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Welcome… To November 2017’s Tax Tips & MYOB News. In October we invited you to respond to the HMRC consultation on Making Tax Digital (MTD). This month we look in more detail about how the government’s plans on MTD might affect MYOB and AccountEdge users.   November 2017 · How will Making Tax Digital (MTD) affect MYOB/ AccountEdge Users? · Charging your Business for the use of your Home Office · Missed the personal tax return deadline? · Using the IHT gift exemptions · November questions and answers · November key tax dates How will Making Tax Digital (MTD) affect MYOB/ AccountEdge Users? top   Charging your Business for Use of your Home Office top You may have had salesmen telling you that your business software needs to be MTD compliant.  What does this mean?  Is this a threat to your business as an MYOB/Accountedge user?  The MTD legislation will not prevent MYOB and Accountedge users from keeping their records in the software they like.  There will not be an approved list of software.  However there will be complications for our users. The regulations allow submissions from a bookkeeping software to a filing software which itself will make the filing to the HMRC.   We are confident that we will have a working solution for for MYOB and Accountedge users.  At the moment we have come up with five potential routes, and we would welcome your comments on these. .  1. Users could approach their existing accountant to make filings on their behalf. 2. Mamut could offer a solution. If they don’t, as a commercial software seller, they are likely to face considerable trouble selling the software in the UK.  Simple Accounting would support its clients to transfer to Mamut.  However Mamut would be unlikely to offer a PC software.  This route is not the comprehensive solution that we hope for. 3. UK users could contract with the online Accountedge subscription.  Simple Accounting would then login to its clients databases and make the filings quarterly for them. 4. Simple Accounting could use the current functionality of its MYOB Usergroup website to take downloads of the key VAT report from its members each quarter.  It could then file this on the members behalf each quarter. 5. Simple Accounting will support clients through our Dropbox file sharing.  We would either enter a copy of your database or get each client to send a report in every quarter. The totals on the report would be uploaded into a VAT return submission software.  This will be a pain for all of us. Accountants generally oppose the MTD program because it will create lots of red tape.  It will waste your time and ours.  The latest HMRC plan is to remove the HMRC government gateway portal VAT return webpage that clients and accountants use to submit VAT returns.  Instead of maintaining a system that works well the HMRC is demanding that we use software to submit the return electronically.  But it is very complex to submit an accurate VAT return direct from bookkeeping software.  Complications include flat rate scheme, bad debt relief, partial exemption, reverse charge, place of supply differences, EC sales list, back claims, unusual vat rates, mixed supply, agency vat, error correction, VAT on stock imports and duty, etc.  These make it impossible to fully underpin a VAT return from bookkeeping software without manual amendment. It would be better if the HMRC would simply relax their intention to shut down the VAT return webpage.  There is a consultation paper issued by the HMRC on which they are taking comments at present.  The consultation is still running. So I suggest that you write to your MP at https://www.writetothem.com/ and email the HMRC at before 10th November 2017 You can get a model letter to base your reply from our website. HMRC will allow you to directly reclaim £3 per week from your business for using your home office. But over a year, £150 at 20% or 40% tax relief is not a lot.  Getting your company to pay more rent for use of part of your home office can work as a tax efficient way of extracting income from the business. The company will get a greater tax deduction for more rent paid (provided it’s not excessive). You need to decide what expenses are properly attributable to the provision of (furnished) accommodation to your company. The total of these is then used to set the level of rent received from the company. The rent can be lower than market value, but must not exceed it. Expenses would include an appropriate proportion of: heating and lighting costs maintenance and repair costs mortgage interest Council Tax, Phone rental, property maintenance costs any expense you incur at your company’s specific request You need to back this up with a formal rent agreement between the company and the property owners (ie you), just stating what has been agreed  Provided you are not being visited by clients, and provided that you don’t use any part of the property exclusively for business, business rates will not be due on your use of your home office. To avoid any ‘exclusively-used for business challenge’ state in the rental agreement that the facilities are only let to the company for designated hours each week, for example 9.00am to 5.00 pm, Monday to Friday.  You will have to declare rental income on your personal tax return, but if, for example, you can get £50 a week treated as rent, but matched with £50 of expenses there will be no tax to pay.  Meanwhile your company would be able to reclaim £2500 taxable expenses, reducing its corporation tax by £500.  We can help with the necessary paperwork. For more details of this, and other tax advantaged staff benefits, please get more details from our website.     Missed the personal tax return deadline? top Have you missed the deadline of 31st October 2017 for submitting your personal tax return on paper? If so, don’t worry, we would be happy to submit your tax return for you online.  Just fill in your details using our online tax return form and we will do the rest!   Using the IHT gift exemptions top   November questions and answers top As Benjamin Franklin observed in 1789 ‘In this world nothing can be said to be certain, except death and taxes.’ More than two centuries on, this statement still rings true! These days however, inheritance tax is often referred to as a voluntary tax, because there are various ways to minimise liability to it, or even avoid it all together. PETS Any assets (cash or otherwise) that a person gives away during their lifetime, that do not fall under the exempt transfer rules, such as transfers between spouses and civil partners and gifts to charities, may escape inheritance tax as a potentially exempt transfer (PET). There is no limit on the amount of PETs that can be made during a lifetime. Broadly, for a PET to escape inheritance tax completely the donor needs to survive for seven years after making the gift. If he or she dies within the seven-year period, the PET is partially chargeable depending on the number of years that have elapsed since they made the gift. Read More Q. My wife and I are directors of a small company. Our two children also work for the company. Is there any advantage to the company paying for all our mobile phones? Answer Q. I am an employee and pay basic rate tax under PAYE each month. My wife works part-time and earns £10,000 per annum and does not pay any tax. Can I benefit from her unused personal tax allowance? Answer Q. My business manufactures and supplies seasonal novelties and is registered for VAT in the UK using the cash accounting scheme. We have recently won a large order for goods from another UK company, but they have requested to be paid in Euros. I understand that I need to show the VAT amount on the invoice in sterling, using one of the agreed methods of conversion published in HMRC VAT Notice 700 section 7.6. When the invoice is paid, as the exchange rate may have changed and be different to the one on the invoice, do I need to recalculate the VAT? Answer   November key tax dates top 2 – Last day for car change notifications in the quarter to 5 October – Use P46 Car 19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/11/2017 22 – Chancellor Philip Hammond will deliver the Government’s Autumn 2017 Budget.   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 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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