If you are a company owner/director you probably don’t need reminding that we live in a constantly changing world of pension and tax regulations. That said, how confident are you that you have acted to ensure you are managing your personal and business tax affairs efficiently in light of recent changes? Below we have listed a few things to consider when talking to your tax advisors. If you take dividends, you have just a few weeks to save future tax - don’t assume that because the new regime affects the year from 6th April 2016 there is nothing you can do now. Instead take the opportunity to both act now and plan ahead. Regardless of when your company year end is, if you have sufficient funds (after corporation tax liabilities have been considered), award yourself higher dividends before the 31st March and save dividend tax that will be payable next year. New tax on dividends – what does it mean for you as a company owner/director? At the moment … [Read more...]
Dividends – Some Pitfalls
Many directors of Small and Medium sized Enterprises (SMEs) which are limited companies take both a salary and dividend from the company with salaries set at a tax effective level. This is acceptable to HMRC and should not give cause for concern. The salary itself should be treated in the normal way via the payroll system and normally is. However with dividends it’s a different story. And here problems start to arise. Not only from a compliance perspective but also because of tax issues arising. In terms of compliance for a dividend to be valid it needs to follow certain rules. These are: There must be sufficient reserves in the accounts for the dividend amount to be covered. Where dividends are paid in the current year based on income from the current year the dividends must be after tax profits. The directors must have reasonable grounds that sufficient after tax profit exists. Reasonable grounds are not just an extract from Sage or other accounting software. The … [Read more...]
>HMRC targeting SMEs with poor records
>UK Business Advisors (UKBA) understands that HMRC have carried out a random enquiry programme from which they believe that 40% of SMEs have either inadequate or poor record keeping. They issued a consultancy document in December entitled “Business records checks” with a view to implementing a programme from the middle of this year to examine the books and records of some 200,000 small businesses. They anticipate raising an additional £600m in tax over four years – an average of £3,000 per company. UKBA’s own research has found many commons problems such as: · Poor evidence of expenditure such as missing key purchase invoices · No documented dividend resolutions · No minutes of key board decisions · No records in support of journal entries like bad debts or disposal of major assets · No directors service contracts in multiple-director companies · Outsourced services not contractually written down or documented. Any of … [Read more...]
>HMRC targeting SMEs with poor records
>UK Business Advisors (UKBA) understands that HMRC have carried out a random enquiry programme from which they believe that 40% of SMEs have either inadequate or poor record keeping. They issued a consultancy document in December entitled “Business records checks” with a view to implementing a programme from the middle of this year to examine the books and records of some 200,000 small businesses. They anticipate raising an additional £600m in tax over four years – an average of £3,000 per company. UKBA’s own research has found many commons problems such as: · Poor evidence of expenditure such as missing key purchase invoices · No documented dividend resolutions · No minutes of key board decisions · No records in support of journal entries like bad debts or disposal of major assets · No directors service contracts in multiple-director companies · Outsourced services not contractually written down or documented. Any of … [Read more...]
