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  • pg 1
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
      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
  aa@fowles.co.uk      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.
        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
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

                                                                 !       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.

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
                                                                 !       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

                                                                    Remember the tax
                                                                    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
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,
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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