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[29 Mar 2017 | Comments Off on HMRC Software Errors Affect 2016/17 Tax Returns | ]
HMRC Software Errors Affect 2016/17 Tax Returns

HMRC have incorrectly calculated a series of 2016/17 tax liabilities, and in mid 2016 they sent incorrect sample calculations to software houses. As a result, the software houses have been compelled to write those inaccuracies into their 2016/17 tax return packages.
HMRC were notified of this problem in November 2016. I first learnt of it in January 2017, and now it transpires (on 29 March 2017) that HMRC have not been able to rewrite their internal software in time for the 2016/17 tax return filing season! And, that means that the …

headline, one offs »

[8 Feb 2017 | Comments Off on VAT Flat Rate Scheme – The New Rules from 1 Apr 2017 | ]
VAT Flat Rate Scheme – The New Rules from 1 Apr 2017

The VAT Flat Rate Scheme changes from 1 Apr 2017 when new rules come into force in a heavy handed attempt to combat abuse of the system. The FRS differs from standard VAT accounting because you pay a percentage of your business turnover rather than paying the actual VAT arising on the difference between sales and purchases.
You continue to charge clients the headline rate of 20% VAT and you can potentially benefit by remitting a smaller percentage to the taxman. The FRS rates differ from sector to sector, but for …

featured, one offs »

[22 Jan 2017 | Comments Off on Public Sector Bodies and Freelancers and IR35 | ]
Public Sector Bodies and Freelancers and IR35

On Saturday 21 Jan 2017 the National Audit Office in Victoria opened its doors to a range of geeks and devotees, both within and beyond Government, for the now annual unconference called UKGovCamp. This one was special, the 10th event, and there was a considerable buzz among the 220 participants.
Somehow, my session ended up in a very early slot (one of eight concurrent streams) and a small, intense discussion of IR35 took place.
This is an extremely complex subject. I have recently concluded an IR35 enquiry for a client. It took …

one offs »

[11 Aug 2016 | Comments Off on Auto Enrolment – the Basics | ]
Auto Enrolment – the Basics

Proactive is not authorised to give pensions advice, and the comments here are a guide to complying with new legislation. It is not a guide to pensions! The figures below relate the tax year 2016/17 and may change every April as each new tax year starts.
Do I need to comply?
You may not need to offer auto enrolment if your business employs no regular staff, but only directors, and none of those directors have a contract of employment. If that’s the case then check this report.
For everybody else, the key points …

one offs »

[28 Jun 2016 | Comments Off on HMRC System Borked | ]
HMRC System Borked

Late on Thursday 23 Jun 2016, we tried to submit a number of Coporation Tax returns for clients. The data went in (apparently), but the normal response did not come back. We tried again early on Friday with the same blank result.

According to Acorah, our software supplier, this issue (experienced by many accountants) was raised with HMRC on Friday, and whilst the data has arrived on the HMRC systems, it is only the “result” message which is failing. We checked the HMRC status page on both Thursday and Friday and …

one offs »

[10 Jun 2016 | Comments Off on Credit Notes | ]
Credit Notes

“I need to issue a Credit Note. What should I do?”
A credit note is simply a negative invoice. It replicates the original invoice is almost every way except that the amounts and the figures are shown as negatives. The date on the Credit Note is normally the date you prepared it, unless there are compelling reasons to use a different date.
Use whatever the next number is (in your normal invoice number sequence) for the credit note. If your software forces you to use a different number sequence for credit notes, …

one offs »

[12 May 2016 | Comments Off on National Insurance Contributions and the UK State Pension | ]
National Insurance Contributions and the UK State Pension

We are accountants and tax advisers, and we do not get involved in pension matters. However, this is what we know about the interaction between National Insurance Contributions and the UK State Pension.

If you are following our recommended director shareholder payments pattern, then your salary should be high enough to give you a National Insurance credit, even though you don’t pay Class 1 National Insurance.
A full year at this level is a “qualifying year”. This page https://www.gov.uk/state-pension/eligibility used to say:
“You might not pay National Insurance Contributions because you’re earning less …

one offs »

[24 Jan 2016 | Comments Off on Budget Day Bombshell? | ]
Budget Day Bombshell?

We are indebted to Richard Dyson of The Daily Telegraph for this news on pensions. Though we stress that it’s a forecast and not an absolute certainty.
A tax break set to be axed within weeks
And at the same time, we need to remind you that we are not authorised to provide pensions advice, but we can tell you about tax law and possible changes to it. If we are to believe everything which we read in the Press, which we hear in Accounting Bulletins and which we learn on our …

one offs »

[30 Nov 2015 | Comments Off on Dividend Tax 2016/17 | ]
Dividend Tax 2016/17

Significant changes to the taxation of dividends will take effect from 6 April 2016
Planned changes:

10% notional tax credit being scrapped
Introducing a tax free Dividend Allowance of £5,000
Then, dividends tax rates will be set at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

In short, this means that the majority of owners of small limited companies, who take a small salary and large dividend, will see a significant increase in their personal tax bill. With the exception of the first £5,000 tax free band, …

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[16 Nov 2015 | Comments Off on Buy To Let – new tax rules | ]
Buy To Let – new tax rules

Two new sets of rules come into force over the next few years.
No more “10% Wear and Tear” allowance
The allowance is being abolished. Starting on 6 Apr 2016, landlords who rent out furnished accommodation will no longer be able to claim the flat rate 10% allowance every year, and instead will be permitted only to claim the actual costs of like-for-like renewals and replacements.
Restriction of loan interest relief
Over a three year period, starting on 6 Apr 2017, the amount of tax relief you can claim for loan interest paid, will …