VAT

Do you know enough about your suppliers?

1 min read

If you fail to carry out checks on suppliers of labour to your business, you could become liable for unpaid National Insurance Contributions and denied input VAT claims.

HMRC expect businesses to carry out adequate checks on their suppliers to allow them to make informed decisions as to their integrity.

HMRC’s guidance on the matter is based around three principals:
Check – Know your own risk – legal, financial, tax and social obligations, and those of your suppliers.
Act – Carry out robust due diligence on your suppliers. If risks are identified do not ignore them, act to mitigate or remove the risk completely.
Review – Effective due diligence needs continuous monitoring and review.

HMRC have recently updated their extensive guidance on their website to assist businesses in following these three principals. It could prove very costly for businesses that fail to meet these obligations, as should HMRC look to recover unpaid taxes from the business, the amounts involved are likely to be very large. It is also possible that HMRC would seek to impose a penalty and fine.

How we can help

We aren’t just your average accountants. We offer a wide range of business advisory services to help you make the right decisions for your business to grow and improve. With over 40 years experience our team is dedicated to really understanding your business. We believe by staying up to date with not only current but changing legislation and industry news we are better placed to help our clients and their businesses succeed.

If you would like to know how Loucas can assist you please do not hesitate to contact us.

Read our related blog on 5 ways to make sure your business gets paid faster

Garden Office Tax Considerations

2 min read

With most of the working population working from home right now, many businesses are considering a permanent change to their working environment and we are being regularly asked about the pros and cons of a garden office.

There are two main considerations when looking at installing a garden office on the grounds of your residential property for business use:

  • will it be solely used by the business or
  • will there also be an element of private use (e.g. as a playroom, hobby room or overnight accommodation for guests).

The treatment of the garden office costs, various tax implications and some other additional points hinge on which of those options is chosen. Each individual circumstance may be slightly different, so it’s always good to seek specific advice but the following table outlines the broad considerations, based on a Limited Company purchasing the garden office as a company asset.

Initial Purchase of structure

The structure will be an asset of the company but no tax deduction is available for cost of the structure itself.

It is possible to claim capital allowances on certain elements such as power supply, heating and thermal insulation as well as fixtures and fittings. It is a good idea to obtain breakdown of the cost of these allowance items.

VAT

If VAT registered you will be able to reclaim the VAT on the cost of the structure and items mentioned above. If there is private use of the office then an appropriate apportionment should be made.

Running Costs

These can be claimed as tax deductible, again an appropriate restriction must be made for any private usage.

Capital Gains Tax (CGT)

Ordinarily, the disposal of a primary residence is exempt from CGT. If the office is used solely for business then this element of the property may become liable to CGT.

This is not an issue of there is some private use of the office.

Benefit in Kind

If there is private use of the office then an annual benefit in kind charge will occur. This is calculated by using the assets made available for private use rules and could be as high as 20% of the purchase price per annum.

VAT Deferred Period – HMRC VAT Direct Debits

1 min read

The VAT payment deferral period, which was introduced as a measure to ease financial pressure on businesses during the COVID-19 pandemic, ends on 30 June 2020.  Any liabilities that fall due on or after 1 July 2020 should be paid in full by the due date, unless there is a time to pay arrangement in place.

Businesses will need to consider setting up any cancelled direct debits in enough time for HMRC to take their next VAT payment. 

Any deferred VAT payments should be paid in full on or before 31 March 2021. Additional payments can be made with subsequent returns.

If you have any questions, our team of expert Accountants would be happy to assist.

Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. Each comment posted by third party readers/subscribers of our website on topics of tax and accounting is their personal opinion and due professional care should be taken by you before you act after reading the contents of that post. No warranty whatsoever is made that any of the posts are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

A welcome delay to the introduction of the VAT Domestic Reverse Charge

1 min read

HMRC have announced a five month delay to the introduction of the VAT Domestic Reverse Charge. 

The significant changes to how VAT is applied to services in the construction industry will now not come into force until 1 March 2021. 

The delay will no doubt be a relief for many construction businesses who are already having to deal with the uncertainty caused by the COVID-19 pandemic.

You can read the full guidance regarding these changes on HMRC’s website.

If you have any questions, our team of expert Accountants would be happy to assist.

Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. Each comment posted by third party readers/subscribers of our website on topics of tax and accounting is their personal opinion and due professional care should be taken by you before you act after reading the contents of that post. No warranty whatsoever is made that any of the posts are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

 

Can you claim vat back on your staff Christmas party?

By Stuart Shaw

2 min readWith Christmas fast approaching many Company Directors want to thank and reward their staff for their hard work. For limited companies, there are certain tax benefits on staff annual and Christmas parties and giving gifts to employees.

Tax free staff Annual and Christmas parties

For any annual event, be it a summer BBQ or Christmas Party, HMRC provides a tax relief for all employees set at £150 per head. The total claim for any annual events combined requires being below the £150 limit to qualify per employee.

How to calculate the cost per head?

The cost per head for the whole event from start to finish can include;

  • food
  • drink
  • entertainment
  • taxis home
  • overnight accommodation

If the VAT, inclusive of cost of the event is over the £150 limit the whole benefit is taxable as a benefit in kind. To calculate the cost per head of your annual or Christmas party, divide the total cost of the function by the number of employees.

Can you bring a guest?

The events are mainly for entertaining employees. If the company has several branches then the event is open to all staff in their location. The £150 threshold is per employee and is split between any employees’ partners or guests who attend too. The cost of the whole event is an allowable expense for your business.

Can you invite suppliers or customers?

When inviting customers or suppliers to the Christmas party, VAT relief may be restricted as non-employees are also being entertained. Event’s for only directors, partners or sole proprietors,  will not be tax deductible as all employees are required to be invited for it to qualify.

What gifts can you give that are tax allowable?

Employers can give gifts listed below to employees as tax deductible, trivial benefit, as long as it does not exceed £50.

  • Turkey,
  • a bottle of wine
  • a box of chocolates

Unfortunately, a hamper with food and wine will not be classed as a trivial benefit. Christmas presents paid in cash to staff are taxed as earnings with tax and national insurance. This also applies with gift vouchers in excess of £50 which are exchangeable for goods and services too.

Record keeping for your annual and Christmas parties

For all events, keep the receipts. By make a note of the employees who attended keeps records organised too.

From Loucas we hope you enjoy your Christmas festivities and that your employees also enjoy their seasonal gifts.

Have a great time.

For more advice on trivial benefits read more on trivial benefits and what they are?