Deadline reductions for filing statutory accounts
Any accounting period commencing after 6 April 2008 will have to implement the new Companies Act 2006. One of the major changes that will effect everyone is that the legislation reduces the period for filing accounts from 10 months to 9 months for private companies.
For example, if your company produces its accounts annually to 31 March, then your new filing deadline will be 31 December of the same year.
New late filing penalties
Also in the new Companies Act are increased penalties for late filing of accounts. Due to the reduction in filing time there is a clear danger of more late filing penalties.
The new penalties compared with the old ones are below for private companies:
|File before 1 Feb 2009||File on/after 1 Feb 2009|
|Less than 1 month late||£100||£150|
|Between 1 and 3 months late||£100||£375|
|Between 3 and 6 months late||£250||£750|
|Between 6 and 12 months late||£500||£1,500|
|Over 12 months late||£1,000||£1,500|
In addition to these increases, the penalties will be doubled for any company that files their accounts late having also filed them late in the previous year.
From 6 April 2008 the personal allowance was increased by £210 to £5,435, the starting rate of tax (10%) was withdrawn and the basic rate reduced by 2% to 20%. The upper threshold of tax payable at 40% was increased by £1,400 to £36,000.
Due to pressure on the chancellor to reinstate the starting rate of tax, as a compromise, he has announced that the personal allowance is to be increased by a further £600 to £6,035.
However, to help pay for this tax giveaway the higher threshold has been cut by £1,200 to £34,800. As the changing of current tax codes is a huge task, it is likely that this will not be done until September 2008. If you are a basic rate tax payer, you will receive a £60 tax refund in September and £10 per month after that depending on the total level of income.
As far as we are aware, the NI bands are not changing so although you will not be subject to income tax if you earn less than £6,035, you will still be subject to 11% Class 1 NI if you earn above £5,435
2007/08 Personal Tax Return Deadline
The deadline for filing a paper tax return is much earlier this year, 31 October 2008. Its sensible to start thinking about getting paperwork together in order to complete you tax return on time.
If you wish to extend this deadline to 31 January 2008 then you must file your return online with HMRC. Here at Cutter & Co, we file all of our returns online and thus all our clients can still take advantage of the extra 3 months available to them.
If you currently file paper returns and think you will struggle to meet the October deadline, please contact us and we can file your return online for you.
Arctic Systems: Income Shifting
Finally, the long running dispute between HMRC and the husband and wife owners of Arctic Systems Ltd came to an end in the House of Lords with a victory for the owners.
This was good news for family owned companies. The ruling meant that any family owned companies are allowed to distribute profits between the members in the best way to minimise tax payable.
However, HMRC are now changing the rules from 6 April 2008. Although the Government are still consulting on the details of the new rules the principle is clear.
The proposals mean that family owned businesses may have to demonstrate that the division of profits between all members of the company are in proportion to the contribution each member makes to the company.
These new rules are likely to affect many small limited companies and partnerships, please contact us to discuss this further if you feel you may be affected.
New CIS Scheme – 2007/08 Self Assessment Tax Returns
The 2007/08 tax year ends on 5 April 2008, this will see the first complete year of the New CIS scheme. Most businesses have coped with the transition to the new rules but it has come to our attention that a large proportion of contractors are not supplying their subcontractors with monthly payslips indicating the amount of tax deducted from them.
The new CIS payslips are required by law to be provided to subcontractors 2 weeks after the end of a tax month (19th of each month). Without the payslips subcontractors will be unable to offset the tax paid at source against their total tax liability on their self assessment for the year. If you are not receiving these on a monthly basis please ask you contractor for copies.
Many subcontractors have a tax rebate each year as the tax paid at source through the CIS scheme is greater than their liability for the year. The increase in the rate used for CIS deductions from 18% to 20% is likely to mean that tax rebate will be higher than usual (assuming profit levels remain steady).
If you are a subcontractor and havebeen receiving refunds over the past few years due to the CIS scheme, there is no need to wait until January to receive this refund. We can complete tax returns from 6 April 2008 for the year and can hope to have your tax refund to you within 2 weeks of submission.
If you have any queries on CIS please speak to Kate Jones in our office or if you would like us to complete you tax return please contact us for a free consultation.