Hello again!

My name is Andrew Richardson and I have been running TaxAssist Accountants in Elgin for five years. I am hoping that this tax advice section will become an interactive feature. Submit your tax and accountancy questions to Moray Life and I’ll answer a sample of them each month, along with a brief summary of the tax issues we should be looking out for.

Things you need to know:

The deadline for renewing tax credits is the 31st of July. If you miss this date, then you will have just 30 days to return your Annual Declaration form, otherwise you will likely be asked to make a new claim. Those who only received an Annual Review notice will have their claims renewed automatically, but still need to call the tax credits helpline [0345 300 3900] if their circumstances have changed.

The 31st of July is also the date when a second 'payments on account' is made. This is only for those who have submitted tax returns and had more than 20% of their total income outside of PAYE and were due to pay a tax bill larger than £1,000 for the 2011/12 tax year.

You must show the VAT and net values (for each rate of VAT) of the invoice in sterling; even if you are also showing the native currency as well

Q: I was late in sending in my staff's 'Benefits in Kind' forms to HM Revenue and Customs. Can you tell me what sort of penalties might I face, and is there anyway to avoid this?

A: Late filing penalties for P11D(b)s are £100 per 50 employees for each month or part month after the deadline. Unfortunately, there isn't much room for avoiding this unless you can prove that there were exceptional circumstances that prevented you from submitting the forms.

The deadline for copy P11Ds [and the original P11D(b)] was the 6th of July with class 1A National Insurance due by the 19th of July (22nd if paying electronically). The only good news I can offer is that your penalty should be limited to £100 (as would anyone who files their return by the 5th of August).

Q: I registered my business for VAT voluntarily, because I thought it would be beneficial for my business. But looking at the numbers, it doesn't look that way so I will be cancelling my VAT registration in due course. I was just wondering if I could retrospectively cancel it - so that I could recoup the VAT I have paid on my sales so far.

A: I am afraid retrospective cancellation of your VAT registration is not possible. The cancellation only applies once HM Revenue & Customs (HMRC) has received your de-registration form - HMRC Form VAT 7 which is available from their website: www.hmrc.gov.uk.

You may opt for a future date though. There are lots of considerations when de-registering for VAT such as the date to de-register and the VAT you have recovered on your stock and certain capital items.

Q: I have just entered into a five-year lease for a shop and my landlord has given me a two-year rent-free period because he struggled to get a tenant. My annual rent once the rent-free period is over will be £15,000 per annum. How will I treat the rent in my accounts for the next five years?

A: The total rent you will pay over the term of the lease will be £45,000 (being £15,000 x 3 years).

Spread this across each accounting period. Assuming your first accounting period is a fully year, you will have tax relief on £9,000 each year (being £45,000 ÷ 5 years). Even though you won't have physically paid any rent in the first two years, you will get tax relief on £18,000.

If you have a tax query then please submit your questions to Moray Life and I'll try to give a response next month. And always remember...

'A fine is a tax for doing something wrong. A tax is a fine for doing something right.'

By Andrew Richardson

TaxAssist Accountants Moray

Andrew’s contact details:

Please see my TaxAssist page for more details.