fpdteam, Author at Bennetts Accountancy

Being made bankrupt

10th August 2023 by fpdteam

The bankruptcy process applies to people living in England, Wales or Northern Ireland. There is a separate process known as sequestration in Scotland. Bankruptcy is a form of insolvency and is normally only suitable for those people who are unable to pay back their debts in a reasonable time. Most applications for bankruptcy are made by those who are in debt, but it is also possible for a person to be made bankrupt.

You can be made bankrupt if you:

do not pay your debts and you owe £5,000 or more;
break the terms of an Individual Voluntary Arrangement (IVA); or
gave information that wasn’t true to get an IVA.

This process is usually seen as a last resort for creditors as there are significant costs involved and creditors will want to be sure that they will get back the money they are owed.

Initially, creditors are required to try other legal ways to get someone to pay their debt. This is usually a statutory demand or a court judgment.

If you’re made bankrupt:

your assets can be used to pay your debts;
you’ll have to follow bankruptcy restrictions; and
your name and details will be published on the Individual Insolvency Register.

Source:HM Government| 04-08-2023

Need to tell HMRC about extra income?

10th August 2023 by fpdteam

There is an online tool that allows taxpayers to check if they need to notify HMRC about additional income. The online tool can be found at www.gov.uk/check-additional-income-tax.

This could include earnings from:

selling goods, for example at car boot sales or auctions, or online;
Undertaking casual jobs such as gardening, food delivery or babysitting;
charging other people for using your equipment or tools; and
renting out property or part of your home, including for holidays (for example, through an agency or online).

In most cases, these types of income are taxable. However, there are two separate annual £1,000 tax allowances for property and trading income. If you have both types of income highlighted below, then you can claim a £1,000 allowance for each. The online tool will indicate if this is relevant.

The £1,000 exemptions from tax apply to:

If you make up to £1,000 from self-employment, casual services (such as babysitting or gardening) or hiring personal equipment (such as power tools). This is known as the trading allowance.
If your annual gross property income is £1,000 or less, from one or more property businesses you will not have to tell HMRC or declare this income on a tax return. For example, from renting a driveway. This is known as the property allowance.

Where each respective allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared. Taxpayers with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses.

Source:HM Revenue & Customs| 04-08-2023

VAT treatment of road fuel costs

10th August 2023 by fpdteam

There are four options for the VAT treatment of road fuel costs.

Treat all of the VAT as input tax because 100% is used for business purposes. This option only applies to fuel for cars used exclusively for business purposes, such as pool cars.
Treat all of the VAT as input tax and either apply the fuel scale charges or account for VAT on the basis of amounts charged to the employee. If a business makes a charge for the private use of fuel it can opt to account for output tax on the basis of the amount charged to the employee. Or it can opt to apply the fuel scale charge instead of accounting for VAT on the charge made. The scale charge is a fixed amount and saves business car users the chore of keeping detailed records of actual private mileage.
Use detailed mileage records to separate the business mileage from the private mileage. This option will require businesses to keep detailed mileage records to demonstrate that only the business element of the VAT charged on fuel has been treated as input tax.
Treat no VAT incurred as input tax. This option allows businesses to choose not to pay the relevant scale charges. If they do this, they must not recover input tax on any road fuel bought by the business. Any business that opts to use this concession must do so in respect of all fuel used by it in all vehicles including commercial vehicles.

This is a complex area and care needs to be taken to ensure the best possible method is used considering the many variables at play.

Source:HM Revenue & Customs| 04-08-2023

HMRC increases interest rates again

10th August 2023 by fpdteam

The Bank of England’s Monetary Policy Committee (MPC) met on 2 August 2023 and voted 6-3 in favour of raising interest rates by 25 basis points to 5.25% in a move to further contain inflation. One member of the MPC voted to keep the rate at 5% whilst two others favoured an increase to 5.5%. This is the fourteenth consecutive time that the MPC has increased interest rates with rates now the highest they have been since 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest has increased by 0.25% to 7.75%.

These changes came into effect on:

14 August 2023 for quarterly instalment payments; and
22 August 2023 for non-quarterly instalments payments.

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on have increased by 0.25% to 4.25% from 22 August 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Source:Other| 04-08-2023

Searching for details about property

10th August 2023 by fpdteam

There are a number of online tools available to help find information about a property in England or Wales, even if you do not own it. The service is available on GOV.UK and allows users to search for property by postcode, map, title number or INSPIRE ID.

Once a property has been located, users can download copies of the property summary, title plan and title register for a property in the service. To get details of any ‘restrictive covenants’ or ‘easements’ users will need to purchase the title register.

The property summary is free of charge. There is a £3 charge for the title plan and title register when purchased online. If the title cannot be downloaded online, then a copy will be sent by post at a charge of £7 per document.

A separate flood risk report for properties in England can be obtained from the Environment Agency.

There are different registers that need to be used if the property is in Scotland or Northern Ireland.

Source:HM Government| 04-08-2023

Scottish charities regulations

10th August 2023 by fpdteam

Charities in Scotland are regulated by an independent body. This body is called the Office of the Scottish Charity Regulator (OSCR). The OSCR is the regulator and registrar for over 25,000 Scottish charities including community groups, religious charities, schools, universities, grant-giving charities and major care providers.

The OSCR was established under the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act). The 2005 Act sets out the powers that OSCR has to regulate charities. This includes publishing and maintaining the Scottish Charity Register.

There is currently a Bill making its way through the Scottish Parliament that will update the 2005 Act.

The bill is intended to:

give OSCR wider powers to investigate charities and charity trustees;
amend the rules on who can be a charity trustee or a senior office-holder in a charity;
increase the information that OSCR holds about charity trustees;
update the information which needs to be included on the Scottish Charity Register; and
create a record of charities that have merged.

These changes will keep Scottish legislation in line with changes that have been made in England, Wales, and Northern Ireland to improve charity legislation since the Act came into effect in 2005.

Source:The Scottish Government| 04-08-2023

The end of scam calls selling financial products?

7th August 2023 by fpdteam

Are we about to see the end of phone calls selling sham financial products?

An 8-week consultation by the Home Office and other government departments is aiming to do just this.

The consultation, published on 2 August, covers proposals to ban cold calls offering any financial products and to clamp down on fraudsters seeking to trick people into buying fake investments. Once in force, people receiving a cold call offering these types of products will know that it is a scam, and fewer people will become victims.

Fraudulent investment schemes represent a significant threat to the UK economy, consumers, and society, with victims losing £750 million during 2022-23, according to data from the City of London Police.

A specialist team which provides support to victims of fraud, known as the National Economic Crime Victim Care Unit, has also been rolled out to all 43 police forces across England and Wales since the Fraud Strategy was announced.

Part funded by the Home Office; the service has existed as part of City of London Police since 2015 and is estimated to have stopped more than £2.8 million being lost to fraud. Last year its teams supported more than 113,000 victims and its rollout to all police forces will ensure more people receive the help and support they need.

The consultation aims to lead to the banning of cold calls for financial products such as sham cryptocurrency schemes, mortgages and insurance. The process marks the next step in delivering the government’s Fraud Strategy.

Source:Other| 05-08-2023

Transferring a VAT registration

3rd August 2023 by fpdteam

The taxable turnover threshold that determines whether businesses should be registered for VAT is currently £85,000. The taxable turnover threshold that determines whether businesses can apply for deregistration is £83,000. The thresholds are currently frozen until 31 March 2026.

When there is a change of business ownership or legal status it is possible to transfer a VAT registration so that the new business will keep the same VAT number.

Businesses can apply for a VAT registration transfer online or by post. It usually takes three weeks for HMRC to confirm the transfer.

HMRC’s guidance states the following:

If you are selling your business:

cancel your accountant’s access to your VAT online account – for example if you authorised them to deal with your VAT;
cancel any direct debits on your VAT online account, and
you must also give your records to the buyer if you are passing on your VAT number.

If you are buying a business:

contact HMRC within 21 days of the transfer application if you want to keep the seller’s accountant,
replace any self-billing arrangements with new ones, and
set up new direct debits on your VAT online account.

Businesses may wish to start afresh and can opt to get a new VAT number. This will mean cancelling the existing VAT registration and re-registering for VAT. Whilst this requires additional paperwork it may be preferable as the VAT registration starts with a clean slate.

Source:HM Revenue & Customs| 31-07-2023

Characteristics of a valid Will

3rd August 2023 by fpdteam

It is important to make a Will to ensure that your estate is divided amongst your beneficiaries in accordance with your wishes. If you do not leave a Will the law decides who inherits the estate. This can result in a distribution of assets that would not have been in line with your wishes and can be especially problematic for cohabitees (a couple who live together but are not married and have not entered into a civil partnership).

HMRC’s internal manual lists the following characteristics of a valid Will:

must be in prescribed form that satisfies all the formalities;
operates only as declaration of intention and does not prevent a testator or testatrix from disposing during their lifetime of assets which may have been allocated to someone in the will;
takes effect only on death and until that time the beneficiaries have no interest in the assets;
may not only deal with dispositions of assets, for example, it may appoint a guardian of minors or give directions on burial or cremation arrangements;
can be revoked or altered at any time before the testator/testatrix dies; and
is ambulatory, that is to say it is capable of dealing with property acquired after it was made (provided the property is still owned by the testator at death).

It should be noted that even when a valid Will is in place, arguments between family members, beneficiaries or personal representatives can arise. Any disagreements must be sorted out before the affairs of the person who died can be settled. This can sometimes be so contentious that it has been left to the Courts to decide if a Will made by a deceased person was valid or invalid.

A Will can also be changed after death. This can be done by what is known as a Deed of Variation for up to two years from the date of death and is most often contemplated to reduce Inheritance Tax liability. A Deed of Variation can only be executed with the agreement of all the beneficiaries. It is more complicated if children are involved as they cannot themselves consent to changes.

Source:HM Revenue & Customs| 31-07-2023

Carrying company losses back

3rd August 2023 by fpdteam

Corporation Tax relief may be available where your company or organisation makes a trading loss. A qualifying trading loss may be used to claim relief from Corporation Tax by offsetting the loss against profits in previous years.

This could be a useful option for companies that have incurred significant losses. Carrying back a trading loss allows companies to seek relief by carrying them back to an earlier profit-making period resulting in a reclaim of Corporation Tax.

Usually, such a claim could only be made once a Corporation Tax return has been prepared and submitted to HMRC. However, in exceptional cases HMRC will allow claims to be carried back based on anticipated losses before the end of a current accounting period. Companies making a submission to HMRC requesting the early carry back of losses would need to provide HMRC with full evidence to support such claims.

Losses may only be carried back against profits of a preceding accounting period if the company was carrying on the trade (in which the loss was incurred) at some time in that accounting period.

Any claim for trading losses forms part of the Company Tax Return. The trading profit or loss for Corporation Tax purposes is calculated by making the usual tax adjustments to the figure of profit or loss shown in the company’s or organisation’s financial accounts.

If a company ceases to carry on a trade, the preceding period is three years preceding the accounting period in which the loss is incurred. Accounting periods must be taken in order, the most recent first.

Source:HM Revenue & Customs| 31-07-2023