Archive for October, 2018

Exclusivity and tax relief

Thursday, October 11th, 2018

In order to qualify as a deduction for tax purposes we have to demonstrate that the expenditure was incurred “wholly and exclusively” for the purposes of our business or employment.

We will also need to consider a further criterion: where the expenditure has a duality of purpose.

In a 1980’s case, a barrister claimed for the cost of business suits which she insisted were only used for business purposes. To her delight, the lower courts agreed, but HMRC were having none of it and pursued their case to the House of Lords where the taxpayer’s claim and appeal was dismissed.

The barrister failed to secure her claim as she could not escape the conclusion that although she may have purchased the required “subdued” clothing for her practice, the clothes purchased could have been worn on a private occasion, even though she may have chosen not to do so.

As always this and other related cases, open the door to speculation: when does expenditure meet these stringent rules?

For example, if the barrister’s suits had carried a visible label – the name of her practice – would this have tipped the balance as she could argue the suit was a uniform and not appropriate to wear on private occasions?

Removing any private advantage may be more difficult than it would appear.

Unfortunately, we are required by legislation to comply with the “wholly and exclusively” rule and if there is a whiff of private advantage to the expenditure, then it will likely be disallowed. HMRC in their instructions to staff say:

 

You should disallow expenditure on ordinary clothing worn by a trader during the course of their trade. This remains so even where particular standards of dress are required by, for example, the rules of a professional body.

Importing goods from outside the EU

Tuesday, October 9th, 2018

Although the Brexit issue is not yet decided it may be salutary for businesses to consider the changes they will need to face if we depart with a no-deal Brexit. We have touched on these issues in past articles posted on this blog, but today we have reproduced the present regulations you will need to consider if you import from outside the EU – with a no-deal Brexit these, or similar processes, will need to be applied to imports from the EU.

Within the EU most goods:

  • are in free circulation,
  • can be imported with minimal customs control,
  • have no import duty or VAT to pay.

Imports from outside the EU are treated differently. You:

  • must make an import declaration to customs,
  • generally, have to pay import duty and import VAT (plus VAT on import duty).

Authorised Economic Operator (AEO)

If you’re already involved in international trade and have an Economic Operator Registration and Identification Number (EORI), you can register with HMRC as an Authorised Economic Operator (AEO).

The scheme isn’t compulsory, but companies that meet the requirements can take advantage of simplified customs procedures for the security and safety of their imported goods in transit.

Import declarations

You have to send a declaration to HMRC when you import goods into the UK from outside the EU. This is usually done using the Single Administrative Document (SAD), also known as form C88.

SADs can be submitted either electronically using the Customs Handling of Import and Export Freight (CHIEF) system, or manually (although manual submissions may take longer to process).

You need to include the:

  • customs classification
  • commodity code
  • import value of your goods
  • customs procedure code explaining what is being done with the goods, for example import to free circulation.

We could continue sketching these regulations in more detail. Sufficient to say that if you presently import, or indeed export, goods from or to the EU you should research the changes you will need to make to ensure your supply chains are maintained after March 2019.

We will be keeping a close eye on negotiations and will report again as and when the news breaks.

In the meantime, if you have concerns about possible disruptions to your supply chains post Brexit, please call for more information.

Did your goat eat your accounts?

Thursday, October 4th, 2018

Companies House have published a list of bizarre excuses for the late filing of their statutory accounts. They include:

  • “goats ate my accounts”
  • “I found my wife in the bath with my accountant”
  • “pirates stole my accounts”
  • “we delivered the accounts to the betting office next door to Companies House”
  • “a volcano erupted and prevented me from filing”
  • “slugs ate my accounts”
  • “it was Valentine’s Day”
  • “my company was more successful than I thought it would be, so I was too busy to file”

As you would expect, Companies House issued late filing penalties and any appeals were swiftly quashed.

The level of the penalties charged depends on how late the accounts reach Companies House and is shown in the following table.

Length of period (measured from the date the accounts are due)

Private company penalty

Public company penalty

Not more than 1 month

£150

£750

More than 1 month but not more than 3 months

£375

£1,500

More than 3 months but not more than 6 months

£750

£3,000

More than 6 months

£1,500

£7,500

A private company’s set of acceptable accounts for the accounting period ending 30 September 2009 would need to be delivered by 30 June 2010 to avoid a late filing penalty. If they were not delivered to Companies House until 15 July 2010 the company will incur a late filing penalty of £150.

The penalties will be doubled if a company files its accounts late in 2 successive financial years beginning on or after 6 April 2008. This means that if a private company, has an accounting reference date of 30 September and the accounts for the period ending 30 September 2009 were delivered late and you delivered accounts for the subsequent period ending 30 September 2010 late, then you would incur a £300 late filing penalty.

Tax Diary September/October 2019

Tuesday, October 2nd, 2018

1 October 2018 – Due date for Corporation Tax due for the year ended 31 December 2017.

19 October 2018 – PAYE and NIC deductions due for month ended 5 October 2018. (If you pay your tax electronically the due date is 22 October 2018.)

19 October 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2018.

19 October 2018 – CIS tax deducted for the month ended 5 October 2018 is payable by today.

31 October 2018 – Latest date you can file a paper version of your 2018 self-assessment tax return.

1 November 2018 – Due date for Corporation Tax due for the year ended 31 January 2018.

19 November 2018 – PAYE and NIC deductions due for month ended 5 November 2018. (If you pay your tax electronically the due date is 22 November 2018.)

19 November 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2018.

19 November 2018 – CIS tax deducted for the month ended 5 November 2018 is payable by today.

Passport issues if a no-deal Brexit

Tuesday, October 2nd, 2018

Guidance on the use of a British passport to travel abroad after 29 March 2019, if there is a “no-deal” Brexit, was issued by government last month. The pertinent facts are reproduced below:

After 29 March 2019, if you’re a British passport holder (including passports issued by the Crown Dependencies and Gibraltar), you’ll be considered a third country national and under the EU Schengen Border Code you will need to comply with different rules to enter and travel around the Schengen area. Third-country nationals are citizens of countries (like Australia, Canada and the USA) which do not belong to the EU or the European Economic Area.

According to the Schengen Border Code, third country passports must:

  • have been issued within the last 10 years on the date of arrival in a Schengen country, and
  • have at least 3 months’ validity remaining on the date of intended departure from the last country visited in the Schengen area. Because third country nationals can remain in the Schengen area for 90 days (approximately 3 months), the actual check carried out could be that the passport has at least 6 months validity remaining on the date of arrival.

If you plan to travel to the Schengen area after 29 March 2019, to avoid any possibility of your adult British passport not complying with the Schengen Border Code we suggest that you check the issue date and make sure your passport is no older than 9 years and 6 months on the day of travel.

For example, if you’re planning to travel to the Schengen area on 30 March 2019, your passport should have an issue date on or after 1 October 2009.

If you are a parent or guardian:

  • For 5-year child passports issued to under-16s, check the expiry date and make sure there will be at least 6 months validity remaining on the date of travel.
  • For example, a child planning to travel to the Schengen area on 30 March 2019 should have a passport with an expiry date on or after 1 October 2019.
  • If a child’s passport does not meet these criteria, they may be denied entry to any of the Schengen area countries, and you should renew their passport before travel.

For countries that are in the EU but not in the Schengen area, you’ll need to check the entry requirements for the country you’re travelling to before you travel.

The Schengen Area is an area comprising twenty-six European states that have officially abolished passport and all other types of border control at their mutual borders. The area mostly functions as a single jurisdiction for international travel purposes, with a common visa policy. The area is named after the Schengen Agreement. States in the Schengen Area have strengthened border controls with non-Schengen countries.

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