News

Getting the VAT treatment right

A Sorry Tale of Misunderstanding

There are three rates of VAT:

  • Standard rate of 20%;
  • Reduced rate of 5%; and
  • Zero rate.

There are also exempt supplies which do not attract VAT, but these are not the same as zero-rated supplies.

For the majority of contractors, the VAT treatment of their sales is straightforward enough, but there may…

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Disincorporation relief close to extinction

Pecuniary liability

OTS warning over neglecting relief

Disincorporation relief was introduced as a temporary measure from 1st April 2013 following recommendations by the Office of Tax Simplification (OTS) to remove the tax barriers when the owners of small companies want to transfer the business to a sole trader or partnership.

The relief allows transfers of land and goodwill to be made at cost or written down…

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Get the shareholding details right

business expenses

Confusion as to who owns shares will prove costly

When establishing a company, it is important to identify who owns the shares and get the correct paperwork put in place. Failure to do so can result in an unexpected tax bill and worse, as proved to be the case in the First Tier Tax Tribunal case of Terence Raine v HMRC (2016).

Mr Raine, a 69-year…

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Can HMRC ever be world class?

HMRC penalties

Revenue set out strategy for becoming top organisation

HMRC has recently published their corporate strategy to become a “world-class organisation” underpinned by the values of professionalism, integrity, respectfulness and innovation. Still, a long, long way to go then!

The department has three strategic objectives:

1. Maximise revenues and cracking down on avoidance and evasion

Taxpayers are divided by type and size into…

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Simplifying corporation tax

tax-treatment

OTS proposes changes to reduce tax burdens

The Office of Tax Simplification (OTS) has recently published its recommendations for making corporation tax (C.T) easier in its report, ‘Simplification of the corporation tax computation’.

To date, there has been little focus on making C.T operate more simply for the benefit of the vast majority of companies. To address this, the OTS has made some…

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Tax-free childcare

business expenses

Registration opens for new initiative

21st April saw the introduction of the Government’s Tax-Free Childcare scheme, available to parents of children under 4 and disabled children under 17. It will be gradually rolled out during this year by age of child, and by the end of 2017 all eligible parents will be able to receive support.

Tax-Free Childcare will be available to over two million households…

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Artificial separation of businesses

contractor phone

Splitting hairs

There are some businesses that seek to avoid registering for VAT by separating their business activities so that each businesses turnover falls below the registration threshold.

This situation can occur when dealing with contractor accounting as artificial separation can occur between any business structure. A sole director of a PSC, for example, may decide to provide some of their services as a…

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IR35 and the meaning of MOO

flat rate

Demystifying mutuality of obligation

Mutuality of obligation (MOO) is a fundamental aspect of a contract of employment and therefore should rank as an important status test in deciding whether or not a contract falls inside or outside of IR35. HMRC, however, are loathe to discuss the issue and have reduced this factor to a very basic definition as set out in their…

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Let it all out

HMRC penalties

Reminder of HMRC’s Let Property Campaign

Each one of our accounting packages gives our clients full, unlimited access to our in-house experts and an important part of their job is keeping our clients informed of the latest changes in tax. Below, we’ve shared a reminder of HMRC’s recently updated guidance for making a disclosure under the ongoing Let Property Campaign.

The Let Property…Read More

Gig economy review should consider tax

LITRG wants Taylor Review to look beyond employment issues

The Low Incomes Tax Reform Group (LITRG) has urged the Taylor Review to examine the relationship between taxation and the growth in non-standard work, such as people working in the ‘gig economy’. This relationship is something we are particularly concerned with, in our role as contractor accountants.

Commissioned in October 2016, the Taylor Review…

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