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“Every week I receive feedback to my Blogs with questions from readers, many of which might be relevant to you. So today I thought I would share a few of them with you” Partner & Founder of Morgan Jones; Shrewsbury Accountant David Jones
Winding up a limited company
Question: I have a small company which either made a small loss or a few hundred pounds profit each year for last few years. I moved to paperless working with HMRC, so I didn’t get the usual paper reminder letter for Annual Accounts and they are now a month overdue with a £150 fine, about to go to £375. This is way too stiff for a small business that is virtually not trading. I had been thinking of finishing with all the hassle if being LTD anyway as it is dubious at the benefits for a small business anyway. I have about £500 in the business bank account and a few business assets, so I thought I might as well just use this as an opportunity to wind up the company to avoid the late filing fees to be honest. Is this something that I can do and will they pursue the £375 fine from the money in the bank?
Answer: Yes if the company is struck off the late filing fee liability will disappear; but before you ask for it to be struck off you need to get the company’s corporation tax affairs up to date even though no Corporation Tax is likely to be due or else HMRC will object to the striking off. You will also need to liquidate all the company’s assets (including its bank account) and distribute them to yourself (or else they will be forfeited when the company is struck off).
Mileage claim
Question: I started my SE business in August 2012 and ceased in September 2013. My biggest expense is motoring and I have done 45,000 miles and intend to claim the 45p mileage rate. I know I need to have Accounts done and I believe that my year can be extended to 13 months so I only need one set of Accounts for 13 months and only one accountancy bill. Am I correct?
Answer: Yes is the quick answer, but you may be shooting yourself in your financial foot. The 45pmileage rate is restricted to the first 10,000 miles, then dropping to 25p. So in your case this would mean a total claim of £13,250. However, if you had a set of Accounts done for each tax year your claim for each year could be up to £7,625, giving you overall an additional £2,000. Speak with your accountant and I’m sure the saving will be well in excess of his bill to you.
Let to Buy mortgage interest
Question: I have an existing property worth £105k and a mortgage of £42k. I am presently In the process of remortgaging for £75k to release equity of £33k as deposit on buying another property. The other property will be my main residence and the current property will be let. My understanding is that mortgage interest would be allowable on the remortgage from the date the current property is let, but only the interest on the amount used to buy the property ie £42k would be allowable. Is that correct or have I misunderstood?
Answer: No that is not correct; the interest on the whole of the new mortgage of £75k is eligible for tax relief.
Statutory Maternity Pay
Question: I have my own LTD Company and I am the only employee. I am due to go on Maternity leave in about 8 weeks time. I know it is possible to claim the SMP payment in advance from the government, but at this stage I’m not sure if I will take 39 weeks off or less, so not sure if possible to claim in advance due to not knowing this fact. With having only employee (myself), I won’t be able to deduct the SMP payment from amounts due to HMRC each month for PAYE/NI. Can you advise my best course of action please? Would it be possible to claim it retrospectively afterward I’ve gone back to work ?
Answer: Good news, you can apply for statutory payment funding so that the Revenue will send you the money in advance, you can apply online here https://online.hmrc.gov.uk/shortforms/form/DMB_SMP2?dept-name=DMB&sub-de… There is a set of instructions there on what you can and can’t claim, ensure that you make separate claims for separate tax years however.
Working away from home
Question: I am a self-employed plumber and work due to the shortage of work locally I got a contract to teach plumbing to apprentices in a large firm 100 miles from where I live, but I will be carrying-on doing plumbing jobs near my home Friday to Sunday. I will incur the cost of hotels & meals while away. As this is an open ended contract, can I claim the expenses against my tax?
Answer: Yes, and this will include the travel costs. You are highly unlikely to have your self-employed status questioned by HMRC as you can clearly demonstrate that your income is not dependant on one single, albeit large, customer.
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David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.