Question: While I was preparing this year’s tax return, I noticed I had made a mistake on last year’s return- and it has quite a significant impact on my tax position for last year. Can I change it?
Answer: If you make a mistake on your tax return, you've normally got 12 months from 31st January after the end of the tax year to correct or amend it. For example, if you send your 2014/15 online tax return by 31st January 2016, you have until 31st January 2017 to amend it. You can only amend your return after this timeframe if you received your return late (after 31st July). If you owe more tax or have to pay a penalty as a result of the mistake, HMRC should tell you how much you need to pay and when and how to pay it. If you think you're due a refund you can tell HMRC how you’d like to receive it. If you sent your tax return electronically, you can also amend it online. If you send it in hard-copy, you don't need to send in the whole tax return again. Just write to HMRC and attached the pages you want to change.
Question: I have a full-time job and in my spare time, I also have a craft business which I look after at weekends and evenings. Finding the money for my tax bill every January is always a bit of a struggle- especially after Christmas. Is there anything I can do to make my tax bill a bit more manageable?
Yes, you have 2 main options:
Collected from your wages;
You could opt to have it collected from your wages through your tax code. HM Revenue and Customs (HMRC) can now collect debts of up to £3,000 by adjusting your Pay As You Earn (PAYE) tax code. The effect of this is to recover the debt from your income, by increasing the amount that your employer deducts from your wages during the tax year. Your employer will then pay the tax they collect to HM Revenue & Customs on your behalf. Taxpayers wishing to have their tax bills coded out should tick the appropriate box on their tax return and submit it by 31st October if filing on paper or 30 December if filing online.
Or you could set up a Budget Payment Plan for Self Assessment. Budget Payment Plans are available to Self Assessment customers who pay by online Direct Debit and are up to date to with their payments. If you haven't paid the full amount you owe by 31st January 2017 through your Budget Payment Plan, then you will need to make another payment to cover the difference. If you'd like assistance in managing your cashflow or tax affairs, contact us to be put in touch with your local TaxAssist Accountant who would be happy to help.
Question: I am a contractor on the Flat Rate Scheme. I heard about the change announce in the Autumn Statement. Could you tell me what the definition of a ‘limited cost trader’ is please?
Chancellor of the Exchequer, Philip Hammond, has announced the introduction of a new category called ‘limited-cost traders’ that will be subject to a rate of 16.5% under the Flat Rate Scheme from April 2017.
A ‘limited cost trader’ will be defined as a business whose VAT inclusive expenditure on goods is either:
· Less than 2% of their VAT inclusive turnover in a prescribed accounting period; or
· Greater than 2% of their VAT inclusive turnover but less than £1,000 per annum if the prescribed accounting period is one year (if it is not one year, the figure is the relevant proportion of £1,000)
Therefore, it may apply to many consultants, contractors and other service-based businesses with minor outgoings. The rate is so aggressive that for those falling into the new category, it is likely to make use of the Flat Rate Scheme unfavourable and may even result in some businesses deregistering for VAT altogether if their turnover is below the VAT deregistration threshold. Businesses that think the new category may apply to them should begin reviewing their affairs ahead of the rate being introduced in April 2017. Your local TaxAssist Accountant would be happy to help and take care of any changes required to your VAT registration.