Tax investigations: What to do when HMRC comes knocking

Your business could be picked out of a hat for a tax investigation.  However, the Taxman now has extremely sophisticated software and tools to analyse your accounts and tax returns.  These days it is more likely that a business will be quickly and easily targeted for an investigation if it stands out for any of the following reasons:

  • Late filing of tax returns
  • Unpaid tax liabilities
  • Errors or omissions on tax returns
  • Fluctuations in tax returns (a drop in income, or increased costs)
  • You receive a tax refund (common for VAT returns where sales are zero rated)
  • Your income levels do not match the ‘norm’ for your business sector
  • Exceeding turnover thresholds for various tax schemes and not acting accordingly
  • You work in a high risk industry that has been targeted by HMRC
  • Your income levels are not consistent with your standard of living
  • HMRC receives a tip-off

HMRC could investigate your business in relation to its CIS, PAYE, VAT, Corporation tax or Self-Assessment Tax Returns.

Don’t Panic

Whilst HMRC may have found an inconsistency in your tax returns, or highlighted a risk area, there could be any number of legitimate reasons for this.

In most cases we find that providing HMRC with full answers to their questions, and sending them the necessary documents and evidence, will lead to them simply agreeing with your tax calculations and moving on.

What to do

  • Keep high quality accurate records
  • File returns on time
  • Pay your tax on time
  • Seek advice from TorrWaterfield

Contact TorrWaterfield – 0116 2423400

If you do receive a letter from HMRC, contact us straight away.  We can assist you throughout the entire tax investigation. 0116 2423400

We will:

  • Offer help and advice
  • Contact HMRC on your behalf, replying to their correspondence by post, email and telephone
  • Use our premises for meetings with HMRC
  • Appeal against HMRC’s decisions if necessary
  • Keep you updated throughout the whole process

Fee Protection

Many investigations are concluded after one letter, meeting or phone call.  But some can be on-going for months or years.

We encourage all of our clients to take out our fee protection.  ThStuart Caney April 2012is typically costs £190 per year.  We can then recover our cost from a third party, rather than charge you for our services. 

Stuart Caney, Accounts & Tax 

If like many of our clients you wish to benefit from this please contact Hollie Crown now for a personalised quote.

The benefits of becoming an apprentice

By deciding to do an apprenticeship the transition from school into the working world was made a lot easier. I still wanted to learn and get qualifications but I found this difficult to do in a classroom as the learning was not hands-on. By doing an apprenticeship I gained intimate knowledge of the work environment which I could not have done in a classroom.

With apprenticeships there are excellent progression opportunities with different levels you can do. With the support of a skills assessor you can easily work out the best course for you, which for me was a level 2 NVQ in Business & Administration. Because the work involved in completing the NVQ was based on my job role, it was easy to complete and I could take skills I learnt from my apprenticeship and use it in my job role. I’ve now progressed on to a level 3 NVQ which I am due to finish in the next couple of weeks.

I was also able to free up some of our existing staff’s time by helping with the work they may not have currently had time to do. As well as gaining extra experience by doing this, it is also extremely helpful for Torr Waterfield and my co-workers.

The benefits of hiring an apprentice

Hiring an apprentice can make the recruitment process easier and quicker for employers as training providers will help with pretty much the entire process such as filtering CV’s, finding and recruiting an apprentice, training and accessing funding.

The wage an apprentice earns is based on their age and the sector they work in which makes it far more cost effective than hiring older, skilled and qualified staff. The cost of training can also be fully government funded or contributed to, however this again depends on the age of the apprentice and the sector your business falls within.

For more information on becoming or hiring an apprentice you can visit https://www.gov.uk/topic/further-education-skills/apprenticeships or call us on 0116 2423400 

Amy Fisher

Administrator/Reception_DSC1514

Spring Budget 2017

I am sure that you have seen the headlines in the papers this morning about the Budget and for a detailed analysis please see the report on our website:

www.torrwaterfield.co.uk/news/budget-report.

The items that have caught my attention and I think are relevant to most people are as follows:

National Insurance for the self-employed

At present, if self-employed, you pay class 2 National Insurance of £145.60 for a complete year, and class 4 at 9% based on your level of profits.  The Government do not think that this is fair as employees pay National Insurance at 12%.  To level this position, class 2 National Insurance will be abolished from 06/04/2018 and the class 4 element will increase to 10% from that date, and to 11% from 06/04/2019, thus bringing the self-employed more in line with the employed.

Dividend changes again …

From 06/04/2016 broadly the first £5,000 of dividend income is taxed at 0 % (Dividend Allowance).  This will continue until 05/04/2018.  However, from 06/04/2018 the Dividend Allowance will reduce to £2,000.  This will mainly affect the family company shareholder and increase their tax liability as follows:

Basic rate taxpayer – additional tax of £225

Higher rate taxpayer – additional tax of £975

Additional rate taxpayer – additional tax of £1,143

Individual Savings Accounts (ISAs)

 The overall limit is increasing from £15,240 to £20,000 on 06/04/2017.

Property and trading income allowances

Although this was mentioned last year it comes into play on 06/04/2017. It is as it says, so if you have property or trading income of £1,000 or less you will no longer need to declare this or pay tax on it.  This could cover small amounts of rent from Air ‘bnb’ activities or trading on ebay. 

New Childcare provisions

 If you are taking out new childcare provisions from 06/04/2017 then, instead of opting for a salary sacrifice scheme and receiving vouchers, for every 80 pence that you contribute the Government will contribute 20 pence. The maximum the Government will contribute will generally be £2,000.

Making Tax Digital

This will be introduced on 06/04/2018 for businesses, the self-employed and landlords who have profits chargeable to Income Tax and pay Class 4 National insurance Contributions where their turnover is in excess of the VAT Threshold, which will be £85,000 from 01/04/2017.

As this is a very new area please contact us for further information.

Salary Sacrifice

 From 06/04/2017 this is changing, but it is still beneficial for both the employer and employee to sacrifice salary in respect of employer provided pensions, childcare vouchers, workplace nurseries and cycle to work schemes. 

Construction Industry

The government are launching a consultation on 20 March 2017 to look at various areas, including the qualifying criteria for Gross Payment Status and options to combat VAT supply chain fraud in supplies of labour.

In addition to the above, certain other changes come into force on 06/04/2017 that have been mentioned in earlier Budgets namely:

Restrictions on residential property interest

Landlords will no longer be able to deduct all of their finance costs from their property income.

Inheritance Tax residence nil rate band

There will be an additional nil rate band for deaths on or after 06/04/2017 where an interest in a main residence passes to direct descendants.

As mentioned above I have only mentioned the areas that I believe will be most relevant to the majority of our clients but other areas can be found on our website.

Please contact us if you have a specific query. 0116 24243400

Julia Harrison, Tax ManagerJulia Harrison April 2012

Charities and Fundraising – New changes

The Fundraising Regulator fundraisingregulator.org.uk was established a year ago to oversee charity fundraising in England and Wales.  There are different rules for charities registered in Scotland.

The new body assumed responsibility for this area on 7 July 2016.

So far most people are unaware of its existence, but that should change as we proceed into 2017.  Generally the Code of Fundraising Practice will affect charities and anyone involved in their management.  The general public should however be aware of the new rules and there are schemes being drawn up to protect people from over eager charities.

The biggest effect on charities is that the Fundraising Regulator will be funded by a voluntary levy.  Charities with spending of over £100,000 on fundraising will be asked to pay between £150 and £15,000 annually, this being on a sliding scale with the top end only being relevant for a small number of very large charities; exempt charities will be charged a flat rate of £1,000.

Below the £100,000 threshold, a charity may choose to register and pay just £50.

Third party fundraising agencies and similar organisations may also sign up and pay between £100 and £1,200 annually.

Although, as already stated, this is a voluntary levy, it is important for charities to consider the message they are giving out by not being registered.  It may well influence potential donors if they feel that the charity is not abiding by the Code.  The government has also retained powers within the legislation to make the levy compulsory if the voluntary approach does not work!

Finally, the Regulator is working on a Fundraising Preference Service which should be launched this year.  This will enable individuals to register and then have control over how, or whether, charities contact them for fundraising purposes.  This is expected to work in a similar fashion to the existing Telephone Preference Service and the Mail Preference Service.

There is of course much more detail behind all of this and we will be happy to help. Please get in touch if you would like to discuss this further 0116 2423400

Neil Ford, Technical Manager Neil Ford April 2012

A Year out

In 1995 my husband and myself decided to take a year out to travel around the world.

At the time I worked for British Telecom who were kind enough to give me the time off, which meant I had a job to come home to. My husband gave up his job but he did have another job offer for when he came home. We both had two jobs and worked all the hours we could to save up the money for our trip.

When I told my dad I remember he wasn’t very impressed, we had a house, he said we should be settling down to start a family not travelling the world.

We sat down and worked out a rough itinerary of where we wanted to go then went to a travel agent. We said want to go here, here, here and here – what flights can they do for us. A couple of places we were going to involved flying in to one place and travelling over land to fly out from somewhere else.

September 1995 – We were dropped off at Heathrow ready for our adventure, one backpack each with roughly what we thought we might need, and our round the world plane tickets.

The first place we were heading to was Delhi, India, we had no accommodation booked, my dad would have gone nuts if he had known so we didn’t tell anyone. We used the Lonely Planet guide which they call the travellers bible, it is, it has everything you need to know, people who have travelled write it so it has alot of information about things you probably wouldn’t know about.

The places we visited after India were Nepal (Annapurna range Himalayas), Kashmir, Singapore, Taman Negara National Park, Krabi, Koh Phi Phi, Bangkok, Hong Kong, China (Xian, Yangtze River, Tiananmen Square), Australia, New Zealand, Fiji, Hawaii (Pearl Harbour), Los Angeles (where we had some friends arrive from England to finish our trip with us), New York, Washington D.C, Chicago, Alaska (Denali National Park), Canada (Jasper and Banff National Park), San Francisco, Mexico, Yosemite National Park, Death Valley, Las Vegas and the Grand Canyon.

We ended back in Los Angeles were we sold our car, said goodbye to our friends and then made the long journey back to the UK, back to our home and jobs.

It was great to see everyone when we came home because you do miss people especially when it is someone’s birthday or Christmas. We absolutely loved our year out, I think it taught us a lot about ourselves, when visiting other counties you learn to appreciate what you have at home and are grateful for it, you have to learn to be organised with travel, accommodation everything really. You also have to learn respect for other country’s beliefs and cultures.

I found it quite difficult to settle back into normal life after such an amazing year out, but I can honestly say I would recommend it to everyone, it was definitely worth the experience. I learnt a lot which I think I still use today, patience, understanding, caring, being organised, being respectful and listening to people.

Linda Sampson, Credit Control thailand-national-park-2-1386659.jpg