In view of the positive feedback to my Blog on questions I’ve received, I thought I would share a few of more of them with you.
If you have a question you would like me to answer please email me directly“
Question: Tax Rebate
I worked full time for a few months in 12/13, paid tax on my earnings but never received wage slips. Part way through the year I went part time but never reached my personal allowance. The company went in administration before the end of the tax year so I never had a P60. Can I claim the tax back would a letter to HMRC be okay and what information would they want?
Answer: You should be able to get a tax rebate as HMRC should have all the information. Give them a call on 0300 200 3300, quote your NI number and get them to do an assessment on the tax year ending 5th April 2013. You should find the number on their website
Question: Tax Investigation Insurance
I’ve heard that HMRC have recently increased the number of tax investigations and I understand that I have to be represented by an accountant, which could cost a four figure sum. Is there any form of insurance I can get?
Answer: Yes, HMRC have significantly upped their numbers on random tax enquiries and it is important to be represented, or it could cost you a lot of stress with a hefty tax bill at the end of it. Providing that you haven’t deliberately understated your taxable income, an average tax enquiry will cost you fees of at least £1,000. There are a number of specialist insurers in this field, CCH have a good service, as do AbbeyTax, but first ask your own accountant, as many firms have an in-house scheme (as we do here at Morgan Jones) which can be much cheaper.
Question: Capital Gains Tax on rental property
I have a property which I used to live in but now rent out, but am thinking of selling. How long have I got to have lived in it so that I don’t have to pay capital gains tax?
Answer: As the house was once your main residence, you will be given the last 36 months of ownership as an exempt period. If you’ve let it out for a longer period and there’s a chargeable gain, the first £10,900 is exempt and you will be charged either 18% or 28% on the balance, depending upon whether you’re a 20% or 40% taxpayer
Question: Wrong Tax Code
I started a new job 3 months ago and am paying way too much tax as I’ve been given an emergency tax code. My employer says there’s nothing he can do as I never received a P45 from my old employer, what can I do?
Answer: Ask your new employer to give you a Starter Checklist to complete and ask that they pass on the information to HMRC who will process the information you have provided and revise the tax code. If your employer doesn’t have one you can visit HMRC’s website http://www.hmrc.gov.uk/forms/starterchecklist.pdf then complete and print off a copy which you should then give to your employer.<
Question: Government Gateway
I registered and have used the Government Gateway before to pay some tax, but that was a couple of years ago, can I still use it as I’ve forgotten my password?
Answer: Yes, you can continue to use it even though you’ve forgotten your password. Visit http://www.gateway.gov.uk/ and enter your User ID and click the “forgotten password” button. You can then retrieve it by providing details of a service you have already enrolled for
Question: Tax Debts
I am self employed and to keep my business going during the recession, I ran up debts of £36k. Sales have picked up recently but my main creditors, HMRC is now putting me under severe pressure to pay what I owe. My surplus cash, over a minimal amount to live on, is still quite modest. I’m thinking of going bankrupt, what else can I do?
Answer: Yes, there is something you can do to avoid bankruptcy, which is a serious step and will severely damage your credit for 10 years. As your business is improving and assuming the modest surplus is likely to rise in future, you should immediately contact HMRC. Even if you can’t pay straight away, HMRC are under instructions to avoid bankrupting someone and it is likely you will be able to come to a time-to-pay arrangement with them. You will however need to explain why:
- You are unable to pay in full and on time
- What you have done to try and raise the money to pay your debt
- How much you can pay immediately
- How long you think you will need to pay the rest
If HMRC accept that you are unable to pay immediately they will to ask you a number of questions to judge your ability to pay off your debt whilst paying ongoing liabilities, and will ask questions about your income and expenditure, your assets and the changes you are making so that you can return to making payments on time. You will not be fined but will be charged a modest level of interest.
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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.