Month: June 2017

An example may illustrate the answer to this question.

Harry updates his iPad and decides to sell his old one – he does not use the iPad for his employment or any business, it’s used purely for recreational purposes. He sets up an account on eBay and manages to sell for a reasonable price. Encouraged, he sells a number of other, no longer used, personal items on the same eBay account.

At this point, it would be difficult for the tax office to argue that Harry was engaged in a trade.

Harry then has an opportunity to buy an iPad from a friend, and the price his friend wants is reasonable, so reasonable that Harry is tempted to purchase and resell on eBay for a quick profit. This he does. With a small profit in the bank Harry starts to consider that he may be onto a good thing and plans to buy and sell more items online.

Buying with an anticipation of selling in order to make a profit is a so-called “badge of trade”, and if Harry continued with this activity he may need to register his online trade with HMRC and submit a tax return.

The criteria that HMRC will apply to decide if a hobby (sometime described as an adventure in the nature of a trade) is a trade are listed below. These are the badges of trade that will be considered by HMRC together with any relevant case law:

• profit seeking motive
• the number of transactions
• the nature of the asset
• existence of similar trading transactions or interests
• changes to the asset
• the way the sale was carried out
• the source of finance
• interval of time between purchase and sale
• method of acquisition.

We are waiting to see if a new Trading Allowance of £1,000 will be reintroduced after the election this month, if it is, Harry would not pay tax as long as the income from his eBay account did not exceed £1,000.

We would be happy to discuss this issue with any readers who are unsure of their present status. You should be aware that there may be penalties if you do not register a business activity with HMRC, file a tax return and pay any tax due.

It is possible to reclaim VAT you have paid on any business purchases before you have subsequently registered for VAT. In fact, once you have registered your business for VAT the first thing you should consider is the possibility of reclaiming input tax on purchases of goods and services prior to registration.

This article summarises the issues you will need to consider for the two categories: goods and services.

There’s a time limit for backdating claims for VAT paid before registration. From your date of registration, the time limit is:

• 4 years for goods you still have, or that were used to make other goods you still have
• 6 months for services

You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply.

You should reclaim them on your first VAT Return (add them to your Box 4 figure) and keep records including:

• invoices and receipts
• a description and purchase dates
• information about how they relate to your business now

If your pre-registration purchases and other costs are significant, this facility can produce a reasonable cash flow benefit. Please call if you would like our help to assess any possible claim you could make.

1 June 2017 – Due date for Corporation Tax due for the year ended 31 August 2016.

19 June 2017 – PAYE and NIC deductions due for month ended 5 June 2017. (If you pay your tax electronically the due date is 22 June 2017.)

19 June 2017 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2017.

19 June 2017 – CIS tax deducted for the month ended 5 June 2017 is payable by today.

1 July 2017 – Due date for Corporation Tax due for the year ended 30 September 2016.

6 July 2017 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2017 – Pay Class 1A NICs (by the 22 July 2017 if paid electronically).

19 July 2017 – PAYE and NIC deductions due for month ended 5 July 2017. (If you pay your tax electronically the due date is 22 July 2017.)

19 July 2017 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2017.

19 July 2017 – CIS tax deducted for the month ended 5 July 2017 is payable by today.

Apparently, over 4 million tax payers are eligible to claim the new marriage allowance, but only 2 million have done so. If our math is correct, this add up to £1.3bn in unclaimed tax refunds.

The allowance has been available since 6 April 2015 and is worth £212 for 2015-16, £220 for 2016-17 and £230 for 2017-18; a cumulative tax rebate of £662. The allowance is only available to the following couples:

• Couples must be married or in a formal civil partnership, living together does not qualify.
• One spouse/partner needs to be a non-tax payer. i.e. their income must be below the personal tax allowance. (£10,600 for 2015-16, £11,000 for 2016-17, and £11,500 for 2017-18).
• The other spouse/partner needs to be a basic rate (20%) taxpayer. Higher rate taxpayers cannot receive any benefit from the Marriage Allowance.

The spouse/partner that has the spare personal allowance needs to make the claim, and once made, the relief should automatically be given in subsequent years. You will need to advise HMRC if your circumstances change.

The allowance is simple to claim, just visit the Gov.uk website at https://www.gov.uk/apply-marriage-allownce. And don’t forget, it is the spouse partner who pays no tax (with an unused, or partially unused, personal allowance) that needs to make the claim.

Before making the application you will need to have you and your partner’s National Insurance numbers. You will also need a way to prove your identity. This can be one of the following:

You’ll get an email from HMRC confirming your application.