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October 2012

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To October’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 in your own specific circumstances. We’re here to help!
October 2012
· The Business Companion Service
· MYOB/ Acclivity tip: simple management accounts journals
· VAT on Incorporation
· Goodwill on Incorporation
· October Question and Answer Section
· October Key Tax Dates
The Business Companion Service – great value, free software.
Simple Accounting Ltd would like to become your business companion. 

An All-in Service
Our comprehensive accountancy service includes Software, Year end Accounts, VAT returns, Payroll, Business Advice, Business Sale and Company Secretarial work. You use as much or as little of the service as you need.  We will use the rest of the time you pay for to help you to plan or market your business, train you in your software, save tax or ease your administration. This is a much fuller service than you are likely to get from other accountants.

Free Software
Our service is also much more ‘hands on’. We keep all the records through one system – yours.  We provide you with basic, single user software for free.  You can make your choice from our recommended range.  We offer Solar Accounts, MYOB and Quickbooks (for PCs); Mamut AccountEdge or Solar Accounts (for Macs).The most powerful software we offer is Acclivity AccountEdge which works on multiple machines, either Mac or PC.  If you want to use Acclivity – we will install it for you for free. We also include membership of the MYOB User group. 

Low fees and 20% Discount
The service cost starts from a mere £61 per month + VAT (depending on your location and turnover). We offer a 20% discount for those with particularly good books. Read More
MYOB/Acclivity tip: simple management accounts journals
VAT on Incorporation top
Often accountants make allowances (accruals) for matters that have not been settled fully at the end of a month or a quarter. Usually they enter these as journals every quarter. They will then release (or reverse) these transactions on the following day. They journal at a quarter end followed by a reversal on the following day. 

There is an alternative strategy. Enter accruals as a monthly charge as a regular amount, rather than the full value of all the liability since the last billing. You need one accrual/ liability account for each transaction.

You therefore can estimate regular overhead costs which are charged annually.  These should be entered as regular transactions every month which should become new recurring transactions.  These include:
  • Accrual releases
  • Finance;
  • Monthly Wages
  • Insurance Prepayment releases
  • Depreciation
  • Bad Debt provisions etc
This alternative to this more common practice has the advantage of being easily verifiable to the value of each accrual and each prepayment. The monthly accounts for the month immediately after a quarter end are not corrupted, as happens with the technique of reversing entries. Recurring entries can then be made even if your accountant is unavailable. The monthly or quarterly management accounts can then be run without support at least roughly.
This is explained in the MYOB Tricks of the Trade guide, chapter 20.
If the previous business was VAT registered it can pass its VAT number on to the new company under the transfer of going concern rules (TOGC). However, this is not always advisable as the VAT number will carry with it all the ‘history’ of the old business, including defaults for late payment and error records. If the owners of the new company are not exactly the same people as those who owned the old business, the new owners may not want to take on the VAT ‘sins’ of the old business.

In this case the new company will have to apply for a new VAT number. This is the same procedure as a new VAT registration, and penalties will apply if it is not done on time.
Read More
Goodwill on Incorporation top
October Question and Answer Section top
Trading as a company is generally more tax efficient for profitable businesses; the tax rates are lower and many tax reliefs are only available to companies.

Certain professions which were previously prevented from operating as a company, such as solicitors, can now incorporate. If your business is loss making it may be better to remain as a sole-trader or partnership until those losses are fully relieved.

When incorporating a business, great care should be taken over the value of assets which are transferred to the new company, including the business goodwill. It is generally fairly easy to value fixed assets such as buildings or equipment, but goodwill of the business will depend on a number of factors and may not exist at all for some businesses. Examples of factors to consider include:Read More
Q. I am employed by a charity that provides me with a Skoda Yeti car as my work involves transporting disabled people. I pay for all the petrol, but the charity reimburses me for work-related journeys at 15p per mile. This rate has not changed since June 2011, although the price of petrol has increased. Can I claim back any more of my petrol costs for work journeys from the Tax Office? Answer

Q. I’m a painter and decorator, working mainly for individual householders. I only give out an invoice for work done if my customer asks for one. Is this acceptable to the Taxman? I’m not VAT registered. Answer

Q. My office junior is paid exactly the national minimum wage (NMW). Do I have to put his wages up from 1 October 2012? Answer
October Key Tax Dates top
5 – If a Tax Return has not been received, individuals and trustees must notify HMRC of new sources of income and chargeability in 2011/12

14 – Return and payment of CT61 tax due for quarter to 30 September 2012

19 – Tax and Class 1B NI due on PAYE settlements for 2011/12

19/22 – PAYE/NIC and CIS deductions due for month to 5/10/2012 or quarter 2 of 2012/13 for small employers

31 – Deadline for 2011/12 self assessment paper returns to be filed for HMRC to do the tax calculation. If a paper return is being filed also the deadline for tax underpaid to be collected by adjustment to your 2013/14 PAYE code (for underpayments of up to £3000 only)
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. We offer a range of accountancy services despite being specialists.

‘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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