tax blog

David Barry on 020 8252 7018/07877671423
www.davidbarryaccountants.co.uk
21/04/2010
I have today received Corporation Tax Agent copy of acknowledgement of a company tax return for the periods 06/11/2007-05/112008 & 06/11/2008-30/11/2008 which are wrong (did you receive these as well, please let me know?)
I have today telephoned HM Revenue and Customs and these are to be deleted once the replacement accounts for the period 06/11/2007-31/10/2008 are received. As I wrote to you on 19 April 2010 I posted these recorded delivery first class on Monday, 19 April 2010 and should be entered onto the system quite soon.
Corrected . I enclose the CT600 sent to HM Revenue and Customs.
I have also telephoned HM Revenue and Customs and told them that accounts are on the way.
I have posted said documents first class recorded delivery together with accounts and new form signed 64-8.
I now wait for the accounts to 31 October 2009 (you have until 31 October 2010 to forward these to Revenue and Customs but I would not (if I was you) wait until the deadline is reached.))
Please note that you should by now have received penalty notices for £200 x 2 but these are to be reduced to zero.
Paye 2010-2011
To remind you I have made an application on your behalf and have applied for a paye pack to be forwarded to you.
I enclose for your attention your first payslip for April 2010 and is what you should draw as salary. Any further drawings can only be made as dividends only.
You will notice that I have written benefits in kind as zero. What this means is please do not use your limited company bank account as a cash cow but instead if you need any private expenditure then simply draw from your personal account cash balance each month: otherwise the withdrawals are treated as directors loan account only with tax ramifications for you.
(I enclose my latest spreadsheet of trading/non trading companies. Do you agree?)
I have today telephoned HM Revenue and Customs at Euston Towers and report as follows:
Forms CT41G are only to be forwarded to them for trading companies only.
Trailing through your emails I have constructed a spreadsheet of these trading companies and do you agree with me that these trading companies are:
Different (non trading forms) must be completed for each of these:
COMPANY LIMITED
I have now applied for a PAYE reference pack for the limited company which enables you to withdraw funds as salary.
Please note that you must not withdraw more than £110 per week/ £477 per month as salary with nil benefits should you not wish to incur personal tax benefits.
If you are to withdraw more than this amount from the company please withdraw once as salary and the second as dividend.
Example 1:
You want to withdraw £1,000 at the end of the month. Write two payments: ie one for £477 (being salary) and the second for £523 (being dividend: please note that there must be funds in the limited company bank account as dividends are distribution of funds only.)
Example 2:
You wish to withdraw £500 at the end of week 1. Write two payments: ie one for £110 (being salary) and the second for £390 (being dividend.)
Writing cheques is self explanatory:1 (if salary only) and 2 (if salary/dividend.) However if you transfer to another account please always follow the audit trail and complete as two payments.
At the time you receive the limited company bank statements please mark explanations against each entry ie what the payments are for. As far as the bank receipts are concerned please write on the bank statement the sales invoice number and its period:
Example 3:
Bank receipt: £500: please write on the bank statement (as an example) "sales invoice 1: period 12 April-15 April 2010.
Once you have completed this task you can PDF the bank statement to me so that I can log the entries.

UTR number (a 10 digit number)
I enclose a letter (Please dowload the form and retain in your paperwork) that I have now posted to HM Revenue and Customs requesting a UTR for yourself. All directors of limited companies must by law file a personal tax return form which must have a UTR (unique tax reference number.) Please advise me of the number as soon as you can, once received by you.
Form 64-8
I have completed the above form. It enables me to represent you in personal /corporation tax/vat /paye affairs.
Please download the form sign and post back to me (I must have a live signature.)
Company Authorisation codes.
I will today shorten all accounting year ends of each company so that two tax computations do not need to be prepared at the end of the period as this helps to keep down fees (I explained to you that HM Revenue and Customs do not recognise accounting periods of more than 365 days.)
Forms CT41G
I will begin work on completing all forms CT 41 G for each company.
VAT-IMPORTANT
I must investigate if vat is relevant to your circumstances but instead as a group registration and how it is to be applied to your circumstances? Since you are the sole director (are you?) of each company and own all the shares (do you?) of each company then these are under common control and for a representative vat return I believe that you can add the turnover of each company to compute if the total turnover is above the vat registration. I will advise you by tomorrow.
This is all for now and will report to you tomorrow,
Email out: 18 April 2010
Fixed assets: On the fixed assets revise as I have shown. Also please change to page 8.
Do you want me to alter to page 7 trading profit and loss account?
I can now complete the form CT600 which I will scan and forward to you later today tomorrow.
I refer to our meeting and after a lot of thought would make the following points:
Car cost
Use of car
Debit: "use of car" account with business usage at the rate of 40p per mile for the first 10000 miles and 25p thereafter.
(Thus if (say) 20 000 business miles are completed then the claim admitted into the profit and loss account would be 10,000miles x 40p = £4000 + 10,000 x 25p = £2, 500 = £6 500 in total giving corporation tax relief at £6, 500 x 21% = £1,365.00.)
Credit: Directors loan account
if all the above transactions lead to a debit on the directors loan account then this must be repaid to the company within the quarter (less £5 000 what is what you are allowed as an interest free loan from the business) otherwise the tax due (the total x 25%) is then added to the quantom of total corporation tax due (but in your case would be extinguished by the carry back of losses from the following year.)
Please note that detailed records must be diarised by the director of all his business trips and summarised at least on a weekly basis.
(Note that with claiming car business usage there is no personal tax benefit due on the director at his marginal rate of tax of 20%/40%/50% nor class 1A NIC at 12.8% due on the company totalling many thousands of pounds.)as the vehicle is owned personally and is not an asset of the business.
Please draw up an ordinary resolutions for business usage of the car. This resolution must be signed by the company secretary.
(If you wish to calculate the emissions of the car if you want to calculate the car benefit I attach two links that will help you to calculate this figure ie http://www.vcacarfueldata.org.uk/ved/) or http://cccfcalculator.hmrc.gov.uk/CCF0.aspx
Please note that this would be for part of the year only and not the full year ie 06 November 2008 to 05 April 09 ie 24+31+31+28+31+5 = 150 from 365 days.
The figure for car benefit sits on top of the salary and is subject to personal tax and is reflected in the coding allowance but is calculated on a fiscal basis and not an accounting basis which means that (in your case) you calculate gross salary from 06 November 2008 to 05 April 2009 and then from 06 April 2009 to 05 April 2010 and these figures must be returned on the directors tax return forms to 05 April 09 and to 05 April 10. (Have you forwarded a tax return form 09 to Revenue and Customs and if so may I please now have a copy?)
I have now faxed through form 64-8 with my attached letter but now must have the director sign the form (again) with a live signature before I can post off to Revenue and Customs. (I have printed off form 64-8 but Revenue and Customs will only accept proper live signatures as is proper and correct practice.)
Please understand that for gross salary packages if the car benefit lifts total pay to more that £6475 being the personal allowance the director must pay a personal tax bill (between 5720 and 6475 there would be NIC due at a total cost of 23.80%.)
It can instead be best to charge the company at 40p. per mile as in this way directors and employees avoid personal tax on benefits in kind as there is no personal tax benefit to pay.
It all depends on the directors salary and car emissions as these are different (higher or lower?) for different vehicles.
What I would like you to do is to give me the director’s gross salary for 08-09 & 09-10 together with the car benefit and I will compute the overall salary package.
In this way we can both better plan and possible extinguish any overall personal tax/NIC charge.
Email out: 17 April 2010
Thank you for your email.
Once you telephone the newly self-employed helpline on 0845 915 4515 please let me know immediately the date of registration as self-employed.
In due course you will receive a UTR number and I would be grateful if this can be forwarded onto me.
I hereby confirm my appointment as your accountant covering your business requirements for the . Please telephone and register as newly self-employed by calling the Newly Self-employed Helpline on 0845 915 4515.
If takings exceed or you expect them to exceed £1347 pw then you must have a compulsory vat
Vat registration
The turnover limit for vat is now £70 000 per annum which equates to £5,833 per month £1 347 per week. If your turnover is below this figure then you can apply for voluntarily registration but not compulsory registration. For compulsory vat registration you must declare all sales made from the first date of trading (what date did you give HM Revenue and Customs as your start of trade as this is the date you must by law adhere to) but for voluntary registration only you are able to apply to be registered but only from the date of application but you can claim for past invoices but only plant (refurb. etc. as I explained at interview) and so this would exclude those items that would appear as revenue items (eg motor etc)I await your reply.
We agreed that the best business structure for you was as self-employed. Please go online at http://www.hmrc.gov.uk/selfemployed/register-selfemp.htm before the end of the three month period in order to avoid a £100 penalty which is the law on late registration. (The class 11 stamp is about £10 per month and qualifies you for the minimum state pension-not as good as that payable under class 1 -but nevertheless useful at retirement.
Alternatively you can register at the telephone (as your accountant I am still not permitted by law to complete this task on your behalf) as follows:
In most cases you can also register as self-employed by calling the Newly Self-employed Helpline on 0845 915 4515. Lines are open from 8.00 am to 8.00 pm Monday to Friday and 8.00 am to 4.00 pm Saturday and Sunday (closed Bank Holidays). The information that you need is You’ll still need all of the information mentioned above to hand.
The information that you need is:
* full name
* full home address
* National Insurance number
* date of birth
* contact telephone number
* contact email address
* the date your self-employment commenced (this will be the date of the first night's takings of the club.)
* the nature of your business
* your business address
* your business telephone number
* Unique Taxpayer Reference (UTR) if you were previously within Self Assessment
* the business's UTR if you are joining an existing partnership
* where relevant, the full name(s) and date(s) of birth of your business partner(s)
In this business you do not have a UTR number (unique tax reference number) and so one will be generated and once received you must email me with the number (there are ten digits to it)so that I can input the details into HM Revenue and Customs website and so act as your agent.
Much of your initial spend is classed as plant of the business and so qualify for various reliefs as detailed in my previous emails.
At some stage in the future we can bring into the business (presently can be given the Ntional Minimum wage or above )as a partner at the time that the business generates profits or incorporate the business as a limited company (you already have one.)
VAT We agreed at interview to register the business for vat. However in order for me to complete this task on your behalf I must have written instructions (an email with accompanying signature will suffice) from you (verbal is not sufficent) and it follows that this date must be the same date (and must follow in chronological order) what you give for the commencement of the trade as detailed above. To sum up first register as self-employed and then give me written instructions to register the business for vat acting only on your written instructions.
You will soon receive your P60 2009 from your employment and you should carefully save this together with your last 6 months payslips.
Please remember that for the purposes of VAT at the time I prepare your vat returns I must have all original purchase invoices as I must stamp these and is the only way in which I can reclaim input vat of the business.
Carefully keep all the till rolls (being your sales invoices) of the business and enter these daily into a book that is divided into the days of the week that the club is open for business.
Prepare weekly totals as well.
I wait to hear from you


David Barry on 020 8252 7018/07877671423
www.davidbarryaccountants.co.uk

David Barry: accountants and tax advisers 0208 252 7018/07877671423
Email out: 01 April 2010

I have now faxed through form 64-8 with my attached letter but now must have your partner sign the form (again) with a llive signature before I can post off to Revenue and Customs. (I have printed off form 64-8 but I do not believe that Revenue and Customs will accept as it look like a photocopy.)

You mentioned charges. However it would be better for me to represent you as agent as in this way I could instead not charge you per meeting but can enter into a fee for the year. However would you still keep the books and records of the company and complete bank reconcilations and agree all the figures in the accounts?

As I intimated in my telephone conversation with you I would like to broach to you the subject of your personal tax return form as director. I could not help but notice that the salary in the accounts was in the region of £8000 (I do not remember the exact amount) and I would be interested in understanding if these have been submitted to Revenue and Customs and for what years (that is 07-08 and/or 08-09?)

Please understand that for gross salary packages in the sum of more than £8500 (that is it will include car benefit) your husband could have to pay a personal tax bill. It can be best instead to charge the company at 40p. per mile as in this way directors and employees avoid personal tax as there is no personal tax benefit to pay. It all depends on the figures involved

It depends on the salary paid and the car emisssions as these are different (higher or lower?) for different vehicles.

What I would like you to do is to give me your gross salaraies for 08-09 & 09-10 together with the car benefit and find what the overall total amount becomes.

In this way we can both better plan and possible extinguish any overall personal tax charge.

David Barry: accountants and tax advisers 0208 252 7018/07877671423I