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

UK Tax Deadline dates for November & December 2014

Tax Deadline dates for Businesses in The UK for the month of November & December 2014!

Date	What’s Due
1 November	Corporation tax for year to 31/01/14
19 November	PAYE & NIC deductions, and CIS return and tax, for month to 5/11/14  (22 November if paid electronically)
1 December	Corporation tax for year to 28/02/14
19 December	PAYE & NIC deductions, and CIS return and tax, for month to 5/12/14 (22 December   if paid electronically)
30 December	Deadline to file 13/14 SA tax return online if unpaid tax (up to £3000) is to be  collected via 14/15 PAYE code

This is for reference only and not a comprehensive list. For more and complete information, check www.hmrc.gov.uk/. 


Please contact us if you have issues or need expert Tax assistance!

APJ Accountancy - A team of Chartered Certified Accountant regulated and monitored by The Association of Chartered Certified Accountants (ACCA).
Tel: 020 89310165  
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Tax Relief For Donating Your Old Suit To Charity!

HMRC has amended its guidance for charities that claim Gift Aid on the sale of donated goods. Gift Aid normally only applies to gifts of money by an individual. However, in certain situations, Gift Aid can be claimed by charities or community amateur sports clubs on the income from the sale of supporters' goods on their behalf. The charity can offer to act as an agent for private individuals and sell goods on their behalf, so that at the point of sale the funds actually belong to the individual. If the owner agrees to donate the sales proceeds to the charity, Gift Aid can be claimed by the charity on the net sales proceeds, subject to all other Gift Aid conditions being satisfied.  The charity  is then able to reclaim tax at the basic rate. A number of charities, such as Oxfam, operate such schemes. The charity provides the donor with details of the value of goods sold in order for the donor to claim tax relief on their self-assessment tax return. Remember that the Gift Aid payments, grossed up for basic rate tax, are an effective way of reducing income where an individual’s personal allowance is restricted by income in excess of £100,000 a year.  Higher rate taxpayers also benefit from additional tax relief. For example, if a suit is sold for £40, the charity is able to reclaim £10 basic rate tax from HMRC (£50 gross) and a higher rate taxpayer obtains a further £10 tax relief - win win!. To keep yourself up-to-date on the latest finance and accounting news in the UK, subscribe to our blog or follow us at Facebook, Twitter or Google+

What should I do if my contract is caught within IR 35?

Accounting Tips for Contractors:

We often get asked about the best way to extract money from a limited company if contract is caught by IR 35.

First and foremost, the only way to be sure whether your contract falls inside or outside IR35 is to have it review by professional accountant firm who are specialised in Contractor Accountancy services.
Note : At APJ Accountancy, we offer this free within our standard package service

And by the way, it works on a contract by contract basis. So, for one contract you may fall under IR35 but for some others you may be outside.

Be aware that every contractors need to be evaluated on their own merits and every contract can be different.

If you aren't sure, you can take the 10 minute Contractor IR35 Test to see if you are likely to be working under IR35 from HMRC website yourself. Click this link to know more information that you need to know about IR35 -  http://www.hmrc.gov.uk/ir35/guidance.pdf

What is the best method to pay yourself?

How to Pay Yourself inside and outside IR35?

Going back to your question the best method to pay yourself, in simple terms

• For Income from all contracts that fall outside scope of IR 35 – you can pay yourself combination of small salary and big dividend to maximise your tax savings.

• For income related to contracts that fall inside scope of IR 35 – You may need to pay some additional PAYE and National Insurance on the taxable income from these contracts at the end of the financial year.

So your company will continue you pay you as usual throughout the year deducting PAYE and NICs as applicable.

At the end of the tax year you will need to check you have paid the right amount of tax and NI by calculating the deemed employment payment due on the IR35 contract(s) undertaken.

If you don’t know much about deemed payment then a step-by-step guide for and related NICs can be found on the HMRC website.

HMRC also have a IR35 ‘deemed salary’ calculation spreadsheet which can be downloaded. Click link to download the spreadsheet. www.hmrc.gov.uk/ir35/ir35.xlt 

Alternatively, contact us to discuss how we can be of help in calculating your IR35 contract(s) ‘deemed salary’ and NIC liabilities.

Visit www.apjaccountancy.com/contractor-accountant.html for more information.

Are you a contractor working under IR35 ? Let us know how you do the salary payment. Feel free to post your thoughts as comments below and share it with your friends.