Loan application turned down by the bank? How to increase your chances of success

April 18, 2013

A recent survey suggests that more than 50% of SME’s have been refused funding by their bank over the last 6 months.   We all hear people moaning that the banks aren’t lending, but the truth is, whilst it is not as easy to get funding as it once was, the banks are still lending.  Their criteria may have changed slightly, and rightly so, it was reckless lending that got us into this mess in the first place.

The local corporate bank managers that we work closely with keep telling us they are still lending, but they are not getting as many people applying.  They are telling us to tell our clients they are still open for business.  I therefore suspect that the ones being turned down are turned down because they have not done their homework and have gone in poorly prepared.

If you have a good business idea, a good business plan and financial forecast, show you have the necessary skills and expertise to pull it off then you are likely to be successful.  Banks are also now looking for entrepreneurs to risk some of their own capital too.  For example if your forecast shows you need £10,000 to start the business the bank like to see you put in say £2,000 of your own money before they will lend the remaining £8,000 you need.

We can prepare business plans and financial forecasts for you before putting you in touch with those local bank mangers who are looking to lend to businesses.  Get in touch for more details in the contact us box on the right.

£10 Daily Penalties for Late Tax Returns Start 1 April

March 27, 2013

If you have still not filed your 2011/12 Tax Return that was due by 31 January 2013 then daily penalties will start to accrue from 1 April 2013.  The penalty is £10 per day up to a maximum of £900.  If the return is more than 6 months late the penalty is £300 or 5% of the tax due whichever is higher.

If you have yet to complete your return, don’t delay do it today.

Year End Tax Planning Tips

The new tax year will shortly be here.  Now is the time to take the opportunity to review our income and assets to make sure we are best utilising the allowances and reliefs available to us.  Here are a few quick tips that can be done before the tax year ends.

Individual Savings Accounts (ISA)

Have you and your partner made use of your allowances for the year?  For 2012/13 the annual allowance is £11,280 of which £5,640 can be in cash.

Pensions

Consider paying more into your pension before the year ends to make the most of the reliefs available.  If you are a 50% taxpayer this is being reduced to 45% next year.  Consider paying more into your pension now in order to obtain relief at the higher rate.  The amount that you can get relief on is also being reduced next year, you therefore may want to make the most of your allowance this year.

Child Benefit

If you do not want to have to pay the High Rate Child Benefit charge, now is the time to opt out.  More details on this are available on our website here.

Dividends – timing is important

Depending on your circumstances you may want to pay a dividend now to make the most of your basic rate allowance this year.   If you have already used your basic rate allowance for this year then you may want to defer the dividend payment until 6 April.

Charitable Donations

Again you may want to consider making these before the end of the tax year.  This may be particularly important for those who want to increase their basic rate bands or to bring them out of another tax bracket.

Annual Investment Allowance (AIA)

This increased from  £25,000 to £250,000 back in January.  There are special rules relating to accounting periods that span that date.  To make sure you make the full use of the allowance, careful consideration is needed on the timing of large purchases of plant.  If you are considering such a purchase let us calculate the optimum timing for you.

Property

Now is the time to review ownership of property.  Making sure you make the most of partners allowances and reliefs.  (see below).

Capital Gains Tax

If you are planning to dispose of assets that would be chargeable to capital gains consider selling now to make the most of this years annual exemption which is currently £10,600.  For example if you were planning on selling two rental properties and you sold them both in the same tax year you would only get one exemption of £10,600.  If however you sold one on 5 April and the other on 6 April they would be in different tax years and would each get an annual exemption.  Now this is easier said than done, but if you have already utilised your annual exemption this year you could try and defer any other gains until after 6 April.

Personal Allowance and Basic Rate Bands

Make sure your partner has utilised their personal allowance.  Consider transferring savings income to the partner that pays the lowest rate of tax.

If you have any questions regarding the above or want us to review your tax affairs and offer you individual tax planning advice then please get in touch through the contact box opposite.

High income child benefit charge

March 15, 2013

You may have already heard of the new high income child benefit charge.  This article aims to explain what it is and how it might affect you.  If you or your partner earns more than £50,000 and are in receipt of Child Benefit then read on.

What is the high income Child Benefit charge?

It is an income tax charge intended to ensure that the child benefit is effectively removed from persons earning in excess of £50,000.  The charge was introduced on 7 January 2013.  You will still receive your child benefit in full but you will be liable to an additional tax charge to claw back some or all of the Child Benefit you receive.  If you have income between £50,000 and £60,000 the amount of tax you will have to pay will be 1% of the Child Benefit you get for every £100 of your income above £50,000.  If you earn over £60,000 the extra tax you will have to pay will be the same amount as the amount of Child Benefit your household receives.

Should I opt out of receiving the benefit to avoid the charge?

Yes you can opt out and there is some benefit in doing so if you know your income is going to be above the £60,000 threshold.  The extra tax charge will be collected through the self assessment system.  Therefore if you do not want to have to fill in a Tax Return and the costs and time associated with that then yes opt out.  Please bear in mind that if your income should drop, or your circumstances change for any reason it would be too late to now claim any benefit.

If you do not want to self asses for the 2013/14 tax year then you only have until 28 March 2013 to opt out.

HMRC are also advising that there may be other reasons for not opting out, more details can be found on their website http://www.hmrc.gov.uk/childbenefitcharge/stopchbpayments.htm#4

Is there any other way to avoid the charge?

It is your adjusted net income which is relevant.  This is the income you receive after deduction of things like gift aid, pension contributions and losses.  This is important from a tax planning point of view.  You could increase your pension contributions or even give some money away to charity under gift aid to avoid the charge.

It is the partner with the highest income that is liable to the charge, even if that person is not the partner in receipt of the child benefit.  If both partners earn below £50,000 then the charge will not apply, even if their combined income is more than £50,000.

If you would like any more information on how the high income child benefit charge will affect you then please get in touch.

 

 

 

What to do if you cant pay your tax bill

February 7, 2013

If you self assess then your 2011/12 tax liability was due by 31 January along with your first payment on account for 2012/13.  If you have not yet made this payment or are struggling to afford it then read on.  Whatever you do, do not bury your head in the sand and ignore it, it won’t go away and it will only get worse.  There may be a few things you can do.

Check the calculation is correct

This may seem obvious but if you’re struggling to pay your tax it may be because its higher than what you were expecting or higher than last years bill.  Make sure that your return includes all the relevant expenses and reliefs that are available to you.  Check for obvious mistakes and compare this years figures to last.  Try and find out the reason for the increase.

Reduce the payments on account

HMRC assumes your tax liability will be the same next year as this year and expects you to make payments on account in respect of this.  Half of the liability is due at the end of January and the other half due at the end of July.  If you expect your 2012/13 income, and hence your tax liability, to be less then you can make a claim to reduce your payments on account accordingly.   For example you may have purchased a van in the 2012/13 tax year and may be eligible to claim the Annual Investment Allowance on that purchase reducing your tax liability significantly.

This however comes with the caveat that should your liability actually be higher than your new estimated payments on account then HMRC will charge you interest on the difference backdated to the original date the payment on account was due.

Get your 2012/13 Tax Return completed before 31 July 2013

Your second payment on account for 2012/13 is due by 31 July 2013.  If you get your tax return done before this date you can calculate your actual liability.  This may turn out to be less than the payment on account that is due meaning you can now pay the lower amount due in July.

Request time to pay

If you have checked the calculation and there is no reason to reduce the payments on account then you need to contact HMRC and ask for time to pay.  Do a budget first, work out what you realistically can afford to pay and work out a time-scale for being able to settle the debt.  HMRC are much more reasonable if you contact them first rather than ignoring their reminders.  If you manage to agree a payment plan with HMRC the interest is normally frozen providing you stick with the agreed plan.

Get your tax liability coded out

This will be too late now for the 2011/12 tax year but is an important tip to remember for future years.  If you have PAYE income and your tax liability is less than £3,000 you can request that HMRC collect the tax through your tax code instead.  This means that you will pay this in instalments each month throughout the following tax year.  The amount is deducted from your pay each month in the normal way.

In order to do this you must submit your tax return to HMRC either on paper by 31 October or online by 30 December.

Common Questions this Tax Return Season

January 23, 2013

The deadline for submitting your 2011/12 Tax Return is fast approaching. A £100 penalty waits for those that don’t submit it in time.  If you are one of those people don’t worry its not too late to do something about it.  Here are a few common questions currently being asked by our clients.

Am I too late to register to file online?

The deadline for submitting paper copies was back in October.  In order to avoid a penalty you have no choice now but to do it electronically.  This will mean registering to file online with HMRC.  It can take a week or more to receive your activation code.  Don’t worry though, we file online using our own in house software rather than using HMRC’s system.  This means there is no need to register online with HMRC.  As long as you have your UTR we can file your return up to midnight on 31 January.

I do not know my UTR.

This is your Unique Taxpayer Reference.  This will be shown on any correspondence you have received from HMRC such as the notice to complete a Tax Return or statements of account.  If you can’t find it give HMRC a ring on 0845 900 0444.  Have your NI number to hand.  For security reasons HMRC will usually insist on sending this by post rather than giving it to you over the phone.  This is therefore one of the things you need to make sure you do sooner rather than later.

I have already registered for Self Assessment with HMRC but have not yet received my UTR?  

Don’t worry HMRC will give you 3 months from the date they notify you to complete a tax return to get it submitted to them.  This is the case even if that takes you past the 31 January deadline.

I have not yet registered for Self Assessment.

Although you should have registered by 5 October there may still be some scope for avoiding the penalty.   You still get the 3 months to complete the return from the date of the notification to complete a tax return.  This could avoid the late filing penalty.  There should however still be a penalty for late notification of the need to self assess.  In our experience however HMRC rarely follow through with this, especially if an unprompted disclosure.

It is never too late and is always preferable to come forward rather than burying your head in the sand.  HMRC are always more lenient to those that do and the penalty regime reflects that.

I don’t have all the information I need can I submit provisional (estimated) figures?

The short answer is yes.  Provisional figures are those that you don’t have to hand right now but can obtain in the future.  Such as missing bank statements and duplicates have been requested but wont arrive before the deadline.  This allows you to submit the return now with estimates, avoid a penalty and submit an amended tax return at a later date when you have obtained the correct information.

How do I pay my liability?

There is plenty of guidance on HMRC’s website regarding this.  The easiest method is using online banking.  With most providers you don’t even need to know HMRC bank details you can just select HMRC Self Assesment from a drop down list of payment beneficiaries.  Make sure you select Self Assessment though as people pay HMRC for many different taxes such as VAT and Corporation Tax.

The alternatives are to pay online using a debit or credit card (charges may apply though).

I have been told that if I don’t owe any tax HMRC cant penalise me.

This used to be the case.  HMRC could not issue a penalty for more than the tax liability.  Therefore if you only owed £20 in tax then the penalty would only be £20.  If you owed no tax then there would be no penalty.  This is no longer the case.  The penalty will still stand even if there is no tax liability.

How long do I have to submit my return before the penalty increases?

If the return is more than 3 months late then penalties will start to accrue at £10 per day up to a maximum of £900 on top of the £100 penalty already incurred. If more than 6 months late a further penalty of 5% of the tax due will be applied (minimum of £300).

In serious cases where the return is over 12 months late the penalty can be up to 100% of the tax due as well as those penalties listed above.  If you still have last years return to submit, now is the time to do it.

What if I make a mistake or omit some information?

You have 12 months to amend your tax return.  So for the 2011/12 Tax Return you have up to 31 January 2014.  This means that the deadline for amending your 2010/11 Tax Return is 31 January 2013 so you only have a small window of opportunity left.

If you have a question that is not listed above, give our tax experts a call now on 0151 355 5777.

 

 

Tax Return Deadline

January 17, 2013

The deadline for submitting your self assessment tax return is 31 January   The penalty for missing the deadline is £100.  It used to be that if you did not owe any tax or paid your tax bill in full before the deadline (usually by estimating it) then the penalty would not be due.  This is no longer the case.  The penalty will stand even if you do not owe any tax.

The deadline for paper submission was October, so you have no choice but to now submit it online.  You can do this using HMRC website and online service.  This however requires registration and an activation code being sent in the post.  It may now be too late to to activate the service before the deadline.

Do not fear however, Taylor Roberts uses its own in house software to file tax returns electronically.  No need to register with HMRC and since its done electronically we have up to midnight on 31 January to file them.

So don’t delay, get in touch today to see if we can help with your return.  Who knows you may even be due a tax refund!

HMRC wrongly fine taxpayers

July 30, 2011

Law firm McGrigors have issued a warning to taxpayers to carefully check their annual tax returns. The legal firm had identified a number of cases where taxpayers had been fined incorrectly by HM Revenue & Customs for making incorrect or late payments. According to the law firm, many people won’t query the fines, as the guidance issued by HMRC is unclear, leading taxpayers to believe that an appeal won’t be successful. However, the law states that HMRC can’t issue a fine to any taxpayer who has a ‘reasonable excuse’ for late filing or payment. (more…)

Teachers strike and time off for parents

June 28, 2011

As I am sure most of you are already aware teachers unions in England and Wales have voted for strike action to protect their pensions and have confirmed a walk out on Thursday 30 June.  This may directly affect you or affect a number of your employees who may have to take the day off work to look after their children if they cannot find alternative childcare.

Do you have to give your employees time off?

An employee has the right to time off to deal with an emergency involving a dependent.  An emergency in this respect includes:

“an unexpected disruption or breakdown of care arrangements for a dependent”

Do you have to pay them?

You do not have to pay employees for time off for dependents.  However you may choose to do so.  Check what your contracts of employment say.

More information is available on the direct.gov website.

HMRC Approved Mileage Rates

April 15, 2011

In the budget HMRC increase the authorised mileage rates for the first 10,000 miles from 40p per mile to 45p from 6 April 2011.

If your employer has not increased the mileage rate they pay you inline with the increased in HMRC authorised rates announced in the budget, then make sure you keep records to claim tax relief (more…)

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