Making Tax Digital—Spread sheets

Following on from our recent client seminars on the subject of Making Tax Digital, we are now aware of compatible software for those who prefer to keep their records on a spread sheet, rather than accounting software.

Absolute Accounting Software Limited have developed an Excel VAT filer, and the software enables users to keep spread sheets and submit this data in the required MTD format to HMRC.

The software uses HMRC’s API and is MTD compliant; it is said to be easy to use; it doesn’t require any other software; is backed up by a support team; and is cost effective. Pricing starts at £40+VAT for a 13 month period.

We are not promoting this product in any way, and you must make your own decisions on what is best for your own business.

But more information can be obtained direct from Absolute Accounting Software Limited, including a video demonstration, by going to www.absoluteexcelvatfiler.co.uk or calling 01869 255797 or email at sales@absolutetax.co.uk.

Making Tax Digital

Making Tax Digital ( MTD ) will come into force for all VAT registered businesses with turnover above £85,000 with effect from the start of the first VAT return period commencing 1st April 2019 onwards.

From this date, the Government Gateway will be disabled, and no VAT returns will be able to be submitted to HMRC via the Gateway. Every VAT return must then be submitted by MTD compliant software. Currently around 85% of all VAT returns are submitted via the Gateway, and therefore the new legislation will affect a significant number of our own clients.

We have notified all clients already about MTD by way of a newsletter, and we are running in house seminars on MTD for any client who would like more information.

We still have spaces available on our seminars to be held on Wednesday 10th October at 8:00am, and also on Monday 15th October at 5:00pm. If you would like to attend one of these seminars ( which should last no longer than 60 minutes ), then please contact Laura in our offices as soon as possible.

June 2018 Fuel Advisory Rates

HMRC announced new fuel advisory rates in June, which apply to all journeys on or after 1st June 2018. For 1 month from the date of change, you may use either the new rates or the old rates.

Hybrid cars for this purpose are treated as either petrol or diesel, depending upon the type of fuel they use.

These same rates can be used for VAT purposes, but the employer must retain adequate VAT receipts to cover the input tax claim.

The rates are :

Petrol      :  1,400cc or less 11p; 1,401cc to 2,000cc 14p; over 2,000cc 22p.

LPG        :   1,400cc or less  7p; 1,401cc to 2,000cc  9p;  over 2,000cc 14p.

Diesel     :   1,600cc or less 10p; 1,601cc to 2,000cc 11p; over 2,000cc 13p.

New Website

Welcome to our new website. This has taken a little time before we could release it live, so if it has created any problems for you, then we can only apologise.

The new style if fresher and more current.

We hope you like it.

March 2018 Fuel Rates

HMRC have announced new fuel rates, which will apply for all journeys from 1st March 2018, until further notice. For the one month of March, either the old rates or the new rates can be applied to business journeys. Hybrid cars are treated as either petrol or diesel for this purpose. These amounts can also be used for VAT purposes but employers will need to keep receipts.

The rates are :

Petrol     :     1,400cc or less 11p ; 1,401cc to 2,000cc 14p ; over 2,000cc 22p.

Diesel    :      1,600cc or less  9p ; 1,601cc to 2,000cc 11p ; over 2,000cc 13p.

LPG       :      1,400cc or less  7p ;  1,401cc to 2,000cc  8p ; over 2,000cc 13p 

 

Minimum Wage Increases

From 1st April 2018 both the National Living Wage ( NLW ) and the National Minimum Wage ( NMW ) will be increasing. These rates are the legal minimum that you must pay your workers. An employee can report an underpayment of wages via a straightforward online form, and also make a claim at Tribunal for the underpayment. The Tribunal fees have also now been removed, meaning it will cost an employee nothing to commence the claim.

The NLW will rise from £7.50 per hour to £7.83 per hour. This is an increase of 4.4% and is the biggest rise since 2008. The NLW applies to workers aged 25 and over.

The NMW increases as follows :

  • a) workers aged 21-24 : from £7.05 to £7.38 per hour
  • b) workers aged 18-20 : from £5.60 to £5.90 per hour
  • c) workers over compulsory school age but not yet 18 : from £4.05 to £4.20 per hour
  • d) apprentice rate  :   from £3.50 to £3.70 per hour  

All employers MUST ensure that they comply with this legislation to avoid back payments, penalties, Tribunal claims, and being named on the Government Register for all to see!

Cryptocurrencies

Bitcoin and other cryptocurrencies are becoming increasingly popular, especially with the high growth in value of Bitcoin over the last year or so ( I should at this point mention that the value of Bitcoin and cryptocurrencies can go down as well as up !!! ). The tax implications are still being thought through, although HMRC business brief 9/2014 outlines HMRC’s approach to the taxation of cryptocurrencies.

If someone buys Bitcoin to hold as an investment, or sets up a business to take payment in Bitcoin, then that person MUST keep proper accounting records, and report any gain or income to HMRC.

Another alternative is that Bitcoin falls into the realms of gambling, where there is no tax implications. For a transaction to be a gambling transaction, the person must be acting in a personal capacity and the other person in the transaction simply held differing views as to which direction the currency would move in. There would be no stake, and there would be a clear winner and a clear loser.

Our own opinion is that HMRC will seek to attribute a clear taxable position on any cryptocurrency activity, and it is therefore essential that all clients keep us informed of any activity they have in cryptocurrency, and they must keep adequate records of all such activity.

As always, investors in cryptocurrencies should seek professional advice and make sure they understand the risks and consequencies of any venture into this area.

Salary Sacrifice and Cars

Company car salary sacrifice arrangements have changed from 5th April 2017, if the car has CO2 emissions of 76g/km or more.

If a salary sacrifice arrangement on such a car began, or changed, after 5th April 2017, then PAYE and NI must be deducted on the greater of the car benefit in kind, or the salary given up in exchange.

HMRC have recently confirmed that the amount of salary sacrificed to be used for the comparison is the figure for the car only. So, you must ignore any part of the salary sacrifice which relates to other costs such as fuel, maintenance, and other attributable services.

When structuring a salary sacrifice on a car, you should ensure that the documentation separately identifies the constituent amounts for the car and the other costs.

Abolition of Class 2 NIC’s – Delayed

HM Treasury has confirmed that the abolition of Class 2 NIC’s has been delayed by 12 months, and will now take effect in April 2019.

Once Class 2 NIC’s are abolished, self employed persons with profits below the small profits threshold will have to pay Class 3 NIC’s in order to build up an entitlement to state benefits such as the state pension.

Directors Tax Returns

HMRC say that it is necessary for a company director to file a self assessment tax return. The guidance issued by HMRC says that a company director should submit a tax return each year without prompt from them. They may impose a penalty for a late tax return.

Following a recent tax case ( M Kadhem TC5929 ) this guidance is not correct. The judge in the Tribunal case said that the guidance issued by HMRC which stated ” as a director of a limited company you must……register for self assessment……and send a personal self assessment tax return “, did not have the force of law and a taxpayer was not obliged to follow it.

Consequently, where there is no tax liability arising, an appeal should be submitted against any late penalty notices issued by HMRC for a late tax return, simply because you were a company director.