Tax Guru

This feature is sponsored by: TaxAssist Elgin

Writing exclusively for Moray Life, Elgin-based tax and accountancy specialist Andrew Richardson gives advice on financial matters to small businesses.

If you have a tax query then please submit your questions directly to Moray-Life using this form and Andrew will try to give you a response on this page next month.



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.

Q: I have just picked up an order for a customer based in Germany. Do I need to do anything differently with the VAT invoice I issue them?

A: There are a number of differences, such as:

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

You must ask the customer if they are registered for VAT in their country, and if they are, obtain their VAT number

If they are VAT registered, then you may zero-rate the sale; i.e. the VAT rate you show on the invoice is 0%, provided that:

The goods are sent outside of the UK to another EU country

You can prove the goods have been sent outside of the UK to another EU country with supporting documents

You have dispatched the goods (and have evidence of this) within a specified time frame – which is normally three months

If they are not VAT registered, then raise the invoice as if it were to any normal UK-based customer

Please note, the above list is merely a brief summary and is not exhaustive.

Q: I am a contractor and have been concerned about the IR35 regulations for as long as I can remember. I recently took HMRC’s Business Entity Tests and came out ‘low-risk’. Is this the end of the story?

A: No, I’m afraid not. If you read the small print of the Business Entity Tests, HMRC state that the result of the tests are not binding.

Firstly, the tests are only designed to gauge the risk that HMRC might check whether IR35 applies to you. The tests look at how your business works overall; they do not check each individual engagement/ contract you have.

Furthermore, the tests cannot cover every scenario and each case would need to be considered on its own facts.

Q: I've paid an employee statutory sick pay as he's been off for two weeks and it looks like it’s going to last a bit longer. However now he wants to take some of it as annual leave, because he's struggling to make ends meet on just his sick pay. Do I have to agree this as I have already run payroll, paid him and printed his payslip?

A: No, you are under no obligation to do what he’s asked. Employees have a right to request annual leave but you do not have to agree to the request. If an employee becomes sick during a period of annual leave, they have the right to have it converted to sickness rather than holiday; but not vice versa.

You might want to agree a request for leave for a period of time in the future though. This would solve your employee’s cash flow problems and mean that you aren’t faced with a large amount of leave to fit in when he returns.

Q: I have my own business and the car I use for business trips is held outside of the business. What am I allowed to claim as a mileage allowance and what are the VAT implications?

A: HMRC sets ‘allowable’ Mileage Allowance Payments (MAPs). Currently, for cars and vans the MAPs are:

45p per mile for the first 10,000 miles in a tax year

25p per mile for mileage in excess of 10,000 miles in a tax year

5p per mile for any passengers

You must keep records of all business mileage and VAT receipts for your fuel costs. Any mileage claimed in excess of the HMRC rate will be classified as a benefit and must be included on a P11D form.

The MAPs are intended to cover all the running costs of the vehicle. As a result, only some of it is VATable and this is calculated based on the Advisory Fuel Rate for your vehicle, which can be found on HMRC’s website.

The structure of your motor expenses can lead to a number of different tax consequences, so you should be advised to seek professional advice if you are doing significant mileage.

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…

"Day in and day out, your tax accountant can make or lose you more money than any single person in your life, with the possible exception of your kids."

By Andrew Richardson

TaxAssist Accountants Moray

Andrew’s contact details:

Please see my TaxAssist page for more details.