Sometimes some a tax payer will have their tax return amended by HMRC after it was submitted. This is a normal thing and nothing to worry about. As it means that HMRC are checking to make sure the information on the tax return matches with the information they hold from other sources e.g. PAYE, CIS etc.

An example is if your tax return did not mention a former employer in the tax year and HMRC records show there was a former employer and some income and tax paid at that employer may affect the bottom final tax figure. This means there could be a difference in the final amount of tax due or refund due from HMRC to you.

Sometimes this is not even your fault as you may have handed the new employer your P45 from the previous employer and the new employer should have start your PAYE using the P45 income and tax figures and carry forward from there, but for a number of reasons the new employer could not do this and therefore the tax code is set on a default standard code meaning you have received 2 lots of tax free allowance in a year.  When this happens towards the end of the tax year (April) HMRC cannot send a notice to amend the tax code to the employer in time to adjust the over / under paid tax. So, they wait instead for the information to be included in the tax return to automatically update with the full info for the year.

Therefore it's not a problem but a normal procedure by HMRC to ensure a tax payer is correctly aligned with their records held and their tax paid is correct. Unfortunately for a tax payer, sometimes this means handing back some of a tax refund as paid by HMRC previously or having a higher tax bill at the end of the tax year.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

If you work for the NHS or for Local Government and you are a contractor then you will have been notified that there will be changes coming in as of April 2017.  We are increasingly being asked the same question by many clients who are confused and have not been advised correctly by their recruitment agnecy or end client. So we have compiled an easy bullet point guide below:

For a vast majority of contractors this means the recruitment agency or NHS / Council paying you has to decide how to pay you after April 2017. They may opt for the safest course of action / most profitable for them which may not be financially beneficial for you. And increasingly we are seeing a knee jerk reaction by most NHS and Council Management staff and recruitment Agencies is to incorrectly lable everyone the same even when HMRC does not say this in their rules.
The vast majority of NHS and Council Management staff and recruitment Agencies are wrongly saying everyone is inside the scope for IR35 just because they cannot be bothered to work out who is and who isn't and they do not care if a person pays more tax than is really due.

So have at look below at the correct options as per HMRC, that all contractors have in all ongoing negotiations:

1. Work for non NHS and local government / council companies who are outside the scope of this legislation.
2. Prove you are not applicable, and then still be paid in full to your Limited Company, same as before. You have the right to present an  independent report from an IR35 assessment company to establish you are indeed outside the scope of legislation. The report can cost around £175 depending on the company used and once you are proven to be outside the scope all parties paying you should pay in full with no deductions. Suffice to say this small fee may save a lot of money in tax and paperwork later.
3. Have tax and NI deducted at source and claim back the over paid tax at the end of the tax year. This is actually very similar to other industries where HMRC refund on an annual basis the over deducted tax after a tax return is submitted to them annually. You must make sure all such income payments are paid to your personal bank account and not to your company bank account. Otherwise you will be taxed twice.
4. Any work you do for a non NHS and local government / council company should still be paid in full to your company bank account.
5. Avoid an umbrella company at all costs as this is going to cost you the most, even more than being directly employed.  Because an umbrella company charges the contractor for employers NI contributions (approx 13%) and extra admin charges on top of normal tax and NI deducted. You can claim back over paid tax on the tax return but will not be able to claim the extra charges and Employers NI. A lot of agencies will push worker here because they will make extra money from the charges passed on. Know your rights as they cannot force you to only have an umbrella company.
6. If you do opt for employment only contract then only tie yourself in for a very short time eg 3 months maximum. As the situation is bound to change soon and the structure of contractor work will have changed and settled by then allowing you to move back to using your limited company if this is still the most tax efficient choice.
7. Do not close your limited company as it can go into a dormant or inactive status and be reused at any time and has an unlimited lifetime. The company can also do other type of work and can be used for working for non NHS and Local Council work.
8. A limited company can still carry on incurring costs without income indefinitely and this will lead to the eventual corporation tax falling and falling as expenses rise and rise in the company. With the actual earned income possibly being completely wiped out by expenses eventually. This effectively allows the director / shareholder to take more of the income earned in the limited company with little to no corporation tax.

Lastly give it time, as one door closes inevitably another opens, and once the changes start to actually be implemented recruitment agencies and the NHS Trust's will most likely find a way around the rules and may well re-employ people in a different way when they see the sea of dissatisfaction from the majority of the contractors that is bound to come.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

As of today there are only 7 working days till the 31st January 2017, which is HMRC's online self assessment deadline.

The submission of the personal income tax return and the payment of any tax and NI due for the period 6/4/15 to 5/4/16 is midnight 31/1/17. And anyone who has not yet had their tax return done and paid for should start to worry about the up to £1300 fine plus interest on late paid tax imposed by HMRC for missing the deadline.

The self assessment / personal tax return is required from the following types of people:

1. Self Employed (even partially) during the tax year 15/16 ie 6/4/15 to 5/4/16
2. Employed and earning over 100k for the year ended 5/4/16
3. Director or shareholder of a Company and taking dividends in the period as above
4. If you have received rental income in the period 6/4/15 to 5/4/16
5. You received savings and investments income in the period 6/4/15 to 5/4/16
6. You sold something and made a profit on the item, so are required to pay the Capital Gains Tax (CGT) eg selling shares, a property, an antique, Plant and Machinery etc
7. You have received income over £50,000 and you claimed Child Benefit
8. If you have not notified HMRC that you have left self employment and they have not confirmed that you do not need to do a 15/16 return
9. A letter / email / text from HMRC has been received by the tax payer advising them that they need to submit a tax return for the 15/16 year (note: only new registrants may get a reminder as HMRC expects old registrants to already know the deadlines and protocols required).
10. You received income from overseas
11. You lived abroad and had income from the UK
12. You are retired and receive more than one type of pension and annual income payment pushing you over the personal income allowance
13. You have had a P800 from HMRC saying you have not paid enough tax in the year
14. You are  minister of religion or and Underwriter
15 Even if a person has died they may still need to submit a tax return to make sure they have paid the correct tax and those that receive an inheritance may need to pay for Inheritance Tax (HMRC will advise further).
16. If you have received a P11d and not paid the correct tax for the benefit in kind eg company car, private medical, gym, travel etc

So if you haven't already had your tax return done and still need to send / drop in your income and expenses information, please take heed of this final reminder.

Those that have handed in their information we will make sure it is done before the deadline. We can even have your deadline extended in some cases as we are registered authorised agents for HMRC.

And if your thinking of using an accountant, note, that not all accountants are the same. We recommend you use an expert in tax so he/she saves you far more in tax than you ever have to pay them for their service.

With fines up to £1300 plus interest on the amount of tax due. In some cases penalties are greater than the tax that would have been due. So don't delay as you have no time left and most excuses and appeals are rejected by HMRC after a penalty has been imposed.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

We often get asked when is the best and worst time to call HMRC? And because at Tax Affinity Accountants, we already know this, we are happy to advise them.

The telephone help lines at HMRC have historically always had long waiting times. With thousands of callers who wait a long time simply giving up even though they have needed important help to get things right.

'The early bird catches the worm'

Its simple the best time to call HMRC is when everyone else is not calling. And this mean's doing it early in the morning between 8am and 10am Monday to Friday.

The worst time is towards the end of the day between 4pm and 8pm, when everyone is calling them.

Calling HMRC at the wrong time can cause a lot of stress and frustation. Plus imagine you ask one of your employees to do this at the wrong time and he/she does nothing for 45 minutes but hold the telephone. This a huge waste of wages and efficiency.

Worse still HMRC also use an automated recorded message to try to turn away callers at peak times by telling them to check HMRC's online system and resources or a “Sorry there is no one available to take your call, please try later”. message.

So plan ahead and try to call them early in the morning and if you must ask an important question just hold on in there until someone picks up and hope they give you the advice without referring you to another department!

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Since the Brexit  vote, we have seen that a larger than usual number of enquiries about ensuring that an entrepreneur, doing business in the UK, needs to make sure they have updated their visa and rights to remain in the UK by the British Home Office.

Normally this involves the services of a solicitor to organise your paperwork or at the very least a good understanding of the Home Office rules for application if your doing it yourself. The solictor will often also ask you to provide a qualified accountants letter and financial evidence of the past 5 to 10 years of employed or self employed activity in the UK. With evidence showing how you have contributed to the British economy through your taxes and national insurance contributions (NI).

If your employed this is through P60's, P45's and P11d's. And if your self employed this is in the form of Company Accounts, Corporation Tax Returns, Personal Tax Return's, SA302's (tax calculation) showing total income and tax and NI payable and a HMRC statement of account (like a bank statement showing payments made and balances due).

Your accountant can provide the company accounts, SA302's and tax returns if required urgently. And copies of the HMRC headed statement of account and SA302's can be ordered from HMRC with a normal delay of 7 to 10 days. This information along with others required eg bank statements and ID documents etc can then be submitted with the application to the Home Office.

Some types of visa's such as the entrepreneur visa require detailed business plans with the application and this is something we have a speciality in and can help create this to help your application.

At Tax Affinity Accountants we have already helped many self employed businessmen and women with their successful applications. So if you feel you need help with any of these documents then feel free to contact us and we would be happy to help.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and advisors for small businesses. Helping and supporting business throughout the UK, they regularly help new and established businesses to succeed.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

For a lot of people it's very stressful having a brown envelope drop through their letterbox. Especially when you know its something likely to be a penalty for late payment of tax or late submission of a tax return.

But there maybe a glimmer of hope to having some of these penalties reduced or cancelled because HMRC have been writing off late penalties for many tax payers if they have provided a reasonable excuse e.g. if you have been trying to contact HMRC prior to receiving the fine then they should be sympathetic to your appeal.

This is most likely because Government Ministers have been condemning HMRC for its bad customer service of late. And an official report issued recently stated that up to half of all calls made to HMRC were not picked up by their call staff. Which could equal as much as nearly 11 million plus missed calls.

A HMRC spokesman said: "We work very much on a case by case basis but if you phoned us and couldn't get through we would take that into account..... If someone says they tried to call us we will take their word for it. We do not want to penalise anyone."

HMRC goes on to say "We know our customer service hasn't been as good as it should be so we have moved a further 3,000 people into them and things are getting better..... All this means no one should get a penalty for missing the 31 January deadline, or for putting the wrong figures in their returns because of call waiting times..... A penalty for a return that was in on time would only apply for failing to take sufficient care to get it right."

If you are not sure about your penalty or would like a professional to appeal them for you then the best thing is to speak to an experienced and respected professional firm like Tax Affinity Accountants.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Surbiton in Kingston upon Thames they are considered in the industry to be experts accountants for small businesses. Helping and supporting business throughout the UK, they regularly help new and established businesses to succeed.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

The importance of budgeting for income or corporation tax for self-employed people
 
A lot of of us dream of running our own business, and with hard work and careful planning, self-employment can be hugely rewarding and fun. But due to the fluctuating incomes many self-employed people face, running your own business requires careful money management. 

Whilst you may have a strong overall income, the flow of money may not always be regular and it can take weeks and even months between pay cheques. It is therefore very  important to manage your money carefully. Running out of cash before you get paid again could mean living on credit and interest payments may prove to be very costly.

Income tax is paid by sole traders and partnerships and corporation tax is paid by limited companies. Regardless of whether you are a sole trader, partnership or work via a limited company it is particularly important to budget for the tax due on 31 January each year.

Unlike employment income, your tax is not deducted at source and as you receive your income untaxed it is easy to assume that all of this is yours. However, some of this income will be paid in tax and should be budgeted for in order to avoid the shock of a high tax bill. It is worth noting at this point that if income or corporation tax has not been budgeted for and you delay payment, you may have to pay fines for late payment (as highlighted in more detail in the previous blog post).

A good accountant can help you with budgeting by calculating how much of your income will be paid to the taxman and can also advise on how to minimise this.

You can also use the 'Self-employed ready reckoner' tool on the HMRC website for an estimate of how much money to set aside. And this is usually around a 80:20 split between you and HMRC.

Furthermore, you can also set up a 'budget payment plan' which lets you make regular weekly or monthly payments in advance. These methods will save you a lot of stress and will help you better manage your money, especially during the Christmas period.

If you need any further help please do not hesitate to contact us and we'll be sure to offer you bespoke advice depending on what best suits you.

By Hamza Habib at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Surbiton in Kingston upon Thames they are considered in the industry to be experts accountants for small businesses. Helping and supporting business throughout the UK, they regularly help new and established businesses to succeed.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

You may or may not have heard recently that the UK government are revising work place pension schemes - causing a lot of confusion for all employers and self employed businesses.

HMRC have revised the pension scheme by introducing a new pension initiative called 'automatic enrolment'.  

It will need to be set up by the employer as they look to make sure people have a pension for the future; with the uncertainty of the state pension, this is a way that forces employers to pay into employees pensions.

The new 'automatic enrolment' covers anyone who works in the UK, earns £10,000 or more per year, and if they are between 22 and the state pension age.

Whereas, if you are self employed, by law there is no requirement to enrol. However,  while the 'automatic enrolment' has no direct impact on the self employed it is still advised to think about the future and enrol into one of the many pension schemes available to you.

Some of the many options available to self employed are; a personal pension, self invested person pension, or a stakeholders pension. While these are all private pensions, the self employed still have an option to enrol into the National Employment Savings trust who are a government body.

As the director of a company, you are required to register for automatic enrolment; however, you can opt out of paying towards the pension scheme. A director of a company is seen to not hold a contract so they are not classed as employees, which means they are not required to be enrolled.  

Although, it is advised that you do have a pension and when thinking about setting up a pension ensure you have enough to survive in the future. When making payments you should look at your income to see how much you can afford after subtracting living expenses.

If you have further questions, get in touch with a reputable accountant who can advise your further like Tax Affinity Accountants, the experts in Tax and Accounting.

By Chris Combstock at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Surbiton they are considered in the Industry to be experts accountants for small businesses. Helping and supporting business throughout the UK, they regularly help new and established businesses to succeed.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Online Sellers to be targeted by HMRC for investigation.

At Tax Affinity Accountants we have always been at the forefront inside knowledge and key advice and support for all of our clients. And we know that every tax year HMRC picks a category of business to focus its investigations on.

We have been successfully guiding and helping those effected by investigations for many years. For the 2014/15 it was Landlords and Property Developers, for 2013/14 it was Electricians and Tutors 2012/13 it was Builders and Decorators.

This tax year 2015/16 we have credible information that it is individuals selling items and services on Autotrader, Gumtree, Ebay, Amazon, E-Auctions, Craigslist, AirBnb and other online platforms that will be investigation for undeclared incomes.

HMRC says it wants to target those that have failed to register for and pay the correct amount of tax. It thinks that this could amount to as much as £5.9 billion of missed tax. And so it is currently starting a consultation on extending their powers even further than before to be to collect data on companies and individuals from other sources.

So far, Ebay has been sympathetic to the request from HMRC and says that it has tried to identify to its sellers their obligations to the tax authorities of the relevant country in which they trade. And have said that they would share information with the tax authorities where there is evidence of wrongdoing. And so it's highly likely other online platforms will be following suit.

HMRC has said it is better that an online seller should come forward and volunteer to put their affairs in order as it will only be a matter of time before they will catch up them. They went on to say that they will not be targeting people selling personal property, but rather those that sell large quantities of similar or categorised items. And they will get the source information directly from the web and the online platform providers.

From our experience investigations can take at least 6 months with some lasting up to 2 years and always cause a lot of stress upon individuals and their families. Especially as the penalties and fines can be up to a further 100% on top the tax due. If you are concerned about how this may affect your business we recommend you contact your local Tax Affinity Office and ask for more detailed help.

By Anni Khan at Tax Affinity Accountants.

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they provide a bespoke service to client’s right across the UK and are considered in the industry to be experts.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.