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What is the wholly and exclusively rule?

23 Aug, 2017

When deciding if an expense is deductible or not for tax purposes it is important to consider if the expenditure was incurred wholly and exclusively for the purposes of your trade or employment. This is a difficult starting point as there is often a fine line dividing what meets the ‘wholly and exclusively’ rule and what does not.

In general, HMRC takes a slightly more relaxed view than a strict reading of the legislation would suggest. HMRC’s own internal manuals offers advice to HMRC inspectors to exercise care when applying the test.

VAT partial exemption

23 Aug, 2017

A business that incurs expenditure on taxable and exempt business activities is termed as partially exempt for VAT purposes. In essence, the business has to make an apportionment between the exempt and chargeable activities using a 'partial exemption method'. This is required in order to calculate how much input tax is recoverable.

Record £2 million in back pay identified on lastest list of national minimum wage offenders

21 Aug, 2017

Around 230 employers have been named and shamed for underpaying their workers the national minimum wage (NMW) or national living wage (NLW). This is the 12th “naming and shaming” list to have been published and it covers more than 13,000 UK workers and means they will now collectively receive around £2 million in back pay. In addition to paying workers back the money they are owed, employers named on the list have been fined a record £1.9 million by the government. Retail, hairdressing and hospitality businesses were among the most prolific offenders.

When must you register for VAT?

17 Aug, 2017

The taxable turnover threshold, that determines whether businesses should be registered for VAT is currently £85,000.

Businesses are required to register for VAT if they meet any of the following conditions:

BPP holdings Supreme Court decision

17 Aug, 2017

The Supreme Court has dismissed HMRC’s appeal in a long running case between the BPP Group of companies (who provide professional and academic education) and HMRC. The case initially centred on the VAT liability of supplies of books and education by BPP. BPP had a corporate restructure in 2006 and began to use one company to supply the books (BPP University College of Professional Studies Ltd) and another company (BPP University College of Professional Studies Ltd) to supply education. BPP argued there were two separate supplies, that of zero-rated books and standard-rated education.

100% write down for qualifying capital expenditure

17 Aug, 2017

The Annual Investment Allowance (AIA) limit has changed significantly over the last number of years. However, the limit has been fixed at £200,000 for all qualifying expenditure on or after 1 January 2016.

What are overlap profits?

17 Aug, 2017

The assessment of self-employed or partnership profits is relatively straight-forward if the accounting date, to which accounts are prepared, falls between 31 March and 5 April. However, year ends that fall outside these dates create overlap profits.

Overlap profits can be created in the first 3 years of the business or in any year in which there is a change of basis period and accounting date.

For example, if your business commences 1 January 2016, and your chosen year end date is 31 December 2016, your basis periods are:

Choosing a company name

17 Aug, 2017

Companies House guidance sets out the main requirements for incorporating a company in the UK. The guidance entitled Incorporation and Names also provides advice on checking which names are acceptable to Companies House when naming a company.

VAT capital goods scheme

10 Aug, 2017

The VAT Capital Goods Scheme (CGS) adjusts the initial VAT recovery in respect of certain assets over either 5 or 10 year period. The scheme seeks to agree a fair and reasonable attribution of VAT to taxable supplies and non-taxable supplies relating to the use of an asset over its lifetime. In effect, the recovery of VAT input tax following the capital expenditure, is spread out over a number of years rather than being recovered at date of purchase.

How to roll-over capital gains

10 Aug, 2017

Business Asset Rollover Relief allows for the deferral of Capital Gains Tax (CGT) on gains when you sell or dispose of certain assets and use all or part of the proceeds to buy new assets. The relief means that the tax on the gain of the old asset is postponed. The amount of the gain is effectively rolled over into the cost of the new asset and any CGT liability is deferred until the new asset is sold.

Carry back charitable contributions

10 Aug, 2017

Donations to charities are a recognised way to benefit charities and certain tax payers. To facilitate these advantages, taxpayers must ensure they keep a proper record of all donations to back up claims on their tax return.

Donations that are made through the Gift Aid scheme allow for the recipient charity to claim 25p worth of tax relief on every pound donated. Higher rate and additional rate taxpayers are eligible to claim relief on the difference between the basic rate and their highest rate of tax.

For example:

Holiday lets occupancy rules

10 Aug, 2017

The furnished holiday let (FHL) rules allow holiday lettings of properties that meet certain conditions to be treated as a trade for tax purposes.

In order to qualify as a furnished holiday letting, the following occupancy criteria need to be met:

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