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David
Robertson
Associate
Director – Perth Office
For mistakes discovered in Vat periods commencing
on or after 1 July 2008, the error reporting threshold
has been increased from £2,000 to £10,000 or 1%
of turnover, whichever is the greater. Where the
1% of turnover figure is used, this is subject to
a maximum limit of £50,000. Where mistakes in Vat
periods exceed £50,000, these will always have to
be notified to HMRC by way of a voluntary disclosure
using form Vat 652 or by writing to HMRC using the
business letter head.
Employment Income – HMRC increases the Tax and Nic
free guideline Rate by 50%
It can often be difficult to calculate the additional
cost to an employee of working from home. HMRC allows
a guideline rate that can be paid free of Tax and
Nic without the employer or employee having to keep
records. With effect from 6 April 2008, HMRC has
increased the rate to £3 per week (previously £2
per week). It is possible to claim larger amounts
providing there is evidence to substantiate them.
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Business Taxation – Capital Allowances
Changes to the capital allowances regime originally
announced by Gordon Brown in March 2007 came in
to force on 6 April 2008 (1 April 2008 for companies).
The single most important change is the introduction
of an Annual Investment Allowance (AIA) of £50,000.
All qualifying expenditure on plant (excluding cars)
up to that figure now qualifies for a 100% allowance.
This effectively means that for many small businesses,
capital expenditure on all qualifying plant will
be treated as revenue expenditure for tax purposes.
It should be pointed out however that such expenditure
must be incurred for a qualifying activity by a
qualifying person. Qualifying activities are defined
in CAA 2001 and include (amongst others) a trade,
Schedule A business, furnished holiday letting business,
and a profession or vocation. However, it is the
definition of a “qualifying person” that is interesting.
A qualifying person is defined as either an individual,
a partnership of which all members are individuals
or a company. Therefore a Trust, or a partnership
of which one member is a Trust, will not qualify
for the AIA, although capital allowances at the
reduced rates of 10% or 20% will be available through
the normal “pools”.
Mistakes discovered in VAT
periods commencing on or after 1 July 2008,
the error reporting threshold has been increased
from £2,000 to £10,000 or 1%
of turnover.
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