Some people panic when they realize the 31st January deadline is nearly upon them; others freeze, not knowing what to do; while some just take it in their stride and accept the inevitability of the £100 fine. However, it is never wise to just accept that your tax return will be late, for two good reasons:

· Late tax returns give rise to an increased risk of an HMRC investigation into all your tax affairs
· The deadline from which HMRC can launch an investigation is also extended when the tax return is filed after the deadline

Given that the new regime of compliance checks and penalties is now well under way, we would recommend that this is a risk that is wise for you to avoid if at all possible. There is still time before the deadline to save yourself the £100 penalty. But act now! Time really is running out.

If you are still struggling to apply the new VAT changes, then there is some useful information on the HMRC website. You need to think about when the service or supply was made but check the guidelines to ensure you get it right. Remember too that the rates on the VAT Flat Rate Scheme also changed on the 1st January 2010, so remember to check your new rate if you are on the FRS.

Have a very Happy Christmas and a prosperous New Year.

The most common question we get asked by start up businesses is whether it is best to trade as self-employed or through a limited company. Rather than offer blanket advice, we prefer to consider each person’s situation individually. The best answer for you might not be the same as for a friend whose circumstances are different to yours. It can be expensive to make a mistake and so obtaining good advice at the start of the business is very important.

Here are some initial questions you may want to consider:

· Are you involving other investors who will own shares?
· Are there risks to mitigate that cannot be covered by insurance?
· Are there tax advantages for you in taking a mix of salary and dividends?
· Is it necessary to incorporate in order to compete in your business sector?
· Do you want to appear larger than you actually are?

Your answers to these questions will begin to guide you as to whether trading through a company might make sense for you. But remember that the level of administration as well as your costs will increase so it needs to makes sense for you (and not just your accountant). And you can always start as self-employed and incorporate once the business starts to trade more successfully.

If you want to discuss your situation then please do get in touch so we can advise you before you have committed yourself to a particular course of action.

Come and see us at Business Start-Up 2009 in London on November 26th & 27th. If you would like a FREE ticket to the event, simply email info@hfmtax.co.uk and we will send you the number you want. We will be running a seminar entitled the Essential Guide to Tax & Accounting at 11 am in Seminar Hall 5. Hope to see you there.

New valuations for Business Rates should have been arriving in the post over the last month and any inaccuracies need to be appealed by 30th November 2009. If you want to check your valuation, you can do it online by going to the Valuation Office website. Don’t delay though, as this valuation is the basis for business rates over the next five years. It is also worth checking with your local authority if you are entitled to a Small businesses rate reduction of up to 50%. A search on their website ought to be able to give you all the information you need to apply. Here is a sample for our local authority, Lewisham. It’s just one simple form and not completing it will cost you money if you are eligible.

If you still have an outstanding 2008/2009 personal or partnership return yet to be submitted, there are two deadlines that may be relevant to you. Paper tax returns must be submitted before 31st October and HMRC have made clear their position regarding delays due to the postal strike which, as we expected, does not much room for delay. However, if you are an HfM client, your tax return will be submitted electronicaly and so you will have until January 31st for the return to be submitted.

Do you owe an outstanding tax payment? HMRC have published new interest rates that apply to both money taxpayers owe in tax and money owed by HMRC. It will come as no surprise that the penalty for underpayment (now at 3.0%) cotinues to outweigh the benefit for overpayment (0.5%). The new rates apply from 29th September apart from that applying to quarterly Corporation Tax payments which changed on 21st September.

If you read this blog regularly, you know that the final part of the 2006 Companies Act is being enacted on 1st October 2009. This was the biggest Act ever passed into law and contains some significant changes. To make the key points more understandable, we have put together a 2-page information sheet which you can download HERE for free. If you have any questions, then contact us for advice. Don’t ignore this. It’s the biggest change on Company Law for a long while.

If you go abroad, either permanently or to work for an extended period of time the you may be non-resident for the purposes of UK tax. As a non-resident, you will generally only be liable for UK tax on income arising in the UK, such as from letting a property (for which you will need to submit form NRL1 to HMRC).  The rule is that in order to be non-resident you should not be in the UK for more than 183 days in any tax year nor average more than 91 days per year. The rules have also recently changed so that days of arrival and departure only count as days in the UK if you are in the UK at midnight of that day.  The rules can be complex so ask us for advice related to your specific situation.