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Business Matters

Charitable donations and the ice bucket challenge

Many people are taking part in the ice bucket challenge and making the requisite donation to charity. If you're in business, you have the choice of donating through your business rather than doing it personally. On the one hand your business gets tax relief on the donation while the charity gets the full amount of your contribution.

If you make the donation personally, you can "gift aid" it - which means you make the donation out of after tax earnings and the charity can reclaim the tax you paid. If you're a higher rate taxpayer you get tax relief at the difference between the basic rate and the higher rate.

Whichever way you pay your donation, a charity somewhere benefits.

Expense Claims

A recent tax case at the First tier tax tribunal made some interesting points which could have wide impact on practical expense claims for both employees and the self employed.

The facts of the case were that a nurse who worked for several hospitals and care homes had claimed expenses not reimbursed by his employers, against his earnings on his tax returns over a period of 6 years. The expenses claimed included travel and subsistence, laundry of uniforms, use of his home as an office and further training for himself.

Two - maybe three - principles were confirmed by the tribunal:

The new Employment Allowance

From 6th April 2014, every employer with less than 250 employees will be entitled to deduct up to £2000 from its Employers National Insurance Contributions (ERNIC).

The last employer tax rebate was the ERNIC Holiday which ended on 5th September 2013 and was a complex system which entitled every employer to escape making payments of up to £5000 per employee but only for the first 10 employees and it applied only to new businesses in their first year. It was a complicated scheme and thankfully is now ended.

 

Child Benefit Tax - too late to be legal?

The tax rules as simply as possible:

If you OR your partner have annual taxable income of more than £50,000 AND one of you is receiving Child Benefit you must submit a Self Assessment Tax Return and whoever is the person receiving the income of more than £50,000 will pay tax on the Child Benefit received. For 2012-13 tax year the Child benefit Tax only applies from 7th January 2013.

While there is STILL time to register for Self Assessment and submit a tax return, you should be aware that the time is running out and probably by 1st December it really will be too late given how long it takes HMRC to do anything and as you would be registering late, it will be difficult to appeal against a penalty for late submission of a Self Assessment Tax Return.

Flat Rate Expenses - No receipts required?

Tax simplification is always welcomed especially by accountants whose job has become ever more difficult. [Pause for sympathetic noises...] but the latest attempt at simplification is not likely to be adopted by many.

Screwed!

HMRC don't like to be screwed with and while there is a need for equality and fairness in our tax system, the bad guys who take things to extremes, spoil the few small remaining loopholes for the rest of us.

Screwed

The most recent is messing with the Directors' Loans rules (it actually has a more precise and official title but directors loans is what it mostly boils down to) making it difficult if not now impossible to have the use of money for free. You need to click here to find out more about what's changed and if you want to know how it affects you and your company, you need to call me on 0141 556 5348.

BIS Consultation on transparency

BIS - which is short for Department for Business Innovation and Skills - is consulting on a range of new measures designed to increase confidence in the corporate structures (limited companies) which operate in the UK.

Some changes are probably more welcome than others for example disqualification of directors who behave inapproriately; and an end to nominee directors and some other technical matters.

Most directors will also welcome an end to the Annual Return, the AR01 form which on the one hand gives a snapshot of the company at the same date every year and shows who the shareholders and directors are. The plan is that as Directors must notify Companies House legally within a few weeks of any change taking place, that the Annual return is now no longer required.

Leftie Loosie Rightie Tightie

I’m reading John Simpsons book right now “Not Quite World’s End” and while he is recalling his memories of Baghdad this tiny almost insignificant phrase is quoted by one of the Americans, reminding the news correspondents to ensure that the water is turned off in their rooms by checking the “faucets” before going out. It’s not the first time I’ve heard this – one of my mountain biking compatriots used it once when he was remembering which way to tighten the saddle assembly having lowered his saddle before descending downhill at 100mph.

Neat little phrases such as this help us through our ordinary lives allowing us to remember simple things. One of our young trainees couldn’t cope with how many days there were in April until a simple recall of the old rhyme (30 days hath September) sorted her out: I think the language nowadays is less biblical however.

So what are the neat phrases that help us through business – we surely need them as much as we do in our day to day lives? One springing to mind immediately is that “Turnover is vanity; Profit sanity”; another which is less catchy is “If you keep doing things the same way, you’ll keep getting the same results”; or what about “Fail to plan? Plan to fail”

Morality

There has been much discussion in the press recently about large firms avoiding tax quite legally and the customer fallout with them because the customers decided that it was not morally correct that the large firms should pay so little tax conveniently ignoring the business rates, VAT and PAYE they do pay, the fact that they help employment and keep our shopping centres busy and provide easy access to a legal drug .

But with this new and very subjective moral dimension of tax emerging quickly like this I have been wondering if perhaps the topic needs a bit more of an airing. No one likes benefit cheats or others who don’t pay their taxes but at what point does “deciding that the taxman isn’t interested in my affairs” become tax evasion? At what point does arranging your tax affairs become immoral if the result is that you pay less or no tax?

Here are two simple examples of immoral tax behaviour....

Latest: HMRC targets Home Improvements traders

HMRC has announced the focus of its campaigns to be implemented later this year.

 

The latest targets for HMRC activity are: