Accountant Belfast | Accountants Northern Ireland

Paper VAT returns to disappear this spring

mcgrady — Thu, 09 Feb 2012 11:23:21 +0000

At present newly-registered businesses and those with turnovers exceeding £100,000 are required to submit their VAT returns online and pay electronically. All other VAT-registered businesses can submit a paper return and do not have to pay electronically.

This is to change in April when all VAT registered businesses in the UK regardless of turnover will have to submit their VAT returns online and pay for them electronically. This will apply to all returns with accounting periods beginning on or after 1st April 2012. This will mean paper returns will be a thing of the past for 1.9 million VAT-registered businesses in the UK. HMRC will be sending a letter to every VAT-registered business not already required to submit online, advising them of the change and detailing what steps need to be taken and they will no longer send out paper returns for those not currently registered to submit returns online.

It is therefore essential that all VAT registered businesses are registered to submit their VAT returns online. HMRC have highlighted the benefits of submitting your return online compared to posting paper returns.

Security – all transactions are 100 per cent secure as they are encrypted to the highest commercial standards.
Convenience – the online service is available day and night, whenever is best for you and you will receive email alerts when the next online return is due.
Accuracy – there are automatic checks to help reduce errors, meaning there’s less chance of having your return sent back to you to be corrected or for clarification.
Reliability – you don’t have to worry about your return being lost or delayed in the post as you’ll get an on-screen acknowledgement – including a unique submission receipt reference number – when you submit your return.

To submit VAT returns online, the taxpayer needs to be registered and enrolled for HMRC’s VAT Online Service. To find out more about VAT registration and submitting your VAT returns online please contact us here at M. B. McGrady & Co.

If you would like to discuss this please contact us on 028 44 616321 or e-mail us at info@mbmcgrady.co.uk .

Nex Tax Coding – The Da Vinci Code

mcgrady — Thu, 09 Feb 2012 09:42:55 +0000

Between January and March 2012 HM Revenue and Customs are sending out revised tax codes for the tax year which begins on 6th April 2012. Not everyone will receive a notice of coding but, where a tax code is sent out, it is advisable to check it in advance and to raise any problems with HMRC in a timely manner so that a correct tax code can be issued before the start of the new tax year 2012-2013.

The Pay As You Earn (PAYE) system aims to collect the correct amount of tax during the year. The tax code is the mechanism for ensuring that the available allowances are taken into account when working out taxable pay. If you have only one employment and not other sources of income then it is a straightforward matter of setting your personal allowances against your pay and taxing the rest. However, if you have multiple employments (or pensions) and perhaps other sources of income like rental or untaxed interest, then the situation becomes rather more complicated. HMRC may try to collect tax due on those other sources via a restriction in your tax code. They must also collect underpayments that have arisen in previous years by this method.

HMRC do not always get it right. Furthermore, their coding calculation is necessarily based on information from the previous tax year and so may be incorrect for that reason. The wrong tax code can lead to too much tax being deducted over the year or, on the other hand, to too little, giving rise to a large tax bill the following January.

In the past, HMRC used to routinely send copies of coding notices to tax agents but, unfortunately, this is no longer the case.
If you would like us to check your notice of coding for 2012-2013 please send it to us or if you would like any further information please call us on 028 4461 6321 or send us an e-mail.

Deadlines for paying your tax

mcgrady — Mon, 16 Jan 2012 15:23:38 +0000

31 January 2012

Many individuals don’t have the cash to pay their tax by the 31 January so HMRC charge interest and penalties on any outstanding liabilities.

You must pay any tax you owe by 31 January following the end of the tax year. For example, for the tax year 2010/11 (ending on 5 April 2011) you must pay any tax you owe by 31 January 2012. This will be:

any tax you still owe for the 2010/11 tax year
the first of two ‘payments on account’ for 2011/12 tax year

If you do not have the money to pay your tax liability you should ring HMRC on 0845 366 1204 (have your tax reference available) and try and agree a timescale to pay your tax. You will receive threatening letters and phone calls from HMRC collection officers but try and arrange and meet a regular payment plan to clear your liability.

Penalties for paying late
Length of delay	Penalty you will have to pay
30 days late	5% of the tax you owe at that date
6 months late	5% of the tax you owe at that date as well as the 5% above.
12 months late	5% of the tax unpaid at that date as well as both the 5% penalties above

The penalties above do not apply to any payments on account that you pay late.

Interest charges if you pay late

You will also have to pay interest (currently 3%) on anything you owe and haven’t paid, including any unpaid penalties, until HMRC receives your payment.

Example

Mr Short’s tax for the 2010-11 tax year is £1,000 due on 31 January 2012. HMRC don’t receive it until 5 Aug 2012 so he will have to pay £1115 in total.It is over six months late so he will have to pay all of the following:

5 per cent of the tax unpaid at 1 March (30 days after the date the tax was due)
5 per cent of the tax unpaid at 1 August (five months after the first penalty)
Interest on all outstanding amounts, including any unpaid penalties which is currently 3%

Self Assessment 2012

mcgrady — Fri, 13 Jan 2012 16:09:53 +0000

Deadlines for sending in your tax return

The deadline for paper returns is long passed and therefore you must send an online tax return to reach HMRC by midnight on 31 January 2012.The deadline has also passed (31 December) if you wanted HMRC to collect any tax you owe through your tax code.

There is a subtle change in the penalty regime this tax year as you must pay a penalty for late filing even if you have no tax to pay. If you miss the 31 January deadline, the longer you delay, the more you’ll have to pay.

Example

Mrs Sloe’s tax return is due on 31 January 2012 but HMRC don’t receive it until 5 August 2012. It is over six months late so she will have to pay all of the following even if she has no tax liability:

£100 fixed penalty
£900 penalty – this is £10 each day from 1 May to 29 July, when the maximum 90 day penalty is reached.
£300 or 5 per cent of the tax due – whichever is the higher

Penalties for missing the tax return deadline
Length of delay	Penalty you will have to pay
1 day late	A fixed penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.
3 months late	£10 for each following day – up to a 90 day maximum of £900. This is as well as the fixed penalty above.
6 months late	£300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.
12 months late	£300 or 5% of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100% of the tax due instead. These are as well as the penalties above.

Is there any reason HMRC will accept for filing a late return?

Sometimes life throws up some major problems and while there are no hard and fast rules some examples of what HMRC may consider a reasonable excuse are:

documents lost through theft, fire or flood that you can’t replace in time
life-threatening illness, e.g. heart attack
death of a partner shortly before the filing deadline
postal strike or HMRC online service disruption

The Bribery Act 2010

orla — Wed, 27 Jul 2011 08:32:02 +0000

After some considerable delay, the Bribery Act 2010 came into force on 1st July 2011 and applies throughout the UK i.e. including Northern Ireland. The question for many businesses, particularly those dealing with other businesses or with government officials will be: what do I need to do?

There are three offences under the Bribery Act:

1. Offering or receiving a bribe

2. Bribing a foreign public official

3. Failing to prevent a bribe being paid on an organisation’s behalf.

If you have a small business that operates only within the UK, it is quite possible that the Bribery Act will have no impact upon you at all. As your business increases in size and deals with more third parties, such as contractors, agents and partners, that situation may well change, especially if you are seeking to win contracts abroad.

Despite concern amongst the business community that the Act would put an end to corporate hospitality and business entertainment, the Ministry of Justice guidance makes it clear that reasonable and proportionate business expenditure is acceptable. Bona fide entertainment is a legitimate and normal business practice and its importance is acknowledged in the guidance. Tickets to Wimbledon, trips to shows or dinner in a restaurant are still considered acceptable; however a common sense approach should prevail. The higher the cost and the more frequent and lavish the hospitality the more suspect it becomes and the greater the risk that it could be construed as a bribe. The best safety net for any business is to have a clearly defined policy which sets out what is responsible and proportionate within the context of their unique operations and has been communicated from top to bottom and throughout partners and agents. Once the policy has been established and communicated, it’s vital to have adequate controls in place as well as total transparency through a clear system of records to ensure it is being adhered to.

If you have any concerns about the impact of this legislation on your business, we shall be happy to advise on appropriate polices and procedures.

For more information on the Bribery Act please contact us here at M.B. McGrady & Co.

Tax credits renewal deadline: 31 July 2011

orla — Wed, 27 Jul 2011 08:30:13 +0000

The deadline for renewal is 31 July 2011. If you don’t renew your payment will stop and you may be asked to repay any overpayment.

You need to renew if you have been sent an Annual Declaration form with an Annual Review notice. You do not need to renew if you have only been sent an Annual Review notice as your claim will be automatically renewed.

You must also inform HMRC promptly of changes to your circumstances which affect the amount of tax credit claimed e.g. marriage, reduced hours of work etc.

If you need to renew but have not done so, please contact us for advice.

Shopping around for annuities

orla — Wed, 29 Jun 2011 12:56:38 +0000

An Annuity is the lifetime income you purchase from your Pension Plan.

Annuity rates vary from one lifecompany to another, so you should always make sure you shop around to get the best deal available for you. This can be done by speaking to an Independent Financial Adviser (IFA).

When are you able to shop around?

Your pension provider should send you information between four to six months before you are due to retire, setting out what they will offer you based on the value of your fund and your age. They will also tell you that it is possible to shop around for a potentially higher annuity. About six weeks before you retire your pension provider should give you an estimate of the value of your fund. You can use this to compare products from other providers. This is known as your open market option.

You should never assume the same company with which you built up your fund will automatically offer you the best rate. You may do better to shop around and check whether another company could offer you more. The annuity rate you get can affect your income by hundreds of pounds a year for the rest of your life.
It may be impossible to change your lifetime annuity provider after you’ve bought your annuity, so take some time to choose the one that’s right for you
Check what your existing provider offers
Before shopping around, make sure you understand what your existing provider is offering you.
Check whether your provider offers a guaranteed annuity rate. This is not the same as a guarantee period. A guaranteed annuity rate means that the provider has to offer a minimum annuity rate for your pension fund. Now that annuity rates are a lot lower than in the past, a guaranteed annuity rate can be very valuable and could give a higher retirement income than can currently be bought on the open market;
Check whether your provider will charge you by way of penalties if you buy your annuity from another company
Your existing provider will usually give you a quote for a specific type of annuity. Make sure you get a quote for the type of annuity you want, not just the one the provider offers you
You can receive annuity in many different ways such as single or joint life, level or escalating, different guarantee payment periods.

Shopping around for your annuity

1. Get an estimate of the value of your pension fund, taking account of any charges, from your provider.

2. Decide whether you want to take a tax-free lump sum, and if so, how much (usually up to a 25% of your fund). If you decide to take a tax-free lump sum, deduct it from the pension fund value your pension provider gives you.

3. Decide whether you want a single or joint-life annuity. If joint life, whether the pension paid to your partner is paid in full or reduced level or escalating annuity

4. Think about whether you want your annuity to continue to be paid for a specific number of years (5 or 10), should you die shortly after you buy it.

5. Does your fund need to be a certain size to qualify for the better rates offered by another company? Some firms may not be interested in providing an annuity for small sums.

Annuity rates are based on 3 main factors. Your age, the size of your pension fund, and your life expectancy. It is very important to consider your lifestyle and health when considering your retirement income. This can have a major impact on your annuity income. You could receive a much greater income simply by completing a health questionnaire. This will then allow the annuity provider to calculate what they consider your own individual life expectancy to be. They can therefore offer you a better rate based on this if they feel this may be shorter than the average similar aged individual with a different lifestyle to you

The health questionnaire will cover such things as:

• Are you a smoker? If you are, you may get a better rate from some annuity providers.

• Do you have a medical condition that could reduce your life expectancy? If you do, you may get a better rate from some annuity providers.

All this can be quite complicated so you should seek professional advice from a Independent Financial Adviser before making any decisions on drawing an income from your Pensions Plans. It should also be pointed out that buying an annuity is only one option you may want to consider.

Below is an example of the difference you can receive by using the open market option when drawing the benefits from your Pension plan.

This example is based on Mr Jones, a male aged 65.

The basis of the annuity is a single life annuity, paid monthly.

The fund size is £200,000 and he wishes to take the maximum tax free cash available:

£200,000 less 25% tax free cash = £150,000 which is used to purchase his annuity.

The best annuity available at this time for Mr Jones is £9926 gross per year.

However during the meeting, with his Independent Financial Adviser. Mr Jones completed a health questionnaire, which established that he is a smoker and suffers from high blood pressure.

The Adviser was then able to use this information to increase Mr Jones annuity by 15% up to £11,647 gross per year.

This is an example of the type of increase that can be achieved by always making sure you shop around when considering taking the benefits from your Pension. They are not maximum or minimum amounts and the rate you will receive is dependent on a lot of factors combined so speak to a Independent Financial Adviser before making any decisions.

Protection for self assessment

orla — Wed, 29 Jun 2011 12:56:11 +0000

The existence of an insurance scheme has attracted considerable interest amongst those required to make a tax return to HM Revenue & Customs. Bearing in mind the fact that full tax reviews can last for a period of twelve months, or in some cases even longer, it is essential that fee protection through yearly insurance cover should be put in place. Whilst some may question the necessity of incurring additional insurance premiums it is worthwhile noting that the average professional fees for an in-depth tax enquiry are probably in the region of £3,500 to £5,000.

To underestimate the value of fee protection is something that an individual does at their peril. Those wishing to avail of this insurance scheme should of course consult their tax adviser in order to obtain full details, and satisfy themselves that they are fully aware of the terms and conditions of the policy.

For more information or to speak to one of out tax advisors please contact any of our offices.

P11D Deadline reminder for employers

orla — Wed, 29 Jun 2011 12:55:54 +0000

The deadline for P11D, P11D(b) and P9D is 6 July 2011 and if you miss the deadline you may receive a penalty. You also need to ensure payment of the Class 1A NICs declared on form P11d(b) is received by HMRC by 22 July, or by 19 July if you pay by cheque.

P11D is a statutory form required by HMRC from employers detailing the cash equivalents of benefits and expenses that they have provided during the tax year to their directors, and employees earning at the rate of more than £8,500 per year. Form P9D is for employees earning less than the £8,500 rate.

Class 1A National Insurance is due on the value of all these benefits at a rate of 12.8%

Some examples of benefits you may provide are as follows:

• Company car

• Fuel provided by company

• Private use of company credit card

• Mileage allowance paid (if no dispensation is in place)

• Company vans

• Interest free/low interest loans greater than £5,000

• Private medical/insurance payments

• Services supplied to the employee

• Subscriptions/professional fees paid

As an employer you are responsible for preparing and submitting the P11D. You must make sure that you give your employees a copy of their P11D or P9D form.

If you have already advised HM Revenue and Customs that you don’t need to complete a P11D, P11D(b) or P{9D, then you don’t need to take an further action.

For more information on completing P11D, P11D(b) and P9D forms please contact us here at M.B. McGrady & Co.

Pressure increases for a reduction in NI Corporation Tax

orla — Fri, 17 Jun 2011 10:27:03 +0000

Northern Ireland businesses are currently being taxed 26% compared to 12.5% in the Republic. However this could soon change after a report from the Northern Ireland Affairs Committee.

“On balance, we believe there is a convincing case for reducing the corporation tax rate in Northern Ireland, not least so it can better compete with the Republic of Ireland,” said the Northern Ireland Affairs Committee, chaired by Conservative MP Laurence Robertson.

The block grant from the treasury, which funds the North’s public services, would have to be cut by the amount lost in corporation taxes.

The change could cause administrative issues for the treasury, revenue and customs, as it would require them to put in place a new system to isolate the amount of corporation tax paid by Northern Ireland businesses, and that paid by those based elsewhere with Northern Irish divisions.

The Treasury would have to identify ways to isolate Northern corporation tax receipts, said the report. If Stormont decided to cut corporation tax, the block grant would then be reduced by that sum.

Mr Robertson said: “I think the gamble is to do nothing. We are not just talking about competing with the Republic. We are talking about bringing in investment from around the world. We have economies growing all over the world. The risk is to do nothing.”