questions and Answers top March Key tax dates top Q1. After several years of successive growth, my wife and I have decided to incorporate our partnership. We have a number of assets used in the trade for which we have claimed relief using the annual investment allowance. As the trade is being effectively disposed of to the new company, do we have a problem with capital allowances? Answer Q2. In the wake of COVID-19 pandemic, I have been reviewing my company’s books in an effort to more accurately review unpaid sales invoices. I have identified a relatively high number of these from the end of 2021, as may be expected in the circumstances. Am I right in thinking I have to wait six months before I can write these off for tax purposes? Answer Q3. Our business has been struggling with VAT compliance for a number of years. Admittedly, this has largely been down to us, particularly the misconduct of a former employee who was responsible for the reporting (they have been dismissed as a result) but we are keen to put things right and have employed the services of a local accountant who will be dealing with things for us going forwards. However, I have now received a letter from HMRC saying that they will be issuing a demand for security payment in respect of VAT liability. As I understand it, this will not be offset against future liabilities, and instead will be refunded after a period of good compliance. My issue is that this will not be easy to fund. Can I refuse on the grounds that the company has already appointed an agent, which will mean vastly improved compliance going forward? Answer 1 – Due date for payment of Corporation Tax for accounting periods ending 31 May 2021 7 – Electronic VAT return and payment due for quarter ended 31 January 2022 19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/3/2022 31 – Deadline to pay self-assessment liability or agree time to pay arrangement without incurring late payment penalty following reprieve announced in January   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, Xero, FreeAgent, Quickbooks 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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