Business Tax News WC 24 02

Business Tax News WC 24 02

– [Dan] Hello everybody
and welcome to this week’s Business Tax Update, where we talk to you about all the news and rumors that affect you,
the small business owner. (uplifting music) (uplifting music) So the first bit of news this week is that the PAYE tax coding notices are out, so if you’re employed,
for example, in a job, or let’s say you’re a
director of a limited company, so you’re on a payroll somewhere, the chances are you
would’ve already started to receive your payroll notice. So HMRC have been sending these out. At this present moment,
they’re technically temporary because until the budget’s
happened on the 11th of March, we don’t know if the rates
and allowances and everything are fixed, so they are subject to being revised. But at the moment you might
notice they’re coming out. The main thing with this is
to check that you’re happy with everything that’s been adjusted. If you’ve got a standard tax code, if it comes in it just
says, you know, 1250L, or something along those lines, then it’s probably fine,
there’s nothing doing, but if you see that they’ve
taken things out of your code or added things in, you wanna make sure they’re right. Because, realistically, most
of the time to change that it’s just a quick call to HMRC to say, “This is wrong, can you take this out? “And here are the reasons why.” If you’ve got an accountant, get them to check it,
they’ll do all that for you. But if you are doing it solo, just make sure you’re happy with that ’cause it can cause you problems later. One of the areas particularly to look for is in the area of cars, so if you’ve got a taxable benefit for a car that you had last year, and maybe it was only
halfway through the year or something like that, see if it’s enough. Quite often their the ones where we see that they get ’em wrong. It’s the same with medical insurance and some of these other key benefits, so just make sure and check that out. And if there is a problem,
do give them a bell. It’s very, very easy to sort out on the majority of occasions, but as I say if you’re
getting some professional help let them do it for you. If you’re really interested
in how your tax code works and made up, and you
haven’t really seen it, I know when I was
employed as an individual I didn’t have a clue how it all worked, that’s actually a blog on our website that explains that to you, so go and check that out. Now, the next interesting
thing in the news this week is we always keep an
eye on the tax courts. So this is really where
the rules are made. So I think a lot of people
presume that with tax there’s a rule book that says, “Here’s the stuff you can do, “here’s the stuff you can’t do.” But actually it’s not really the case. There is a little bit of that, but the majority of the actual specifics come from interpretation of what happens in the tax courts. So in this particular case
there’s been an interest in a case that was heard this week, and that was toucanBox. So this is a kid’s craft company, boxes with some reading material and then some craft materials in a box, for children, sort of, I think it’s in that
three to eight age range. And what happened is they got slapped with a 600 odd K VAT
bill from the tax man, and they said, “We think you
owe us this amount of money.” And it’s been going through the courts, and the reason that was is
that VAT can be quite complex and in this particular
case that parcel they sent that had some reading material
and some craft materials are two different things for VAT reasons. The craft materials are what
they call “standard-rated”, which is the normal 20% VAT that you pay on a lot of goods and services. And magazines, printed material like that, is generally what they call “zero-rated”. It just means there’s no VAT on it. But there’s technically difference. It’s technically a VATable
service, but the rate’s 0. So this is all important
for different reasons, but, really, if you just think about it, one’s got VAT on, one hasn’t really. It went through and what they did was, so the toucanBox went, “Okay, fine. “We’ve worked out a fairer apportionment “between the VATable bit
and the non-VATable bit. “And therefore what we’re gonna do, “Is we’re gonna hand
over this amount of VAT “on the money we’ve received.” And that’s quite normal. That seems quite reasonable to me, and to a lot of other people, I think, that were looking at this case closely. But HMRC disagreed and
said that, actually, they felt the magazine
was almost immaterial, like a tiny bit of that overall package, and therefore they should
have VAT on the whole amount. And we’ve seen this historically
in a few cases before where people have tried to
be quite clever with this, but in this case it seemed
pretty straight-forward to the onlooking eye that actually it was fine as it was. They actually won their
appeal and HMRC lost, and the reason, really,
that that was able to happen was because they able to
prove that customers saw the reading material, the
magazine in this particular case, as really something quite
important, or “very important”, to the actual overall product. And the reason I use those
words in little bunny ears is how they were able to prove is they actually used a
customer survey they ran, and 91% of their customers
felt that it was important, or very important, which is
a really key piece to this. So, great news for them and also for common
sense by the looks of it, so that’s the latest thing
that was in the courts. The reason I picked this one
is it’s a takeaway, really, to say that VAT is so complex, especially with mixed rates
and thing like that going on. So if you’re running a
business where that’s the case it’s always worth getting
a professional opinion, mainly because HMRC are
prone to deciding themselves what they’re gonna do. And if you phoned HMRC helpline, all they would normally do is they won’t give you an
opinion that you can rely on, they’ll just point you to
an area within the guidance, which is kind of helpful but it really doesn’t give you that certainty that you want. So, yeah, definitely check that one out if you’re in that sort of situation. And then, finally, as news
was fairly quiet this week, as we move towards the budget, I wanted to highlight an area of tax that not a lot of people know about, and that’s the DIY self-build VAT scheme. What this is all about means if you build yourself a
new residential property there’s another couple of things, like conversions and things, you can do, but that’s just to keep it quiet simple, the chances are you’ll be
able to reclaim the VAT you incurred on the building costs. The idea of this scheme is it
puts you into a similar place to somebody who’s a building
company or a developer that’s doing the same sort of thing. And what you’re able to do is, after you’ve done the
build, you can submit a form with all your expenditure and receipts, and they’ll actually
repay you the VAT on it, presuming that all your
paperwork is in good order. We actually did this recently
a couple of times for clients, and both times it’s very,
very straightforward. So if you are doing this, make sure that you keep all your records, make sure that you’ve read the guidance, and kept all your paperwork in exactly the right sort of order and presented it in an
easy-to-understand manner, and you should be able to get that back. There’s quite a lot of guidance on that and I’ll put some links in the
video or the comment section, so that you can go there and have a read if you want to do that. The thing to be aware with it is there’s some quite
restrictive timescales. You gotta do it quite
quickly after completion, so just make sure that
you’ve got it all ready as your build goes on really, in that all your VAT paperwork is there. Because one of the things
we’ve found internally when we’ve done these is that the tax man can be
quite picky over receipts, and it being in the right names and saying the right things on it, ’cause they do get inspected,
so just check that out. But it is a really quite, I don’t know, it’s one of those areas of tax that not many people
know about, bizarrely. So, yeah, there you go. If you’re building a house,
VAT reclaim there for you. And that’s it. Not a lot happening this week, so hopefully that’s kept you up to date and you’ve learnt something along way. We’ll see you on the next one.

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