Saturday, 15 November 2014

New IR35 guidance

This new guidance from HMRC explains when IR35 applies to a director who provides their services through a company.

IR35 is the name given to the anti-avoidance tax rules which can apply where someone provides their services to another business through a limited company or partnership. However, it only applies where the person providing the services would be classed as an employee of their customer if they worked for them direct, i.e. not through a company or partnership.

There are a number of changes to HMRC's approach announced in July 2014, but perhaps most importantly for directors, the guidance makes it clear that IR35 will inevitably apply where someone uses their own company to provide directorial services to other companies.

For example, Jim is on the board of several companies, but rather than receiving a salary he invoices each of them for his work as a director through his own company, Jim Ltd. In that way he hopes to avoid PAYE tax and national insurance from being deducted from his pay. However IR35 will apply.

In my example because IR35 applies Jim Ltd will have to account for PAYE tax and national insurance on all the income it receives from the companies Jim works for. Depending on how much Bill Ltd is paid by each company for Jim's services as a director, it might still be tax and national insurance efficient for it to continue with the arrangement and accept the IR35 charges.

If you use your own company to provide directorial services to others, calculate how much tax and national insurance you will have to pay as a result of IR35 and compare this to the amount payable if each company of which you are a director deducted PAYE tax and national insurance at source.

Link to HMRC latest IR35 guidance  here

Free Companies House digital data

In 2013 customers searching the Companies House (CH) website spent £8.7million accessing information about registered companies. However this revenue stream will soon cease as CH has confirmed it's going to make all of it's digital data available free of charge from the second quarter of 2015. It claims this move will:

1. Open up opportunities for entrepreneurs.

2. Make it far easier for businesses and the public to scrutinise the activities and ownership of companies and connected individuals. While this will make your due diligence checks on clients, suppliers, etc. much easier, do be aware that all of your company's information will be openly available to anyone.

It will therefore be prudent to have someone completely review your company secretarial files to ensure that all is in order.

Friday, 14 November 2014

Important changes regarding VAT, Europe and eSales

New VAT rules are coming into force on 1 January 2015.

The changes only affect if the following categories are relevant:

  • It is a BTE sales (Broadcasting, Telecommunications or E-Service) 
  • It is a sale to a consumer (non-business, individual)
  • It is an EU sale.

If all three are met then VAT is charged at the country’s rate where the consumer is based.  It is also payable to that country’s VAT authority.  This can be done under MOSS scheme – ie you pay to UK & they pass on.

Points to bear in mind:

An E-Service involves minimal human intervention and the service would not exist if there were no internet.  E.g. music downloads, apps, software, website supply/hosting, supply of images, e-books.  These rules do not apply to goods.

The UK has a high VAT threshold compared to other EU countries (e.g. Ireland = €35,000).  A business may not be UK VAT registered but still be caught by these rules, if threshold in EU country exceeded.

 Other EU countries require you to keep records for longer (e.g. Poland = 10 years).

 MOSS returns are due on calendar quarters (31 Mar, 30 Jun, 30 Sept & 31 Dec).

Clearly these are very important changes and therefore an urgent review of all accounting systems is should be completed in order to ensure that you business is ready and thereby alleviating the risk of potential penalties being charged in the future.

The above is only a brief review of the new rules and therefore professional advice should of course always be taken.

Sunday, 9 November 2014

In Flanders Fields

In Flanders Fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields 
Take up or quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields
Lieutenant Colonel John McCrae MD
Canadian Army (1872-1918)