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Accounting Frequently Asked Questions

Although we have provided the answers to many of the queries that we get asked on a regular basis you should note that this is not a substitute for professional advice and we would recommend that you take specific advice before taking any action. We do offer new clients a free initial consultation and should this be of interest to you please contact us either by telephone to arrange an appointment or by completing our on-line form.

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Q.1 I am not currently VAT registered and am concerned that I ought to be?

  • A. It is possible to register for VAT voluntarily and this may be advisable depending on your business sector. Otherwise should your turnover exceed £67,000 then registration is required.

Q.2 I normally pay around £400 of tax each January but have been advised that this year I have to pay £1500. Is this correct?

  • A. It may be that your business profits being reported on this years Return have increased, giving you a higher balance to pay in January. In addition to this if your tax is over £500 you are required to make payments towards the following tax years balance and hence you would be due to pay 1.5 times the actual tax in one installment.

Q.3 When does my tax return have to be lodged?

  • A. Assuming that we will be calculating the amount of tax due then the submission date is 31st January in the calendar year following the tax year end. Should you however wish the Inland Revenue to calculate the amount of tax due, or have tax owed collected through your tax code the filing deadline is 30th September in the same calendar year as the tax year end.

Q.4 I am a director of a limited company and have been advised that company tax is due to be paid by 31st March, but I thought tax had to be paid in January and July?

  • A. Corporation tax is payable 9 months after the company year end. Personal tax is payable January and July.

Q.5 I'm selling my house. I agreed a price with the buyers of £252,000, but now they've asked me to agree a price of £250,000 plus a separate £2,000 for the fixtures. Why?

  • A. Almost certainly to save stamp duty On the original inclusive price of £252,000, the Stamp Duty your purchasers would have to pay is 3%, or £7,560. By reducing the price of the house to £250,000 and buying the fixtures separately, the Stamp Duty will reduce to 1%, or £2,500 - a saving for your purchasers of £5,060.

Q.6 My wife and I recently separated. Can I get a tax allowance for maintenance payments ?

  • A. Generally speaking no. Tax relief on maintenance payments is restricted to certain enforceable payments and then only if one or more of the parties to the former marriage was born before 6th April 1935. The maximum tax available for 2003/04 on qualifying maintenance payments is worth £215.

Q.7 Is there any tax advantage in paying a salary to my spouse for work done for my business?

  • A. There are definite advantages in paying a spouse a salary if it can be justified, and also if the income will be taxed at a lower rate than you would pay. The Inland Revenue insists that the salary should actually be paid, and that the level of payment should not be excessive when compared with an 'open market' salary for the type of work done. Remember to allow for national insurance contributions in the calculation.

Q.8 People keep telling me I should make a Will. Does it really matter?

  • A. Dying without a valid Will could be unfortunate for your family because your estate would be divided according to the intestacy rules, which may be very different from what you would intend.
    Failing to make a Will has other consequences:
  • The welfare of infant children is handled by appointed administrators rather than the guardians you choose
  • Common law 'partners' do not benefit, although they can apply to the court for 'reasonable provision'
  • Intestacy rules rarely produce the lowest possible inheritance tax bill
  • Increased stress for the family and the possibility of disputes
  • A slower process for obtaining probate and the disposition of your estate
    A regularly reviewed Will also makes better provision for changes in the value of your assets. You may need an enduring power of attorney to appoint someone you trust to deal with your affairs.

Questions of a Practical Nature

Q.a Are you an expensive firm?

  • A. This really depends on who you're comparing us with. Compared to the big "3" accountancy practices we are remarkably reasonable. Compared to a sole practitioner who works out of his back bedroom then we may be more expensive but in return offer a wider expertise in tax saving and compliance issues. It all comes down to the level of care and service you require and as with most things, you tend to get what you pay for!

Q.b Can I call you for specific advice?

  • A. Yes. Being an accountant is no longer a case of just preparing a set of numbers each year. relevant and pertinent advice is an integral part of our business.

Q.c Will your fees increase after the first year?

  • A.We do not buy clients. Quoting a low fee for the first year and then substantially increasing it - Is not a thing we do! In many cases the fees in the clients second year with ourselves can be reduced on the basis that we both have an understanding of your and our requirements.
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