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FAQ's
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frequently asked questions
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Do I need to submit a tax return?
Yes if you are self-employed, are a company director, have made a chargeable disposal (for capital gains tax purposes). You may need to submit a return if you have rental income, untaxed income or foreign income. Even if you feel that you do not meet any of this criteria but you have still been issued with a tax return you will be expected to complete and submit it. Contact us if you need further advice in respect of filing your tax return.
I receive cash in hand money for bits of work. That's ok isn't it?
No, you need to seek advice without delay. The failure to declare income (and capital gains) can be very severe. Do not wait to be found out by HM Revenue & Customs.
I have recently become self-employed. What am I required to do?
You must notify HM Revenue & Customs within 3 months of commencement of trading or you risk being subject to a penalty if you fail to. This should be done by completing form CWF1 and National Insurance mandate. Contact us and we can arrange for this to be completed and submitted on your behalf.
What kind of records do I need to keep and how long for?
Either manually or computerized you are required to records details of the payments, receipts, sales & purchases of the business. These records need to be supported by purchase and sales invoices, bank statements, cheque books, paying in books, copies of vat returns, loan agreements and statements and any finance/HP agreements.
You are required to retain your records for 6 years following the end of the tax year that they relate to. For instance if your first accounting period ends 30th April 2007, then you will need to retain your records until at least the 5th April 2014.
I run training courses around the country and in addition to my fee I recover traveling and hotel costs. Should I charge VAT on these incidental expenses that don't normally attract VAT (eg train tickets)?
What you should consider is that you are not a supplier of train travel services but what you have done is to supply a person to be present at a given location on a given date and time. Therefore the provision of this service is standard rated and VAT should be charged.
This is not an issue until you have a customer who is not registered for VAT and cannot therefore reclaim it.
Also, you are reminded that these incidental expenses belong to you and therefore you should retain the original receipts for your records. Your customers' evidence is in the form of your invoice itself.
Should I be trading through a limited company?
The headline news is that corporation tax rates are lower than income tax rates and in theory you can limit your personal liability by trading through a limited company. For many businesses this is true at this point in time, however other factors need considering before a decision is made.
It is common in new businesses that you will be expected to offer personal guarantees on raising finance and the seemingly lower tax rates can be deceiving. If you are operating a successful business and after providing for corporation tax you extract all of the remaining profits for personal use, the total tax rate being paid might be higher than if continuing as a sole trader.
Contact us to discuss the most effective trading entity from both a business and taxation perspective.
I am confused by the tax return submission deadline. When is it?
Each person's tax return is completed up to the 5th April each year irrespective of when their accounts year-end is. Currently the filing deadline is the 31st January following the 5th April, giving the individual almost 9 months to comply with this legal requirement or suffer penalties if failing to do so.
HM Revenue & Customs promote the fact that if your tax return is submitted before the 30th September, they will calculate the tax and national liabilities arising, however, this is of course an elementary part of the service we provide to our clients.
My turnover is increasing. Do I need to register for vat?
As a new business, you must look at your taxable supplies and when they exceed the limit, currently &pund;61,000, you need to register within 1 month. If, after 1 year you have not exceeded the limit, then you need to monitor your turnover on a rolling 12 month period in order to avoid a slip. Furthermore if your turnover within the first month of trading will exceed the limit, you are required to register immediately. However, there are many other factors you need to consider before registering - such as the various schemes available to smaller businesses. You might in fact choose to register for vat despite the fact that your turnover is below the threshold. Contact us if you require further information in this respect.
Since I am self-employed I cannot claim tax credits. Is this correct?
Most certainly not. There are many people who are entitled to claim tax credits but are not doing so because they do not understand the complicated criteria set for entitlement. Families with combined income in excess of £50,000 can still be entitled to claim tax credit as well as low income families, who with the correct advice, can be entitled to receive substantial amounts of tax credit depending on their family/working circumstances. If you feel that you may be missing out on tax credit contact us so that we can evaluate your personal circumstances and advise accordingly.
I pay my staff the national minimum wages. So I am ok?
Not necessarily.
Are you keeping sufficient records? Have your employees signed the necessary forms? Do your employees receive their legal holiday entitlement? Are you sure the new CIS rules do not effect your business? We have a dedicated payroll department that can advise you on these and all payroll matters.
My employee is pregnant/always taking sick leave. May I sack her?
No. Before taking any measure of this kind you must contact a specialist in this area. They can advise you on what your employee's entitlements are and how you work through these problems. Contract law is a complex area but as an employer you be sure you can draw on specialist advice as and when required. Contact us for further details on how we can make sure this provision is available.
Every time I discuss my tax bill with my friends they say they pay less tax. How can this be?
A super question that we now offer a few of the possible reasons why.
Your friends have made investment in plant & equipment and hence taken advantage of generous first year allowances to reduce their tax bill.
Your friends have made significant pension contributions during the year and this has resulted in a lower tax liability.
You friends are only discussing their personal tax liability and have failed to recognise the liability that their limited company has paid
Your friend is already our client.
It could also be what we term 'bar talk'. Nevertheless, contact us and we will work with you to make sure your tax bill is as low as possible.
How do I become a client?
Full details are provided on our 'contact us' page but in principal it is very simple and painless.
Will I need to pay for an initial meeting?
No.
We are convinced that if you can afford to give us 30 minutes of your valuable time, we will generate a client that will give us years of business and you, in turn, an unparalleled level of personal service and experience from The Burtwistle Partnership.
As a client, how much will your services cost me?
There are two ways in which we charge fees. It can be on a time basis or an agreed fixed fee. The fixed fee method gives you, without any further charge, unlimited telephone access to discuss problems throughout the year. Any additional or one off services, such as preparation of cashflows, will be subject to separate invoicing with a fee fixed prior to commencement of work. Charges on a time basis are generally for tax investigation work etc but an assessment of the possible cost will be given initially and you will be informed of the progress.
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