Category: Tax

If you own a private limited company and its taxable profits do not exceed £300,000 you will pay corporation tax at the small companies rate of 20% from 1 April 2011. Profits in excess of £300,000 up to £1.5m will be taxed at a marginal rate of 27.5% and over £1.5m at the main rate … Continued

A default surcharge is a penalty levied on businesses that submit VAT returns after the nominated filing date, or make payments late. VAT registered traders should take the following factors into account: There is no penalty for a first offence, however a business that submits a VAT return late or makes a late payment is … Continued

We have listed below some of the more commonly encountered business expenses where VAT input tax recovery is prohibited or restricted. Cars – cannot reclaim VAT added to purchase price unless the vehicle is used to directly create income for the business: for example a taxi, a self-drive hire car or a car for driving … Continued

What does this mean? Disincorporation is the process of moving a trade from a limited company to its shareholders who would then use the business assets to trade as a sole trader or partnership. Presently there are a number of significant tax disadvantages when a trade is disincorporated. It is with this in mind that … Continued

If you are a director of a small company you may have made private payments using the company’s bank account or other resources. Unless these private amounts are reimbursed to the company you would become a creditor, owe money to, your company – you would have an overdrawn director’s loan account. There are three principal … Continued

As most retailers sell a high volume of lower priced commodities, some subject to zero rate and some standard rate VAT, HMRC have created a number of special schemes that simplify the calculation of VAT due. What schemes are available? Standard retail schemes are suitable for most retail businesses. However, there are special arrangements and … Continued

If you use the Cash Accounting scheme to calculate any VAT due to HMRC you are automatically protected from the VAT effects of bad debts – you will only be paying over output tax received from customers less input on bills paid to suppliers. If you are not using Cash Accounting or other special schemes … Continued

In our July update we advised businesses to take care when timing their capital expenditure during 2012. You may remember that the Annual Investment Allowance is being reduced from £100,000 per annum to only £25,000 per annum. The effective date of the change is 6 April 2012 for unincorporated businesses and from 1 April 2012 … Continued

VAT inspectors are sent out to verify that returns filed correctly reflect the underlying accounting records of the tax payer. They will conduct as many tests as they feel are necessary to satisfy themselves on this point. For instance:  Can you provide an audit trail that shows how your sales and purchases have been recorded … Continued

Some EU member states, including the UK have a zero rate which was agreed as part of their EU Accession Treaty.  For example, in the UK most ‘basic’ food stuffs are zero rated.  However, the UK is no longer able to add to the zero rate categories, and the minimum VAT rate that can be … Continued