DON’T! - These letters are important, that’s why you always feel nervous opening them probably, if you have any doubts, send them to your accountant to action on your behalf. If the communications mention anything about payments / penalties / overdue amounts, then make sure you DO NOT IGNORE them. It could be the difference between sorting things out in a timely manner and having to pay up to £1600 penalties. Yes, I sadly have a client who ignored all of those green letters and has ended up with all sorts of late payment penalties, this is so unnecessary and could have meant a nice family holiday for her and her family this year instead of a cheque being sent to HMRC.
Following on from my last discussion - are you the sort of person who opens letters from HMRC with relish and action them promptly? Or, do you put them on the side ready to action later (much later). Ok, so I admit it even I sometimes do the latter. DON’T! - These letters are important, that’s why you always feel nervous opening them probably, if you have any doubts, send them to your accountant to action on your behalf. If the communications mention anything about payments / penalties / overdue amounts, then make sure you DO NOT IGNORE them. It could be the difference between sorting things out in a timely manner and having to pay up to £1600 penalties. Yes, I sadly have a client who ignored all of those green letters and has ended up with all sorts of late payment penalties, this is so unnecessary and could have meant a nice family holiday for her and her family this year instead of a cheque being sent to HMRC.
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I was recently talking to a self-employed trader and he told me a shocking fact “…I’m always late filing my self-assessment, so any tax rebate I’m due I end up paying in penalties…”
So for the sake of keeping a few records and keeping his books up to date (and putting reminders in his calendar) he was losing out on hundreds of pounds! I got to wondering how many other traders were operating like this and how many of them end up getting themselves in a pickle and have to call in an expert. Well that’s where I come in ;-) Then an interesting article landed in my in-box this week prompting me to think even further, HMRC are taking money for old rope, let’s not let them take any more in penalties than they deserve, let’s keep those books up to date and file everything on time. Let me help if you find you don’t have the time to do this, or to go to the full article click below. http://www.taxinsider.co.uk/1441-Enquiries_Dont_Give_HMRC_An_Opportunity_To_Raise_Extra_Tax.html?inf_contact_key=4e85f3524c715458b47253f3f4456a1b00f4819344a885c66c93b4754893920c Source: www.taxinsider.co.uk If you are ever flagged by HMRC for inspection would you be ready? The key to peace of mind is keeping a tidy, up-to-date set of books, imagine trying to track down lost receipts or missing invoices to prove your trading figures?
An accountant or bookkeeper can help you keep up to date so that at any time you know how much VAT you owe and when, they can help prevent errors and help you calculate your corporation/income tax liability. Alternatively, choosing and using the correct bookkeeping software reduces the headaches immensely. For advice on the best tools to use, contact CMW, or let CMW take the worry off your shoulders by completing your bookkeeping on your behalf. Note the following changes to personal tax rates, allowances and National Insurance Contributions for tax year 2015/2015
Important rates for tax year 2015/16 Basic rate of income tax 20% Basic rate band £0-£31,785 Higher rate of income tax 40% Higher rate band £31,786-£150,000 Additional rate 45% Additional rate band £150,000 Personal Allowance those born after 5 April 1948 £10,600 those born between 6 April 1938 and 5 April 1948 £10,600 those born before 6 April 1938 £10,660 National Insurance contribution thresholds Weekly Lower Earnings Limit (LEL) £112 per week Weekly Primary Threshold (PT) £155 per week Weekly Secondary Threshold (ST) £156 per week Upper Earnings (UEL) £815 per week Upper Profits Limit (UPL) £42,385 Employment Allowance £ 2,000 (per year, per employer) You are not legally obliged to register for VAT unless your turnover exceeds the VAT threshold (currently £81,000 during 2014). Note that this turnover is calculated on a rolling 12 month period so it could be that you hit this threshold within a calendar year, if you think you might exceed this limit it is important to keep accurate sales records. There might be advantages to voluntarily register for VAT, for example: giving the impression to customers that your company is larger than it really is, or when claiming input VAT back on purchases may exceed output VAT on sales (eg zero or reduced rate sales). IF you are at all unsure what’s best for you, you should always take proper advice.
There are important steps to take when thinking about setting up your own business. Firstly, you should decide whether to be a sole trader, a limited company or a social enterprise (sometimes called not for profit businesses). The legal structure you decide upon will have implications for how you run your business, how you employ people and the type of documents you will need to produce. Note that if you decide to be a sole trader, you and the business are not separated legally, therefore all profits and conversely all debts are yours as well as the business’s. Depending on the type of trade, you might decide it is advantageous to act through a separate legal entity to provide your product or service, this can be done through a limited company or a social enterprise. In this case, the company exists as a separate legal entity and will therefore have specific legal obligations.
Regardless of what you decide, it is important to take advice on what is best for you and your business and most important of all you must inform HMRC as soon as possible after you start trading. |
Author: Catherine WainwrightUseful stuff to help small business owners be more effective. Archives
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