Frequently asked questions
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What professional qualifications and certifications do you have?
Rather worryingly, anyone can call themselves an accountant. Please be assured that Duncan is a dual-qualified Chartered Accountant and a Chartered Tax Advisor, holding membership of both the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Taxation.
Holly Lodge is also an ICAEW-accredited practice. ICAEW is a professional body that examines and regulates accountants on a global basis, setting high professional and ethical standards which they expect their members to follow in their work. ICAEW regulates its members’compliance against its own professional standards and UK law ensuring that we, as a practice, have achieved and maintained a standard of excellence that enables us to offer the best available service to clients.
Do you hold current professional insurance?
Yes, we maintain an annual professional indemnity insurance policy via Hiscox.
What are the deadlines for Personal Tax / Self-assessment return filing?
Under self-assessment, a paper return must reach HMRC by 31 October and an online return by 31 January. If you fail to file the return, you automatically receive a £100 fine - even if you don’t owe any tax or have paid the tax you owe. If, for whatever reason, you miss the deadline, the longer you delay the more you pay.
Everyone’s circumstances are different and we can help you plan accordingly, in advance, to ensure you pay the right amount and avoid any fines
What are the deadlines for filing a Corporation Tax return?
The deadline for filing your corporation tax return is within 12 months of the end of your company’s corporation tax accounting period. Yearly filing would include the submission of your company tax return form and other supporting documentation. If you fail to file your return on time your company will be charged an automatic penalty, even if it does not owe any corporation tax.
How do I know if I need to complete a tax return?
As a general rule, anyone who receives income that isn’t taxed at source needs to complete a Self-assessment return.
In the case of a sole trader, the income you receive from your trade doesn’t have National Insurance Contributions or Income Tax deducted from it, so you need to tell HMRC about that income on a Self-assessment form so they can calculate what, if any, tax you owe.
If you’re a limited company director, you’ll usually need to file a Self-assessment to let HMRC know about any dividend income you’ve received from your company.
Other examples of income not taxed at source can include rental income from any property you own, income from abroad, or investment (dividend) income.
What sort of records/bookkeeping requirements do I need to think about?
It is a good idea to consider setting up a business specific bank account which should help to separate business income and expenditure from personal income and expenditure.
You should keep records relating to your accounts for six complete tax years. Although you might be keeping hard copy receipts and invoices, we will probably only need to see your spreadsheets or software (assuming that they are in order) to prepare the accounts. You can keep your receipts and invoices digitally if you prefer.
For individuals/sole traders, a simple set of spreadsheets is quite often all that is required to keep a decent set of records. They are cheap to run, easy to tailor to your needs and the data can be easily manipulated to give you most management information that you might require.
For those interesting in or requiring specific bookkeeping software, we can suggest suitable software packages.
Do I have to register with HMRC once I start trading?
If you are intending to work for yourself (known as being self-employed) or are self-employed currently, then you will probably need to register your business with HMRC. The process is easily completed online or over the phone and we can certainly help you with this. You can be self-employed and employed at the same time.
I currently use another accountant / practice. How do I change accountants?
Moving your business to a new accountant is a straight-forward, easy process. Should you decide to instruct us, we will manage the process for you, contacting your current accountant on your behalf and facilitating a transfer of records.
Do I need to register for VAT?
It is important to be aware of the VAT registration requirements. Registration is compulsory once your sales exceed the current threshold of £85,000 (this is set to remain as such until 31 March 2024). We would probably need to start looking at your VAT situation more closely if your sales start to approach around £7,000 per month on average.
You must also register for VAT if you take over a VAT-registered business as a going concern.
As you will be able to reclaim some or all of the VAT you pay on purchases, we may recommend registering for VAT even if your turnover is below the threshold.
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Accounts Preparation.
Do I have to engage an accountant for this process?
Although it is not a legal requirement to engage an accountant, most businesses use an accountant to make sure that their documents are in order and that they are paying the correct amount of tax. Certain third-party users of the accounts, mortgage providers in particular, often require certified accounts prepared by an accountant in order to process applications.
Why is accounts preparation important?
Sets of accounts usually form the basis of tax returns that are filed with HM Revenue and Customs (HMRC). Accounts can therefore provide an additional level of confidence that the figures submitted to HMRC are accurate. For limited companies and certain other entities, accounts need to be filed with HMRC and at Companies House. The accounts filed at Companies House are available for the public and potential investors to view. Accounts preparation is therefore important as it helps to ensure that the correct amount of tax is paid to HMRC, that legal obligations are met and that third party users have reliable information on which to form decisions.
How much does it cost to have a set of accounts prepared?
It very much depends on the type of accounts required, the information to be included, the state of the underlying records, the complexity of the business and the time and expertise required to prepare the accounts. Please contact us to discuss your needs and we will be happy to provide a quote.
Do I need to file my accounts with anyone?
Limited company accounts need to be filed with Companies House. The deadline is usually nine months after the end of the period covered by the accounts.
A set of limited company accounts also needs to be filed with HMRC. This set will usually accompany the Corporation Tax Return, which needs to be filed within twelve months of the end of the period covered by the accounts. Unincorporated businesses (sole traders/partnerships) do not need to file accounts with anyone but they will need to file tax returns, which include pages that have been based on the accounts.
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Corporation/Income Tax.
Do I still need to complete a tax return if I have not been sent a notice to complete one?
As a general rule, anyone who receives income that exceeds the annual personal tax free allowance, which is not taxed at source, will probably need to complete a Self-assessment return. Also, it might be necessary to complete a tax return if you want to reclaim tax that has been deducted at source from your income.
What are the deadlines for filing a Self-Assessment Tax Return?
Tax returns filed on paper must reach HMRC by 31 October and online returns must be submitted by 31 January. We file all returns online to make sure that the deadline is maximized and that HMRC acknowledge receipt of the return within a few seconds of the return being submitted.
What happens if I miss a filing deadline?
Penalties are payable if your return is not filed on time, unless you have a ‘reasonable excuse’, even if you donot owe any tax or have paid the tax you owe.
We can help you to plan accordingly, to ensure that you pay the right amount of tax and avoid any fines.
What are the deadlines for tax payments?
Balancing payments in respect of the tax due for a tax year are payable by 31 January. If you need to make ‘payments on account’, which are calculated estimates of the tax that you will need to pay for a tax year, then these are payable by 31 January before the end of the tax year on 5 April and by 31 July after the end of the tax year.
What is the deadline for paying Corporation Tax?
Unless your company is particularly large, the deadline for paying Corporation tax due is usually nine months and one day following the end of the period covered by the accounts.
What about the deadline for filing the company’s Corporation Tax Return?
The deadline for filing the company’s Corporation Tax Return is usually twelve months after the end of the period covered by the accounts. This means that the company needs to pay the tax due for a year before the tax return is filed with HM Revenue and Customs (HMRC).
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Capital Gains Tax.
What is a chargeable asset?
Chargeable assets include most personal possessions worth £6,000 or more, real estate that is not your primary residence, shares or other investments (including cryptoassets) and certain business assets.
Certain assets including cars, medals and cash are not chargeable assets. Gains from Individual Savings Accounts, Personal Equity Plans, UK government gilts, Premium Bonds and gambling (including lottery and pools winnings) are exempt from Capital Gains Tax.
How do I report a capital gain to HMRC?
Capital gains should be reported on your Self-Assessment Tax Return for the tax year of disposal.
However, you do not need to complete supplementary Capital Gains Tax pages to accompany your tax return if proceeds from the disposal of capital assets were less than four times the Capital Gains Tax allowance and net gains (proceeds remaining after the deduction of allowable costs, reliefs and losses) were less than the Capital Gains Tax allowance.
Alternatively, you can use HM Revenue and Customs’ Real Time Capital Gains Tax Service to report your gain immediately if you know what you owe. The deadline for using this service is 31 December after the end of the tax year (5 April) in which you made the gain.
Is there a different reporting procedure for UK residential property?
Yes. If you sell a UK residential property that generates a Capital Gains Tax liability, then you must report and pay any tax due within thirty days of completion.
The interim report should be filed using a Capital Gains Tax on UK Property Account that you can set up through the HMRC website.
It is very likely that estimated figures will need to be used to calculate the Capital Gains Tax payable and so the disposal will also need to be reported on your Self-Assessment Tax Return for the tax year of disposal. This return will use final figures for your other income and so the Capital Gains Tax payable will be recalculated with any under or overpayments from the provisional return being taken into account in the calculation of your final liability for the year.
How much Capital Gains Tax will I pay?
Capital Gains Tax is chargeable as a percentage of your gains. The percentage applicable to each gain depends on the type of asset that you have sold, what the asset was used for and your other income for the tax year of disposal.
Please contact us if you would like some estimates of your potential Capital Gains Tax liability calculated.
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VAT/PAYE.
Do I need to register for VAT?
It is important to be aware of the VAT registration requirements.Registration is compulsory once your taxable sales exceed the current threshold of £85,000 (this is set to remain as such until 31 March 2024).
The threshold is applied to your taxable sales for a rolling twelve month period.
There are certain other situations where VAT registration might be required. For example, you should also register for VAT if you take over a VAT-registered business as a going concern.
You can also register for VAT voluntarily even if your taxable sales are below the compulsory registration threshold. This might be advisable if you want your business to appear to be ‘bigger’, if all of your customers are VAT registered or if your sales are taxable at the zero rate of VAT.
What does VAT registration entail?
A registration is lodged with HM Revenue and Customs (HMRC) and a VAT number is issued. This should be shown on invoices that you raise.
You would need to keep records of the VAT that you charge on your invoices and the VAT that you reclaim on your costs and expenses. These then need to be reported to HMRC (usually quarterly) on a VAT return.
The VAT return will show the difference between the VAT charged and VAT reclaimed. If the VAT charged exceeds the VAT reclaimed then the difference is payable to HMRC. If the VAT reclaimed exceeds the VAT charged then the difference should be repaid to you by HMRC.
Does anything need to be filed for PAYE?
Reports need to be filed with HM Revenue and Customs on or before the date that payments are made to employees.
Annual submissions also need to be made at the end of the tax year and P60 end of year salary and tax deducted forms should be given to employees. A P45 form should be given to employees when they leave.
Reports need to be filed using software and in accordance with ‘Real Time Information’ reporting requirements for PAYE.
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Company Secretarial.
What information might I need to send to Companies House?
If you are a director then you are responsible for making sure that the information that Companies House holds about your company is accurate and up to date. If the information is incorrect then you should make sure that it is updated by filing the necessary documents.
Documents and filings that might need to be filed with Companies House are likely to include:
• Annual accounts
• Annual Confirmation Statement
• Changes to articles (basically company rules), directors, the secretary, addresses (including the registered office address) or persons with significant control
• Changes to the company’s accounting year end
• Changes to the company’s share structure
• Details of charges over any company assets
What is a Confirmation Statement?
A Confirmation Statement is a report of non-financial information held by Companies House about the company.
It needs to be checked and updated, if necessary, each year.
The filing process can be completed on paper but is usually dealt with online as the filing fee is reduced. Some companies must file paper Confirmation Statements as they are not allowed to file online.
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Records/filing.
What records of my business do I need to keep?
Accounting records can include information relating to:
• Sales and income
• Business related expenses and costs
• VAT information and returns if registered for VAT
• PAYE details and payment/deduction information if you have employees
• Details of any other income received; bank interest for example
• Details of assets/equipment owned by the business
• Debts owed to or by the business
• Stock takes and stock that the business has on hand at the end of the financial year;
• Loan paperwork
In practice, your records should be able to support the information filed with HM Revenue and Customs or Companies House in respect of accounts and other returns.
How do I keep records for my business?
For individuals/sole traders, a simple set of spreadsheets is quite often all that is required to keep a decent set of records. They are cheap to run, easy to tailor to your needs and the data can be easily manipulated to give you most management information that you might require.
For those interesting in or requiring specific bookkeeping software to manage larger businesses, we can suggest suitable software packages.
It is a good idea to consider setting up a business specific bank account which should help to separate business income and expenditure from personal income and expenditure.
How long should I keep my records?
Generally, it is a good idea to keep records relating to your accounts and/or tax returns for six complete tax years.
Although you might have hard copy receipts and invoices, it might be advisable to keep these records digitally as this can cut down on storage space, make them more easily accessible and could allow you to make backup copies.
For companies, the six years should run from the end of the last company financial year. You might need to keep records for a longer period if:
• they show a transaction that covers more than one of the company’s accounting periods
• the company has bought something that it expects to last more than 6 years, like equipment or machinery;
• The Corporation Tax Return for a period was filed late;
• HMRC has started a compliance check into a Corporation Tax Return.
What should I do if my records have been lost, stolen or destroyed?
If you cannot replace your records after they were lost, stolen or destroyed you should:
• Do your best to recreate them;
• Tell your accountant and/or your Corporation Tax office straight away;
• Include this information on your personal tax return or Corporation Tax Return.
Are there any other filing requirements to be aware of?
Depending on your business, the following information might need to be filed;
• VAT returns to HMRC (usually quarterly)
• PAYE submissions to HMRC (usually on or before the date that payments are made to employees)
• P11D expenses and benefits forms to HMRC (usually by 6 July following the end of the tax year on 5 April)
• Event-based filings to Companies House regarding changes to a company’s structure, contact details, officers amongst other items.
Different types of business can have different filing requirements in addition to the items covered above. If you are unsure about what you / your business needs to file then we can help you.
Have more questions?
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