Doug Blake FCA has been a practicing accountant for many years and is a fellow of ICAEW (Institute of Chartered Accountants in England & Wales).

Doug is part of the team of experts that supports 185 TaxAssist Accountants offices across the UK. TaxAssist Accountants was set up 12 years ago to help small business owners and self employed individuals with their accounts and tax returns. We currently service over 30,000 small businesses and are the largest network of accountants in the UK.

Send us your question: If you would like to have a tax question answered here, please send your question to taxquestions@taxassist.co.uk. We can't guarantee to respond to every question individually, but we will publish as many answers as we can here on the blog.

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Disclaimer

Advice shared in this blog is intended to inform rather than advise. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Tuesday
09Mar2010

Barclays announces additional investment in small businesses

A recent announcement by Barclays may improve the potential for small businesses to compete in the post-recession climate.

The bank has made an additional £88m available to smaller companies through the government’s Enterprise Finance Guarantee scheme (EFG). Under the terms of the EFG, the government guarantees a portion of the loan if the debtor is unable to repay in full.

The new loans will be available to UK-based small businesses with a turnover of less than £25m.

The announcement will be welcome news for smaller companies, many of whom have struggled to acquire financing since the economic downturn hit. In recent months, banks have been seen as less willing to lend to SMEs, who have struggled to cope with the effects of recession.

Now that the economic climate is improving, small businesses will need finance more than ever as they face tough competition for market share as consumers gain more confidence.  Adequate cash flow will be essential to ensure stock levels can be controlled and growth strategies pursued.

Small businesses account for more than 40% of the country’s GDP and generate over £1tn a year in turnover.

Monday
08Mar2010

HMRC reports record number of online tax returns

A record number of tax returns were filed using HM Revenue & Customs’ (HMRC) online facility, according to figures published on February 1st. A total of 6,429,899 returns were submitted, an increase of 12% on last year’s total. Online returns also counted for 75% of all submissions.

As in previous years, many submissions were made in the week leading up to the deadline of January 31st. HMRC had issued repeated warnings that all submissions made after the deadline would be subject to a £100 penalty fee. A total of 384,638 returns were sent on January 29th, with 40,000 submissions made in the busy 16:00 to 17:00 window.

In recent years HMRC has been keen to increase uptake of its online facility, arguing it is easier and faster for taxpayers to receive money owed, in addition to keeping its own administrative costs down. The later deadline of January 31st also appeals to many taxpayers who would otherwise have to submit their paper returns much earlier, on October 31st.

The online facility was severely affected by computer issues in 2008, resulting in a day’s extension to the deadline after thousands of taxpayers were unable to file their return in time.

HMRC’s computer systems appeared more robust this year, with fewer problems reported and no extension to the deadline made. HMRC were reported to have worked closely with their IT supplier throughout January to ensure issues were corrected promptly.

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Tax Returns Help from TaxAssist Accountants

Friday
05Mar2010

Setting Trading Losses Against Capital Gains

Q: I made a loss in my soletrader business this year, and sold a number of shares I own to supplement my living expenses. I estimate that selling these shares will realise a capital gain after relief’s of £30,000. Can I claim relief for any of my trading loss against the gains I have made?

Judy, Bournemouth

A: Yes, a loss relief is available that allows individuals to offset self-employed losses against any capital gains you have made in the same tax year.  

You must first offset the trading losses against your total other income for the tax year, even if this means losing the benefit of your tax free personal allowance. Any excess can then be extended under section 71 of Income Taxes Act 2007 (ITA 2007) and set against your chargeable capital gains (after capital gain losses have been accounted for) for the tax year.

Alternatively, you can choose to carry the loss back to the previous year, first against other income (s64 ITA2007), and then against capital gains (s72 ITA2007).

If you do not have any other income in the tax year, tax relief on your trading loss is claimed against your capital gains of £30,000. This will result in a significant fall in your capital gains tax liability.

However, be aware that the capital gains tax rates are currently only applied at 18% of any gain, and it may therefore be beneficial for you to consider carrying the losses forward to obtain income tax relief in a later year at a higher rate.

Your local TaxAssist Accountant can advise on the most tax efficient option available to you with a quick calculation.

Thursday
04Mar2010

Filing VAT Returns Online

Q: I recently received a letter from HM Revenue & Customs informing me that I am now required to submit my VAT returns online. Can you explain further?

A: From the 1st April 2010 all business with an annual turnover of £100,000 (excluding VAT) and any newly VAT registered business will be required to submit their VAT returns online, and pay any VAT electronically.

The online VAT Return is very similar to the paper version and there has been no change to the rules on how you complete your return or how you calculate VAT. Also, you won't have to change your existing record keeping system - you can still keep your records on paper if you prefer.

Any business which is required to file online must sign up to the VAT online service through the HMRC website. Signing up to do your VAT online is straightforward and you don't have to be a computer expert. The service is designed to make the process easier, more secure and more efficient for small businesses.

Further advantages of using the VAT online service system include setting up an email reminder service to advise when your next online VAT Return is due. Another benefit as you are required to make payments electronically either through Direct Debit, internet banking, telephone banking, is that you receive a further seven extra calendar (in addition to the usual one month deadline) to file your return and for the payment to reach the HMRC bank account.

If you are concerned about any aspect of this new requirement, please contact your local TaxAssist Accountant, who can assist with submission of your VAT returns online.

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Vat Returns Help from TaxAssist Accountants

Wednesday
03Mar2010

HMRC issues 'urgent' PAYE alert

HM Revenue & Customs seems determined to give businesses a fair chance to get their affairs in order ahead of compulsory online PAYE filing.

HM Revenue and Customs (HMRC) seems determined to give businesses ample time to get their affairs in order ahead of the implementation of compulsory online PAYE returns.

Earlier this month, the department issued an "urgent alert" to businesses via the government's News Distribution Service warning firms about the forthcoming "important changes".

HMRC is also writing to all UK employers to remind them paper filing is "no longer an option" for Employer Annual Returns.

Instead, businesses have been informed that they must complete an online return by May 19th or face paying a penalty.

The announcement also contained information that, from May this year, a new range of penalties are to be introduced for late filing of PAYE returns, including National Insurance contributions, student loan deductions, Construction Industry Scheme deductions and income tax.

HMRC urged businesses that may have difficulty meeting the payments to call its Business Payment Support Service, before the payment is due, on 0845 302 1435.

Businesses that have concerns about the new system could also benefit from contacting an accountancy firm for guidance.

Stephen Banyard, from HMRC, said: "Major changes to PAYE filing and payment are only a matter of weeks away, so employers need to make sure they're well prepared for them. We will be writing to affected employers over the coming weeks, so please look out for this information and take the time to read it.

"One key thing to flag up at this stage is that employers do not need to keep a hard copy of their Employer Annual Return if they file it online themselves. As a consequence, HMRC will be reducing its stocks of hard-copy PAYE forms – P35s and P14s. So please carefully consider your PAYE stationery requirements before ordering paper forms from HMRC."

Following the announcement, the Low Income Tax Reform Group (LITRG) expressed concerns that a number of the UK's smaller businesses may be unprepared for the changes.

For instance, the organisation urged business owners to ensure they had the necessary software in order for them to complete their online transactions.

The group highlighted the fact that there are several different software platforms catering for enterprises of various sizes.

LITRG explained that businesses with less than 50 employees would be able to complete the forms using the software on the HMRC website, while those with less than ten members of staff would be required to use the free Employer CD-ROM, which contains a P11 calculator and will provide businesses with the tools necessary to directly submit the return once the calculations have been made.

However, neither of these two models can be used by businesses with a workforce more than 50-people.

These businesses will need to purchase commercial software programmes in order to complete their returns.

"Many providers sell PAYE products and those which have been accredited are listed on HMRC's website," said the LITRG.

The group issued the software advice as part of a list of tips amid concerns that a number of firms would be unprepared for the changes and could end up with penalty fines of up to £3,000.

"For the first time, employers with 50 or fewer employees will no longer automatically receive a paper P35 end of year return from HMRC and … must now file these forms online together with accompanying P14s for all employees by May 19th," a statement from the LITRG said.

The statement also carried a warning for businesses to ensure they are registered for the online service in time for the deadline.

"You will need to have to hand your employer PAYE reference number and your Accounts Office reference number to do so. It can take up to a week for the activation code to come through so this needs to be done soon," the group explained.