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Jay & Jay Partnership Ltd
Newsletter September 2006
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Newsletter September
2006
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This month we have
included a reminder for the owners of "small" business properties
to claim rate relief in certain circumstances, an article covering the
possible withdrawal of employee car ownership schemes, HMRC interventions and
Gift Aid considerations.
Clients will be pleased to
know that the Revenue have backed down from their proposed changes to the
filing dates for self assessment tax returns. Previously the deadlines were
going to be changed to 30 September for paper returns and 30 November for online
filing, but a successful lobbying campaign by the profession has resulted in
these dates being changed to 31 October for paper returns and 31 January (as
now) for electronically filed forms. These amended changes will apply to
returns issued for 2007-08 and subsequent years.
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Small Business Rate
Relief - Application deadline England
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The deadline for
submitting applications for Small Business Rate Relief 2005/2006 in England
is 30 September 2006.
The amount of relief that
you may be able to claim depends on the rateable value of all the business
properties that you own.
If the rateable value of
all properties you own is below £5000 (In Scotland £3,000) you will be
eligible for a 50% relief. This reduces as the rateable value rises.
For owners of new business
premises please note the following quote from the Government's web site:
Assuming a business meets
the eligibility criteria, the relief can only be granted if the property the
business occupies is on the rating list from 1 April. The date of
occupation of the property is irrelevant, the key date is the effective date
given to the property in the rating list. If the property has an
effective date after 1 April, then the relief can only be applied for from 1
April of the following year.
Forms are reasonably easy
to complete, if you need help please call. For smaller business property
owners this is a relief not to be missed.
Scotland has a separate
scheme which has been in place since 1 April 2003. There are no specific
deadlines for applications, which can be made by calling the appropriate
rating authority and requesting an application form.
There is no small business
rate relief scheme in operation in Wales.
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Employee Car Ownership
Schemes
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ECOS
Schemes aim to achieve the following objectives, which generally
exempt the employee from the car benefit and car fuel benefit rules.
a)
improve employers' profits by funding the business travel on the part of its
employees in a more cost-effective manner than continuing to fund Company
Cars. Improve Health and Safety procedures.
b)
Provide employee drivers with net pay benefits, flexibility and more choice.
In some
schemes, ownership of the vehicle is transferred to the employee at the start
of the scheme. In others, (badly designed schemes), ownership is not
transferred, but the car is not made available by reason of the employee's
employment.
Where
this has been the case, the Revenue will be interested to look at the
following aspects of schemes to see if a tax charge applies:
- is there any tax charge in
respect of a sale of the car at undervalue to the employee,
- is there any tax charge in
respect of a resale of the car at overvalue by the employee,
- is the employee making good
the full cost to the provider of items such as insurance, servicing and
repairs, vehicle recovery assistance,
- is there a free or low
interest loan.
If HMRC
perceive that members of such schemes are receiving tax breaks that work
against the government's plans for the environmental impact of cars, we are
likely to see a tightening of the law in this area.
HMRC are
currently reviewing car ownership schemes offered by employers that do not
accord with HMRC approved procedures and are to report on the matter in the
Pre-Budget Report 2006. (November 2006)
There are
still opportunities to set up Car Allowance Schemes before Company Car
taxation is increased yet again in 2007.
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HMRC Interventions
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There is a "new
game" in town, HMRC Interventions!
The Revenue are trialling
a new approach with their customers (taxpayers), the stated objectives being:
- a review of current record
keeping, to make sure they meet HMRC standards.
- a short risk review.
- self audit of tax returns,
i.e. phone calls or letters requiring taxpayers to consider changes to
their returns.
- correction challenges - where
the Revenue have good quality information, from banks etc, they will
simply change your return and ask you why the information returned was
incorrect.
Initial contact may be by
letter or a telephone call. We would strongly advise all clients to contact
us immediately should an approach be made. We would also advise against
entering into a dialogue with HMRC - simply advise them that you will refer
their enquiry to your accountant. It is by no means certain that we will
receive copies of correspondence, or notification that calls will be made.
It is also worth
mentioning that under current legislation the Revenue have no powers to carry
out these interventions - they can only do so with your agreement and
co-operation. The Revenue are recently quoted as saying:
"...the pilots
are purely voluntary and there is no question of any customers being
compelled to take part."
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Giving to Charities
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Gift Aid donations
increase the cash benefit to charities by enabling them to recover the deemed
standard rate tax that you certify you have deducted before making the gift.
For instance if you make a donation of £10 the charity can recover a further
£2.82 from the Revenue. This effectively increases the charity's income by 28.2%.
The tax effect for the
donor depends on your highest rate of tax paid:
40% rate taxpayers
As you pay the donation
net of the standard rate tax charge, you can claim an additional £2.31 for
every £10 of donation made.
Standard Rate
taxpayers
There is no additional
benefit for standard rate taxpayers as they are deemed to have deducted the
standard rate tax charge before making the donation.
Individuals who
pay no tax
When making a gift aid
donation you assert that you will pay standard rate tax on the equivalent
amount of income. If it transpires that you pay no tax then you are required
to refund the notional standard rate tax. In the example above based on a net
donation of £10 you will need to repay £2.82.
Backdating
donations
One further point regarding
the date of payment and the tax year you can claim a deduction.
You are allowed to include
in your tax return all payments made after the end of the tax year, up to the
earlier of:
- the following 31 January, or
- the date on which you file
your return.
This can be significant
for taxpayers who realise that in the current year they will not pay higher
rate tax, whereas in the past year they did pay tax at 40%. By carrying the
appropriate gift aid payments back higher rate marginal tax at 23% can be
recovered. Without the carry back this benefit would be lost.
Please keep a record of
all the gift aid payments that you make. We can only make a claim on your tax
return if we are advised.
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Tax Diary
September/October 2006
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1 September 2006 -
Due date for
corporation tax due for the year ending 30 November 2005.
19 September 2006
- PAYE and
NIC deductions due for month ending 5 September 2006. (If you pay your tax
electronically the due date is 22 September 2006)
30 September 2006
- Last day to
submit 2005-2006 applications for small business rate relief in England.PAYE
and NIC deductions due for month ending 5 October 2006. (If you pay your tax
electronically the due date is 22 October 2006)
1 October 2006 - Due date for corporation tax due
for the year ending 31 December 2005.
19 October 2006 - PAYE and NIC deductions due for
month ending 5 October 2006. (If you pay your tax electronically the due date
is 22 October 2006)
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If you would like your
email address removed from our subscriber list please reply to this email
with the word "unsubscribe" in the subject bar.
DISCLAIMER -
PLEASE NOTE:
The ideas shared with you in this email are intended to inform rather than
advise. Taxpayers circumstances do vary and if you feel that tax strategies
we have outlined may be beneficial it is important that you contact us before
implementation. If you do or do not take action as a result of reading this
newsletter, before receiving our written endorsement, we will accept no
responsibility for any financial loss incurred.
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Jay & Jay Partnership
Limited.
2 Chesterfield Buildings,
Westbourne Place, Clifton, Bristol, BS8 1RU.
Telephone: 0117 973
5120 Fax: 0117 923 9807
Web: www.jayandjay.co.uk
Jay & Jay is a
limited company, registered for VAT under reference 793 4730 00.
Directors in the firm are
members of the Association of Chartered Certified Accountants (ACCA). This
body has their headquarters in the UK and their rules of Professional Conduct
can be obtained from their web site.
Jay & Jay are
authorised to act as statutory auditors by the ACCA.
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