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

Dates and deadlines December 2013

Posted by: edwinsmith on November 30th, 2013

Upcoming deadlines for businesses and individuals

1 December: Corporation tax payment for a company not within the instalment regulations: year ending 28 February 2013.

5 December: End of month 8 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession.

7 December: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 31 October 2013.

12 December: Direct debit VAT payment will be taken: quarter ended 31 October 2013.

19 December: CIS monthly return deadline: month ended 5 December 2013.

19 December: Cheque payments for PAYE/NI, student loan, CIS  to be cleared into HMRC bank: month ended 5 December 2013.

20 December: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 December 2013.

30 December : Submission of electronic 2012/13 self assessment tax return if require unpaid tax to be collected by tax code.

31 December : Company tax return CT600 due to HMRC: years ending 31 December 2012.

31 December: Company accounts (Private Limited Co) due to be filed: years ending 31 March 2013.

31 December: Company accounts (Public Companies) due to be filed: years ending 30 June 2013.

1 January : Corporation tax payment for company not within the instalment regulations: years ending 31 March 2013.


Revised advisory fuel rates 1 December 2013

Posted by: edwinsmith on November 28th, 2013

H.M. Revenue and Customs (HMRC) have published the latest advisory fuel rates relating to mileage payments for business travel in company cars. These are as follows:

Engine size Petrol LPG
1400cc or less 14p  ↓ 9p ↓
1401cc to 2000cc 16p   11p ↔
Over 2000cc 24p  ↓ 16p ↔


Engine size Diesel
1600cc or less 12p ↔
1601cc to 2000cc 14p 
Over 2000cc 17p ↓


The changes this quarter are highlighted in red above.

The new rates will be effective from 1 December 2013. However for the first month employers may continue to use the previously published rates if they choose to.

These rates will be reviewed again in February 2014 and any changes made will be effective from 1 March 2014.  The revised fuel rates will be published on the fuel rates page on the HMRC website when they are released.

Advisory fuel rates can be used to calculate the following:

  1. Reimbursement to employees of fuel used for business travel in a company car
  2. Repayment by employees of fuel used for personal travel in a company car
  3. Allowable input VAT on business mileage claims

A more detailed explanation of the use of these rates is on the HMRC website.

The rates applying for earlier periods are also on the HMRC website.

If you have any questions regarding the use of advisory fuel rates or mileage payments please contact us.

Filed under: Company, Employers, PAYE, Tax, VAT

Company purchase of own shares

Posted by: edwinsmith on November 26th, 2013

Where there are shareholders in an unquoted company who wish to exit the company then there are sometimes certain advantages in the company making a purchase of own shares.

This would especially be the case where the remaining shareholders do not have the resources (without personally borrowing the funds) to acquire the shares from the exiting shareholders (vendors) and the remaining shareholders want to ensure that the shares are not sold to other shareholders who may not be acceptable.  The vendors may also benefit from the Capital Gains Tax (CGT) treatment of the shares.

When a company purchases its own shares then the normal tax treatment is for the purchase price to be treated as a distribution – taxable income of the recipient/vendor. The amount subject to income tax is the excess of consideration over the amount subscribed for the shares. The excess is treated as a distribution and taxed as a dividend. This treatment would be more suitable for a basic rate tax payer.

There are exceptions to this treatment which may be advantageous to vendors who would benefit from CGT treatment on the disposal of shares. Capital treatment on the disposal of shares can be obtained for the vendor where an unquoted company purchases its own shares and one of the following conditions are met:

  1. Condition A - The purchase of own shares is made wholly or mainly for the purposes of benefiting a trade carried on by it or by its 75% subsidiary and does not form part of an arrangement where the main purpose of the transaction is designed to benefit the vendor. There are other conditions for the vendor*.
  2. Condition B – The whole or substantially the whole of the payment is applied by the person to whom it is made in discharging a liability of that person for inheritance tax charged on a death and is applied that way within two years after the death.

*Other conditions (for vendor) that need to be met in respect of Condition A include:

  1. Vendor must be resident in UK.
  2. Vendor must not be connected to the company after the sale – employee considered connected for this purpose if he possesses more than 30% of the ordinary share capital, loan capital or voting power of company.
  3. The shares owned by the vendor must have been held for a minimum period –a five year period ending with disposal.

Examples of trade benefit test can be found at HMRC SP2/82 HMRC.

HMRC operates a statutory clearance procedure to help clarify the position for companies purchasing their own shares.

There were amendments to the regulations for the Purchase of own shares by an unquoted company which came into force on 30 April 2013. These regulations will not themselves give rise to an employment income tax charge for employees holding shares but certain events facilitated by the regulations may trigger a charge – see HMRC - purchase of own shares - lifting of a restriction on shares, shares not sold at market value, share options and close companies.

There are certain procedures that need to be followed by the company for purchasing own shares the most straight forward of which is from distributable reserves. In the scenario described above there does need to be sufficient profits to make the purchase of shares from reserves.

The shares being purchased must be fully paid up and the shares must be paid for on purchase. There must be some issued shares left in existence after the purchase.

The purchase must be approved by a special resolution which must be filed within 15 days of its passing. The procedures for passing a special resolution must be followed and a copy of the contract or memorandum setting out the terms of special resolution must be made available to the company members.

The person whose shares are being purchased cannot vote on the resolution.

Companies House return form SH03 should be completed and if stamp duty payable on purchase of own shares (if consideration greater than £1,000) then form must be submitted to HMRC for stamping before forwarding to Companies House (within 28 days).

Before making a decision for the company to purchase own shares then it is advisable that further advice is taken as the company situation may not be straight forward and you may be caught by some of the pitfalls in this area.

Please contact us for further advice.


What happens if my company makes a loss?

Posted by: edwinsmith on November 21st, 2013

Has your company or organisation chargeable to corporation tax made a trading loss or purchased a large amount of capital equipment which qualifies for the annual investment allowance and hence produces a taxable loss for the accounting period?

A taxable loss from trading activities in an accounting year is first set against other profits chargeable for the same year such as bank interest received and capital gains on the sale of assets. Any balance of the taxable trading loss can be set against profits chargeable to corporation tax in the previous 12 months and a corporation tax refund obtained as long as the trading activity was active during that period. If there are no taxable profits in the previous 12 months or insufficient profits to use up all the loss, the loss or balance of the loss will be carried forward to future trading profits.

To obtain relief for a taxable trading loss in a previous year the company/organisation needs to make a claim when submitting the corporation tax return for the period in which the loss was made. Alternatively, the claim may be made by letter to HMRC within two years of the end of the accounting period in which the loss was made.

If the company ceases trading and makes a taxable trading loss in the final period of trading, then a terminal loss claim may be made. The terminal loss can be offset against profits chargeable in the previous 3 years as long as the trading activities occurred in those years. The loss is set against later accounting periods first and then previous periods. Again a claim must be made to HMRC either through the company corporation tax return for the final loss making year or by letter to HMRC within two years of the end of the accounting period in which the loss was made.

The above assumes the company/organisation has continuous accounting periods of 12 months. If the year end has been changed profits of periods will need to be apportioned.

Information can be obtained on HMRC website or please contact us if you require any further advice or assistance on these matters.

Filed under: Company, Tax

Automatic closure of unused PAYE schemes by HMRC

Posted by: edwinsmith on November 14th, 2013

HMRC issued a notice on their website in October stating that with effect from 28 October 2013, they will be issuing letters to employers, (RTI206), to advise that they have closed their PAYE scheme. This will have been due to a period of inactivity meaning that they (HMRC)  believe that the scheme is not required.

Any PAYE schemes set up since 5 April this year will be shut down automatically if the employer has not made any RTI submissions, paid subcontractors or paid HMRC within 120 days of it being set up.

Schemes registered as annual PAYE schemes will not be affected.

Employers are reminded that to close a scheme down, they will need to make a final RTI submission and tell HMRC that the scheme should be closed where it is no longer required. This will avoid unnecessary penalties being issued and unnecessary correspondence and calls to HMRC to correct their records where they are chasing for returns and payments which are not due.

If you have received a letter and you believe your scheme is still required, then you will need to contact HMRC. You may also need advice on how to manage your scheme. Please contact us for advice and assistance.

Filed under: Employers, PAYE, Tax

Tax relief on repairs for let property

Posted by: edwinsmith on November 8th, 2013

Carrying on from our August article on tax relief on wear and tear of furniture for let property, this article sets out guidelines for tax relief on the replacement or repair to integral parts of the let building.

Normally tax relief can be given against rental income for the repair of an asset, i.e, the restoration of that asset by replacing subsidiary parts of the whole asset. If there is significant improvement to the asset beyond is original condition, then the expenditure will be classified as capital expenditure and relief will not be available against rental income. Consideration needs to be given also to the ‘entirety’ of the subject being repaired,  for example, if the roof of a let property is damaged, the replacement of the damaged area is a repair and the expenditure allowable against the rental income.

Examples of repairs that are normally deductible in computing rental profits are:

  1. Exterior and interior painting and decorating
  2. Stone cleaning
  3. Damp and rot treatment
  4. Mending broken windows, doors, furniture and machines such as cookers and lifts
  5. Re-pointing
  6. Replacing roof slates, flashing and gutters
  7. Replacing windows even if single glazed windows are replaced with double-glazed windows

Generally if the replacement of a part of the ‘entirety’ is like-for-like or the nearest modern equivalent, the expenditure is allowable against the rental income. For example, if a fitted kitchen is refurbished by removing the existing units, sink, worktop etc, and replacing with a similar standard kitchen, this expenditure will be a repair. If however, additional cabinets are fitted increasing storage space or additional equipment is installed, then expenditure on those items is capital and cannot be relieved against the rental income. If the whole kitchen is substantially upgraded and standard units replaced with expensive customized items using high quality materials, then all the expenditure will be classified as capital with no relief against rental income. Other examples of repair expenditure which do not give significant improvement to the property are the cost of replacing wooden beams with steel girders and replacing lead pipes with copper or plastic pipes. If however the steel girders were designed to take heavier loads or the pipes to take heavier pressure, the expenditure is likely to be capital.

Care needs to be taken when repairs are incurred after a property is acquired as to determine whether the expenditure is a repair allowable against revenue or is capital expenditure. If a property was acquired not in a fit state to let until the repairs had been carried out, then the repair expenditure will be capital. If there is expenditure which adds to or improves the land or property such as converting a disused barn to a dwelling to be let, this will be capital expenditure.

Separate tax relief may be available for capital expenditure on a property or on certain plant and machinery within certain buildings such as a lift but this will be the subject of another article.

Please contact us if you require further advice concerning the tax implications of let properties.