TELEPHONE INTERNAL PROBLEMS – BT

We would like to apologize for any inconvenience caused regarding our telephone system. Vertice Services made a decision to change the telephone system in order to improve customer services but BT didn’t delivery the services as agreed which caused a telephone disruption during two weeks in MAY/JUNE. I personally would like to apologize for any inconvenience caused.

Rodolfo Basilio

Vertice Services director

Get the right insurance for your business

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Emergency Budget 2010

Chancellor George Osborne has confirmed that an emergency Budget will be held on Tuesday 22 June 2010.

Tax credits – When you need to renew your tax credit claims

Renew your tax credits claim as quickly as possible. The sooner you renew, the sooner the Tax Credit Office can work out your payments for the coming tax year. If you delay you may be paid too much tax credits – an ‘overpayment’ - that you have to pay back. If you don't renew, your payments will stop.

If you received both an Annual Declaration form and an Annual Review notice

Give the information asked for as quickly as possible – and definitely no later than 31 July. Your renewal pack will tell you if you have a different deadline.

The earlier you renew, the sooner the Tax Credit Office can make sure:

· they paid you the correct amount for the last tax year

· that you are getting the right amount of money for the coming tax year

If you delay, you could build up an overpayment that you have to pay back.

If you can’t provide details of actual income for the last tax year, still renew using an estimate of your income.

A tax year runs from 6 April one year to 5 April the next.

If you've given details of estimated income - deadline for providing actual income

This is usually 31 January but check Step C of your Annual Review notice to see if you've been given a different date.

If you miss the deadline for renewing

If the Tax Credit Office doesn’t hear from you by 31 July - or the deadline on your renewal pack - they will:

· stop your tax credits payments

· send you a statement showing you whether you've been paid too much, or not enough, tax credits

You then have a further 30 days to provide the information asked for. If you don't provide the information within 30 days, you will usually have to make a new tax credits claim.

The Tax Credit Office will ask you to pay back any overpayments from the last tax year - and any payments made to you since 6 April.

If you received an Annual Review notice only

You only need to renew if the information in your Annual Review notice has changed, or if anything is wrong, missing or incomplete.

Give the information asked for as quickly as possible - and definitely no later than 31 July. Your renewal pack will tell you if you have a different deadline.

The earlier you renew, the sooner the Tax Credit Office can make sure:

· they paid you the correct amount for the last tax year

· that you are getting the right amount of money for the coming tax year

If you delay, you could build up an overpayment that you have to pay back.

A tax year runs from 6 April one year to 5 April the next.

If you miss the deadline

If the Tax Credit Office doesn’t hear from you, they:

· treat the information on your Annual Review notice as correct and complete for the whole of the period shown

· check the payments you received against the information they have about your circumstances

· make a final decision on your award for the last year

If the Tax Credit Office decides to carry on paying you tax credits and then later find that you knew this information was not right or incomplete, you may be asked to pay back any money you should not have had. You might also be asked to pay a penalty.

Be prepared for VAT changes

Businesses are being urged to prepare for changes in the way VAT returns are filed.

HM Revenue & Customs has urged businesses and traders to make sure they are ready for the changes, which come into effect next month.

Under the new system, businesses and contractors, including sole traders and limited companies, will be obliged to file their VAT returns online if their annual turnover is in excess of £100,000.

Traders registering for VAT for the first time will also need to do so using HMRC's online service.

The department warned that anyone issuing an invoice with VAT included, without registering could face a penalty charge.

Stephen Banyard, director of HMRC's Business Customer Unit, said: "If you're a VAT-registered trader or an employer, make sure you're up to speed with all the VAT and PAYE changes coming in this spring.

"If you're well prepared for the changes, you'll help avoid a last-minute rush when the new measures take effect."

The changes also mean that all VAT payments made to HMRC will have to be made using electronic methods.

Beware Tax Email Scams

Many people are currently waiting for a tax rebate from the Tax Office, as they have claimed for losses to be set against an earlier year's income. If you are expecting such a tax refund, or even if you are not, take care not to be drawn in by emails that claim to have a tax rebate ready for you. These emails tend to ask for details of your bank account to pay the refund into, but they are scams.

The UK tax office HMRC does not send emails to taxpayers informing them of tax rebates. All such emails are fraudulent, and potentially very dangerous. You should not respond to the email. Do not click on any link embedded in the email as this may allow the scammers to get to your computer through a virus included in the link.

Fraudulent emails normally stand out as they are not correctly addressed to you personally. The email may have missing address details or say 'Dear Subscriber' or 'Dear Taxpayer'. Some scam emails include what looks like a tax refund form including a fax back number. You should never complete such a form sent to you by email supposedly from HMRC. To complete genuine HMRC forms yourself you need to log into the HMRC secure website using the login details which will have been sent to you in the post.

New penalties for late PAYE

From this current tax year the Taxman can impose penalties if you are late in paying over the payroll and CIS deductions you make in the tax year. 'Late' in this context means the payment reaches the Tax Office after the 19th of each month, (or 22nd when paying electronically).

Until now the Taxman did not impose penalties or interest on small employers if all the payroll deductions for the year reached him by 19th April (or 22nd) after the end of the tax year. Large employers (those with more than 250 employees) have been subject to surcharges for late payment for some years, as they have been obliged to pay over all deductions electronically.

Those surcharges for large employers have been scrapped and all employers are now subject to the same penalties. However, small employers do not have to pay over their deductions electronically.

The penalty will be based on the total amount of deductions paid late for the tax year and will be calculated based on the number of times payments are late in a tax year as follows ...

- Late once – no penalty
- Late 2 to 4 times – 1% penalty
- Late 5 to 7 times – 2% penalty
- Late 8 to 10 times – 3% penalty
- Late 11 or more times – 4% penalty

The penalty applies to the total amount that is late in the tax year (ignoring the first late payment in that tax year).

If any payment is made more than six months late a further 5% charge is added to the above penalties. Where the payment is over 12 months late another 5% penalty charge is added.

However, these penalties cannot be imposed automatically as at present the Taxman does not know how much PAYE etc you should be paying over month on month. Although, when the Taxman inspects your PAYE records and it is apparent that you been late in paying over your payroll deductions, he has every right to impose these heavy penalties for late payment.

Are you having problems to pay your tax bill? Vertice Services can help you. New Business Payment Support Service.

From 24 November 2008, HMRC has introduced a new, dedicated Business Support Service designed to meet the needs of businesses affected by the current economic conditions.

If you're worried about being able to meet tax, National Insurance, VAT or other payments owed to HM Revenue & Customs (HMRC), or you anticipate that payments coming due will cause you problems, you can contact Vertice Services and we will call the Business Payment Support Line on your behalf.

HMRC’s staff will review your circumstances and discuss temporary options tailored to your business needs, such as arranging for you to make payments over a longer period. They will not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies.

Please note: The Business Payment Support Line is for new enquiries only. If HMRC has already contacted you about an overdue payment, or if you already have a payment arrangement with them, please let us know.

Now you can prepare your Tax return 09/10

Dear Client,

Finally, now it is the beginning of the new financial year 2010/2011 and it is time to prepare your tax return 2009/2010. Please, call us at: 020 7624 16 16 in order to prepare your tax return09/10.

Now you can prepare your Tax return 09/10

Dear Client,

Finally, now it is the beginning of the new financial year 2010/2011 and it is time to prepare your tax return 2009/2010. Please, call us at: 020 7624 16 16 in order to prepare your tax return09/10.

Are you having problems to pay your tax bill? Vertice Services can help you. New Business Payment Support Service.

From 24 November 2008, HMRC has introduced a new, dedicated Business Support Service designed to meet the needs of businesses affected by the current economic conditions.

If you're worried about being able to meet tax, National Insurance, VAT or other payments owed to HM Revenue & Customs (HMRC), or you anticipate that payments coming due will cause you problems, you can contact Vertice Services and we will call the Business Payment Support Line on your behalf.

HMRC’s staff will review your circumstances and discuss temporary options tailored to your business needs, such as arranging for you to make payments over a longer period. They will not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies.

Please note: The Business Payment Support Line is for new enquiries only. If HMRC has already contacted you about an overdue payment, or if you already have a payment arrangement with them, please let us know.

VAT on line

You may have recently received a letter from the VATman that officially notifies your company or business to file its VAT return online, or face penalties. If your business had a turnover of £100,000 or more in the year ending 31 December 2009 you are legally required to file your VAT returns online, rather than as a paper form, for all periods beginning on or after 1 April 2010. So you can file your VAT return for the quarter to 31 March 2010 on paper, but VAT returns for later periods must be submitted online.

If you don't agree that your turnover was £100,000 or more in the year to 31 December 2009, you need appeal against the VATman's decision within 30 days of the date of his letter. The VATman has not sent a copy of his letter to us, so please forward it on if you have concerns about this turnover threshold. If you want us to submit your VAT returns online on your behalf we will need that letter as it contains some key details for the registration process.

Even if you have already filed several of your VAT returns online, and your turnover is over £100,000, you will still receive the notification letter from the VATman, including the expensive glossy brochure. If your turnover is currently less than £100,000 per year, you will not have to file your VAT returns online until 2011. The Government has announced that all VAT registered businesses will be required to file their VAT returns online from April 2011, but that requirement is not law yet.

If your business first registers for VAT on or after 1 April 2010 you will be required to file all your VAT returns online from your first VAT return, even if your turnover is way below the £100,000 threshold.

We can assist with online filing of VAT returns. From simply submitting the return to a full outsourced bookkeeping function. Please contact us for more details PAYE late we should discuss how to improve your systems before the new penalties start.

Beware Tax Email Scams

Many people are currently waiting for a tax rebate from the Tax Office, as they have claimed for losses to be set against an earlier year's income. If you are expecting such a tax refund, or even if you are not, take care not to be drawn in by emails that claim to have a tax rebate ready for you. These emails tend to ask for details of your bank account to pay the refund into, but they are scams.

The UK tax office HMRC does not send emails to taxpayers informing them of tax rebates. All such emails are fraudulent, and potentially very dangerous. You should not respond to the email. Do not click on any link embedded in the email as this may allow the scammers to get to your computer through a virus included in the link.

Fraudulent emails normally stand out as they are not correctly addressed to you personally. The email may have missing address details or say 'Dear Subscriber' or 'Dear Taxpayer'. Some scam emails include what looks like a tax refund form including a fax back number. You should never complete such a form sent to you by email supposedly from HMRC. To complete genuine HMRC forms yourself you need to log into the HMRC secure website using the login details which will have been sent to you in the post.

Time for tax claims

For as many years as we can remember individuals have had six years from the end of the tax year to claim most allowances and tax reliefs in respect of that tax year, (some tax claims have to be made within two years). That long claims period was shortened to five years from 31 January following the end of the tax year when self-assessment was introduced in 1996/97, but that change meant the loss of just two months. Now the long claims period is changing to four years from the end of the tax year with effect for claims submitted from 1 April 2010.

Thus claims and elections for the tax years 2004/05 and 2005/06 need to be made by 31 March 2010 and 5 April 2010 respectively. Such claims could include an error or mistake claim where tax has been overpaid, claims for personal allowances for marriage, age or blindness, and a number of capital gains tax reliefs.

Confusingly these new claims periods do not apply to everyone from the same date. If you have only recently come within the self assessment system, but you want to make a claim for an earlier year when you were taxed only under PAYE, you will have a further two years to make the claim. For example, claims from PAYE taxpayers for the tax year 2004/05 run out of time on 31 January 2011.

The long claims period for limited companies is also changing from six years from the end of the accounting period, to four years from the end of the accounting period, for claims submitted on and after 1 April 2010. Thus claims for accounting periods that end between 31 March 2004 and 31 March 2006 all need reach the Tax Office by 31 March 2010.

The period during which the Taxman can normally raise a tax bill for a particular tax year has also been cut back to four years from the end of that year. However, where the extra tax is due because the taxpayer has made a careless or deliberate error, the Taxman has six years, extending to 20 years for deliberate errors, to raise the tax bill.

Budget – At glance

Entrepreneur’s lifetime limits are to be raised to £2m (from £1m) on which they will pay just 10% capital gains tax, instead of the main rate of 18%.

The government is to sign a new tax information exchange agreement with Belize,Dominica and Grenada.

The Chancellor has vowed that over the next year RBS and Lloyds will provide £94bn in new business loans, with half going to SMEs.

The time to pay scheme for business will be extended for the whole of the next parliament.

Business rate taxes for SMEs will be reduced for one year starting from October 2010. This will impact on 345,000 small businesses that may get a business rate tax holiday.

The inheritance tax threshold will be frozen for four years.

The stamp duty limit is doubled to £250,000 for first time buyers (effective from midnight 24/03/2010)

Since this is a budget announced before a General Election, some of these changes may be overturned after the election, but they stand for the moment.

Individuals

Increase in child element for those aged one and two

The Government is increasing the child element for those families with children aged one or two from April 2012 by £4 per week.

Tax credits - Fixed period childcare costs

From April 2010 awards for fixed period childcare costs (such as claims of a few weeks during the school holidays) will be averaged and paid over that fixed period rather than averaged over a year. This will enable families to receive all the financial support towards their childcare costs they are entitled to receive for these periods when they need it.

Working Tax Credit for the over 60s

From 6 April 2011, people aged 60 and over will qualify for Working Tax Credits if they work at least 16 hours a week.

Tax rates and thresholds

Budget 2010 confirms the Pre-Budget Report 2009 announcement of the Income Tax rates and Personal Allowances for 2010-11:

• the basic rate will remain at 20 per cent
• and higher rate will remain at 40 per cent
• the additional rate will be set at 50 per cent
• the basic rate limit will remain at £37,400
• the starting rate limit for savings will remain at £2,440
• the personal allowances will remain at their 2009-10 amounts

From 2010-11 the additional rate will apply to taxable income above £150,000.

From 2010-11 the amount of the Personal Allowance will be gradually withdrawn for all individuals (regardless of age) with adjusted net incomes above £100,000. The rate of reduction is £1 for every £2 above the income limit.

National Insurance contributions rates and thresholds

The following amounts announced in the PBR 2009 have been confirmed in the Budget 2010. All National Insurance contributions rates and thresholds are unchanged from the current year 2009-10.

Allowances and rates

The 2010/11 personal allowance will remain at the current level of £6,475. The basic rate limit will also be maintained at £37,400. Therefore an individual will start to be taxed at higher rates when their total income exceeds £43,875.

Capital Taxes

Capital gains tax (CGT) annual exemption

The annual exemption for 2010/11 is frozen at £10,100.

CGT rates of tax

For individuals and trustees capital gains continue to be charged at 18%.

Entrepreneurs’ Relief

The amount of an individual’s gains that can qualify for Entrepreneurs’ Relief are currently subject to a lifetime limit of £1 million. For trustees, the £1 million limit is that of the beneficiary of the settlement who meets the conditions for the trustees to claim the relief. Gains qualifying for the relief are charged at an effective rate of 10%.

This limit will be increased to £2 million for disposals on or after 6 April 2010.

Inheritance tax (IHT) nil rate band

As previously announced, the nil rate band for 2010/11 will be frozen at the current level of £325,000. This will now be extended to cover the tax years 2011/12 to 2014/15.

Stamp duty land tax (SDLT)

At present the SDLT rate is 1% for residential property purchases where the consideration is more than £125,000 and up to £250,000.

Legislation will be introduced in the Finance Bill to give relief from SDLT where the consideration is more than £125,000 but not more than £250,000. This relief will apply where the purchaser or all the purchasers are first time buyers and intend to occupy the property as their only or main home.

The new relief will be available for residential property purchases where the effective date (normally the date of completion) is on or after 25 March 2010 and before 25 March 2012.

The current highest SDLT rate of 4% applies to residential property purchases where the consideration exceeds £500,000. A new rate of 5% will be introduced for transactions in residential property where the consideration exceeds £1 million.

This new higher rate will apply where the effective date is on or after 6 April 2011.

VAT

VAT thresholds

The VAT registration limits increase with effect from 1 April 2010 as follows:

• the threshold for compulsory registration is £70,000
• The threshold for voluntary deregistration is £68,000.

Time to Pay

HMRC will continue to offer Time to Pay as part of its support for all viable businesses having difficulty in meeting their tax obligations. In addition, to ensure that all requests continue to be assessed on a consistent basis, businesses that need to use the service more than once will be directed to a specialist team.

Video games industry

The government has announced that, following consultation on design, it will introduce a tax relief for the UK’s video games industry, subject to state aid approval from the European Commission.

Business Tax

Corporation tax rates

The small companies corporation tax rate which applies to companies with up to £300,000 of profits is currently 21%. An increase to 22% is planned to take effect from 1 April 2011.

Capital allowances on plant and machinery

Most businesses are able to claim an Annual Investment Allowance (AIA) on the first £50,000 spent on most plant and machinery. This provides immediate 100% tax relief on qualifying expenditure.

The allowance is to increase to £100,000 from 1 April 2010 for a business within the charge to corporation tax and from 6 April 2010 for a business within the charge to income tax.

As the chargeable accounting periods of many businesses will span the operative date of change, a pro rata calculation of their maximum entitlement will be required.

Budget Summary and other issues

Economy

• The impact of the economic crisis has meant the UK economy has shrunk by about 6% over the recession

• Growth forecast for 2011 revised down to between 3% and 3.5%. Predicted growth of 1-1.25% in 2010 in line with forecasts

• Borrowing will be £11bn lower this year, at £167bn. It should be £163bn next year, £131bn in 2011-12 and £110bn in 2013-14. It will reach £74bn in 2014-15, £8bn lower than forecast in December

• The reduction in the deficit will go from 11.8% of GDP to 5.2%, more than halved over four years

Taxes

• Tax on bank bonuses raised £2bn in 2009-10, twice as much as forecast

• More systematic tax on banks is needed. It should be internationally co-coordinated

• Doubling of stamp duty allowance, from £125,000 to £250,000, funded by 5% stamp duty for properties worth more than £1m

• Inheritance tax threshold frozen for next four years

• Tax information agreements with Dominica, Grenada and Belize

• Business rates cut for one year from October, so 345,000 businesses will pay no rates at all

• No further announcements on VAT, national insurance and income tax

Jobs

• For older workers, an extension of tax credits

• Length of time over-65s have to work to receive work credits is reduced

• For next two years, no one under 24 will need to be unemployed for longer than six months before being offered work or training

• Total of 15,000 civil servants relocated, including 1,000 Ministry of Justice posts moved out of London

Drinks, cigarettes and fuel

• Duty on cider will increase by 10% above inflation from Sunday. Duty on beer, wine and spirits will increase as planned from midnight Sunday

• Tobacco duty will rise immediately by 1% above inflation this year, then 2%

• Increase in fuel duty to be staged. Fuel duty to rise by a penny in April followed by a further 1p rise in October and the remainder in January

Businesses

• RBS and Lloyds will provide £94bn in new business loans, nearly half to small and medium-sized businesses (SMEs), over next year

• A new credit adjudicator will fast-track complaints from smaller firms who say they have been unfairly denied credit

• Faster licensing process for new banks to boost competition

• Increase of 15% in the number of central government contracts going to SMEs

• A new national investment corporation, UK Finance For Growth, will streamline and improve government help to

SMEs

• New growth capital fund to provide capital for fast growing firms

• Investment allowance for small firms doubled to £100,000

Jobs

• A £2.5bn one-off growth package paid for by switching spending in some areas, with the extra proceeds from the tax on bank bonuses, announced last year

• Number of civil servants in London to be reduced by a third, with 15,000 posts relocated outside the capital within five years

• Public-pay settlements will be held at a maximum of 1% for the two years from 2011

Education

• A £35m university enterprise capital fund to support university innovation and spin-off companies

• A £270m fund to create 20,000 university places in subjects such as science, maths, engineering

Banking and savings

• Everyone to have a basic bank account, bringing an extra million people into the banking system over next five years

• From next month the annual Isa limit to rise from £7,200 to £10,200 and Isa limits to increase annually

Defence

• Over £4bn next year for operations in Afghanistan

Infrastructure and environment

• £100m set aside for repairs to local roads, £285m for improvements to motorways

• A £2bn green investment bank, using £1bn of public cash matched with private funds

• £60m to develop ports hosting manufacturers of offshore wind turbines

Tax credits and allowances

• Parents of one- and two-year-old children to get an increase of £4 a week in child tax credit from 2012

• The pensioners' higher winter fuel payment of £250 and £400 for the over-80s, guaranteed for another year

Savings

• From October next year, the most expensive properties will be excluded from the housing benefit calculation in each area, which will, added to anti-fraud measures, save £250m a year

• Departments will publish details about how to achieve £11bn of new savings

No festive cheer in Pre-Budget Report

First impressions. Our initial view of the tax changes announced in Mr Darling’s recent PBR is in line with the general consensus. There isn’t really anything for directors to worry about on the business or personal tax front, but here are a few of the highlights (or lowlights!).

On the plus side. The already deferred increase in the rate of Corporation Tax for small companies has been put back another year. The current rate of 21% for those businesses with taxable profits of £300,000 or less will remain in place until March 31 2011. Thereafter it will increase to 22%. The delayed increase in CT offers a potential tax saving for your company for 2010/11, but it’s small and difficult to plan around, so our advice is don’t waste any of your, or your accountant’s, valuable time finding ways to make use of it.

On the down side. The planned 0.5% increase in NI contributions will now be doubled to a 1% rise. So, as a director you’ll potentially get hit with a 2% increase in NI. On a salary of £50,000 you can expect to pay about £360 more per year, while your company will have to stump up around an extra £400. The good news is that at least this measure doesn’t take effect until April 2011.

Tip. For those who expect to have taxable income of over £100,000 in 2010/11, stick with our previous advice of taking a bonus before April 6 2010 to reduce the effect of higher rates of income tax coming in after that date. And as it’s money that you wouldn’t have paid yourself until after April 6 2011, you’ll also be skipping the hike in NI rates.

Pensions. There’s yet another chapter in the saga of Mr Darling’s idea of capping higher rate tax relief on pensions. The goalposts have been moved again; from December 9 2009 the point at which anti-avoidance rules kick in has been reduced to £130,000 but only in some cases, particularly where a salary sacrifice is involved. The Taxman hasn’t yet given the details.

Tip. If you’re planning a salary sacrifice to fund a pension contribution, and your company earnings are £130,000 or more, hold fire for now or you could lose out on higher rate tax relief. We’ll bring you further advice once the Taxman has published the full rules.

Protecting directors from personal liability

Risky business?

The principle of “limited liability” assumes that when things go wrong in a company the company itself takes the rap. So, in theory at least, the directors should be protected by the “corporate veil”. But over recent years, this has not been the reality as more and more directors have found themselves on the end of legal proceedings.

Can that happen?

For example, you could come under attack from shareholders and regulators, e.g. the HSE and Information Commissioner. But even if you’re not subjected to formal legal action, the costs of defending your own position could be high. Fortunately, there are two options available that can provide you with a degree of protection.

Option 1 - indemnity

First, the company can offer an “indemnity”. This is an agreement whereby it agrees to foot the costs if the director faces any legal action. It doesn’t need to be complicated, e.g. the terms could be put into a letter, and other than the time involved in doing this, it shouldn’t cost anything to set up. The financial implications only come into play if it needs to be relied on, i.e. action is taken.

Note. The Companies Act 2006 prohibits companies giving indemnities against any: (1) negligence; (2) default; or (3) breach of duty or trust caused by the director.

Option 2 - insurance

Interestingly, the Act does not prevent a company from purchasing insurance for directors in connection with any negligence, default, breach of duty or trust by them. This is usually done in the form of Directors’ and Officers’ Liability insurance (D&O cover) and there are two types:

• Side A - this provides cover for those accused of a wrongful act in civil, regulatory or criminal proceedings, i.e. the directors; and

• Side B - this covers the company for the cost incurred in indemnifying a director who faces actual or potential litigation.

It’s all the same?

It’s important to remember that there’s no such thing as standard D&O cover. Each insurer will offer a different policy, terms and, of course, price. So always be clear about what you need covered, e.g. corporate manslaughter, shareholders’ claims etc.

Tip 1. The policy should be “composite”, not joint, i.e. each director needs individual cover which can’t be affected by the misconduct of another.

Tip 2. Make sure that the policy can’t be cancelled by the insurance company for non-payment of the premium without notice being given to the director. You don’t want someone’s forgetfulness affecting your cover.

Best way. Ideally, to protect a director as far as possible, both an indemnity and D&O cover should be made available. Whilst each is beneficial, together they cover as many angles as possible.

Companies can provide an indemnity and/or Directors’ and Officers’ Liability insurance, with the best position being that both are available. An indemnity shouldn’t cost anything to set up - it only comes into play if things do go wrong. The cost of insurance will depend on the provider and cover, so shop around.

VAT increase

The standard rate of VAT is due to rise from 15% to 17.5% on 1 January 2010. This small rise in VAT may encourage people to make large value purchases in December 2009 rather than in January 2010, but there are other ways to take advantage of the lower VAT rate.

Where services or goods are invoiced for in advance, the VAT rate applies according to the date of the invoice. Say an organisation normally raises invoices for its annual membership fees on 2 January each year. If the 2010 membership invoices are raised on 1 December 2009 the members don't have the VAT increase and the organisation would receive at least some of its membership income earlier.

The VAT rate to be applied to a sale normally depends on the tax point for that transaction. This tax point is usually when the customer receives the goods or services. However, that tax point is superseded by an earlier date if the money is received before the supply of goods or services, or by the invoice date if that invoice is raised within 14 days of the goods or services being supplied.

When the VAT rate changes in the middle of these dates, you can choose whether to apply VAT at the date when the goods were supplied, or the date the invoice is raised. If you supply goods on say 24 December 2009, but raise the invoice on 4 January 2010, you have the option of charging 17.5% VAT rate based on the invoice date of 4 January 2010, or 15% VAT based on the date the goods were physically supplied.

Where you are supplying a service over a period that straddles the VAT increase, the VAT man will, by concession, allow you to charge VAT at 15% for the portion of the work done before 1 January 2010 and 17.5% VAT for work done on or after that date. Alternatively you can apply the usual rules and charge VAT according to the date the invoice is raised, or the payment is received, which ever happens first.

There are tax-avoidance rules which will add an extra 2.5% supplementary VAT charge where the value of the sale (and connected sales) total more than £100,000, or the customer and supplier are connected, or the payment is due more than six months after the date of the invoice. Talk to us if your sales are likely to fall into any of these categories.

Who’s liable for a sub-contractor’s mistake?

If you bring in outside help to complete work for one of your customers and something goes wrong, who will be in the firing line? And what steps can you take to protect yourself?

A helping hand

If you’ve landed a contract but don’t have the resources or expertise to complete the work yourself, it’s common practice to use a sub-contractor to help out. But will you and your company be liable for their mistakes if things don’t go as planned?

Contractual problems

If you don’t supply the goods or services you’re being paid for in accordance with the terms and conditions of sale, you’ll be on the hook to sort out the problem, financial or otherwise, even if it was a sub-contractor which caused it.

Trap. Not having a sale contract doesn’t mean you escape. Even if there’s no written or oral agreement, there’s an implied obligation to ensure that the job is completed to a reasonable standard.

Passing the buck

If your customer makes a claim against you because of, say, faulty workmanship, but this was down to the sub-contractor you used, you can, in turn, make a claim against them.

Tip. Have a formal contract with your sub-contractor that mirrors the terms of the contract you have with your customer. This can make it easier for you to go after the sub-contractor responsible if your customer makes a claim against you.

Non-contractual problems

If the sub-contractor has caused a problem not directly linked to the contract, for example their van damages your customer’s property, the good news is that they are liable. But there are two exceptions to this rule, and if either apply your customer can make a claim against you as well as against the sub-contractor.

• Vicarious liability. If you’ve “borrowed” your sub-contractor’s workers to do the work.

• Extra-hazardous activities. If the work involved is unusually dangerous.

The second exception is self-explanatory, but the first was recently redefined following an appeal court case.

Exceptions

In the case of Biffa Waste Services (B) v Maschinenfabrik (M), M had been asked by B to construct some heavy machinery, and had in turn engaged specialist sub-contractors to help. However, one of the sub-contractors caused a fire at B’s premises. B sued both M and the sub-contractors. In the original judgment M was found liable because it was caught by the exceptions above. But M appealed and won. The judge decided that the sub-contractors should be solely liable, but why?

Supervision is not control

The judge said that “supervision” of sub-contractors was not “control”. M did not control them and so couldn’t be liable for their mistakes.

Tip. When hiring a sub-contractor state in the contract that you’ll only supervise work. Control over how the work is carried out is up to them.

Trap. Even though you may not control the sub-contractor’s work, you and your co-directors still have an obligation under the Health and Safety at Work etc. Act 1974 to provide a safe working environment for everyone working for you, whether or not they are employees.

A customer can expect compensation if you fail to live up to the terms of your contract, even if it’s a sub-contractor’s fault. But if the problem isn’t directly related to the contract, they will be solely liable, providing you weren’t in control of their workers. State in your contract you’ll only supervise them, not control how they do the job.

Beware Tax Email Scams

Many people are currently waiting for a tax rebate from the Tax Office, as they have claimed for losses to be set against an earlier year's income. If you are expecting such a tax refund, or even if you are not, take care not to be drawn in by emails that claim to have a tax rebate ready for you. These emails tend to ask for details of your bank account to pay the refund into, but they are scams.

The UK tax office HMRC does not send emails to taxpayers informing them of tax rebates. All such emails are fraudulent, and potentially very dangerous. You should not respond to the email. Do not click on any link embedded in the email as this may allow the scammers to get to your computer through a virus included in the link.

Fraudulent emails normally stand out as they are not correctly addressed to you personally. The email may have missing address details or say 'Dear Subscriber' or 'Dear Taxpayer'. Some scam emails include what looks like a tax refund form including a fax back number. You should never complete such a form sent to you by email supposedly from HMRC. To complete genuine HMRC forms yourself you need to log into the HMRC secure website using the login details which will have been sent to you in the post.

PAYE Due

This is an easy question - all PAYE and NIC deductions, including student loan repayments, and CIS deductions for the tax period ending on 5th of the month must be paid to HMRC by 19th of that same month. This means your cheque must reach the Taxman's accounts office by the last working day before the 19th. If you pay electronically the payment must reach the Taxman's account by 22nd of each month. In most cases you will need to set-up the payment to leave your bank account on or before 19th as the Taxman's bank does not accept 'faster payments', which arrive the same day as they leave.

If all your average monthly PAYE deductions for the tax year are less than £1,500 you can pay those deductions to the Taxman each quarter instead of monthly. In this case the deductions must reach the Taxman's accounts office by 19th July, 19th October, 19th January and 19th April. If you pay electronically the payment must arrive by 22nd of the relevant months.

These deadlines are particularly important for sub-contractors in the construction industry who currently have 'gross payment' status.

Gross payment status allows those firms to be paid without deduction of tax. But the Taxman will withdraw gross payment status if you are up to 14 days late with more than three PAYE payments. If you are more than 14 days late for just one payment gross payment status will be withdrawn. You can appeal against the withdrawal of gross payment status, but you need a good excuse for making the late payments!

From May 2010 all employers will be subject to late payment penalties if they are late with more than one PAYE payment in the tax year. If you regularly pay your PAYE late we should discuss how to improve your systems before the new penalties start.

Are you having problems to pay your tax bill? Vertice Services can help you. New Business Payment Support Service.

From 24 November 2008, HMRC has introduced a new, dedicated Business Support Service designed to meet the needs of businesses affected by the current economic conditions.

If you're worried about being able to meet tax, National Insurance, VAT or other payments owed to HM Revenue & Customs (HMRC), or you anticipate that payments coming due will cause you problems, you can contact Vertice Services and we will call the Business Payment Support Line on your behalf.

HMRC’s staff will review your circumstances and discuss temporary options tailored to your business needs, such as arranging for you to make payments over a longer period. They will not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies.

Please note: The Business Payment Support Line is for new enquiries only. If HMRC has already contacted you about an overdue payment, or if you already have a payment arrangement with them, please let us know.

Erro PAYE Codes

The Taxman has started to issue the 2010/11 PAYE codes, for the tax year that starts on 6 April 2010. This code arrives in the form of a P2 notice, and a copy should go to your employer (on a form P9). If you have received your 2010/11 PAYE code already please study it carefully, as any corrections need to be made in the next few weeks.

Since the Taxman fired up a new PAYE computer last summer there have been a number of faults appearing in PAYE codes. In some cases the age allowance or married couples allowance disappeared, in other cases the state pension amount was understated. Now many of the 2010/11 codes have excluded some of the basic personal allowance, which should be £6,475 for those aged under 65.

This fault occurs if you have changed jobs in the last few years, or started to receive a pension.

The Taxman's computer thinks you are still receiving a wage from your old job, so has split your personal allowance over your current employment or pension and your old job. If you do not have your full personal allowance of £6,475 shown on your 2010/11 PAYE code, ring the Tax Office to ask why, or speak to us.