January 24. 2017
Let’s talk about how and
why HMRC Investigations happen, this week’s tip explains the best way to deal
with an enquiry and keeping the taxman happy.
Once the Revenue has taken up
an enquiry, it is in the taxpayer’s interest to settle the enquiry as speedily
as possible by cooperating with HMRC and providing them with any information
they request as they do have statutory powers that they can put in place if
they don’t get the information that they require within specified periods of
The length of an investigation
can vary from months to sometimes years depending on what HMRC find and how
they decide to progress. During an
enquiry, the Revenue may well look at your personal expenditure as well as your
business records. It is important that
you can also account for entries on your personal bank, building society and
credit card statements as well as your business statements. The Revenue will often deem receipts that you
cannot account for as undisclosed business income.
Clearly, the best way to
avoid having an enquiry into your tax return, is to ensure that when your tax
return is submitted it includes accurate and complete accounts information and
that it also gives full details of all your non-business income such as any
bank or building society interest, income from property, Capital Gains
etc. This may be stating the obvious but
it can only be achieved by keeping full and accurate records:
-You should always record all
sales and business receipts as you get them and retain the records;
-You should keep back-up
records, for example, invoices, bank statements and paying-in slips to show
where the income came from;
-You should record all
purchases and other expenses as they arise and ensure, unless the amounts are
very small, that you have, and retain, invoices for them.
It is important that each
entry is recorded as and when it happens.
By doing this, it reduces the chance of you omitting or entering an
incorrect amount if you have to record it on your records some weeks or months after
You will see from this how
important it is for you to keep accurate records in both your personal and
business dealings. By doing this, the
chances of you getting a letter from the Revenue will be considerably reduced. However, if you are unlucky enough to still
be selected for an enquiry, your hand is much stronger when you can produce
accurate, well-kept and timely records.
The FBTC online cashbook is a
great way to record your business income and expenditure. Have a read of the FBTC Online Cashbook
"Simplicity at its best!"
If you have any questions
about Revenue investigation or the online cashbook, please get in touch;
Call 0344 984 4445 Email firstname.lastname@example.org
January 16. 2017
The first line of the letter that tends to send a
shiver down the spine of most self-employed individuals if they are unlucky enough
to receive a letter from HM Revenue & Customs.
You may have submitted your Tax Return and thought ‘great,
it has been accepted’. But confirmation of receipt doesn’t mean to say that
HMRC have finished with it.
Under Self-Assessment, the Revenue’s method of dealing with
Tax Returns is to “Process Now / Check Later.” The Revenue then has a
period of time to review the entries on the Return. If some of the
entries on the Return differ from information which they already hold or if
these entries fall outside the normally accepted patterns for that particular
business sector, then there is a possibility that the Return could be selected
for an enquiry.
There is a time limit within which the Revenue can take up
an enquiry. This is currently within 12 months of the normal filing date
for the Return i.e. a 2015/16 Tax Return must be filed with the Revenue by 31st
January 2017, therefore the window for opening an enquiry is up to 31st January
However, it has been known for HMRC to open an enquiry
outside of that time frame which is called a ‘Discovery’ enquiry. Why can
they do this you ask? Because they can! Such an enquiry can take
place where based on the information (or lack of) shown on the tax return HMRC
could not have known that the tax return was incorrect and issued an enquiry
within the normal time limits.
In addition to the ‘normal’ lines of enquiry, HMRC are now
carrying out random ‘Business Record’ checks in which
they look into your record keeping. If they have reason to believe that
it is not up to scratch, they will arrange to make a visit.
Unfortunately, no one is immune from receiving a ‘Business
Record’ check, however you can take steps to avoid a full-blown
investigation. How? Stay tuned for our next tip – Keeping the Tax
man at bay!
January 6. 2017
Do you want an easy to use online cashbook system to record your business income and expenditure?
Fill your car with fuel then head to your next lesson. 5
minutes to spare before Justin Thyme arrives for his 3pm lesson, then login to
your FBTC online cashbook and add the £50.00 fuel expense to your cashbook. It
is as easy as that!
Record as you go then you can spend your own time reading
Intelligent Instructor magazine. Prevent the end of year rush to record your
income and expenditure.
Tracey Leck, FBTC Accounts Technician, advises the online
cashbook is the way forward to streamline your accounts. It is the most
efficient way of recording your income and expenditure.
But don’t take our word for it, Deborah Hunter has been an
FBTC client since 2011, see her thoughts on our cashbook system; “I use the online cashbook for ease. I can log at my
leisure, come back to it when I please and it orders each entry in the date
order. Simplicity at its best!”
Stephen Harlow is another client of ours that favours the
online cashbook, “Having
used the online cashbook since joining FBTC in February 2016, I can only
recommend it to all, especially those currently using the paper format
cashbook. Data entry is simple with nicely laid out and intuitive categories’’.
If you have any questions about our online cashbook get in
touch. If you want to start using the online cashbook it is a straight forward
transition and we can advise you accordingly.
Call us on 0344 984 2515 or email us at email@example.com to take advantage of our FREE online cashbook.
Remember the HMRC deadline to complete your 2015/2016 tax
return is 31st January 2017.
October 5. 2016
After the March 2015 Budget, the press were quick to state that the end
of the tax return had been announced. We were sceptical about this and
have been waiting for further announcements to be made by HMRC to clarify the
HMRC has now confirmed that from 2018, most businesses, will have to submit their business
records quarterly rather than annually. Further announcements will be made over
the next few months by HMRC on exactly how this will work.
Be assured that FBTC are monitoring these announcements to ensure that our
clients are fully prepared.
We will publish updates through emails, our website and our social media
Please do not hesitate to contact us if you have any questions - 0344 984 4445.
June 15. 2016
Intelligent Instructor magazine, the biggest and only independent magazine for the driver training industry, teamed up with FBTC Accountancy Services, and conducted a snap survey of ADIs to understand their views and intention in the forthcoming EU Referendum.
Over 24 hours between the 8th and 9th June, 200 ADIs took part.
92% intend to vote on the 23rd June 2016
But nearly 1 in 5 (19%) are still undecided on whether to remain or leave
Only 31% of the sample intend to vote to remain
50% intend to vote for leaving the EU at this point
Nearly half (45%) don’t feel they have sufficient information to make an informed decision to remain or leave
Only 1 in 5 (19.7%) see that leaving the EU would have a negative impact on them personally
(200 responses on 8th and 9th of June 2016)
Paul Caddick, Editor of Intelligent Instructor and Andrew Briscoe, General Manager of FBTC
Of course we (Intelligent Instructor and FBTC) are independent on this matter, but interested in facts and other interested party’s views and perspectives on what is probably the single biggest national decision for a lifetime.
It is clear from this snap poll that while it is so important, people are finding it very difficult to ascertain the real facts needed to properly formulate a decision. This is incredibly disappointing when the result will have huge consequences for us all in the UK and, Europe as a whole, for decades to come.
Driver trainers deal in the world of motoring and road safety. It is unlikely that there will be any direct implications for driver training and the driving test per se. However, it is perhaps worth bearing in mind that a huge amount of the positive road safety developments over the last thirty or forty years have come through a combined European effort.
- The EU funds a significant amount of road safety research which benefits UK research establishments and UK road users in general.
The UK has many ‘harmonised’ driver and vehicle regulations and enforcement, from driving licences and professional driver’s hours, to insurance and manufacturing standards. Of course, if the UK leaves the EU it could adapt and adopt EU legislation.
EuroNCAP has probably been the single biggest improvement in road safety, forcing better, safer vehicles, and it is a test of standards that is now being adopted worldwide.
There are potential risks and complications of the UK not getting access to vehicle technical data (repair and maintenance information) currently being legislated by EU
Adrian Walsh, Director, Road Safe said:
"Europe is perhaps the largest and most sophisticated market in the world; this has provided an ideal environment for a rapid advance in the development of vehicle safety technology spurred on by the consumer-facing NCAP programme. As a result, we now have the safest cars in the world.
Furthermore, the harmonisation of traffic law and a focus on road safety research within the community has helped to reduce death and injury on European roads.
Britain has played a leading role in all these areas".
Iain Temperton, Director of Communications, Road Safety GB commented:
“Our legislative framework is delivered via Department for Transport, some is home-grown and some originates from Europe. There are some advantages to harmonisation between states, such as standardisation of driving licences and co-operation of enforcement agencies, how much of that could continue outside of EU membership is an unknown.
My feeling is that the result of the referendum will have no short-term effect on road safety and I suspect that long-term effects will be limited as well. We search for best practice wherever it can be found".
These are just a few examples of how the EU has benefited our motoring lives, careers and safety over the years. Leaving the EU is likely to create economic uncertainty in the short-term, and this could cause a rise in diesel and petrol prices, vehicle purchase costs and even insurance premiums. However, assessing the unknown requires a functioning crystal ball, and such a thing does not exist as far as I know.
This Referendum is about a lot more than motoring, driver training and road safety. It is about our relationship with the rest of Europe, our position in a global market place and also the best way to ensure stability, safety and brotherhood in an increasingly fractured, insecure and unstable world. So perhaps it is most important to remember that it was the European wars and economic instability that led to the desire to unite the powers and nations of Europe; to prevent war, find common purpose and economically benefit all. Therefore, we need to assess if the EU, and our membership of it, has succeeded or failed, and whether going back to the old state of affairs will be a step forward looking at the whole issue.
See the full ADI survey results below:
For more information about Intelligent Instructor and to subscribe to the driver training industry’s biggest and only independent magazine, click here: www.intelligentinstructor.co.uk Check out their Facebook page here @IntelligentInstructor
Remember to follow the FBTC Facebook and Twitter
May 9. 2016
was introduced in the 2015/16 tax year and allows, in certain circumstances,
the transfer of 10% of unused personal allowances between spouses or civil
the 2015/16 tax year, you may be eligible to transfer £1,060 of your personal
allowance between each other which represents a tax reduction of £212.00.
the 2016/17, tax year you may be eligible to transfer £1,100 of your personal
allowance between each other which represents a tax reduction of £220.00.
How do I qualify?
qualify, one partner must have total income below the personal allowance
(£10,600) and the other must be a basic rate taxpayer.
How do I apply?
you have not already submitted a claim then don’t worry, as it is not too late.
claim must be made by telephoning HMRC on 0300 200 3300 or online at www.gov.uk/marriageallowance
which can then be backdated to the 2015/16 tax year. Your tax liability will not
be reduced if an online or telephone claim has not been made.
tax return is not for the purposes of making a claim, but for confirming to
HMRC that an online/telephone claim has already been made.
person who calls HMRC must be the person who is transferring the allowances (ie
the person with income below £10,600 in 2015/16 or £11,000 in 2016/17).
HMRC will not allow agents to make the claim on their clients’ behalf.
more information call FBTC, the tax experts!
April 5. 2016
It is fast approaching the end of another tax year, it means only one thing – tax return
Remember, you have nine months in which to file your 2015/16
tax return with HM Revenue and Customs.
However, if you are planning to claim tax credits or renew
your tax credit claim, your tax return will have to be completed before 31st
July 2016 so that you can give the tax credit people the required figures from
your tax return.
Another good reason for getting your tax return completed
early is that you will know sooner rather than later how much tax you will be
required to pay by 31st January 2017. Remember, depending on your level of profit, your
liability could include the addition of Class 4 National Insurance and Class 2
National Insurance. Also, you may be
liable to make payments on account towards the next tax year if your total
liability is in excess of £1,000. All
told, you could be looking at a hefty tax bill, so knowing early how much you
need to pay, could be beneficial to you.
The good news from the recent budget is that most of the tax
thresholds have increased from last year and will increase again in the year
just beginning so you are allowed to earn a little more before you start paying
March 24. 2016
Sadly Easter Eggs are not an allowable
This maybe a good time to mention some expenses
that are not allowed. In other words, those expense that do not meet the HMRC
test of ‘wholly and exclusively for business purposes.’
There are a whole raft of expenses that could be deemed allowable but in fact
are not. The most commonly asked about are:
-Personal insurance and sickness policies. It probably makes sense to
have such insurance but unfortunately the costs are not an allowable business
expense. The fact that they are personal expenses is a bit of hint.
-Work clothes and shoes. You may quite rightly claim to your accountant:
‘I have to look good whilst I teach’. True, but so do most people who go
to work in any professional capacity and they have to personally pay for their
suits, shirts and ties. It is no different for a driving instructor or any
other similar profession. However, shirts and tops are allowed for tax
purposes if they display a prominent logo promoting your business. Shoes
are a definite no: we all have to wear shoes.
-Spectacles and eye tests. This is an interesting one but at the end of the day
we all have to take regular eye tests, wear glasses if required, and pay for
them personally. The same applies to sunglasses.
The list of non-allowable expenses is understandably endless. Some of the
strangest requests that have made the non-allowable list include chewing gum,
gym membership and solar panels.
Making a claim for an expense that is not allowed for tax purposes on your tax
return could land you in hot water with HMRC if they investigate the detail of
your return. Usually the cost to you of that investigation will be far in
excess of the expense you were endeavouring to offset against tax. Seek
expert advice before deciding whether to include an item on your tax return, if
you are not 100% sure about it. Call us 0344 984 2515!
What about a chocolate calculator then??
March 22. 2016
Fuel Duty Frozen
Business Rate Relief
Corporation Tax Cut
The above are some of the highlights from the Budget, announced by the Chancellor on the 16th March 2016.
There are a lot of positive measures to take from the Budget, especially when considering small businesses and the self-employed. There is a feel for supporting local growth and the measures announced may prompt budding entrepreneurs to follow their business dreams.
Commencing with the fuel duty freeze, this will definitely appease those who rely on fleet vehicles to run their business. As a specialist accountancy service for driving instructors, we know this is good news for most of our clients!
For those who operate their business from a commercial property, another highlight to consider is the relief on business rates. From April 2017, small businesses that occupy property with a rateable value of £12,000 or less will pay no business rates. Currently, 100% relief is available if you're a business that occupies a property (e.g. a shop or office) with a value of £6,000 or less. There will be a tapered rate of relief on properties worth up to £15,000.
This will affect some 600,000 small and medium-sized enterprises (SME’s) from April 2017. Could this be a vital step on the road to fundamental reform? Furthermore, April 2020 will see business rates been based on the consumer price index (CPI) instead of the Retail Price Index (RPI). The government is also planning to modernise the administration of business rates. This again is a measure to make it easier for businesses, they can then spend the critical resource we call time, actually doing business!
The Budget brings long term planning with a focus on the next generation. This is encouraging. The increase in personal allowance from £10,600 to £11,000 from 6th April 2016 and to £11,500 from 6th April 2017, will allow people to earn a little more before they start paying tax. This is also a further opportunity for individuals to save with the introduction of the Tax Free Personal Savings Allowance. Currently for every £100 interest earned, basic-rate taxpayers lose £20 in tax, higher rate £40. Yet from 6 April 2016, the new personal savings allowance means every basic-rate taxpayer can earn £1,000 interest without paying tax on it.
The final area we would like to mention is the cut in corporation tax, to 17% by 2020 which will affect those who operate limited companies. This will be a positive move for the economy, surely making the supply chain between businesses more efficient, every little helps as they say.
March 14. 2016
We recently wrote about ‘employing’ someone to take care of
your paperwork, answering your calls and basically all things office related. A
common question relates to utility bills and what can and cannot be claimed as
business expenses. Your driving school
business is predominantly run from your tuition vehicle but it still may be
possible to gain tax relief against certain utility bills.
Some of your business, such as preparing lesson plans and
bookkeeping is carried out at home but this would probably account for less
than 10% of your time. So what expenses are allowable for tax relief? In most cases, it will be small proportion of
your heating and lighting bills.
Unfortunately, rent, rates, council tax and water rates are not allowed
for tax purposes. It may be possible to gain relief by making a claim for ‘home
use as office’ but whether this is beneficial is heavily dependent upon your
personal circumstances and you should certainly seek expert advice before
proceeding down this route!
If you decide to ‘build’ an office in your home or add an
extension in which to house an office you should ask yourself if it is
justifiable and necessary for the running of your business. However, it is possible to gain tax relief on
items that you purchase to ‘kit out’ your ‘office’ such as filing cabinets and
the like, but not the cost of construction or converting a room into an office.
Generally, for a small business, a table in the kitchen will
suffice for your paperwork!
What would your dream office look like???
If you’d like further advice on this or
any accountancy matter please contact FBTC
on 0344 984 2515.
March 2. 2016
Telephone calls and paperwork! And all you want to do is go
out and do what you are good at – teaching people to drive. Why not ask a
family member to manage your diary, take telephone calls and more importantly
keep your accounting records up to date? There is nothing like having a free
administration service on hand when you need it.
But is having your family member work for free the best way?
Not necessarily and it can benefit you as a self-employed individual if you
‘pay’ someone to run your ‘office’ and keep your paperwork in order as the cost
is tax deductible against your trading income.
However, in the complex labyrinth of UK tax rules,
regulations and do’s and don’ts, paying someone is not as straight forward as
you would think:
-You must pay the person the average hourly ‘going rate’ for
the type of work they carry out;
-You have to consider whether the person already receives
any other form of taxable income. If
they do, the addition of your ‘pay’ may push their total income over the
taxable limit and they could end up having to register for self-assessment and
paying tax themselves on this new income;
-There has to be a paper trail of payment. This is one of the areas HMRC will look into
closely if you are ever unlucky enough to be picked for an investigation,
specifically transactions between family members.
Paying a family member to help you out could open a can of
worms and could prove quite costly if it not administered correctly but done
properly is a good way to reduce your tax bill.
If in doubt, ask! 0344 984 4445
February 22. 2016
How often do you keep your accounting records up to
date? Once a week? Once a month? Do you play catch up at the end
of the tax year when your records are requested from your accountant?
You should try and set some time aside each week to update
your accounting records and get into the habit of doing it every week, whilst
the week is still fresh in your memory.
You will find it much easier to recollect what has happened
in the last seven days, than trying to think back over fifty two weeks, if you
are trying to complete your records after the tax year has ended.
The advantages of sticking to this regime are
plentiful. As well as being able to keep
a track on how your business is performing, it will assist you in answering the
questions from the dreaded ‘Business Record Check’ letter should you be unlucky
enough to receive one from HMRC. Based
on a set of answers you give in relation to questions about your accounting
records, HMRC will decide if they will need to pay you a visit to carry out
further checks. The more accurate
information you can supply them with, the better your chances are for not
getting a visit.
you’d like further advice on this or any accountancy matter please contact FBTC on 0344 984 2515.
Please visit our Facebook and Twitter page.
February 3. 2016
Plan ahead! Look forward and see where you are heading! Plan
for your taxes……
Let's get organised! Start a saving account or maybe a payment scheme with HMRC, prepare yourself for your final liability.
Don’t forget as well as income tax, Class 4 National Insurance also needs
paying and you should be planning and accruing for this too.
Always contact HMRC should you need to discuss your tax bill, don't stick your head in the sand. They may agree a payment plan which is a much better option than accruing interest on what you owe.
you’d like further advise on this or any accountancy matter please contact FBTC on
0344 984 2515.
Don't forget to check out our Facebook and Twitter pages!