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Getting advice from HMRC

Getting advice from HMRC

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This question was deleted by the original poster, but due to the quality of some of the answers AccountingWEB has re-instated the thread for members to read.

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Euan's picture
By Euan MacLennan
15th Apr 2014 11:59

Tax advice from HMRC?

CLW Accounting wrote:

Trying to get hold of anyone at HMRC to discuss this matter is increasingly frustrating.

Do you seriously expect HMRC to give you tax advice over the 'phone?

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Replying to Tim Vane:
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By CLW Accounting
15th Apr 2014 13:14

Very useful

Euan MacLennan wrote:

CLW Accounting wrote:

Trying to get hold of anyone at HMRC to discuss this matter is increasingly frustrating.

Do you seriously expect HMRC to give you tax advice over the 'phone?

 

I am not asking for "tax advice" from HMRC.  I'm simply trying to find out what the penalties etc are for the not registering as an employer and submitting RTI ontime.

 

Thankyou both very much for your comments, extremely useful.  Glad you have the spare time to be writing them.

 

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Replying to 356B:
Euan's picture
By Euan MacLennan
15th Apr 2014 14:25

That was the gist of your question

CLW Accounting wrote:

Euan MacLennan wrote:

CLW Accounting wrote:

Trying to get hold of anyone at HMRC to discuss this matter is increasingly frustrating.

Do you seriously expect HMRC to give you tax advice over the 'phone?

I am not asking for "tax advice" from HMRC.  I'm simply trying to find out what the penalties etc are for the not registering as an employer and submitting RTI ontime.

Your question was all about the most tax efficient method of treating your client's drawings, so I made the obvious inference when you said that you wanted to discuss the matter with HMRC.  There is no need for you to throw a hissy fit.

leonardjames wrote:

I would think an accounting entry for a salary up to the secondary threshold, since commencement, would be in order, and if the client wants a higher salary from now on then just register for PAYE now. No penalty, I believe, this way?

There is a requirement to register for PAYE if anyone is paid a salary at or above the NI Lower Earnings Limit, which was £464 a month in 2012/13 and £473 a month in 2013/14, and hence, to submit RTI returns for 2013/14.  I would only agree to treating some of the drawings as salary up to £472 a month from April 2013 onwards.

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By GuestXXX
17th Mar 2015 16:33

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Replying to andy.partridge:
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By CLW Accounting
15th Apr 2014 13:16

Please read what is written

[quote=secondhand_22]

HMRC are well known for giving tax advice including how to re-write history in order to pay less tax! NOT!

 

 

If you read what I put, it's not actually about paying less tax at all.  It's about trying to make sure that penalties are not incurred when there is no need to be.  The suggestion is actually to take a tax hit in order to register with HRMC properly and make sure all documentation is correct and supported.  

 

 

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By leonardjames
15th Apr 2014 13:34

Do the best you can

I would think an accounting entry for a salary up to the secondary threshold, since commencement, would be in order, and if the client wants a higher salary from now on then just register for PAYE now. No penalty, I believe, this way?

Payments treated as Salary from Dec 12 to 5th April, 13 may affect previously submitted income tax returns, of course, which will be a factor.

As for dividends, it sounds as though post salary there would be say £8,000 FY13 profit. Up to £8,000 could possibly be treated a dividend to match some of the payments made.  The rest would be loan, now cleared off by a further dividend out of any clear FY 14 profits (or funds from the director paid in externally.

Its far from ideal and I would tell HMRC what has happened, but as the amount of the dividend would be small, I can't see a major issue.

But failing that, just pay the dividend in FY14, again assuming that there is no other income its unlikely that higher rate tax will be payable.

For VAT, there is no bailout option. Its a fine, as you are already aware!

I think re-writing history is wrong, but I think most HMRC Officers would agree that this person was effectively paying salary and dividends but waiting for the year end catch up to put them into the correct boxes.  At this low level, HMRC have agreed situations like this since time began, though times are changing and best practice is to get it right and evidenced at the right time.

 

 

 

 

 

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By GuestXXX
17th Mar 2015 16:36

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Replying to lionofludesch:
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By Jekyll and Hyde
15th Apr 2014 14:00

where is the embarrassment here?

secondhand_22 wrote:
And, if we're being honest, it was an embarrassment to your practice.

Are you off to do what you should have done all along? which is to read a book.

If this was the case there would be no question s on this site. I for one like to see what others do when they are thrown a curveball of a client. I took on a client in December where there has been a load of problems from the previous rouge accountant and I have had a lot of problems to be resolved, some aspects I am still working through. I am guessing this may be one such similar client.

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By Jekyll and Hyde
15th Apr 2014 13:44

regarding your original post
I would not backdate the salary option. I would make right whatever I can from the point I was engaged. May sound harsh, but clients need to engage accountants prior to the end of their first and become good clients and start to understand we are not magicians.

This is not me banging on from the hindsight brigade, however if I were engaged prior to 5/4/14 my priority would have been to register employer for PAYE and paid salary on 5/4/14. This way client would have got PA for 2013/14. Having registered prior to 5/4/14, I would have used mitigating circumstances for any penalties, and I say any as I do not think there would have been any, As HMRC have relaxed penalties for 2013/14.

If the director was adiment that at the year end they had written documentation to support this accretion that the company had entered into an obligation to pay the salary, then I would include a provision in the company accounts. However in most cases I would tell the client that they will get the corp tax relief in the following year. Then from April deal with the wages. This was you get both corp tax and per tax relief accordingly.

If a client engaged my post 5/4/14 then I would tell them there is nothing I am prepared to do with the salary in the first year.

As for hmrc penalty, 2013/14 have been relaxed somewhat.

My point is I would do everything I could do from the point I am engaged. That is me and my view. Otherwise you will be backdating things every year.

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By CLW Accounting
15th Apr 2014 13:46

Thankyou!

Thankyou LeonardJames.  Agree about the previous income tax returns, however as his previous accountant had prepared but they were never submitted, this is another mess I'm sorting out!  So at least I can update those with any necessary info. 

Having not had this situation before with the RTI and a client not registering as an employer until over a year later,  I just wanted to some guidance on the best course of action and if anyone else had had this issue with a client and HMRC's response.  My other clients are all registered and I have no issues with their RTI etc.  There will be enough fines coming up for this business without any I can avoid!

I appreciate the useful answer and time taken! :-)

 

 

 

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By CLW Accounting
15th Apr 2014 13:59

Follow up

Thanks Jekyll and Hyde, agreed, if I'd been engaged before 05 April I absolutely would have gone down this route.  As it is, I wasn't and therefore not much I can do.  Client is keen to get everything sorted and back in order, so fines will just have to be taken where applicable.

 

@ secondhand - if you can recommend a book that has been written post 05/04/2014 that specifically deals with how HMRC responds in this situation, this year.  Then yes I will read it.

I'm not sure how asking for advice on a matter that I haven't dealt with before (and is pretty new to alot of people this year) is an embarrassment?  I was simply asking if anyone else had had this situation with PAYE and HMRC and how they had dealt with it.  

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By CLW Accounting
15th Apr 2014 14:55

Hissy fit

Apologies if you think I was throwing a hissy fit.  I was merely trying to get the point across that I am clearly not asking HMRC for tax advice!  (I'm not sure anyone is quite that naive?!)  The original question was trying to say (obviously not worded very well on my part) that it wasn't really about the tax implications - sure if it's possible to put it through as a salary then clearly that is the most tax efficient route, but not if the penalties/fines are going to be more than the CT if I don't.  Also it's not high levels of profits so we're talking small numbers therefore paying the tax isn't the issue, more about making sure HMRC are happy with how it's all been handled and are happy with when they register for PAYE - hence the want to speak to them.

With regards your second point, that's what I was thinking of doing, could you just clarify why you wouldn't put through any before April 13?  Is it just due to SA for PY?  (client has not submitted Apr13 SA yet or previous years for that matter - yes I know - this is what I'm dealing with - hence brain overload and "hissy fit" and perhaps "poor questions")

Thanks

 

 

 

 

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Replying to M.R.S.:
Euan's picture
By Euan MacLennan
15th Apr 2014 15:24

2012/13

CLW Accounting wrote:

With regards your second point, that's what I was thinking of doing, could you just clarify why you wouldn't put through any before April 13?  Is it just due to SA for PY?  (client has not submitted Apr13 SA yet or previous years for that matter - yes I know - this is what I'm dealing with - hence brain overload and "hissy fit" and perhaps "poor questions")

As you have deleted the original question, I am not sure when the business started - was it January 2013?  If so, you could treat 3 months @ £463 of his drawings as salary in 2012/13, provided that he did actually draw out that much in those first 3 months, and include it on his 2013 Tax Return when you prepare it.

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By Old Greying Accountant
15th Apr 2014 16:41

VAT is the worst ...

... this what HMRC say:

What you can write to HMRC about

The VAT Helpline can answer most questions relating to VAT, but there may be times when you need to write to HMRC if:

you've looked at all the published VAT information and can't find the answer to your questionyou can demonstrate (using specific examples) that HMRC’s published guidance or the law is unclear when applied to your particular situationyou've already contacted the VAT Helpline and they've asked you to writeyou want to know your Effective Date of Registration (EDR)

If HMRC already publish information that answers your question, they will write to you and give the relevant details.

Getting confirmation about VAT law - clearances

HMRC aims to make its help and guidance as clear as possible. If you feel that the guidance doesn't explain how the law will apply in a particular situation, you can ask them to provide a 'clearance'. A clearance is written confirmation of HMRC's view of how tax law is applied to a specific transaction or event. HMRC will accept clearance applications from a business, their agent or adviser, where they can show that there is uncertainty about how legislation will affect transactions they're involved with.

Questions that HMRC can't answer

HMRC can't answer VAT questions about:

Situations where you want to know what might happen in certain circumstances (hypothetical questions)Cases where you are already aware of the relevant guidance but are seeking confirmation that it applies to a particular transactionOther people's VAT affairs, unless you've got permission to act on their behalfA supply where you are the customer. HMRC will not supply a VAT ruling to a supplier’s customer unless they disagree with the supplier’s original decision and the relevant Public Notice does not cover the matter of concern. If HMRC already publish information that answers your question, they’ll write to you and give the relevant detailsProgress with your application to register for VAT and how long it will takeSituations that may help you with 'tax planning' or the creation of schemes to avoid paying tax.

This my client's response as we know some of his transactions should be zero-rated, but would love a letter confirming this to produce when it is inevitably questioned so we don't need to spend hours proving it 6 years down the line!

I love the way they make the rules then aren’t able to comment on hypothetical situations or help you with ‘tax planning’. They won’t even give ‘confirmation’ of your interpretation of THEIR RULES...... what a joke !

 

 

 

 

 

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