Tax returns for Directors, Sole Traders, CIS Rebates, Partnerships, & CGT

Self Assessment Tax Returns

Prices are fixed annual fees and a one-off setting up fee for auto enrolment is charged at £125+VAT.

Work Place Pension Price List

The prices include provision of all wage slips, RTI filings, P35 filed online, P11d, P14, P60, P38, basically all forms taht are required.

Payroll Prices

The cost for VAT registration id £140+VAT, which can include finding your regsitration date, the best scheme for your bsuiness and registering the business for VAT & enrolling the VAT number for Making tax Digital.

VAT Prices

The prices are correct to December 2021 and are negotiable.  Please call us on 020 876 1000 for more information.

Limited Company Accounts

There is an online self-assessment tax deadline on 31/01/year where your figures need to be submitted to HMRC and your first payment be made.

The self assessment dates run from 06/04/20xx – 05/04/20xy with the submission/payment needing to be done no

later than 31/01/xz.  Depending on the amount of tax owed, HMRC will want payments on account from you. What this means is that you pay a balance towards your next year’s tax bill based on figures from the current year.

So, keeping this in mind, your first ever tax return may become more costly than you anticipate as you will not have any paymounts on account towards your current tax bill, so will be paying x1.5 of your tax bill to HMRC on 31/01.

If you are new to self employment or for whatever other reason are submitting a tax return for the first time, it is a good idea to do it in advance of the deadline, so you are prepared to make the first payment to HMRC without any nasty surprises.

The second payment on account must be made by 31/07/year.

If you are late filing your tax to HMRC and therfore not making your first payment without good reason, you will get an instant £100 penalty for tax returns filed up to 3 months late.  You will also be charged interest on the late payment.

After 3 months late, you will then need to pay £10 per day for up to 90-days along with interest.

Self assessment is a system HM Revenue & Customs (HMRC) uses to collect income tax that is not otherwise collected via the means of pay as you earn (PAYE), which happens in most instances when someone is employed by an individual, small business, or

large organisation.  Under PAYE tax is usually deducted automatically from wages.

You will need to register for submitting a self assessment income tax return to HMRC if any of the following criteria are met:

• You are self-employed
• You are a landlord
• You are on PAYE but have income from other revenues
• You are a director
• You are in a partnership
• You are on PAYE and earn above £100,000.00 per annum

At Taxfile we can help you register for Self Assessment tax return.  You can register online at HMRC and you will be sent a Unique Taxpayer Reference (UTR) within 10-working days.  After registering you will need to create an online account at HMRC and

on doing so you can use your UTR to sign up for HMRC’s Self Assessment Service.

The simplest explanation is that your profit (or loss) is calculated by taking all your sales/income and subtracting it from all your expenses.  This figure will either be a profit or a loss, if negative.  Each tax year, the government identifies income tax bands

and rates that can be found HERE. The first band is known as your ‘personal allowance’.  It is the amount that can be earned without any income tax deductions, then the basic rate at 20%, higher rate at 40%, and the additional rate at 45% (correct at time of writing – 2019).

So if you have made a profit, the amount for your personal allowance is taken off and the remainder will be taxed at the appropriate rate(s).  You should be aware that if you earn above £100k your personal allowance drops by £1 for every £2 you earn above, so that by £125k you will not actually have a personal allowance.

It is important to remember that the tax year runs from 6th April 20xx & ends on 5th April 20xy.

It is also important to remember that if your income during any 12 month period (not just within the tax year), exceeds the VAT threshold, you will need to register your business for VAT within one month of exceeding the threshold.

If you need any help or advice about your self assessment income tax, call us on 020 8761 8000 and arrange a 20 minute free consultation.

If you are self-employed, you will need to keep records to be able to calculate your profit/loss for when you submit your tax return.  All the records that are used to calculate your tax return should be kept for 5 years minimum, in the

eventuality that HMRC investigate a return and require evidence.  You should keep records of;

• all expense receipts for goods, stock, and services required to run your business
• bank statements, cheque books, & paying-in stubs
• Sales invoices, till receipts, credit card reports and bank slips
• statement from any other income, such as investments, shares, or stocks

If your records are lost, stolen or destroyed you need to inform HMRC when submitting your tax return that the figures are estimated.

At Taxfile we submit over 500 tax returns a year for our clients.  A self assessment tax return can be submitted by yourself or someone you have granted authority to act on your behalf.  If you are a new customer at Taxfile,

the tax agent would require photographic ID, your National Insurance Number, and your UTR number from you.  They would then send a request to HMRC to for Taxfile to represent you on your self assessment tax returns.  HMRC will then send an authorisation code to your home/registered address & upon receiving it, you would pass this code to Taxfile.  Once the code has been confirmed on our HMRC Client site, we will then be authorised to speak to HMRC & act on your behalf, with your permission of course.  This includes calculating and submitting your self assessment tax return via our company software, directly to HMRC.

We would request to see your records for the tax year and guide you through the process of paying the only amount of tax that you need to.

Please note that our submissions are insured if your tax return was pulled up by HMRC for an investigation.  Barring any fraud, Taxfile would do all the legwork and liaise with HMRC on your behalf to answer any of their questions around the submission without any additional cost to you.

The Construction Industry Scheme (CIS) is where a construction contractor deducts, at source, a portion of the money due to their subcontractor. Whatever amount is deducted is then passed directly to HMRC which is then counted towards the tax and National Insurance

of a subcontractor. This effectively pays the tax element in advance.

How much is deducted will depend on whether or not a subcontractor is registered under the CIS system. Unregistered subcontractors usually get a 30% deduction, while the registered ones get a deduction of 10% less or the standard rate of 20%. This is one of the reasons that, by the end of the financial year, the amount deducted at source often ends up being overpaid.  But a bigger reason is the fact that the deductions did not factor in the personal allowance that every taxpayer in the UK is entitled to.  Because of this over payment, many subcontractors in the construction industry are due a tax refund.

You can also claim extensively for any work related expenses such as; accountant fees, travel, telephone, tools, clothing, etc.

It is a complex process and to ensure you get the maximum tax rebate let Taxfile help you. CIS tax refunds and accountancy for sub-contractors is one thing that Taxfile is exceptionally skilled at. Over the years we have secured valuable tax refunds or ‘rebates’ for thousands of subbies working in the construction industry.

What Construction Workers Can Claim on Tax:

• Materials, Tools and Equipment
• Protective clothing/uniform
• Business travel
• Business trip expenses
• Internet phone and stationary
• Membership fees
• Motor expenses / mileage allowance
• Home office expenses when working from home
• Administration expenses including remuneration from a family member helping with administrative duties or bookkeeping

In most circumstances you will need to fill in a self assessment tax return if you are a UK resident with foreign income or capital gains.  You do not need to fill in a tax return if your only foreign income is

dividends under £300 in total.  There are also foreign incomes that are taxed differently with special rules, for example, pensions, rent from property or certain types of employment income.  At Taxfile we can help you determine if you foreign income needs to be declared and as your tax agents we can complete and submit your tax return on your behalf.

If for whatever reason you have not paid the right amount of tax to HMRC with regards to income tax, capital gains tax, national insurance contributions, or corporation tax, then a disclosure will need to be made.  At Taxfile we can help

you calculate the amount of the disclosure and make the formal offer to them and liaise with them on your behalf about the previous inaccuracies.

HMRC is targeting tax evasion and are currently integrating IT systems and offices to help them identify customers who have not declared all their income.  If you owe any additional taxes they can charge higher penalties than when an individual comes forward by their own admission.  If Taxfile are your agents, HMRC will liaise through us about your disclosure and you can leave it in our capable hands to ensure everything is done correctly.

The criteria for company directors are the same as for any employed individual and there is a tax code for company directors. If your only income is already taxed at source, such as PAYE, or you only have small amounts of

savings interest or dividends below £2,500, you may not need to file a return.  It is still a legal requirement to complete a tax return, if HMRC has issued a notice to file under TMA 1970. However, in such cases, the director can ask HMRC to have the notice to file withdrawn, but it may decline that request and insist that the tax return is submitted. If such a notice has been issued, and not withdrawn, the tax return must be submitted and penalties will be imposed if it is not.

Value Added Tax (VAT) is a rate of tax that is added to the sale of goods and services within the United Kingdom.  The rate of VAT is dependent on the good on the goods or services being provided but generally speaking in the

UK.

The standard rate of VAT in the UK is 20% and is applied to the majority of goods or services.  The reduced rate is 5% and generally applied to health, energy, and protective products and services.   0% on things to do with health, building, publishing, and children’s clothing.  A detailed list of the VAT rates on different goods and services can be found HERE.

VAT does not apply to all products or services, things like insurance, antiques, arts, and educational training are exempt from VAT.

As a sole trader or business owner, you would only charge VAT if your taxable turnover exceeds the VAT threshold stipulated by HMRC.  At Taxfile we can analyse your business data and find your regsitration date, advise on the best scheme for you, register you, & compile and submit your VAT returns via MTD compliant software.  Call us on 020 8761 8000 to see how we can help you with VAT.

Your business must register for VAT if your taxable turnover exceed the threshold within any consecutive 12-month period (irrespective of your accounting dates).  Your taxable turnover refers to the total value of everything that you sell that is not exempt from VAT. 

The threshold for VAT is specified by HMRC and subject to change.  You can find the VAT thresholds HERE.

Under ‘normal’ circumstances, VAT registered businesses submit their VAT returns to HMRC quarterly.  The annual accounting scheme allows you to complete just one VAT return each year.  You then pay instalments of the VAT that you expect to owe (usually based on your previous

VAT return figures), so that you are not faced with a large VAT bill at the end of the year.  The main benefits of the scheme are:

• it helps you smooth out your cash flow by paying a set amount each month or quarter
• you can make additional payments as and when you can afford to
• you only need to fill in one VAT Return each year instead of 4
• you get 2 months to submit your annual VAT Return and balancing payment, instead of one
• you can align your VAT year with the end of your business tax year to simplify your end of year routines

The Flat Rate VAT Scheme is a way of paying your VAT liability whereby you or your business pays a fixed percentage of its turnover.  The flat rate percentage usually depends on your business type & you may get a different rate

if your expenditure on goods is below 2% of your turnover or you only pay £1,000 or less in a year on goods.  If this is the case, your business is termed a limited cost business and your flat rate is 16.5%.  Flat rates for businesses that are not classified as limited cost can be found HERE.  It is possible to fluctuate between your reduces business flat rate percentage and the higher limited cost rate.

When on a flat rate scheme your VAT liability is calculated by finding your percentage rate against your ‘gross sales’.  Say you were in the construction industry, your rate would be 9.5%.  You invoice a client for £100 + VAT giving you a gross of £120.  The amount you pay to HMRC is £11.40 (9.5% of 120), pocketing the £8.60.  However, this means that you can not claim any VAT back on expenses, so obviously is beneficial to where you have limited VAT expenses.

At Taxfile we can help you decide whether a flat rate scheme would be beneficial to your business as well as monitor your VAT return to see when it may be time to sign off from the scheme.

Making Tax Digital (MTD) is an initiative started by HMRC initially for VAT submissions (as of 01/04/2019) & is intended to be rolled out to all areas of taxation for individuals and organisations.  The MTD initiative is believed to benefit HMRC on

two levels.  It will help to ensure the correct VAT is being paid to HMRC, & seeing that VAT accounts for the highest unpaid tax in the UK (35%), the government has estimated that it will generate £610M in 2020-21 from eliminating erroneous returns.

The MTD initiative will also save HMRC money as it will no longer have the cost associated with maintaining the VAT portal where submissions are currently made, estimating a saving of £10M a year of taxpayers’ money.

HMRC’s long-term vision is to have one of the most digitally advanced tax administration systems in the world & they are striving to have MTD applied to all of UK’s taxation processes.

What are my responsibilities?

You will need to ensure that all your transactions (expenses & sales) are individually recorded digitally with a MTD-compliant software.  You still need physical &/or electronic copies of these records stored for at least 6 years.  The MTD compliant software is then used to calculate & submit your VAT returns.

What should my ‘digital’ data look like?

From April 2019 all digital record keeping will include;

• Business Name
• Business Address
• VAT Registration Number
• VAT Account Schemes
• Information about Supplies & Sales

All Supplies & Sales invoices should include;

• a Tax Point Date
• Sequential (alpha-)numerical labelling format
• Itemisation of services/goods
• NET amount clearly shown
• VAT rate & VAT amount clearly stated

Currently, the date, NET & VAT amount all need to be digitally stored for each-and-every-one of your transactions.  It is also recommended that a digital upload of your bank feed is included to back the entries for both expenses & sales.  VAT will then be calculated using these digital entries & submitted to HMRC via the compliant software used to record them.

At Taxfile we can see to all your VAT requirements, from the bookkeeping, to the submission via MTD compliant software, only thing left for you to do is to pay your VAT bill to HMRC.

The Domestic Reverse Charge of VAT is a scheme introduced by HMRC (commencing date 01/10/2020) for any company or individual that is VAT registered and works under the Construction Industry Scheme (CIS) providing construction, paining, & decorating services may be subject to

the Domestic Reverse Charge.

HMRC states it is aware of the large scale fraud that has occurred within the industry, whereby construction businesses charge VAT for their services but then disappear without paying their VAT bill, taking with them the 5% or 20% as additional profit.  They have also managed to under cut their prices against many businesses working legitimately with the knowledge that they will have this additional ‘profit’.  Therefore,  by moving the VAT charge down the supply chain, HMRC intends to make this kind of fraud impossible.

The idea is that the sub contractors in the middle will pass on the VAT liability to the end user, so to the contractor at the end of the supply chain.  This means that the sub contractor’s cash flow will decrease as it will no longer receive the VAT on it’s invoices but obviously does not then have a VAT liability for the jobs that meets the domestic reverse charge criteria.  If you are effected by the domestic reverse charge it may be beneficial for you to go on a monthly VAT scheme where you can ease you cash flow strains by reclaiming VAT on purchases.  It will probably no longer be beneficial for you to be on a flat rate scheme either.

This is a rather complex question and many variables comes into play, such as if your are on a Flat Rate Scheme, or if Domestic Reverse Charge applies.  However, under normal circumstances, when a  business is on the standard VAT scheme without any reverse

charges applicable, the formula is;

(OUTPUT VAT) – (INPUT VAT) = VAT LIABILITY

The output VAT is the VAT that you have charged on your own sales of goods and services.  Input VAT is the VAT that you have paid on eligible goods and services to provide your sales.

However, this simple formula is often clouded by many grey areas that may arise.  At Taxfile we can cover all aspects of VAT from registration, bookkeeping, as well as the actual calculation.

You would need to de-register from VAT if your Limited Company goes into administration, gets de-registered, or goes dormant.  You would also want to de-register from VAT if your earnings fell below the threshold for 12 months and you believe that they

would continue to do so in the immediate future or you stop making supplies or relevant acquisitions.  If you sell your business you can either allow the new owner to continue using the VAT number registered to the business but you would need to still de-register yourself from that number.

To de-register from VAT you would need to complete a VAT7 form, which can be done online, requesting to cancel your VAT registration.   At Taxfile we can do the de-registration for you and take out the complexity of the administrative requirements in de-registering you/your business from VAT.