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Administration Centre

There are many simple processes that can ease your bookkeeping administration and relations with the tax authorities. Why not have a browse through these resources which are taken from my experience with our clients over the years?

1. Starting Up

• To create a New Business
• Incorporation
• Business Stationery
• Companies House
• Registering with HMRC

2. Registering with Simple Accounting

• Engagement
• Identity checks
• Authorisations

3. Financial Procedures

• Financial Controls
• Authorising purchases and invoices
• Banking
• Hire Purchase (HP) versus Purchase
• Legal Protection
• Credit Checks

4. Personnel

• Self Employed Staff
• Employing Staff
• Statutory Maternity Pay (SMP)
• Payroll

5. Staff Benefits and Expenses

• Tax-Free Benefits
• Tax Advantaged Benefits
• Taxable Benefits
• Simpler Accounting for Staff Expenses
• Staff Expenses Spreadsheet
• Mileage
• Petty Cash Voucher
• Mobile Phones for Family employees
• Overdrawn Directors’ Loan Accounts
• Charging your Company Rent for your Home Office
• Staff Suggestion Scheme

6. Tax

• Paying Tax
• Late filing penalties – Companies House and HMRC
• Corporation Tax Compliance
• Access Powers for HMRC

7. Selling Your business

• Accounting Needs
• Due Diligence

8. Useful Links

1. Starting Up

To Create a New Business

There are tax and legal advantages if you run your business through an incorporated body like a limited company. Try our incorporation calculator to check some of these potential gains for yourself. We are here to help you through the process. This is a list of the things you will need to do to create a limited company. This is not for the faint-hearted. If you are already operating as a firm, some of the following will not apply.

What You Will Need to Create a Company (Word)

For a more detailed guide to starting a new business have a look at our New Business Start-up guide.

New Business Start-up Guide  

Incorporation

If you would like to create a company then you could set it up yourself on the Companies House Website or we could do it for you. Note that this would be freely included as part of our Business Companion Service). You could also choose to use a formation agent.

Business Stationery

The following rules applies to business stationery whether in hard copy, electronic or any other form.

Simple Accounting Helpsheet on Business Stationery Rules.

Companies House

In order to preserve your incorporation you will need to submit regular information to Companies House.

Key Companies House Forms are provided on our website .

Registering with HMRC

If you are self employed/ in partnership for the first time you only have three months to register with HM Revenue and Customs (HMRC). Failure to meet this requirement will mean an automatic £100 fine. So file Form CWF1 with the tax office straightaway. This form is your official gateway into starting off on the right track for tax purposes and is required to alert HMRC to your business’s existence. This form can be found at Self Employed Registration: https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed

2. Registering with Simple Accounting

Our Engagement with You

Engagement Letter

When we take you on as a Business Companion client we will prepare a detailed engagement letter which explains all of our services to you in detail. The letter also explains both our responsibilities and yours in delivering these services.

Data Processor Agreement

We also provide a Data Processor Agreement (DPA) which may be issued as an Annex to the engagement letter. We will provide two copies of both the Engagement Letter and Data Processor Agreement. They should be signed by Simple Accounting ltd and you, the client. A copy of both signed documents shall be kept as a record by each of us.

Identity Checks

We also require identity evidence to meet our obligations under the Money Laundering Regulations 2007. Please send us copies of a recent utility bill and your passport or driving licence.
Ownership of key business assets will have to be confirmed. As our relationship develops we shall also monitor your cashflow to verify that your income is legitimate. In proving our clients’ honesty we are protecting all our clients from false accusations.

HMRC – Authorising Simple Accounting Limited as your Agent (HMRC Form 64-8)

Before Simple Accounting can fully handle all your tax matters efficiently and effectively, HMRC requires you to complete an Authorising your Agent form 64-8 (pdf file). This gives authority to your accountants to deal with your company’s and personal tax affairs. We will also need to get authorisation to act for you through HMRC’s online services. This requires us to instigate generation of an authorisation code which is sent to you in the post, and which you then forward to us.

This authority allows HRMC to exchange and disclose information about you with us. It also allows them to deal with us on matters which are normally your responsibility. This overrides any earlier authority given to them – only one accountant can act as your agent. HMRC will hold this authority until you tell them that the details have changed.

HMRC will start sending letters and forms to us as your agent. Sometimes they also will allow us access to your account information online. The HRMC may need to correspond with you as well as, or instead of us, as your agent. You will not receive your Self Assessment Statements of Account if you authorise us to receive them instead. Paying any amount due is your responsibility. HRMC do not send National Insurance statements and requests for payment to us unless you have asked the HMRC if you can defer payment.

What this authority means for VAT:

HMRC will continue to send correspondence to you rather than to Simple Accounting (so please email us copies). If we have a 64-8 the HMRC can deal with us in writing or by phone on specific matters. We need to have further online authorisation to be able to submit VAT returns online on your behalf. Unfortunately these authorisations do not give us access to your online VAT account – we cannot check how much you have paid.

What this authority means for Corporation Tax:

HMRC will continue to send correspondence to you rather than to Simple Accounting. If we have a 64-8 the HMRC can deal with us in writing or by phone on specific matters. This authority also allows us to submit your Corporation Tax returns online and to see payments that you have made. 

What this authority means for Personal Tax :

We will be able to submit your personal tax returns and see the amounts due and payments made online. If you require evidence of personal income for mortgage purposes we can provide copies of tax computations (prepared by us) together with Tax Year Overviews from HMRC online. Together these replace the SA302 reports previously issued by HMRC.

Companies House – Authorisation for Simple Accounting Ltd

In order for us to submit Final Accounts and your Annual Returns to Companies House please give us your 6 digit authentication code.  This will also allow us to make changes to your Company set up on your behalf web-filing.

Where to send these forms

When you have completed these forms and details please return them to us: Simple Accounting Ltd, 95 Bridge Lanes, Hebden Bridge, HX7 6AT.

3. Financial Procedures

Financial Controls

If you are a larger organisation the following documents help you set up your procedures:

• Financial Procedures – short document (Word)
• Financial Policy & Procedures – detailed document (Word)
• Purchase orders and invoices (pdf)
• Financial Glossary (word)

Authorising purchases and invoices

This is an authorisation flowchart showing you how to make a purchase, authorise it and pay the bill in a controlled way.

Flowchart for Purchases and Invoices (Word)

Banking

We recommend the Yorkshire Bank and Metro Bank. We have written a thorough review of UK banks in our e-newsletter for March 2018. It also recommends Lloyds and the Bank of Scotland.

We no longer recommend the Federation of Small Businesses (FSB) offer of free banking with the Co-operative Bank We have had too many complaints about their quality of service.

Hire Purchase (HP) versus Purchase

A Comparison of the Benefits of HP versus Purchase (pdf)

Legal Protection

We recommend that our clients join a legal protection scheme. Small companies tend to be particularly vulnerable to employment and trading disputes or Inland Revenue investigations. You can get a whole series of insurance and membership benefits by simply joining the Federation of Small Businesses – call them on 08705-133307.

Federation of Small Businesses Website

Credit Checks

We use CheckSURE which is a complete online commercial credit checking service:

Checksure

4. Personnel

Self Employed staff

It is vital that you make it clear to the HMRC that there is a separation between your firm and any self-employed workers that you engage. The first defence is simply to make sure that you have some sort of contract. The contract need not be complex …. but it must have been signed by both participants. Here is a model that you can use.

Model Consultancy Contract (Microsoft Word)

Employing Staff

You should advertise your job vacancy using all the tools available.

When you have chosen your recruit it is vital that you contract with your employee correctly. Your firm needs to state the ‘key particulars’ in a statement to the new employee.  The compulsory elements of an employment contract that you need to cover are explained well on this Government website.

The following documents (all in Microsoft Word) are drafts which you may like to amend for vacancies within your own business:

• Application Form
• Application Form Covering Letter
• Appointment Letter
• Equal Opportunities Policy
• Equal Opportunities Monitoring Form
• Job Description
• Joiner Form
• Person Specification
• Dismissal Letter
• Standard Employment Contract
• Workplace Pension Letter
• Zero Hours Contract

Employing your Spouse or Children

Mixing business and pleasure can cost you dearly if you don’t stick to the rules. If you are thinking of employing your spouse or child (over 13) ask us about ways to keep within the government requirements.

Statutory Maternity Pay

Statutory Maternity Pay (SMP) is recoverable against your National Insurance bill. If you are paying on gross National Insurance contributions Class 1 of £45,000 per annum or more you can get 92% of your SMP back.  If you are paying less than £45,000 then you can get 100% of the SMP and 3% more as admin compensation against your National Insurance bill.

Payroll

In our view Payroll has become too complex for HMRC’s requirements for ‘Real Time Information’ (RTI), the requirements of the Student Loan Company, attachments of earnings orders, Working Time and Sick Pay monitoring requirements, and Autoenrolment workplace pension contributions.

Our Business Companion Service, provides free payroll calculations, payslips and returns along with full telephone support.  We include Personal Tax Returns for the directors. We include auto enrolment when appropriate.

Alternatively:

• We provide a free simple payroll calculator on this site: payroll calculator
• This is a really good free site for calculating PAYE and National Insurance contributions. http://listentotaxman.com
• There is a review of payroll software on our software review site. For a small business doing their own payroll we recommend Brightpay Payroll Software. http://www.brightpay.co.uk

 5. Staff Benefits and Expenses

Not all employers provide benefits. If you decide to, some benefits can be given to employees (including yourself) tax-free, while others are taxable at beneficial rates.

Do not think you can use all kinds of expenses to lower the tax bill. The reality is that tax relief is due only for expenses which are incurred wholly and exclusively for the purposes of the business. In practice HM Revenue and Customs (HMRC) does allow proportionate claims to be made for assets like cars, which are used partly for business and partly for private purposes.

Tax Free Benefits and Expenses

The following are completely ignored in working out an employees personal tax. Common examples are:

• free or subsidised meals in a staff restaurant (so long as it is open to all staff)
• staff parties up to £150 pa
• free parking near your workplace
• fuel maintenance, tax and insurance on a pool car (must not be used for commuting or private travel)
• zero and ultra low emissions vehicles
• parking costs for work visits
• mileage of 45p per mile on work trips
• interest free loan to buy a season ticket to travel to work up to
• gifts up to £50 per staff member or £300 per director each Christmas
• relocation expenses
• employer pension contributions up to £40k pa
• employer-provided life insurance
• training courses
• relevant magazine subscriptions
• professional association memberships
• Scale rate meals and accommodation
• Staff Suggestion Scheme payments
• Subsistence
• Business telephone calls (not landline rental)
• Business Travel

List of Staff Benefits (Microsoft Word)

Tax Advantaged Benefits

During these difficult times you may feel you want to reward staff.  However you may wish to avoid giving an across-the-board salary increase, which some of your staff may appreciate less than the alternatives.

Some of the possible tax advantaged staff rewards and benefits that we can advise you on are as follows.

• Bicycles for commuting
• Childcare vouchers
• Enterprise Management Incentives (ie share options)
• Expenses
• Gym membership
• Home computers
• Larger Loans
• Keyman insurance – which could pay for generous sick pay or death in service benefits
• Mileage and travel expenses
• Mobile Phones
• Moto Bikes
• Pension contributions made by employees
• Permanent health insurance
• Salary sacrifice
• Unpaid holiday
• Use of home as office

Of these bicycles, mobile phones, business computers used at home, mileage subsistence and training get VAT relief as well. Employee Pension Contributions are subject to Employer NI which contradicts the government’s claim that they are tax-free.

Very often you need a staff policy on expenses.  Here are two drafts.

General Expenses Policy (Word)

Travel and Subsistence Policy (Word)

Taxable Benefits

You will have to pay tax if you give your employees these. Common examples are:

• a car or van that your employee can use for private motoring
• free fuel for their private motoring
• free, or low cost, living accommodation, unless it is needed because of your job
• tickets and vouchers that your employee can use to get free or cheap goods or services
• staff loans beyond £10,000
• medical insurance

These have to be declared on a P11D and a P11D(b) which is filed by 6th July each year. Naturally we tend to advise against these sorts of benefits.

Here is a brief advising the heavy tax costs of paying for fuel on company- owned cars used by employees:

Free fuel (Word)

Simpler Accounting for Staff Expenses

It is now possible to get company credit cards that do the bulk of the accounting work for you.

For easier VAT bookkeeping, you need your accounting year, VAT quarter end and VISA card statements to all align.

Staff Expenses Spreadsheet

Ensure that you have the right records to satisfy the HMRC should they come knocking on your door. To keep accounting discipline use the sample expenses spreadsheet below to record employee expenses.

You will be able to record costs incurred by staff (including directors) and have a record sheet to issue reimbursements from the supplied receipts.

Once the spreadsheet has been setup with your company name, the employees name and an incremental record number for each spreadsheet produced for your employee; you can begin to start inputting all the expense receipts.

Example staff expenses spreadsheet

Staff Expenses Spreadsheet (Excel)

Simple Mileage Record (Microsoft Excel)

Tax-Free Business Mileage Rates

The H M Revenue & Customs (HMRC) will allow the following amounts that can be claimed tax-free for business use.

	1st 10,000 miles pa	Each mile over 10,000	Extra passenger making same trip
Cars and vans	45p	25p	5p
Motorbikes	24p	24p	n/a
Bicycles	20p	20p	n/a

10,000 Mile Limit

If you travel over 10,000 miles in a tax year, your mileage rate drops to 25p per mile for the excess. The HMRC expects each employer to keep a running total of exactly what mileage each employee has done throughout the year. This is so that the employer can satisfy a potential HMRC audit that they are observing the 10,000 mile limit for each employer.

As usual the HMRC are making life difficult for us. Our advice is do not keep a cumulative mileage log. Instead, periodically check ‘find transactions’ in AccountEdge. Look for a top driving staff member. Has the employee been paid more than £4,500 in mileage expenses this tax year (1/4/21 – 31/3/22)? If not, continue to pay 45p per mile.

Petty Cash Voucher

I recommend using an imprest system to administer petty cash. Don’t try to book every transaction into AccountEdge, it is too easy to get confused. Instead, enter a weekly or monthly summary.  Treat the Petty Cash as a member of staff that periodically claims their staff expenses from the firms current account.

Example petty cash voucher:Petty Cash (pdf)

Mobile Phones for Family employees

Could your family live without their mobile phones? And did you know that the provision of a mobile phone to an employee is exempt from both income tax and NI? A company can potentially reclaim the VAT you all incur on your phones? So why not combine the two and have company phones for those of your family who are employed by the business?

The company pays the phone bills and should get a full tax deduction for them. However, we have heard of some Tax Inspectors disallowing the family phone costs because they are not expenses of the business. There is a simple solution to this. Make the provision of the mobile phones a condition of your employment i.e. it is part of your remuneration package. Your remuneration is tax deductible for the company. Therefore the cost of the mobile phones will be as well because they are now part of your package.

Make sure the phones are on annual contracts, as pay-as-you-go phones are not caught by the benefit-in-kind exemption. Note also that the VAT element of the bill may be irrevocable for the company if the phone is provided to a family member and there is no business use.

Overdrawn Shareholder or Directors’ Loan Accounts

Companies often have more cash than they really need.  Owners face a choice.  Would it be better for the company to loan the money to them rather than pay a dividend or bonus?

The situation is usually fine when the company itself has no borrowings.  However as companies get larger they often borrow from either the state (taxes due), banks (overdrafts), financiers (HP agreements, leases) and others.  Problem is that it is then easy to think that you have more cash in the company than you need.  You draw the excess funds that have been created from your company’s bank account into your personal account and describe them as ‘dividends’.

Dividends are normally a reasonable and accepted tax planning measure.  However they are subject to a big limitation.  They cannot be paid when the company has net liabilities (ie it owes more than it is owed).  Then you risk spending out the money and making your co look insolvent.

Why Company borrowing is a bad idea

Modern businesses are at high risk from insolvency. Most modern companies have minimal assets (owned equipment, stock, cash at bank and debtors) but easy access to loans, credit cards, Iwoca finance, disguised factoring and HP. If borrowing increases your spare cash then the shareholders want to draw the excess. But drawing the cash means that dividends can become illegal.

The government doesn’t like this misuse of company law (as they see it). They impose a special tax, s455 Corporation Tax, at 33.75% of the amount borrowed. If you have taken a shareholder loan from an insolvent company, the company has to be prepared to bear the cost of s455 at 25% CT. This will significantly increase the normal corporation tax charge.

Now if you do make the mistake and overpay dividends then we are in an awkward position. If the company isn’t repaid within 9 months then we have to declare the s 455. And this charge is usually so high that allowing for it makes the company even more insolvent. Which in turn means that it could become unable to earn enough to be able to earn profits sufficient to ever pay a dividend to clear the indebtedness.

As a correction the company could pay the money as a self employed earning to the debtor. We could even declare a bonus salary. If we do that the Corporation Tax 455 can be recovered and the provision doesn’t have to be made.

Alternatively the company could even decide to write off the loan. The direct cost of the loan write off should then be written off the Shareholder loan and added as a charge to the P&L in a similar way to a dividend charge.

But with all these corrections the company will be forced even further in deficit. Its credit standing could be damaged.

It gets worse. Providing for the unpaid taxes (Employer NI and s455 CT) on the payment to the Director or shareholder debtor adds further cost to the company. If the company has made losses then effectively then the company may lose tax relief on these extra costs.

And all these corrections also incur personal tax. A loan write off is treated as a dividend. A dividend is subject to personal dividend tax (8.75%, 33.75%, 39.35The upshot is that over-payments of dividends can come with heavy unplanned tax bills.

Rule of thumb 1. Don’t let your company borrow money. In particular each time you consider applying for a company loan, do not borrow any more money in excess of the net assets of the company books. If the company does borrow money then let it be finance for a new asset which has enduring value.

Rule of thumb 2. If your company has borrowed money, pay these loans back in preference to paying dividends to your company directors and shareholders.

Rule of thumb 3. If you have excess cash in the business and you have repaid all significant company borrowings then you can borrow money from the company bank account rather than pay yourself dividends. If the company has positive net assets then there is no effect on the company tax position. If interest is charged at least 2.0%, and declared in the books and

then repaid by the debtor in cash, then there is no ‘benefit in kind’ and therefore no personal tax effect on the debtor.

Charging Your Business Rent for Use of your Home Office

The HMRC will allow a very limited flat rate allowance for use of your home as an office. Getting your business to pay a more realistic rent for use of part of your home for office accommodation can work as a tax efficient way of extracting a modest tax-free income The company will get a tax deduction for the rent paid (and provided it’s not excessive) you don’t pay personal tax on the receipt.

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 could include:

• an appropriate proportion of gas and electricity costs
• maintenance and repair costs
• a proportion of mortgage interest or rent
• a proportion of council tax
• a proportion of the cost of broadband and landline calls
• any expense you incur at your company’s specific request

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, 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 may have to declare rental income on your personal tax return. If you can get, say, £50 a week treated as rent, but matched with £50 of expenses, there will be no tax to pay. This is a detail that we can look after for you.

Paperwork for home rent

• Get a formal board minute drawn up to state the arrangement and that it has been agreed.
• Prepare a rental agreement setting out formal terms and conditions.
• On the company accounts include payment for rent under ‘Rent and Rates’.
• On your personal tax return, record the rent received from your company as rental income – but if the rental income equals your own costs you will have a zero tax bill.

We can help with all this bureaucracy.

Example Office Rental Policy (Word)

Example Office Rental Agreement (Word)

Backdating a Claim

Unfortunately it is not possible to backdate a rental agreement itself as it is a legal document. However the terms of the agreement can specify an earlier date from when rent first became payable. We wouldn’t recommend this being any earlier than the beginning of this tax year.

Staff Suggestion Scheme

A simple way of paying staff free of tax is to create a staff suggestion scheme.

Example Staff Suggestion Scheme (Word)

See our Staff Suggestion Scheme guide

Back to Top

6. Tax

Paying PAYE and National Insurance

PAYE Bank account details:
Sort Code: 08 32 10
Account number: 12001039
Account Name: HMRC Cumbernauld

PAYE/ NIC payment reference:
Use the Accounts Office reference shown on your payslip booklet cover or on the letter HMRC send you in place of the booklet, for example 123PA00012345.

If your payment is not for the current month or quarter you need to tell HMRC the year and month – add this as an extra 4 digits to the reference in the form YYMM eg 2401 for a the period up to end of April 2023 (no gaps)

Quarterly payment option for small employers:
If your total PAYE/ NIC payment will be, on average, less than £1,500 per month, you can choose to make quarterly rather than monthly payments. We will still submit your Full Payment Submission (FPS) each month on or before the date you pay your employees.

Class 1a National Insurance/ P11d:

To pay your Class 1A National Insurance/ P11d use your 13 character Accounts Office reference followed by the year and month 13. For example, to make a payment in July 2024, for the year 2023-24 (the previous tax year) add 2413 to your Accounts Office reference to give 123PA000123452413. Please note by using 13 as the final 2 digits you are letting HMRC know that this payment is intended for Class 1A NIC. Do not use 13 as the final 2 digits if you are paying any other Employer/Contractor liabilities.

Paying VAT

VAT Bank Account Details:
Sort Code: 08 32 00
Account Number: 11963155
Account Name: ‘HMRC VAT’

Your payment reference:
Quote your nine digit VAT registration number (no spaces)

VAT Payment Deadlines:
VAT is due a month and seven days after the VAT return quarter end date. Alternatively for VAT Annual Accounting it is due two months after the end of the VAT accounting year.

Paying Corporation Tax (CT)

Corporation Tax Bank Account Details:
Sort Code: 08 32 10
Account number: 12001039
Account Name: HMRC Cumbernauld

Your payment reference:
Your payment reference is given on the payslip at the bottom of the payment letter that the HMRC should send you. It comprises your 10 digit CT reference (UTR) followed by seven digits which represent the Accounting Period for which you are paying. The extra seven digits are in the form A00105A where the 05 increments for each CT return submitted, giving a 17 digit payment reference such as 1234567891A00105A. You can find the payment reference on your online tax account or we can provide it for you.

Corporation Tax Payment Deadlines:
Corporation tax is due nine months after the end of the year to which it relates (the end of the accounting year). This is rather strange as the CT return is not due until twelve months after the end of year! In practice, if you pay your CT a few weeks late HMRC will just add a little interest.

Paying Self Assessment Tax

HMRC Bank account details:
Sort Code: 08 32 10
Account number: 12001039
Account Name: HMRC Cumbernauld

Self Assessment Payment Reference:
Use your 10 digit Self Assessment number (UTR), followed by the letter K for example 1234567890K.

Self Assessment Tax Payment Deadlines:
The balancing payment for self assessment tax is due with the personal tax return (if filed electronically) on the 31st January after the year it relates to. If you have to pay ‘Payments on Account’ these are due on 31st January and 31st July in the year that they relate to.

Late filing of accounts and penalties – Companies House and HMRC

Many businesses are unaware of the penalties if their tax returns are late, have errors or underpay their taxes.

E.g. A company’s year-end and VAT period end on 31st March 2023 and the company followed the timetable below then the penalties incurred are likely to be as follows:

The Companies House penalties are doubled if accounts are filed late in two successive years. Meanwhile the HMRC penalties Corporation Tax increase to £500 and £1000 if they are late in three successive years. Late payment will attract further fines e.g. £500 for four months late payment of personal tax of £10,000.

Persistent late filing of the annual accounts or returns may also lead to the company being removed from the register. Note that there are currently no fines for late submission of the Companies House ‘Confirmation Statement’ which is filed annually.

VAT Penalty Notices

Two new VAT penalty regimes came into effect for VAT periods beginning on and after 1 January 2023, for late filing of VAT returns and for late payment.

Late filing of a VAT return now attracts a penalty point rather than a warning or formal default surcharge notice. Only when you reach a certain threshold of points do you have to pay a fixed financial penalty of £200.

The points threshold which generates a financial penalty varies according to the frequency of the VAT returns required:

• Annual returns: £200 penalty at 2 points
• Quarterly returns: £200 penalty at 4 points
• Monthly returns: £200 penalty at 5 points

Once the points threshold is reached all further late returns after that attract another £200 penalty until the points slate is wiped clean. You need to achieve full compliance for two years to wipe out points awarded for late quarterly returns.

HMRC has issued the first points for late filed monthly VAT returns. Any late quarterly returns will start to generate penalty points after 7 May 2023.

If you receive a notice about late filing penalties, check the VAT number shown matches your own registration VAT number, as the letter may not include your business name or address.

Next, check if your VAT return was submitted late and if it was, whether you have a reasonable excuse for the late filing. You can appeal against points awarded incorrectly, or where you have a good excuse.

The new late payment penalties give you a grace period of 30 days to pay the VAT due in 2023 but do your best to pay promptly as interest will be charged on late payment at 6.75% from the first day it is late.

Corporation Tax Compliance

It is useful if you can make your chart of accounts straightforward for subsequent final accounts, tax and VAT calculations. To ease calculation of business tax it is important that you separately analyse all potential expenses that are disallowable and include those where expenses are allowed. Therefore try to design your chart of accounts so that it includes separate lines for all those expenses which have particular tax effects. The more bookkeeping you are willing to do the less we, as your accountant charges you to do bookkeeping for you

Access Powers for HMRC

HMRC has the right of access to business records and information. This includes right to inspect any records relevant to working out a business’s tax position in advance of the business making a tax return or filing its accounts. HMRC is also be able to visit your business premises and inspect records and assets on site – and they only need to give you 24 hours’ notice of their inspection. An inspector is able to ask your accountant, solicitor or other business adviser to release your files to him, without your permission

If you don’t comply with HMRC, there will be a base penalty of £100 with additional fines of £65 per day. There is the right to appeal but clearly the penalty regime is best avoided in the first place.

AccountEdge is a digital record keeping system and can hold all the source information to justify your declarations. Businesses wanting to keep on the right side of the taxman are strongly advised to keep careful and up to date financial and tax records. Call us if you want help keeping your data in good order.

Dividend Certificates

To verify that you are not receiving remuneration you need to prove that your dividend payments are exactly that… dividends. This is also evidence that will back up your personal tax return. Complete one for every decision you make.

The interim or final dividend must go into the books on the day it is due. This is best done through entering service purchases to each shareholder for the dividend due. If the dividends are put into the books retrospectively it could face challenge from the Inland Revenue unless minuted within 9 months of a year-end.

Model Dividend Certificate (Word)

7. Selling Your Business

We are orientated to your long term goals, which inevitably will include sale or transfer of your business.

Accounting Needs

It is important when you sell a business, that you put matters in order and make the business look as appealing as possible to potential buyers.

Accounting needs if you are selling your business (Word)

Due Diligence

At the time you sell your business your records need to be complete. This is to allow the purchaser to be sure what he buying. Accurate and consistent documentation of the firm’s finances will help you get a good price for the work you have put into your firm over the years.

The buyer will conduct a process called ‘Due Diligence’ on your firm to establish whether the final accounts are consistent with the terms of the sale of the business. The list of documents required is intimidating. However most of them can be provided from your Accountedge system, if your records are accurate and up to date.

Due Diligence Documents (Word)

One service we offer is to prepare these documents for prospective sellers.

Our minimum charge for preparing all the required documents along with any returns and liaison with the purchaser and your solicitors is £2000 plus 2% of the sales price of your firm. excluding land and property.

More information on Selling Your Business.

8. Useful Links

Visit our useful links page for further information:

http://www.simpleaccounting.co.uk/useful_links/