Introduction

COLIN COATES & PARTNERS

TAX ADVISERS

Welcome to the website for Colin Coates and Partners, Tax Advisers

We are tax advisers based in Winscombe, North Somerset.

Our website gives details of the services we offer together with information about us and how to contact us.

The items on the site are listed chronologically. If you require specific information about us or what we do please use the Category menu on the left hand side, or the search facility.

Prospective Clients – please feel free to call us to arrange an introductory no obligation discussion or meeting at no charge.

Contact Us

Colin Coates & Partners Webs House Woodborough Road Winscombe BS25 1AD United Kingdom

Tel: +44(0) 1934 844133 Fax: +44(0) 1934 844797 Email: info@ccptax.com

The Directors are Colin Coates, Michael Ashley and Robin Simmonds.

Colin Coates & Partners is the trading name of CCPtax Limited Registered in England No 4450558.

Client Agreement April 2012

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The following changes were made to our existing agreement:

Client Agreement  – Addendum April 2012

 

The following changes were made to our client agreement in April 2012:-

Clause 8 – Ethical and Practice Guidelines – We now follow the ethics and guidelines of the Federation of Tax Advisers (in place of theInstitute ofFinancial Planning) and this was added to Clause 8 – “We also observe the Guidelines of The Federation of Tax Advisers.”
 
Clause 12 - Basis Of Fees – The following addition was made “No professional clearances will be given unless all outstanding fees have been paid.”

Clause 17 – Client Records – We added – “We have entered into an agreement with Helen Bardle Chartered Accountant in respect of the provision and enhancement of the accountancy services we provide, information will be shared with her as appropriate”.
 

Clause 21 - Quality of Service – The arbiter in the case of complaint against us was changed from Chartered Institute of Taxation to Federation of Tax Advisers (as we are all members of the latter so the change was made for clarity) – “We undertake to look into any complaint carefully and promptly and to discuss the matter with you.  If we do not answer your complaint to your satisfaction you will be entitled to independent arbitration by our professional body The Federation of Tax Advisers by completion of a complaint notification document, available on their website www.ifa.org.uk”

Generally – Our current Schedule of Charges has been updated and clarified as follows:-
 
Schedule of Charges                                                   March 2012
 
         

Charge Out Rate Per Hour	Administration	Managerial	Partner
Financial   Planning, Tax Planning & Consultancy	60	135	250
Tax   Compliance & Accountancy	35	85	150

On request and where possible we will provide our best estimate of charges in advance.  If this level is exceeded we will advise you before any further work is carried out.
The aggregate of all charges for time spent working on a matter establishes our basic fee, which may be increased by an overall uplift or the application of higher hourly rates if the work is particularly complex or urgent.
VAT will be added as appropriate.

We do not charge for expenses incurred in travelling to and from appointments (unless abroad or where a journey is made for a single appointment).  Time will be charged at Administration rates.

You can pay by regular instalment if you wish.  A standing order form is available for your use if required.

If information is not provided within the time parameters laid down by this agreement we reserve the right to increase our charges. Our tax compliance deadlines are normally 3 months before the due date for submission to HMRC (or other authority). If you are unclear of any deadline please contact us immediately.

Main Dates to submit information to CCP:

Personal Tax Returns – information expected by 31 October following the year to which the Self Assessment relates (for submission by 31 January);

Corporation Tax Returns and Companies House – 6 months after the company year end (for submission and tax payment within 9 months);

Monthly or Quarterly VAT Returns and Monthly Payroll – by 15^th of the appropriate month
Where information is received after these dates we will still endeavour to ensure timely submission but we a) reserve the right to increase our charges and, b) cannot guarantee submission.  Clients should also be aware that if documents are not submitted to the authorities on time then cover under our Tax Compliance Service (see item 3 in our client agreement) cannot be guaranteed.”

UNDISCLOSED TUITION FEES – HMRC INVESTIGATIONS INITIATIVE

UNDISCLOSED TUITION FEES – HMRC INVESTIGATIONS INITIATIVE

HMRC launch tax catch-up plan

HMRC have launched yet another initiative aimed at encouraging taxpayers to come forward with previously unrevealed earnings.

The tax catch-up plan is aimed at educators of all kinds – those who profit from tuition and coaching as a main or secondary job – but who have not put up their hand to fully disclosed their income to the Revenue.

It follows similar schemes of late, one of which targeted doctors and dentists and another that focused on plumbers and associated trades. Traders who are unlawfully not registered for VAT are currently the subject of a disclosure campaign by the taxman.

The latest opportunity is available to all those who teach, regardless of qualifications, meaning it covers not only tuition of traditional academic subjects, but also fitness and dance instruction, musical tuition, and other such services.

The plan has two stages:
1. From 10 October 2011 to 6 January 2012, individuals must register with HMRC to notify they department that they plan to make a voluntary tax disclosure.
2. By 31 March 2012, those who have registered must tell the Revenue what they owe and pay the tax, interest and penalties.

Taxpayers who come forward by the deadlines are likely to receive the best possible terms for paying the sums owed. Penalties are unlikely to be more than 20% of the unpaid tax.

Those who are discovered by the Revenue at a later date will find they have to pay much higher fines and may face criminal prosecution.

If you are in receipt of income that has not been declared, whether tuition fees or otherwise, you should contact us immediately.

VAT – Cash Accounting

Cash accounting enables a business to account for and pay VAT on the basis of cash received and paid rather than on the basis of invoices issued and received.

Advantages and Disadvantages of the Scheme

The advantages of the scheme are as follows.

• Output tax is not due until the business receives payment of its sales invoices. If customers pay promptly, the advantage will be limited. Even so, the gain may be material.
• There is automatic bad debt relief because, if no payment is received, no output tax is due.
• Most businesses find it easier to think in terms of cash flows in and out of their business than invoiced amounts.

The potential disadvantages are as follows.

• There is no input tax recovery until payment of suppliers’ invoices.
• The scheme will not be beneficial for net repayment businesses – for example, a business just starting up, which has substantial initial expenditure on equipment, stocks etc so that input tax exceeds the output tax, should delay starting to use the scheme. That way, it recovers the initial input tax on the basis of input invoices as opposed to payments.

Key Rules

From 1 April 2007 a business can join the scheme if it has reasonable grounds for believing that taxable turnover in the next 12 months will not exceed £1,350,000 provided that it:

• is up to date with VAT returns
• has paid over all VAT due or agreed a basis for settling any outstanding amount in instalments
• has not in the previous year been convicted of any VAT offences.

All standard and zero-rated supplies count towards the £1,350,000 except anticipated sales of capital assets previously used within the business. Exempt supplies are excluded.

When a business joins the scheme, it must be careful not to account again for VAT on any amounts already dealt with previously on the basis of invoices issued and received.

A business can start using the scheme without informing HMRC. It does not cover:

• goods bought or sold under lease or hire-purchase agreements
• goods bought or sold under credit sale or conditional sale agreements
• supplies invoiced where full payment is not due within six months
• supplies invoiced in advance of delivering the goods or performing the services.

Once annual turnover reaches £1,600,000 the business must leave the scheme immediately.

On leaving the scheme, VAT is due on all supplies on which it has not already been accounted for. However outstanding VAT can be accounted for on a cash basis for a further six months after leaving the scheme.

Accounting for VAT

Output tax must be accounted for when payment is received.

Cheque. Treated as received on the date the cheque is received or if later the date on the cheque. If the cheque is not honoured an adjustment can be made.

Credit/debit card. Treated as received/paid on the date of the sales voucher.

Standing order/direct debits. Treated as received/paid on the day the bank account is credited.

Part payments. VAT must be accounted for on all receipts/payments even where they are part payments. Part payments are allocated to invoices in date order (earliest first) and any part payment of an invoice allocated to VAT by making a fair and reasonable apportionment.

Records

Under the cash accounting scheme the prime record will be a cash book summarising all payments made and received with a separate column for VAT. The payments need to be clearly cross-referenced to the appropriate purchase/sales invoice.

In addition the normal requirements regarding copies of VAT invoices and evidence of input tax apply.

How we can help

We can advise on whether the cash accounting scheme would be suitable for your business.

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For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.

VAT Annual Accounting Scheme

HMRC have introduced a number of VAT schemes over the years designed to reduce the administrative burden on small businesses. One such scheme is the annual accounting scheme.

What is the Annual Accounting Scheme?

The annual accounting scheme helps small businesses by allowing them to submit only one VAT return annually rather than the normal four. During the year they pay instalments based on an estimated liability for the year with a balancing payment due with the return. The scheme is intended to help with budgeting and cash flow and reduce paperwork.

Joining the Scheme

A business can apply to join the scheme if it expects taxable supplies in the next 12 months will not exceed £1,350,000.

Businesses must be up to date with their VAT returns and cannot register as a group of companies.

Application to join the scheme must be made on form 600(AA) which can be found at the back of VAT Notice 732. HMRC will advise the business in writing if the application is accepted.

Paying the VAT

Businesses that have been registered for 12 months or more will pay their VAT in nine monthly instalments of 10% of the previous year’s liability. The instalments are payable at the end of months 4-12 of the current annual accounting period.

Alternatively such businesses may choose to pay their VAT in three quarterly instalments of 25% of the previous year’s liability falling due at the end of months 4, 7 and 10.

The balance of VAT for the year is then due together with the VAT return two months after the end of the annual accounting period.

Businesses that have not been registered for at least 12 months may still join the scheme but each instalment – whether monthly or quarterly – is based on an estimate of the VAT liability.

In all cases HMRC will advise the amount of the instalments to be paid.

The annual accounting period will usually begin at the start of the quarter in which the application is made. If the application is made late in a quarter it may begin at the start of the next quarter.

All businesses are able to apply to HMRC to change the level of the instalments if business has increased or decreased significantly.

Leaving the Scheme

Any business can leave the scheme voluntarily at any time by writing to HMRC.

A business can no longer be in the scheme once its annual taxable turnover exceeds £1,600,000.

Advantages of the Scheme

• A reduction in the number of VAT returns needed each year from four to one.
• Because the liability to be paid each month is known and certain, cash flow can be managed more easily.
• There is an extra month to complete the VAT return and pay any outstanding tax.
• It should help to simplify calculations where the business uses a retail scheme or is partially exempt.

Potential Disadvantages

Interim payments may be higher than needed because they are based on the previous year. However, they can be adjusted if the difference is significant.

A business is obliged to notify HMRC if the VAT liability is likely to be significantly higher or lower than in the previous year.

How we can help

We can help you to plan your VAT administration and consider with you whether the annual accounting scheme would be beneficial for your business.

Top of page

For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.

VAT

VAT registered businesses act as unpaid tax collectors and are required to account both promptly and accurately for all the tax revenue collected by them.

The VAT system is policed by HMRC with heavy penalties for breaches of the legislation. Ignorance is not an acceptable excuse for not complying with the rules.

We highlight below some of the areas that you need to consider.

It is however important for you to seek specific professional advice appropriate to your circumstances.

What is VAT?

Scope

A transaction is within the scope of VAT if:

• there is a supply of goods or services
• made in the UK
• by a taxable person
• in the course or furtherance of business.

Inputs and outputs

Businesses charge VAT on their sales. This is known as output VAT and the sales are referred to as outputs. Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.

The output VAT is being collected from the customer by the business on behalf of HMRC and must be regularly paid over to them.

However the input VAT suffered on the goods and services purchased can be deducted from the amount of output tax owed. Please note that certain categories of input tax can never be reclaimed, such as that in respect of third party UK business entertainment and for most business cars.

Points to consider

Supplies

Taxable supplies are mainly either standard rated (20%) or zero rated (0%). The standard rate was 17.5% prior to 4 January 2011.

There is in addition a reduced rate of 5% which applies to a small number of certain specific taxable supplies.

There are certain supplies that are not taxable and these are known as exempt supplies.

There is an important distinction between exempt and zero rated supplies.

• If your business is making only exempt supplies you cannot register for VAT and therefore cannot recover any input tax.
• If your business is making zero rated supplies you should register for VAT as your supplies are taxable (but at 0%) and recovery of input tax is allowed.

Registration – is it necessary?

You are required to register for VAT if the value of your taxable supplies exceeds a set annual figure (£73,000 from 1 April 2011).

If you are making taxable supplies below the limit you can apply for voluntary registration. This would allow you to reclaim input VAT, which could result in a repayment of VAT if your business was principally making zero rated supplies.

If you have not yet started to make taxable supplies but intend to do so, you can apply for registration. In this way input tax on start up expenses can be recovered.

Taxable person

A taxable person is anyone who makes or intends to make taxable supplies and is required to be registered. For the purpose of VAT registration a person includes:

• individuals
• partnerships
• companies, clubs and associations
• charities.

If any individual carries on two or more businesses all the supplies made in those businesses will be added together in determining whether or not the individual is required to register for VAT.

Administration

Once registered you must make a quarterly return to HMRC showing amounts of output tax to be accounted for and of deductible input tax together with other statistical information. For businesses whose turnover is more than £100,000 (excluding VAT) returns must be filed online. In addition, smaller businesses which registered for VAT on or after 1 April 2010 have to file online, regardless of turnover. By April 2012 all other businesses will have to file online.

Returns must be completed within one month of the end of the period it covers, although generally an extra seven calendar days are allowed for online forms.

Electronic payment is also compulsory for those businesses filing online.

Businesses who make zero rated supplies and who receive repayments of VAT may find it beneficial to submit monthly returns.

Businesses with expected annual taxable supplies not exceeding £1,350,000 may apply to join the annual accounting scheme whereby they will make monthly or quarterly payments of VAT but will only have to complete one VAT return at the end of the year.

Record keeping

It is important that a VAT registered business maintains complete and up to date records. This includes details of all supplies, purchases and expenses.

In addition a VAT account should be maintained. This is a summary of output tax payable and input tax recoverable by the business. These records should be kept for six years.

Inspection of records

The maintenance of records and calculation of the liability is the responsibility of the registered person but HMRC will need to be able to check that the correct amount of VAT is being paid over. From time to time therefore a VAT officer may come and inspect the business records. This is known as a control visit.

The VAT officer will want to ensure that VAT is applied correctly and that the returns and other VAT records are properly written up.

However, you should not assume that in the absence of any errors being discovered, your business has been given a clean bill of health.

Offences and penalties

HMRC have wide powers to penalise businesses who ignore or incorrectly apply the VAT regulations. Penalties can be levied in respect of the following:

• late returns/payments
• late registration
• errors in returns.

Cash accounting scheme

If your annual turnover does not exceed £1,350,000 you can account for VAT on the basis of the cash you pay and receive rather than on the basis of invoice dates.

Retail schemes

There are special schemes for retailers as it is impractical for most retailers to maintain all the records required of a registered trader.

Flat Rate scheme

This is a scheme allowing smaller businesses to pay VAT as a percentage of their total business income. Therefore no specific claims to recover input tax need to be made. The aim of the scheme is to simplify the way small businesses account for VAT, but for some businesses it can also result in a reduction in the amount of VAT that is payable.

How we can help

Ensuring that you comply with all the VAT regulations is essential. We can assist you in a number of ways including the following:

• tailoring your accounting systems to bring together the VAT information accurately and quickly
• ensuring that your business is VAT efficient and that adequate finance is available to meet your VAT liability on time
• providing assistance with the completion of VAT returns
• negotiating with HMRC if disagreements arise and in reaching settlement
• advising as to whether any of the available schemes may be appropriate for you.

If you would like to discuss any of the points mentioned above please contact us.

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For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.