Edwin Smith - Chartered Accountants
  • Home
  • About Edwin Smith
  • Accounting Services
  • Contact Edwin Smith

September 2012 email newsletter

Posted by: edwinsmith on September 30th, 2012

To view a copy of our September 2012 newsletter please click .

Please also consider subscribing by using the link on the left hand side.

Filed under: Newsletters

VAT registration – keep a watch on your turnover

Posted by: edwinsmith on September 28th, 2012

The basic rule

If your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current VAT registration threshold of £77,000, or you expect it to go over that figure in the next 30 days alone, you must register for VAT. This must happen within 30 days of exceeding the registration threshold of £77,000 to avoid penalties and interest. Details of how to register can be found on the HMRC website or contact us for information.

If you took over another VAT-registered business within the last 12 months, then when you regularly check your turnover for the previous 12 months against the threshold, you should take into account the turnover of the business before you bought it as well as your own turnover.

Temporarily exceeding the threshold

If your turnover has gone over the registration threshold temporarily, then you may be able to apply for an exception from registration if you can demonstrate to HMRC that in the longer term you will only be trading below the de-registration threshold of £75,000. To apply for exception you will still need to complete a VAT registration form and state why you are applying for exception.

How do I calculate the taxable turnover

Your VAT taxable turnover includes the value of any goods or services you supply within the UK, unless they are exempt from VAT. This means you must also include any supplies you make that would be zero-rated for VAT.

When calculating your VAT taxable turnover you will include your sales, but for VAT purposes, you should also include the value of certain other types of supply:

  1. goods or services that you exchange or barter
  2. supplies of certain services that you receive from suppliers in other countries that you have to 'reverse charge'
  3. where you use your own labour to construct certain building or civil engineering works for your own business use with an open market value of £100,000 or more

You must not attempt to avoid registration by artificially separating business activities to reduce your turnover. If you run more than one business, the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.

However, if you are involved in the running of several separate legal entities, you may not need to combine the sales of those businesses to find whether you need to be VAT-registered.

For further help and advice please contact us.

Filed under: VAT

HMRC Direct Selling Campaign

Posted by: edwinsmith on September 27th, 2012

The latest in a long line of opportunities to come forward and voluntarily put your tax affairs right comes into effect on 28 September 2012. HMRC have named this latest opportunity as the Direct Selling Campaign.

This campaign focuses on those who are selling directly to customers such as door to door for example. You may be known as an agent, a consultant, a representative or perhaps a distributor and your selling may involve leaving brochures for later collection, demonstrating products in the home or at a party organised by the homeowner.

Perhaps you only sell to friends and family. Unfortunately, this makes no difference. Tax may still be due on any earnings you generate.

Am I eligible to use this opportunity?

If you started this type of work before 6 April 2011, and have not told HMRC, then you can come forward under the Direct Selling Campaign. To do so, you must complete and submit a disclosure form before 28 February 2013.

If you started after 6 April 2011, then you do not need to use this campaign, however, you must make sure that you have registered with HMRC if appropriate. If you are unsure, then please contact us for help.

When you make a disclosure, you will need to work out your earnings, the tax, interest and any penalty payable. There is an interest calculator on the HMRC website which may help.

Any disclosure you may must be full and complete. If it is later found to be false then HMRC will take action.

What if I do not come forward?

HMRC is using legal powers to obtain information from an extensive range of sources and, after each notification period closes, will use this data to identify those who have failed to come forward. HMRC campaigns use cutting-edge tools such as 'web robot' software to search the internet and find targeted information about specified people and companies which helps identify those who have failed to pay the right amount of tax.

HMRC has the right to pursue a criminal investigation in cases of tax fraud but an important factor in making this decision is whether a person has made a complete and unprompted disclosure of any amounts evaded or improperly reclaimed. While HMRC considers each case on its merits, where a person has made a complete and unprompted disclosure, they would generally not carry out a criminal investigation.

So, if you have income which has not been declared to HMRC, get in touch now before it is too late.

If you have any questions about your tax affairs then we would be pleased to discuss these with you. Arrange an appointment today with one of our advisors.

Student employment – Important changes

Posted by: edwinsmith on September 24th, 2012

Current rules

Under current legislation, if you employ students on a UK based course, or UK students studying abroad, their wages may be paid without the deduction of income tax, provided the following circumstances apply:

  1. The student only works for you during the holiday periods, and
  2. Their total income from all sources (excluding student loans, scholarships and educational grants) is less than the personal allowance – £8,105 for 2012/13.

In order to pay a student without the deduction of PAYE income tax, a form P38(s) must be completed a soon as the student starts to work for you. If their income goes over the personal allowance, then you are required to start deducting PAYE and will need to complete form P46. The box ticked by the student will determine the tax code applied.

So what will change?

From 6 April 2013, the P38(s) will be withdrawn and all student employees will be subject to PAYE in the same way as other employees. The processes noted below will change with the introduction of PAYE in Real Time (RTI). More information on this will follow soon on our news feed.

If you currently employ students and have previously been using the P38(s) system you will need to obtain the information required on a form P46 for each student employee and submit the information to HMRC either online or using your payroll software.  As above, the information provided by the employee will indicate which PAYE code should be applied to the wages payments.

Note: Employee national insurance contributions (NICs) should be deducted from payments to students over £146 per week under both the old and the new system, and employer NICs are due on payments over £144 per week.

Further guidance on the payment of student employees can be found on the HMRC website.

For more information or help with understanding payroll, PAYE and NICs please contact us.

Filed under: PAYE, Tax

Should I complete a Self Assessment Tax Return?

Posted by: edwinsmith on September 20th, 2012

Your personal circumstances will affect how HM Revenue and Customs calculate and collect income tax on your earnings.  For many people in the UK, income tax is calculated based on their salary or pension, and paid over to HMRC on a monthly basis using the ‘Pay as You Earn’ system (PAYE).  For individuals with more complicated tax affairs, HMRC requires an annual self assessment tax return to be completed in order to assess the tax liability for the year.

It is the responsibility of the taxpayer to tell HMRC if they believe that they should be completing a self assessment return. Therefore the following is a list of the most common scenarios which will lead to the requirement to complete a tax return:

Self employment

If you are self employed or a member of a partnership, HMRC will require you to complete a tax return for each year until your self employment ceases.

Company directors, Ministers, Lloyd’s names or members

HMRC require individuals in the following positions to complete a tax return each year:

  1. Company director (except for directors of non-profit organisations, who do not receive any payments or benefits)
  2. Minister of religion (any faith)
  3. A name or member of Lloyd's


Trustees or personal representatives managing the tax affairs or another individual (including deceased individuals) are required to complete a tax return.

Similarly trustees of certain pension schemes should complete a tax return each year.

Income above a certain level from savings, investments or property

Individuals generating high levels of income from sources other than employment or self employment are also required to declare the income on a self assessment tax return.  Such levels of income are:

  1. £10,000 or more income from savings and investments
  2. £2,500 or more income from untaxed savings and investments
  3. £10,000 or more income from property (before deducting allowable expenses)
  4. £2,500 or more income from property (after deducting allowable expenses)
  5. Annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
  6. Income from the estate of a deceased person on which tax is still due


Restricted age-related allowances

Individuals aged 65 or older will need to complete a tax return, if they are:

  1. Receiving age-related personal allowances, and
  2. Earning over £25,400 per year (in the tax year 2012-13)

(Exceptions apply in some circumstances especially where your tax affairs are simple)

Non-resident or non UK domiciled individuals

As residency is a complex issue, individuals may also need to complete a tax return if they are:

  1. Not resident in the UK
  2. Not ordinarily resident in the UK
  3. Not UK domiciled and are claiming the 'remittance basis'
  4. Dual resident of the UK and another country


Other circumstances

HMRC also require individuals to complete a tax return if they generate income:

  1. From overseas (which is liable to UK tax)
  2. Over £100,000 in a tax year

Employees who want to claim tax relief for expenses or professional subscriptions of £2,500 or more also need to do so by completing a tax return.

Unpaid taxes

Employed individuals who have not paid enough income tax using the PAYE system may need to complete a tax return, if the outstanding amounts cannot be collected through the PAYE code for future years.

Capital Gains Tax becomes liable if you've sold, given away or otherwise disposed of a chargeable asset such as a holiday home or shares. Individuals in this scenario need to complete a tax return and the Capital Gains Tax pages.

If your tax affairs fall into one or more of the above categories and you have questions about registering for self assessment or how to complete your tax return, please contact us to find out how we can help.

Filed under: PAYE, Self Assessment, Tax

Change to National Minimum Wage

Posted by: edwinsmith on September 13th, 2012

There are changes to the national minimum wage (NMW) rates in some categories from 1 October 2012. The new rates per hour are as follows :

Old rate (p/h) Employee category New rate (p/h)
£6.08 Workers aged 21 and over £6.19
£4.98 Workers aged 18 to 20    £4.98
£3.68 Workers aged 16 to 17    £3.68
£2.60 Apprentice under 19    £2.65
£2.60 Apprentice 19 and over but only in the first year   £2.65


If you have any queries please contact us.

Filed under: PAYE, Tax

Form R40 – Claiming tax back on bank or building society interest

Posted by: edwinsmith on September 7th, 2012

If you think you have paid too much tax on your interest you can claim it back. To do this you will need to fill in a form R40 Tax Repayment Form. You will need to do this for each year you think you paid too much tax and you will need to also complete the other sections of the form with details of your other income.

There are time limits for claiming back tax as shown below:

Tax year: Tax year ended on:  Deadline for claim:
2008-09 5 April 2009 5 April 2013
2009-10 5 April 2010 5 April 2014
2010-11 5 April 2011 5 April 2015
2011-12 5 April 2012 5 April 2016

You can access the R40 form and helpsheets on the HMRC website

If you would like help in completing form R40 please contact us and we would be happy to discuss this with you.

Filed under: Tax

Dates and deadlines: September 2012

Posted by: edwinsmith on September 1st, 2012

1 September: Corporation tax payment for company not within the instalment regulations: year ended 30 November 2011

5 September: End of month 5 for PAYE

7 September: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 31 July 2012

12 September: Direct debit VAT payment will be taken: quarter ended 31 July 2012

14 September: HMRC E-marketplaces campaign, time to disclose and pay

19 September: CIS monthly return deadline: month ended 5 September 2012

19 September: Cheque payments due for PAYE/NI, student loan, CIS: month ended 5 September 2012

22 September: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 September 2012

30 September: Company tax return CT600 due to HMRC: year ended 30 September 2011

30 September: Company accounts (Private Limited Company) due to be filed: year ended 31 December 2011

30 September: Company accounts (Public Company) due to be filed: year ended 31 March 2012

1 October: Corporation tax payment for company: year ended 31 December 2011

1 October: National minimum wage increases from this date

2 October: HMRC tax return initiative deadline