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.

HMRC continue to press estate agents to obtain records of property letting that has not yet been declared by taxpayers. As well as writing to landlords who are currently letting property, they are now obtaining records of people who have let a house or flat in the past and may even have sold their buy-to-let properties. They will be writing to taxpayers to get them to declare both the income from the letting and any potential capital gain from the sale of the property. If you have a property that you let but has not yet been declared to HMRC, we strongly encourage you to come clean about this as soon as possible. The penalties for a ‘discovery’ rather than a voluntary declaration are significantly higher and we can approach HMRC in the first instance in order to deal with the matter in the best light.

There has been a huge increase in the number of scam emails claiming to be from HMRC this month and promising a tax refund. The emails all ask you to click through to a website and enter bank and/or credit card details for the repayment to go to. Some request 3 digit security codes from credit cards, as well as your mother’s maiden name.

All this provides fraudsters access to your account and gives them information to sell on to others. Remember the golden rule, ‘If it seems to be too good to be true, it probably is’!

Those wishing to report a phishing email should contact phishing@hmrc.gsi.gov.uk, should delete the email and should not click through to the website as requested. There is more information on the HMRC press release.

Companies Act 2006 – Countdown to October 2009

The Companies Act 2006 is changing the law for companies. These changes affect every company operating in the United Kingdom. Passed in 2006, the Act reaches the final stage of implementation on 1st October 2009.

What are the key changes for October?

This is the main implementation of the Companies Act 2006, with a number of changes for companies. A list of all the changes can be viewed here. However, we have listed the main changes below with a small explanatory paragraph beneath each:

Directors’ addresses protected from disclosure
Alternative address for registers
Easier to set up a company
Notifying us of articles changes
UK wide company registry
Guidance
Forms
Fees
Dealing with us online
Protecting your company from hijack
Important tips for companies to make the transition to the new Act a smooth one