Welcome to our February Newsletter.
This month we are looking at new companies house late filing penalties, planning for the end of the tax year, saving tax when winding up a company and some exciting new additions to Mazuma!
Companies House Late Filing Penalties
It is more important than ever to get your books and records into us on time because from 1st February 2009 private companies that fail to file their accounts on time will face increased fines. The maximum fine will be imposed after 6 months rather than the current 12 months. The fines will also start to increase after just one month's delay instead of three months. The new penalties for private companies are as follows...
Less than 1 month late: £150
More than 1 month but less than 3 months: £375
More than 3 months but less than 6 months: £750
More than 6 months: £1,500
The permitted time limit for filing accounts also comes down from 10 months after the year end to 9 months for accounting years starting on or after 6 April 2008. In addition where there was a failure to comply with filing requirements in relation to the previous financial year (and the previous financial year had begun on or after 6th April 2008), the penalty will be double that shown above.
Companies House can expect its late filing penalty income from private companies to soar to £100 million in 2010, up from the 2007 figure of £47.4 million.
Planning for the tax year end 5 April 2009
With the January deadline having recently passed it may feel that you seem to lurch from one tax return straight into another! If you leave it until the last minute to file your returns you should consider moving onto our Purpleforce service which makes sure your accounts are processed monthly rather than once a year.
If you are self employed, either a sole trader or in partnership, you are approaching a key date - the end of yet another tax year!
Due to the current economic downturn you may recently have experienced a drop in your profits or be trading at a loss.
If this is the case please read the check list that follows. We can only help you to achieve the very best tax result if we are made aware, in good time, of your financial situation. Read the check list and see if any apply to you.
This is a year when careful consideration of your current trading position is paramount. There is no point in ignoring this issue. If you do, you may end up paying more tax than is necessary. Paying less tax, or winning repayments of tax will only be one aspect of your fight to sustain a healthy cash flow - nevertheless it is not one you should ignore.
Winding up a Company
It is often not quite as easy to close down a limited company, as it is to set one up. Where a company has surplus assets it is often beneficial for tax purposes for those assets to go back to the shareholders in the form of a capital gain rather than as dividend income to take advantage of CGT exemptions and reliefs. The formal way of doing this to appoint a licensed insolvency firm to deal with the assets and liabilities but this can be expensive. However, an alternative to consider is an informal procedure called Extra Statutory Concession C16 (ESC C16) that can be used.
This is a concession applied by HMRC, which allows the remaining assets and cash in the company to be distributed to the shareholders without a liquidator being involved.
Where ESC C16 is used the distributions made to the shareholders are treated as capital, so capital gains tax is payable on any gains. In many situations, the amounts are small so the gains are covered by the individual's annual capital gains exemption (£9,600 for 2008/09) so no tax is payable at all.
However, before the Taxman will give permission for ESC C16 to be used the company secretary and its shareholders must give HMRC the following assurances:
- does not intend to trade or carry on a business in future;
- intends collecting its debts, paying off its creditors and distribute any balance of its assets to its shareholders; and
- intends to ask Companies House to strike it off the register of companies.
The shareholders and the company must agree to:
- provide all information to HMRC such as company tax returns and accounts to determine any tax liabilities, and pay any corporation tax due on income or chargeable gains and
- the shareholders will pay any tax due in respect of any amounts distributed to them out of the company.
One word of warning; any aggrieved creditors of the company can object to the company being struck-off and may ask for it to be reinstated if it has already been struck-off. Thus if there are any live claims against the company, a formal liquidation is usually the best way to solve the problem.
Mazuma are delighted to welcome three new franchisees to our network. The three new offices will all be fully operational from 1st March and are located in Cardiff South and the Vale, East London and Milton Keynes.
This marks an exciting stage in Mazuma’s development. We are thrilled that we have three new offices across the UK that are all able to offer the unique combination of good value services and exceptional customer service that are at the heart of Mazuma’s philosophy.
Tax Diary February/March 2009
1 February 2009 - Due date for corporation tax payable for the year ended 30 April 2008.
19 February 2009 - PAYE and NIC deductions due for month ended 5 February 2009. (If you pay your tax electronically the due date is 22 February 2009)
19 February 2009 - Filing deadline for the CIS300 monthly return for the month ended 5 February 2009
19 February 2009 - CIS tax deducted for the month ended 5 February 2009 is payable by today.
1 March 2009 - Due date for corporation tax due for the year ended 31 May 2008.
19 March 2009 - PAYE and NIC deductions due for month ended 5 March 2009. (If you pay your tax electronically the due date is 22 March 2009)
19 March 2009 - Filing deadline for the CIS300 monthly return for the month ended 5 March 2009.
19 March 2009 - CIS tax deducted for the month ended 5 March 2009 is payable by today.
DISCLAIMER - PLEASE NOTE: The ideas shared with you in this newsletter are intended to inform rather than advise. Taxpayers circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.