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MYOB Centre

There are many simple processes that can ease your bookkeeping administration and relations with the tax authorities. Why not have a browse through these resources which are taken from my experience with my clients? I have also included some links to websites that I recommend.

1. MYOB - Tricks of the Trade

This manual is intended to offer guidance on some key aspects of the use of MYOB for small businesses accounts. It is written for UK small businesses with issues like stock, VAT, foreign exchange, dividends and expense claims to deal with.

Have a look at this set of procedures for common accounting or taxation problems within MYOB. If you are looking for a procedure that isn't covered please let us know and we'll see if we can help, or perhaps even write you something specifically for you. 

• Tricks of the trade

2. Starting Up

• Creating a Company
• To create a Company
  
• Business Stationery
  
• Registering with HM Revenue and Customs
• Incorporation

3. Bookkeeping

Cashflow Monitoring using MYOB

MYOB has functions which can assist you control your cashflow. The full cashflow monitoring functions can be time-consuming to setup and maintain. Therefore most businesses do not use these areas.  For more complex businesses, however they can be a help.  They reduce your need for unnecessary credit and help you avoid unauthorised overdrafts. 

You need to anticipate when money is likely to be paid out to suppliers or receivable from customers. To track these payment dates, you need to use the ‘Terms field’ in either Purchase Invoices or Sales Invoices. These need to be set to the date on which the customer is expecting to pay or date on which the supplier is due to be paid.This simple cashflow procedure doesn't involve using the MYOB cashflow report. 

Make sure the defaults are set accurately across the board under preferences. You can  specifically alter customer defaults or individual sales invoices. You can generate the reports necessary to show when receipts are going to actually come in.  You need to run a ‘Debtors Reconciliation’ [Detail] report. Critically you need to alter the ‘Options’ under ‘Customise’ to show the days overdue, rather than according to sales invoice days. To show the month in which the receipts are expected you should switch your preference to work on month ends rather than by banding by number of days. 

When you run the ‘debtors reconciliation report’, run it for four months in advance of the current date. This will give you a column breakdown showing you the date by which the invoices are expected to be paid. Thus you will be able to see the receipt dates under total receipts, due in by month across the whole firm. You can add these into a spreadsheet planning your cashflow.

Similarly you can create a report by payment date by supplier month by month, by post dating the ‘Creditors reconciliation’ [Detail] report.  To get the best out of these two report, it maybe advantageous to set the payment terms on the date by which you absolutely have to pay a supplier, or the date on which you definitely expect a receipt from the customer. This is better than using the formal payment terms that have been agreed or offered with the customer or supplier.   

Accounting at VAT Period Ends

This is an MYOB procedure for VAT quarter or month ends. The procedure is the same whether you are on VAT quarters or for those on annual accounting.

A. Preparing the books for the VAT period end.

1.    The first priority is to do the bank reconciliation. Ideally this should be on the exact date of the VAT period end.

2.    Then run the ‘Debtors Reconciliation [Detail]’. The debtors’ reconciliation report compares the balance of debts as at the period end date with the amount outstanding in the trade debtor nominal account as stated in the balance sheet. Obviously there should be no imbalance nor illogical or uncollectable values.

3.    Then do the same on the creditors’ side. Look at the purchases register and check the open purchases. Are they all logical and genuinely due? Then display the report `Creditors Reconciliation [Detail]’. Check through it and make sure you have sensible recent values and no out of balance figure. Will all these values actually be paid?

4.    You need to run through a report called the `Vat Exceptions’ report. Run it for both `cash’ and `invoice’ transactions.  Examine all the transactions which look odd, highlighting them with the magnifying glass that appears when you move the mouse arrow over report. When you are happy with the VAT expectations report.

5.    You should make sure your bank and VAT accounts both reconcile to the relevant reports - the bank account to the bank reconciliation, and the VAT to the VAT detail or the VAT return report. Make sure your VAT outstanding on your debtors and creditors looks roughly right. This in turn means that your debtors and creditors have to be correct. Any mis-invoiced sales have to be reversed or amended.

6.    Then you run the VAT detail cashbook. Look at the individual lines and see if there is anything important that is missing. Check if any value looks odd (for example if there is a sale turning up unexpectedly in the zero-rated section. An obvious line to check is your mileage.

7.    Then finally run off the VAT Detail report and print it. Fill out the VAT return, either online as recommended last month or as a physical copy, and post it. Keep a printed copy and file it with the VAT Detail Report. Then amend the set-up preferences - go to 'Setup', 'Preferences', and ‘Security’. Then and set the lock period forward to the end of the quarter that has just shut. This prevents you from making any amends on that closed quarter.

Accrued Accounting

This is where you pay VAT on sales you have invoiced out. Correspondingly you claim VAT on purchases you have actually paid the invoice off. If you are on this scheme print off VAT Return and use it to complete the VAT return.

The ‘VAT Due’ balance now crystallises because you are issuing a VAT return to the HMRC. So we need to journal the balance out of ‘VAT Due’ and post it into ‘VAT Due on Next Return’. Date the journal the last day of the quarter. This should reduce the balance on ‘VAT due’ to nil.

I've shown you how to enter a recurring journal using the crystallising of the VAT liability as an example. You'll find all of the ledgers working the same way with this sort of recurring transaction.

It is important to remember to turn the alert on so that the administrator (yourself) is reminded to run them as they fall due. Also, tick the box at the bottom which says 'Save my changes'.

The period end journal is dated the last day of the VAT period and has two lines:

1.    The amount that is debited to the ‘VAT Due’ account is the balance on the account at the period end.

2.    The amount that is credited to ‘VAT Due On Next Return’ liability is the same amount as on the report: ‘VAT Return’. This report is on an accrued basis. Enter these figures on the VAT Return.

Cash Accounting

This excellent scheme is where you only pay VAT on sales you have actually been paid for. Correspondingly you only claim VAT on purchases you have actually paid off. If you are on this scheme print off VAT Return [Cash] and use it to complete the VAT return.

Again the ‘VAT Due’ balance crystallises on the last day of the VAT period because you are issuing a VAT return to the HMRC. So we need to journal the balance out of ‘VAT Due’ and post the amount payable into ‘VAT Due on Next Return’.

However there is a twist if you are on cash accounting. An element of the accrued VAT isn’t going to be payable. This is the ‘VAT Cash accounting element’. You hold this value aside in a third VAT liability nominal account.

The period end journal is dated the last day of the VAT period and has three lines:

1.    The ‘VAT Due’ account works on an accrued basis (as opposed to the cash basis you may use for your actual payments. The amount that is debited to the ‘VAT Due’ account is the balance on that account.
 
2.    The amount that is credited to ‘VAT Due on Next Return’ is the same amount as on the report: ‘VAT Return [Cash]’ as you are on cash accounting. This report is on a cash basis, and will give a different payable figure to the accrued report above. It will be a debit figure if you are reclaiming money from the HMRC.

3.    As you are on cash accounting there will be a difference between 1 and 2. The difference between the two figures goes to ‘VAT Cash accounting element’.

Annual Accounting

This is also an excellent scheme, which I recommend to most clients turning over less than the £1.4 million per annum threshold. If you are on this scheme then, during the year you pay annual instalments on an estimated basis.

The HMRC will agree a figure with you say £5000 per month. The bookkeeping is easy! You book these payments to liability nominal- ‘VAT Payments on account’.

Then you come to the end of the year. During that year all of your real VAT liabilities have been building up in the ‘VAT Due’ account. This is the account you should already be familiar with. When you get to the end of the year, check that the balance on the ‘VAT Due’ nominal account agrees to the VAT Return report (for accrued VAT accounting). You run this report from the ‘Index to Reports’. Check the report balance for the year agrees to the amount on the ‘VAT Due’ account.

Then run the cash or accrued process as described above, depending on which form of annual accounting you are on. Run the journal for the year end liability as given above.

The amount payable at the end of the annual accounting period therefore becomes the difference between ‘VAT Due on the next return’ and ‘VAT Payments on account’. Code the transaction to pay the VAT so as to clear these two nominal accounts down to nil.

Annual Accounting Cashflow Advantage

Say your VAT year is also the calendar year, say you have a liability in one year, four quarters of £50,000.This would equate to £5000 per month, paid in nine monthly instalments and a balancing payment also of £5000 at the end of February 2011. You can negotiate that with the HMRC dependent upon your fourth quarter 2009 return. The scheme will save you cashflow for any growth that you have above the actual for 2009.

Imagine you increase your turnover in 2010. The VAT that falls due in 2010 will be assessed only on the basis of your 2009 liability.
 
VAT Compliance

If the VAT inspectors were to call suddenly, you ought to really know where your VAT cashbook is. This may have been a spreadsheet in the past. You've got to ensure that the VAT [Detail] reports exactly match what has been reported to HMRC at each period-end such as June. This is the case even if you get a subsequent adjustment, such as a late arriving purchase invoice or a correction to a previous sale. You must post the change into the following VAT quarter.
 
If we have been onsite our consultant will have been through a VAT period end procedure with you, including the journal, the reconciliation of the cash accounting and the VAT [Detail] report, to maintain your record-keeping.

The reason for these reports is that each business is required to keep a VAT cashbook by the HMRC. You have to allow inspection of this cashbook should the HMRC come to investigate you.

Closing the VAT period end

When you’ve finished the VAT period-end, it is very important that you put on the lock period. You find this function under ‘Setup’, ‘Preferences’, ‘Security’.  Please advance it to the current quarter-end to prevent retrospective alteration of the VAT cashbook.

Conclusion

All this may seem fearsome; but it only has to be done at a VAT period end. The huge advantage of the procedure I describe is that the VAT system doesn’t need further reconciliation. The system self-reconciles. As long as balance on the ‘VAT Due’ account is nil at each period end the justification for each VAT return is transparent. If you end up paying more or less than the calculated liability the outstanding liability for the past VAT periods is separated from the VAT liability building up for the current period. The year-end justification for the VAT balance should ideally become the VAT Return itself. Simple.

If you move to VAT annual accounting all this can become part of the year-end accounting job.  I’m explaining all this in detail, however the chances are that your accountant would do this for you, whether that is Simple Accounting Ltd or another firm.

Charity Accounting

This is a short review of how charity accounts must be regulated following the introduction of SORP (Statements of Recommended Practice) 2005.

SORP (Statements of Recommended Practice) 2005 (Word)

Credit Checks

CheckSURE is a complete online commercial credit checking service:

Checksure

Financial Controls

The following documents help you set up your procedures:

• Financial Procedures(Word)
• Purchase orders and invoices (pdf)
• Financial Glossary (Word)

Banking

The Federation of Small Businesses and the Co-operative Bank
The Federation of Small Businesses (FSB) offers free banking with the Co-operative bank for FSB members. Tel: 0800 141415 (Co-op bank) 
FSB website: www.fsbbusinessbanking.co.uk

Alliance and Leicester
The Alliance and Leicester offers a free Business Current Account Tel: 0800 5870800
Website: www.free-not-fee.co.uk

Co-op business visa card: www.co-operativebank.co.uk/

I recommend you use a card willing to create a quarterly transaction report. This can be entered directly and can save time with bookkeeping.

See the section below under Staff Benefits and Expenses.

Authorising purchases and invoices on MYOB

This is an authorisation flowchart showing you how to make a purchase and pay an invoice in MYOB.

Flowchart for Purchases and Invoices (Word)

Hire Purchase (HP) versus Purchase

A Comparison of the Benefits of HP versus Purchase (pdf)

Legal Protection

I recommend that my clients join a legal protection scheme. Small companies tend to be particularly vulnerable to employment and trading disputes or Inland Revenue investigations. You can get a whole series of insurance and membership benefits by simply joining the Federation of Small Businesses - call them on 08705-133307.

Federation of Small Businesses Website: www.fsb.org.uk/

Pensions

Pension Practitioner.com are a team of pension experts specialising in structuring and administering small schemes for business and entrepreneurs. They make sure that small schemes can operate for a low cost, simply and efficiently. They achieve this by operating under low overheads, the structure of the schemes are simplified and in-house systems ensures smooth administration.

Pension practitioner .com

The following document provides useful information for setting up a will or pension.

Wills and Pensions (Word)

Personnel

Appointments

The following documents (all in Microsoft Word) are drafts which you may like to amend for your own business:

• Application Form
• Application Form Covering Letter
• Appointment Letter
• Equal Opportunities Policy
• Equal Opportunities Monitoring Form
• Job Description
• Person Specification
• Travel and Subsistence Policy

Employing your Wife

Mixing business and pleasure can cost you dearly if you don't stick to the rules – so if you are thinking of employing your spouse, consult this top ten checklist of ways to keep your house in order. It was written by accountants and business advisors PKF.

Employing your wife(pdf)

Dismissal

• Changes in Employment Law
• Dismissal, Disciplinary and Grievance Procedures

Statutory Maternity Pay

Statutory Maternity Pay (SMP) is recoverable against your National Insurance bill. If you are paying on gross National Insurance contributions path 1 of £45,000 per annum or more you can get 92% of your SMP back.  If you are less than £45,000 then you can get 100% of the SMP and 4.5% more against your National Insurance bill. 

Bookkeeping

• Staff Payment Request
• Staff Change Record Form

Staff Benefits and Expenses

Not all employers provide benefits. If you decide to, some benefits can be given to employees (including yourself) tax-free, while others are taxable at beneficial rates.

Tax Free Benefits

Do not think you can use all kinds of expenses to lower the tax bill. The reality is that tax relief is due only for expenses which are incurred wholly and exclusively for the purposes of the business. In practice HM Revenue and Customs (HMRC) does allow proportionate claims to be made for assets like cars, which are used partly for business and partly for private purposes.

The following are completely ignored in working out an employees personal tax. Common examples are:

• free or subsidised meals in a staff restaurant so long as it's open to all staff
• some staff parties
• free parking at, or near, your work
• an interest free loan to buy a season ticket to travel to work
• relocation expenses up to a certain limit

Tax-Free Business Mileage Rates

The H M Revenue & Customs (HMRC) will allow the following amounts that can be claimed tax-free.

(Petrol hybrid cars are treated as petrol cars for this purpose)

Taxable Benefits

You will have to pay tax if you give your employees these. Common examples are:

• a car or van that your employee can use for private motoring
• free fuel for private motoring
• free, or low cost, living accommodation, unless it is needed because of your job
• tickets and vouchers that your employee can use to get free or cheap goods or services
• loans beyond £5000

Here is a brief advising against paying fuel costs on company- owned cars used by employees:

Free fuel (Word)

Expenses Dispensation

A P11d expenses dispensation simplifies the process at the end of your payroll tax year. No longer are you forced to declare expenses as taxable income and then forced to recover the tax from the Inland Revenue for legitimate company expense. Below is a typical letter that you can write.

Expenses Policy(Word)

Simpler Accounting for Staff Expenses

It is now possible to get company credit cards that do the bulk of the accounting work for you. Get a credit card that has a quarterly activity statement – a typical supplier would be the company Visa card issued by the Co-operative Bank or MBNA:

MBNA Business Credit Card: https://wwwn.applyonlinenow.com/UKBCapp/Ctl/....

Co-op business Visa card: www.co-operativebank.co.uk/

A typical activity statement lists out all of the transactions on all of your company Visa cards every quarter. Then there follows a very useful analysis based upon the sort of supplier that you paid with each transaction. Thus your quarterly meal costs are added up under the 'restaurant' heading, accommodation under 'hotels', and consumables and other expenses under'other'. The total costs can therefore be booked in aggregate every quarter using this statement and the appropriate VAT codings given.

It may be that some lines may need to be split (for example 'other expenses'). But entering this summary every quarter is far more straightforward than accounting for every single Visa payment on the date that it occurs and then reconciling the Visa card nominal account back to the amount that was paid off each month.

This method means that you still have to enter the bank transaction that pays off the Visa balance each month. The monthly transactions are simply posted, VAT free, to the largest nominal involved (e.g.accommodation). If your business incurs large Travel and Subsistence claims, the quarterly bookkeeping then becomes a 'spend money' transaction. This reverses the interim postings made to accommodation in the preceding months and allocates the costs off in line with the activity statement.

To use this method, you really need your accounting year, VAT quarter end and quarterly activity statement to align. There are workarounds if you don't manage to do this.

Staff Expenses Spreadsheet

Ensure that you have the right records to satisfy the HMRC should they come knocking on your door. To keep accounting discipline use the sample expenses spreadsheet below to record employee expenses.

You will be able to record costs incurred by staff (including directors) and have a record sheet to issue reimbursements from the supplied receipts.

Once the spreadsheet has been setup with your company name, the employees name and an incremental record number for each spreadsheet produced for your employee; you can begin to start inputting all the expense receipts. 

Example staff expenses spreadsheet
Staff Expenses Spreadsheet (Excel)

General expenses (excluding mileage)
Please carry out the following tasks to ensure you have a good, clean set of records:

1.    Start by entering the date of the transaction in column A,
2.    Enter a small description of the item in column B,
3.    Enter the suppliers name if known in column C,
4.    Enter the amount in column F
5.    In column G enter ‘0’ if item zero rated VAT, ‘1’ if the item bears reduced rate VAT (5%), or ‘3’ if the item bears standard rated VAT (17.5% or 15%).
6.    Enter the corresponding expense account number to which the item relates to; e.g. stamps will be ‘6’ relating to MYOB expense account 6-6700.

You will now see the original amount shown under the relating expense account (columns M-T). This figure will be net of VAT. Any VAT corresponding to this amount will be shown separately in column U.

Mileage expenses
To enter mileage in the expenses spreadsheets please enter as follows:
1.    Follow instructions as per General Expenses 1-3 above.
2.    Enter the starting mileage and ending mileage in columns D and E (issue an employee with a record sheet to record starting and ending mileage, this can then be used to enter the mileage details).
3.    Column F then gets pre-populated with the figure total using the following sum [(ending mileage - starting mileage) x 0.40].  You can amend the rate of mileage you give employees by going into the first cell in column F by changing the figure from 0.40 to the required rate). Please remember to drag the cell down to copy the new formula into the rest of the column.
4.    Follow Instructions 5-6 as per General expenses above. (Note mileage bears VAT at 5%).

How to change the VAT
To change the VAT please go into cell G8 and change the relevant figure e.g. 2=15% to 2=17.5% once the rate is changed again in January 2010.
Then go into cell U8 and change the corresponding VAT element e.g. change the following formula for the rate change in 2010 to 17.5%:

Original Formula
=IF(G8=1,F8*0.05/1.05,IF(G8=2,F8*0.15/1.15,0))

The new formula will read as follows:
=IF(G8=1,F8*0.05/1.05,IF(G8=2,F8*0.175/1.175,0))

Note- Please remember to copy this formula down to all the rows below U8 to ensure you get the correct VAT figure and total payable figure.

Petty Cash Voucher

I recommend using an imprest system to administer petty cash. Don't try to book every transaction into MYOB, it is too easy to get confused. Instead, enter a weekly or monthly summary.

Example petty cash voucher:

Petty Cash (pdf)

Mobile Phones for Family employees

Could your family live without their mobile phones? And did you know that the provision of a mobile phone to an employee is exempt from both income tax and NI? So why not combine the two and have company phones for those of your family who work for the business?

Mobile Phones (Microsoft Word)

Directors' Loan Accounts

There are two consequences of leaving an overdrawn director loan;

a) Leave it as a director loan.  If we carry it forward at the year-end you have to declare it.  You have to pay tax to the UK authorities of 20% of the amount outstanding on the loan.  That will repaid nine months after the accounting period in which the loan is repaid or written off.  Is it worthwhile paying the tax leaving the loan overdrawn until we have sufficient reserves to pay a dividend?  If there is going to be enough profit in forthcoming year then an overdrawn DLA becomes a business tax cash flow issue.

b) There is also a personal tax effect of an overdrawn loan account.  One of two things have to happen. You could declare a benefit in kind based on the official rate of interest 6.25% on the outstanding loan (on a P11d) - and the director pays income tax broadly of 2% (higher rate tax payers). Alternatively we must get the company to charge the director the historical interest equivalent to what would have been the benefit - 6.25%.

Wills and Pensions

The following document provides useful information for setting up a will or pension.

Wills and Pensions(Word)

Board Minutes and Dividend Certificates

If your business is run through a limited company, it is important that you have proper board meetings to decide matters such as dividend payments. The Inland Revenue may challenge dividends as a potential form of remuneration and therefore subject to PAYE.

Directors must agree the dividend with a minuted vote. You should attach draft accounts, profit and loss and balance sheet. This shows that the decision was taken in line with actual profits. You should issue a fax or email. These are dated and so they show that a decision was taken at the time, not retrospectively.

Get it right - minute your decisions! We can help with this process if you prefer.

Draft Board Meeting Minutes (Word)

Dividend Certificates

To verify that you are not receiving remuneration you need to prove that your dividend payments are exactly that... dividends. This is also evidence that will back up your personal tax return. Complete one for every decision you make.

The interim or final dividend must go into the MYOB books on the day it is due. This is best done through entering service purchases to each shareholder for the dividend due. If the dividends are put into the books retrospectively it could face challenge from the Inland Revenue unless minuted within 9 months of a year-end.

Model Dividend Certificate (Word)

Tax

HMRC Form 64-8 authorising Simple Accounting as your Agent

Before Simple Accounting can fully handle all your tax matters efficiently and effectively, HMRC requires you to complete a form 64-8 (pdf file). This gives authority to people like us who deal with your companys' and personal tax affairs.

This authority allows HRMC to exchange and disclose information about you with us. It also allows them to deal with us on matters within the responsibility of HMRC. This overrides any earlier authority given to them. HMRC will hold this authority until you tell them that the details have changed.

Who should sign the form

What this authority means for matters other than VAT or Tax Credits

HMRC will start sending letters and forms to your agent (that’s us). They also will allow us access to your account information online.

Usually the HRMC may need to correspond with you as well as, or instead of, your agent.

For example, the latest information on what Self Assessment forms HRMC send automatically can be found on the HMRC’s website www.hmrc.gov.uk/sa/agentlist.htm or phone the SA Helpdesk on 0845 9 000 444.

You will not receive your Self Assessment Statements of Account if you authorise us to receive them instead, but paying any amount due is your responsibility. HRMC do not send National Insurance statements and requests for payment to us unless you have asked the HMRC if you can defer payment. Companies do not receive Statements of Account.

VAT

HMRC will continue to send correspondence to you rather than to Simple Accounting. If we have a 64-8 the HMRC can deal with us in writing or by phone on specific matters. If we are able to submit VAT returns online on your behalf, you will need to authorise us to do so through the HMRC’s website.

This authority does not allow Simple Accounting to request personal information held about you under the subject access provisions of the Data Protection Act 1998. Further information can be found on the HMRC website, www.hmrc.gov.uk

Multiple agents

If you have more than one agent (for example, Simple Accounting acting for you on Corporation Tax and VAT issues and TaxAssist for Personal Income Tax and PAYE ), please sign one of these forms for each.

Where to send this form

When you have completed this form please send it to:

HM Revenue & Customs
CAA Team
Longbenton
Newcastle upon Tyne
NE98 1ZZ.

There are some exceptions to this to help speed the handling of your details in certain circumstances.

Businesses Face New Penalties by HMRC

Many businesses are unaware of the new penalties introduced in April this year if their tax returns are late, have errors or underpay their taxes.

Her Majesty’s Revenue and Custom’s (HMRC) new penalty regime affects business irrespective of their size, sector or structure. This is part of their policy to ensure businesses pay their dues in full and on time – or face the consequences.

So what are the penalties for incorrect tax returns?

From 6 April 2008 (for returns for this tax year), if a tax return is incorrect and the tax is understated, your business could be fined up to 100% of the understated tax.

The penalty will depend on:

• How much tax has been understated
• Why you understated the tax and
• Whether you then disclosed the error to HMRC.

If you make an honest mistake, there will be no additional penalty. But other types of behaviour can result in higher penalties:

Telling HMRC of your mistake can reduce the fine but penalties won’t be reduced if HMRC has to chase you up! From next year, the penalties regime will also apply if you don’t tell HMRC about new or altered taxable activities – for example, if you are late registering for VAT.

Companies House and HMRC- late accounts and penalties

E.g. A company's year-end is 31st March 2009 and the company followed the timetable below then the penalties incurred are likely to be as follows:

These penalties are doubled if accounts are filed late in two successive years.

Failing to deliver annual accounts, annual returns (form 363A ) and other documents on time is also a criminal offence for which company directors may be prosecuted. Persistent late filing of the annual accounts or returns may also lead to the company being removed from the register.

Accounting and Tax Deadlines

The date for submitting accounts to Companies House is being brought forward to nine months after the Accounting Reference Date.

Accounting and tax deadlines (Word)

Buy-to-let landlords beware!

If you’re letting property, take extra care to declare your income this tax year. HMRC is cracking down on this sector, so you may find your tax returns subject to particular scrutiny.

New powers for HMRC

HMRC now has the right of access to business records and information. This includes right to inspect any records relevant to working out a business’s tax position in advance of the business making a tax return or filing its accounts. HMRC is also be able to visit your business premises and inspect records and assets on site – and they only need to give you 24 hours’ notice of their inspection. An inspector is able to ask your accountant, solicitor or other business adviser to release your files to him, without your permission.

If you don’t comply with HMRC, there will be a base penalty of £100 with additional fines of £65 per day. There is the right to appeal but clearly the penalty regime is best avoided in the first place. 

Conclusion

Businesses need to be aware of HMRC’s tougher stance on mistakes on tax returns. Even if you think a mistake is an honest one, you may find it difficult to persuade HMRC of that!

MYOB has the facilities to keep the HMRC satisfied with all the source information to justify your declarations. Businesses wanting to keep on the right side of the taxman are strongly advised to keep careful and up to date financial and tax records. Call us if you want help keeping your data in good order.

For more information a look

Source:

http://www.foot-ansteys.co.uk/index.cfm/solicitors/News.Details/sectionzone_id/66/news_id/1242

VAT quarter ends

We have outlined the procedure you should follow for VAT quarter or month ends.

VAT quarter ends (Microsoft Word)

Bad Debts and VAT

Businesses that have not paid their suppliers more than six months after the invoice date lose the right to reclaim the VAT on the purchase. Unless the cash basis is used, a business will normally have claimed input tax in the period in which the invoice date fell. If the invoice remains unpaid six months later, the VAT must be repaid regardless of whether or not the supplier has claimed bad debt relief. Of course, if the business does eventually pay up, it can then reclaim the VAT.

Customs is reported to be scrutinising aged creditors lists during VAT Inspections. A business that has not operated the rules correctly will be faced with a demand for the VAT plus interest. Where the amount is large, they will also charge penalties.

VAT Inspectors may also check that businesses are repaying VAT bad debt relief that they claimed in cases where they eventually receive full or part-payment of the outstanding debt. For example, a supplier may have gone into liquidation and the liquidator may have eventually made a part-payment to the creditors. Businesses sometimes forget that VAT must be paid on such part payments if they had previously claimed bad debt relief on the original debt.

Construction Industry Scheme

Here are some top tips to help you with the scheme.

Top Tips to Prepare For the CIS(Microsoft Word)

Corporation Tax

It is useful if you can make your chart of accounts straightforward for subsequent final accounts, tax and VAT calculations. To ease calculation of business tax it is important that you separately analyse all potential expenses that are disallowable and include those where expenses are allowed. Therefore try to design your chart of accounts so that it includes separate lines for all those expenses which have particular tax effects. The more bookkeeping you are willing to do the less your accountant charges you to do bookkeeping for you.

Information Required for Completion of the Corporation Tax Computation (Word)

Inheritance Tax Planning

Pavilion Row have produced a simple information sheet.

Inheritance Tax (pdf)

Intrastat

Intrastat is a trade reporting requirement for companies turning over £250,000. We have produced an MYOB add-on to address this.

Intrastat (Word)

Selling Your Business

It is important when you sell a business, that you put matters in order and make the business look as appealing as possible to potential buyers.

Due Diligence

Next Step:

Please contact us if you need further advice.

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