As it’s been over three months since my last Blog on some of the more interesting questions asked by clients and readers of the Blog, here’s my latest selection:
1. I’ve paid the right tax into the wrong account
I have made a major mistake by accidentally paying the VAT due into my online PAYE account with HMRC. I’ve tried to switch the payment back into the VAT account, but the system won’t let me, what can I do or should I just leave it, as between the two taxes, I have paid the right amount?
Unfortunately, just ‘leaving it’ is not an option because of the new automatic interest and late payment penalties that apply. Personally, I would pay the VAT due into the correct account and the PAYE account will ‘use up’ the incorrect payment over the next few months. If you can’t afford to do that, then you will have to spend a considerable amount of time on the separate helplines for VAT and PAYE, but this assumes that they will coordinate seamlessly! Just try and pay the VAT again if you possibly can, is my advice.
2. My limited company has been struck off, what can I do?
Because of a long-term serious illness, my limited company has only intermittently traded for the last 2 to 3 years and made a small loss each year. I have recently been informed that Company House has dissolved it for non-filing of accounts. Unfortunately, there was a fair amount of money in the bank account, what can I do?
As the company has traded, it is relatively easy to restore it by applying for an administrative restoration. You must submit form RT01 to the registrar which includes a statement of compliance confirming that you are legally entitled to make the application and that the conditions for administrative restoration are met plus a fee of £100. But remember, before restoration takes place, Companies House will require you to submit all outstanding annual accounts, as will HMRC.
3. Is my truss tax deductible?
I’m a builder and due to over-exerting on a roofing job I developed a hernia in the groin area which stopped me doing anything but office work. I’ve now bought a hernia truss, which allows me to do around 85% of what I was doing before. I only have to wear the truss when I’m doing something physical which could make the hernia worse. So as the truss allows me to work and earn more (and pay more tax) can I claim for it?
Normally the answer would be no, but if you can obtain a medical report from your doctor unequivocally stating that without the truss you can’t do physical work, and that you do not have to wear it when not working, then it should be allowable.
4. Can I claim for the Christmas Party?
My company recently hired a venue for a company meeting, including light refreshments. We then found out that the venue hire was a flat charge until midnight, so we brought forward our annual party to the evening of the same day and are having the party in the evening. My question is, does the cost of the venue hire need to be included in the calculation for total party costs (to establish whether it would be under £150 per head)?
No, if the original purpose was purely for the business meeting and the booking documentation makes this clear, however a picky tax inspector might want the cost split pro rata.
5. The taxman wants to go back over 10 years
I have just received a letter from HMRC asking for a substantial amount of PAYE from years ago which refers to a “5/4/2013 PAYE investigation”. I recall a PAYE visit about 10 years ago, which showed a few errors but nothing serious and nothing further happened at the time. I closed my business on my retirement 5 years ago and don’t have the relevant paperwork. Also, neither I nor my accountant at the time, have received any contact from HMRC in the intervening years since; what do you suggest that I do?
It is vital that you do not ignore the demand, even if you believe it’s a mistake. Write to HMRC using Special Delivery, as they have to provide proof of receipt and ask them to provide the relevant paperwork. Also, point out that their demand is out of time. I suspect however that this is one of several, apparently random, erroneous demands to taxpayers I’ve seen in recent months. Good luck, and don’t let them fob you off.