In a month when tax avoidance and tax evasion have been rarely out of the news, who better to nominate as 3CA Rat of the Month but Philip Green, friend of politicians but no friend of small businesses.
Last week John Humpreys, in an interview with the Prime Minister on BBC’s Today programme, tried to establish what the government meant by the term ‘aggressive tax avoidance’.
Unfortunately, he over-stepped the mark and the BBC was forced to issue an apology to Philip Green.
With a specific link on Wikipedia titled Tax avoidance and the specific target of UK Uncut’s original protests I cannot think of a worthier recipient for this month’s Rat of the Month.
HMRC has announced that a smartphone, supplied by your employer, will now be treated as a mobile phone and need not be included on your P11D as a benefit in kind.
Having said that I think most people have always treated their smartphone as a mobile phone anyway! Even HMRC seem to agree when they say:
In most instances an employer-provided smartphone will not have been reported to HMRC as a taxable benefit.
There are two important points relating to this statement though:-
- If you did treat your smartphone as a taxable benefit you may be entitled to a tax repayment (see final section of statement); and;
- It does not cover tablet computers.
Last August I asked this question in relation to HMRC’s hardening attitude to Time to Pay Arrangements and sent a copy to my Member of Parliament, Tim Farron.
This morning I received a letter from Tim Farron who had just received a reply from Mike Eland, Director General, HMRC.
Decide for yourself.
FreeAgent shows your tax liabilities in the Tax Timeline on the Overview page but the figure will rarely agree with the amount your accountant has calculated and told you to pay.
The reason for the difference is, as FreeAgent say on their website:
The figures in FreeAgent are a projection of your company’s ball-park corporation tax figure. They may not agree to the figures worked out by your accountant but they should be in the correct region
Despite what FreeAgent say about correcting the difference I believe your accountant should be making the corporation tax account (820) agree with the actual amount you have to pay, not you. However, irrespective of who does do the journal entries the adjustment will not affect the figure shown on the Overview page.
P.S. It suddenly occured that I hadn’t explained exactly why your accountant does come up with a different figure than FreeAgent! I could bore and confuse you with a detailed explanation of tax relief on fixed assets and disallowable expenses but in simple terms the answer is
Tax is too complicated for it to be calculated in a simple way!
Childcare costs paid by an employer (up to £55 per week) are, with effect from 6th April this year, only tax exempt for employees who pay tax on their earnings at the basic rate, i.e. 20%.
The rules have been tightened up so that everyone receives the same amount of tax relief (£11 per week) which means that a 40% taxpayer is only allowed to receive £28 of childcare costs from their employer before paying tax on the rest.
However,some poor drafting of the tax legislation has meant that if you are in the fortunate position of being able to keep your salary low and take the rest in dividends you should still be able to receive the full £55 per week tax free from your employer.
As always the paperwork has to be correct so you should speak to your accountant to make sure you qualify. And, if your accountant doesn’t know about this, e-mail us and we’ll help.
Cumbria LEP and Coventry & Warwickshire LEP – compare and contrast.
Compare
- Both are Local Enterprise Partnerships
- Both have websites.
Contrast
- The latest news item for Cumbria is dated 4 August 2011 whereas Coventry & Warwickshire’s is dated 18 October 2011.
- Cumbria’s chairman – George Beveridge (public sector background mainly at BNFL). Coventry’s chairman – Denys Shortt ( a winner of Entrepreneur of the Year).
- Coventry & Warwickshire LEP (CWLEP) is on Twitter and Linked In whereas I’m not certain if Cumbria LEP has heard of either!
- CWLEP has a page titled What have we delivered so far? It’s virtually impossible to find out what Cumbria LEP has delivered so far. Their website has a heading Current Activities which has the latest Board Minutes (12 August 2011) and a mention of the Enterprise Zone bid (unfortunately, but not surprisingly, it doesn’t mention the bid failed!). And the Latest News from Cumbria is a job advert for the LEP.
- CWLEP has a list of Future Events which includes Lep Local – meet your LEP. Cumbria LEP would appear to be a closed shop.
The Independent has an interesting story about HMRC’s increasingly tough attitude to sole traders and partnerships who go bankrupt owing HMRC money.
Nobody ever thinks they are going to fail in business but when you’re short of cash it’s too easy to “forget” to pay over the PAYE you’ve deducted from employees and to delay paying your VAT. And then there is your own tax bill which isn’t due for another 18 months ……
The article quotes Edward Starling of Wedlake Bell as saying
The authorities are making an example of business owners who have allowed their businesses to run up insurmountable tax debts by banning them from involvement in senior management positions of a company for a long time
This may be yet another reason why you should consider trading as a limited company.
Next week we’ll all be told how wonderful Mintfest was and how much money it has added to the local economy.
In 2009 we were told that it had contributed £1.5 million to the economy by “boffins from Manchester University” and in 2010 Lakes Alive (Mintfest is part of this) brought £3 million into the economy.
Statistics rather than actual figures always worry me but as the “boffins” were from the Centre for Research on Socio-Cultural Change in Manchester I shouldn’t worry.
There is just one thing which puzzles me – surely Mike Savage, a Research Fellow at Cresc, who was Director of the ESRC Centre for Research on Socio-Cultural Change (CRESC) from 2004 to 2010 cannot be the same Professor Michael Savage who was appointed a director of Kendal Arts International in January 2011?
Oh by the way, Kendal Arts International runs Lakes Alive!
The latest copy of VAT Notes wa released by HMRC in June but I didn’t add it to our blog. My daughter got married on July 9th so I think I may have an excuse for not focusing on VAT!
I have said previously that it isn’t the most exciting read you’ll come across but HMRC do expect you to read it (even though they don’t send you a copy any longer!)
The full notes are here.
In a month when tax avoidance and tax evasion have been rarely out of the news, who better to nominate as 3CA Rat of the Month but Philip Green, friend of politicians but no friend of small businesses.