Tuesday 26 January 2016

Share dealing losses, National living wage, VAT on telecoms services

Last week we examined a case concerning share dealing losses which provides hope to all day traders. You need to warn your clients about the NMW rate rise on 1 April 2016 and about a change in VAT treatment on wholesale telecoms services which applies from 1 February 2016.

This is an extract from our topical tax tips newsletter dated 21 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

National living wage 
The national minimum wage (NMW) rate normally increases with effect from 1 October. Many employers will be geared up to include such changes in their annual pay reviews. However, the next rate change applies from 1 April 2016. 
  
In his Summer Budget on 8 July 2015 George Osborne stole the opposition's clothes by announcing a “National Living Wage” of £7.20 per hour, to be gradually increased to £9 per hour by 2020. In fact the living wage is just another NMW rate, with all the same legal requirements. It must be paid to workers aged 25 and older for pay periods that fall on and after 1 April 2016. 
  
The NMW for those workers is currently £6.70 per hour, so a 50p per hour increase is significant. It will push the weekly wage for a worker on 35 hours up from £234.50 to £252, and cost the employer an extra £19.91 per week including employer's NI. Where the worker is enrolled in a company pension under auto-enrolment the total cost to the employer will be higher. 
  
You can help your clients identify which employees should receive a pay rise from 1 April, and budget for this extra cost. Remember company owner/directors don't have to pay themselves the NMW or living wage as long as they don't have a contract of employment with their company. Family members living in the employer's home also are not entitled to the NMW. 
  
The employment allowance is increasing from 6 April 2016 from £2,000 to £3,000 for most employers. One-man companies won't qualify for the employment allowance in 2016/17. 
  
The extra £1,000 of allowance will be available to off-set the additional employers' NIC payable on the compulsory wage increases for workers entitled to the living wage. However, the employment allowance can't be used to off-set the cost of pension contributions, or the actual wage increase itself.  


This is an extract from our topical tax tips newsletter dated 21 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>

Tuesday 19 January 2016

VAT MOSS, VAT flat rate scheme, Trust tax returns

This issue highlighted two VAT issues which affect small businesses; the ridiculous VAT MOSS rules, and the VAT flat rate scheme which should make life easier for small businesses but can trip them up. We also have news about incorrect penalties issued in respect of trust and estate tax returns.

This is an extract from our topical tax tips newsletter dated 14 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

VAT MOSS 
All VAT MOSS returns must be submitted for calendar quarters, irrespective of the period for which the trader submits his domestic VAT returns. Thus the next VAT MOSS return must be submitted by 20 January 2015, for the quarter to 31 December 2015. 
  
This is just another example of how the VAT MOSS rules are a bad-fit for micro-traders. HMRC are starting to realise this, as they have issued new guidance on VAT MOSS for small traders. These are businesses with annual turnover below the UK VAT registration threshold, so they aren't required to be registered for VAT in the UK. However, they must operate VAT MOSS. In theory just one international sale of an electronic service to a non-business consumer in another EU country brings the business within the VAT MOSS reporting regime. 
  
HMRC say they have analysed the VAT MOSS returns submitted so far. From this incomplete data HMRC have concluded that some people registered for VAT MOSS may not be in business. A person who is not “in business” doesn't have to register for VAT MOSS as the supplies are not made in the course of a business. Problem solved!    
  
No, the problem is not solved. HMRC can't accurately determine whether a trader is “in business” from three VAT MOSS returns, but they are writing to those people they believe aren't “in business” suggesting the trader should deregister from VAT MOSS. If your client receives such a letter he will be confused, as HMRC is constantly telling people to declare all of their income for tax purposes. 
  
If you have advised your client to register for VAT MOSS, you will have already reviewed whether he is in business or not, and concluded that he is. If the international sales are merely part of a “hobby” and not part of a business, then you wouldn't have advised the individual to register for VAT MOSS. 
  
For those small traders who decide to stay registered with VAT MOSS, a further concession is offered: they only have to retain one piece of evidence of where their customer is located. However, the trade needs to abide by the VAT laws of the country he is selling into. A concession applied by HMRC won't necessarily be recognised by another EU tax authority.


This is an extract from our topical tax tips newsletter dated 14 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>> 

The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>

Tuesday 12 January 2016

Farmers and losses, SDLT supplement, HMRC communications

Business life doesn't stop in January so everyone can concentrate on completing their tax returns - although you may like it to. Clients are busy trying to make a profit, or at least striving to avoid a farming loss for the sixth year running. We explain why this is so important in this week's newsletter. Property owners need to act quickly to complete deals before the new SDLT supplement kicks in. We also have a timely warning about communications from HMRC.

This is an extract from the first of our topical tax tips newsletters for 2016. It went out on 7 January (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>


HMRC communications 
Where a taxpayer has appointed a tax agent HMRC is supposed to write to that agent, or at least copy-in the agent on any correspondence with the taxpayer. That rule is being broken again with “educational” letters being sent out by HMRC. 
  
The letter we have seen is addressed to farmers, reminding them that subsidies paid by the EU are taxable income and should be included on their SA tax return. It goes on to say the farmer should check their tax returns to see if the right amount of income has been declared. This will alarm some clients, and no-doubt prompt phone calls to you. 
  
Other communications, such as emails and texts supposedly from HMRC are obvious fakes. We know that HMRC doesn't offer taxpayers refunds by email but it does send reminders to complete tax and VAT returns. It's easy to be duped by the fraudsters. 
  
Finally, where you or clients have been affected by the floods, and as a result need more time to complete tax returns or make tax payments, there is help available. Access that help by calling the HMRC flood helpline: 0800 904 7900. To arrange time to pay a tax debt call before the debt becomes due.

This is an extract from our topical tax tips newsletter dated 7 January 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>