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.


Tax Guru 06-2013

Hello again!

My name is Andrew Richardson and I have been running TaxAssist Accountants in Elgin for six 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 still haven't filed my tax return for the 2011/12 tax year, but I'm pretty sure I don't owe anything. What penalties could I face when I file it?

A: You should have already received an automatic £100 initial filing penalty from HMRC. This is payable regardless of whether you had no tax outstanding or you were due a refund.

However, from the 1st of May, daily penalties of £10 per day will begin. These are capped at £900.

I would encourage you to file your return as soon as possible, ideally no later than the 1st of August when a further penalty of £300 (or 5% of the tax due, whichever is greater) will be added to your existing penalties. Further penalties will be triggered if the return is over 12 months late.

Q: I've just stopped trading as self-employed and returned to a PAYE job. What do I need to do and do I need to tell HMRC?

A: You should tell HMRC that your trade has finished as soon as possible so that they can get your tax affairs in order. This will also bring your Class 2 National Insurance bills / Direct Debits to an end as well. The easiest way to do this is to use HMRC's online form called 'Stopping self-employment'. You need to provide your contact details, date of birth and (depending upon your circumstances) your Ten-digit Unique Taxpayer Reference number or National Insurance number.

The online form only covers self assessment and national insurance, so if your business was VAT-registered, you will need to separately notify HMRC for that.

You'll also need to complete a tax return for the tax year in which the trade stopped. Once HMRC have processed this, they may send you a letter stating that they no longer require a return from you if your only source of income is from employment.

Q: I submitted P11D forms for my staff. They mostly cover reimbursed expenses, so they're very fiddly and time-consuming. Is there any way to reduce the paperwork and preparation time?

A: You could apply for a dispensation (or form P11DX) from HMRC. If you are successful, then you can remove the requirement to report reimbursed expenses on forms P9D or P11D.

Just remember that HMRC often update their online services, which means that it isn't always available and late returns may be subject to surcharges

There is a list of expenses that can be covered by dispensations, but examples of expenses typically covered are:

  • Travel, including subsistence costs associated with business travel
  • Fuel for company cars
  • Hire car costs
  • Telephones
  • Business entertainment expenses
  • Credit cards used for business
  • Fees and subscription

To stand a chance at obtaining a dispensation, you must have an independent system in place for checking and authorising expense claims so as a minimum, someone other than the employee must check their claim. If you are a sole director, you may still be successful, provided that you obtain receipts for all expenditure and the expenses are within the list referred to above.

A dispensation covers these items indefinitely, however HMRC reviews them regularly (usually at intervals of five years or less) to make sure the conditions under which it was granted still apply. Please note, a dispensation may not completely negate the requirement for P11Ds though, so if benefits in kind are provided, such as a company car, you will still need to complete forms P11D and P11D (b).


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 penny saved is worth two pennies earned…after taxes.'

By Andrew Richardson

TaxAssist Accountants Moray

Andrew’s contact details:

Please see my TaxAssist page for more details.