New Tax Relief For Investment In Social Enterprise!

HMRC's Social Investment Tax Relief scheme (SITR) introduced this year helps individuals support social enterprises, giving these enterprises access to new sources of finance.

SITR helps social enterprises raise finance by offering tax relief to individual investors.

The new relief provides the investor with a deduction from their tax liability, equal to 30% of the amount invested. A £10,000 loan to a qualifying social enterprise would therefore allow an individual to reduce his income tax liability by £3,000.

The relief is available for qualifying investments made on or after 6 April 2014. A social enterprise is a commercial business that helps people or communities. It may be a charity or community interest company.

The social enterprise can make sure they (and the proposed investments) qualify by sending an advance assurance application to HMRC.

Resources about SITR from HMRC:

Guidance for social enterprises
Eligibility and the conditions social enterprises must meet so investors can claim SITR

Guidance for investors
Conditions investors must meet before claiming SITR

Get approval if you're a social enterprise
What social enterprises need to do to get approval from HMRC

How to claim tax relief if you're an investor
What investors need to do and when to claim SITR

Form: SITR Compliance Statement
Social enterprises must use this form to request authority to issue Compliance Certificates to investors

Policy on Social Investment Tax Relief (Opens new window)
How SITR will help grow the social investment market

Post your questions on SITR or other Tax Relief options and we'll help you.

No Loss Relief For Non-Commercial Business!

A recent case before the Tax Tribunal reminds us that HMRC has set that in order to set a trading loss sideways against other income, the business must be commercial one with the intention to make profit against general income.

The case in question relates to Ms Thorne, who ran an equestrian business and another business growing asparagus.  HMRC has disputes on whether the trade had been carried out on a commercial basis with a view to the realisation of profits.  The self-employment pages of her tax return showed a single composite business, which incurred an overall trading loss. The equestrian business was unlikely to make a profit and was clearly a hobby. However, the asparagus business was in its early stages; it is widely accepted that it can take up to three years before a significant crop is produced. Had separate accounts been prepared for the asparagus business, loss relief would likely have been available, as it could be argued that the venture was being carried out on a commercial basis with a view to making a profit.

Check this Working sheet from HMRC Losses HelpSheet

If your business makes losses in the first few years, we can help to ensure the availability of relief by helping you prepare forecasts and a business plan, demonstrating that the business is being carried out on a commercial basis with a view to making a profit.

If you have made a loss in your business/trade or are entitled to a share of the loss made by a partnership of which you are a member, check this HMRC Losses HelpSheet for more details

Collection Of Unpaid Tax Through Your Tax Code!

Currently, HM Revenue & Customs can collect tax debts of up to £3,000 by adjusting your Pay As You Earn (PAYE) tax code. HMRC refers to this as ‘coding out’. The effect of this is to recover the debt from your income, by increasing the amount deducted from your income during the tax year.

This applies if you have a debt with HMRC and:
• are an employee paying tax through (PAYE), and/or
• receive a taxable UK-based private pension

HMRC are now increasing the amount of debt that can be recovered through your tax code if your annual earnings are £30,000 or more. To do this, HMRC will apply a sliding scale to your main PAYE income. The maximum amount that can be coded out is being increased to £17,000 (where earnings exceed £90,000 a year).

These changes will only apply to underpaid Self-Assessment and Class 2 National Insurance debts and Tax Credit overpayments. Changes will be reflected in your 2015-16 tax code and we will write to you before we collect any debts through your PAYE code from April 2015.

If your earnings are less than £30,000, there’s no change. Check the table below if your earnings are above £30,000 & its coding out limits from HMRC website:

More information on this at Collecting overdue tax through your tax code: changes to the amount HMRC can collect

Coding out the unpaid 2013/14 tax is only possible if you submitted your paper tax return by 31 October 2014 or file your tax return online by 30 December 2014.

If you have any queries, post them as comments below.

Contact us to know more on these changes and what changes you need to make to your small business!

Changes in VAT place of Supply rules!

VAT place of supply rules changes from 1 January 2015

Andrew Webb, Senior VAT Policy Manager at HM Revenue & Customs (HMRC), explained on the changes to the EU VAT place of supply rules for B2C digital service suppliers.

The changes will be implemented from 1 January 2015 to the European Union (EU) VAT place of supply of services rules involving business to consumer (B2C) supplies of broadcasting, telecommunications and e-services i.e., digital services.

VAT Moss Business to consumer supplies of digital services

What are the changes being made to the VAT place of supply of services rules?

On the 1st of January 2015, the EU Vat place of supply, and therefore taxation rules are changing, so that from that date the place of taxation will be where the customer lives, rather than where the supplier of the service is established. It's the final change in a series of changes to embed the idea that, with consumption taxes such as VAT, the place where the tax is paid should be where the service or goods are enjoyed, consumed or used.

What does it mean for the businesses affected?

It imposes on them an obligation to register for VAT where their customer is located. It also means that they have to collect information to define where their customer is actually living and the VAT rate in that Member State.

What can a business do if it doesn't want to register for VAT in every Member State where it supplies a service?

It can make use of a new service introduced on the 1st January called the VAT Mini One Stop Shop, or MOSS. With the MOSS, the business will only need to register in one jurisdiction and make one MOSS VAT return, one MOSS Payment to cover all of its obligations across the whole of the EU.

How can a digital service supplier register for VAT in the UK?

First of all register with HMRC through the gov.uk website.

Then, once registered, the business will collect the information about the supplies it's making to the customers. At the end of each calendar quarter it will submit its single return to us and its single payment, and then it can leave it to HMRC to do the rest.

HMRC will split the payment and the return and send it to the appropriate Member States where the consumers live.

Check the website for more information - http://www.hmrc.gov.uk/posmoss/

Are you still not clear on the changes? We are always happy to help you.
APJ Accountancy - A team of Chartered Certified Accountant regulated and monitored by The Association of Chartered Certified Accountants (ACCA).
Tel: 020 89310165  
Mobile: 07900537459 
E-mail: info@apjaccountancy.com

RTI Penalties Start October 2014!

Since 6 April 2013 employers have been reporting PAYE information to HM Revenue & Customs (HMRC) in real time. You may see this referred to as Real Time Information - or RTI.

This means you must set up payroll records for the new tax year using payroll software, some of which is free. It makes PAYE submissions to HMRC be updated in real time, every time you pay your employees.

Earlier this year, HMRC announced that the penalties for late returns of payroll information (RTI) would start from October 2014 instead of April 2014. If you operate your own payroll, make sure that your RTI submissions are made on time to avoid an automatic penalty.

Remember that the RTI submission should normally be made on or before the date when the wages or salaries are paid to the employees.

Check for more information about PAYE payments and deadlines and penalties at http://www.hmrc.gov.uk/payerti/paying/deadline.htm

HMRC Task Forces Launched September 2013!

HMRC announced 4 new task forces that will investigate tax evasion in specific commercial and geographical sectors. The task forces bring together various compliance and enforcement teams for what they term “intensive bursts of targeted activity”.

The new task forces will investigate the following:

•    Construction industry in London (expecting to raise £3 million)

•    Security guards, bouncers and their employers in London and the South East (expecting to raise £10 million, with fraudulent VAT repayment claims identified as an increased risk in this sector)

•    Second-hand motor traders in the Midlands (expecting to raise £3 million)

•    Hidden wealth / “means” issues in the Midlands (also expecting to raise £3 million from comparing lifestyles to known assets)

If you know anyone involved in the above sectors who are having tax concerns, please ask them to contact us at 020 89310165 for advice!