The Deadline Looms

As you might imagine at this time of year, I am up to my eyes in tax returns.

A reminder in case you have missed my previous warnings, midnight on Tuesday is the deadline for filing your self assessment return and failure to do so will result in a £100 penalty regardless of whether you have any tax to pay.

It still might not be too late. I can’t make any promises, but if I receive paperwork in the coming days, I and my team may still be able to ensure a penalty is avoided. Last year almost 600,000 returns were filed on the last day, including several at Lerman Jacobs Davis. We’d like to increase our share of that number

Approximately 1 Million returns were filed late last year and with the stricter conditions this year, the treasury is set to net a small fortune. As you know, my role is to minimise the amount the treasury earns and keep this money in my clients’ pockets. Minimising tax is one way, but avoiding penalties is a much easier way of saving clients money.

The ICAEW are warning all self-assessment taxpayers to check what constitutes a reasonable excuse before missing the January 31 online deadline. Jane Moore from the ICAEW says: "What is reasonable depends on your situation. It may be valid if an unexpected or unusual event prevented you from meeting the deadline." HMRC, though, will not accept excuses such as the return being "too complicated", that you were too busy or that you didn't have all the information. "You must file as soon as possible after the reasonable excuse comes to an end," adds Moore. Elsewhere, The Sun’s Cashflow column claims that a HMRC source has admitted to them that their website will struggle with the number of people expected log on to file their tax returns on the deadline day. The column warns that 600,000 businesses are expected to try to file their forms to HMRC on that day, with estimates suggesting that 90,000 will be baffled by the complexity of the form, and that anyone hoping for over the phone help could be in for a long wait as the call centre workers will be on strike

So the referral I am looking for this week, is anyone who hasn’t yet filed their tax return and wants to avoid a penalty. Please get in touch mitch@ljd.uk.com

Mitch the Tax Man

New Year - New Tax Tips

Happy New Year to you all!

January is traditionally a very busy month for those that work in tax. However please do not worry I will be posting my tax tips up for my dedicated readers every week this month.

1. Did you know HMRC are now accepting tax payments through the faster payment service? It is important to note however that they do charge interest for any late payments so make sure you pay on time

2. In light of HMRC's revised interpretation of the pension carry forward rules for the unused allowance in respect for the tax years 2008/09 to 2010/11 are you or your clients affected? It may be worth recalculating your tax based on the pension figures.

3. It is common for a property to be owned by the company director or shareholder and then rented to the limited company. If this applies to you then you really need to consider the tax implications sooner rather than later because there maybe a reduced or no entitlement to entrepreneurs relief.

4. The European Commission has approved for state aid purposes the increase in the small and medium sized enterprise research and development relief to 200% from 1 April 2011. Does your business activities/expenditure qualify for research and development? Take advantage of this generous relief.

5. HMRC has advised that correspondence goes missing because tax payers do not give their National Insurance or Unique Tax Reference Number as references. Make sure when writing to HMRC you always put at least one of these as a reference

I hope you have found these useful. I am now going to get back to my tax returns however if you have any questions please do not hesitate to contact me or alternatively if you know of anyone panicking about completing a tax return by the end of the month pass them on to me.


All the best


Mitch the Tax Man
mitch@ljd.uk.com

A Tax Rhyme for Xmas by Mitch Young

Good morning, Mitch Young, the young dynamic accountant from LJD

Where we are committed to saving our clients hassle and money

Leading up to Xmas you may have some spare time

So think about your tax return over a glass of mulled wine

It is important you are not late in submitting the return to HMRC

Because if you do you will face a significant penalty

Even if you have no tax, they will now charge you £100 pounds

3 months late and a 5% surcharge, how do you think that sounds?

And after that it could go up to £10 a day

So make sure you give me a call I will keep the tax man away

Furthermore if you know a private tutor don’t forget they must declare

All their private earnings by 5^th Jan or face a right old scare

If you get your tax return into me within the next 28 days

I can complete this for you on time and offer you tax advice in lots of different ways

So listen out over Xmas for your friends and family talking about tax

When you hear the magic word give them my phone number, email or even my fax

Surely this rhyme proves accountants can also be fun

Wishing you happy holidays from LJD and Mitch Young

Xmas Tax Tips

Over the past week I have been snowed in. No, not by snow by 100's of tax returns! I still have around 150 to complete by the end of January and no doubt I will be working over the festive period. However this is the name of the game when it comes to tax and it is Xmas I have made sure I spend some time preparing my tax tips blog just for you. So here are 5 tax tips for xmas:

1. It is very important that you are all aware that new penalties will apply for tax return that is submitted after the 31 January deadline. An initial £100 fixed penalty, will apply even if there is no tax to pay. After 3 months additional penalties of £10 a day, up to £900 and after 6 months a further 5% of the tax due! Get them in

2. Make sure those who of you provide a service on a self - employed basis have a water tight contract. For example important factors to include within a contract are mutuality, control and the right to organise a substitute.

3. Remember if you are a partner in a partnership you will have to complete a specific partnership tax return as well as filling in the partnership pages of your personal self assessment tax return.

4. I have mentioned before about some of the tax benefits of sharing income evenly between husband and wife however a new opportunity has recently come to my attention in this regard. If a partnership is created between husband and wife, and say the wife is designated as a sleeping partner, i.e. she does no work at all for the business, she is able to receive whatever share of the profits is desired and will incur no national insurance liability on her income whatsoever. This means that (depending on the overall profit) it makes probably sense to give the wife the majority of the profits as there is no national insurance for her whereas there is for the husband

5. A final reminder for Private tutors and coaches that you have less than a month to tell HMRC about any tax you may owe for not declaring your private work income. Under the tax catch up plan, teachers with previously undisclosed earnings must register by 6 January 2012 to benefit from the terms of the offer.

I wish you all a very merry Xmas and a happy and healthy new year and remember if you have not got your loved one a present yet how about a voucher from me to complete their tax return.


Mitch the Tax Man
mitch@ljd.uk.com

Friday's Tax Tips - Episode 3

I have had an excellent week. I have taken on 3 newly self employed clients and one landlord. Although it means more work for me over the Xmas period I don't mind, you know that is going to be the case when you decide to have a career in tax! Furthermore my week has been topped off by attending a really useful tax lecture where I recapped on some really interesting points that I will share with you next week in my blog.

As it is Friday, it can only mean one thing - My weekly tax tips!

1. HMRC has revised their interpretation of the way that pension allowance carry forward works for years 2008/09 to 2010/11. You can now potentially contribute £200,000 if you meet all the qualifying criteria. Contact me for further info on this

2. It is very important that owners of small companies follow the proper procedures when carrying out share subscriptions so that evidence can be provided in the future as and when required.

3. If you are non domiciled have you been monitoring the number of year’s resident you have been? There may be an up and coming remittance base charge you need to plan for.

4. If you are an employer have you considered changing your employees benefit package to a flexible benefits package to take advantage of tax and National Insurance Mitigation?

5. Whenever properties are bought or sold with a view to building residential property, there are potential issues concerning the option to tax. Make sure you contact your tax advisor before finalising any deals.

We are now in December so not long to go until you have to submit a tax return. If you need any assistance please do not hesitate to get in touch mitch@ljd.uk.com

Have a great weekend




Mitch the Tax Man

Chancellor's Autumn Statement 29/11/11 - Commentary from Mitch Young

I watched the Chancellor on BBC give an Autumn Statement he never wanted to give. He looked uncomfortable at times especially when the noise from the back benchers increased to a very loud level. There was a lot of waffle within the statement so I have summarised the main points that I found interesting and relevant to me and my clients:

1.      From April 2012, anyone investing up to £100,000 in a new start-up business will be eligible for income tax relief of 50%. In 2012, any tax on capital gains invested in such businesses will also be waived.

2.      Freeze on Capital Gains Tax allowance

3.      Corporation Tax confirmed to fall to 25% next year, and rules of taxation of foreign profits to be published next week

4.      End of tax breaks for the Channel Islands

5.      Capital Allowance boost to several zones including Liverpool

6.    The bank levy tax will be raised for a third time this year

7.      National loan guarantee scheme - covering £40bn for bus' of less than £50m turnover. Expect fall in rates of one percentage point

8.   The child element of the working tax credit will be uprated in line with inflation, but other elements will not

9.      Public sector pay awards will be set at 1% for the two years after the current freeze ends. Mr Osborne says he's knows this is tough, but it's fair to taxpayers.

10. There'll be £40bn to underwrite loans for small and medium sized firms

Overall, these are just a few of the main points I picked up from the statement and in truth there was not too much that was announced that was new and not predicted. However for me it is clear from a tax point of view there is and will be a lot of planning to be done with the use of EIS and investing in new qualifying companies

If you have any comments or questions please do not hesitate to get in touch mitch@ljd.uk.com

Mitch the tax man

Friday's Tax Tips - Episode 2

I hope you all have had a lovely week? What better way than to enjoy your Friday afternoon with my next instalment of tax tips!

1. Remember that if you complete your own VAT returns be aware that even being one day late in filing and payments to HMRC is likely to result in a default surcharge. If you know you will be away on the date the VAT return is due make sure you file it early.

2. As I write this the government are currently consulting on a statutory resident test, the rules introduced from 6th April next year are likely to be significantly different to those in the previous consultation document. Make sure you keep up to date with the changes as this may have serious affects on your current situation in regards to tax.

3. I read a brilliant article in Taxation Magazine concerning the Farming industry. Now could be the time if you run a farm to incorporate. Potentially huge tax savings. If this applies to you contact your tax advisor

4. If you are planning on disposing of a subsidiary company, have you considered with a degrouping charge will arise and whether there is an exemption for substantial shareholdings.

5. Another warning that HMRC will be continuing to write to pensioners whose state pension was not coded out in 2010/11 to tell them the tax they owe. Even if you have received a tax code and it looks correct it may be worth getting an expert to look at it for you.

I hope you all have enjoyed the second instalment of Friday's Tax Tips. Remember to look back next Friday for some more useful tips.

If you have any questions or would like to arrange an initial meeting free of charge please get in touch mitch@ljd.uk.com

Have a fantastic weekend



Mitch the tax man