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ACTION ADVICE Newsletter No 10 December 2006 Charity Demelza House Following the favourable response last Christmas year to our decision to buy a Shelterbox instead of sending Christmas cards to and our clients and contacts, this year we have made a donation to Demelza House. Office New Year hours Greetings We like to be flexible Our office will be closed from 12:00 to all our Friday 22 December until 9:00 Tuesday 2 January as it has been for Clients many years between Christmas and New Year. We hope that this will not and Contacts be inconvenient. Our office also closes on the other statutory holidays, but otherwise our Boxing night normal working hours are 9.00 till 1.00 Call us on The Rotary Club of Thanet is promoting and 2.00 till 5.00, Monday to Friday 01843-863901 another Boxing Evening with the with reception open and answering telephone calls during the lunch break. Monday - Friday Ramsgate Amateur Boxing Club on 9 9-5 February 2007 for the benefit of Cancer Care and Kent Air Ambulance. If you We have voice mail on 863901 in the would like to attend please ask us for evenings and at weekends and or fax holidays, and reception can record a 01843-860407 more details. voice mail message for anyone at any The 2006 event was very successful time, or we can be contacted by e-mail or e-mail which we sometimes pick up out of raising money for the Pilgrims Hospice firstname.lastname@example.org and Oasis. office hours. or visit We are happy to work at clients www.fowles.co.uk premises where that is more convenient, and to visit clients when or write to us at convenient, out of office hours if 45a High Street, appropriate, and we do not generally charge for travelling time. Broadstairs, Kent Because we sometimes work out of CT10 1JP the office, we are not always available, and we recommend clients arrange Partners: appointments to see us, but we will Michael Studham always try to see clients without Jo McCormack appointments. Newsletter No 10 Page 2 ACTION December 2006 ADVICE Almighty? Moving Is it like David taking on Goliath? targets Have you ever thought what information is Change of procedure available to HMRC? HMRC can change the rules if they Apart from the fact that HMRC can compare make the rules! the income and expenses of everybody who completes a Tax Return, HMRC administers Parliament passes the Taxes Acts and Stamp Duty Land Tax so the details of every HMRC has to administer those Acts, property transaction in the UK is on their files. but sometimes Parliament leaves some aspects open to interpretation. HMRC carry out detailed investigations into the Accounts and VAT Returns of businesses in the UK. The guidance booklet IR20 published by HMRC details They can extract information from any of those the non-residency rules stating that individuals must businesses to check against any other. remain out of the UK for at least 183 days of a tax year, and average no more than 90 days in the UK each year over four HMRC have access to details of the interest paid by every years. UK bank and building society, and as we reported in August they are gathering information about Offshore The guidance states that the days of arrival and departure Bank Accounts. are not included in these counts and on that basis Robert Gaines-Cooper considered that he was not UK resident. HMRC keep originals of any newspaper articles that name taxpayers, which they can produce as evidence. He had made a number of visits to the UK arriving on one day and departing the next, so on the basis of the guidance Many of the cases which HMRC Inspectors investigate these visits should not be included in the count. do differ from the average because the reported information is incomplete, for example, some sales have In the recent case of Robert Gaines-Cooper v HMRC the not been reported. Inspectors therefore become Special Commissioner has ruled that arrival on one day and somewhat cynical and disbelieve explanations which departure on the next should count as one day in the UK, so cannot be supported by evidence. he is treated as UK resident, despite the HMRC guidance booklet. H.M. Customs & Excise have always had extremely wide Change of mind powers in order to deal with smugglers etc. They had powers to search and arrest that were not available to the ‘A’ day, 6 April 2006, saw major changes to the pension rules Inland Revenue. The allocation of powers within the after several years of consultation. combined Her Majesty’s Revenue and Customs has yet to be finalised, but it is more likely that the powers of After his December 2005 announcement that, contrary to Customs & Excise will be extended to the Inland previous suggestions, residential property would not be Revenue than that it’s powers will be reduced. permitted as an investment within pension plans, in December 2006 Gordon Brown has decided that new life While HMRC have lots of infor mation and resources, assurance policies written under the pension legislation they do not have the right to impose their expectations in which became effective in April 2006 should not qualify for place of an individual taxpayers unique circumstances. tax relief. Alternatively Secured Pensions were also Any taxpayer who has unusual circumstances introduced as an alternative to annuities from age 75 in should be prepared to explain why their results April 2006 and only nine months later, Gordon Brown has differ from the average - for example by keeping introduced an additional tax liability on them. records of selling prices, exceptional wastage or other unusual events. In 1997 the UK Tax Handbooks on primary legislation comprised 2,300 pages, they now comprise 8,300, only Taxpayers who keep records with adequate supporting exceeded by India which runs to 9,000 pages - all from a evidence should never have to compromise with HMRC Chancellor who talks about simplification and reducing red in order to settle an enquiry. tape! Newsletter No 10 Page 3 ACTION December 2006 ADVICE Self Assessment Taxsure If you keep good and comprehensive records, you might be able to settle any tax investigation quickly and cheaply, but most investigations are time consuming and stressful, How could it benefit you? so you could consider Taxsure cover against the cost of our Helplines fees. Taxsure provides access to a free helpline for advice on - If you are the subject of an enquiry and do not have fee Employment and personnel matters such as insurance, we may ask you to make a payment of up to Disciplining an employee £470 on account of fees each month and we will review Dismissal this after 6 months. Gross misconduct The average length of a full enquiry is currently 16 months. Health & safety matters such as Some are shorter, but some are considerably longer, Reporting an accident perhaps up to 4 years. Hazardous substances If you are selected for investigation, the Taxsure cover will Commercial legal issues such as only pay the additional accountancy fees which arise Landlord and tenancy provided Company law Copyright and patent ! any irregularity is disclosed at the start of any enquiry VAT ! the relevant tax return was submitted by us within the filing deadline If, following a visit from a VAT inspector, there are any matters which are in dispute, our fees for resolving that There is no cover against the extra tax, interest, and dispute, any tribunal hearing or appeal against a tribunal penalties which HMRC might find to be due. decision are met by Taxsure. PAYE If, following a visit from an employer compliance inspector, there are any matters which are in dispute, our fees for resolving that dispute, any Commisioners hearing or appeal against a tribunal decision are met by Taxsure. The premiums for Taxsure are - ! Individual £55 per annum ! Sole trader £130 per annum to include individual cover ! Partnership £155 per annum to include the individual partners Premiums paid do not generally qualify as a deductible expense against taxable income, but receipts from the ! Audit exempt limited company £180 to include policy are not taxable. the individual directors Cover is for the calendar year and starts as soon as we bank ! Other limited company £230 to include the individual directors your cheque but would not cover an enquiry letter which is already in the post. We invite renewals at the beginning of If you would like further details of Taxsure please contact December to ensure that cover is continuous. us. Newsletter No 10 Page 4 ACTION December 2006 ADVICE Scrooge Remember the tax rules HMRC are happy for you to be as generous as you like at Christmas, but they will expect you to comply with the tax rules, so let us recap - Giving away free samples of Big pieces go your own products is tax deductible. Gifts of food, drink, tobacco and vouchers are not tax first deductible. Other gifts which carry the business name are tax deductible up to £50 per person per year. Your business Your new year resolutions name could be on a label attached to the article, but not the gift wrapping, and does not need to be printed or engraved. You could take a photograph and file it as evidence. Malcolm Gallagher at www.bizvisionplus.com quotes the story of the lecturer who produced a large glass jar, put You can recover input VAT on the gifts that you buy, some large rocks in it and asked the audience if it was full. including food and drink, so long as the total value per They said yes, so the lecturer added some small pebbles person does not exceed £50. and asked again. Once again the audience said yes, so the lecturer poured in some sand. When the jar was full of An employer can provide employees with a seasonal gift sand the lecturer poured in some water, then asked what such as a turkey, an ordinary bottle of wine, or a box of the BIG principle was? chocolates. ‘All these gifts are considered to be trivial and as such are not taxable’ (EIM21863). The simple answer is that you can always squeeze a little more in, but the best answer is that to get the most in, you The cost of a Christmas lunch or party is allowable. It will have to put the big pieces in first! If life is filled with water not give rise to a benefit assessable on the employee, even if and sand and pebbles, you will never squeeze the big rocks partners are invited, provided the cost is less than £150 per in later. person attending, (not per employee) and all employees are invited. You As you set your objectives for 2007, should you consider can ask employees to make a the principle of the big pieces, and give your big pieces the contribution to the cost in order to time, energy and focus that they deserve? keep the cost below £150 per person. Some possible suggestions for the bigger pieces could be - Health and fitness - you only get one body - are you taking care of it? Time - we all get 24 hours in every day - do you take time Can we save you out for your personal interests? Relationships - people matter - are you investing in money, others? Finances - spending what you cannot afford is stressful - or help you generate do you know what you can afford to spend? Work - doing it well is satisfying - do you need to improve extra income? your skills in order to work more effectively?
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