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Follow the outline below to ensure that the cost of your annual staff party will not create tax issues for you or your staff.

1. The event must be open to all employees at a specific location.
2. An annual Christmas party, or other annual event offered to staff, generally is not taxable on those attending, provided that the average cost per head of the functions does not exceed £150 p.a. (including VAT). The guests of staff attending are included in the head count when computing the cost per head attending.
3. All costs must be considered, including the costs of transport to and from the event, accommodation provided, and VAT. The total cost of the event is divided by the number attending to find the average cost. If the limit is exceeded then individual members of staff will be taxable on their average cost, plus the cost for any guests they were permitted to bring.
4. VAT input tax can be recovered on staff entertaining expenditure. If the guests of staff are also invited to the event, the input tax should be apportioned, as the VAT applicable to non-staff is not recoverable. However, if non-staff attendees pay a reasonable contribution to the event, all the VAT can be reclaimed and of course output tax should be accounted for on the amount of the contribution.

The following press release was published by HMRC last month. Extracts are reproduced below:

Sir Amyas Morse, the former Comptroller and Auditor General and Chief Executive of the National Audit Office (NAO), will lead an independent review of the Loan Charge…

The review will consider whether the policy is an appropriate way of dealing with disguised remuneration loan schemes used by individuals who entered directly into these schemes to avoid paying tax.

The disguised remuneration Loan Charge was introduced to tackle contrived schemes where a person’s income is paid as a loan which does not have to be repaid.

Disguised remuneration loan schemes were used by tens of thousands of people, and concerns have been raised about the use of the Loan Charge as a way of drawing a line under these schemes. The government is clear that disguised remuneration schemes do not work and that their use is unfair to the 99.8 per cent of taxpayers who do not use them.

The Treasury has asked Sir Amyas Morse to report back by mid-November, giving taxpayers certainty ahead of the January Self-Assessment deadline.

We will report on this issue as soon as the results of this review are published.

1 October 2019 – Due date for Corporation Tax due for the year ended 31 December 2018.

19 October 2019 – PAYE and NIC deductions due for month ended 5 October 2019. (If you pay your tax electronically the due date is 22 October 2019.)

19 October 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2019.

19 October 2019 – CIS tax deducted for the month ended 5 October 2019 is payable by today.

31 October 2019 – Latest date you can file a paper version of your 2018-19 self-assessment tax return.

1 November 2019 – Due date for Corporation Tax due for the year ended 31 January 2019.

19 November 2019 – PAYE and NIC deductions due for month ended 5 November 2019. (If you pay your tax electronically the due date is 22 November 2019.)

19 November 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2019.

19 November 2019 – CIS tax deducted for the month ended 5 November 2019 is payable by today.

The following guidelines are reproduced from the government’s website:

You must send a tax return if, in the last tax year (6 April to 5 April), you were:

• self-employed as a ‘sole trader’ and earned more than £1,000
• a partner in a business partnership

You will not usually need to send a return if your only income is from your wages or pension. But you may need to send one if you have any other untaxed income, such as:

• money from renting out a property
• tips and commission
• income from savings, investments and dividends
• foreign income

Other reasons for sending a return

You can choose to fill in a tax return to:

• claim some Income Tax reliefs
• prove you’re self-employed, for example to claim Tax-Free Childcare or Maternity Allowance

If your income (or your partner’s, if you have one) was over £50,000, you may need to send a return and pay the High Income Child Benefit Charge.

Unfortunately, this is just the tip of the iceberg. For example, you may have to submit a return if you have made significant capital gains in a tax year.

If you are at all uncertain if you do need to file, please call. There are significant penalties for failing to register and submit a return. The deadline to register for the tax year 2018-19 is imminent, 5 October 2019, and so action should not be delayed.

If your circumstances have only recently changed – during the current 2019-20 tax year – you have more time, but it is worth getting the registration process completed so you can start to plan for any tax payments that may fall due 2020 and beyond.

If your business makes a trading loss its ability to survive the loss will depend on a number of issues. They include:

• Did your business have sufficient reserves to absorb the loss?
• If not, are the business owners able to introduce new capital to cover the losses? Or,
• Are the business bankers willing to step in and support the business with additional funding?

In all cases, due regard will need to be made to the reasons for the loss and how likely it may be that the losses will continue.

Clearly, planning for the management of losses is critical; digging into the reasons for the loss may reveal that the company has little chance of re-establishing profits or that the loss was occasioned by temporary factors and a clear path back to profitability can be reasonably expected.

Tax planning for the use of losses is also a factor that needs to be considered. Can losses be utilised in such a way that refunds of previously paid tax can be recovered?

Whilst this may only produce modest refunds for companies, corporation tax rates are below 20%, self-employed business owners – particularly those who have paid income tax at the higher rates of 40% or 45% – may be able to recover significant cash refunds to offset the effects of qualifying trading losses.

Again, planning is critical to ensure that any claims for loss relief are not lost. For example, there are annual limits to the amount of certain reliefs that can be claimed and the self-employed must take care that loss claims do not result in a waste of personal tax allowances.

If your management accounts reveal that your business is making losses, please contact us sooner rather than later so we can help you develop strategies to minimise the down-side effects on your business.

HMRC has published a check list of issues you will need to deal with prior to 31 October 2019.

The check list has been sent to all businesses that already trade with the EU or the rest of the world.

The text of the letter is reproduced below, and this contains the links to the step-by-step guides.

We can provide assistance with the implementation required, please call if you need help.

Letter from HMRC:

We are writing to you because our records show that you are a VAT registered business and you trade with the EU and the rest of the world. This means that you will be affected by changes when the UK leaves the EU on 31 October 2019.

As you already trade with countries outside the EU, you’ll have a UK Economic Operator Registration and Identification (EORI) number starting with the letters ‘GB’. You will need this for importing and exporting when we leave the EU.

If you deal with the customs processes of EU Member States, you may need to get an EU EORI number too. Find out if you need an EU EORI by reading our EORI myth buster, go to www.gov.uk/government/publications/hmrcbrexit-communications-resources.

Next steps you need to take to get ready for Brexit

Once you have your EORI number starting with ‘GB’ there is more that you can do to get your business ready. You can:

• use the checklist overleaf to start working through the actions and decisions that you need to make now
• go online to find more detailed step by step guides – for importers, go to www.gov.uk/prepare-import-to-uk-after-brexit – we recommend that you talk to the person who helps you with customs declarations now – for exporters, go to www.gov.uk/prepare-export-from-uk-after-brexit – focus on understanding what information you’ll need to give to the person you are selling to, so that they can complete the transaction
• keep up-to-date with the latest Brexit news, including details of upcoming webinars we are running on importing and exporting with the EU after 31 October – register for our free email update service, go to www.gov.uk/hmrc/business-support and select ‘business help and education emails’, then select ‘Brexit’

With just over one-month to go before the current Brexit deadline, we recommend that you access the check lists and work through the issues raised. The temptation to wait and see what happens should be resisted as this could leave you exposed if we do exit at the end of October.

The short answer to this question is a resounding “no”, but as always with tax, there are exceptions.

Obviously, if you are in business and not VAT registered, you cannot reclaim the VAT added to any of your purchases. If you are VAT registered HMRC has published the following guidance for VAT recovery when acquiring or leasing a company vehicle:

Buying a new car

You may be able to reclaim all the VAT on a new car if you use it only for business. The car must not be available for private use, and you must be able to show that it is not, for example it’s specified in your employee’s contract.

‘Private use’ includes travelling between home and work, unless it’s a temporary place of work.

You may also be able to claim all the VAT on a new car if it’s mainly used:

• as a taxi
• for driving instruction
• for self-drive hire

Leasing a car

If you lease a car, you can usually claim 50% of the VAT. You may be able to reclaim all the VAT if the car is used only for business and is not available for private use, or is mainly used:

• as a taxi
• for driving instruction

Self-drive hire cars

If you hire a car to replace a company car that’s off the road, you can usually claim 50% of the VAT on the hire charge. If you hire a car for another reason (for example you do not have a company car), you can reclaim all the VAT if all the following apply:

• you hire it for no more than 10 days
• it’s used only for business
• it’s not available for private use

Commercial vehicles

You can usually reclaim the VAT for buying a commercial vehicle (like a van, lorry or tractor) if you only use it for business. If they’re used only for business, you can also reclaim VAT on:

• motorcycles
• motorhomes and motor caravans
• vans with rear seats (combi vans)
• car-derived vans

A further restriction in your ability to recover the VAT on a vehicle purchase applies if you purchase a second-hand car and the dealer selling the car uses the VAT margin Scheme. The invoice for the car purchase will clearly show when this is the case. To recover VAT, it must be shown on the seller’s invoice.

If you own a small limited company your shares entitle you to draw a return on your shareholding – in common parlance these returns are called dividends.

A company can only pay dividends if it has current or accumulated tax-paid reserves. For most smaller companies this will be described as reserves or retained profits on your company balance sheet.

As these reserves are made up of retained profits after corporation tax has been paid, if you take a dividend the underlying profits have already been taxed at 19% – the current corporation tax rate. Unfortunately, when you receive the dividend this is deemed to be taxable income; and will be subject to further, hybrid rates of Income Tax.

For the tax year 2019-20 the rates of dividend tax applied are:

• The first £2,000 of dividends received are tax-free.
• Dividends that fall to be taxed as part of your basic rate Income Tax band are taxed at 7.5%.
• Dividends that fall to be taxed as part of your higher rate Income Tax band are taxed at 32.5%, and
• Dividends that fall to be taxed as part of your additional rate Income Tax band are taxed at 38.1%.

For shareholders whose income, including dividends, falls into the higher or additional rate bands, the additional dividend tax payable can be significant.

However, dividends are not subject to National Insurance and if you need to take funds from your company, withdrawing the bulk of your remuneration package as dividends can still be an attractive option. The key, as always, is in the planning. Every person’s tax affairs are to some extent unique and for this reason care needs to be taken when considering the way you take funds from your company.

If you are keen to minimise the amount of tax you pay on your earnings, please call so we can find the best-fit planning option for you.

A reminder that you can avoid the hefty car fuel benefit charge if you drive a company car and your employer pays for your private fuel.

One way to achieve this is to repay your company for the private petrol provided.

Many employers have an arrangement with their company car drivers to obtain reimbursement of any private fuel provided. Usually, the employee must reimburse the employer for private fuel included in petrol bills paid by the employer. Otherwise, the employee may face a tax charge.

Consider the following example:

If your private mileage for the year to March 2020, is estimated to be 600 miles a month, and you drive a 1900cc diesel engine car, the rate per mile to cover fuel charges, as quoted in the latest rates published by HMRC, is 12p per mile. Accordingly, you should repay £864 to your employer (£72 per month).

In order to exempt yourself from the car fuel benefit charge you must be able to demonstrate that the refund was actually made in the relevant tax year, in this example before 6 April 2020; although in practice, HMRC may give you more time.

Based on the above example, if the vehicle’s list price when new was £30,000, and the car benefit charge rate was 34% (based on a 130g/km CO2 rating) the benefit in kind charge for 2019-20 would be £10,200. With no repayment of private fuel, there would also be a £8,194 car fuel charge. Both these amounts would be added to your taxable income for the year. If you were a higher rate tax-payer, the car fuel charge would cost you £3,277 a year in additional tax (£8,194 x 40%). This amounts to £273 per month.

If your actual private mileage proved, on average, to be 600 miles a month, you would therefore save £201 per month (£273 – £72).

It is worth crunching the numbers. Obviously, the lower your private mileage, the more likely a repayment system will save you money.

There is nothing more intriguing that the notion we may be due untold riches from undisclosed sources. For example, do you have any premium bonds, and did you notify the registrar the last time you moved to a new house?

And did you know that the estates of deceased persons whose beneficiaries or family cannot be traced are held by the government for 30 years?

It is possible to download the unclaimed estates list in a digital format that you can search to see if remote relatives have unclaimed estates that you might be eligible to claim.

Not a task for the faint hearted.

The department that manages the list is known as the Bona Vacantia division. In a recent update posted on the Gov.uk website they said:

The Division publishes a list of unclaimed estates which have been recently referred, but not yet administered, and historic cases which have been administered but not yet been claimed within the time limits for doing so.

The list is published in a Comma Separated Values (CSV) file format. This acts like a spreadsheet and although it can be opened in any text editor it is best viewed in a spreadsheet application, such as Microsoft Excel, Google Docs or OpenOffice Calc.

If you are looking for a particular estate you can search by using Ctrl-F in your browser, text editor or spreadsheet application.

Any estates where the Bona Vacantia division (BVD) no longer has an interest, for example, when a claim to an estate has been admitted, will be removed daily. Estates where the 30 year time limit from the date of death has expired are also removed.

The following notes explain more about the claims process:

If someone dies without leaving a valid or effective will (intestate) the following are entitled to the estate in the order shown below:

1. husband, wife or civil partner
2. children, grandchildren, great grandchildren and so on
3. mother or father
4. brothers or sisters who share both the same mother and father, or their children (nieces and nephews)
5. half brothers or sisters or their children (nieces and nephews of the half blood or their children). ‘Half ’ means they share only one parent with the deceased
6. grandparents
7. uncles and aunts or their children (first cousins or their descendants)
8. half uncles and aunts or their children (first cousins of the half blood or their children). ‘Half’ means they only share one grandparent with the deceased, not both

If you are, for example, a first cousin of the deceased, you would only be entitled to share in the estate if there are no relatives above you in the order of entitlement, for example, a niece or nephew.

If your relationship to the deceased is traced through someone who survived the deceased but has since died, you will need to confirm who is entitled to deal with that person’s estate. The person entitled to deal with someone’s estate is known as their ‘legal personal representative’. They are the person entitled to make the claim to the deceased’s estate.

For example, children are only entitled to share in an estate if their parent died before the deceased, in which case they take their parent’s share of the deceased’s estate. If their parent survived the deceased but has subsequently died, then whoever is dealing with their estate should claim.

The unclaimed estates list can be downloaded at https://www.gov.uk/government/statistical-data-sets/unclaimed-estates-list