VAT payment deadlines & small traders. A warning. (Long)


The end of our VAT quarter was 30th April, therefore I understood the return & payment to be due on 31st of May, but since we submitted the return and made the payment electronically by the Banco Franco Billpay service HMRC made great play of pointing out we could hang onto our cash for 7 extra days & save / earn interest at the Bank Yada, Yada, Yada. We have taken advantage of this for a few years now without any issue.
Now it all appears to have changed (ICBW). According to the HMRC website today the Vat return is due in on 7th of June just as before, but we have to make the payment by 31st of May. I.E. before the return has been done and no 7 days "grace" !
So ... First we have the good news
They've given us 7 extra days grace to get the return + payment to HMRC.
The bad news is Banco Franco & HMRC use up this 7 days grace and sometimes more, themselves. :-(
They say (somewhere else on the website) HMRC must recieve cleared funds by 7th of June, and the banking system takes 3 days to transmit the funds to HMRC, & HMRC's own computer system takes *another* 3 days to allocate the funds to our VAT account. IGWS neither Banco Franco nor HMRC work weekends or holidays.
Surely, if I make a payment by debit card the transaction is authorised instantaneously so how the hell does it take 6 - 9 days to make a simple payment by debit card.
Oh, IGWS there are severe financial penalties for making the payment minutes to microseconds late, and it's never their fault.
Maybe that's their motive.
DerekG
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I just think financial organisation shall we say, take the biscuit when it comes to creating mountains out of molehills. They just cover up how inept and inefficient they are compared to the rest of the world. They live in a bubble I'm sure of it. Brian
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On 26/05/2012 00:36, DerekG wrote:

You need Dennis - our resident VAT expert.
--
Dave - The Medway Handyman www.medwayhandyman.co.uk

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On a similar subject, did you say you were thinking of changing to a Ltd. Company?
My plasterer mate is doing it now (mainly as he never pays his bills, and the bailiffs have been round to scare him into paying up).
I've been doing some research into it, and it can be done really cheaply now, with no need to use an Accountant for anything (even year end returns) for a small business.
You can set it up for less than £50, then there is a little more paperwork, as you need to pay employee tax and NI, but there are some good benefits - full pension and benefits, less tax overall, very little chance of personal bankruptcy if the business fails etc.
Alan.
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On 26/05/2012 09:57, A.Lee wrote:

I did it for tax reasons. My accountant set it up for about £60.
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Dave - The Medway Handyman www.medwayhandyman.co.uk

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So, where on your website does it say that you are a limited company trading as The Medway Handyman and where are your company registration details?
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Iain Freely

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On Sat, 26 May 2012 10:52:29 +0100, Iain Freely wrote:

You're right. Isn't TMH trading illegally or something. Maybe a word to Trading Standards. Over to you Dennis.
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Have you started trading under the Ltd. Co. yet? If so, is the extra paperwork simple to do - say half hour a week?
Did you transfer your stock/tools/van to the Ltd Co.? If not, did/will you have an extra tax bill when you cease trading as a Sole trader?
I've probably got £5k of kit, so it'd cost me £1250 ish to close down the Sole Trader I think, though maybe I'm completely wrong about it?
Ta Alan.
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That catches a few people out, the IR estimated one of my customers assets to be £100,000 and sent him a bill for it when he went ltd
It was up to him to prove it incorrect
Watch out !

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geoff

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A sole trader and the company can elect to transfer tools and other plant and machinery at their written down value for tax purposes so as not to trigger balancing charges on them. They can also elect to have trading stock and work in progress transferred so as to avoid triggering a tax charge. And there is an "incorporation relief" for capital gains. But there are other ways of people can get a tax bill they don't expect on "cessation" so the general point stands.
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Robin
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I did mine today. I'm now a Company Director! [1]
And, being as this is a DIY group, all done DIY, £18 total cost.
I spoke to an accountant today, she said there is little point in changing from a Sole Trader to a Ltd. Co. if you are earning less than £25k/yr, however, if you do the accounts/filing/tax returns yourself, the break-even level is a lot lower. Once you have it registered, there is no reason to use it, you can leave it dormant, or just use it for a certain line of business you have.
There is no reason to finish as a Sole Trader, as you can run both at the same time, so you can split earnings between the 2 to limit bad debt exposure, or tax reasons.
[1] well, I will be when they have processed the paperwork.
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Interesting.
Business use letting of agricultural barns is treated as unearned income which is OK until there is some capital gains to account (land sale etc.) when my total income exceeds the threshold for the next tax band.
The other issue is that for estate duty, agricultural barns are fully relieved but not those for industrial use. I am interested in the reliefs available as a letting business.
Can you point to a help source?
regards
--
Tim Lamb

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These 2 are the official sources: <http://www.businesslink.gov.uk/bdotg/action/layer?lang=en&topicId738 58805>
and
<http://companieshouse.gov.uk/index.shtml>
Loads of other pages if you google.
In your situation, you'd need to find if it is suitable for your needs. A clued up Accountant would probably be better than 100 opinions on the web/newsgroups.
I just walked into a local one today, said "how much for half an hours advice?" and walked out 15 minutes later with all my queries answered, and they didnt want to be paid. the main pint they made was that the CH paperwork is easy, the Tax return is far harder, and needs to be submitted in a standard format so that HMRC can understand it, and not give you a penalty charge for doing it wrongly.
HTH Alan.
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OK Alan. Thanks
regards
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Tim Lamb

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A.Lee wrote:

The stuff for CH and the payroll stuff (including end of year) is easy, the VAT is straightforward too (if applicable) easiest to use cash VAT accounting while you're small enough to be allowed to use it, and maybe worthwhile using one of the industry specific flat rate schemes.

I've always done my own personal tax returns (on the grounds that their adverts say how easy it is, so I take the position I shouldn't need an accountant far that) but the corporation tax return I don't think I'd fancy, it seems designed with accountants in mind.
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On May 29, 6:45 pm, a...@darkroom.+.com (A.Lee) wrote:

Just make sure you get more of a clue than TMH on the law regarding business communications.
MBQ
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Oh, FFS. You know nothing. How do you know he is trading under the Co.? Maybe his website is his Sole Trader site?
When you have a clue, please follow up with some facts, in the meantime, please fuck off.
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On May 29, 8:59 pm, a...@darkroom.+.com (A.Lee) wrote:

I'll let him clarify that, for the avoidance of doubt.
Funnily enough, TMH had to have it pointed out to him that he needed to display a geographical address on that site. On past form, he clearly dosn't have a clue.

Oooohhhhh!
MBQ
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You will still need to make an annual return to companies house

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geoff

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On Sat, 26 May 2012 09:57:25 +0100, alan@darkroom.+.com (A.Lee) wrote:

Do you know the disclosure requirements for limited companies? Do you know the tax rules?
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