We are focussed on ensuring that you take advantage of the small business schemes available to you. A brief summary is included below for your reference – contact us for further details.
Making VAT work for you
Your VAT status and current circumstances will be reviewed on sign up to ensure that the system is working for you. The current VAT registration threshold is £85,000.
We prepare and file your VAT Returns under the cash accounting scheme, meaning that you only pay the VAT on your sales when your customers have paid you, providing a cash flow benefit to your business. There is no separate VAT application process for this scheme.
Flat Rate Scheme
If your turnover is less than £150,000 per annum you could simplify your VAT status by calculating your payments as a percentage of your total VAT-inclusive turnover, rather than recording all Output and Input VAT. The scheme is simple and often results in a reduction in the amounts payable to HM Revenue & Customs.
There is a 1% reduction in your flat rate if you apply in your first year of VAT registration, and you can stay in the scheme until your total business income is more than £230,000.
Making the most of your tax allowances
Your tax status will be reviewed on sign up and we will make recommendations to ensure that your overall affairs are as tax efficient as possible. In addition to the commercial benefits of operating via a limited company, this option continues to be the most tax efficient choice for the majority of small businesses and we will discuss this option with you. Please also see our video Should I form a limited company?
We will cover key items such as pension contributions and use of home as office calculations, all within the guidelines set out by HM Revenue & Customs. We also ensure that the necessary paperwork is in place, and that the administration around these areas is handled on your behalf.
Our service includes a pre-year end call to discuss these areas and other tax planning matters.
Concerned about IR35?
Whilst the IR35 legislation is targeted at individuals who operate through a service company, the principles outlined in the summary below will be applied by HM Revenue & Customs in a similar way when assessing the status of an individual operating on a self employed basis.
Whether a worker is an employee or independent contractor depends on a range of factors. When the detailed facts have been established, the right approach is to stand back and look at the picture as a whole. It is necessary to determine whether the individual works under a contract of service (employee) or under a contract for services (independent contractor). For tax and NICs purposes, there is no statutory definition of a contract of service or of a contract for services. What the parties call their relationship, or what they consider it to be, is not conclusive. It is the reality of the relationship that matters. In order to determine the nature of a contract, it is necessary to apply common law principles. The courts have, over the years, laid down some factors and tests that are relevant. The actual application of IR35 will always come down to employment status factors that must be tested against case law going back to 1968 however.
If the answer is 'Yes' to all of the following questions, it will usually mean that you are not employed:
- Can you hire someone to do the work or engage helpers at your own expense?
- Do you risk your own money?
- Do you provide the main items of equipment needed to do your job, not just the small tools that many employees provide for themselves?
- Do you agree to do a job for a fixed price regardless of how long the job may take?
- Can you decide what work to do, how and when to do the work and where to provide the services?
- Do you regularly work for a number of different people?
- Do you have to correct unsatisfactory work in your own time and at your own expense?
This is an overview of the IR35 legislation only and it should be noted that HMRC are currently in the process of overhauling its operation of the regime for personal service companies. This includes the introduction of 12 business entity tests based on the above criteria. HMRC have confirmed that the establishment of specialist IR35 teams will mean an increase in tax investigations.
All MBT fixed fee accountancy and tax clients are covered by our Tax Fee Protection Insurance policy. Please contact us if you require further information, or if you would like to be referred to one of our specialist partners.
"But I already have an accountant..."
We make changing accountants hassle-free by looking after the entire process for you.
First we establish the most appropriate time for you to transfer then we communicate directly with your existing accountants - all in accordance with ACCA guidelines.
You can then focus on working with us to bring your affairs up-to-date.
Should I form a limited company?