Accelerated Mobile Pages

We aim to be the Carlisle accountants who are always up to date with new technology, which should mean among other things that we are able to deliver better value to our clients. If you click on the link then you will find our new AMP website, which we aim to use to broadcast simple key messages at different times of year. For example as the income tax year end approaches, company directors will be encouraged to think about how they extract rewards from their company in the form of salary and dividends.

Employer’s Return to 5 February 2017

As an employer, you need to make a return of some sort for the month ended 5 February 2017, which is normally done by making a Full Payment Submission at some time during the month. If you happen not to have paid anybody, then you must make an Employer Payment Summary as a NIL return by 19 February. This can be overlooked too easily.

If a local accountant and business advisor or a payroll bureau does the wages for you, then they are not likely to forget. In our case we keep a diary and have a number of other payrolls to do at roughly the same time. Our PAYE files are bright yellow like the P30BC booklet so we don’t miss anything.

Construction Industry Scheme return to 5 February 2017

Construction Industry Scheme returns for the month from 6 January to 5 February 2017 should be submitted online by 19 February. Do not overlook the need to submit NIL returns.

It is easy to overlook this need for submission when a NIL return has to be done. You could engage a local accountant such as David Porthouse and Co to do the job. We keep a diary and do a batch of submissions at the same time very month. Our CIS file is bright yellow and we leave it out until it is done. We are hardly likely to forget! We want to be the accountant Carlisle businesses can contact for a full range of services.

If your Company Accounts have missed the 31 January 2017 Deadline

If your company’s accounts should have been submitted to Companies House by 31 January 2017, and you have missed this deadline, then you should act now. You will need to pay a penalty of £150, but this penalty rises to £375 if you miss another deadline on 28 Februrary 2017. If you miss deadlines two years in a row, then these penalties are doubled to £300 and £750. Any Carlisle accountant such as David Porthouse and Co are able to prepare and submit your accounts within the month if you contact us right now. You still have something to play for.

The Cheque Run round about 25 January 2017

If you supply goods or services to a large company, then they will expect you to give credit, and they will expect your terms to be something like “30 days or net monthly account”. This means that you expect an invoice issued in December 2016 to be settled by 31 January 2017. Typically a large company will do a computerised cheque run on about 25th January, and they will want you to have sent a statement at the start of the month listing all invoices outstanding from the previous month, so several invoices can be settled with one big payment. Small companies which do not operate a system like this should pay you within 30 days. If you do give credit, you might like to have a discussion with some local accountants like us. Many accountants aim to be general business advisors alongside our specific work.

Incompetent Parliamentary Draughtmanship

The Referendum Act 2015 said nothing about what to do if there was a vote in favour of Brexit, so frankly we have had an incompetently managed Referendum. The principal culprit is David Cameron, although Theresa May was a member of the Government at the time as well, and could have said something. It is not possible to use the Royal Prerogative to patch up the consequences of this incompetence, and we must thank Their Lordships of the Supreme Court for making this clear. They have also made it clear that the Scottish and Welsh devolved assemblies have no special rights, so at least now we have a simple constitution which everybody can understand.

Income Tax Deadlines in 2017

Companies pay corporation tax. Directors pay income tax. If you are a company director, then you may well have two different types of tax return to do.

Your income tax return is based upon a fixed period ending on 5 April each year. The return for the year ended 5 April 2016 needs to be submitted by 31 January 2017, or a fine of £100 will be imposed. To submit your income tax return, you need a Unique Taxpayer Reference which is a 10-digit number in a format like 12345 67890. It is not the same as your UTR for the purposes of corporation tax, which may also be a 10-digit number. This may be confusing, but it’s the system.

If you don’t have an income tax UTR, then you can apply for one, which may take 7-10 days. If you have left it this late (24 January), then you would do best to get £100 ready and look at the next deadline. This is 2 March 2017, when any income tax due needs to be paid off, or a 5% surcharge will be made. There is still plenty of time to anticipate this deadline if you act NOW!

We can use new technology to prepare accounts at high speed, and the 7-10 days period to get a UTR is frustrating for us as well. We aim to be the local accountants Carlisle companies can turn to when they want something done quickly.

How to Avoid Looking Incompetent

If you are a director of a small company, then you should probably be paying yourself a basic salary to use up the personal allowance of £11,000. This is complicated by the existence of National Insurance contributions, so we advise many directors to keep the salary down to £8,116 to keep below the NI threshold. £2,884 of personal allowance is left unused unless you have other income to cover it. If you have a lot of other income, then this advice on using up the personal allowance may need to be changed. Discuss this with your accountant.

The next thing to do is to pay yourself a dividend of at least £5,000 which is tax-free (after corporation tax) unless you have other dividends, which most people don’t. We will do a round-robin e-mail in March each year to make sure all our company clients have done something here.

The next £32,000 of payable dividend would incur dividend tax at 7.5%, and dividends above that would be taxed at 32.5%. We suggest you keep dividends to the 7.5% tax band unless you really need the money.

You don’t have to pay the dividend physically. You can just leave it as a credit on your director’s loan account. You need to complete dividend paperwork which any accountant can help with – we do it on a spreadsheet system which is easy to re-use.

Now the question is, given the 7.5% dividend tax, should you avoid it by paying no extra dividend at all? Well what happens if you suddenly need lots of cash in a future year? You could end up paying a future dividend at a marginal rate of 32.% when you might have paid just 7.5% this year.

Should you take £32,000 of dividend? Well what happens if you don’t need the dividend? Then you will have paid £2,400 too much tax.

Our suggested answer to this imponderable question is that you split the difference and pay yourself dividend of £16,000 on which tax of £1,200 will be due, so you take a bit of a hit up-front. In future years you won’t look back and accuse yourself of being utterly incompetent, and maybe that is the best that can be done.

If you happen to know you will need more cash soon, for school fees for example, then vote yourself a higher dividend. Otherwise take a mid-range figure as the starting point, and see if you can identify a good reason to vary it.

If you have some scientific knowledge, you will see that this is the thermodynamic concept of equipartition in action.

VAT Return Deadline on 7 February 2017

Companies with a Value Added Tax quarter ending on 31 December 2016 will need to submit their return by 7 February 2017. The return has to be submitted electronically, and any payment which is due must also be made electronically by the same date.

Any Carlisle bookkeeper and accountant such as us will be happy to prepare your VAT returns for you. In our case, if we do your VAT returns then we will give you 25% discount off the annual accounts fee to reflect non-duplication of work in our efficient system.