Making Tax Digital

mtd

The government have now issued their replies to all responses on MTD, Making Tax Difficult Digital.

In a nutshell … they have more or less ignored completely all the representations to them by learned professional bodies, the Treasury Select Committee (see earlier post on that) and everyone else who took the time and trouble to bother responding to their 6 white papers.

HMRC continue to insist that all small businesses, and people with rented property income, submit their figures on a quarterly basis, online ONLY.

The system will be trialled this year with a view to going live in April 2018.

However, even at this late stage, details are sparse, very few and far between. There is not much I can add to firm up the proposals.

One notable point is that the £10,000 income threshold, under which MTD will not apply, is still “under review” so……. will you be in this new system or not? Who knows.

Nothing more to say now. Will add more when developments occur.

Advertisements

Treasury Select Committee whacks HMRC

headache

The Treasury Select Committee has reported on Making Tax Digital (MTD).

The Committee says HMRC should…..

1. hold back imposing MTD from April 2018 to April 2019,

2. increase the exemption threshold,

3. run pilot tests across the FULL reporting cycle and

4. allow software providers to catch up.

So what’s the chance HMRC will listen? What do you think?

Somewhere between slim and none IMO.

VAT error correction and claims for entertaining

vat

CORRECTING VAT RETURN ERRORS

If you find your business has made a mistake you need to correct it in order to avoid paying additional interest and penalties.

The error correction procedure has two parts …..the correction itself and notification.

Errors under £10,000 can be adjusted on the next VAT return. Errors over £10,000 have to be notified on a special form and are subject to interest / penalties.

BIG HEADS UP >> Most businesses are unaware that, to avoid a penalty on an error under £10,000 that has been corrected on a subsequent VAT return, you must also notify.

If not HMRC would consider it to be a careless error and so liable to a penalty up to 30%.

When correcting an error you should write to HMRC VAT section detailing:

  1. the period the error was made in,
  2. amount of the error,
  3. the reason for the error and
  4. the VAT Return the adjustment was made in.

 

EXPENSES, INPUT VAT ON OVERSEAS ENTERTAINING CURRENT CUSTOMERS

VAT suffered on expenses when entertaining a business customer has not been allowed for some years but this has changed.

Despite the change, unfortunately, you still can only reclaim it when entertaining overseas contacts who are already your customers.

Do NOT push this in your VAT Return claims or HMRC will disallow your entire claim and maybe even penalise you.

Be reasonable and prudent. Claim only if “reasonable in scale and character”. Remember this is THEIR definition of “reasonable”. Not yours.

Maybe basic food and light refreshments, sandwiches and soft drinks (including tea / coffee but definitely NO alcohol) provided to enable a specific business meeting to proceed without interruption.

Taking an overseas customer out to a restaurant is very likely to lead to a claim refusal.

 

Take care. Always.

VAT Flat Rate Scheme changes

vat

Are you using the VAT Flat Rate Scheme?

Are your costs for goods (not services) less than £1,000 p.a. or, if higher than that, less than 2% or your business sales?

If you reply “yes” to both questions then you will be classified as a “limited cost trader” and subject to the new 16.5% flat rate from April 2017.

If you want to see what the taxman has to say about it read this …..

https://www.gov.uk/government/publications/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note

 

 

 

Financial Statement 23rd November 2016

philip-hammond

A few main points from today’s statement in the House by Philip Hammond.

The autumn statement abolished. Next year’s spring budget will be the final spring budget. After that there will be an autumn budget, well before the new financial year starts.

Gloomily he predicts…..

Slower growth

Higher inflation

Lower tax receipts

Higher borrowing*

* this is tipped to rise by £122M, curiously, exactly the same figures as the increased prediction of the BREXIT “black hole”. So is he borrowing to cover the hole??

Large investment will be made in R&D and infrastructure focusing on rail/transport links and new housing at “in demand” locations. Question … where are these locations and is there any space left in them for new houses??

On tax the personal allowance is to rise to £11,500 in April then up to £12,500 by the end of this parliament.

The 40% income tax threshold will rise to £50,000, again, over the life of this parliament.

The National Living Wage is to rise from £7.20 per hour to £7.50.

Legislation will be introduced to ban all fees charged by agents to tenants.

Hammond also announced an attempt to help savers (and possibly to bolster the government’s borrowing needs). In the Budget a new Saver’s Bond will be introduced through NS&I paying 2.2% for a fixed 3 years period. More complications to the tax system. Unless they make it tax free of course. We shall see.

5 tax submissions every year

where-to-start

Recently I have come across many people – in and out of the tax profession – who do not fully grasp this crucial aspect of the “Making Tax Digital” change (see earlier posts here for more background on this).

Under MTD some people will be required to file four “in year returns” PLUS an end of year declaration.

So that’s FIVE submissions every year.

If VAT registered the 4 VAT returns will continue to be required, as now, along with intrastat returns if you trade with countries in the EU (no change because of BREXIT yet).

If a business has any employees under PAYE then the usual 12 FPS returns and up to 12 EPS returns will also be required.

Rumour for immanent Budget speech in a few days …. the 31st January deadline we have all grown to know may be brought forward to 31st December.

Before too long you will have no time to actually run your business or your life ….. you will be spending all your time preparing and filing data demanded various government departments by various deadlines or suffer fines & penalties.

As always do call us if you need help or clarification with any of this looming MTD disaster.

 

Check your State Pension

pension-fund

The new “Check your State Pension” service is a digital collaboration between DWP and HMRC.

Use it here to find you where you stand ….

https://www.gov.uk/check-state-pension

Good luck and DON’T FALL for any pension scams.

%d bloggers like this: