This will just look like the standard reply but you do need to speak to an accountant who can get your tax affairs in order. They will be able to get all the correct information from you and who knows get the tax you say you are due to pay reduced.
Just from a quick look at your question I come up with the following:
1. Did you receive notification before to advise you you needed to complete a tax return and just ignored it as you are in fulltime employment and though your tax was taken care off through PAYE?
- If you did then yes the late filing penalty will be correct.
- If you didn't receive the notification the accountant may be able to appeal the late filing penalties.
2. Who told you that you needed to complete a tax return because you had a company car? did you call HMRC or did you get advice from a 'man in the pub'?
- That's complete nonsense, if your work is operating the payroll properly the tax due for the company car will be getting deducted at source through your PAYE as HMRC will have provided them with an adjusted tax code to take the car into account.
- There must be some other reason why you are required to submit a return and speaking to an account will identify that as long as you provide them with all the relevant information. - Are you a Director of the company you work for? - Do you have any other untaxed earnings? are just a couple of questions you will need to answer.
- If you called HMRC and it was their representative who stated that then it just goes to show the (lack of) training / quality provided to their staff.
- If it was 'a man in the pub' then there is not much I can say if you believe them. As with the man in the pub scenario do not take any advice offered on here other than you need to speak to and pay an accountant, you then have come back against them if there advice costs you money. Going with any 'professional' advice offered here would be wrong as we do not know your full story, even if some individuals appear to have some tax experienced sounding online names and their names may appear in many posts offering advice / opinions in reality they could just the man in the pub as there is no guarantee who they are.
3. Did you complete your own tax return online? Or did you use an accountant?
- I am assuming you have completed it yourself and you may have just entered the details incorrectly hence the large increase in tax due. I have looked at HMRC's tax completion software and it isn't that user friendly so I guess it could easily just be this.
- However, the difference could be tax HMRC is saying is due for previous years, they may have received different information from your employers or they may believe they have another source of income you haven't declared (which could be the reason you are now required to complete a tax return). Again an accountant will be able to look into that for you, if not sort it out at least be able to explain to you were the liability is coming from.
- Having reread your question before posting my reply I see you say you filed your "late returns yesterday" and not just 'a return' which would easily explain why the amount is much higher. Again speaking to an accountant hopefully can help here. I recently had a client who had 5 years worth of returns to complete, after talking it through with them we could show they were never informed of returns being due and the late filing penalties and associated interest were written off by HMRC, so it shows that it is worthwhile speaking to an accountant.
4. Sorry to say that, no whilst the system is meant to make life easier HMRC has never managed to get it to that standard and I am sure they never will.
As my first paragraph highlights I do suggest you get yourself an accountant, they should ask you all the relevant details and hopefully save you money and keep you right going forward.
Pretty straight forward, so I think you are just looking at it in the wrong way.
For the Company:
1. The Company borrows the amount from a lender. The Company, not you has a debt to the lender and is responsible for making the repayments and is liable for any defaults, and shows the liability accordingly in their accounts.
2. The Company then provides you with a loan of the amount you need to buy the shares and show you as a debtor within their accounts, so effectively the two transactions cancel each other out (although you cannot set them off against each other, they both need to be shown in the accounts). The terms they charge you for interest and the length of loan period has nothing to do with the loan they have received from their lender. So the interest rates they charge you can just be enough to cover what they are paying to their lender.
For you personally:
1. You then have the funds to buy the shares directly from the outgoing Partner / shareholder.
The above is assuming the business is not going to act as a guarantor for you to get the money to buy the shares. If so all the transactions are out with the business, although a note will need to be entered into the accounts over their potential liability in case of you defaulting on the payments.
The above is also assuming you do plan to tell the lender what the loan is for. Basically a loan to provide a loan to a new Director. You may find most lenders may not be too happy about that and advise you to apply for a personal loan. If the lender does accept to provide the loan to the Company they may wish to put special conditions on the loan, so my point above that it is nothing to do with the lender may become incorrect. Obviously to lie to the lender over what the loan is for is not a good idea / is illegal and could get you into big trouble, but being an accountancy firm you will know this (I take it from your username you are accountants).
No doubt you will have considered the other implications over making a loan to a Director?
The only way to make sure you value the Company and more importantly the % of the shares that you wish to be transferred is to complete a Form CG34 and submit the full information and calculations on how you have valued these shares to HMRC for their agreement. If you don't your actions could come back and cost you for not getting it correct and agreed at a later date. If the Company suddenly takes off over the coming years HMRC could argue the values used now if not agreed where undervalued and various tax adjustments.
You do not know how to value the Company, as you yourself have highlighted.
As others have highlighted it is not as straight forward as just valuing the Company.
Where would you start valuing the full Company? There are various ways and normally a combination of a few is the best, but you will need to justify why you have used the basis you have.
Once you have a value for the whole Company you need to look at the % of the shares that are to be transferred/sold. It is not just taking the value of that % of the overall Company. It will need to be adjusted for various factors. How small the % being sold is, who the individual who is going to end up with the shares is and what does it do to there overall shareholding - does it now make them the majority shareholder? You will then have to justify with evidence how you have come to make these adjustments.
Various other points but these are just to give you the idea it is not as straight forward as you appear to think it is. You should seek professional advice and let them do the calculation and get the agreement with HMRC for you. The figures involved are not high so it should be straight forward for them to do and shouldn't cost you too much, that is unless there is a lot of relevant information you haven't posted on here.
This is not my advice on what to do but you could also just pick a figure out the air and go with that and hope for the best.
If your are they accountant, admit you don't know and advise your client to move to someone who does understand the rules. Whilst this comment may appear rude I don't mean it that way. If you don't know it saves you getting it wrong and any future potential claim against you.
Why would you consider doing anymore work for the client?
I would write off your time spent on preparing the accounts to date and put it down to experience.
From what you have said the client would not be happy if you try to adjust the accounts in anyway to show the true position and would no doubt not be willing to sign them off. So you wouldn't be able to file them as they have not been approved and very liking not get paid for the work.
Just be happy you have got rid of them and walk away.
I note there are some assumptions being made from other individuals and giving you advice/replies based on these assumptions.
I would ignore them all and as I suggested find yourself an accountant who will ask all the relevant questions and therefore be able to give you the best/correct advice based on having access to all the relevant information.
Without being rude you do appear to be confused over what is happening and your tax status.
If you are indeed working on a self employed basis then you are a business. So if you aren't already will need to be registered as self employed and will be required to complete a tax return. You will not be "employed by them", you are providing a service to "them" which your business is being paid for.
Speak to an accountant who will ensure everything is being dealt with properly. This will hopefully ensure your worries regarding the VAT is being dealt with properly and make sure you do not incur any unnecessary costs/fine going forward.
I note there are some assumptions being made from other individuals and giving you advice/replies based on these assumptions.
I would ignore them all and as I suggested find yourself an accountant who will ask all the relevant questions and therefore be able to give you the best/correct advice based on having access to all the relevant information.
Without being rude you do appear to be confused over what is happening and your tax status.
If you are indeed working on a self employed basis then you are a business. So if you aren't already will need to be registered as self employed and will be required to complete a tax return. You will not be "employed by them", you are providing a service to "them" which your business is being paid for.
Speak to an accountant who will ensure everything is being dealt with properly. This will hopefully ensure your worries regarding the VAT is being dealt with properly and make sure you do not incur any unnecessary costs/fine going forward.
Do you mean you have been charged VAT on the invoice for preparing your wages/payslip? If so this means the company/individual preparing your wages is VAT registered. If so, yes this is correct and no you are not being ripped off.
If you are being paid wages this indicates you are working through your own limited company rather than as a self employed individual. If you are not set up as a limited company then they are not wages, it is just income as a sole trader so it may in fact be that the VAT has been incorrectly deducted.
Yes you need to be VAT registered to be able to claim the VAT back. Depends on who your actual customers are it may be worthwhile and not detrimental to you to be registered for VAT.
Overall though I would advise getting an accountant so they can get a full understanding of what is actually happening so they can give you the proper advice. It is better getting it all sorted at the beginning as it can save you money.
Why do you think it has been incorrectly withheld? Do you/you're Company meet the requirements to be without the relevant countries rules relating to withholding tax? Since it's been deducted I assume not, there are various requirements for each country to be outside their rules in relation to withholding tax.
The income is taxable in the UK , you can offset the withheld tax under the appropriate tax agreements if appropriate.
If it is a substantial amount I would suggest appointing an account with knowledge of your circumstances.
My answers
Hi Leon
This will just look like the standard reply but you do need to speak to an accountant who can get your tax affairs in order. They will be able to get all the correct information from you and who knows get the tax you say you are due to pay reduced.
Just from a quick look at your question I come up with the following:
1. Did you receive notification before to advise you you needed to complete a tax return and just ignored it as you are in fulltime employment and though your tax was taken care off through PAYE?
- If you did then yes the late filing penalty will be correct.
- If you didn't receive the notification the accountant may be able to appeal the late filing penalties.
2. Who told you that you needed to complete a tax return because you had a company car? did you call HMRC or did you get advice from a 'man in the pub'?
- That's complete nonsense, if your work is operating the payroll properly the tax due for the company car will be getting deducted at source through your PAYE as HMRC will have provided them with an adjusted tax code to take the car into account.
- There must be some other reason why you are required to submit a return and speaking to an account will identify that as long as you provide them with all the relevant information. - Are you a Director of the company you work for? - Do you have any other untaxed earnings? are just a couple of questions you will need to answer.
- If you called HMRC and it was their representative who stated that then it just goes to show the (lack of) training / quality provided to their staff.
- If it was 'a man in the pub' then there is not much I can say if you believe them. As with the man in the pub scenario do not take any advice offered on here other than you need to speak to and pay an accountant, you then have come back against them if there advice costs you money. Going with any 'professional' advice offered here would be wrong as we do not know your full story, even if some individuals appear to have some tax experienced sounding online names and their names may appear in many posts offering advice / opinions in reality they could just the man in the pub as there is no guarantee who they are.
3. Did you complete your own tax return online? Or did you use an accountant?
- I am assuming you have completed it yourself and you may have just entered the details incorrectly hence the large increase in tax due. I have looked at HMRC's tax completion software and it isn't that user friendly so I guess it could easily just be this.
- However, the difference could be tax HMRC is saying is due for previous years, they may have received different information from your employers or they may believe they have another source of income you haven't declared (which could be the reason you are now required to complete a tax return). Again an accountant will be able to look into that for you, if not sort it out at least be able to explain to you were the liability is coming from.
- Having reread your question before posting my reply I see you say you filed your "late returns yesterday" and not just 'a return' which would easily explain why the amount is much higher. Again speaking to an accountant hopefully can help here. I recently had a client who had 5 years worth of returns to complete, after talking it through with them we could show they were never informed of returns being due and the late filing penalties and associated interest were written off by HMRC, so it shows that it is worthwhile speaking to an accountant.
4. Sorry to say that, no whilst the system is meant to make life easier HMRC has never managed to get it to that standard and I am sure they never will.
As my first paragraph highlights I do suggest you get yourself an accountant, they should ask you all the relevant details and hopefully save you money and keep you right going forward.
Goodluck
You need to speak to your accountant, no point asking this question here where no one has all the relevant information to give you the proper advice.
Pretty straight forward, so I think you are just looking at it in the wrong way.
For the Company:
1. The Company borrows the amount from a lender. The Company, not you has a debt to the lender and is responsible for making the repayments and is liable for any defaults, and shows the liability accordingly in their accounts.
2. The Company then provides you with a loan of the amount you need to buy the shares and show you as a debtor within their accounts, so effectively the two transactions cancel each other out (although you cannot set them off against each other, they both need to be shown in the accounts). The terms they charge you for interest and the length of loan period has nothing to do with the loan they have received from their lender. So the interest rates they charge you can just be enough to cover what they are paying to their lender.
For you personally:
1. You then have the funds to buy the shares directly from the outgoing Partner / shareholder.
The above is assuming the business is not going to act as a guarantor for you to get the money to buy the shares. If so all the transactions are out with the business, although a note will need to be entered into the accounts over their potential liability in case of you defaulting on the payments.
The above is also assuming you do plan to tell the lender what the loan is for. Basically a loan to provide a loan to a new Director. You may find most lenders may not be too happy about that and advise you to apply for a personal loan. If the lender does accept to provide the loan to the Company they may wish to put special conditions on the loan, so my point above that it is nothing to do with the lender may become incorrect. Obviously to lie to the lender over what the loan is for is not a good idea / is illegal and could get you into big trouble, but being an accountancy firm you will know this (I take it from your username you are accountants).
No doubt you will have considered the other implications over making a loan to a Director?
The only way to make sure you value the Company and more importantly the % of the shares that you wish to be transferred is to complete a Form CG34 and submit the full information and calculations on how you have valued these shares to HMRC for their agreement. If you don't your actions could come back and cost you for not getting it correct and agreed at a later date. If the Company suddenly takes off over the coming years HMRC could argue the values used now if not agreed where undervalued and various tax adjustments.
You do not know how to value the Company, as you yourself have highlighted.
As others have highlighted it is not as straight forward as just valuing the Company.
Where would you start valuing the full Company? There are various ways and normally a combination of a few is the best, but you will need to justify why you have used the basis you have.
Once you have a value for the whole Company you need to look at the % of the shares that are to be transferred/sold. It is not just taking the value of that % of the overall Company. It will need to be adjusted for various factors. How small the % being sold is, who the individual who is going to end up with the shares is and what does it do to there overall shareholding - does it now make them the majority shareholder? You will then have to justify with evidence how you have come to make these adjustments.
Various other points but these are just to give you the idea it is not as straight forward as you appear to think it is. You should seek professional advice and let them do the calculation and get the agreement with HMRC for you. The figures involved are not high so it should be straight forward for them to do and shouldn't cost you too much, that is unless there is a lot of relevant information you haven't posted on here.
This is not my advice on what to do but you could also just pick a figure out the air and go with that and hope for the best.
Try asking your accountant.
If your are they accountant, admit you don't know and advise your client to move to someone who does understand the rules. Whilst this comment may appear rude I don't mean it that way. If you don't know it saves you getting it wrong and any future potential claim against you.
You have stated you have already resigned.
Why would you consider doing anymore work for the client?
I would write off your time spent on preparing the accounts to date and put it down to experience.
From what you have said the client would not be happy if you try to adjust the accounts in anyway to show the true position and would no doubt not be willing to sign them off. So you wouldn't be able to file them as they have not been approved and very liking not get paid for the work.
Just be happy you have got rid of them and walk away.
I note there are some assumptions being made from other individuals and giving you advice/replies based on these assumptions.
I would ignore them all and as I suggested find yourself an accountant who will ask all the relevant questions and therefore be able to give you the best/correct advice based on having access to all the relevant information.
Without being rude you do appear to be confused over what is happening and your tax status.
If you are indeed working on a self employed basis then you are a business. So if you aren't already will need to be registered as self employed and will be required to complete a tax return. You will not be "employed by them", you are providing a service to "them" which your business is being paid for.
Speak to an accountant who will ensure everything is being dealt with properly. This will hopefully ensure your worries regarding the VAT is being dealt with properly and make sure you do not incur any unnecessary costs/fine going forward.
I note there are some assumptions being made from other individuals and giving you advice/replies based on these assumptions.
I would ignore them all and as I suggested find yourself an accountant who will ask all the relevant questions and therefore be able to give you the best/correct advice based on having access to all the relevant information.
Without being rude you do appear to be confused over what is happening and your tax status.
If you are indeed working on a self employed basis then you are a business. So if you aren't already will need to be registered as self employed and will be required to complete a tax return. You will not be "employed by them", you are providing a service to "them" which your business is being paid for.
Speak to an accountant who will ensure everything is being dealt with properly. This will hopefully ensure your worries regarding the VAT is being dealt with properly and make sure you do not incur any unnecessary costs/fine going forward.
I have to admit I don't really follow the post.
Do you mean you have been charged VAT on the invoice for preparing your wages/payslip? If so this means the company/individual preparing your wages is VAT registered. If so, yes this is correct and no you are not being ripped off.
If you are being paid wages this indicates you are working through your own limited company rather than as a self employed individual. If you are not set up as a limited company then they are not wages, it is just income as a sole trader so it may in fact be that the VAT has been incorrectly deducted.
Yes you need to be VAT registered to be able to claim the VAT back. Depends on who your actual customers are it may be worthwhile and not detrimental to you to be registered for VAT.
Overall though I would advise getting an accountant so they can get a full understanding of what is actually happening so they can give you the proper advice. It is better getting it all sorted at the beginning as it can save you money.
Your question doesn't really make sense.
Why do you think it has been incorrectly withheld? Do you/you're Company meet the requirements to be without the relevant countries rules relating to withholding tax? Since it's been deducted I assume not, there are various requirements for each country to be outside their rules in relation to withholding tax.
The income is taxable in the UK , you can offset the withheld tax under the appropriate tax agreements if appropriate.
If it is a substantial amount I would suggest appointing an account with knowledge of your circumstances.