September 2011

The Tax Inspector may raise questions if you make a persistent loss and want to set that loss against your other income. Only where your trade is conducted on a commercial basis with a view to a profit can the losses be available for relief against your other income of the same or immediately preceding tax year. For periods ending after 11 March 2008 the loss relief can be restricted if you do not spend at least 10 hours on average per week working in the business. This restriction will normally only apply where your loss for the year is £25,000 or more, but it can apply to any level of loss that has been artificially created.  

CKLG ACCOUNTANTS IN CAMBRIDGE ARE HERE TO HELP, CONTACT US OR CLICK ON THE LINK BELOW.

Helpsheet for self-employed losses 2010/11

US citizens who are resident in the UK may be eligible to use the remittance basis when reporting their overseas income and gains to HMRC, which means such overseas income can escape UK tax. However, in most cases the US citizen must pay the remittance basis charge in the UK (£30,000 p.a) in order to use the remittance basis for a particular tax year. Until recently it was not clear whether the remittance basis charge could be set against US tax liabilities. The US tax authority: the Internal Revenue Service (IRS), has now confirmed the remittance basis charge can be set against US tax, see ruling 2011-19. 

Contact CKLG Accountants in Cambridge for further information or click on the link below.

Internal Revenue Service Ruling 2011-19.

The recent Swiss/UK tax deal will affect all holders of Swiss bank accounts who are resident in the UK, even where the income and gains from those investments have been correctly taxed. Significant tax deductions will be made from Swiss bank accounts held by UK residents from 2013, unless the bank account holder authorises the bank to disclose all details of the account to HMRC, and pays all the taxes due in the UK on the investment income.

Contact CKLG Accountants in Cambridge for further information or click on the link below.

UK and Switzerland deal announced

If you owe money to HMRC you may soon receive a letter arranging for collection of that debt through your 2012/13 PAYE code. Up to £3,000 of outstanding tax, or overpaid tax credits, can now be collected by a restriction on your PAYE code. The letter should also contain a summary of the debt. Do check this summary as mistakes can occur. You can ask HMRC not to amend your PAYE code, and arrange to pay the debt in a different manner. We can help you with this.

CLICK HERE - Ways tax debts can be collected

If you are a contractor registered in the Construction Industry Scheme (CIS), you are required to submit a CIS return (form CIS300) by 19^th of every month. The penalties for late submission of these returns are changing for periods beginning after 5 October 2011. The new penalty structure will generally impose a lower total penalty where the CIS return is less than 6 months late, but higher penalties in other cases. New contractors will also have their initial penalties capped at £3,000, where they are late in submitting their first return.

New penalties for late CIS returns

Do you still submit a paper form P11D(b) to HMRC? This year HMRC has rejected a number of forms that were not signed by the employer. If you receive a rejection letter for your 2010/11 form P11D(b) call HMRC on the telephone number given in that letter. This should ensure any penalty raised for non-submission of the form P11D(b) is cancelled. 

HMRC statement concerning rejected P11D(b)s

If you have been tempted to avoid tax by using a trust loan scheme, partnership loan scheme, or another tax scheme that uses an off-shore company or employer funded retirement benefit scheme (EFURBS), you may be disappointed. HMRC have recently announced that they believe these sorts of schemes are caught by the new anti-avoidance law known as ‘disguised remuneration’. We can advise you on this.

CLICK HERE - Spotlights 11 &12: articles on schemes to avoid income tax and NICs

Do you operate two or more businesses within your family, which could be connected for reasons other than your family relationship? VAT Inspectors are aware that some people split their businesses artificially so that one part of the business remains under the compulsory VAT threshold. They will challenge business they suspect of artificial splitting, such as VAT registered farms that are home to B&B businesses which are not VAT registered. We can help you defend your position if you are unfairly challenged on these grounds.

VAT Notice 700/1:Should I be registered for VAT, see section 13

Generally UK land can be held as joint tenants when the owners hold an equal undivided interest in the whole property, or as tenants-in-common where the individuals hold separate and identifiable shares, say 10% and 90% of the property (the legal terms may be different under Scottish law). Where the owners are either married or in a civil partnership, the property will be treated for tax purposes as being held in equal shares (50:50), even if this is not the case. To be taxed on the actual interest each holds in the property the couple need to sign the declaration on Form 17 and submit it to HMRC.

CLICK HERE FOR FORM 17

There has been a delay in sending out some self-assessment statements this year, and as a result HMRC has waived the interest due on tax payable by 31 July 2011, where this is paid late. However, the interest free period only runs to 27 September 2011 and only applies to the second payment on account of income tax for 2010/11. Any other late tax payments, such as for amounts due on 31 January 2011 will accrue interest as normal. 

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If two or more electronic PAYE payments arrive within the same tax month the Tax Office computer will allocate those payments to that month even if one or more payments relate to a later or earlier period. To avoid misallocation of PAYE payments you must use the correct 13-character reference number for your PAYE scheme. If the payment is made earlier or later than the computer expects it, you should add on four extra digits to the reference number to indicate the tax year and month the payment relates to. For example for payments for the month to September 2011 add 1206 (year 2011/12, month 6).

CLICK HERE - How to pay PAYE

Please contact us immediately if you receive a demand for PAYE titled ‘notice requiring payment’. Payment is normally requested within seven days or recovery by distraint will ensue (the bailiffs arrive). However, the amount demanded may be an estimate and may not be due at all. In many cases the underpayment has arisen because the Tax Office computer has allocated a PAYE payment to the wrong period.

CLICK HERE FOR THE NOTICE REQUIRING PAYMENT

It is now possible to set up an email reminder service for Company or LLP accounts and annual returns due to be submitted to Companies House. Once registered you will receive an email reminder of when to submit your documents, and all paper reminders from Companies House will cease. You can nominate up to four separate email addresses for each organisation, so we can also receive reminders for your company if you wish.

CLICK HERE FOR COMPANIES HOUSE eREMINDER SERVICE

HMRC is reorganising the tax offices that deal with corporation tax compliance work. Companies currently dealt with in Ipswich, which were previously handled by compliance teams in Tees Valley, Cambridgeshire and South Essex, will be transferred to the Norwich office. All the affected companies should shortly receive a form CT210 to inform them of the new HMRC contact details for corporation tax matters.

CLICK HERE FOR CT OFFICE MOVES