Member Since: 18th Jun 2009
14th Jun 2019
One thing they could do is phase the loss of the personal allowance between £100K earnings and £150K instead of the current £125K. Between £100K and £125K the effective tax rate is 60% and with payments on account they double the cash outlay the first year anyone hits this mark. This makes the payment 120% of the earnings and is grossly unfair. This acts as a barrier to growth in tax receipts. Clients with cash balances in their limited companies would convert these into dividends if the payment wasn't so penal. By phasing the withdrawal of the personal allowance over a larger range, this barrier would be removed. I have no doubt that the overall tax take would increase.
21st May 2019
Good article. There have been several threads on Accounting Web about Companies House data. I know from using an identity checking company that they widen the search to include mis-spellings and slight changes that can hide the full extent of someone's activities at Companies House.
13th Apr 2019
Charlie - a very good summary - similar to my own experience. I decided to make my accountancy practice the guinea pig for MTD. I got no confirmation of the ASA being set up or the linking of the clients being successful. As you say you can't see a list of clients once this is done. I phoned HMRC and was told only that the facility was not yet available. This is gross incompetence.
If you login to a client through the old ASA, there is a warning that VAT Returns for those registered for MTD cannot be submitted through that portal. When submitting my practice 31st March VAT Return, there was no confirmation received, so I logged into my practice Government Gateway account and the figures were there, but not on the front page where the Corporation Tax and PAYE where showing. I had to click on another link. Lousy design.
Back in the ASA account there was nothing to indicate anything had been done. Because I have access to my Government Gateway account, I can check what has been done for my practice, but I won't be able to check my clients. Disaster awaits.
When signing up the practice for MTD, I had to enter the Box 5 figure, the VAT number, the VAT Post code, the quarter end of the last VAT Return. I now have to motivate every clients to get on and do this via a Government Gateway account that most have never logged into. Apathy rules and it will take considerable effort to get this done.
To say I am unimpressed is putting it mildly.
7th Mar 2019
I do live in Kent, so I will sign off for you!!
7th Mar 2019
I called HMRC yesterday because when I signed up for the new Agent Account it said link your old Agent Account, so all of your clients transfer over. Result, none visible and I was told this feature is not yet available. I decided that my practice would be the first to sign up to the new MTD for VAT regime. After completing the process, was told I would hear from HMRC within 72 hours. Still waiting about 10 days later, but I did get an email on 25th February confirming my direct debit has been transferred, as the only clue something had changed. A shambles and I am being polite through gritted teeth.
6th Mar 2019
There is no such thing as a watertight self employed contract. These arrangements are often legally challenged and there is much case law on the subject. Customers know this, hence they want the protection of engaging through a limited company. I have argued elsewhere that there should be a new type of tax/NI structure called 'worker' which follows the definition being established by case law in the gig economy. That would avoid disputes over self employed or IR35 status. These people would neither be an employee nor self employed and wouldn't have to have limited companies. Other countries have this status, so why can't we?
6th Mar 2019
The replies to you above mostly cover the reasons and it is not a simple as tax/NI avoidance. Most employers engaging contractors have a specific need for a project duration. They don't want permanent staff after the project is complete and won't offer self employed work for this very reason, because employment status can then be challenged. By insisting on a personal service company the customer avoids the risk of a self employed person being re-classified as employed at some future date with the associated risk from back taxes and NI. So this is about the risk the customer is avoiding and not down to the contractor trying to save tax/NI themselves.
6th Mar 2019
This isn't quite right and over simplifies the issue. Contractors day rates are higher than employees, because they lose employment rights. They don't get holiday and sick pay or employment protection. A contractor will pay more corporation tax and dividend tax than a lower paid employee that then partially compensates for the loss of employers NI. Furthermore, the combination of taxes paid by a contractor, operating through a personal service company, is similar to the tax and NI paid by the self employed, with whom they should strictly be compared.
Contractors are engaged mostly by one client at a time because their work is project related and they are brought in to cover the increase in workload during the project. Once the project is complete, they are no longer needed. The fact they usually have one customer at a time, doesn't make them employees, as HMRC have found out many times when trying to enforce IR35 at employment tribunals.
6th Mar 2019
Other countries have a status similar to "worker" that seems to be creeping into case law from the gig economy. This is a half way house between personal service companies and self employment. Instead of applying an ever increasing pile of sticking plasters to a failed piece of legislation, why not just recognise that there is a gig economy, define its status and tax/Ni rates and forget about this horrendous change that has already driven contractors out of the public sector. Where contractors have remained, scarcer resources have been able to increase day rates to compensate. In this case, although the tax take has increased, public sector costs have gone up, so no one wins. When the private sector is included, this is inevitably what will happen, because the contractors won't now have the choice of changing from the public to the private sector, so again no one wins. So why bother. Best to create the new 'worker' status and avoid all of the uncertainty and extra administration costs.
26th Feb 2019
All of my clients, bar a few small property maintenance companies and the odd sole trader, use cloud software. They are all limited companies and most are registered for VAT. The transition to MTD for VAT will be relatively straightforward, because Liberty Accounts have done the hard yards with their software. In fact the hard bit of MTD for VAT will be setting it up with HMRC.
There are other benefits of being in the cloud that simplify bookkeeping, reduce costs and improve management information - bank feeds, integrated payroll and in-year accountant verification of transactions. Most of our clients use the system for sales invoicing, which is something they often screw up on spreadsheets. The shared workload with the client is the biggest benefit. It avoids duplication of effort and improves the results for clients as well as reducing the mind-numbing work for accountants.
When we do the year end compliance work, it is a simple exercise to finalise the accounts in Liberty Accounts and transfer the Trial Balance to Taxfiler. Job done and none of this nonsense of year end entries failing to be updated on Excel. I have lost count of the number of times a new client’s bookkeeping doesn’t match the statutory accounts.
Using online systems will become the norm. The technology is there now, is tried and tested across a number of vendors and the capability far exceeds the complexity inherent in using spreadsheets.
The next phase will see further integration with bank data, integration with supplier invoicing and uploading of customer invoices. Just check out what delivery companies have done with technology to get an idea of where accounting is headed.