There are many ways that you can get help with HMRC enquiries. Of course, you can take care of them on your own, without an agent. If this is your choice, you can find help in the form of e-books, websites, and books that will explain fully your rights and how to protect yourself from unfair taxation and penalties. However, it is always recommended that you have someone to represent you when you attend meetings with HMRC investigators.
If you are a business, or self employed, it will definitely be to your advantage to get tax enquiry insurance. This coverage allows for an agent to help you whenever you have any type of tax enquiry. In fact, other than dealing with full enquiries, there is Aspect Enquiry Cover and VAT insurance included as well. This allows you to get free tax advice and have an agent present with you in the case of an enquiry. It can also help offset some of the financial loss if penalties and taxes are charged by the government as a result of the enquiry.
If you want an agent and you do not have Tax Enquiry Insurance, you will have to find a firm of professionals that handles tax enquiries. You can do this through a simple internet search, by looking in your local phone directory, or by asking friends and neighbors for referrals.
Tax Enquiry Insurance is coverage that protects you or your business in the case that you are investigated by the government HM Revenue and Customs in tax enquiry, VAT enquiry, or aspect enquiry. The coverage is fairly inexpensive, and can save you a lot of money in the case that you are the subject of an HMRC enquiry. In fact, under this coverage, if you find yourself in an enquiry, you will have an agent appointed to you to protect your interests and rights during the case. The coverage may also allow for partial or total payment of penalties and additional tax amounts.
Most tax consultancy firms will offer tax enquiry insurance at a discounted rate when you take advantage of their tax advice and help in filling out your self assessment forms. These policies are more likely to offer partial or total payment of penalties and additional taxes, because the consultant will be partially or wholly responsible for the mistake. These policies are also more likely to cover VAT insurance for businesses, especially if you also use the service for your business accountancy. If you do not use tax consultancy firms for your self assessments, you can still get tax enquiry insurance through tax consultancy firms or insurance agents. These policies are more expensive and cover much less, but will include aspect enquiry cover.
VAT stands for Value Added Tax. This tax is comparable to the United States sales tax. VAT is charged on goods purchased within the United Kingdom, outside the European Union, and within the European Union. VAT is also charged on some services. The HM Revenue and Customs term for the goods and services that are VAT rated is taxable supplies. The value of the goods and services is called taxable turnover. As a business, you must charge VAT on all taxable supplies. This can include goods sold, goods and services rented, providing a service, or charging admission.
VAT registration is required by most businesses, primarily those that reach the taxable turnover threshold amount. Once registered, you must charge VAT on all of your products and services, with a few exceptions such as loans and property transactions that are exempt. You will also be required to file additional self assessment forms, and account for as well as pay all VAT income to the business. Getting VAT advice from a VAT consultancy firm will likely increase your chances of following correct procedure as well as help you determine how to charge VAT and what records must be kept. This will also help you avoid the VAT enquiries, which is almost more common than other HMRC enquiries. You can also get VAT insurance that will help protect you in case of an enquiry.
You will likely need to register for VAT if you take over or begin a business or corporation in the United Kingdom or Isle of Man. This is true especially if you get goods from other European Union nations to sell in the United Kingdom. However, some services are exempt from VAT, such as loan services, some property transactions, insurance policies, and most educational training and services. You may also be exempt from VAT if you do not meet the taxable turnover threshold.
Taxable turnover is defined as the value of goods and services sold through the business. Basically, taxable turnover is your total income from your business, not just the profit. The current taxable turnover threshold is 64,000 pounds. This means that if your business brings in 64,000 pounds or more annually, you will need to register for VAT. Even if you do not meet the threshold at first, you may want to go ahead and register for VAT if there is even the slightest possibility that you will meet the threshold, to protect you from VAT enquiries in the future.
If you are unsure whether or not you need to register for VAT, you can check with the HMRC, although they will likely try to convince you to register whether you need to or not. If you want real VAT advice, you should probably go to a VAT consultancy firm.
There are many instances in which you may want to register your business for VAT even though you do not meet the taxable turnover threshold. The most common instance of this is if you take over a business that previously did not meet the threshold. If a business was doing poorly, but you know you can turn it around, you should probably go ahead and register for VAT. If you do not register and charge VAT on your taxable supplies, and you meet the threshold for that year, the HMRC will likely begin the VAT enquiries and you will wind up paying a lot of money in penalties and taxes. According to government HMRC, you must register for VAT if you reach the threshold at the end of any month counting back twelve months, even if the previous twelve months do not all fall within the same tax year or accounting period. You must also register for VAT if you suspect that your taxable turnover will exceed the threshold amount within thirty days.
You can, if you wish, register for VAT voluntarily. If you make or sell zero rated goods, you will be able to get back input tax for your troubles of registering. You will also gain credibility for your business. However, you will also have to keep appropriate records and file regular VAT returns, so get VAT advice from a tax consultancy firm before going forward with registration if you do not meet the threshold.
Running a small business can be difficult anyway, especially if you know your business but not how to run it. You will definitely be the subject of many VAT enquiries if you do not keep proper records and remain organized. You can get help with this from accountancy firms, or through HMRC VAT consultancy. However, here are some available ways to keep your records and stay organized—and one step ahead of those nasty VAT inspectors!
First, you have to choose how you want to do your record keeping and pay your VAT taxes. Annual accounting seems to be the preferred scheme for HMRC, because you pay your VAT in monthly installments, then file a return at the end of the year and pay whatever is still due. Did you notice that there is no mention of getting overpayments back? Cash accounting is much better for small businesses, and is often more fair as well. In cash accounting, you pay VAT monthly as it comes in. There are also flat rate and retail schemes to help you manage your VAT more efficiently in larger businesses.
The best thing to do is contact a VAT consultancy firm for tax advice, and find out which scheme will benefit your company rather than the governments coffers. The important thing to remember is that without careful and precise record keeping and payments of VAT, you will surely find yourself the subject of stressful and expensive VAT enquiries, so it is better to spend a little money now to get the advice than have to pay for an agent to represent you later.
There are many ways that tax consultancy can be helpful when running a business. First, there are many records that you must keep when running a business, and these records are used to file your taxes each year. Some records also need to be sent to the government HMRC. Additionally, there are many tax laws regarding the employment of individuals, as well as hiring services. In most cases, you will also need to register for VAT, and keep records for this as well, and VAT consultancy is offered at most firms. Tax consultancy firms are staffed with professionals that can help you and offer you tax advice in all of these matters.
Tax consultancy can help you in other ways as well. In fact, more and more firms are now also offering employment law advice as well as health and safety advice for businesses. This allows you to go to only one company for all of your consultancy needs. You can also obtain tax enquiry insurance, and get assistance with any enquiries that may arise. Self employed or sub contractors will also benefit from these services, since the IR35 legislation has made it more difficult to tell what taxes these individuals must pay. All in all, it is a very good idea to enlist the aid of tax consultancy.
The government HMRC decided recently that too many people were claiming to be self employed, when really they should have been considered employees. Employee status makes a big difference in tax amounts as well as National Insurance contributions. For this reason, IR56 legislation was enacted to place restrictions on sub contractors and businesses, and placed special limitations on who can claim to be self employed for purposes of taxes and National Insurance contributions.
Under the IR56 legislation, even if you are a sub contractor, you are considered an employee for taxes if you work under the control of someone else. Basically, if someone else tells you when to work, what to do, and how to do it, and you do not run any risks of owning a business, you are considered an employee for tax purposes. If you run risks of owning a business, work with one or more clients, and set your own hours, you are considered self employed. While you may have to pay more taxes and NIC as an employee, you may also be entitled to benefits that you are not entitled to as a sub contractor. Therefore, there are some advantages to this policy. Still, the restrictions are getting tougher, and any questionable “self employment” will surely be investigated through aspect enquiries by the HMRC. If you are unsure if you can claim to be self employed or not, contact an agent for employment law advice.
Using tax consultancy to help you fill out your self assessment forms is a very good idea in most cases. However, while these professionals can save you money, you need to understand the laws governing these professionals. As of 2006, any professional is required to report tax avoidance schemes. This means that, while professionals can save you money through tax advice and correct filing of forms, they cannot offer or support any scheme that will save you money on your taxes through a loophole in the law, even if the scheme is technically legal. Not only this, but they must report that the tax avoidance scheme was used so that the HMRC can investigate.
The stated purpose behind this policy is to help HM Revenue and Customs collect taxes that have wrongly remained unpaid. However, the real effects of this policy is that loopholes in the law are being spotted and reported routinely, allowing for new legislation to be passed to close the loophole. Additionally, penalties can be charged, even if the return was technically legal. Basically, this is just a way for the government to get more money and raise taxes without raising rates. Still, using tax consultancy firms can help you avoid higher taxes and penalties by letting you know what your rights are and how to fill out the tax self assessment properly, so that you do not find yourself in tax disputes later.
There have been many complaints and many more enquiries into self assessments due to the new IR35 tax legislation. This legislation basically says that someone working for themselves can be considered an employee for tax purposes, and applies mostly to personal services that are companies with only one owner and employee, such as secretarial services and IT services. Basically, under this legislation, the HMRC can review the contract between the worker and the client company, and formulate a hypothetical contract that shows the worker to be a disguised employee. For example, an IT professional who may work Monday through Friday for three months for one company, then do the same thing with another company, would be considered an employee rather than a service for the purposes of taxes.
This is one of the situations in which tax advice and consultancy can really become helpful. If the HMRC tries to claim that you are a disguised employee, but you qualify as self employed under their own rulings, you can avoid being taxed as an employee on your wages, instead having to collect and pay the VAT tax on those service fees, which is much lower. In this way you can easily dispute the ruling, and “win” the aspect enquiries. However, because this practice is becoming so common, you should have IR35 cover in your Tax Enquiry Insurance, and make sure that you have the support and advice of an agent to help you legally dispute the issue.
