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Welcome...
March 2014
· Business Journeys
· Let Property Campaign
· VAT on Books and Leaflets
·
· March Question and Answer Section
· March Key Tax Dates
Business Journeys top
A number of self-employed businesses have been waiting for a tax case to be decided which turned on the question of "what is a business journey?" The test case concerned a doctor who was both employed by the NHS and self-employed as a private consultant.

The Upper Tax Tribunal decided that the doctor's self-employed work started when he arrived at his private clinic, so the travel between his home and the clinic was not a business journey. This was in spite of the fact the doctor had an office at his home where he prepared his treatment plans.

So what does this mean for you as a self-employed person who travels to various sites to work? The taxman will argue that your work only starts when you reach your customer's site and any business activity performed at your home-office is irrelevant. This would restrict your allowable travel costs to journeys between customers and deny a deduction for travelling from your home to the first customer of the day.

The key is determining where your "place of business" is located, and whether the activity undertaken at the home-office is wholly and exclusively undertaken for the purpose of your business. As ever it will come down to the evidence you can produce.

Can you show that the activities you perform at your home must be performed at that location? For example: contacting suppliers, drawing up quotes, or scrutinising plans. Also can you provide evidence of the time you spend working exclusively on your business at your home, perhaps by records in your business diary?

We can help you record the details the taxman will want to see in order to prove you do start work at home, and not when you reach your first customer of the day.
 
Let Property Campaign top
The taxman has launched another 'confess your tax sins' campaign aimed at individuals who have failed to declare rental income they have received from residential properties. This let property campaign (LPC) can't be used by companies that let property or by landlords who let commercial rather than residential properties.

Like other tax disclosure campaigns the taxman promises that you will pay a lower amount of penalties if you disclose under the LPC, but the tax due and interest on late paid tax will have to be paid in full.

If you want to use the LPC to declare income and gains from your let properties, you need to complete a notification form on the HMRC website, or phone the property campaign helpline on 03000 514 479. We can help you with this.

There is no set deadline for asking to use the LPC, but the Taxman is running a taskforce in parallel to the LPC which is targeting tax evasion by residential landlords. So it's a case of "confess before we catch you."

Once you have notified HMRC that you want to use the LPC, you will be given a reference number and be told to make a full disclosure of the previously un-declared income and gains within three months. You will also need to pay all the tax due within the same three month period. If you can't pay all the tax in that time period you must ask HMRC for a "time to pay" arrangement before the deadline arrives. We can help you with this as well.
 
VAT on Books and Leaflets top
There is no VAT on printed books, booklets, newspapers, and leaflets. Well there is - it's zero-rate VAT, so the customer pays no VAT, but the supplier can reclaim the VAT it pays on purchases.

Printing businesses have to be very clear about which of their products they treat as zero-rated for VAT and which are standard-rated so 20% VAT applies. The VATman likes to come round and check. If you have classified your printed products incorrectly, VAT on the earlier sales (up to four years ago) will have to be paid. It's unlikely that you will be able to recover this extra VAT from your customers.

In a recent case printed card document folders, which were designed to hold other leaflets, were judged to be standard rated for VAT, as was a laminated business card. However, personalised souvenir photo-books were determined to be zero-rated. We can help you decide which of your products should be zero or standard rated for VAT.

Beware; if the book, leaflet or newsletter is provided in an electronic form, standard rate VAT will apply. There is a special exemption for audio-books for the blind which are zero-rated.
 
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March Question and Answer Section top
Q. I've received a refund of the PPI premiums I paid on top of my mortgage. Do I need to declare this sum on my tax return?

A. The refund of payment protection insurance (PPI) premiums should not be included on your tax return as it is a repayment of a fee that you were incorrectly charged. However, the bank will have also paid you 8% interest on the PPI refund, and that interest should be declared on your tax return, just as if it was interest paid on a regular savings account. Some banks deducted 20% tax from the interest element of the refund, others did not, so you should check the documents you received with the refund to see if your payment had tax deducted from it or not.

Q. I'm self-employed. How do I work out what to claim for motoring expenses in my accounts?

A. You can calculate your business-related motoring costs by either:
a) Take the proportion of business miles to total mileage driven in your vehicle in the year and apply that proportion to your total motoring costs for the year; or
b) Use the fixed expense of 45p per business mile for the first 10,000 miles driven in the year and 25p per mile for additional business miles in the year.

If you use method a) you can also claim capital allowances on the cost of your vehicle, restricted for the private use of that vehicle. If you use method b) you can't claim capital allowances for your vehicle but you can claim the interest amount of any finance lease used to purchase the vehicle. We can explain exactly what you can and cannot claim in your accounts for tax purposes.

Q. How do I go about claiming the £2,000 employment allowance?

A. From April 2014 most employers will be able to claim a £2,000 annual allowance to set against the employer's class 1 NICs due on their employees' wages. It will be easy to claim. All you need to do is tick a box on the first Employer Payment Summary (EPS) submitted for 2014/15. Your payroll software will show you how, or we can do that for you.

Once the claim is made it stays in place for all future tax years, until the PAYE scheme is closed or the Government withdraws the allowance. Only employers can claim the employment allowance. It can't be set against class 2 or 4 NICs paid by the self-employed.;.
 
March Key Tax Dates top
19/22 - PAYE/NIC and CIS deductions due for month to 5/3/2014

28 - Last minute tax planning for the 2013/14 tax year. Ensure you use up all exemptions to which you are entitled
 
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there's anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to come to meet with you to discuss how we can help and provide you with a competitive quote for our services.

All new client consultations are provided free of charge and without obligation.
 
About Us top
TWR Accountants are based in Brandon near Thetford, offering local business owners and individuals a wide range of services to small and medium sized businesses.

All clients receive fixed fees, work delivered on time and free unlimited phone support. Visit our website http://www.twraccounts.co.uk for more information.
 

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Disclaimer
The information contained in this newsletter is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.

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