Rickaby & Co., Accountants, Berkhamsted, Hertfordshire

Budget 2008
Income from Property
Income Shifting
Changes to business stationery rules
Company Secretary requirement abolished
Loans to Directors
Change to the Accounts Filing Deadline
Late Filing Penalties Increased
Capital Allowances
Limited Company or Sole Trader?
Cars – Business or Personal?
Companies Act 2006
TaxSafe – Our Tax Compliance Service
Identity Theft
VAT
Sub Contractors in the Construction Industry New System from 6th April 2007
Tax Credits - 90% of Families With Children or Without Are Entitled to Receive Them
Pensioner Tax Credits - These are there to be claimed so make sure you claim your share!
Changes to Accumulation & Maintenance (A&M) and Interest in Possession (IIP) Trusts
Details of Gifts & Potentially Exempt Transfers & Inheritance Tax Planning
Pension Forecast
End of the Tax Year

Budget 2008

Chancellor Alistair Darling presented his first Budget, surrounded by concerns relating to the recent changes to the tax regime, a slowing economy and continuing furore over his handling of the Northern Rock crisis.

All clients have been sent a hard copy of a summary of the main points from the Budget; click here if you would like to download a copy, or here if you would like to access the tax cards for the next financial year.

If you would prefer to read a full transcript of the Chancellor’s speech, click here to access the Treasury website.

Income from Property

HM Revenue & Customs (HMRC) has announced that it has launched a campaign targeted at people who have income from property and have not declared it on their tax returns. The income includes:

income from renting a room
buy to let income
furnished holiday letting income.

If you think that this may apply to you, we have developed a guide to provide an overview of the type of property income being targeted; please contact us to obtain a copy or to discuss the campaign in more detail.

If you receive a letter from HMRC on the subject it is essential that you respond fully as a matter of urgency; we are able to help you to present your response and to advise you as to the potential interest and penalties that may be due.

Income Shifting

The Government has entered into a consultation regarding 'income shifting'. The consultation process will continue until 28th February and the new legislation will be effective from 6th April 2008.

We are obviously unsure as to the outcome of the consultation process, but would advise you to read our summary and contact us if you think that there may be an impact upon your arrangements as a result. We will, of course, keep you up to date with any developments.

Changes to business stationery rules

As from 1st January 2007 the following rules have applied to Business Stationery, whether in hard copy, electronic or any other form:

A company or Limited Liability Partnership (LLP) must state its name, in legible lettering, on the following -

all business letters;
all its notices and other official publications;
all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by, or on behalf of, the company;
all its bills of parcels, invoices, receipts and letters of credit

On all of its business letters, order forms or any web sites, the company or LLP must show in legible lettering –

its place of registration
registered number
its registered office address
and if it is being wound up, that fact,

For more details, click here to see the Companies House website.

Please note that Trading Standards are now issuing penalties of £5,000 should your company be found to be in breach of these rules.

Company Secretary requirement abolished

With effect from the 6th April 2008, there is no legal requirement for a company to have a Company Secretary in place. If you would prefer not to have a Secretary, you will need to resign the current incumbent by submitting a form 288b, either by post or on-line. These can be downloaded from the Companies House website, or we can submit them on your behalf. Please be sure to let us know if you do resign your Secretary.

Loans to Directors

These are no longer illegal but MUST be approved in writing; please contact us to discuss the subject further.

Change to the Accounts Filing Deadline

With effect from the 6th April 2008 the filing deadline for Companies House will change to nine months after the year end, rather than ten. Please ensure therefore that your records are submitted to us promptly; we will be calling for them earlier next year!

Late Filing Penalties Increased

On a similar subject, penalties levied by Companies House and HMRC are going to be increased in line with inflation, but back dated to their inception in 1992. This will mean that a penalty of £100, for example for the late filing of accounts at Companies House, will now be increased to around £250. An added level of penalty has also been announced which means that if you submit your accounts late for a second year in succession, the penalty will be doubled.

Capital Allowances

The tapering method of calculating Capital Allowances with writing down allowances will be replaced with new rules from April 2008. The details have yet to be finalised but propose to give an immediate allowance of up to £50,000 to be written off for tax, together with a reduced rate of writing down allowances going forward. By the Treasury’s own admission the reduction in the rate of allowances that can be claimed will raise an additional £2.27 billion of tax by April 2010. Contact us for more details of the proposed changes.

Limited Company or Sole Trader?

For some people, this leads to the question 'Should I unincorporate?' Until the Budget is announced, it is impossible to draw a clear conclusion. Even after this point, the decision is unlikely to be an easy one to reach, but definitely one that should be discussed in some depth. Just as some clients gained large tax savings by incorporating, some may soon find themselves facing higher tax bills by staying incorporated.

Cars – Business or Personal?

This subject is likely to see significant change as a result of the Budget in 2008. Unless you are able to enter into a cheap lease agreement between now and then, it is probably safest to defer making any definite decisions until the Chancellor has spoken. Talk to us if you need to make a decision sooner, or have any immediate concerns.

Companies Act 2006

As you will no doubt be aware, significant changes to the Companies Act 2006 took effect from 1st October 2007, with further enhancements taking effect on the 1st October 2008. Please click here to access a summary of the key changes to a Directors duties and responsibilities or contact us to discuss the changes in more detail.

TaxSafe – Our Tax Compliance Service

We recognise that HM Revenue & Customs (HMRC) are increasingly conducting random investigations, aspect enquiries and disputes into personal and corporate tax returns and therefore we offer all our clients a Tax Compliance Service.

This is a service that will pay the additional professional fees that are incurred during an investigation, aspect enquiry or dispute by HM Revenue & Customs. Therefore, all our clients have to worry about is paying any additional tax due. This enables you to defend your case without worrying about the professional fees you are incurring, and allows you to instruct us to use our experience in dealing with such enquiries for your benefit.

Directors and Partners can be covered for investigations, aspect enquiries and disputes into their own tax returns without the business being investigated. However for them to be covered, we must act as tax return agents for the Director or Partner and the tax return must be a personal one. Cover for Directors & Partners can be included in the cover for the Limited Company or Partnership, or you can choose to cover just the business.

Additional Benefits

Through subscription to this service, businesses gain unlimited free access to a Business Support Helpline. These consultants have many years’ experience and provide tailored, practical, realistic solutions in the same way that we do.

The Helpline offers free advice on Employment Law, Health & Safety and Commercial Legal matters.

Please contact us for details on how to join or if you would like more details.

Identity Theft

An increasingly common problem for individuals, it is not so widely known that companies can face the same threats.

Fraudsters are increasingly changing the registered office and officers of companies and obtaining goods and services based on the previously good credit history of the ‘stolen’ company; the first the victim company knows is when their credit rating slumps and they are left the arduous task of clearing their name.

Companies House do not check the authenticity of the forms which it receives, and it can therefore be frighteningly easy to change these key Company details. The Protected Online Filing Service now being operated by Companies House offers far more protection, as these keys details can only be changed on-line, using various security procedures and any subsequent paper forms will be rejected.

In line with our policy of using technology to aid and protect our clients, we are able to register on your behalf to submit these key documents and can even save you money in the process; if you would like more details, please contact us.

VAT

1. Fuel Changes

From 1st May 2007 the existing bands based on the engine size and fuel type of the car were replaced by scale charges based solely on the carbon dioxide rating of the car, with 21 bands.

These new rates apply from the start of the first VAT accounting period beginning on or after this date – it may not be worthwhile reclaiming VAT on fuel if your vehicle has a high carbon dioxide rating so go through the sums before claiming.

2. VAT Receipts for fuel reminder

The Revenue has the power to disallow any input tax claimed on mileage claims if the drivers have forgotten to deal with the tax invoice requirement which came into effect in January 2006.

Input tax can still be claimed on the petrol element of mileage claims from employees / directors who make business journeys, provided that they submit a petrol receipt or tax invoice to support the claim. The amount of VAT on the petrol receipts will be greater than the amount of VAT being recovered on the mileage claim as the receipts will include petrol for private use.

The same applies to owners / partners who claim the fixed profit mileage rate for business journeys rather than putting the running costs of their car through the business.

3. Flat Rate Schemes

These have been around for a couple of years now and some clients find they can save money by registering BUT once registered it is important to ensure that you are operating the scheme correctly, for example if the nature of the business has changed the flat rate category to be applied may also change – it is also necessary to inform HM Revenue & Customs of these changes.

Vans for Employees / Directors - Taxable Benefit Increase from 6th April 2007

The taxable benefit charge increased from £500 to £3,500. A tax charge (and the employer’s corresponding Class 1A NIC charge) can be avoided however, if restrictive private use conditions are met, or private use in the tax year is insignificant.

We recommend a signed agreement with any employees this applies to for your protection.

Sub Contractors in the Construction Industry New System from 6th April 2007

The rules have changed – if you work in this industry and you have not discovered how this will affect you, you need to do so fast! The status of any sub contractors should be reviewed and contracts that both parties understand should be in place.

The potential costs of getting this wrong are astronomical!

Tax Credits - 90% of Families With Children or Without Are Entitled to Receive Them

If you are entitled, claim them!

You do not need to have children to claim - if you are working and your income is low you may also be entitled. Any claim can only be backdated three months.

The increase in income that needs to be notified is now £25,000, so unless your income increases by at least this amount you will not need to pay back any tax credits awarded based on your income for the previous tax year (provided no change in circumstances).

To check your entitlement telephone 0845 300 3900 or click here to visit the website.

Pensioner Tax Credits - These are there to be claimed so make sure you claim your share!

Every person aged 60 or above is guaranteed a certain amount of income. Owning your own home and receiving certain benefits including Attendance Allowance, Disability Living Allowance, Housing Benefit and Council Tax Benefit do not affect your entitlement. Claims can be backdated by 12 months; this is paid by way of a 'Guarantee Credit'. If you are 65 or over you may also be entitled to the 'Savings Credit' element.

To check whether you are entitled call 0800 99 1234 or click here to visit the website.

Details of Gifts & Potentially Exempt Transfers & Inheritance Tax Planning

If you would like us to keep a record of these on our files for Inheritance Tax purposes, please provide us with details for the last seven years. There are various useful exemptions available to mitigate potential inheritance tax liabilities.

If you would like our fact sheet please contact us.

Pension Forecast

If you are not yet receiving a state pension and have not obtained a pension forecast we recommend that you do so now.

Millions of pounds worth of National Insurance contributions remain unallocated and some of these could be your contributions! In addition decisions can be made regarding future and past gaps in your records. Note that a basic contribution is given for the first named for Child Benefit and other family responsibility benefits (not made clear in forecast).

To obtain a form call 0845 3000 168 or click here to visit the website.

End of the Tax Year

The following useful dates should be noted:

	31st January 2008	The date by which Self Assessment Tax Returns must be filed to avoid an automatic late filing penalty.
	19th April 2008	The date by which all Income Tax and National Insurance for 2007-08 must be paid to avoid an interest charge.
	19th May 2008	The due date for filing completed Form P35. (NB: Small businesses can qualify for tax free rebates from the Government if they file on-line.)
	31st May 2008	Deadline for giving each employee their P60 for 2007-08.
	6th July 2008	Deadline for giving Forms P11D or P9D to each relevant employee and sending to the Inland Revenue.
	19th July 2008	Deadline for payment of Class 1A National Insurance Contributions (Calculated on some benefits reported on Form P11D)
	30th September 2008	Deadline for submission of your Self Assessment Tax return if you have a liability of less than £2,000 that you would like to be collected via your Notice of Coding
	31st October 2008	Deadline for submission of paper Self Assessment Tax Returns for the tax year ended 5th April 2008. There is unfortunately no guarantee that HMRC’s systems will accept the electronic submission of Returns after this date and no confirmation has been given by the Revenue as to the position of the taxpayer if the return cannot be accepted electronically by them after this date.