Category Archives: Corporation Tax

Everything to do with corporation tax

Toolkits to help reduce errors

The HMRC has revised the list of toolkits as a guidance on areas of errors that are frequently seen in returns. The idea of these kits is to reduce these errors.These should help taxpayers to:

  • ensure that returns are correct in material respect;
  • focus on the areas of possible error that HMRC consider key
  • demonstrate reasonable care

The complete list is as follows:

Individuals, business and corporations

Business Profits (PDF 179K)
Capital Allowances for Plant and Machinery (PDF 174K)
Capital Gains Tax for Land and Buildings (PDF 228K)
Capital Gains Tax for Shares (PDF 178K)
Capital v Revenue Expenditure (PDF 145K)
Chargeable Gains for Companies (PDF 219K)
Company Losses (PDF 218K)
Directors’ Loan Accounts (PDF 144K)
Expenses and Benefits from Employment (PDF 206K)
Income Tax Losses (PDF 124K)
National Insurance Contributions and Statutory Payments (PDF 212K)
Private and Personal Expenditure (PDF 174K)
Property Rental (PDF 231K)
Small Profits Rate and Marginal Relief (PDF 112K)
VAT Input Tax (PDF 182K)
VAT Output Tax (PDF 208K)
VAT Partial Exemption (PDF 171K)

Trusts and Estates

Capital Gains Tax for Trusts and Estates (supplement) (PDF 237K)
Inheritance Tax (PDF 205K)
Trusts and Estates (PDF 221K)

Senior Accounting Officers legislation

The new rules on The Senior Accounting Officers (SAO for short) requires all qualifying UK resident companies to appoint an SAO to take personal charge for their company’s tax accounting matters.

What are the rules?

The SAO requirements came into force for accounting periods beginning on or after 21 July 2009 and apply to companies that in the preceding financial year either alone or when its results are aggregated with other UK group companies has turnover of more than £200m or has a relevant balance sheet total of more than £2bn.

The legislation requires that the SAO of a qualifying company must take “reasonable steps” to ensure that the company establishes and maintains “appropriate tax accounting arrangements” and in particular, monitors the accounting arrangements of the company to identify any aspects in which those arrangements are not appropriate.

The SAO must certify the position annually to HMRC, and the SAO will need to retain adequate supporting evidence to demonstrate that ‘reasonable steps’ have been taken. Failure to adhere to the rules risks a personal penalty of £5,000 for failure to comply with the requirements.

A briefing document prepared by KPMG, a leading provider of professional services including audit, tax and advisory. is avalable from the links shown below. Please contact me if you need further assistance in this matter in prder to ensure that your organization is in compliance with the legislation.

SAO – Briefing paper by KPMG – Direct Link

SAO – Briefing paper by KPMG – SkyDrive Link

SAO – Briefing paper by Google Docs – Direct Link

Return reminder for employers

With the 2011/12 tax year now ended on 5th April 2012, employers across the country are reminded to send in their annual returns on time, or face a penalty.

Employer Annual Return Forms (previously called Form P35), which provide information on employees’ tax and national insurance deductions during the tax year, must be sent online to HM Revenue & Customs (HMRC) by the 19th May deadline. Almost all employers must file these returns online. Paper returns must not be sent to HMRC.

If you file the return late, the penalty is £100 per 50 employees for each month, or part month, that the return is outstanding.

Employers who are not registered for online filing need to sign up now for HMRC’s PAYE Online service. The registration process takes a few minutes, but you won’t be able file online until you have activated the service using a code that HMRC sends you by post. This can take up to a week to arrive – so don’t leave registration until the last minute. I can certainly help you to register you for HMRC’s online service so please contact me at your earliest convenience.

HMRC has published a list of common errors to avoid on its website at www.hmrc.gov.uk/paye/payroll/year-end/errors.htm.

Limited companies – Claiming back CIS deductions

All registered subcontractors should read the latest HMRC leaflet which sets out how Limited Companies registered as subcontractors can claim back any overpayments of deductions under the CIS rules.

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The leaflet is available from my website and people can contact me if they need further assistance in how to go about making the claim.

Limited Company Subcontractors – Claiming back Construction Industry Scheme (CIS) deductions

Cap on unlimited income tax reliefs

Granny tax, pasty tax and fuel fiasco has over shadowed what I consider to have the most far reaching impact on how our income tax system operates.

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At present individuals can offset almost unlimited amount against income to arrive at income liable to income tax. This results in an individual pays not tax at all even if his total earnings are in millions of pounds.

This is likely to change from 6 April 2013 when a cap would be placed on how much can be offset against income to arrive at income for tax purposes. The cap will apply only to reliefs which are currently unlimited. And will be set at 25 per cent of income or £50,000, whichever is greater.

The reliefs likely to be affected are:

    • loss reliefs claimable against total income;
    • qualifying loan interest reliefs;
    • reliefs for charitable donations; and
    • miscellaneous small reliefs which are currently uncapped.

Some of the reliefs not likely to be affected are:

    • Reliefs for double taxation such as foreign and dividend tax credits and notional tax on life insurance gains.
    • Reliefs that are already capped such as pension tax relief, front-end Enterprise and Seed Enterprise Investment Scheme income tax relief, Venture Capital Trusts and the Cultural Gift Scheme.
    • Deductions that are allowed against specific source to arrive at income liable to tax;
    • The new business investment incentive for non-domiciled individuals who are resident in the UK for tax purposes (this relief is against specific foreign income brought to the UK;
    • The income tax reclaimed by charities under the Gift Aid scheme;

The detailed HM Revenue/Treasury press release has more information and it is available exclusively from this blog:

Link: Cap on unlimited income tax reliefs

List of negligible value assets

hmrc_official_logoHMRC have today produced a revised list of assets that are officially accepted as qualifying for negligible value claims for Capital Gains Tax purposes. The revised list include any new agreements during the month of February 2012.  The list is very long so I suggest please use HMRC’s website to browse it.  The link is here:

Negligible Value agreements to 29 February 2012

As always, if you have any questions or need further assistance on this matter, please don not hesitate to contact us using this form: Contact us.

Budget 2012: – Summary of announcement

Main announcement on direct & indirect taxes

  • Income tax: 50p tax rate for anyone earning more than £150,000 a year will be reduced to 45p, effective 6th April 2013. Mr Osborne said the 50% rate is driving budding entrepreneurs away from Britain. Are they going to some other planet? Only he can tell us ;
  • Personal allowance: Tax-free threshold will rise to £9,205 from 6th April 2013;
  • Corporation tax: The corporation tax will be cut by 1% immediately, taking the tax to 24%. This will decrease to 22% by April 2014. the chancellor wants me to advertise this fact ” for business in Britain”. WELCOME TO BRITAIN FOR OUR WELFARE, FREE HOUSING AND REDUCED TAXATION;
  • Stamp duty: The Stamp Duty Land Tax charge on residential properties over £2m will rise to 7% from midnight tonight (21 March 2012) and homes bought inside a corporate envelope will see tax of 15%. Now this is going to hurt people who buy residential properties on a daily basis;
  • Tobacco: The tax on cigarettes will rise to 5% above inflation – adding 37p to the price of each packet sold from 6pm tonight (21 March 2012); Now this is the best time for smokers to quit;
  • Gambling: Slot and fruit machines will see new taxes – with a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings; Kids and truants would be hit hardest by this announcement;
  • Alcohol and Fuel: No new changes to taxation announced. But Previously announced plans mean the price of a pint will rise between 5p and 10p from next week; Alcoholics beware!
  • Additional: A consultation document to be published in April on Integration of income tax and national insurance;
  • Where your money goes: the government confirmed that everyone would receive a personal tax statement explaining what they have paid and where this money has been spent – i.e. how much of your money has gone to things like education, health, benefits and the like. Now this move is considered money well spent by our government;
  • Tax breaks for industry: The 2012 Budget contained tax breaks and support for several UK based industries, including TV production companies, animators, video games producers and more industrial sectors like aviation and pharmaceuticals. this move is likely to benefit foreign investments more than British investors; Britain is for sale from midnight tonight;

Detailed tables and rates are at this link; Rates and Allowances

Property losses – Anti-avoidance

The Government has announced that it will introduce new legislation, effective from 13 March 2012, to counter tax avoidance that relies on property business loss relief or post-cessation property relief.

 

Online traders are next target by HMRC

HMRC has launched a campaign to target people who sell goods and services online for profit.

The campaign is aimed at people using online marketplaces (HMRC calls this e-marketplaces) to buy, sell or swap goods for a profit. You are at a risk to be investigated if it is suspected that you may not be paying tax on this income.

How to work out if you are trading

A website with questions and answers have been set up to help people decide if their activity is classed as an online trading. You can get preferential terms if you come forward before 14 June 2012. The website is here: http://www.hmrc.gov.uk/campaigns/emarket.htm