CIS300 and PAYE payments due 19 June

The monthly returns for payments to sub-contractors, CIS 300, must be received by HM Revenue & Customs by 19 June. If you have not made any sub-contractor payments you may still be required to submit a NIL return.

For those with PAYE and National Insurance payments averaging £1,500 or more per month funds should reach HM Revenue & Customs bank by 22 June. Last day for paying electronically is affectively Friday 18 June. If paying by other means such as a cheque this should reach them by Friday 18 June. Basically HM Revenue & Customs are seeking to receive cleared funds by 22 June.

In previous tax years HM Revenue & Customs have not fined small employers for late payment however from this tax years you could find yourself liable to a penalty of between 1 & 4% of the amount late depending on how many payments are late. There will be no penalty for the first late payment providing it is not 6 months or more late.

If you miss any of the above payment deadlines you can always pay by card by clicking here

For more information on penalties click here

Posted by Joe Martin providing business services for small businesses and the self employed. Go to my web page here

Answer to Paul_1DayLater who's on Twitter

In answer to your Twitter Paul; I’ll start with a couple of clichés;
Horses for courses! Sledge hammer to crack a nut!

I work from home so my overheads are low. I don’t have fancy offices and a receptionist; there’s just me and my son who works part time bookkeeping for me. I just charge for our time plus Vat and if you’re Vat registered that’s not a problem’ cos as you know; you get the Vat back!

Why would you want to use an accountancy firm that’s capable of dealing with the likes of Marks and Spencer if you’re a small company?

To make a medical analogy I see myself as a GP. If I come across aspects I feel needs the opinion of a consultant, and there have been times when I’ve done, just that. The client might not see much change out of £300.00 but at least they are satisfied that they have the best advice for that situation and not paying in that order for everything else that needs to be done.

I have just taken on two new clients who have used high profile local accountants; both have been local branch committee members of a highly regarded national business institution.

The chairman is likely to see his fees at around about 30% of the previous level. He is local.

The other a former secretary is likely to move to the coast, we don’t have any coast here in Cheltenham, and is not at all daunted by the distance. There are certain aspects of his tax situation I warned him I might not be able to deal with and need to consult with someone with greater knowledge in that field than I have. In the event I shall thoroughly research the aspect and put it to the client. Let’s face it; there’s no point in paying £1,000 for a £900 tax saving.

I’ve also recently taken on my cousin’s limited companies in London, and he found because he was so small everything was late, incurring fines they eventually paid, and it took me ages to obtain information I needed.

So I come back to the clichés do you hire a Bugatti Veyron; yes I’d love one, when a Smart Car will do?

Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

HMRC tax investigations into small businesses yield little compared to larger firms

Posted in bytestart.co.uk

A leading accountancy group points out that tax investigations into large companies are 18 times more productive than those into small businesses.

For every £1 HMRC spent on investigations into multinationals during 2008/09, they clawed in £181 of tax. In contrast, tax investigations into SMEs and private individuals only generated £10 of extra tax for every £1 invested.

Roy Maugham, Tax Partner, of UHY Hacker Young says: “The Government is under pressure to reduce the UK budget deficit and the expectation is that they will try and collect more money from tax investigations. If that is the case these figures suggest that HMRC should avoid focusing on SMEs.”

“Not only are the amounts of money to gain from investigating SMEs far smaller but also small businesses feel the pain of tax investigations much more acutely than multinationals.”

The Liberal Democrats made a manifesto pledge to collect an extra £4.6bn by clamping down on tax in avoidance.

The accountancy group explains that when a smaller company is investigated by HMRC a higher percentage of that business's senior staff will be tied up dealing with HMRC than with a larger company.

“Many smaller businesses won’t have an internal finance function to help deal with a tax investigation. The most senior managers may have to sit in meetings with HMRC and they will probably have to pay for external tax advice.”

In the past 12 months though, HMRC has generated £4.9 billion through tax enquiries into multinationals, but just £359 million from Self Assessment business and personal tax enquiries.

“If we are set for a period of more frequent and more aggressive tax investigations we hope that HMRC shows some sympathy for SMEs – the statistics show it would be in HMRC’s favour if they did.”

Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

Parents 'breaking law' on car insurance

By Brian Milligan
Business reporter, BBC News

Millions of parents are said to be breaking the law in order to save money on car insurance for their children.

New figures suggest that 41% of parents deliberately lie when filling out policy applications.

Parents are claiming to be the main drivers on the policy, when in fact it is one of their children who is the main driver, or owner of the car.

The practice is known as fronting, but could lead to prosecution.

It is attractive for people, because it potentially offers large savings.

Findings
Research by Co-operative Insurance found that 41% of parents were actually fronting policies at the moment, and 61% would do so in the future.

Continue reading the main story
[Parents] are not only risking prosecution, but harming their chances of obtaining insurance in the future

Tim Franklin
Co-operative Financial Services
Cutting the cost of car insurance
Typically, insurance companies identify the practice when a car is registered to the parents' address in say, Manchester, but the car seems to spend most of its time in Leeds, where a child may be studying at university.

The industry is warning that it is an extremely risky practice.

"The view that motor insurance fronting is harmless and does not hurt anyone could not be further from the truth," said Tim Franklin, of Co-operative Financial Services.

"Parents who believe they are helping their children to save money by fronting are not only risking prosecution, but harming their chances of obtaining insurance in the future."

Costs
Tom Dunn is a 17-year-old who is learning to drive in Milton Keynes.

But that could be the closest he ever gets to owning a car for himself, because he acknowledges that he cannot afford to pay for the insurance.

"I think I would be able to buy a second-hand car, but I do not think I would ever be able to buy the car and pay for the insurance," he said.

In a test to see how much Tom would have to pay to insure the car he is learning in - a Vauxhall Corsa - the cheapest was £4,000. That was assuming the car was kept on a private driveway.

Some parents are trying to reduce such costs by any means they think is legal.

Tom's driving instructor, Bryan Greenall, said he was seeing more and more parents who are tempted to break the law by fronting their car insurance.

"I basically tell them to make sure everything is above board and legal. You do not want to be going down the route of something that is not legal, even though you do not know it is not legal," he said.

Premiums
At the Motor Insurers' Bureau - set up to compensate victims of uninsured drivers - they insist the high cost of insurance should never justify lying on an application form.

Fronting could leave parents looking over their shoulder
They say the premiums being charged are not excessive.

"Yes, £4,000 is an awful lot of money but it accurately reflects the risk posed by young drivers," said Ashton West, the bureau's chief executive.

Mr West is keen to stress that fronting was an attempt to obtain money by deception, and therefore amounted to stealing.

And it was not just a criminal record parents could be saddled with. Insurers could refuse cover, and deny insurance in the future.

"If you cause injury to a third party, you will have to pick up their costs as well," said Mr West.

"That could be hundreds of thousands of pounds, and those consequences could stick with you for the rest of your life."

To see for ourselves whether parents were aware of the illegality of fronting, the BBC spoke to some as they parked up in the centre of Milton Keynes.
By Brian Milligan
Business reporter, BBC News
Within the space of 15 minutes, we spoke to three parents who told us they would be perfectly happy to put themselves as the main driver on a policy, even when it was not true.

"Anything that saves money is a good idea," one woman said.

When asked whether she knew it was illegal, she said, "I had no idea."

Another woman admitted to actually having fronted in the past.

But she too was unaware of the illegality, or of the consequences.

The survey says hard times may be forcing parents to try and save money on insurance. But it warns that if they do so illegally, the ultimate price could be prosecution.

Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

HMRC moves to simplify helplines

Gavin Hinks of Accountancy Age writes:

The taxman has heeded the calls of advisers and reduced the number of helplines from 12 to just one.

Brian Redford, head of HMRC’s Business Engagement Team, said: “Agents told us that they wanted us to make it easier to contact HMRC and wanted a single helpline. So we have reduced the number of Agent Dedicated Lines from twelve to just one.

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“This will give agents access to the same number of experienced staff who can answer their queries, but without having to decide which regional ADL was relevant to their clients.”

However, there remains a seperate line for tax credits on 0845 300 3943.

The new helpline number doesn't appear on HMRC's website so I guess we have to wait to learn what that number is! I'll post it when I know it!

Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

A coalition housing crisis

The BBC's Robert Peston posted the following report on Friday...

George Osborne is learning the hard way that almost anything a chancellor says about tax can have unintended and potentially serious consequences.

I am not referring to the incipient rebellion on the right of his party about the coalition's commitment to equalise the rate of capital gains tax with income tax - thus, for some people on higher earnings, increasing CGT to 40% or even 50%.

I should point out that this spat is a wonderful microcosm of the new politics: economic liberals, such as David Davies and John Redwood, are attacking a Tory chancellor for proposing to throw out an 18% unified CGT rate, which was introduced by a Labour government only a bit over two years ago (and was criticised at the time for being too hard on entrepreneurs).

Mr Davies and Mr Redwood are, in effect, saying that the then Labour Chancellor, Alistair Darling, was a free-market marvel. And that the great Tory tax-reforming chancellor of the 1980s, Nigel Lawson - whose CGT approach Mr Osborne seems to want to emulate - was wrong-headed.

And, by the way, Labour MPs are today more likely to be with Mr Osborne on the need to increase CGT than with his Tory opponents.

How an election changes everything!

But what I am really interested in is the effect on the housing market.

Because it is the uncertainty about what's going to happen that's doing the real damage.

If Mr Osborne had simply implemented the higher tax rate on the day the coalition said that's what it wanted to do, there would probably have been a one-off hit to house prices - as potential buyers of second homes and buy-to-let properties factored into their investment plans the potential increase in future tax they might pay.

But if the uncertainty persists about when the new higher rate will be introduced, the negative effect on house prices could be much greater.

Because for those sitting on significant capital gains above the tax free rate of £10,100, it becomes rational to flog properties pronto - to take advantage of the 18% rate and avoid a tax rate that looks set for most property investors to rise to more than double that.

In a housing market that is still weak, a wave of panicky sales could push down prices in a significant way.

Perhaps that doesn't matter. Certainly, if you are yet to buy your first home and feel priced out of the market, you'll say hooray if prices fall.

But the Treasury is only too aware of the inextricable link between the health of our big banks and conditions in the housing market.

There is a mechanistic link between falling house prices and rising bank losses - because banks are forced by accounting rules to incur losses when the housing collateral underpinning the mortgages they provide drops in value in a substantial way.

And if banks' profits recovery were to be set back by a housing market slump, that would have an effect on their ability to provide credit - which in turn would be a setback to the more general economic recovery.

Which is simply a way of saying that Mr Osborne presumably won't want the uncertainty about what's happening to CGT to persist longer than is strictly necessary.

Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk

Up to 100,000 overpaid tax, admits HMRC

According to Accountancy Age's Kevin Reed...

Up to 100,000 workers have paid too much tax after problems with PAYE coding, the taxman has admitted.

With problems arising from bringing together two PAYE databases, HM Revenue & Customs has admitted that it has received 50,000 calls relating to PAYE coding errors, and estimates as many as 100,000 have an incorrect code.

HMRC told the Telegraph that its call centres were exceptionally busy.

"HMRC bosses need to take a close look at whether they are adequately resourced for the future," CioT tax policy director John Whiting told the paper.

John Whiting's comment will very much depend on whether HMRC can get its act together and deliver Tax Coding Notices correctly first time.

Posted by Joe Martin providing business services for small businesses and the self employed. Go to http://www.joemartin.co.uk