If your tax position is relatively straightforward you may not have to complete self-assessment, as all the tax you are liable for may have been paid through a PAYE (Pay As You Earn) system through your employment. However, there are certain groups with a more complicated tax situation that will be required to complete the tax return. Anyone who is self-employed, whether this be as a sole trader or as part of a partnership, will be required to file a return with HMRC. In addition, those holding a directorship of a limited company are required to complete self-assessment, though there are certain exemptions. For example, the directors of a non-profit organisation, such as a charity, aren’t required to file as they are receiving no benefit from holding their office. In addition, those receiving income over certain levels from a number of different sources will be required to file. You will also probably be required to file a return if you receive income that is not taxed at source, such as rental income.

HMRC should contact you by letter if they require you to file a self-assessment tax return, though the deadlines for when this should be submitted vary depending on how you send it. Paper returns must be received by HMRC by midnight on October 31st, while electronic filings must be received by midnight on January 31st. There are certain circumstances where the deadline can be extended, namely if you receive the letter informing of the requirement from HMRC after a certain date. For online returns, this is if the letter is received after October 31st. It is important to note that if looking to file your tax return online you need to request a Government Gateway code from HMRC, in order to allow your submission of the return. This can take a number of weeks to arrive, so it is important that you request this in-time for the deadline. This is your responsibility, and not one of the reasonable excuses for missing the deadline if it is your fault.

There are varying penalties for missing the self-assessment deadline with HMRC, which tend to increase with the length of time after the deadline the form is submitted. The current HMRC penalties for late filing are as follows:

• One-day late: £100 penalty, regardless of whether any tax is owed to HMRC.
• Three months late: £10 extra penalty for each extra day you are late, up to a 90-day limit and a £900 penalty. This is paid in addition to the fixed payment above.
• Six months late: The highest of £300 or 5% of the tax due.
• Twelve months late: £300 or 5% of the tax due – in extreme cases this may be up to 100% of the tax due. This is in addition to previous penalties.

The payments for any tax due must be paid by 31st January after the end of your tax year.

If you have any queries on self-assessment, please contact us on 020 8952 0140.

A data controller is a party, in this case a company, that has control over some personal information and details of individuals. This can be information that is held about members of the company such as directors or shareholders, or it may be information about customers. The treatment of data is covered in the Data Protection Act (1998), and it refers to a wide range of personal details that a company may hold as a result of their association with individuals. It is important that all data controllers register with the Information Commissioners Office (ICO) where appropriate to ensure that regulation takes place.

When a data controller register with the ICO it must follow the eight principles of data protection, regardless of whether they use the information they hold or not. The eight principles are as follows:

1. To use personal data in a fair and lawful manner
2. To only gain data for a purpose that is lawful, and process it in an appropriate manner
3. To limit the amount of information gained to what is required
4. To ensure data kept is accurate
5. Not to keep any information for longer than is necessary
6. To process data withing the rights of the subject
7. To keep data securely
8. To ensure data is kept within the European Economic Area

There are, however, certain circumstances where the data can be used and processed for purposes without the consent of the individual. For example, the data could be used to fulfil a contractual obligation of the individual. Alternatively, the data can be used without permissions if it is to meet a legal requirement, or is in the best interests of the individual.

Internally, it is important that companies have a specific policy with regards to the handling and maintenance of documents beyond their initial usage. The policy will not only help to meet legal requirements in specific areas, but will also help in the general administration of the company. It is important that time lengths and potential storage options are considered in the policy, for example what format documents should be kept in. Furthermore, it is vital to consider the disposal and destruction of documents, so that they are kept for the minimum relevant periods. This is important as the validity of certain contracts, and therefore the necessity to keep them, may vary.

The data protection policy of a company is not only important to meet basic legal requirements and protect the rights of consumers, but is also important in efficient administration. Consideration of the varying areas of data is important to meet statutory requirements, and minimise excess costs relating to storage of unnecessary information. If you have any queries on data protection, please contact us on 020 8952 0140 (note that we can only provide basic guidance).

One of the important deadlines you need to be aware about shortly after company registration is thatn relating to corporation tax. It is important you inform HMRC within three months of starting your company. Shortly after formation, HMRC will send you a New Company Details (CT41G) form accompanied with details about corporation tax. By filling in this form completely and returning it, you are informing HMRC of your basic company details for corporation tax purposes. It should be noted that even if your company is not trading, the CT41G should still be completed with the relevant insert to inform HMRC of your company’s dormant status.

A company is also required to submit a set of annual accounts to Companies House, which provides a snapshot of the financial health of the company. The first sets of accounts are due on your accounting reference date – the end of your company’s financial year. Your company’s first financial year will end 12 months after formation, ending on the last day of the month that the company was incorporated.

The second statutory filing with Companies House is the company’s annual return. This is a form with Companies House that outlines all the details and information of the limited company: directors’ details, shareholders’ details, the registered address etc. The annual return must be submitted to Companies House within 28 days of the return date. Usually, the company’s return date is the anniversary of incorporation. Failure to file the annual return on time is an offence, and can lead to fines or the company being struck-off.

When a company is registered for VAT, it is important they are aware of when their company’s VAT return is due. A company is only legally required to register for VAT when their taxable turnover exceeds the level of £73,000 for the past 12 months. You are responsible for calculating how much VAT you need to pay HMRC. The deadlines for the completion of your VAT return and payment of money owed will vary depending on te method of payment, but usually the due date is about one-month after the end of the VAT period.

Similarly, it is important that you are aware of when your PAYE/NIC payments are due with HMRC. The due dates will vary depending which quarter or month you are calculating the payments for. Payment is dued by the 19th day of the month; though an accurate list of payment deadlines can be found on the HMRC website. It is important that you make these payments on time, as failure to do so will lead to the company incurring interest and penalty charges.

If you have any further questions on important deadlines for you and your company, please call one of Wisteria’s experts on 020 8952 0140.

The first type of tax relief that companies can get on research and development spending is for small and medium-sized companies, also known as the SME Scheme. HMRC qualify a company as an SME if they have less than 500 employees and either annual turnover not exceeding €100 million, or a balance sheet not exceeding €86 million. A company that meets these conditions is eligible to claim relief against allowable R&D costs. From 1^st April 2011, tax relief of 200% on qualifying R&D expenditure is available, as long as the amount is greater than £10,000. This rate was previously 175%, and is proposed to be increased to 225% as of April 2012. It is important to note that subcontracted SMEs are subject to different levels of relief, outlined below.

Alternatively, a company of a size exceeding the classification of an SME may claim under the Large Company Scheme. Similarly to the SME scheme, tax relief is only available on R&D spending in excess of £10,000. However, with the Large Company Scheme the level of relief is at the lower level of 130%. Under this system, in addition to claiming their direct expenditure on research and development, a company is able to claim costs of projects that have been subcontracted to third parties. As long as the spending is relevant to the company, the subcontracted work can be completed by a variety of parties, for example a smaller company, or a university. If this work is completed by an SME, they are also able to claim relief against qualifying expenditure; however this can only be at the lower rate of 130%.

Projects that would be eligible to receive tax relief are those that look to contribute to advancements within a technological or scientific field. In order to claim, the research must be related to the company’s industry or an industry that the company is considering entering. In addition, the company must own any intellectual property rights that relate to the results of the R&D expenditure.

Any claims for R&D tax credits are made in the Company Tax Return. It is encouraged for the company to state why they believe they are eligible for the relief, and summarise their calculations with regards to expenditure. The tax credit will be received either in the form of a reduced amount of taxable profit, or in some cases a tax repayment where the business is making a loss.

If you have any further questions on R&D Tax Credits, please call one of Wisteria’s tax experts on 0208 952 0140.

Normally when calculating VAT that you pay to HMRC and in its simplest form, you take the difference between the VAT you charge to customers (output VAT) and the VAT you incur on your purchases (input VAT). A flat rate scheme instead allows you to pay a fixed percentage rate of your VAT inclusive turnover. Different types of businesses should pay different fixed percentages of VAT, depending on the business sector. The scheme is designed for small businesses and therefore you can only join the Flat rate scheme if your VAT taxable turnover is less than £150,000.

There are a number of benefits of moving to a flat rate scheme these could include:

• You will have a lot less work to do as it is much easier to correctly calculate the VAT that you pay to HMRC.
• You are less likely to make mistakes as you are not making as many calculations.
•  You will always know how much VAT you will be paying to the taxman.
• It is a lot simpler to comply as there are fewer rules to follow.
• In your first year you can get a discount of 1% on your VAT return saving you money. This is a 1% discount of your sector’s percentage that applies straight up until the 1 year anniversary of your business being VAT registered.
• It could also be beneficial from a financial point of view as you could end up saving money on the amount of VAT that you need to pay, where the actual VAT input tax you incur is actually less than expected by HMRC.

How to work out how much VAT you pay with a flat rate scheme.

The fixed percentage that you use depends on the sector that you would consider your business to be in. You can only have one fixed percentage rate. This means that even if you believe that different aspects of your company lie in different sectors you must choose the sector that you believe describes your business best on a whole. As noted above in your first year of VAT registration you receive a discount of 1% so this must be taken into account when applying your percentage.

Once your percentage has been chosen, you will need to register for the scheme with HMRC and the you apply it your total ‘flat rate turnover’. Your flat rate turnover is all the supplies your business makes. This includes VAT inclusive sales for standard rate, zero rate and reduced rate supplies.

You must always be aware of what your flat rate is for your chosen sector. This is because it can change at any time. If this change does happen you must start using your new percentage from the date that it comes into force.

Although you do not have to record how much VAT you charge on every sale in the normal way, you must still show a VAT amount on each sales invoice. You must also keep a record of the flat rate percentage that you have used in every VAT period.

A flat rate scheme is not the most beneficial scheme for everybody. You should probably avoid the flat rate scheme if you buy a significant amount of mostly standard-rated items, as you cannot generally reclaim any VAT on your purchases. You should also avoid it if you regularly receive a VAT repayment under standard VAT accounting. Although it is ok to have a flat rate scheme if you make zero rate and exempt sales, it should probably be avoided if you are continually making them.

If you wish to join the Flat Rate Scheme you can do it at the beginning of any VAT accounting period.

It is also easy to leave the flat rate scheme if you decide that it is not for you. It is common to leave at the end of a VAT period but you can leave at any time as long as you notify HMRC. You must also make sure that you leave the flat rate scheme if your total turnover and expected turnover for the next period is £230,000 or over.

Before deciding this scheme is right for you, you should always contact a professional for further advice. To speak with one of Wisteria’s VAT specialists, please call us on 0208 952 0140.

A business plan is not a singular document that is only required once, but more of a document that will require constant updating over time. Keeping your business plan up-to-date will be important in affecting your ability as a firm to raise capital and your ability to execute the opportunities at hand.

The main sections that require constant updates are milestones, competition, management team and financial sections.

Milestones/checkpoints
This will need constant updating to show whether or not your business has been able to reach new milestones since the last business plan was written. By showing that your company continues to succeed in reaching new checkpoints and meet new milestones is a sure way of maintaining current investments as well as enabling new investment for future plans.

Competition
By monitoring the competitive environment, you will be able to see whether there have been new competitors that have entered the market. Updating the competitive analysis section will be important in letting managers and investors aware of the new environment and enable you and your firm to adapt accordingly.

Management Team
As management team members are added to the business, it is important to keep an up-to-date manager profile. The more there are in the management team, the more it seems that the business is successful and booming and is a positive indicator to investors. Not only this, but as your business expands, each area of your business will be monitored more efficiently by multiple manages compared to you alone monitoring every area of the business.

Financials
As you start to achieve your targets and carry out various objectives, it is useful for you to replace your forecasted figures in the financial section, with your actual figures and sales that you achieved. By doing this, it enables you to see whether or not you are following your predicted path or not.

Many management teams and their businesses know the importance of having their business plans updated regularly as it helps them to focus on their objectives as they will always be crystal clear. It will also enable you to determine where your business is succeeding and where your business may be faltering. Also it is important to share these updates with the investors to keep them informed as to how your business is doing.

These are just a few reasons why it is important for you to regularly update your business plan.

If you have any questions or would like help to plan for times ahead, then please visit our site at www.wisteriabusinessplans.co.uk. Alternatively you can email us at businessplans@wisteria.co.uk or call us on 0844 967 1337.

This payment is towards 2010/2011 and would have been determined by the income shown on your 2009/2010 return.

Your Self Assessment tax return will include a self assessment statement that indicates what tax you owe and how to pay it. One thing to note is that when you receive your tax bill, it might not necessarily always match the amount that you have calculated on your Self Assessment tax return. The reason being that sometimes you’ll owe ‘balancing payments’ for the previous tax year or ‘payments on account’ for the current year. Interest charges may also be shown where applicable.

Many individuals who receive substantial amounts of income which is not taxed at source will often need to make payments on account. The first due date was on or before January 31st 2011 which has already passed, but the second deadline is in just over 3 week’s time on or before 31st July 2011. You will only have to make the two payments on account if the amount of tax from the previous year that you have to pay is more than £1,000 (with the exception that if more than 80% of the last year’s liability was covered by tax taken off at source.) If however, the tax you have to pay from the previous year is under £1,000, then you will only have to make one single balancing payment each year.

Each of the two payments, given that the tax from the previous amounts to more than £1,000, should be equal to half of the total amount of tax that you owe. An easy way to understand this is to have a simple example.

Imagine the tax you need to pay is:

Income Tax: £6,000
Class 4 NIC: £400

These payments on account would mean that you would have already paid £3,000 + £200 (£3,200, which is 50% of your total tax) on or before January 31st 2011 and the amount that you would have to pay on or before July 31st 2011, would amount to £3,200 (the other 50% of the tax you need to pay).

The main reason why it is essential to stick to these deadlines is because if you don’t, then you are liable to significant interest charges. Some people decided to make an application to reduce their tax payments on account. This is allowed and can be beneficial where your tax liability will fall, perhaps due to a change in circumstances or a fall in business profits. However care should be taken as reducing the payments too far can result in additional backdated interest charges.

For the above reasons, it is vital that you prepare your self assessment tax returns accurately and in good time. We at Wisteria Chartered Accountants, Tax and Business Advisers can assist with your Self Assessment Tax Returns and if you would like more information contact one of our advisors on 020 8952 0140 or email us at info@wisteria.co.uk.

Each year, the company will be sent yearly reminders regarding the date on which these requirements are due and it is the director’s duty to comply with these. If not, then there is a chance of being fined or punished in another way.

In the past few months, Companies House has become much tougher with those companies that file their annual returns beyond their allotted time. Their policy is now to threaten to strike off the company much earlier than they would have done in the past.

As it stands, Companies House imposes the following fines on companies that fail to file their accounts on time. These can range from £150-£1,500 for a private company and from £750-£7,500 for a public company. If the company continually files late accounts, then these penalties are likely to be double by Companies House. Companies House also entitles each company a time of 30 days post the due date (which is the date on which the company was formed) to file the annual return whilst allowing a total of 9 months for the company to file their annual accounts. If a company fails to do so, then Companies House will strike off the company from their official records.

Even if your company is declared dormant (which is defined as a company that in legal terms does not have any accounting transactions throughout the financial year) it is still a requirement of Companies House that you file you end of year accounts. This comes in the form a Dormant Company Filing Requirement which is a Dormant Company Accounts or DCA. These are fairly simple accounts as they simple show the assets and shares of a company. However as soon the firm becomes active and trading, then the company will be required to start filing normal to Companies House.

Another part of owning a company is that you will no doubt have to complete a Self Assessment Tax Returns form. The purpose of a Self Assessment Tax Return is to provide details to HMRC about your income and capital gains on the tax return, or claim tax allowances or reliefs. This can be either done by paper or online depending on your preference. Not everybody is required to complete one of these as it depends on the complexity of your tax affairs. If you are required to file one each year, again like the annual returns and year end accounts, if you fail to stick to the deadlines given, then you are liable to face harsh penalties set by HMRC, up to a maximum of £60 per day.

This is why it is always essential that you keep on top of your companies affairs, finances and accounts to ensure that you do not run the risk of facing heavy penalties or maybe even worse, losing your business altogether.

If you and your business require assistance with your year end accounts to your annual returns, or would simply like to find out more detail about how Wisteria Limited could help, then please feel free to visit www.wisteria.co.uk. Alternatively, you can contact us on 0230 8952 0140 or email us on info@wisteria.co.uk.

Following on from the success of Wisteria Formations and Sole Trader vs Limited Company projects, we are proud to unveil Wisteria Business Plans, a new website under the Wisteria umbrella that will enable users to purchase customised business plans and will offer services and guidance to those seeking help with their companies’ business plan. These business planning services will not be based on a business plan template, nor standard business plan software. Instead the service aims to provide users with a customised business plan produced by one of Wisteria’s professionals.

The website will feature a selection of videos and images to make it a simple and easy to understand experience, as well as providing the user with business plan samples and guides to download. This will be backed up by our high levels of customer service and hugely experienced business plan consultants.

A launch date is yet to be announced, but you’ll find details here first.

If you need help with your business plan, Contact Wisteria on 020 8952 0140 or click here to find out more about how we can help.

All taxpayers who need to prepare a self assessment tax return will by now have received the HMRC notice that they will need to complete a return covering the 2010/2011 tax year.  As usual, this return will need to provide the details of all income and gains for an individual covering the period from 6 April 2010 to 5 April 2011.

The first question asked by most clients is ‘when is the deadline for the return to be submitted?’  Strictly, the tax return deadline is 31^st January, although paper returns must be submitted by 31^st October.  This answer, rather unfortunately, tends to encourage most individuals to leave this for another day.  We are of course all busy people and as we have so long to do it, it can wait.  Of course far too often, it does wait and wait and wait.  In the end, many individuals leave it to the last few weeks to get their return prepared or to send the information to their adviser.

There are however a number of worthwhile benefits to dealing with your return earlier, as follows:

• Individuals who are entitled to a tax repayment will get their refund significantly earlier by completing their tax return sooner.
• If you do owe tax, you will have a longer time to prepare and plan for the tax payment.  Submitting your tax return earlier does not mean that you will have to pay earlier!
• If you use a tax adviser, they are likely to be less busy with returns prior to November and therefore are likely to be able to provide an even better service to you earlier in the year.  This often means that more tax saving opportunities can be highlighted.
• Leaving things until the last minute can often mean that you make mistakes, possibly increasing your chances of a fine or penalty.
• Leaving your return to the last minutes may cause you additional stress as well as your tax adviser.
• Trying to complete your return very close to the deadline often leads to you running out of time and therefore incurring a penalty of at least £100.

Perhaps it is time to make a resolution for this year – I will deal with my tax return before the end of the summer!

If you need help with your personal tax return or are looking for tax advice in general, please contact a member of the tax department on 0208 952 0140 or info@wisteria.co.uk