From Friday 17 February, HMRC are sending out penalty notices to all taxpayers who failed to file their 2010/11 returns on time. Penalties of up to £1,600 have been introduced to tackle the growing problem of late filing and non-filing of self-assessment tax returns.
The new penalty regime has four elements, as follows:
• £100 fine from 3 February (after 31 January deadline was extended due to HMRC strikes)
• £10 a day fine from 1 May for 90 days – a maximum of £900
• £300 fine on 1 August (or 5% of the tax due if that is more)
• £300 fine on 1 February the following year (or 5% of the tax due if that is more).
These fines are also no longer capped at the tax owed, so taxpayers could face fines of up to £1,600 – even if they owe nothing or if HMRC owes them a refund.

Our new Spring Newsletter is now available for download. In this issue we summarise the conditions that need to be met to benefit from Entrepreneurs’ Relief and the subsequent 10% tax rate.

We also look at changes to the capital allowances system for all businesses. It isn’t particularly good news so careful planning is needed to make sure you maximise the allowances available.

Please contact us if you have any questions regarding any of the articles we have included in our newsletter or would like any further information on these topics.

Please click on the link below to view the PDF of the guide.

Spring Newsletter 2012 PDF

A new report published by AXA Insurance suggests that SMEs are entering 2012 with mixed emotions.
The report found that many businesses felt positive about an increase in revenue. Figures showed that 43% of UK small and medium sized enterprises expect their turnover to grow and only one-in-six expect to see a decrease during the coming 12 months.
There is however a distinct contrast in optimism depending on the size of the business. When it came to sole traders, only 23% believe that turnover will improve in the coming year. This figure more than doubles when it comes to SMEs with 50-99 employees where over half (51%) expect turnover to improve.
The outlook on profitability however is less positive across the board with 21% expecting it to worsen and just under 35% expecting it to improve.

While there are a large percentage of middle sized firms who expect both turnover and profitability to increase over the coming year, this does not translate into expected growth in employment levels. Only one in seven firms surveyed expecting to take on more staff during the year.
Matthew Reed, Managing Director Intermediary for AXA Commercial Lines comments: “When it comes to the fortunes of the UK’s SMEs, there is a more complex picture out there than the headlines would lead us to believe. It’s not all doom and gloom for sure. However there is a real need for valuable advice when it comes to risk management given the fact that, when asked to identify key risks facing their business, nearly a quarter of UK SMEs (23%) couldn’t name a single one. I find this quite staggering. In my view it means that brokers have a major role to play in helping their clients to both understand the risks their businesses face during these difficult times as well as manage them.”

Source: http://newsroom.axa.co.uk/media-releases/2012/smes-entering-2012-with-mixed-emotion-says-axa-commercial-lines/

Dissolution of companies – Update on ESC C16

The First Delegated Legislation Committee approved the Statutory Instrument The Enactment of Extra Statutory Concessions Order 2012 on Monday 30 January which included a change to the old ESC C16 (see link http://www.legislation.gov.uk/ukdsi/2012/9780111519134/article/16 ).

This means that distributions which are made on or after 1 March 2012 in anticipation of a dissolution and which exceed £25,000 will be subject to income tax and not capital gains tax.

The way to preserve capital gains tax treatment will then be to enter a formal liquidation but that may be a rather expensive exercise.

We would recommend that clients wishing to dissolve a company and extract the assets should try to beat the 1 March deadline and dissolve the company concerned under the ESC C16 rules.

There is no limit, or cap, on the amount of the distribution that can be made under ESC C16 and be subject to CGT.

As you will be aware the Self Assessment deadline remains as midnight on the 31^st January. Although, due to industrial action HMRC will treat all Returns that are filed by midnight on the 2^nd February as though they were submitted on the 31^st January.

There is no extension to the enquiry window and this will remain as 31^st January 2013, but HMRC are not proposing to impose any penalties on Self Assessment Returns filed on the 1^st or  2^nd February.

From the 16th December 2011, HMRC is able to accept payments made using the Faster Payments Service. This allows taxpayers to make faster electronic payments, typically via internet or telephone banking, enabling them to be processed on the same or next day. HMRC suggest you contact your bank or building society before making a payment to confirm:
• that the service is available to you
• whether there are any single transaction or daily limits on the amount you can pay
• the latest cut off times for making a payment
When making a payment to HMRC please use the correct bank account details and reference number. This will ensure that your payment is received by HMRC and will help avoid incurring a penalty, interest or surcharge for late payment.