Abbey

Chartered Tax Advisers
Old Bishops' College
Churchgate
Cheshunt
Hertfordshire
EN8 9XP

T: 01992 642024

E: abbey@abbeyaccountants.com

Smiling businessmen and women

  TAX E-NEWS - June 2016


Welcome to the June monthly tax newsletter.  These newsletters are designed to keep you informed of the latest tax issues.

We hope you enjoy reading the newsletter;  remember, we are here to help you so please contact us if you need further information on any of the topics covered.

Peter McDaid CTA ATT TEP
Director

POSSIBLE NEW “LOOK THROUGH” ENTITY WILL CHANGE SMALL COMPANY TAXATION

The Chancellor announced in his Budget Speech that the Government is considering further major changes to small company taxation following a review by the Office of Tax Simplification (OTS).

As in many small companies the directors are also shareholders and the OTS believe that it would simplify matters if the shareholders of such companies were to be taxed on their share of profits made by the company in proportion to their shareholdings. In other words, the shareholders would be subject to income tax in a similar way to members of a partnership or LLP and there would be no corporation tax paid by the company. This would clearly level the playing field between limited companies and unincorporated businesses. This will inevitably result in a great deal more tax payable than under the current rules!

We will monitor further discussions on this possible future change and keep you updated.

CHANGES TO CONSTRUCTION INDUSTRY SCHEME (CIS) REPORTING

Following the abolition of monthly paper CIS returns from 6 April 2016 HMRC have indicated that some leniency will be allowed for late returns for the first three months of the new tax year. Contractors and other businesses required to operate CIS now have to submit their returns online.

It is proposed that from April 2017 contractors will also be required to verify subcontractors online.

Remember that it is not just mainstream contractors that are required to operate CIS. The system extends to property developers who pay plumbers, electricians, and others in the building trade. However, CIS does not apply to home owners and property investors who renovate a property prior to renting out to tenants.

THINKING OF BUILDING YOUR OWN HOUSE? YOU CAN RECLAIM THE VAT

You can apply to HMRC for a VAT refund on building materials and services if you are building a new home, or converting a property into a home. In order to qualify the home must be separate and self-contained, be for you or your family to live or holiday in, and not be for business purposes (although you can use one room as a work from home office). Builders working on new buildings should zero rate their work anyway and you won’t pay any VAT on their services.

Where there is an existing dwelling on the site you will normally need to demolish the existing building, however it will count as a new build where a single façade is retained if that is a condition of the planning consent. You may also claim a refund for builders’ work on a conversion of non-residential building into a home, or a residential building that hasn’t been lived in for at least 10 years.

When you make your claim you must supply a copy of the planning permission, a full set of building plans, the invoices - including tenders or estimations, if the invoice is not itemised, and proof the building work is finished.

Please contact us if you need advice or assistance on this or any other VAT matters.

SCOTTISH TAXES

In these newsletters we tend to focus on tax matters that apply generally throughout the UK. However, under powers devolved to the Scottish Government there is now a different system of tax for the transfer of property in Scotland instead of SDLT.


HMRC DISCLOSURE CAMPAIGNS

HMRC are allocating a great deal of resources and time in trying to identify non compliant taxpayers or non taxpayers. They obtain information from third parties, data mine the information that they do receive using powerful computers, search databases like the Land Registry, and use software to search the internet to determine inconsistencies involving taxpayers and their lifestyles. This is very much big brother in action.

To encourage tax payers to come clean on undeclared income/profits/gains HMRC from time to time set up specific targeted campaigns.

The current campaigns are:

Let Property Campaign  (for Landlords whohave failed to declare the rental income received to HMRC).
Second Income Campaign  (for taxpayers with undeclared part time or additional income from self-employment).
Credit Card Sales Campaign (for taxpayers who have undeclared income from credit card sales)
National Minimum Wage Campaign (for employers who have not paid their staff the required minimum wage)

Each campaign has a set procedure which the taxpayer must adhere to in format and timing and the advantage to the taxpayer is they can benefit from much reduced penalties compared to what would normally be charged.

The taxpayer must volunteer the information first and these campaigns cannot be used if HMRC commence a review of the issue arising.

Making a voluntary disclosure using one of thesecampaigns does mean that tax arrears can easily and quickly be brought up to date with minimum professional fees being incurred and avoiding the time, costs and stress of a full HMRC investigation.

We have extensive experience on these disclosure campaigns and please therefore do call us if you require further information in this connection.

FORMS P11D DUE BY 6 JULY

The deadline for filing the 2015/16 returns of benefits and expenses paid to employees is 6 July 2016. Note that there can be significant penalties for incorrect returns so they need to be completed with great care. Remember that reimbursed
expenses do not need to reported where there is a P11d dispensation from HMRC in place.

TAX DATES AND PAYMENTS


Date What's Due
19 June

PAYE & NIC deductions, and CIS return and tax, for month to 5/6/16 (due 22 June if you pay electronically)

1 July Corporation tax for year to 31/09/15
6 July Forms P11D and P11D(b) for 2015/2016 tax year, and where appropriate form P9D.
19 July PAYE & NIC deductions, and CIS return and tax for month to 05/07/2016 (due 22 July if you pay electronically); payment of Class 1A NICs for 2015/2016 (22nd July if you pay electronically).




If you have any questions about this newsletter please contact us, we will be happy to help.