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Personal UTR (Unique Taxpayer Reference) is a 10 digit code. It is completely unique to each and every UK taxpayer who is a natural person. Whether the taxpayer is sole trader or an individual earning any income or part of a partnership, a personal UTR number is needed to file a Self-Assessment tax return online or via post. HMRC uses it to identify you for everything relating to your taxes.

The constraints to file self-assessment tax return SA100 are:

• A person self-employed as a 'sole trader' and earning more than £1,000
• A partner in a business partnership
• A person may file a self-assessment return to claim some income tax reliefs
• A person may file a self-assessment return to prove he/she is self-employed, for example, to claim Tax-Free Childcare or Maternity Allowance
• A person whose, only income is from wages or pension but also has any other untaxed income, such as money from renting out a property, tips, and commission, income from savings, investments, and dividends, foreign income, etc.
• Most employees paying tax under the PAYE system are not required to file a tax return. However, some employees may have income that has not been taxed at source and needs to be declared to HMRC. Such a person shall do so by submitting a self-assessment tax return.

The following persons need to file self-assessment tax return SA100:

• A person self-employed as a 'sole trader' and earning more than £1,000
• A partner in a business partnership
• A person may file a self-assessment return to claim some income tax reliefs
• A person may file a self-assessment return to prove he/she is self-employed, for example to claim Tax-Free Childcare or Maternity Allowance
• A person who's only income is from wages or pension but also has any other untaxed income, such as money from renting out a property, tips and commission, income from savings, investments and dividends, foreign income etc.
• Most employees paying tax under the PAYE system are not required to file a tax return. However, some employees may have income that has not been taxed at source and needs to be declared to HMRC. Such a person shall do so by submitting a self-assessment tax return.

To know more about self-assessment tax return filing due dates click here.You can also read our article on self assessment to know more about it.

The tax year for a personal tax return is 6 April current year to 5 April of next year.

The deadlines for filing personal tax returns (for the tax year 2020-21) are:

'Payments on account' mean advance payments made for your Self-Assessment tax bill. HMRC assumes that you will continue to earn at the same rate as the previous year, therefore, you will pay approximately the same amount of tax in the following year. Each year two payments on account must be made. Each payment is half the previous year’s tax bill. Each payment is due by midnight on 31 January and 31 July. To know more click here.

You must keep your records for at least 22 months after the end of the tax year the tax return is for. HM Revenue and Customs (HMRC) may check your records to make sure you're paying the right amount of tax.

Claiming expenses on an actual basis requires the businesses to maintain records pertaining to those expenses. Simplified expenses can relieve your businesses from the burden of maintaining records. Your business expenses are calculated using flat rates and the resultant figure is claimed as business expense out of the net profits for the year. Once you have claimed simplified expenses you can no more claim actual expenses for the same. Simplified expenses can be claimed by sole traders and business partnerships that have no companies as partners. You can read more about simplified expenses in our article here.

Simplified expenses can be used by:

• sole traders
• business partnerships that have no companies as partners

Flat rates for simplified expenses can be claimed for:

• business costs for vehicles
• working from home
• using business premises for personal use

All other expenses are claimed by working out the actual costs.

If you've never registered for self-assessment with HMRC ever before, then you need to register for it online on gov.uk website. Once you register, HMRC will set up your self-assessment online service account and send you a letter with your UTR.

You need to re-register online via form CWF1 if you've sent a self-assessment return online before. For this you'll need your 10 digit UTR (Unique Taxpayer Reference). To know where you can find your UTR click here.

Once you register, you will get a letter from HMRC within 10 business days (21 days if you're abroad) that will have an activation code for your online account which you will need while signing in to your online account for the first time.

Yes, you can make changes to your self-assessment return either online or by post within 12 months from the filing deadline for the self-assessment return for the said period.

The income tax rates in UK for current tax year i.e. from 6 April 2019 to 5 April 2020 are as follows:

The due date for filing self assessment tax returns are:

The due date for paying self-assessment tax returns for the tax year 2020-21 is Midnight 31 January 2022.

You must keep your accounting records for a period of at least 5 years after the 31st January submission deadline of the relevant tax year.

Most people in the UK pay all their tax ‘at source’, for example, through Pay As You Earn (PAYE) if they are employed, and are not required to file a tax return. Self-Assessment therefore does not affect everyone and you will normally only need to complete a form if one or more of the following apply to you:

• You are working for yourself – you are self-employed;
• You are a partner in a partnership business
• You are a trustee or the executor of an estate.

The idea of Self-assessment is that you are responsible for completing a tax return each year if you need to, and for paying any tax due for that tax year. It is your responsibility to tell HM Revenue & Customs (HMRC) if you think you need to complete a tax return.

If you complete a Self-assessment tax return, you include all your taxable income, and any capital gains. You also claim any tax allowances or reliefs that you are entitled to on the tax return

SA100 is the form for carrying out a self-assessment of your (an individual’s) income and informing the HMRC. It is accompanied by several supplementary forms to detail out income from other sources like UK property, foreign income, etc. SA 100 along with relevant supplementary forms is called self-assessment return. You can read our article on ‘SA 100-things every taxpayer should know’ here.

Firstly, advisory fuel rates (AFR) are used when the company’s car is used by you (employee) whereas approved mileage allowance (AMR) is used when your (employee’s) own car is used for business travel. Secondly and most importantly, AFR only covers fuel expenses since the employer is already paying for the car. On the other hand, AMA covers the cost of insurance, repair, maintenance, etc. AFR can be used to figure out how much of the annual business mileage is spent on fuel, regardless of the fact whether the company’s or own vehicle is used.

1257L W1 and 1257L M1 codes or just 1257L X code are temporary codes. HMRC applies an emergency tax code if it doesn't have enough details about the amount of tax the person needs to pay. M1 is used when the pay is monthly while W1 is used when the pay is weekly. 1257L X can apply to either of these. M1/W1 or X code indicates that the tax shall be non-cumulative. In other words, the tax will be calculated based on the only current period's pay and not on the basis of year to date earnings.

A “cumulative” code (like 1257L) calculates tax due by taking into consideration rebate on any overpaid tax or recovery on any underpaid tax automatically. Suppose, if a person is not paid in a particular pay period a cumulative code would automatically give him/her benefit of the tax allowances for the no income period on the next payment but a non-cumulative code would not. In cases where HMRC does not issue a cumulative tax code before the end of the tax year, any overpayment gets rebated when the year is reconciled or when the person completes his/her self-assessment return. One always starts a new tax year with a cumulative tax code.

Property allowance is a tax exemption of up to £1,000 a year available only to individuals with income from land or property. This means that if the rental income is less than £1,000 then no tax is payable and also nothing needs to be informed to HMRC. But, if the rental income is more than £1000 then self-assessment tax return needs to be filed. One needs to choose between receiving the property allowance and deducting the actual expenses from rental income. Claiming actual expenses is advisable if this produces a rental loss, as no loss can be claimed if he/she elects to use the property allowance.

HMRC introduced a system called “payments on account” for assesses who pay most of their tax through Self-Assessment. If the Self-Assessment bill of a person is more than £1,000, then his/her tax needs to be paid on account. But, if more than 80% of one's income gets taxed through PAYE, then this system won't apply on him/her.

• Everyone, including students, has something called a Personal Allowance. This is the amount of money you’re allowed to earn each tax year before you start paying Income Tax.
• For the 2021/22 tax year, the Personal Allowance is £12,570. If you earn less than this, you usually won’t have to pay any income tax.
• If your Income is above £1,00,000, basic personal allowance is reduced by £1 for each £2 you earn over the £1,00,000, limit.
• This means that if you earn £1,25,000 or more in 2021-22, you will receive no personal allowance and all your income is taxed.

Once your business opts for claiming simplified expenses it needs to stick to it throughout the life of the business or the life of asset regarding which simplified expenses are claimed.

The main purpose of a UTR number is to help HMRC identify tax payers. You will need your UTR number when completing and filing of corporation tax return and when someone is helping you with tax related matter.

Here is a sample letter containing the company UTR.

A Unique Taxpayer Reference is issued and used by HMRC to identify a particular company or organisation for tax purposes only. It consists of 10 digits.

A Company Registration Number (CRN) is immediately created and assigned by Companies House when a new limited company or LLP is incorporated. It is a unique 8-digit number or 6 numbers prefixed by 2 letters.

CT 603 is a notice HMRC issues to a company to request the filing of a company tax return for corporation tax, including supplementary pages. If HMRC has sent company a 'Notice to deliver a Company Tax Return' (form CT 603), then the company must, by law, deliver a Company Tax return (CT 600). The said Company Tax return shall be prepared for the company's accounting period that is the same as or ends in the period specified in form CT603.

Income in form of dividends paid to a company from earnings on which corporation tax has already been paid by the originating company is called franked investment income.

CT 603 is a notice HMRC issues to a company to request the filing of a company tax return for corporation tax, including supplementary pages. If HMRC has sent company a ‘Notice to deliver a Company Tax Return’ (form CT 603), then the company must, by law, deliver a Company Tax return (CT 600). The said Company Tax return shall be prepared for the company’s accounting period that is the same as or ends in the period specified in form CT603.

If your company has made common law claims concerning tax paid ‘under a mistake of law’. If a restitution award is made, whether because of judgment or an agreement, THE INTEREST element of the award will be chargeable to corporation tax at a special rate of 45% instead of the normal rate (i.e., currently 19%). This interest is defined as restitution interest. It does not apply to any element of the award that represents the repayment of overpaid tax.

A CT activation code is a 12-digit code that is needed to activate your company’s corporation tax account. Once you successfully enrol for the corporation tax online service, you will receive a letter containing the activation code within 7 days of enrolment. The activation code is valid for only 28 days from the date mentioned in the letter and you need to use it before that. If it expires then you will have to request a new activation code online. This can be done by signing in for HMRC online services and enrolling for the services again. But if the code is lost within 28 days, then sign in for HMRC online services and ask for a new code.

As per section 1055 of Corporation Tax Act 2009 the company has a surrenderable loss if in an accounting period the company:

• obtains an additional deduction under section 1044 of the Corporation Tax Act 2009 in calculating the profits of a trade and it makes a trading loss in that period in the trade, or
• is treated as making a trading loss under section 1045 of the Corporation Tax Act 2009.

For expenditure incurred on or after 1 April 2015 the amount of the surrenderable loss shall be calculated as the lesser of:

• the amount of the unrelieved trading loss sustained in that period; and
• 230% of the related qualifying R&D expenditure.

Click here to read about R&D tax relief

As per section 1056 of Corporation Tax Act 2009 the amount of the unrelieved trading loss is the amount of the trading loss less the sum of following:

• any relief that was, or could be obtained by making a claim to set the loss against profits of the same accounting period under section 393A(1)(a) of Income and Corporation Tax Act 1988,
• any other relief obtained in respect of the loss,
• any amount surrendered to group or consortium members.

Knowing unrelieved trading loss is used to calculate amount of surrenderable loss

You need to file your company’s tax return within 12 months from the end of an accounting period to which it relates.

The corporation tax bill needs to be paid by you within 9 months and 1 day from the end of an accounting period to which it relates.

The Extensible Business Reporting Language (XBRL) is a standard used for tagging business data for computers. It involves applications of computer-readable tags to business data such that data is automatically processed by the software.

Some organisations, such as limited companies, pay Corporation Tax on the profits that they make from trading and investment income. It’s also applicable to other organisations, like societies, associations, clubs and charities. They will have to submit a CT600, along with supporting documents, so that HMRC know how much Corporation Tax is due.

A Company Tax Return is the financial information that most companies file with HMRC each year to report on their earnings, losses, loans and any other factors relevant to their tax liability. Companies use this information to calculate the Corporation Tax that they owe.

Yes, you can make changes to your corporation tax return either online or by post within 12 months from the filing deadline for the corporation tax return for the said period.

Currently, corporation tax rate is 19%.

Yes, you can make changes to the corporation tax return of your company upto 12 months after the tax return filing deadline. This can be done either online or by sending a paper return to HMRC. Suppose you need to make changes in the return for the year ending on 30th November 2017, then deadline for filing the return will be 30th November 2018. Thus amenedments, if any, need to be made upto 30th November 2019.

A company number is officially known as a Company Registration Number (CRN). It is issued by Companies House immediately upon incorporation of a company. It is unique to a company and is displayed on the certificate of incorporation. A company must provide this number whenever it contacts Companies House.

It is important to note that company's CRN (company registration number) is not the same as company Unique Taxpayer Reference (UTR). Click here to know the difference between both of them.

A company is called dormant for Companies House if it had no 'significant transaction' in a financial year. If a company pays filing fees to Companies house, penalties for late filing of accounts and/or money paid for shares when the company was incorporated; then such transactions shall not amount to significant transactions and so the company shall still continue to be a dormant company.

A company shall be considered to be dormant for corporation tax purposes, if:

• It has stopped trading and has no other income like investment income, rental income etc.
• It is a new limited company that hasn't started its business.
• It's a flat management company.
• It is an unincorporated association or club owing less than £100 corporation tax.

A worker is involved in off-payroll working when they work for a client through their intermediary, often a personal service company (PSC), but would be an employee if they were providing their services directly instead of involving the arrangement of providing service through a PSC. An intermediary will usually be the worker’s personal service company. It could also be a partnership, a managed service company, or an individual.

Inside IR 35: The entity inside IR 35 you are required to pay tax & National Insurance Contributions on the entirety of your deemed salary, just like a permanent employee would have.

Outside IR 35: The entities outside IR 35 are deemed to be legitimate companies and they continue to operate and pay tax accordingly (as any other limited company would have).

Following persons shall be covered under IR 35 off-payroll working rules 2020:

1. Public sector entities
2. Private sector companies that satisfy at least two of the following conditions:
   • Annual turnover of more than £10.2 million
   • Balance sheet total more than £5.1 million
   • More than 50 employees

Any person is other than the company, LLP, an unregistered company, an overseas company with an annual turnover of more than £10.2 million.

If the parent of a group is medium or large, their subsidiaries will also have to apply the off-payroll working rules.

There are 5 parties involved in the labour supply chain:

1. Worker
2. Intermediary - Workers own personal service company (PSC)
3. Fee payer (maybe)
4. Agencies (maybe)
5. Client - for whom work is being done

'Clients' covered under IR35 wef April 2020 are:

1. Every public company
2. Every private company which satisfies 2 or more of the following conditions:
   • Annual Turnover of more than £10.2 million
   • Balance sheet total of more than £5.1 million
   • 50 or more employees
3. Every entity, other than company, limited liability partnership, unregistered company and overseas company with an annual turnover of more than £10.2 million.
4. If the parent of a group is medium or large, their subsidiaries will also have to apply the off-payroll working rules.

IR35 or off payroll working rules refer to an anti-avoidance tax legislation designed to collect tax and National Insurance at a rate similar to employment, where the contractor is an employee in all but name.

Click here to read about IR 35 in detail.

Check Employment Status for Tax service (CEST) is a tool that has been developed by HMRC to help the user in determining the employment status of a person, i.e., whether the said person is employed or self-employed for tax purpose. It is pertinent to note here that the tool assumes there is a contract in place between employer and employee to see whether the engagement can be classed as employment or self-employment. HMRC claims it to provide accurate results and that it shall stand by the result produced by the tool provided the information input is accurate and the tool is used in accordance with the guidance.

A Managed Service Company (MSC) has a separate set of owners and organisers managing a group of contractors. Management Service Company differs from Personal Service Company. MSC manages and controls the affairs of the business, not the contractor. Further, MSC are subject to different regulations by HMRC.

A Personal Service Company is a limited company set up to provide services of a single contractor. In other words it is generally an “intermediary” taking the form of a limited company. This company is generally owned 100% by the contractor, and he/she is usually the sole director too.

Forming a PSC has many benefits. Firstly, the liability of the sole contractor becomes limited. Secondly, it provides a more formal and professional way to present services to their clients. Also, company form of business structure enables managing taxes efficiently.

You can reclaim VAT on the following purchases and services made before registering into VAT:

• 4 years for goods you still have or that were used to make other goods you still have.
• 6 months for service.

It is worth noting that you can only reclaim VAT on supplies for the business which is now registered for VAT. Also, these supplies must be used for ‘business purposes’ only.

Click here to read more about claiming back VAT.

Using the Flat Rate Scheme you pay VAT as a fixed percentage of your VAT inclusive turnover. The actual percentage you use depends on your type of business.

A first year discount. If you are in your first year of VAT registration you get a one per cent reduction in your flat rate percentage until the day before the first anniversary you became VAT registered.

VAT Flat Rate Scheme might not be right for your business if:

• you buy mostly standard-rated items, as you cannot generally reclaim any VAT on your purchases
• you regularly receive a VAT repayment under standard VAT accounting
• You making a lot of zero-rated or exempt sales.

You usually submit a VAT return to HMRC every 3 months. This period of time is known as your ‘accounting period. However, your VAT accounting period will comprise of 12 months in case you have opted for VAT Annual Accounting Scheme.

The due date for submitting the vat return online is 1 month and 7 days after the end of a VAT accounting period.

The due date for submitting the return online and paying HMRC are usually the same - 1 month and 7 days after the end of a VAT accounting period.

If you opt for annual accounting scheme you need to file VAT return only once a year. Your VAT accounting period will comprise of 12 months. The VAT return shall be due in 2 months from the end of VAT accounting period.

If you're covered under the annual accounting scheme you need to make advance payments towards your VAT bill during a VAT accounting period and a final payment once you file your VAT return. HMRC will tell you in writing when your installments are due and how much they'll be.

If the due date falls on a weekend or bank holiday, your payment must clear HMRC's bank account on the last working day before it, unless you pay by Faster Payments.

You can usually reclaim the VAT paid on goods and services purchased for use in your business.

You may be able to reclaim VAT paid on goods or services bought before you registered for VAT if the purchases were made within certain time limits.

If a business is registered for VAT then it must charge VAT on all its taxable sales. There's no option to decide not to charge VAT to certain customers.

Value added tax, or VAT, is the tax you have to pay when you buy goods or services.

Businesses with a turnover of more than £85,000 must register to pay and charge VAT on the products and services they buy and sell. Other businesses can choose to register for VAT voluntarily.

Click here to read the detailed article on understanding Value Added Tax.

When goods or services are zero rated they are still called VAT able supplies. The VAT rate on such goods and services is zero. Hence, a supplier supplying goods at zero rated can reclaim credit on purchases.

When goods or services are zero-rated, they are still called VAT able supplies. The VAT rate on such goods and services is zero. So, if the taxable turnover goes above £85,000 the supplier needs to register under VAT.

There are three VAT rates prescribed:

1. Standard rate is charged on most of the goods that are 20%,
2. Reduced rate is charged on domestic fuel power, mobility aids, etc. that is 5%
3. Zero-rate - the goods and services covered under this rate are VAT taxable and charged to customers at 0%. Though practically no VAT is collected but the businesses are still required to record such sales in their VAT account and report them in VAT return. Zero rates are applicable on books, newspapers, motor cycle helmets, children’s clothes and shoes etc.
4. These are the 3 rates that are prescribed in the UK.

Exempt supplies- Some goods and services are exempt from VAT. No VAT is charged on exempt goods.

The partly exempt business can claim tax credit on capital goods through capital goods scheme. Under this scheme VAT recovery is adjusted based on the taxable use. As the taxable use increases, a further amount of input tax can be claimed and, as it decreases, equivalent input tax already claimed needs to be repaid. Click here to know more about capital goods scheme.

No. VAT is generally recorded, collected, and paid by the seller. But if a transaction is covered under reverse then the VAT will be recorded by the buyer instead of the seller. In such situations, VAT is paid by the buyer directly to HMRC instead of the seller.

However, the VAT reverse charge applies to intra-community EU transactions, and with effect from 1st October 2020, this will also apply to industry services.

MTD refers to Making Tax Digital. With effect from1st April 2019, all the VAT registered businesses with an annual turnover of more than £85,000 were mandated to maintain their VAT records digitally and file the VAT returns through MTD-compatible software. Businesses with a taxable turnover less than the VAT threshold can voluntarily opt for it. Click here to read more about Making Tax Digital.

Zero rated: The goods and services covered under this rate are VAT taxable and charged to customers at 0%. Though practically no VAT is collected but the businesses are still required to record such sales in their VAT account and report them in VAT return. Also, the best part is that a claim can be made for any INPUT VAT paid while producing/acquiring zero-rated goods. Zero rate is applicable on books, newspapers, motor cycle helmets, children's clothes and shoes etc.

Exempt supplies: No VAT is charged on goods that are exempt, and such turnover is neither required to be reported in a VAT return nor can you claim back the INPUT VAT charged on your inputs. Exempted supplies include sponsored charitable events, Admission charges by charities, Charitable fundraising events etc. If a business only supplies VAT exempt goods, then such business is neither required nor allowed to register for VAT.

A group of companies connected to each other may choose to file a single VAT return. Such group of companies are treated as single entity and so are called a VAT group.

Making VAT group facilitates two or more eligible persons to account for VAT under a single registration number and allows any one of the eligible persons within the group acting as the representative member.

VAT return is basically a form that depicts the amount of VAT owed to HMRC or the amount they owe to you. It shows total sales and purchases, amount of VAT owed, amount of VAT reclaim, VAT refund from HMRC for a particular VAT accounting period.

Providing the errors meet certain conditions, you do not need to tell HMRC about them – you can simply correct them by adjusting your next VAT return.

You can adjust your current VAT return to correct errors on past returns as long as the errors:

• are below the reporting threshold;
• are not deliberate; and
• Relate to an accounting period that ended less than four years ago. Or you can send form VAT652 to the VAT Error Correction Team.

The different VAT flat rate schemes are as follows:

1. Limited Cost Business: A business that spends a small amount on goods is classed as a ‘limited cost business’ if goods cost less than either:
   • 2% of your turnover,
   • £1,000 a year (if your costs are more than 2%)
   • If a business satisfies the condition of limited cost business then it has to pay a higher rate of 16.5%.
2. Others: If the business isn’t a limited cost business, the VAT flat rate will depend on the type of business. Click here to know the flat rates applicable on different types of business.

A VAT-registered number is a unique identification issued to businesses that are registered to pay VAT. Businesses can find their VAT number on their VAT registration certificate issued by HMRC.

A UK VAT number is nine (9) digits long, with two letters at the front indicating the country code of the registered business. For example, for Great Britain (UK), the first two digits of the VAT code are GB.

If you’re dealing with a supplier in another EU country then its VAT number will follow a different format, with its own unique country code. HMRC provides a list of ID formats from European Union member states on their website.

From April 2019, VAT registered businesses and organisations with taxable turnover above the VAT threshold of £85,000 are required to:

• Maintain accounting records digitally in a software product or spread sheet. As a result, maintaining paper records has ceased to meet the legal requirements in tax legislation.
• Submit VAT returns to HMRC using a compatible software product that can access HMRC’s API (Application Program Interfaces) platform.

There are several PAYE forms in use. Each has its own purpose.

Form P60- A P60 form is that explains how much you have earned over the tax year (06 April 2021 to 05 April 2022). It is also includes how much you have paid in national insurance contributions and PAYE tax.

Form P45- When you leave a job, your former employer should issue with a P45 form this is included your salaries, national insurance contributions, PAYE tax up to leaving date. You will need your P45 when changing the jobs, as your new employer will use it to make sure you are put in correct tax code.

Form P11D- A P11D form is sent to HMRC by UK employers outlining the cash value of any work-related taxable expenses and taxable benefits you've received over the tax year (6 April-5 April). These are only benefits or expenses that have not already been included in your wages.

There are currently 14 sections on the P11D:

• Section A – Assets Transferred
• Section B – Payments made on behalf of the employee
• Section C – Credit Cards and vouchers
• Section D – Living Accommodation
• Section E – Mileage Allowances
• Section F – Cars and car fuel
• Section G – Company Vans
• Section H – Beneficial Loans
• Section I – Medical Health
• Section J – Qualifying Relocation Payments
• Section K – Services Supplied
• Section L – Assets placed at employee’s disposal
• Section M – Other Items
• Section N – Expenses Payments

You can find on any correspondence you receive from HMRC, like tax forms, payslips, P45 and P60 forms. It is also in the welcome pack you receive when you first register your business.

Your Accounts Office Reference Number is a unique, 13 character code which will be shown on the letter you received from HMRC when you first registered as an employer.

You will be required to put in your Accounts Home Office Reference Number when you intend to make PAYE payments to the HMRC.

Yes, benefits in kind can be payrolled if the employer has registered with HMRC for using the 'payrolling employee's taxable benefits and expenses service'. All the benefits can be payrolled except employer providing accommodation and interest free and low interest loans. These needs to be reported in P11D even if you’re payrolling other benefits for the same employees. Further, if company car benefits are payrolled then there is no need of P46.

If the employer intends to payroll benefits and expenses then he/she needs to register for payroll before the start of tax year in which he/she wishes to begin running it.

If benefits in kind are payrolled then there is no requirement of submitting P11D form. However, all the benefits except employer providing accommodation, interest free and low interest loans can be payrolled. Hence, these need to be reported in P11D even if you’re payrolling other benefits for the same employees.

Further, you need to complete and file form P11D(b) to report Class 1A National Insurance contributions on benefits in kind despite payrolling them.

P87 is a form that can be used by employees to claim tax relief for allowable employment expenses. If the allowable expenses are less than £2,500, the employee can claim tax relief through P87 form, but if the allowable expenses are more than £2,500 then these can be claimed only by filing a self-assessment return.

If benefits in kind are payrolled then prima facie there is no requirement of submitting P11D form.

However, all the benefits except employer providing accommodation, interest free and low interest loans can be payrolled. Hence, these need to be reported in P11D even if you're payrolling other benefits for the same employees.

Further, you need to complete and file form P11D(b) to report Class 1A National Insurance contributions on benefits in kind despite payrolling them.

You must collect and keep records of:

• What you pay your employees and the deductions you make.
• Reports you make to HM Revenue and Customs (HMRC).
• Payments you make to HMRC.
• Employee leave and sickness absences.
• Tax code notices.
• Taxable expenses or benefits.
• Payroll Giving Scheme documents, including the agency contract and employee authorisation forms

The records must be maintained for 3 years from the end of the tax year they relate to. HMRC may check your records to make sure that the employer is paying the right amount of tax. Click here to read more about PAYE and payroll.

Click here to read more about PAYE and payroll.

EPS refers to Employer Payment Summary. It is basically used to claim refunds/recoverable amounts from HMRC or making declarations to HMRC. Few situations in which EPS needs to be filed are:

1. For recovering statutory payments
2. For reporting Apprenticeship levy
3. For recovering Construction Industry Scheme (CIS) deductions suffered
4. For informing HMRC that you have ceased using PAYE scheme, etc.
5. For making an election to claim the employment allowance.

EPS refers to Employer Payment Summary. It is basically used to claim refunds/recoverable amounts from HMRC or making declarations to HMRC. Few situations in which EPS needs to be filed are:

1. For recovering statutory payments
2. For reporting Apprenticeship levy
3. For recovering Construction Industry Scheme (CIS) deductions suffered
4. For informing HMRC that you have ceased using PAYE scheme, etc.
5. For making an election to claim the employment allowance.

FPS refers to Full Payment Submission. FPS is sent to HMRC to inform HMRC about the payments made to employees and the deductions made. It contains information like starter and leaver information, employee details, employee payment and deduction information etc.

FPS refers to Full Payment Submission. FPS is sent to HMRC to inform HMRC about the payments made to employees and the deductions made. It contains information like starter and leaver information, employee details, employee payment and deduction information etc.

Employer Summary Scheme (EPS) needs to be sent to HMRC by the 19th of the following tax month to apply any reduction (for example statutory pay) on what you'll owe from your FPS.

Full Payment Submission (FPS) needs to be sent to HMRC on or before each payday even if taxes and National Insurance are paid to HMRC quarterly or monthly.

Payroll refers to the process of evaluating employee's pay, deducting income tax and national insurance contributions and reporting the same to HMRC.

PAYE refers to the system of Pay As you Earn. It is a system used by HMRC to collect Income tax and NI contributions from employee's pay as they earn it.

When you register to payroll benefits on the online service, you select the benefits you want to payroll. Therefore, you can choose which benefits in kind you wish to payroll and which you wish to process through form P11D. You may even choose to exclude employees who you will not payroll benefits for, i.e. for such employees you will continue submitting form P11D.

Registering to payroll benefits in kind is a one off requirement. You do not need to register for it every year. Click here to registering to payrolling benefits online.

No, it is not necessary to payroll benefits in kind nor does HMRC wishes to make it compulsory in future. You can instead report the benefits in kind through form P11D.

Tips and gratuities paid to employees are not benefits in kind. Instead if the employer distributes the tips then it shall form part of salary and be subject to tax and NICs as usual.

Yes, P11Ds must be submitted to HMRC before 6 July 2022 for the tax year 2021-22. You’ll get a penalty of £100 per 50 employees for each month or part month your P11D(b) is late. You’ll also be charged penalties and interest if you’re late paying HMRC.

A P11D form is sent to HMRC by UK employers outlining the cash value of any work-related taxable expenses and taxable benefits you've received over the tax year (6 April-5 April). These are only benefits or expenses that have not already been included in your wages.

Yes, if you wish to deregsiter from payrolling of benefits you can do it before the start of tax year using the online service.

Yes, you can choose to exclude employees for whom you do not wish to payroll benefits in kind. For such employees you will continue submitting form P11D.

The PAYE reference number is given to every business that registers with HMRC as an employer. It’s a unique set of letters and numbers used by HMRC and others to identify your firm.

This reference is made up of two parts: a three-digit HMRC office number and a reference number unique to your business. It will usually look something like 123/A45678 or 123/AB45678 (though there can be exceptions).

In order to simplify the procedural requirements for movement of goods between the EU and the UK post Brexit, TSP have been introduced. TSP aim to make import of goods easier for an initial period of one year to give businesses time to prepare for usual customs procedures while importing from the EU. The businesses registered for TSP will be able to postpone payment of import duty until one month after imports. Further, they'll be required to give reduced information in the import declaration when the goods are crossing the border and give full declaration only after the goods have crossed the border.

Common Transit Convention (CTC) allows quicker movement of goods across the borders of common transit countries. The common transit countries are EU member states, Iceland, Norway, Liechtenstein, Switzerland, Turkey, North Macedonia, Serbia. The customs declaration and payment of customs duty needs to be paid only when the goods reach final destination. This facilitates cash flow benefits and reduces administrative burdens.

Yes, the companies need to mandatorily report Person with Significant Control (PSC) changes to Companies House as and when they happen. Besides reporting changes to Companies House, companies are also required to maintain a Register of People with Significant Control. If you fail to comply with these requirements you could be committing a criminal offence.

1. Filing of dormant accounts to Companies house- Dormant accounts should include a balance sheet and any relevant notes for the past financial year. The accounts will have to be filed with Companies House every year, no later than 9 months after the end of the company’s financial year.
2. Filing of confirmation statement to Companies House- You also required to provide an annual confirmation statement for a dormant company every 12 months. The due date for filing a confirmation statement for the dormant company is 12 months from the date the company was incorporated and then needs to be filed every 12 months. It must be filed within 14 days from this date. It is to be filed even if there is no change to the relevant details.

Click here to know more about the compliances required by a dormant company.

1. Filing of dormant accounts to Companies house- Dormant accounts should include a balance sheet and any relevant notes for the past financial year. The accounts will have to be filed with Companies House every year, no later than 9 months after the end of the company's financial year.
2. Filing of confirmation statement to Companies House- You are also required to provide an annual confirmation statement for a dormant company every 12 months. The due date for filing a confirmation statement for the dormant company is 12 months from the date the company was incorporated and then needs to be filed every 12 months. It must be filed within 14 days from this date. It is to be filed even if there is no change to the relevant details.

Note: As long as the company is inactive throughout the financial year there won't be any tax liabilities and it won't have to file a tax return. However, in cases when company was previously trading you need to call HMRC on 0300 200 3410 or write a letter addressed at Corporation Tax Services, HM Revenue and Customs, BX9 1AX, United Kingdom to tell them that the company is dormant and that you shall thereby not submit any tax return.

Click here to know more about compliances required by a dormant company.

You can inform HMRC about the dormant status by calling on 0300 200 3410 or you can update the same over the Web chat Or write a letter addressed at Corporation Tax Services, HM Revenue and Customs, BX9 1AX, United Kingdom.

Almost anyone can be a director of a UK limited company. There are very few barriers to appointment, which makes company formation an accessible option for many people. Whilst no specific qualifications are required, the role of company director does involve a great deal of responsibility, so there are certain restrictions as below:

• You must be over the age of 16.
• You must not have been disqualified from acting as a company director.
• You cannot currently be in bankruptcy (unless a court has given you permission to act for a particular company).
• You must not be subject to any UK government restrictions
• You must not have been restrained by a court from becoming a company director.

Also, as a director, you’re legally responsible for running the company and making sure information is sent to us on time.

• the confirmation statement
• the annual accounts, even if they’re dormant
• any change in your company’s officers or their personal details
• a change to your company’s registered office
• allotment of shares
• registration of charges (mortgage)
• any change in your company’s people with significant control (PSC) details

A company does not have its own physical existence. The Board of Directors is basically the soul and body of the company. As a result anything required to be done by the company under the Companies Act, 2006 is to be carried out by the Directors unless otherwise provided (e.g. Passing resolutions required to be passed at a general meeting etc.). Most important obligations as required to be complied by a Company Director:

• Ensure that the company has filed accounts with Companies House and HMRC on or before due date.
• Make sure that the corporation tax returns are filed with HMRC on time.
• Filing confirmation statement to Companies House.
• Maintain various statutory registers like- register of charges, register of members, register of directors etc.).

A Person with Significant Control (PSC) is an individual who meets any one or more of the following conditions in relation to a company:

1. directly or indirectly holding more than 25% of the shares
2. Directly or indirectly holding more than 25% of the voting rights
3. Directly or indirectly holding the right to appoint or remove the majority of directors
4. he/she has the right to exercise, or actually exercising, significant influence or control
5. he/she has the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.

These need to be reported to various authorities. Click here to know more.

In addition to financial statements, all Companies and LLPs are required to complete a Confirmation Statement. This is an annual statement filed by companies to Companies House in every 12 month review period to update any changes related to:

1. Principal business activities or SIC codes,
2. Statement of capital (paid/unpaid share capital or classes of shares),
3. Shareholder information, and
4. Trading status of shares and exemption from keeping a register of PSC.

Companies House introduced the annual confirmation statement in June 2016. It’s designed to streamline the process of reporting information about your company.

An annual confirmation statement filing confirms the following information:

• Information about the company’s directors
• Information about the company’s secretary (if appointed)
• The company’s registered office address
• The company’s core business activities (SIC codes)
• Details of any shareholders
• Issue of shares
• Person(s) of significant control (PSC)

Every company, including dormant and non-trading companies, must file a confirmation statement. It confirms the information Companies House hold about your company is up to date. You may simply click here to view the same on their official website.

The due date for filing a confirmation statement is 12 months from the date the company was incorporated or the date you filed your last confirmation statement. It must be filed within 14 days from this date. It is to be filed even if there is no change to the relevant details.

To make a previously dormant company active, inform HMRC within 3 months from the date company starts trading. It can be done by signing in to company’s HMRC gateway account and registering the company as active.

An umbrella company is a standard UK limited company. It acts as an ‘employer’ on behalf of its contractor employees. The recruitment agency shall enter into a contract with umbrella company, on behalf of the contractor who will be carrying out the work for the end client. Another contract, i.e. employment contract is to be signed between umbrella company and the contractor employee. Once the work is completed, the contractor employee shall submit a timesheet to both his recruitment agency, and umbrella, showing the number of hours he/she worked. The umbrella company will raise an invoice to the recruitment agency, which will subsequently bill the end-client. As soon as the umbrella company receives payment from the agency, they can prepare employee’s payroll and pay him/her a salary, allowing deductions for employment taxes, the pre-agreed umbrella fee/margin, personal taxes, and pension contributions (if applicable). They will also reimburse for certain allowable expenses he/she might have claimed – such as mileage.

The umbrella company is created as a special purpose entity to lessen the compliance burden. Instead of working as a contractor to the company yourself and getting stuck in hassles of compliances required to be done by a contractor, one could simply enter into employment contract with an umbrella company and work for the client. In this case the umbrella company shall carry out all the administrative activities like running your payroll, paying taxes and dealing with HMRC etc. Also, you could be able to claim work related expenses, holiday pays, workplace pension scheme etc. All you need to do is submit your time sheet and expenses and wait to get paid; the umbrella company will do all the paper work for you.

The umbrella company is created as a special purpose entity to lessen the compliance burden. Instead of working as a contractor to the company yourself and getting stuck in hassles of compliances required to be done by a contractor, one could simply enter into employment contract with an umbrella company and work for the client. In this case the umbrella company shall carry out all the administrative activities like running your payroll, paying taxes and dealing with HMRC etc. Also, you could be able to claim work related expenses, holiday pays, workplace pension scheme etc. All you need to do is submit your time sheet and expenses and wait to get paid; the umbrella company will do all the paper work for you.

From the client’s point of view, it needs not run payroll, provide any employment benefits etc. All these need to carry out by Umbrella Company only.

A Personal Service Company is a limited company set up to provide services of a single contractor. In other words it is generally an “intermediary” taking the form of a limited company. This company is generally owned 100% by the contractor, and he/she is usually the sole director too.

Forming a PSC has many benefits. Firstly, the liability of the sole contractor becomes limited. Secondly, it provides a more formal and professional way to present services to their clients. Also, company form of business structure enables managing taxes efficiently.

A Managed Service Company (MSC) has a separate set of owners and organisers managing a group of contractors. Management Service Company differs from Personal Service Company. MSC manages and controls the affairs of the business, not the contractor. Further, MSC are subject to different regulations by HMRC.

Company's accounting records need to be kept for 6 years from the end of the financial year they relate to, or longer if:

• they show a transaction that covers more than one of the company's accounting periods
• the company has bought something that it expects to last more than 6 years, like equipment or machinery
• Company Tax Return was sent late
• HMRC has started a compliance check into your Company Tax Return

Companies whose annual turnover must:

• not be more than £10.2 million,
• the balance sheet total must be not more than £5.1 million.
• The average number of employees must not be more than 50,

Only then your company can be qualified as a small company. To know how to do bookkeeping for these companies click here.

Micro company is a company that fulfils any two of the following:

• Companies whose annual turnover of £632,000 or less,
• the balance sheet total is £316,000 or less,
• The average number of employees must not be more than 10.

Yes, you can apply to extend your accounts filing deadline and before applying the extension you will require the information as listed below:

• The company number.
• An email address.
• Information about your extension reasons.
• any documents that support your application (optional)

Yes, you can extend or shorten the current accounting period by changing the current or the immediately previous accounting reference date. You need to inform Companies House for change of accounting reference date in form AA01. The submission should be done before the due date for filing the accounts of period that you wish to change. This change can be done using Companies House’s software filing or online filing services or by sending the relevant paper forms.

The authentication code is a 6 digit alphanumeric code issued by us to each company. The authentication code provides access to the Companies House Web Filing service. This can be used to file various documents online. This enables a company to easily update the current appointments and file statutory documents.

To apply to strike off your limited company, you must send Companies House form DS01. This must be signed by a majority of the company’s directors. When your company is dissolved, all the remaining assets will pass to the Crown (including any bank balances).

A company which has not commenced trading since incorporation is called a dormant company. While a company which was previously trading but isn't active and trading anymore is termed as a non-trading company.

A non-trading company may be receiving other incomes like rent, interest and/or maybe paying expense like rent, bank charges etc. However, to maintain a dormant status, the company shall not be have any significant accounting transaction.

A close company is a company:

1. which is under control of-
   • five or fewer participators or
   • any number of participators if those participators are directors,
2. more than half the assets of which would be distributed to five or fewer participators, or to participators who are directors, in the event of the winding up of the company.

If you are filing your company's first accounts and those accounts cover a period of more than 12 months, you must deliver them to Companies House:

• within 21 months from the date of incorporation in case of private companies
• within 18 months from the date of incorporation in case of public companies
• 3 months from the accounting reference date whichever is longer

The time allowed for filing company’s first accounts for the subsequent years, to Companies House is:

• 9 months from the accounting reference date for a private company
• 6 months from the accounting reference date for a public company

When a company shortens its accounting period, the new filing due date will be the longer of the following two options;

• 9 months for a private company (or 6 months for a public company) from the new accounting reference date
• 3 months from the date of receipt of the notice (change of accounting reference date).

An annual confirmation statement for a company needs to be filed every 12 months. The due date for filing a confirmation statement is 12 months from the date the company was incorporated or the date you filed your last confirmation statement. It must be filed within 14 days from this date. It is to be filed even if there is no change to the relevant details.

Firstly, advisory fuel rates (AFR) are used when company's car is used by employee whereas approved mileage allowance (AMR) is used when employee's own car is used for business travel.

Secondly and most importantly, AFR only covers for fuel expense since the employer is already paying for the car. On the other hand, AMA covers cost of insurance, repair, maintenance etc. AFR can be used to figure out how much of the annual business mileage are spent on fuel, regardless of the fact whether company's or own vehicle is used.

Advisory Fuel Rates (AFRs) are the rates prescribed by government for:

1. Calculating how much employees need to reimburse their employer for use of the company vehicle for personal travel
2. Calculating how much employers need to reimburse an employee for fuel expenses that they are responsible for a company car on business travel.

Where the fuel cost is reimbursed at AFR instead of actual cost, for the particular engine size and fuel type, then HMRC will accept that there's no taxable profit and no Class 1A national insurance to pay. Click here to read more about Advisory Fuel Rates.

Current advisory fuel rates (AFR) per mile are:

Current advisory fuel rates 2020 (AFR) per mile with effect from September 2020 are as follows:

Note that you can use the previous rates for up to 1 month from the date the new rates apply.

Hybrid vehicles: HMRC treats hybrid cars the same as either petrol or diesel cars for this purpose.

Electric vehicles: If the car is fully electric, the Advisory Electricity Rate (AER) of 4p per mile shall be applied.

If the business wishes to claim the cost of buying and running the vehicles, then it will have to keep records of buying, repairs, maintenance, road tax etc. separately. Instead one can opt to claim such cost of buying and running the vehicles at flat rates. These flat rates are called approved mileage claim or approved mileage allowance. Click here to read more about it.

Vehicle Approved mileage rate per mile

Note 1: Sole traders have a choice to claim for actual expenses instead of claiming vehicle expense as simplified expense.

Note 2: The amount so calculated is the total allowable expense for the whole year irrespective of how many vehicles have been used.

A company is called dormant for Companies House if it had no 'significant transaction' in a financial year. If a company pays filing fees to Companies house, penalties for late filing of accounts and/or money paid for shares when the company was incorporated; then such transactions shall not amount to significant transactions and so the company shall still continue to be a dormant company.

A company shall be considered to be dormant for corporation tax purposes, if:

• It has stopped trading and has no other income like investment income, rental income etc.
• It is a new limited company that hasn't started its business.
• It's a flat management company.
• It is an unincorporated association or club owing less than £100 corporation tax.

The director of a company can be removed before the expiration of his period of office, as per the procedure laid out in Article of Association of the company.

Some other circumstances in which the director may be removed are as follows:

• Immediate removal
  As per model AOA, director can be removed in following circumstances immediately:
  • A provision of the Companies Act 2006 or any other UK legislation prohibits a director from remaining in office.
  • A bankruptcy order is made against a director.
  • A composition is made with that person's creditors generally in satisfaction of that person's debts.
  • A director is deemed physically incapable of remaining in office by a registered medical practitioner.
  • Court makes order to prevent the director from exercising the powers or rights, by reason of that person's mental health.
  • Resignation of director.
• Removal by ordinary resolution
  If the director is to be removed in circumstances not specified in the AOA, then an ordinary resolution needs to be passed by shareholders to remove the director. Shareholders must be given 'Special Notice' of at least 28 days before conducting such a general meeting. The director who is to be removed must also be notified to attend the meeting and make representations. Such removal generally happens when shareholders are unhappy with the said director's performance.
• Removal by court or other authority
  This may happen in following situations:
  • If the director fails to maintain his or her statutory duties and responsibilities.
  • If the director's conduct is deemed 'unfit' for any reason.
  • An official complaint is made to the Insolvency Service by any member of the company or public.
  • He/she is disqualified to be a director by the Court, Companies House, HMRC, the Competition and Markets Authority etc.

Memorandum of Association is a legal document that forms the basis for formation of a company. It is a statement signed by all initial shareholders or guarantors agreeing to form the company.

Articles of Association is a legal document containing the rules on running and internal management of the company agreed by the shareholders or guarantors, directors and the company secretary. It contains key information like appointment and removal of directors, how decisions shall be made, rights and responsibilities of directors and members etc.

Penalties for not filing Company Tax Return by the deadline are as follows:

[Note: If your tax return is late 3 times in a row, the £100 penalties are increased to £500 each.]

Balance Sheet refers to a statement showing value of company’s assets, liabilities and equity as on a specific date, generally every 12 months. It is also known as Statement of Financial Position.

A dividend is a payment made by a company to its shareholders either as a distribution or as profits. It can be paid on a fixed date or as a one-off depending on your company type. Although it is a simple and tax-efficient way of taking out money from the company, however, you have to maintain the requisite compliance records such as Dividend voucher etc. There are few dates that need to be taken into consideration when processing a dividend;

• Dividend declaration date
• Last day to trade (LDT)
• Ex-dividend date
• The record date
• The payment date

Our expert accountants at Debitam help you completely with managing the Dividend related compliance with ease.

We can help you with:

• Corporation tax
• VAT
• Payroll
• Self-assessment
• CIS Scheme

We can assist you with the preparation and filing of the below:

• Micro-entity accounts for Limited Company, LLP, CIC
• Small-entity accounts for Limited Company, LLP, CIC
• Dormant set of account filing for Limited Company, LLP, CIC
• Amended accounts for all the above

Starting a limited company comes with great responsibility and we can assist you with making the first step in the right direction. To get started first of all you need to decide the nature of business, type, and size of the company. Secondly, you need to decide a suitable name for the company, gather the legal documents such as ID and address proof, decide directors and the share-holding patterns, etc.

Yes, we can assist you completely with the bookkeeping on our cloud-based software so that you have a real time access to the reports. This comes with a timely reconciliation based on the frequency (monthly/quarterly/annually) as per your needs.

We will require your:

• 6-character company authentication issued by Companies House
• 10-digit Company UTR issued by HMRC
• Access to your bookkeeping software AND/OR an Excel/CSV version of the business bank account statement for the concerned period.
• A copy of the previous year's full accounts and company tax return along with the tax computation. (not applicable for first year filings)
• Other financial details as requested by our accountants.

LLP stands for Limited Liability Partnership, first introduced by the LLP Act 2000. It is often suited to professions that conventionally operate as a traditional partnership; however, it offers limited liability to its members. This reduced financial responsibility is quite advantageous, as it safeguards the personal finances of members more than their capital contribution or any financial commitment they might have made to the limited liability partnership.

Similar to limited companies you need to file the annual accounts and tax return (SA800) for the LLPs to Companies House and HMRC respectively.

Yes, we will prepare the accounts from scratch for the concerned period that needs correction and the amended reports will be submitted to replace the originally filed reports.

Abridged accounts are meant to be submitted to Companies House and therefore available for the general public to view. It’s done to avoid disclosing key matters concerning your profit and loss to everyone.

Switching accountants might sounds like a mess but we will make the whole process seamless and painless for you. You simply need to share the details of your previous accountant so that we can write them a Professional Clearance Letter to them asking to handover the information they hold on your behalf.

Construction Industry Scheme is a scheme under which contractors deduct money from a sub-contractor's payment and pass it to HMRC. This is a type of reverse charge, whereby the amount so deducted and paid to HMRC are actually advance payments towards sub-contractor's tax and Class 4 National insurance liability.

The Construction industry scheme was introduced in order to prevent the loss of revenue to HMRC which arose as a result of payments between contractors not being properly accounted for tax purposes.

Construction Industry Scheme mandates the contractors to deduct CIS deductions , from the payments to be made to sub-contractors, at either 30% (if the sub-contractor is not registered with HMRC) or 20% (if sub-contractor is registered). The amount so deducted is paid to HMRC and this stands to the credit of sub-contractor's account.

If sub-contractors are not registered, then HMRC does not have any way to verify them since they have no records relating to such sub-contractor. So the higher rate of deduction is meant to encourage sub-contractors to register with HMRC to enjoy the benefit of lower deduction. This would as a result make it easier for HMRC to keep a hold on them.

After deducting the money in Construction Industry Scheme, contractors need to send HMRC a monthly return of all payments made to all subcontractors within the scheme in the preceding tax month. The return needs to be filed irrespective of the fact whether the subcontractors were paid-gross, net of the standard deduction or net of the higher deduction. It should be filed within 14 days from the end of the tax month the deductions relate to.

Yes, exactly. The contractors are merely fulfilling the statutory duty assigned to them by the HMRC. They are actually acting on behalf of HMRC, thereby lowering the latter's burden and ensuring proper accounting of taxes and their payment into government coffers.

The money deducted by contractor out of payments due to sub-contractor is ultimately paid to HMRC as an advance payment towards sub-contractor's tax and Class 4 National insurance liability. So such an amount stands as a credit in the respective sub-contractor's account upon being paid to HMRC.

Yes, the sub-contractor can claim back the money deducted from its payment by the contractor. The way it can be claimed back is different for a self-employed and company.

If the sub-contractor is self-employed then they need to file self-assessment return as usual, recording the full amounts on invoices as income and showing any deductions the contractors have made in the 'CIS deductions' field.

If the sub-contractor still owes tax after this, he/she will need to pay it by 31 January following the end of the tax year. If a tax refund is due, then HMRC will pay the money back. Click here to know more.

In case sub-contractor is a company, then they need to claim back CIS deductions through monthly payroll scheme. They cannot claim it in corporation tax return as in case of sole trader. If they do say, they might be penalised. Click here to know more.

In case sub-contractor is company then they need to claim back CIS deductions through monthly payroll scheme. They cannot claim it in corporation tax return as in case of sole trader. If they do say, they might be penalised. To claim the CIS deductions, companies need to:

1. Send their monthly Full Payment Submission (FPS) as usual to HMRC.
2. Enter the total CIS deductions for the year to date while sending Employer Payment Summary (EPS).
3. HMRC will take the CIS deductions off what the sub-contractor owes in PAYE tax and National Insurance. The sub-contractor needs to pay the balance by the usual date.

If sub-contractor company's PAYE bill for the period is reduced to zero and there are still some CIS deductions that could not be claimed back, then these need to be carried these forward to the next month or quarter (in the same tax year). Also, they need to inform HMRC in the EPS that they have nothing to pay.

If the sub-contractor is self-employed then they need to file self-assessment return to claim back CIS deductions . They need to record the full amounts on invoices as income and show any deductions the contractors have made in the 'CIS deductions' field.

They need to record the full amounts on invoices as income and show any deductions the contractors have made in the 'CIS deductions' field. If the sub-contractor still owes tax after this, he/she will need to pay it by 31 January following the end of the tax year. If a tax refund is due, then HMRC will pay the money back.

No, for a SOLE TRADER the CIS deductions is available to be adjusted against the overall personal tax liability computed at the end of the year. As you know the taxes are payable on profits (income after deducting expenses), you are right in thinking that there should be a refund (at least partial one) every year. But the only exception here is when you fall under the higher income slab and pay taxes at 40% in your annual personal tax return.

For a LIMITED COMPANY, the CIS suffered needs to be submitted through the payroll and can only be adjusted against the overall PAYE liability for the year, and therefore it is very rare to not have a refund. The only essential here is registering for PAYE and then running regular payroll to claim it back.

There are two types of contractors:

1. Mainstream contractors
   If you are into construction business and you pay sub-contractors for this construction work, then you will be called a mainstream contractor. Mainstream contractor includes builder, labour agency, gang master, property developer.
2. Deemed contractor
   If you are not indulged into construction work but you spend more than £1 million a year on an average on construction in any 3-year period, then you shall be a deemed contractor. Deemed contractor includes housing association or arm's length management organisations (ALMOs), local authorities, government departments.

Contractors are required to be registered under Construction Industry Scheme (CIS) if:

• They pay to subcontractor for construction work
• If though they are not into construction business but still spend more than £1 million a year on construction work in any 3-year period.

Subcontractors should register under the CIS if:

• They are self-employed, owner of a limited company, a partner in a partnership firm and
• They work for any contractor

A person who performs construction work on behalf of a contractor is called subcontractor.

Contractors need to pay deductions due to be made in each tax month to HMRC within 14 days from the end of the relevant month or within 17 days where payment is made electronically. The payment of CIS deductions need to be made irrespective of the fact whether or not these deductions have actually been made.

The deduction rates prescribed under Construction Industry Scheme are as follows:

1. 20% for registered subcontractors
2. 30% for unregistered subcontractors
3. 0% if the subcontractor has gross payment status

If the subcontractors opt for gross payment status, then they are entitled to receive payment from their contractor in full, without any deductions. The subcontractor in such case shall pay the tax and national insurance contributions at the end of the tax year.

Following business grants have been announced by the government to support businesses from the economic disruption caused by coronavirus outbreak:

1. Retail, Hospitality and Leisure Grant (RHLG): Businesses in the retail, hospitality and leisure industries, with a rateable value:
   • Less than £15,000 will be provided with a cash grant of £10,000
   • Between £15,001 and £51,000 will be provided with a cash grant of £25,000
2. Small Business Grant Fund (SBGF): To support the small businesses covered by SBRR, Rural Rate Relief (RRR) and tapered relief, the government announced to provide one-off cash grant of £10,000 to around 700,000 businesses to help meet their on-going business costs.

Note that the businesses eligible for such reliefs shall receive only one grant per property. Also, they cannot receive both SBGF and RHLG on the same property.

Businesses with properties which were as on 11 th March 2020:

1. Eligible for Small Business Rate Relief (SBRR) Scheme (including those with a Rateable Value between £12,000 and £15,000 which receive tapered relief).
2. Eligible for relief under the Rural Rate Relief Scheme

shall be eligible for Small Business Grant Fund.

Following businesses shall not be eligible for SBGF:

1. Properties occupied for :
   • personal uses, such as private stables and loose boxes, beach huts and moorings.
   • Car parks and parking spaces.
2. Businesses :
   • which were in liquidation as of the 11 March
   • which were dissolved

Businesses eligible for the business grants will be contacted by their local authority, though some local authorities have decided to operate an applications process. You can check out the website of your local authority or contact them to find out how it works in your area.

Click here to find out your local authority and its website address.

Rateable value is the open market rental value of the property as on 1 April 2015, based on an estimate by the Valuation Office Agency (VOA).

The business rates relief allows businesses a business rates holiday for tax year 2020-21, meaning the businesses eligible for business rates tax relief would not have to pay businesses rates for the year 2020-21.

Following businesses are eligible for business rates relief:

Business rates refer to the amount required to be paid to the government by businesses on most non-domestic properties like shops, offices, warehouses, pubs etc.

The government has provided the following reliefs if you are finding it difficult to pay your taxes by the deadline:

1. Deferral of VAT payment: The VAT taxpayers will not have to pay VAT payment during 20 March 2020 to 30 June 2020 until the end of tax year 2020-21 (i.e. 5 April 2021). However, the government shall pay VAT refunds and reclaims as normal.
2. Deferral of Income Tax payment: Any income tax payments due on 31 July 2020 shall be deferred to 31 January 2021. This would particularly help those individuals who are required to pay Payments on Account or those who have existing time to pay arrangement with HMRC.
3. Time to pay arrangements: Where the taxpayer is unable to pay the taxes before the due date of payment because of financial difficulty caused by the virus breakout, they can now approach HMRC's COVID-19 helpline to agree a bespoke 'Time to Pay' arrangement. This would help the business earn some extra time before having to make the tax payments without the concern of being penalised. Furthermore, HMRC will waive late payment penalties and interest in cases where a business experiences administrative difficulties in contacting HMRC or paying taxes due to COVID-19.
   If you have missed a tax payment or you might miss your next payment due to COVID-19, then you call HMRC's dedicated helpline: 0800 0159 559 for any support required.

Under Job Retention Scheme the government has decided to reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. This scheme shall be in action for at least 3 months beginning from March 2020. This relief has come up to prevent laying off employees in the times of crisis.

Yes, the salaried company directors are eligible to be furloughed and receive support through Job Retention Scheme. So if you agree to be a furlough director, you cannot take any work that would generate revenue or provide services. However, you may carry out duties to fulfil statutory obligations.

Every UK business that had created and started a PAYE payroll scheme on or before 19 March 2020 and has a UK bank account shall be eligible for Job Retention Scheme. This means any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.

For applying for the Job Retention Scheme:

• Decide which employees have to be categorised as 'furloughed workers'
• Agree with the employee on this change
• Work out the amount you're claiming in each claim period (a period here shall mean a minimum of 3 weeks)
• Submit the information relating to employees furloughed and their earnings to HMRC through a new online portal which is yet to be notified.
• Only send one claim at least every 3 weeks (the minimum length an employee can be furloughed)

[Note:

1. The online service is now available. While applying for the claim you'll need the Government Gateway user ID and password you got when you registered for PAYE online. Click here to apply for the claim. Now, if you do not finish your claim in one session, you can save a draft but complete your claim within 7 days of starting it.
2. The grant will start on the day you were placed on furlough and which can be backdated to 1 March 2020.]

“Furlough” means to grant leave of absence to employees, instead of resorting to lay-off procedure. The employees keep such employers on the payroll but do not have any work to be assigned to them. Under the Job Retention Scheme if the employee has been categorised as furlough, then he/she cannot take up any work for the employer for the time he/she is furloughed. Also, if the employer decides to furlough an employee then he/she will have to be furloughed for a minimum of 3 weeks.

Please note that changing the status of employees is subject to employment law and, depending on the employment contract, may be subject to negotiation. For further guidance, visit Advisory, Conciliation and Arbitration Service website.

The Job Retention Scheme will continue to apply for agency workers who are paid through PAYE, including those working under umbrella company.

Furlough will then be agreed between agency and worker. Further, where agency provides clients with workers employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Once an agency worker has been categorised as furloughed he/she should take up no work on behalf of agency or for the agency client.

Yes, you can use Job Retention Scheme for apprentices also. Apprentices can be furloughed in the same way as other employees. Unlike other employees, they can continue to train whilst furloughed.

Apprentices should be paid at least Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage as applicable on them. This means you (the employer) must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

Yes, you need to file your VAT return as usual before the filing deadline. The deferral period has been granted for VAT payments only.

Deferral of VAT payment is an automatic offer. NO application is required.

Deferral of Income tax payment is an automatic offer. NO application is required.

Yes, the government has announced a scheme called Self-employment Income Support Scheme (SEISS) to support the sole traders in financial distress.

The Self-employment Income Support Scheme (SEISS) will allow the sole traders/self-employed to claim a taxable grant amounting to 80% of the average profits from the tax year 2016-17, 2017-18 and 2018-19. It is capped to maximum of £7,500 for entire period of 3 months paid out in a single instalment covering 3 months.

Those self-employed individuals and members in the partnership firm who fulfil the following conditions can apply for the SEISS:

• Traded in the tax year 2018 to 2019 and submitted self-assessment return for tax year 2018-19
• Traded in tax year 2019-20
• Intend to continue trading in tax year 2020-21
• Were trading at the time of applying for the scheme unless affected by COVID-19
• Have lost trading/ partnership trading profits due to COVID-19
• Further eligibility test would include:
  1. Test 1: The self-assessment return for tax year 2018-19 will be examined. The trading profits must be no more than £50,000 and at least equal to the non-trading income.
  2. Test 2: If taxpayer is not eligible based on the 2018 to 2019's self-assessment tax return, then HMRC will examine the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019. The average trading profits must be no more than £50,000 and at least equal to the average non- trading income for 3 years.

Note:

1. HMRC shall use data on the 2018 to 2019 tax returns already submitted to identify those eligible. Changes, if any, made to submitted returns after 26 March 2020, will not be considered while working out eligibility or amount of the grant.
2. You can use HMRC's online tool to find out if you're eligible to make a claim. You'll need self-assessment Unique Taxpayer Reference (UTR) number and National Insurance number while using the tool.

The amount of grant provided under SEISS shall be 80% of average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether.

The total trading profit for the 3 tax years (where applicable) will be added and then divided by 3 (where applicable), and the resultant figure will be used to calculate a monthly amount.

HMRC will pay the grant under SEISS directly into your bank account, in one instalment. It will be paid into bank account where Bacs payment can be accepted.

The online service to apply for grant under SEISS will be available from 13 May 2020. The HMRC will itself inform the taxpayers eligible for this grant and give them the date they from which the taxpayer can make the claim. If claim is approved they'll receive payment within 6 working days.

Following details will be required for applying for grant under SEISS:

• Self-assessment Unique Taxpayer Reference (UTR) number
• National Insurance number
• Government Gateway user ID and password
• Bank account number and sort code you want the grant to be paid into (only provide bank account details where a Bacs payment can be accepted)
• Self-declaration that the business is adversely affected due to coronavirus.

Yes, you can avail loan facility under new, temporary Coronavirus Business Interruption Loan Scheme (CBIL) to support your small and/or medium sized business' finances. The major support provided through this loan scheme is:

• Amount of facility provided under this scheme is up to £5,000,000 per business
• The Government will pay a Business Interruption Payment to cover the first 12 months of interest and lender fees, thus reducing the immediate amounts payable by a business.
• Zero guarantee fees for SMEs to access the scheme
• This facility is backed by partial guarantee of 80% by government. (However, The borrower remains 100% liable for the debt notwithstanding the 80% government guarantee)

All major banks and over 50 accredited lenders will offer this scheme.

For applying for loan under the scheme of CBIL you should talk to your bank or one of the 50+ accredited finance providers to discuss your business plan. You may contact them through their websites as the branches might be shut at the present to enable social distancing.

Under the Coronavirus Statutory Sick Pay Rebate Scheme government will repay employers the current rate of SSP that they pay to current or former employees for periods of sickness starting on or after 13 March 2020. Even if the employer pays more than the current rate of SSP they can only claim the current rate amount.

The amount equivalent to current rate of SSP paid for periods of sickness will be repaid under the SSP rebate scheme. The repayment will cover up to 2 weeks starting from the first day of sickness, if an employee is unable to work because they either:

• have coronavirus or
• are self-isolating at home

This scheme is open for all the UK businesses. The employers can apply for the scheme if they:

• are claiming for an employee who's eligible for sick pay due to coronavirus
• had a PAYE payroll scheme that was created and started on or before 28 February 2020
• had fewer than 250 employees as on 28 February 2020
• Connected companies and charities can also use the scheme if their total combined number of PAYE employees is fewer than 250 on or before 28 February 2020.

The scheme covers all types of employment contracts, including:

• full-time employees
• part-time employees
• employees on agency contracts
• employees on flexible or zero-hour contracts

The online service for apply for SSP rebate has not been notified yet.

To claim rebate under SSP Rebate scheme you must keep records of all the statutory sick payments that you want to claim from HMRC, including:

• the reason why an employee could not work
• details of each period when an employee could not work, including start and end dates
• details of the SSP qualifying days when an employee could not work
• National Insurance numbers of all employees who you have paid SSP to
• You'll have to keep these records for at least 3 years following your claim.

In general, SSP is paid when the employee is sick for at least 4 days in a row (including non-working days). However, from 13 March 2020 employer should start paying SSP from the first 'qualifying day' an employee is off work, as long as they are off for at least 4 days in a row.

In order to provide financial assistance to large businesses to cope up with the financial distress as a result of coronavirus outbreak, government has announced two schemes as follows:

1. Covid Corporate Financing Facility (CCFF).
2. Coronavirus Large Business Interruption Loan Scheme (CLBILS)

All non-financial companies that meet the criteria set out on the Bank of England's website are eligible to apply for Covid Corporate Financing Facility (CCFF). It majorly covers large-sized businesses making a material contribution to the UK economy.

You can apply for Covid Corporate Financing Facility (CCFF) on Bank of England's website.

For businesses located in Scotland, Wales and Northern Ireland the support available can be found in the following links:

• Click here for Business in Scotland
• Click here for Business in Wales
• Click here for Business in Northern Ireland

If you think the filing of your company accounts will be late because your company is affected by COVID-19, and your filing deadline has not yet passed, you can apply for an automatic and immediate 3 month extension to file your accounts.

If your company is affected by coronavirus and finds it difficult to submit accounts on time, then you can apply to extend the filing deadline provided your filing deadline has not passed yet. Click here to apply for such extension.

Yes, all companies can apply for extending their accounts filing deadline provided your filing deadline. However, companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for an extension.

If you wish to extend your company accounts filing deadline as your company is affected due to coronavirus, then you can apply for deadline extension. You will need the following information to apply:

• Company number
• Email address
• Reason for extension
• Any document to support the application (optional)

Once the application is submitted the Companies House will revert back in 5 days to inform whether the application has been accepted or not. So we recommend all the companies in need of an extension to assess their personal circumstances and make the application at the earliest possible.

Following employees are covered under Job Retention Scheme:

• Employees on any type of employment contract -zero-hours, flexible, part-time or fixed term
• Apprentices
• Agency workers (including those employed by umbrella companies)
• Office holders, company directors) - but only on their PAYE income
• Salaried members of Limited Liability Partnerships (LLPs).
• Limb (b) workers - ie those on PAYE
• Domestic staff, nannies etc.

The wage cost shall include all regular payments that are obligatory on employer's part to be paid, like wages, fees, compulsory commission etc. Any discretionary bonus, tips, commission payments and non-cash payments shall be excluded.

The claim needs to be made using the amounts on the payroll either shortly before or at the time of running the payroll. If possible, furloughed worker's wages should be reduced to 80% of the salary within the payroll before they are paid.

The furlough period should be of minimum 3 weeks. Once the employees join back the work they should be taken off the furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

You do not need to apply for business rate relief. If you are eligible for the discount then it shall be applied by your local authority automatically. In case of any queries, click here to contact your local authority.

Businesses that satisfy ALL of the following conditions shall be eligible for Retail, Hospitality and Leisure Grant (RHLG):

1. It is based in the UK.
2. It is operating in retail, hospitality or leisure industry.
3. It is eligible for a discount under the business rates Expanded Retail Discount Scheme.
4. The business properties having rateable value of less than £51,000.

With respect to Charities:

Charities which would otherwise meet this criteria but whose bill for 11 March had been reduced to NIL by a local discretionary award should still be considered to be eligible for this grant.

Following businesses shall not be eligible for RHLG:

1. Properties occupied for :
   • Personal uses, such as private stables and loose boxes, beach huts and moorings.
   • Car parks and parking spaces.
   • Properties with a rateable value of £51,000 or over.
2. Businesses :
   • which were in liquidation as of the 11 March.
   • which were dissolved.
   • that are not ratepayers in the business rates system.

Following businesses shall be eligible for applying for loan under the scheme of CBIL:

• UK-based business
• Annual turnover of up to £45 million
• The borrowing proposal which the lender would consider viable, if not for the coronavirus pandemic

The following businesses are not eligible to apply:

• Banks, insurers and reinsurers (but not insurance brokers)
• Public-sector bodies
• Further-education establishments, if they are grant-funded
• State-funded primary and secondary schools

In order to facilitate liquidity amongst larger firms, the Chancellor announced that the government has agreed to a new lending facility with the Governor of the Bank of England to provide low cost, easily accessible commercial paper. This Facility is called Covid Corporate Financing Facility (CCFF). It will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms to help businesses in paying wages and suppliers. Information on how to access this scheme will be provided by the government shortly.

Yes, you can avail loan facility under new, temporary Coronavirus Large Business Interruption Loan Scheme (CLBILS) to support your large business' finances. The major support provided through this loan scheme is:

• Providing large businesses (with annual turnover over £45 million) loans of up to £50 million.
• This facility is backed by a partial guarantee of 80% by the government.
• This Facility will be offered at commercial rates of interest.

Following businesses shall be eligible for applying for finance facility under the scheme of CLBILS:

• UK- based business
• Annual turnover of over £45 million
• Business has been adversely impacted by coronavirus. This needs to be self-certified.
• The business is unable to secure facility under the Bank of England's COVID-19 Corporate Financing Facility.

Such business should have a borrowing proposal for the lender:

• To consider viable, if not for the coronavirus pandemic.
• To believe that it will enable you to trade out of any short-term to medium-term difficulty.

The following businesses are not eligible to apply for loan under this scheme:

• Banks, insurers and reinsurers (but not insurance brokers)
• Building societies
• Public-sector bodies
• State-funded primary and secondary schools

The facility to apply for the loan is now available on Bank of England's website. The businesses can apply for finance under the scheme through a series of accredited lenders, which are listed on the British Business Bank website.

The Bounce Back Loan Scheme was an initiative introduced by the government to help small and medium-sized businesses affected by the coronavirus crisis to secure loans of up to £50,000. The scheme closed on 31st March 2021.

1. The amount of loan; borrowed can be any amount between £2,000 and £50,000.
2. Fees and Interest; Businesses will not have to pay any fees or interest for the first 12 months. For the period after the first year, the interest rates will be 2.5%.
3. Government guarantee: It shall be a 100% government-backed guarantee for lenders.
4. Loan period: Loan term shall be of up to 6 years with no repayments due for the first 12 months. Early repayment can be done without paying a fee. No repayments will be due during the first 12 months.
5. CBILS; if you have already claimed to fund under Coronavirus Business Interruption Loan Scheme (CBILS) then you cannot apply for the loan.

You can click here and check whether you are eligible for the bounce-back loan.