Business Payment Support Service

/in , , , , , /by
Business Payment Support Service (BPSS) was launched on 24 November 2008. This service is designed to support businesses having trouble payment their tax bills in the current economic crisis.
Very important to realise is that this service does not deal with anyone that has already made a payment arrangement with HMRC .
Also, the BPSS does not deal with you if HMRC has already got in touch with you regarding an overdue payment.
In order for the BPSS to be able to help your business, you need to contact them before the tax, VAT, Corporation Tax, Pay As You Earn or National Insurance contributions liabilities are due.
You can contact them seven days a week on 0845 302 1435.
According to HMRC, this service “designed to assist all businesses (large and small) that will be unable to pay their tax. The service is primarily available to self-employed people and companies but can be used by any of your clients who are having difficulty in meeting their tax liabilities. It covers most taxes and duties including Income Tax, Corporation Tax, VAT, PAYE and National Insurance.”
The Payment Support service only applies to businesses that cannot genuinely meet their tax payments on time and they are likely to pay their tax over a longer period of time.
Also according to HMRC, “ surcharge(s) can be avoided on late payment of income tax where a Time to Pay agreement is entered into before the relevant surcharge date AND the terms of the agreement are adhered to.”
Although surcharges can be avoided, interest on late payment will be charged in the normal way.
If you would like to know more about this service , you can follow this link.
Taxfile‘s tax agents in South London and Exeter can discuss your business position with HMRC on your behalf and arrange a Time to Pay agreement.

Deferred tax scheme for loss-making companies

/in , , , , /by

One of the better tax-related things to come out of the Chancellor’s recent budget is the potential help some struggling companies may receive from HMRC. Companies who anticipate making a trading loss in the current tax year may be allowed to take the anticipated loss into account earlier than previously possible, when scheduling payments of Corporation Tax or Income Tax. Such businesses will no longer need to wait until the end of their complete accounting period (which is often some considerable time ahead) before they can take probable losses into account for payment of tax. Qualifying businesses may be able to agree extensions to the time in which they can pay with a couple of provisos: firstly that they really are likely to make a trading loss in the current year and secondly that they are genuinely unable to pay straight away or enter into a reasonable instalment agreement with HMRC.

Since launch, more than 110,000 businesses have already agreed deferred tax payment arrangements, equating to around £2 billion. Typically, repayments are scheduled over 3 to 6 months. The scheme is administered by the BPSS (Business Payment Support Service).

For further information and help with any of your tax affairs, contact Taxfile, accountants based in Tulse Hill, South London (tel: 020 8761 8000) or go to the relevant HMRC web page.

Corporation Tax (CT)

/in , , , , , , , /by

The fourth largest source of government revenues is Corporation Tax, charged on the profits and chargeable gains of companies. The main rate band is 30%, which is levied on taxable income above £1.5m. The small companies rate of 19% is charged on the first £300,000 of profits where profits are between £50,000 and £1,500,000.
Profits between the lower and upper profit thresholds (£300,000-£1,500,000), are in effect charged at a marginal rate of tax of 32.75%.
Companies that are resident in the UK are subject to Corporation Tax on their profits (income plus gains) arising in an accounting period which cannot be more than 12 months.
Non-resident companies may be subject to Corporation Tax (CT) where they trade in the UK through a permanent establishment.
• A company incorporated in the UK is treated as UK resident.
• A non-UK incorporated company is treated as resident in the UK if its central management and control is exercised in the UK.

A company’s trading losses can normally be set against:
• Income and gains of the same accounting period.
• Income and gains of the previous year.
• Trading profits from the same trade in future years.

In terms of Dividends, companies do not have to pay tax at the time they pay a dividend. Corporation tax is paid at the normal time on the company’s taxable profits without any deduction for dividends paid. For small companies, profits that are paid out as dividends are charged at not less than 19%.
A shareholder receives the dividend with an accompanying tax credit equal to 10% of the dividend plus tax credit. The tax credit is equivalent to the basic rate of income tax on dividends. Companies pay no tax on dividends received.
Companies normally have to file their return within 12 months of the end of the accounting period. If a return is filed late, the company is automatically charged a fixed penalty of between £100 and £1,000, depending on how late the return is and whether lateness is habitual. An additional tax-linked penalty is charged if the return is filed more than six months late.
If you need to know more about corporation tax, our tax experts at Taxfile in South London can help you understand it better and at the same time minimize your tax liability, making sure you pay the right amount of tax.

Penalties Reform – The Next Stage

/in , , , , , , , , , , , /by

Hello self-employed taxpayers,

I hope you enjoyed your holidays. I’m sure it might be quite difficult for those of you who haven’t submitted your tax return yet with the the deadline coming soon.
Now, you might wonder what this Next Stage is all about!
Well, as part of ”The Review of Powers, Deterrents and Safeguards HMRC has been developing ideas and consulting on how to modernise and align civil financial penalties.[…]The first substantial measure,[…] was a single new penalty regime for incorrect returns for income tax, corporation tax, Pay As You Earn(PAYE), national insurance contributions (NICs) and value added tax(VAT)(the main taxes)”(HMRC and the Taxpayer, Modernising Powers, Deterrents and Safeguards, Penalties Reform:The Next Stage.Consultation Document 10 January 2008).
In other words, the Tax Office wants to make sure that people do pay the right amount of tax and at the right time. The payment of taxes together with the repayments and reliefs cannot be voluntary or arbitrary. They must be governed at all times by a framework of rules
and obligations. According to HMRC, these penalties should influence behaviour, should be effective and fair.
Penalties have been considered in the following categories:
•incorrect returns
•failure to notify a new taxable activity
•late filing and late payment
•record keeping and information powers failure
•other regulatory failures.

There will be no penalty where taxpayers make a mistake or misinterpret the law despite taking reasonable care in completing their returns.
To make sure your tax return is submitted correctly and in time visit Taxfile‘s tax accountants in South London and they will do it on your behalf.

Business welcomes tax Tory plans

/in , , , , , , , , , , , /by

The Tories yesterday set out proposals for easing the burden of tax and regulation on British businesses in an attempt to improve the economy’s competitiveness.

However Chancellor George Osborne said that any tax reductions would have to be paid for by tax increases elsewhere, such as new environmental taxes:

” Any reductions in specific taxes will have to be balanced elsewhere, most notably green taxes.”

The former Cabinet minister John Redwood called for a series of tax reductions including abolishing inheritance tax, reducing corporation and capital gains taxes, abolishing stamp duty on share deals and raising the threshold for the higher rate of income tax.

Mr Redwood said that ” reducing the tax burden was the best way to stimulate economic growth and increase overall prosperity.[…] we believe a lower tax economy would be a more successful economy. If you have the courage to cut the rates , the rich pay more.”

The proposals received great support from business organisations.

Richard Lambert, CBI director-general said that the goal of getting corporation tax down to 25% and reducing tax on small businesses, represents a welcome direction of travel after a period when the burden of business taxes has grown substantially. He added, ” A focus on cutting regulation and red tape, one of the biggest irritants for firms trying to succeed and expand, is also positive. Too often, while our European competitors manage to implement EU directives in a few pages, the UK gold plates them with reams of prescriptive and complex regulations and guidance.”

Companies like Taxfile In South London can help you understand better the way corporation tax and capital gains taxes, inheritance tax and income tax works, giving you the right accounting advice at the right price.