I am struggling this year to complete my tax return by the 31 October. Would it be ok if I made a payment on account of tax, so that I won’t have a penalty?
Whilst in previous years if you did not have a tax liability or if you paid the tax by the due date, you would not get a late filing penalty. Unfortunately, the rules have changed so that if you do not submit your tax returns by the 31 October (for paper) or the 31st January (electronically) you will receive a penalty. If you do not think you will be able to submit your return by the October deadline, then I suggest you apply for online registration which will give you a further 3 months in which to submit your return online.
From this month I am having to charge my customers a minimum of 5p per bag! What are the VAT implications on this?
If you are VAT registered then the 5p levy per bag is subject to VAT. Therefore you are actually charging your customers 4.17p plus VAT per bag and you owe the VATman 0.83p per bag you sell. The Welsh Assembly Government expects the proceeds from the bags to be used to fund good causes in Wales and you should get tax relief on those payments.
I am going to start up a new graphic design business, but I’m not sure whether I should be VAT registered or not. What do you think?
You have to register for VAT if your turnover is more than £73,000 in a 12 month period. Initially, I would imagine that this is unlikely to happen although you still may want to register for VAT voluntarily. The decision to register for VAT will often be influenced by the type of customer you trade with (i.e. are they businesses or individuals) and what are your likely costs. If you mainly trade with businesses then they can reclaim the VAT you charge them, so it shouldn’t be an issue. However, if your customers are individuals then you automatically make yourself 20% more expensive than a competitor who is not VAT registered. If you decide at a later date to become VAT, you can reclaim the VAT on items you’ve bought within the last 3 years (6 months for services), as long as you still have them in your possession.
We are paying employer’s National Insurance for our 4 employees, but we thought that there was ‘holiday’ period where we didn’t have to pay it. What is the correct position?
As mentioned in my September 2010 article, the government announced proposals to exempt small businesses from paying employer National Insurance (NI) up to 10 of their employee’s (subject a limit of £5,000 per employee) in the first year of trading. If you believe that you meet this criteria and your business has only started to trade after the 22nd June 2010 then you can back date your NI claim. Please speak to your advisor for further details on this.
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