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Accountants in Bromley. Bookkeeping in Bromley
Accountants in Bromley. Bookkeeping in Bromley

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May's 12-point plan for leaving the European Union

May has set out 12 objectives to follow to ‘build a truly global Britain’, saying that the UK cannot remain within the European single market as staying in it result in ‘not leaving the EU at all’. Instead she wants to ensure a ‘big free trade deal’ with Europe, despite admitting that she has not yet worked out how the UK will achieve this.

During her long-awaited speech, May revealed that government will put the final Brexit deal down to a vote in Parliament, despite previously fighting this decision.

May’s 12 objectives are as follows:

Certainty

May expressed that she recognised how important certainty was, moving forward through the process, for businesses, the public sector and everyone else in the UK.

Control of laws

There will be an end to the jurisdiction of the European Court of Justice and UK laws will be controlled and decided by government. Laws will be interpreted in courts in the UK not in Luxembourg, which is the case now.

Securing the union

May stressed the importance of union but the UK government must take back responsibility and will have control over foreign affairs. She mentioned taking into consideration Scotland’s Brexit plans.

Maintain common travel area with Ireland

The UK has always had a special relationship with Ireland and it is important that the UK works to retain the border.

Immigration control

May said: ‘We will have control of the number of people coming to Britain from the EU.

‘Controlled immigration can bring benefits to businesses but when the numbers get too high then public support for the system falters.’

Rights of EU nationals

The rights of EU citizens in the UK and UK citizens in Europe must be established and resolved as soon as possible.

Workers' rights

Workers' rights currently under EU law will be kept and built upon.

Global Britain

May said: ‘ 23 June was the moment that we chose to build a truly global Britain…the result of the referendum was not a decision to turn inward and retreat from the world.’

The UK will still reach out the allies across the globe and will continue to build relationships.

Leave the single market

If the UK is not part of the single market then it does not have to make any contributions to the EU. May wants to have a customs union agreement with the EU.

Science

The UK should aim to stay one of the leaders of science and innovative advances.

Terrorism

The UK will continue to work with Europe on defence and foreign policy saying the response cannot be ‘to cooperate less but to cooperate more’. Intelligence and information will continue to be shared in order to beat terrorism and ‘threats to common security’.

Transitional phase

There will be a phased implementation of Brexit to allow businesses time to plan and prepare.

In her speech May said: ‘ I want Britain to be a country that reaches beyond the borders of Europe’, while stating, ‘we are leaving the European Union, we are not leaving Europe.’

As a result of May's speech the pound recovered from $1.20 on Monday to become $1.21 against the dollar at the time of reporting.

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EU VAT Payments

The European Commission is proposing to simplify rules for e-commerce across EU country borders by introducing a one-stop shop for online VAT payments that will cover goods as well as services, in a move which it says will cut compliance costs by 95%

It says introducing an EU wide portal for online VAT payments will save businesses across the EU €2.3bn a year. The new rules will also ensure that VAT is paid in the member state of the final consumer, leading to a fairer distribution of tax revenues amongst EU countries.
The Commission says the proposals will help member states to recoup the current estimated €5bn of lost VAT on online sales every year.

In addition, the Commission is revising regulations so that member states can, if they choose, apply the same VAT rate to e-publications such as e-books and online newspapers as they do for their printed equivalents.

Pierre Moscovici, commissioner for economic affairs, taxation and the customs union, said: 'Online businesses operating in the EU have been asking us to make their lives simpler. Today we're doing that. Companies big and small that sell abroad online will now deal with VAT in the same way as they would for sales in their own countries. That means less time wasted, less red tape and fewer costs.
'We're also simplifying rules for micro-businesses and startups, allowing them to tap new markets more easily'.

Currently, online traders have to register for VAT in all the member states to which they sell goods, which the Commission estimates costs businesses around €8,000 for every EU country into which they sell.

Under the new proposals, businesses will make one quarterly return for the VAT due across the whole of the EU, using the online VAT one stop shop.

A new yearly threshold of €10,000 in online sales will be introduced under which businesses selling cross-border can continue to apply the VAT rules they are used to in their home country. The Commission says this will make complying with VAT rules easier for 430,000 companies across the EU, representing 97% of all micro-business trading cross‑border.

There will be a second new yearly threshold of €100,000 for SMEs when it comes to VAT, with simplified rules for identifying where their customers are based.

Other simplifications would allow the smallest businesses to benefit from the same familiar VAT rules of their home country, such as invoicing requirements and record keeping. The first point of contact will always be with the tax administration where the business is located and businesses will no longer be audited by each member state where they have sales.

The exemption from VAT for small consignments imported into the EU that are worth less than €22 is to be removed, on the grounds it is creating opportunities for fraud and tax abuse.

Andrus Ansip, Commission vice president for the digital single market, said: 'Our VAT rules were set up before the boom of the internet and online sales.They are complex. They vary between EU countries. They bring extra cost to businesses trying to trade in different national markets. They need updating.

'Today's proposals are designed to support the digital economy and to accelerate growth for cross-border online businesses.'

These legislative proposals will now be submitted to the European Parliament for consultation and to the Council for adoption.

Digital Single Market - Modernising VAT for cross border e-Commerce is here.

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HMRC has published a brief setting out the policy on the deduction of VAT relating to assets used by a business prior to its VAT registration, saying this has not always been treated consistently.

The brief clarifies when, and to what extent, VAT is deductible and what to do if the correct treatment has not been applied.

A business registering for VAT can recover tax they have incurred on goods and services before their effective date of registration (EDR) as long as they are used by the taxable person to make taxable supplies once registered.

Services must have been received less than six months before the EDR for VAT to be deductible, while goods have a four year time limit for deduction that is consistent with the general 'capping' provisions.

HMRC says the word 'consumed' has been interpreted inconsistently over time, particularly in relation to business assets. It states that VAT on services received within six months of EDR and used in the business at EDR is recoverable in full. VAT on stock is deductible to the extent that the goods are still on hand at EDR (for example apportionment may be required).

VAT on fixed assets purchased within four years of EDR is recoverable in full, providing the assets are still in use by the business at EDR.

Full recovery only applies if the business is fully-taxable. If it is partly-exempt, has non-business activities, or need to restrict VAT deduction for any other reason, the business will need to take that into account when calculating the deductible VAT.

HMRC says it will accept corrections for overpayment of VAT in the following circumstances. These are if the business has reduced the VAT it deducted on fixed assets, to account for pre-EDR use; circumstances where HMRC has raised an assessment of tax to account for pre-EDR use of fixed assets; and cases where HMRC has reduced a repayment claim to account for pre-EDR use of fixed assets.

HMRC says it will consider claims for repayment of penalties and interest charged as a result of assessments.

The time limits for error corrections are four years from the due date of the relevant VAT return where VAT deduction has been restricted in error by the business, or HMRC has incorrectly reduced a repayment, and four years from the date the assessment was paid where HMRC have raised an assessment that incorrectly restricts VAT deduction.

Corrections of errors, other than assessments, should be dealt with as per the guidance in section 6 of VAT notice 700/45. Claims relating to VAT paid on assessments raised in error should be made on an error correction notice (form VAT652).

HMRC is to amend guidance in the VAT input tax manual and Section 10 of VAT notice 700 to ensure the policy position is clear

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As part of Making Tax Digital, HMRC has set out the priorities for its plans to make near real time adjustments to taxpayers' tax codes so they pay the right amount of tax within the current tax year

HMRC plans to introduce these changes in time for the 2017-18 tax year. The PAYE system is not changing as such, but a number of changes will be introduced to ensure that real time reporting of PAYE codes is available. This requires a change in current HMRC practice to include:

HMRC says it will use the information it holds, and supplied by employers and pension providers through real time information (RTI), in a 'more proactive way' to ensure more customers end the tax year having paid the right amount of tax
the new approach to coding will aim to keep the customer's tax completely up to date in-year so that more taxpayers pay the right amount of tax and do not end the year with an underpayment or overpayment.
The first phase of HMRC using real time data will enable HMRC to change a customer's tax code to adjust, correct or collect any estimated in-year underpayment that arises as a result of a change to the their tax code. This means more customers will end the tax year balanced.

PAYE customers using their personal tax account will be able to claim an in-year repayment and arrange for it to be paid into their bank account.

However, HMRC does not plan to notify employers of code changes any more frequently than on a monthly basis.

The only change for employers and pension providers will be the volume of coding notices is likely to increase because HMRC will have to change codes more often. It is hoped that the new system will mean that more taxpayers will pay the right amount of tax each year, without having to face year end bills or in some instances, refunds.

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Buy-to-let landlords lose case to bring judicial review of interest relief cuts

Cherie Blair of Omnia Strategy LLP, represented claimants and landlords Steve Bolton, chairman of Platinum Property Partners, and Chris Cooper, on behalf of the ‘Axe the Tenant Tax’ group.

The group, which is a crowd-funded coalition of individuals and organisations who represent more than 150,000 landlords, believes that the changes in Section 24 of the Finance (No.2) Act 2015, otherwise known as ‘tenant tax’ will stop buy-to-let finance costs (largely mortgage interest) being a claimable business expense.

Landlords will have to pay extra tax of 20% or more of their mortgage interest payments and the tax they pay might be greater than their profit, leaving them with a rental loss and a cash shortfall. This will only affect individuals who own rental properties in their own names, meaning companies owning buy-to-let property will be excluded.

Cherie Blair said: ‘The Court's decision that our clients' legal challenge should not proceed is very disappointing. Steve and Chris, and many others, have dedicated a lot of time and energy into putting forward the best case possible. We know the case has been supported and followed with interest by a large number of individual landlords. Many of these landlords now face challenging times ahead.

‘From the outset, the legal process was just one aspect of our clients' fight against this unfair measure. Together with their impressive and growing coalition, they will continue to engage with the Government, and the legal team wishes them every success.’

Omnia strategy LLP argued that the tenant tax is unlawful due to the restriction on the landlords’ ability to deduct finance costs as a business expense which can result in an unlawful grant of state aid to corporate landlords.

Mr Bolton and Mr Cooper said: ‘We are outraged by the Court's decision today. It has completely missed the opportunity to protect tenants, landlords and the housing market from the disastrous consequences of Section 24.

‘Sadly it will be tenants who are hit hardest; they are set to see unprecedented rent increases over the coming months and years, which will be a very clear and direct consequence of this ludicrous legislation.

‘Now that the legal route has run its course, we will be focussing 100% of our attention and resources on taking our case more forcefully, more powerfully and more directly, right to the heart of government. Our goal is simple: to abolish this tax or to remove the retrospective nature of it. ‘

Axe the Tenant Tax has launched its third crowd-funding campaign to raise money for media, PR and lobbying campaign in an attempt to push pressure on MPs and government.

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Personal Tax Accounts

The latest figures from HMRC show that 16% of taxpayers have signed up for the new accounts since they were launched last December.

Although it is understood that personal tax accounts will not be compulsory, they are a major plank of HMRC's five-year plan to create 'a tax authority fit for the 21st century'. Part of this overhaul will see the introduction of Making Tax Digital for business, which will require mandatory quarterly reporting for all businesses, a plan which has been criticised for being rushed and unnecessary.

By late 2018, buy-to-let landlords, the self-employed and most businesses will have to start providing quarterly reporting to HMRC, although details about the level of financial information required has not been finalised. Reporting corporation tax obligations will not come online until 2020.

From an individual taxpayer perspective, in the longer term HMRC expects that personal tax accounts will replace the requirement for annual self assessment returns, currently completed by over 10m taxpayers for the 2014/15 tax year.

Personal tax accounts were launched in December 2015 and give taxpayers an online record of their tax information and a number of integrated services, including:

estimates of income tax and details of tax code;
file a self assessment tax return;
check company car status and update details;
claim a tax refund directly into a bank account and receiving it within three to five working days instead of waiting for a cheque or payable order;
check and manage tax credits to reflect changing circumstances throughout the year;
check state pension;
check or update marriage allowance; and
check or update benefits you get from work, such as company car details and medical insurance.

To set up an HMRC personal tax account, taxpayers will need a Government Gateway account and a National Insurance number, or via the gov.uk Verify system.

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The research focused on micro employers that had received a PAYE late filing penalty from HMRC and those who had made an amendment after the tax year.

HMRC's latest 46-page research report makes suggestions at what causes error in reporting PAYE in real time for the smallest businesses as well as how the tax authority can improve its services to avoid these errors being made.

The report states: 'Lack of understanding of how PAYE should be managed, particularly what should be done and by when, creates errors in RTI reporting, resulting in receiving penalties.

There are mixed levels of understanding about how things should be done and little knowledge of where to get information when non-routine issues, such as maternity leave, arise.

The HMRC support materials are described as 'difficult to navigate and understand', so people choose to learn as they go which is where errors arise.

But the report also blames micros and agents, stating: 'Micro employers' and agents' misunderstanding of RTI reporting is exacerbated by their own behaviours (lack of checks and low prioritisation), which also contribute to error in RTI submissions.

The research shows that HMRC has to focus on better and clearer support rather than providing more of it. This includes having more available resources, such as a guide that takes micro employers through the entire process, highlighting key requirements and providing a summary of important dates.

Penalties should also be clearer and more consistent with explanations about why the penalty has been received and how to prevent it from occurring again.

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Dividend tax rules are changing from this April - for more details please follow this link and click "new dividend tax rules" : http://www.awaccounting.co.uk/online-resources/

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Self Assessment deadline approaching

The deadline of midnight on 31st January 2015 is relevant to individuals who need to complete a self assessment tax return and make payments to HMRC in respect of their income tax, Class 4 National Insurance (NI) and any capital gains tax liabilities.  There is an automatic penalty of £100 if the return is not submitted on time, even if there is no tax due or the return shows that a refund is due.

The first payment on account for 2014/15 is also due for payment by 31st January 2015.
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Do not leave until the very last minute - contact AW Accountancy & Bookkeeping today and get submitted on time.

Call 0208 313 3753

or visit www.awaccounting.co.uk

Changing Accountants

Changing accountants is much easier than most would have you believe or than your existing accountant may tell you. Below outlines what steps you need to follow to change accountants and what information you need to give to your old and new accountants.

Inform your existing accountant - First of all you must notify your existing accountant of your intention to leave in writing.

Clearance - Once you have notified your new accountant that you have notified your previous accountant that you are leaving your new accountant must send a letter to your existing accountant to request professional clearance and request handover of the paperwork and documents they will need in order to carry out the duties they have been engaged for. Your existing accountant will hand over to the new accountant provided there is no professional reason not to.  Most accountants will take their time as they will not be happy that you are leaving - but they have a duty to provide the requested information.

Money Laundering Checks - You will be required to provide your new accountant with documentation which will allow them to complete their money laundering checks.  Your accountant should not work for you until the money laundering checks have been carried out.  In most situations this will consist of photographic ID and confirmation of address.

Engagement Letter - Your new accountant should not complete work for you unless they have been engaged to do so and this will take the form of an engagement letter which sets out the basis of both parties responsibilities.  It is important that you read these documents before signing as they set out the roles and responsibilities of accountant and customer. This also outlines the exact scope of work that will be carried out and the fees. There should be two copies - one for you to keep and one for your new accountant.

This is all that is involved in changing accountants, so do not be hesitant in changing just because you think it is a hassle. If you have been thinking of changing you must have had a reason for doing so.

If you are looking to change accountants or are unsure about the processes involved contact AW Accountancy & Bookkeeping - accountants in Bromley.

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