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Say goodbye to small earnings

Say hello to small profits

HMRC has changed the name of the threshold for paying Class 2 National Insurance from the Small Earnings Limit to the Small Profits Threshold.  If you earn less than £5,965 in 2015-16 you won’t need to pay Class 2 NI, but if you do, it will be calculated as part of your 2015-16 tax return and due with the rest of your tax by 31st January 2017.

English: British National Insurance stamp.

English: British National Insurance stamp. (Photo credit: Wikipedia)

Alterledger can help

For more information on filling in your tax return, contact Alterledger or visit the website alterledger.com to see if you can organise yourself better and cut your tax bill.
 

Taxman reveals top 10 terrible tax excuses

the dog ate my homework

Last years excuses used in unsuccessful appeals against HMRC penalties for late filing and payment. Here’s the full list:

  • My pet dog ate my tax return…and all the reminders.
  • I was up a mountain in Wales, and couldn’t find a postbox or get an internet signal.
  • I fell in with the wrong crowd.
  • I’ve been travelling the world, trying to escape from a foreign intelligence agency.
  • Barack Obama is in charge of my finances.
  • I’ve been busy looking after a flock of escaped parrots and some fox cubs.
  • A work colleague borrowed my tax return, to photocopy it, and didn’t give it back.
  • I live in a camper van in a supermarket car park.
  • My girlfriend’s pregnant.
  • I was in Australia.

https://www.gov.uk/government/news/taxman-reveals-top-10-terrible-tax-excuses

The previous year, the following bizarre, exotic and flimsy excuses have all been used by tardy taxpayers:

  1. My pet goldfish died (self-employed builder)
  2. I had a run-in with a cow (Midlands farmer)
  3. After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman)
  4. My wife won’t give me my mail (self-employed trader)
  5. My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser)
  6. I’ve been far too busy touring the country with my one-man play (Coventry writer)
  7. My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
  8. I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man)
  9. Our business doesn’t really do anything (Kent financial services firm)
  10. I’ve been too busy submitting my clients’ tax returns (London accountant)

All of these people and businesses received a £100 penalty from HM Revenue and Customs (HMRC) for filing late. They appealed against the decision using these excuses, but were unsuccessful.

https://www.gov.uk/government/news/revenue-reveals-top-10-oddest-excuses-for-late-tax-returns

Don’t be late get your return done!

steve@bicknells.net

Will your tax return stand up to HMRC Profit Benchmarking?

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HMRC have been doing lots of research on SME businesses, the most interesting areas of research are:

Understanding Small and Medium Enterprise (SME) business life eventsSME Customer Journey Mapping

Research was carried out to understand:

  • the key life events and activities that SMEs experience
  • how these relate to tax
  • what opportunities there are for the improvement of HM Revenue and Customs (HMRC) services by more closely aligning them to business lifecycles

The Transparent Benchmarking Team Statement (November 2014)

HMRC is conducting a number of pilots, focussed on SME customers, designed to explore the effectiveness of publishing benchmarks on aiding greater voluntary compliance.

Following the first pilot (benchmark net profit ratios for Painters and Decorators, and Driving Instructors) in March 2014, HMRC will run two more in the autumn. One of these will focus on self-employed taxi drivers and pharmacists, where HMRC will be writing to around 2,500 agents that have a number of clients in the target sectors. The idea is to test whether publishing benchmarks through an agent is more effective than writing to a customer directly. Letters will also be sent to a sample of represented and unrepresented customers within the selected sectors to form control groups for evaluation purposes. All represented individuals and businesses written to directly will be informed that their agent has not received a copy of the letter.

The benchmark for both sectors is the net profit ratio. Because this is a controlled pilot exercise, not all agents or businesses within the relevant sectors will be receiving a letter. (source CIOT)

The Benchmarks we know so far are:

  • Painters & Decorators range from 59% to 79%
  • Driving Instructors 31% to 67%

So the range of profits are big!

We await the ranges for Taxi Drivers and Pharmacists.

If your profit doesn’t fit then you need to know why.

Do not ignore the letter because HMRC are likely to follow it up and assume you are deliberately trying to avoid tax!

You may have some valid reasons for not fitting the benchmark and you must explain those reasons to HMRC.

A deliberate error will results in a higher penalty (up 100% of the tax) but can also open the door to HMRC going back over up to 20 years of your accounts!

The letters refer to common mistakes in:

  • Travel Expenses
  • Telephone Costs
  • Utility and insurance charges
  • Professional Fees
  • Capital Expenditure

You may find these blogs helpful

Motor Expenses

Travel Expenses

Home Office Expenses

10 Ways to Save Tax

HMRC also have some useful toolkits/checklists…..

Business Profits Toolkit

Private and Personal Expenditure Toolkit

steve@bicknells.net

What if you can’t complete your Self Assessment Tax Return?

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11.2 million people will be required to complete a Self Assessment Return for 2013/14 and the deadline is the 31st January 2015.

The most common things you will need to know are:

  • Employment Income – P60 and P11D
  • Pension Contributions – statement from provider
  • Donations to Charity
  • Bank and Building Society Interest
  • Dividends
  • Buy to Let Investments, Holiday Lets and Second Homes
  • Other Income
  • Employment Expenses not paid by your employer including mileage to approved rates and clothing
  • Professional Memberships related to your job and on HMRC List 3
  • Home Office Expenses

What can you do if despite your best efforts you can’t find or get hold of the information you need?

Returns which include provisional or estimated figures should be accepted provided they can be regarded as satisfying the filing requirement.

  • A provisional figure is one which the taxpayer / agent has supplied pending the submission of the final / accurate figure
  • An estimated figure is one which the taxpayer / agent wishes to be accepted as the final figure because it is not possible to provide an accurate figure for example where the records have been lost. The taxpayer is not required to tick box 20 of the Finishing your Tax Return section of the return page TR 6 (or equivalent in a return for an earlier year) where estimated figures have been used

If you make a mistake on your tax return, you’ve normally got 12 months from 31 January after the end of the tax year to correct or amend it. For example, if you send your 2013-14 online tax return by 31 January 2015, you have until 31 January 2016 to amendment it.

If you sent your tax return online by 31 January, it’s easy to amend it online too. You just need to log into your Self Assessment online account, go to the ‘at a glance’ page and choose the option to amend your tax return.

steve@bicknells.net

Simple Tax – a great way to file your return

https://stevejbicknell.files.wordpress.com/2014/08/laptop_ipad_simpletax_right1.png

I read about Simple Tax in an article in the Express

Backed by venture capital investors including EC1 Capital, Seedcamp and Charlotte Street Capital, SimpleTax was set up to help customers find ways to save money on their tax bills and file returns online with HMRC in minutes.

SimpleTax’s users have so far cut a total of £2.5 million from their tax bills

So I tried it out, it’s great and it’s free.

You will need your HMRC Online filing details if you want to file your return alternatively you can just print out the return.

For taxpayers who have very straightforward returns Simple Tax should make it quicker and easier to complete and file online.

As you prepare the return Simple Tax gives you tips on things you can claim and ways to save tax.

Take a look and see what you think https://www.gosimpletax.com/

For those with more complicated tax returns get advice from a CIMA Accountant.

steve@bicknells.net

How HMRC use IT systems to seek out tax evaders

HMRC Undeclared 8169099509_3860d7f26c

There is no doubting the resolve of HMRC to track down and prosecute tax evaders.

The Government has committed to spend £917m to tackle tax evasion and raise an additional £7bn each year by 2014/15.

HMRC are using 2,500 staff to tackle avoidance, evasion and fraud, there is also a website to help those who want to declare income https://www.gov.uk/sortmytax

In the search for tax evaders, HMRC have a £45m computer system called Connect which in 2011 delivered £1.4bn in tax revenue and the system is getting bigger and better all the time. According to Accounting Web:

It uses a mathematical technique to search previously unrelated information and detect otherwise invisible ‘relationship’ networks. Using Connect, HMRC sifts through information on property transactions at the Land Registry, company ownerships, loans, bank accounts, employment history, voting and local authority rates registers and compares with self-assessment records to spot taxpayers who might be under-declaring or not declaring income.

Last year Connect made links between tax records and third party data from hospitals, pharmaceutical companies, insurers and even gas SAFE registrations. DVLA records and the shipping and Civil Aviation Authority registers help identify owners of cars and planes who declare income that the computer suggests cannot support such purchases.

In addition HMRC have also identified 200 accountants, lawyers and professionals who advise on tax avoidance structures and its currently unclear how HMRC will be dealing with them and their clients.

It is important to remember that most people pay the correct tax, in fact HMRC calculate that 93% of tax due is paid correctly, its only a small minority who try to evade tax.

steve@bicknells.net

HMRC reveals ‘Top 10 oddest excuses’ for late tax returns

I found this on the Gov.uk website and thought is was well worth re-blogging

The following bizarre, exotic and flimsy excuses have all been used by tardy taxpayers:

  1. My pet goldfish died (self-employed builder)
  2. I had a run-in with a cow (Midlands farmer)
  3. After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman)
  4. My wife won’t give me my mail (self-employed trader)
  5. My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser)
  6. I’ve been far too busy touring the country with my one-man play (Coventry writer)
  7. My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
  8. I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man)
  9. Our business doesn’t really do anything (Kent financial services firm)
  10. I’ve been too busy submitting my clients’ tax returns (London accountant)

All of these people and businesses received a £100 penalty from HM Revenue and Customs (HMRC) for filing late. They appealed against the decision using these excuses, but were unsuccessful.

HMRC’s Director General of Personal Tax, Ruth Owen, said:

There will always be unforeseen events that mean a taxpayer could not file their tax return on time. However, your pet goldfish passing away isn’t one of them.

If you haven’t yet sent your 2012 to 2013 tax return to HMRC, you need to do it online and pay the tax you owe by the end of January. With all the help and advice available, there’s no excuse not to.

To send an online tax return, you must be registered for HMRC Online Services. This involves HMRC sending you an Activation Code in the post, so allow a few days for this to arrive. To register for HMRC Online Services go to the HMRC website and follow the on-screen instructions.

 

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