PART 1 1. Once sales reach the VAT registration limit of 68000 it must register for VAT. Once month = 7500 @ 9 months ( 7500 x 9 = 67500) Once 10 months have passed VAT registration is required ( 7500 x 10 = 75000) i.e. by 30 April 2010 HMRC must be informed within 30 days i.e. 30 May 2010 and VAT registration will begin one day later on 1 June 2010. Only taxable supplies count towards the VAT registration threshold; Therefore exempt supplies are excluded. This is the historical turnover test. 2. VAT registration number of company (supplies) Address of supplier Rate(s) of VAT used Tax point Invoice date Breakdown of invoice, i.e. net,vat,gross Item by item breakdown of net, VAT and gross amounts Quantity of items supplied VAT rate code 3. (1) By 31-01-09-1 st POA ( 18000/2) = 9000 Add: balance for 07/08 and CGT for 07/08 ( 4000) By 31-07-09 2 nd POA ( 18000/2) = 9000
By 31-01-10 balance for 08/09 and 1 st POA for 09/10 and CGT liability ( 19000-18000 = 1000 + 10000 = 11000) POA for 09/10 = ( 19000/2 = 9500) (2) Additional liability due as soon as possible. Interest will be payable from the due date of 31 January 2010 to the day before payment is actually made. 4. The partnership tax return for 2008/09 should have been submitted at the latest by 31 January 2010, or within 3 months of when the return, or notice to complete one, was received. If later the initial penalty is 100. The responsibility of filing the tax return was with the nominated partner, so that is who the penalty will be raised for. 5. (1) Ellie should have informed HMRC by 5 October 2009. i.e. 6 months after the tax year in question. (2) 08-09 Return was filed late, so they can quarter following the actual filing date. i.e. 12 months after the g/e 31-07-10 Therefore until 31-07-11 09-10 Return was filed within deadline so HMRC can enquire within 12 months of receiving the return. i.e. by 14 July 2011. 6. (1) Within 12 months of the chargeable lifetime transfer. i.e. by 4 May 2010 (2) For chargeable lifetime transfers made between 6 April and 30 September, the payment date for IHT is 30 April in the following year. i.e. by 30 April 2010. 7. (1) Form IHT 20S must be filed within 12 months of Josh s death. i.e. by 10 July 2010 (2) The inheritance tax must be paid within 6 months of the end of the month Josh died. i.e. by 31 January 2010.
8. (1) If they are a member of a DPB (Designated Professional Body) or authorised by the FSA ( Financial Services Authority). (2) Regulated activities: Advising on pensions Advising on pension schemes Advising on shares/stockmarket 9. Abuse of position using profession position whereby others trust you to cause loss to others Committing a fraudulent act, including conspiracy or conspiracy to defraud Cheating the public revenue e.g. submitting false accounts 10. Regulations are rules which must be followed. They are guidelines, law Directions offer direction but are not legally binding and do not have to be followed Decisions is final, it cannot be compromised. 11. Golden rule The interpretation of the statute must make sense. This follows on from the literal rule although the literal meaning must be taken, the interpretation cannot be absurd. Literal Rule words are taken to have their literal meaning, i.e. it cannot be taken to mean something that isn t implicitly implied. 12. Pre budget report in November/December The Finance Act passes through different houses of Parliament and goes through various stages in each: - 1 st Reading (no debate) - 2 nd Reading - Committee stage - Report stage - Third Reading - Finally the Finance Act receives royal ascent and becomes law Budget speech in March/April
PART 2 Mr Woods Address Mr Adams Address Date Dear Mr Adams, Thank you for your letter dated ( ). Please find below my comments relating to your Corporation Tax queries. (1) Power policies Ltd must notify HMRC to its liability to Corporation Tax within 12 months of the end of the first accounting period, i.e. by 31 December 2012. The new failure to notify chargeability penalties covered by Finance Act 2009 apply if HMRC are not notified of this trading. The penalties are behaviour related and based on potential lost revenue. The maximum penalties are: - 100% - for the deliberate action and concealing this - 70% - for deliberate but not concealed action - 30% - for any other reason The penalties can be mitigated for disclosure, with greater reduction for unprompted disclosure. The above penalties can be halved for prompted disclosure and reduced to 30% (for deliberate and concealed) or 20% (deliberate and not concealed) for unprompted disclosure. For carelessness the mitigation depends also on whether disclosure is made within 12 months, if so, and unprompted, the penalty could be reduced to nil. Potential lost revenue is the potential tax which could have been lost as a result of failing to notify chargeability to Corporation Tax. (2) Assuming Power Policies Ltd is a small company, the corporation tax liability will be due in full 9 months and 1 day after the end of the accounting period, i.e. by 1 October 2012. If the liability is paid late, there will be a penalty of 5% of the tax due, and another 5% will be due at 3 months and again at 9months. (A maximum penalty of 15% of the tax due).
(3) Corporation Tax Returns need to be filed within 12 months of the end of the accounting period. Therefore, the due date for Power Policies Ltd is 31 December 2012 (4) If a Corporation Tax Return is filed on time, HMRC may open an enquiry within 12 months of the actual filing date. If it is filed late, HMRC may open an enquiry within 12 months of the relevant quarter following the actual filing date. The relevant quarters are 31 January, 20 April, 31 July, 31 October. (5) Where a Corporation Tax Return is filed late, the following penalties apply: - Immediate 100 penalty - After 3 months, a 10 penalty per day for up to 90 days - If the return is more than 6 months, but less than 12 months later, the penalty is 5% of the tax due - If the return is more than 12 months late, the penalty is based on the behaviour of the taxpayer. ~ 100% x tax due if deliberate and concealed ~ 70% x tax due if deliberate but not concealed ~ 5% x tax due for any other reason (in addition to 5% at 6 months date) (6) If the company has a reasonable excuse for not filing the tax return on time, penalties may not be charged if there is a reasonable excuse. The following do NOT constitute as reasonable excuses: - Shortage of funds or inability to pay - Claiming that somebody else was relied upon to submit the form I hope the above is helpful. If you require any further assistance, please do not hesitate to contact me. Yours Sincerely, Mr Woods
NOTES (1) When an employee leaves a firm P45 must be provided to them It is a 3 part form, Part1 is submitted to HMRC, Part 1A is for the employees retention to assist with the completion of his self assessment tax return and Parts 2 and 3 are given to the new employer. It contains the following details: - Employee s name and address - Employee s date of birth - Employee s National Insurance number - Employee s tax code - Leaving date - Employer details (name and address) The purpose of a P45 is so that the next employer has details of the employee s tax code (and earnings to date), so that they can continue to operate PAYE and deduct the correct amount of tax. (2) When a new employee is recruited, they must provide a P45 from their previous employer. If they do not have one, or haven t had another job in the current tax year, they must complete a P46. The P46 needs to be completed with basic details (e.g. name, address, date of birth, NI number) and the employee must tick the relevant box to show whether they have had another job in the tax year or whether they have another job. This helps determine their tax code. Once completed, the relevant part of form P45 or the P46 must be submitted to HMRC. Payroll can be performed for the employee as for the other employees on P11 deduction sheets. (3) A tax code shoes the amount of tax free pay an employee can earn in a tax year, i.e. how much he can earn before he becomes liable for tax. For 2009/10 the normal code is 647L, which indicates 6475 of tax free pay. The code works on a cumulative basis. Once the tax free pay is exceeded, tax will be payable at the appropriate basic or higher rate.
MEMO To: Partner, Jess + co From: Tax Consultant, Jess + co Date: xx/xx/xx Subject: Accepting new clients Please find below the results of my research into the procedures which should be taken before new clients are accepted: (1) Anti-money laundering Guidance To comply with anti-money laundering guidance, there are certain procedure which should be carried out. Firstly, forms of identification are required. A photographic form of ID such as passport or driving licence is required. In addition, a secondary form of ID to prove where the individual can be found (i.e. their address) is also required. Such items include a utility bill or bank statement. The date of birth of the individual should also be noted. The identification should ideally be obtained when a new client is met, but if this is not possible, it should be obtained before any work is carried out for the client. Any evidence as explained above which is obtained for anti-money laundering purposes should be kept for a minimum of 5 years after the relationship with the client has ceased. If there are any immediate concerns they should be alerted to the MLRO (Money Laundering Reporting Officer) or direct to the SOCA (Serious Organised Crime Agency). (2) Beneficial Owner A beneficial owner is somebody who receives the benefits from a trust. The beneficial owner of a trust would be its trustees. (3) Engagement letters An engagement letter is extremely important; it is the contract between a member and his client. It sets out the terms and conditions of the engagement as understood by the member. The client is requested to sign a copy and return to the member as proof of agreement to the terms. It avoids misunderstanding. An engagement letter should be sent to a client before any work is undertaken, however, even if an engagement letter is not in place, a contract does still exist. Anyone providing good and/or services is bound by law by The Goods and Services Act (1982).
The main information which should be included in an engagement letter is: Details of who exactly the engagement is between The length/duration of the engagement The basis for charging fees, e.g. fixed fee basis, time and expenses, contingency/success fees Complaints procedure the name of a person who should be contacted in the event of a complaint. It should also be noted that complaints can be made to the relevant professional body Acknowledgement and confirmation that the Data Protection Act 1998 is adhered to Space for the client to sign the letter. I think this covers the main areas to be considered. Tax consultant (1) Slow payers Down and Out Ltd should be contacted and asked firstly, whether or not they received the invoices from Smith + co. If not, they should be re-issued. Maybe they could be sent by recorded delivery so that Smith + co can be sure they have been delivered. If they have been received, Smith + co should try to establish why the bills haven t been paid, e.g. is there a dispute over the amount? Or maybe Down and Out Ltd having cash flow problems. If the reason is regarding cash flow or similar reason, an agreement should be reached with the client as to how the liability can be settled. E.g. Instalment option, or a proportion could be accepted for now in part-payment. If the liability still remains unpaid, Smith + co should consider charging a (fair) rate of interest. As a last resort, Smith Ltd could consider taking legal action through court. This should not be done however, if upon considering the consideration due it does not outweigh the risks. The risks include damaging the reputation of Smith + co or indeed the tax profession as a whole.
(2) File Note Smith + co have decided that the client relationship with Down and Out Ltd should be terminated. We cannot continue to act for the client due to the extent of their un-cooperative behaviour, as well as the fact that they have still not settled out invoices to them. We cannot risk out professional integrity. The next course of action regarding this dis-engagement is: 1. Inform Down and Out Ltd in writing that we are ceasing to act for them, outlining the situation as we see it. We must advise them that we will not continue to act on behalf of them in correspondence, or in any way with HMRC. We must advise them this may result in an investigation being started by HMRC. 2. We must inform HMRC in writing that we are no longer acting for Down and Out Ltd. Name Tax consultant Date
(3) a. Notes Any relevant documents produced for Down and Out Ltd must be provided to Plunket + co e.g Accounts, computations, copies of tax returns Any working papers used to produce those documents belong to the member do not need to be provided Any original documents belonging to the client must be sent on to Plunket + co. Copies must be made however and kept on file by Smith + co in order to maintain complete records The documents do not have to be provided if a line exists over them, and Plunket + co may be informed of this Any other information relating to the client as reasonably requested should also be supplied. The new adviser s should be advised if any professional reasons why they shouldn t accept Down and Out Ltd as a client. b. Any future correspondence received which has been addressed to the client should be forwarded onto the client or the new adviser.