Tax & IR35 News

Room for hire

Get the documentation in place

Many contractors operate their company’s business out of their own home and use at least one room in the house as a dedicated office.

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Overdue PAYE refund trumps VAT penalty

HMRC tardiness provides escape from surcharge

HMRC’s delay in repaying overpaid PAYE to a business, handed the taxpayer a reasonable excuse for a slight late payment of VAT, the First Tier Tax Tribunal ruled.

Read more...

HMRC’s IR35 public sector consultation

Have your say

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Contractors working in the public sector may face draconian new rules from April 2017 if the recommendations in HMRC’s latest IR35 consultation come into force. Agencies with public sector contractors will become responsible for determining their freelancers’ and contractors’ IR35 status. The concern is that risk-averse engagers will simply apply IR35 by default, leaving public sector contractors with a tough choice – leave their contract or take a significant pay cut.

Read more...

Flat rate VAT and IR35

How to treat VAT in the IR35 calculation

The VAT flat rate scheme (FRS) was introduced on 24th April 2002 and provides many contractors with an easier way to administer their company’s VAT affairs. Provided a business is eligible to use the scheme, then the amount of VAT it pays over to HMRC is based on a fixed percentage of its VAT inclusive sales. VAT of 20% still has to be charged on the businesses sales but FRS avoids the need to record and reclaim the VAT it incurs on its expenses. Any difference between the VAT charged on sales and the amount of VAT paid is pocketed by the business but what happens to that income where a contractor is caught by IR35?

Read more...

Fatal error proves very costly

HMRC lose out on £653K due to mistake

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One erroneous digit on a tax enquiry notice cost HMRC very dear after the First Tier Tax Tribunal ruled their notice to be invalid.

Read more...

The quality of service is strained

HMRC underestimated effect of staff cuts

hmrc icon

A recent report titled, ‘The quality of service for personal taxpayers’, compiled by the National Audit Office (NAO), confirms that it is no coincidence that the collapse of HMRC’s service to individual taxpayers occurred after the department shed some of its staff.

Read more...

Online tax returns – common mistakes

Error messages when using HMRC software

error icon

For those using HMRC’s own software to file their 2016 tax returns you need to be aware that the Revenue are currently trialling some changes. HMRC have identified 21 of the most common mistakes made in online returns and to address these the department has created three different types of messages to help taxpayers and reduce potential errors.

Read more...

IR35: Shape of things to come?

HMRC consults on changes to ‘off-payroll’ in public sector

ir35 icon

Following the announcement in this year’s Budget that the rules for ‘off-payroll’ workers in the public sector would be tightened up as from April 2017, HMRC have now released the anticipated consultation document, ‘Off-payroll working in the public sector: reform of the intermediaries legislation’

Read more...

Contractor Doctor

Retirement: Directors Pension

Q. I am registered as ltd company and wish to retire. Can I use the balance of capital in the business to fund a directors pension and take the penion immediately?

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Self Assessment - It's in the Kitty

Q. I work as a Ltd Co contractor as a Business Analyst, but in my spare time I have set myself up as a hobby breeder of pedigree cats. I plan to be producing kittens later in the year, some of which I may sell as there are likely to be too many to keep within my breeding programme. How will the income from any kittens I sell affect my tax position?

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IR35 Investigation: Tax Liabilities

Q. If an IR35 investigation resulted in a tax liability for PAYE and NI am I correct to assume that the resultant bill for tax would represent the difference to the overpaid corporation tax that would already have been paid and likewise allowance made for the personal dividend tax paid that would otherwise have been icons subject to PAYE ? I ask because online calculators suggest the marginal benefit of being outside of iR35 is often shown as c10%. 

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IR35: Retrospective Enquiry

Q. Dear Doctor, I have been contracting for last 7 years via my limited company. By law, a company must keep records for at least 6 years from the end of the last company financial year. Does it mean that HMRC cannot investigate my IR35 status of my first year contract if I have lost all the contracts and documents; as I am not obligated to keep those documents. Does it also imply that it is better to leave the company in trading for at least another 6 years if I decide to go back to permanent job this year?

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Caught by IR35?

Q. My Limited Company ceased to trade in 2013. After that HMRC began a 2 and a half year investigation which has ended with them finding me caught by IR35. I still dispute this and had planned an appeal. HMRC prevented my company from being dissolved however on the same day as I received a bill from HMRC for money they deem I owe, I received a letter from Companies House saying the company is now dissolved. Where do I stand?

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Travel & Subsistence Rules: Overseas Travel

Q. I work as a contractor in UK but I am not a UK resident yet. I work through an umbrella (as an employee) and due to last Travel and Accomodation Allowance changes I'm not allowed to claim overseas travel expenses anymore (I fly home every weekend). I wonder if this new rules apply when you live overseas and work temporary in UK. If I am not wrong, one become a resident when it stays at a permanent address for at least 183 days.

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How much VAT should I pay?

Q. What VAT should I pay as an Oil and Gas engineering consultant?

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Montpelier Contractor

Q. I was contracting (permie since 2010) but for a period was using Montpelier. I am now trying to disentangle this in a way that is lawful but am not clear what the start point is - specialist accountant/tax lawyer etc. Do you have any suggestions?

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Tax & IR35 News

Room for hire

Get the documentation in place

Many contractors operate their company’s business out of their own home and use at least one room in the house as a dedicated office.

Read more...

Overdue PAYE refund trumps VAT penalty

HMRC tardiness provides escape from surcharge

HMRC’s delay in repaying overpaid PAYE to a business, handed the taxpayer a reasonable excuse for a slight late payment of VAT, the First Tier Tax Tribunal ruled.

Read more...

HMRC’s IR35 public sector consultation

Have your say

survey icon small

Contractors working in the public sector may face draconian new rules from April 2017 if the recommendations in HMRC’s latest IR35 consultation come into force. Agencies with public sector contractors will become responsible for determining their freelancers’ and contractors’ IR35 status. The concern is that risk-averse engagers will simply apply IR35 by default, leaving public sector contractors with a tough choice – leave their contract or take a significant pay cut.

Read more...

Flat rate VAT and IR35

How to treat VAT in the IR35 calculation

The VAT flat rate scheme (FRS) was introduced on 24th April 2002 and provides many contractors with an easier way to administer their company’s VAT affairs. Provided a business is eligible to use the scheme, then the amount of VAT it pays over to HMRC is based on a fixed percentage of its VAT inclusive sales. VAT of 20% still has to be charged on the businesses sales but FRS avoids the need to record and reclaim the VAT it incurs on its expenses. Any difference between the VAT charged on sales and the amount of VAT paid is pocketed by the business but what happens to that income where a contractor is caught by IR35?

Read more...

Fatal error proves very costly

HMRC lose out on £653K due to mistake

letter icon

One erroneous digit on a tax enquiry notice cost HMRC very dear after the First Tier Tax Tribunal ruled their notice to be invalid.

Read more...

The quality of service is strained

HMRC underestimated effect of staff cuts

hmrc icon

A recent report titled, ‘The quality of service for personal taxpayers’, compiled by the National Audit Office (NAO), confirms that it is no coincidence that the collapse of HMRC’s service to individual taxpayers occurred after the department shed some of its staff.

Read more...

Online tax returns – common mistakes

Error messages when using HMRC software

error icon

For those using HMRC’s own software to file their 2016 tax returns you need to be aware that the Revenue are currently trialling some changes. HMRC have identified 21 of the most common mistakes made in online returns and to address these the department has created three different types of messages to help taxpayers and reduce potential errors.

Read more...

IR35: Shape of things to come?

HMRC consults on changes to ‘off-payroll’ in public sector

ir35 icon

Following the announcement in this year’s Budget that the rules for ‘off-payroll’ workers in the public sector would be tightened up as from April 2017, HMRC have now released the anticipated consultation document, ‘Off-payroll working in the public sector: reform of the intermediaries legislation’

Read more...

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