Vertice Services

TELEPHONE INTERNAL PROBLEMS – BT

2010-06-07T14:03:00.000-07:00

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

2010-06-07T12:26:00.003-07:00

We have seen that many businesses do not have any kind of insurance.

There are many different types of business insurance available - but which ones do you need to have, which should you have, and which don't you need at all?

This tool helps you to answer these questions and assess what types of insurance you need. It will help you decide what cover you must have, and what cover it is advisable to have.

Click Below to find out what kind of insurance your business needs.

Emergency Budget 2010

2010-06-07T12:26:00.001-07:00

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

2010-06-07T12:25:00.005-07:00

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

2010-06-07T12:25:00.003-07:00

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

2010-06-07T12:25:00.001-07:00

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

2010-06-07T12:24:00.003-07:00

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.

2010-06-07T12:24:00.001-07:00

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

2010-06-07T12:23:00.000-07:00

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

2010-05-03T18:44:00.001-07:00

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.

2010-05-03T18:43:00.005-07:00

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.

VAT on line

2010-05-03T18:43:00.003-07:00

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

2010-05-03T18:43:00.001-07:00

Time for tax claims

2010-05-03T18:42:00.000-07:00

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

2010-04-03T19:06:00.000-07:00

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

2010-02-17T08:33:00.003-08:00

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

2010-02-17T08:33:00.001-08:00

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

2010-02-17T08:32:00.005-08:00

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?

2010-02-17T08:32:00.003-08:00

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

2010-02-17T08:32:00.001-08:00

PAYE Due

2010-02-17T08:31:00.000-08:00

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.

2010-02-17T08:30:00.000-08:00

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.

Erro PAYE Codes

2010-02-17T08:29:00.000-08:00

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.

Tax Relief on Accountant Fees

2009-12-11T03:12:00.001-08:00

Certain MPs got into hot water recently for including the cost of preparing their personal tax returns in their expense claims. Employees and company directors, including MPs, are not permitted to claim the cost of personal tax advice, or the cost of preparing their personal tax return as a deduction from their taxable income. If those costs are born by their employer, the cost should be treated as a benefit in kind, reported on the form P11D and taxed accordingly.

Where an individual runs his own business as a sole-trader, his personal tax return must include details of the turnover, expenses and profits of his business. The cost of preparing and completing that part of the tax return is tax allowable as that cost relates to the business and not to the individual's personal affairs. Where the remainder of the personal tax return requires little effort to complete the Taxman will, by concession, allow the whole of the cost of preparing the sole-trader's tax return to be treated as a tax allowable business cost.

Help with Business rates

2009-12-11T03:11:00.004-08:00

More time to pay your 2009-10 business rates increase

On 31 July, local authorities will be writing to local businesses offering them the option to spread payment of this year's inflation up-rating to business rates over three years, under new legislation announced by the government in March.

Business rates are adjusted every April in line with the Retail Prices Index for the previous September. The new measure is designed to smooth the effects of the spike in inflation of 5 per cent in September, which would have seen businesses facing an impact on their cash flow this year.

From 31 July:

All business ratepayers can apply to their local council to put off 3 per cent of their whole year's 2009-2010 business rates bill. So, if a yearly bill is £5,000, ratepayers will be able to postpone paying £150.
Those who accrued a rise in their bill because transitional relief has come to an end can defer 60 per cent of the increase.

VAT increase

2009-12-11T03:11:00.003-08:00

Christmas Gift

2009-12-11T03:11:00.001-08:00

Many firms are foregoing expensive Christmas parties this year and as an alternative are giving small seasonal gifts to staff and customers. But before you break open the hampers consider what may be allowable for income or corporation tax purposes, and what VAT you can reclaim.

- Gifts to customers of the products or services you normally sell are tax allowable, as long as you are not in the food business.
- Small promotional gifts of any item are also treated as tax allowable for your business if they cost less than £50 each and carry a clear advertisement for the business. However, you cannot get income tax or corporation tax relief for the cost of gifts of food, drink, tobacco and gift tokens of any value.
- A number of gifts worth more than £50 in total should not be made to the same person in any 12-month period.
- If you are VAT registered you can reclaim the VAT on small gifts that cost up to £50 each, including gifts comprising of tobacco and alcohol.
- If the gift cost more than £50 (net of VAT) you must account for the VAT on the item as if you had sold it at cost.

Gifts to your staff are tax allowable, but your employees could be taxed on the value of the gift as a benefit in kind. In that case you would also have to pay Class 1A NI on the value of those gifts. The Taxman does consider some small items to be trivial benefits, which can be given as tax-free gifts to staff members. Trivial items can include seasonal gifts such as a turkey, an ordinary bottle of plonk (not fine vintage or champagne), or a box of chocolates.

Where you are considering making larger gifts to each employee such as a Christmas hamper, you can include the cost of those gifts in a PAYE Settlement Agreement (PSA) with the tax office. The PSA allows you pay the tax and NI due on behalf of your employees.

Beware Tax Email Scams

2009-12-11T03:10:00.002-08:00

Bad Debt

2009-12-11T03:10:00.001-08:00

In these troubled times the failure of one business can have a knock-on effect on its suppliers. If one of your customers goes down you need to quantify the bad debts created by that failure as soon as possible.

Say your accounting year end is 30 June 2009, and one of your customers fails in October 2009 leaving the sales invoices it received in April, May and June all unpaid. Where it is clear that you will not receive payment from the liquidators or administrative receivers of that business for those sales invoices, you can include the bad debt built up between April and June 2009 in your accounts to 30 June 2009. This applies as long as your June 2009 accounts have not been finalised by the time you receive confirmation of the bad debt. Any sales made to this customer between July and October 2009 will need to be written off in your accounts to 30 June 2010.

This is a clear example of business failure, but bad debts can also arise where your customer is still trading. Before we finalise your accounts to submit them to the Tax Office or to Companies House, we need you to undertake a thorough check of all your sales debts. Where you can identify specific debts that are unlikely to be paid, and you have made every effort to recover the money due, those amounts need to be written off in your accounts. This will reduce your taxable profits, and avoid you paying tax on money you are very unlikely to receive.

VAT on bad debts can only be reclaimed six months after the due date for payment for the invoice. You must also pay over the VAT due to the VATman before it can be reclaimed. If you use the cash accounting scheme for VAT you automatically get relief for unpaid sales debts, as you do not account for the VAT due until the sales invoice is paid. Any business with a turnover of under £1.35 million can join the cash accounting scheme.

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

2009-12-11T03:08:00.000-08:00

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.

Tips and Service Charges

2009-12-11T02:47:00.000-08:00

From 1 October 2009 tips, gratuities, and services charges cannot form part of the national minimum wage of your staff who receive those payments. This applies even if the service charge is a compulsory part of the customer's bill. The Tax Office has reissued leaflet E24: Tips, Gratuities, Service Charges and Troncs to explain this point clearly.

If tips are paid directly to your staff by the customers, those employees should declare the amounts they receive in tips to the Taxman on their personal tax returns, but you don't have to worry about the tax situation. Where the tip is paid to you as the employer, perhaps as an additional amount on the credit card bill, and you decide how to distribute the total tips pool (known as the tronc), among your staff, you must deduct both PAYE and NICs at the relevant rate for each employee.

Where someone else manages the tronc, perhaps the manager who is not the employer, that manager must deduct PAYE but not NICs from the payments of tips to staff. Please talk to us if you uncertain about how to handle tips paid to your staff.

Help with Business rates

2009-10-15T06:30:00.004-07:00

More time to pay your 2009-10 business rates increase

From 31 July:

All business ratepayers can apply to their local council to put off 3 per cent of their whole year's 2009-2010 business rates bill. So, if a yearly bill is £5,000, ratepayers will be able to postpone paying £150.
Those who accrued a rise in their bill because transitional relief has come to an end can defer 60 per cent of the increase.

Expenses

2009-10-15T06:30:00.003-07:00

Personally paying for expenses

You may have incurred expenses in getting your business up and running before setting up your company but the receipts for these will be in your name. Can the company now claim a tax deduction for these, and will this affect your tax?

In the beginning

Before you set up a company you wanted to be sure that you had a viable business. So, you personally paid for travel and other costs to carry out market research etc. before forming the company through which your business would run. But can tax relief be claimed for these costs and who should claim it?

Two types

This so-called pre-trading expenditure for companies can be incurred in two ways:

• by an individual before the company was formed

• by the company after it was formed but before it started to trade.

The company paid

In the latter case the rule is fairly straightforward. If the expenditure would have been allowable for tax had the company been trading at the time it was incurred, then a tax deduction can be claimed for it in the company’s first accounts. s.61 of the Corporation Taxes Act 2009 says that the expense is to be treated as if the company had incurred the cost on its very first day of trading. But the position is more tricky if a would-be director or employee paid the expense before the company was formed.

The director paid

You would think that if the expense was incurred by a director-to-be for a legitimate business purpose, it should qualify for tax relief under the pre-trading expenses rule. The problem is that the Taxman’s rules say that the person (or company) who incurred the expenditure must be the one who claims the tax relief. No matter how you look at it, the company and the individual are clearly not the same person. So is there a solution?

Expenses claim

Example. Jim was an engineer who after being made redundant in 2007 decided to set up his own workshop. In the process of getting the business going he paid several hundred pounds on travel to negotiate with potential customers etc. Jim went ahead with the business, and on advice from his accountant he formed a company Jimeng Ltd on April 1 2008. Even at this stage in October 2009 Jim can claim the pre-incorporation travel expenses from his company. And as this is a current cost, the company can claim CT tax relief for this in its 2009/10 accounts. But where does that leave Jim?

Expenses of employment?

The expenses Jim receives from his company are taxable unless they relate wholly and exclusively to his employment. But the company wasn’t even formed at the time he incurred them, so there’s no chance that could apply. We decided to challenge the Taxman on this apparent inequity. After consideration the official line is that the Taxman will accept that expenses received by a director in these circumstances are not taxable. That’s good news for common sense!

Tip. If you paid out business expenses on behalf of your company before it was formed you can reclaim them tax-free from your company even if they date back several years. But make sure you have receipts etc. to support your claim

New company forms from 1st October

2009-10-15T06:30:00.001-07:00

When something changes with the set-up of your company, such as a new director, change of company name or registered office address, you need to fill in a form and send it to Companies House. All the forms that are used to report these events are replaced with new versions for changes effective from 1 October 2009 or a later date. You must use the new form to report the change as the old form will be rejected and this could lead to your company being fined if the event is not reported within the statutory deadline.

Most of the new forms can be filed online through the Companies House website, which is quicker, cheaper, and more secure than sending a paper form through the post. If you sign-up to the Companies House PROOF scheme you can only file changes to your company's details online. This prevents anyone hijacking your company by submitting a fraudulent paper form.

Beware Tax Email Scams.

2009-10-15T06:29:00.001-07:00

Late tax returns and penalties.

2009-10-15T06:28:00.000-07:00

Late Tax Returns: Your personal tax return for the year to 5 April 2008 should have been submitted to the Tax Office by 31 January 2009 at the very latest. Tax returns submitted on paper for that year were due in by 31 October 2008. These deadlines may be later if the 2007/08 tax year was the first year for which you needed to submit a tax return, and you didn't receive the tax return form until after 31 July 2008.

The Taxman does not have much patience when it comes to late delivery of tax returns and has instructed his computer to send out £100 penalties every six months. The first penalty would have been issued in February 2009 and the second one in August 2009. If the Taxman gets really cross he will ask the Tax Tribunal to issue daily penalties of up to £60 per day, until you do deliver a complete tax return!

If you have paid all the income and capital gains tax you owed for 2007/08 by 31 January 2009, or you are due a tax repayment for that year, the £100 penalties can be reduced to nil. However, you do have to appeal against the £100 penalty notices to claim the reduction.

Late Payments: If you have not paid all the tax you owe for 2007/08 you will have been issued with a 5% surcharge in February and another 5% surcharge in August, plus interest will be mounting up at 2.5% on the amount owing. This interest rate on late tax increased to 3% from 29 September 2009. Where you have agreed a time to pay plan with the Tax Office, and are paying the instalments due under than plan on time, the 5% surcharges should not have been raised. If this is the case the Tax Office should be contacted as soon as possible to get the 5% surcharge cancelled.

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

2009-10-15T06:27:00.000-07:00

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.

When is paying a dividend illegal?

2009-10-15T06:20:00.000-07:00

A dividend may be 'illegal', in that it is contrary to Company Law, when the proper procedures are not followed. If the Taxman examines the paperwork and decides the payment from your company was not a legal dividend he may treat the amount paid as a loan, or even as a bonus payment.

In both cases additional tax may be due from the company and sometimes from you.

To pay a legal dividend it is not sufficient just to write 'dividend' on the cheque stub or against the entry in director's loan account.

We recommend following these steps when paying dividends...

1. The directors should first review the profits available for interim dividends. This is not the same thing as funds in the bank account, as you have to take account of other assets and liabilities. Those deliberations should be recorded as a formal board minute, so if the Taxman ever asks, you can prove the profits were there when the decision to pay an interim dividend was made.

2. If the final accounts for the year are complete and show the accumulated profit and loss account is positive, the directors can recommend that the profits, which are not required for investment, can be paid out as a final dividend to the shareholders. The shareholders can either accept the directors' recommendation or suggest a lower figure of dividend. Both these decisions also need to be properly recorded at the time they are made.

3. Dividend vouchers need to be prepared when either a final or interim dividend is paid, for each shareholder showing the total due, the tax credit attached to the dividend and the date of payment.

4. The dividend should be paid. The payment can be transferred from the company's account by cheque or bank transfer into the shareholder's own bank account. If the shareholder is a director his account in the company books may be credited with the dividend due to him or her, but this needs to be done as soon as possible after the decision to pay a dividend is taken.

We can help you with all this paperwork, but it is important that the decision to pay a dividend is made in advance of any payment being paid out of the company.