The Shrewsbury Accountants Blog – Taxassist Accountants in Sundorne

December 19, 2011

Nigel from TaxAssist Accountants in Shrewsbury warns about the tax return late filing penalties and how they will soon start becoming payable

Filed under: owner-managed businesses — Tags: , , , , — taxassistshrewsbury @ 4:37 pm

 

As most of you know, 31st January, 2012 is the 2010/11 online deadline for filing individuals’ and partnerships’ tax returns.

The deadline for filing in paper form was 31 October 2011.

The difference in filing deadlines for paper and on-line submissions needs to be considered. As the examples below will show, if you are not one of our clients,  it may be better to instruct us to file on-line for you and pay our fees out of the penalty you have saved.

Under the new penalty regime that applies for the first time this year, if a return is filed late the following penalties will be charged:

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.

Penalties may also be incurred for paying tax late.

Let me give you a few examples of the penalties payable. I am assuming that the taxpayer has no tax to pay:

2010/11 tax return filed on 1st March, 2012 –

£100 penalty if filed online; £390 penalty if filed by paper.

 

2010/11 tax return filed on 1st May, 2012 –

£110 penalty if filed online; £1,300 penalty if filed by paper.

 

2010/11 tax return filed on 1st August, 2012 –

£1,300 penalty if filed online; £1,300 penalty if filed by paper.

 

2010/11 tax return filed on 1st November, 2012 –

£1,300 penalty if filed online; £1,600 penalty if filed by paper.

 

These examples show that, as a result of the £10 per day penalties, on-line filing penalties start to increase after 1st May, 2012. Anyone filing a paper return after 1st February will incur high late filing penalties.

December 12, 2011

Nigel Lomax from TaxAssist Accountants in Shrewsbury advises owner-directors of tax-efficient wages and dividends for 2012/13 tax year

Filed under: owner-managed businesses — Tags: , , , , — taxassistshrewsbury @ 1:35 pm

Following the recent announcements from HM Revenue and Customs, I am pleased to put forward our recommendations for tax-efficient wages and dividends for the year beginning 5th April, 2012

If you are the owner of a limited company, the most tax-efficient remuneration package is an annual salary of £7,600 and dividends of £30,933 (profits allowing). This assumes you have no other income. At this level, you will have no income tax to pay. The limited company will have been taxed on the dividend income.

There are some formalities about dividend vouchers and board minutes which we would be happy to advise on.

December 8, 2011

Nigel from TaxAssist Accountants in Shrewsbury points out some issues with PAYE coding notices for Directors and warns about over-paying tax on dividends

Filed under: owner-managed businesses, shropshire — Tags: , , , , — taxassistshrewsbury @ 1:02 pm

We have had a few questions lately from clients who have received coding notices for 2011/12 tax year saying that they are liable to pay higher rate income tax on their dividends. This follows the filing of their 2010/11 tax return.

Have HMRC got this right, they ask.

The answer is yes and no.

In 2010/11, an owner/director of a profitable limited company would have been advised to take a salary of £5,760 to “stamp” his NI contribution whilst avoiding class 1 NI and take £34,304 as dividends. Assuming no other income, there would be no income tax to pay.

But there were major changes in 2011/12 income tax rates, allowances and NI thresholds.  The NI threshold went up dramatically but was offset by a reduction in the tax-paid “dividend allowance”. We have advised owner directors  to take a salary of £7,200 p.a. but  reduce net dividends to £31,725.

So the answer is yes because HMRC assume that 2011/12 dividends will be the same as 2010/11 dividends and so higher rate income tax of £645 will be due. They then seek to collect this tax before 5th April, 2012 through the PAYE code. That’s a bit naughty.

We believe HMRC are wrong because owner directors will manage their tax affairs to avoid the higher rate tax and adjust their dividends.

It all re-inforces the need to carry out some tax planning with  your accountant before 5th April to avoid this additional tax.You could also ask HMRC to adjust your PAYE code or wait until it comes out in the wash in your 2011/12 tax return.

Please see our previous blog articles on dividends by typing dividends in the search box in the right hand column.

 

December 5, 2011

Nigel from TaxAssist Accountants in Shrewsbury passes on HMRC’s plans for on-line VAT filing

Filed under: accounting, owner-managed businesses, shropshire, small business, tax, VAT — Tags: , , , , , , , — taxassistshrewsbury @ 11:00 am

The latest VAT notes confirm that HMRC intend to seek approval for compelling virtually all VAT-registered traders to file online and pay electronically from April, 2012. The notes also say that HMRC are “working towards being able to receive faster payments from January 2012″. That is good news and removes a common source of irritation.

The text of the note is shown below:

During December 2011, HMRC intends to lay before Parliament regulations which, when passed, will require virtually all remaining VAT businesses to file their VAT returns online, and pay any VAT due electronically from April 2012.

HMRC will send letters during February 2012 to all the affected businesses – some of you may have already received yours. The letter lets you know that you will be affected by the change to online filing, and sets out what action you need to take.

Included with the letter is a handy step-by-step guide explaining how to sign up and file your VAT Return online. If you think you will need help converting to online filing, please don’t delay – get in touch with us immediately.

Sign up to VAT Online as soon as you’ve received the letter from HMRC. It’s easy to get started and there’s lots of helpful information on the HMRC website. Or if you can’t find what you need there, you can phone the VAT Online Helpdesk.

Please note that HMRC is planning to upgrade their IT services in April 2012. This means that, for a few days in early April, the VAT Online service may not be available (so you may not be able to sign up for VAT Online services or file a return during this period). To find out, nearer the time, exactly when the service will or will not be available, go to News and updates on our HMRC homepage and click on the Service Availability link and select VAT Online.

Other things you need to know
  • •HMRC strongly recommends that you set up an email address so that they can remind you when your VAT Returns are due (you won’t receive a prompt from HMRC otherwise). If you do this, HMRC will send you an email reminder about six weeks before the due date. You can set up the email reminder service once you’ve signed up to VAT Online on the At a Glance page. Click on the Add email address link within the Maintain email address section and follow the on screen prompts.
  • •If you don’t do this, you’ll need to put in place your own reminder system to make sure that you file each VAT Return and pay what you owe by the due date.
  • •HMRC are working towards being able to receive faster payments from January 2012 and you can find more information on the website at www.hmrc.gov.uk/payingvat. Please note the limit on how much money can be transferred varies between banks.

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