A one off process when the VAT details arrive late

There are times when an application for VAT registration is delayed, and in a few cases that can mean that your business ought to have charged VAT to customers but couldn’t, because the VAT registration number was not known.

In situations like these, it is necessary to issue a “VAT only” invoice as soon as your registration number is known. There are three examples of invoices on this Excel file and the final one shows you how to set out a “VAT only” invoice.

When sending it to the customer(s) it is best to remind them that you are simply following the rules as set out by the VAT office. You have a legal duty to do it this way and they have a legal duty to pay you the VAT!

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Posted on 29 Jul 2010 by The Proactive Accountant Dot Com

No more trips to the sorting office

Roughly once per month, we end up making a trip to the local sorting office to collect our mail. When we can catch cases like this one (at the time of delivery) we have paid the surcharge and accepted that these instances are just one of those facts of life . . .

Some people still send us paper, and they sometimes put a regular stamp on a large envelope. Never mind! With our move to new premises (see the blogpost below) we now have a concierge (during office hours) who can sign for important mail. However, if we miss a letter like the one above and it finds it’s way back to the sorting office, we may just leave it there in future! It’s not the price that Royal Mail charges us, it’s the time we waste making the 30 minute round trip.

We are changing our terms and conditions to explicity account for this sort of situation. If a letter like this is not collected from a sorting office within 3 weeks, then Royal Mail will return it to the sender, even if they have to open the letter to get your address. So be it!

Please send us digital documents whenever possible, or send letters (using our new address) with the right amount of postage. Thanks!

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Posted on 19 Jul 2010 by The Proactive Accountant Dot Com

We are now in the City of London

We have moved 500 metres, out of the London Borough of Tower Hamlets and into the City of London. On account of multiple issues with Royal Mail (see the article below) we believe that there is a better chance of the Mount Pleasant Sorting Office delivering our mail, when compared to the Whitechapel Sorting Office.

Proactive
Unit 115
155 Minories
London
EC3M 1AD

We may still encounter some problems with Royal Mail but as the City of London is such an important financial centre, we feel certain that the service here, has to be better!

And of course, we are still moving towards a 100% paperless operation. Until all of the Civil Service does that, we will maintain our hybrid system, and accommodate regular mail whenever necessary.

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Posted on 8 Jun 2010 by The Proactive Accountant Dot Com

More lost mail than ever before

Last October, we reported that Royal Mail was not delivering. We have had more of the same in April and May 2010 and we need to take serious steps to combat the problem.

In particular, we submitted 7 VAT registration forms recently and we know that only 1 response has been delivered. We have established from phone calls to the VAT Unit that “more information” letters have been sent in the other 6 cases, but either the VAT Unit or Royal Mail are having difficulties with letters.

What makes it worse is that the VAT office believe that VAT is solely the responsibility of the taxpayer and not the accountant. Unlike the rest of HMRC they persist in writing to the taxpayer, and without a clear authority form in place, we have trouble getting any information out of the VAT Central Registration Unit!

We also know from our records of Recorded Delivery and Special Delivery items that the Royal mail failure rate is creeping up from 20% to around 25%.

And, we have reports from clients where business records have been mailed to us in London, but have never been received.

Our solution is twofold. We are pressing on with our paperless operation and we are also moving somewhere more reliable. If you are using our address in London E1, we will be keeping it until 31 Dec 2010. At that stage, any clients who have a registered office with us, will need to establish a new registered office.

With the implementation (in Oct 2009) of all of the provisions of the Companies Act 2006, a registered office should be staffed during normal business hours. After 31 Dec 2010 we will not be able to offer that facility in London E1.

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Posted on 1 Jun 2010 by The Proactive Accountant Dot Com

What is the VAT treatment on recharged expenses?

There is little logic in VAT legislation, and so the system is set out here for your information. Whether we like it or not, we have to follow the rules!

If you are VAT registered, then you charge VAT to your clients, on top of the cost of your product or services.

If in the course of doing that you incur expenses and you want to recharge those expenses, then you have to charge VAT on top of the expenses as well. The absurdity of this means that (for example) the cost of a train ticket which is normally exempt from VAT, becomes a VATable item the moment you recharge it to a client.

Any expense which you “consume” and then recharge to your client falls into this VAT catchment area. The only time you can avoid charging VAT on an expense is when it falls into the narrow definition of a “disbursement”.

That’s for things that you do not consume as part of your service, but which you pass on intact to your client, or on behalf of your client. In the case a solicitor handling a house purchase, the stamp duty is a disbursement and not an expense. It is not “consumed” as part of the service which the solicitor provided.

Likewise, if I recharge the costs of providing clients with tea, coffee and milk, then I need to add VAT to the bill (even though food is exempt from VAT). Whereas if I bought a pint of milk for you and handed it over, unused and unopened, then it would be classed as a disbursement.

Crazy, but true. As a general rule add VAT on top of all the expenses that you recharge to your clients!

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Posted on 27 May 2010 by The Proactive Accountant Dot Com

You can link directly to this article using the short URL http://bit.ly/akqEqp

Moving towards a more digital world

In order to work with the tax office electronically, we still have to handle a little bit of paperwork. As part of the process of setting up the online records, HMRC may send you an authorisation code in a letter like this . . .

The codes have a 28 day limit, so as soon as you receive one, please let us know. We don’t need the letter, just the authorisation code. Thanks.

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Posted on 12 May 2010 by The Proactive Accountant Dot Com ]]> http://www.proactive.uk.net/?feed=rss2&p=721 http://www.proactive.uk.net/?p=708 http://www.proactive.uk.net/?p=708#comments Wed, 28 Apr 2010 10:18:57 +0000 proactivepaul http://www.proactive.uk.net/?p=708 You can link directly to this article using the short URL http://bit.ly/93A7Nc

Tidying things up nicely

Some clients have a fully managed service from us and some of them do their own VAT. If you’re in that second category and you now need to de-register for VAT, the you need this form:

Form VAT7

Experience tells us that when filling it out, it’s easiest to tick BOX E on page 4  and add the cessation date, skip page 5 and go directly to page 6.

Question 7 is about how much VAT you might “owe” the government. If the total VAT at stake is less than £1,000 then they waive it. So, if you’re stocks and assets are less than about £6,600 in total there is no problem. Most businesses need to show the total value of a computer and a printer and that deals with question 7.

Send the completed form to:

HM Revenue & Customs
77 Victoria St
Grimsby
DN31 1DB

We recommend that it is sent by Recorded Delivery!

Posted on 28 Apr 2010 by The Proactive Accountant Dot Com

There is no legal requirement to complete a P161 form

The people at HMRC Towers have (in their wisdom) decided to rearrange the way that some work is done. Today we learnt more about the new National Insurance and PAYE Service.

It can cause problems. One of which is the way explanations are delivered. Have a look at this  extract from a letter which we received form the newly introduced Complaints Service . . .

If you can translate that paragraph into English please let us know!

Anyway, the new Pension Coding Form P161 is something which we think you can safely ignore. HMRC is perfectly well equipped to get your coding notice wrong, with or without the details on the new form. They seem to do that already by not checking your tax return properly. Save yourself the time and just shred the P161 when you get it!

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Posted on 9 Apr 2010 by The Proactive Accountant Dot Com

Approval of accounts

In the old days traditional paper accounts were sent out by post, for approval and signature. Nowadays, HM Revenue & Customs will accept authorisation electronically and that speeds things up. That means that we now prepare PDF files and email them to clients:

• 444600 report - full accounts
• 444610 report - abbreviated accounts (for Limited Companies only)

Please check the PDF files which you receive, because they are based on the records which you have provided.

The formal process of preparing accounts for all businesses, no matter how small or large, ensures that no steps are overlooked. That way, when tax returns are finalised, we can be sure that we have each and every business recorded correctly.

Any paper documents which you sent to us are batched up at this stage and are returned to you by regular post. These need to be kept safe for a period of 6 years after the end of the trading period.  If you have any queries on the accounts, then please let us know before they are approved. Thank you.

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Posted on 6 Apr 2010 by The Proactive Accountant Dot Com

Concise and to the point

In conjunction with our sister organisation @bookkeeper140 we can now offer a monthly payroll service . . .

Click here for details

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Posted on 6 Apr 2010 by The Proactive Accountant Dot Com

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