Incorporated and unincorporated businesses have to submit tax computations to the Inland Revenue in support of their Accounts or Tax Returns. Profits shown in annual Accounts are adjusted for tax purposes to take account of disallowed expenditure or items of a private nature. Such items would include goods taken by the proprietor for own use or entertaining of customers.
Businesses are also required to submit Capital Allowances computations in support of their Accounts to claim any tax relief which may be available on capital assets such as motor vehicles or plant and equipment.
Again, the average taxpayer cannot be expected to have the tax knowledge to produce these computations and Hudson Lees have all the required expertise to deal with this aspect of clients’ tax affairs.
If you are in paid employment, either as an employee or as a director of a company, and your earnings exceed certain limits, your employer is required to tax your earnings at source under the PAYE system. Your employer will deduct Income Tax and National Insurance Contributions from your earnings and pay these over to the Inland Revenue at regular intervals, usually monthly or quarterly.
The amount of tax and NIC you pay will depend on the level of your earnings.
Each employer is required to operate a PAYE scheme for its employees. The Inland Revenue will issue a PAYE pack to the employer who becomes liable to the Inland Revenue for the Income Tax and NIC deducted from its employees.
As you might expect, the rules and regulations governing PAYE are extremely complicated. Each employer pack contains detailed tax and NIC tables as well as instructions which should be used to calculate the relevant deductions from pay.
(Please see under Other Services for Hudson Lees Payroll Bureau information.)
Self Assessment was introduced in 1996 and has been the first major change in the taxation system in this country for over 40 years.
Under Self Assessment taxpayers are required to assess themselves on an annual basis. This involves completing a Tax Return incorporating details of income from all sources and submitting this return to the Inland Revenue. If returns are submitted before the end of October in the relevant tax year, the Revenue will calculate the taxpayer's liability for you. Otherwise the taxpayer has to calculate his own liability and is expected to get it right!
A system of punitive interest and penalties has been introduced by the Inland Revenue to ensure that filing and tax payment deadlines are met.
The Self Assessment system claims to be a lot fairer to the taxpayer, in that it taxes income in the year in which it is earned. So if you have a good year you expect to pay more tax in that year rather than a year later.
However the Self Assessment system is flawed in that the average taxpayer not only finds the Tax Return very complicated and difficult to complete, but also has very little knowledge of the tax rules needed to enable him to compute his own tax liability. This, of course is where Hudson Lees come in!
Our State of the Art computer software enables us to complete Tax Returns accurately and efficiently, and provided we receive all the relevant information in good time, we can guarantee submission of Returns by the due dates and calculate clients' tax liabilities for them, instead of relying on the Inland Revenue to do it for you.
The Inland Revenue are trying to encourage us all to submit our Tax Returns on-line.
If you prefer not to submit your Tax Return on-line, you will need to complete a paper Return before 31 October. The deadline for on-line submission is extended by 3 months to 31 January.
Hudson Lees have all the facilities to submit Tax Returns on-line on your behalf.
Value Added Tax is a tax on most business transactions which take place in the United Kingdom. Business transactions which are liable to VAT are called taxable supplies. From the date on which you are first required to be registered you must charge VAT on all the taxable supplies you make, but you can also claim back VAT charged to you from your suppliers. VAT is currently charged at 20%. Some supplies are charged at zero rate and certain supplies are exempt from VAT altogether.
If you are in business and you make taxable supplies, then as soon as your taxable turnover exceeds £73,000 you become a taxable person and must register for VAT. The tax you charge on your sales is your Output Tax and the tax charged to you from your suppliers is your Input Tax. The difference between your Output Tax and your Input Tax has to be paid over to Customs & Excise at regular intervals, usually quarterly.
The rules and regulations governing VAT are extremely complicated. It should not be assumed that all VAT charged to you is recoverable. Certain items cannot be reclaimed and if you have any doubts please contact Hudson Lees for further information.
There are also many different types of VAT schemes available to traders which might be appropriate to your business, and could save you money.
If you need advice on any VAT related matters or assistance with registration please give us a call.
Hudson Lees are a Chartered Certified Accountancy practice providing a full accountancy service to Limited Companies, Limited Liability Partnerships, Sole Traders and unincorporated Partnerships.
Hudson Lees offers more than just an accountancy service. As a trusted advisor, we are able to help in areas such as business plans or new computer systems.
Give us a call on:
01423 740 900