New HMRC Penalties

Making Tax Digital (MTD) New points based penalty model HMRC have been exploring changes to the penalty system for late submission failures under Making Tax Digital (MTD). They have now decided to adopt a points based model with the draft legislation expected in summer 2018. This will see the introduction of a system where late submission of a return or of the filing obligations under MTD attract points. A penalty will be charged for every failure to provide a submission on time once points have been accumulated up to a certain threshold. Penalty thresholds The penalty thresholds will be: Submission frequency penalty threshold Annual 2 points Quarterly 4 points Monthly 5 points Good compliance points reset After a period of good compliance, the government is ‘minded’ to use the following periods of good compliance before resetting penalty points back to zero. Submission frequency good compliance period Annual 2 submissions Quarterly 4 submissions Monthly 5 submissions Both the accumulation of points and any subsequent penalties will be fully appealable. When will this start? April 2019 sees the start of mandatory reporting of VAT obligations for all VAT registered businesses with a turnover in excess of £85,000. A 12 month soft landing period will follow, before the new points system commences in 2020. This will then be rolled out across the other taxes. What will the penalties be? The actual penalty amount has yet to be announced. Watch this space, once we know more details we’ll be sure to share...

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Tax Guide 2017/2018

Great news, our tax guide for 2017/2018 is online and can be downloaded here: Courtley West tax guide 2017 2018 If you have any questions or we can help you in anyway way, please don’t hesitate to get in touch.

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2016 Budget Summary

On 16 March 2016 George Osbourne presented his budget, the budget was followed by the publication of the finance bill on the 24 March. Here are the top key points affecting small business. Personal Allowance For 2017/18 the personal allowance will increase to £11,500 (2016/17: £11,000). The basic rate band will increase to £33,500 (2016/17: £32,000), resulting in a higher rate threshold of £45,000 for 2016/17. We have been told that the higher rate threshold will increase to £50,000 by the end of this parliament. New Lifetime ISA From April 2017 those under the age of 40 will be able to subscribe to a ‘Lifetime ISA’. Subscribers can pay in up to £4,000 a year until the age of 50 and receive a government bonus of 25%. Contributions to a Lifetime ISA will count towards the ISA contribution limit which will be set at £20,000 for 2017/18. Funds can be withdrawn without charge when the subscriber reaches 60 or purchases their first residential property worth £450,000 or less. The ISA will be ‘flexible’ and funds can be withdrawn at any time before the age of 60, subject to the subscriber losing their bonus (including any interest or growth thereon) and paying a 5% charge. More details should be released in Autumn 2016. Class 2 National Class 2 NICs will be abolished from April 2018. 4 NICs will be reformed so that the self-employed will continue to build entitlement to contributory benefits following the abolition of Class 2. We would expect an increase in the Class4 NIC rate, although this has not been announced yet. Micro-businesses allowances Two new allowances of £1,000 each were announced by the Chancellor, to be introduced from April 2017. The allowances are available for property and trading income and are aimed particularly at micro-entrepreneurs carrying out activities such as selling goods or letting their homes through online marketplaces. Individuals with trading or property income below £1,000 will no longer be required to declare or pay tax on that income. Whilst detailed information on these two new allowances is not available at the time of writing, we do know that they will work in a similar way to rent a room relief: if income from property or trading exceeds £1,000 the taxpayer will have a choice between deducting actual expenses from income or deducting the £1,000 allowance from income. Corporation Tax Rates The planned reduction in the rate of corporation tax to 19% on 1 April 2017 will go ahead as planned. 1 April 2020 the rate will drop to 17%. Loans to participators This will affect any client with an over-drawn director’s loan account. The rate of s455 tax will increase from 25% to 32.5% from April 2016. The new rate will apply to loans made or benefits conferred by close companies on or after 6 April 2016. Planned reduction in CGT rates One of the headlines from the 2016 Budget was the reduction of Capital Gains Tax rates from April 2016. The basic rate will reduce to 10% (from 18%) and the higher rate will reduce to 20% (from 28%). An 8% surcharge rate will apply to gains on residential property and carried interest, effectively keeping the rates exactly as they were. ATED related gains will also be chargeable at 28%. Trustees and personal representatives will...

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The Town That Took on the Taxman

  There was a great programme on the TV last night. “The Town That Took on the Tax Man’” You can catch up with it on iPlayer here: http://bbc.in/1nnmfQJ A group of traders from Crickhowell, set up a multinational tax avoidance scheme using the same techniques used by the likes of Starbucks, Amazon & Facebook to highlight the inequality in the tax system.* It comes to light that these large corporations have a special relationship with HMRC, they also have very expensive barristers and accountants and the deep pockets required to pay them in order to fight off HMRC when they are ultimately challenged. The sad truth is that the tax system is unfair. As a small business the relationship with HMRC is very different. You can be on the phone, listening to their on-hold music for an hour before ‘the computer’ will decide you should try again later and hang up. They will write to you with a deadline which has already passed by the time the letter is delivered and they will not respond to your letter for several months. So, the question I suppose many are asking is, can I set myself up an offshore company? Can I have a Dutch Sandwich? For many SMEs the answer will be no. The tax saved will be less than the legal fees in getting such a scheme set up and then successfully defended. It’s still not fair though is it? That’s what really hurts, we’re writing out the cheques while the multinational corporations are cutting deals. We’ll help our clients minimise their tax liability within the legal framework available, more importantly we’ll guide our clients through their business growth ensuring they know what they’re doing and are profitable. At the end of the day, we all should pay our taxes if we want to have an NHS, state-pension, roads and the emergency services etc but we would like to think it’s fair. Perhaps if the multinationals played along then the SMEs wouldn’t have to pay as much. I hope we get to find out how the Crickhowell traders get on, ultimately I think they’ll get stuck but good on them for trying and highlighting the inequity in the system. *I think Amazon and Starbucks have rearranged their tax affairs to ensure they do pay UK Corporation tax...

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All Inclusive Contractor Accounts

  We are pleased to announce our all inclusive contractor accounts package: Annual limited company accounts Corporation tax return Quarterly VAT returns Companies house annual return including the filing fee Payroll for no more than 2 employees / directors paid monthly 1 x Personal tax return   All for £80 plus VAT per month. For more information please give us a call and quote the all inclusive contractor accounts package.  ...

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What happens if I file my Annual Return late?

What happens if I file my Annual Return late? Firstly, do not confuse your annual accounts with your annual return. The annual return is a snapshot of general information about a company’s directors, secretaries, registered office address, shareholders and share capital. Every company must deliver an annual return to Companies House at least once every 12 months. The deadline is 28 days after the anniversary of incorporation of the company or the anniversary of the made-up date of the last annual return. Helpful tip: If you don’t know the date, you can look at the Companies House Web-Check service, simply enter the company name or the registered number and the summary screen will show you when it is due. So what happens if I file my annual return late? Companies House will remind you that it is a criminal offence not to deliver the annual return on time and that the company and its directors could be prosecuted. This could mean the directors have a criminal record and also a £5,000 fine for each document not filed on time. Companies House will not impose a penalty (unlike the late filing of accounts). Companies House will send increasingly threatening letters warning of removing the company from the register. Ultimately the company will be removed from the register and if you want to keep the company you will have to pay a fee to have it restored. That was pretty much it, however recently we have seen Companies House take the threats further with more real threats of prosecution. A client who had forgotten to file his annual return received an email from Companies House reminding him that it was overdue and he could face prosecution, they also intended to remove the company from the register. He replied, apologising and advising that he wanted to keep the company. Companies House responded stating was that it was now being referred to the legal team as they intended to prosecute. We intervened and the matter was resolved without prosecution, penalties or fines. But the lesson here is that: Think twice before forming a company. Discuss your business plan with your accountant. Is a company really the best way to trade? Don’t ignore the Companies House letters, bring the annual return up to date. Customers and suppliers will check you out and if your documents aren’t up to date it doesn’t give a good impression. If you don’t want your company, the striking off fee is only £10. So deal with it properly. If you want any advice regarding your company statutory filing or with anything else please feel free to contact us...

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