How long do I have to register with HM Revenue and Customs once I’ve started trading?
You must notify them within 3 months to avoid a £100 penalty. If you’re approaching this deadline then contact us and we can help you get the form in on time.
How do I know whether I am employed or self employed?
This is usually a question of fact and is dependent on many factors, not just, for example whether or not you have more than one client/employer. The answer depends on your working relationship with the business with whom you are working and your contractual position with them. It is never a choice. You are either one or the other! If you are in any doubt about this do contact us as mistakes here can be very expensive.
What do I do if I think that I owe tax?
If you are an individual or a company who owes tax then you are required by law to complete a self-assessment tax return and pay over any tax due. HMRC will not necessarily tell you to do so but, not withstanding this, you could be liable to penalties and interest on outstanding tax if you do not declare such tax or do not complete a tax return within the statutory time limits.
I have money or assets overseas. What are my responsibilities here?
If you are resident and domiciled in the UK then this is easy. You must account to HMRC for everything. If you are not domiciled here then things get a little more complicated. The definitions of residence and domicile are long and complex and have to some extent been decided by case law. If you are not sure then you will need to take advice.
I think that I have paid too much tax. What should I do?
If you know why you have paid too much tax and that it is due to an error by you or the tax authorities, you should contact them by phone or in writing explaining the error and they can then normally adjust it. If however you just feel that you are paying too much tax then perhaps you should realise that we all feel like that, but take advice if you feel thing are not correct!
Do you do my invoicing?
You are responsible for invoicing, but we can provide a sales invoice template if you need one, and we’d be happy to offer guidance.
What information do I need to send you?
When we send you a letter requesting for your accounting records, we normally include a checklist to assist you, although we will advise you of this during our initial meeting.
When do I need to send my accounting information to you?
It is good practice to send records of your business transactions on time and you should send everything we need once you have come to the end of your accounting period. It is important that we receive everything in good time, to meet your return deadlines. Always remember that your records should be complete and accurate for us to provide correct services and advice to you.
How Much Tax Will I Pay?
This depends on your circumstances, we will of course explain in precise detail how we have arrived at your liability, according to legislation and offer you any assistance possible, relating to the payment of same by contacting HMRC, with a payment plan, if this should be necessary.
When do I pay personal tax?
Some income is taxed at source, for instance salary through the PAYE scheme, other income such as dividends are received net of basic rate tax. Your personal tax return compiles your total income and allowances for a tax year and determines your final tax liability or even a tax repayment. A liability is payable in up to three instalments, 31 January before the tax year end (5 April), the 31 July after the year end and a final balance on the following 31 January. This is sometimes difficult to follow but we can explain this fully.
Do I need a business bank account?
Yes. You must have a business bank account as the Limited company is a legal entity and as such requires an account specifically in its own right.
What insurance do I need?
Employers’ liability isn’t mandatory when you are the sole director and shareholder, however if you intend to have a second shareholder or employ anyone in your company it is prudent to consider employers’ liability insurance. Public liability is recommended and for peace of mind you may wish to consider professional indemnity insurance but it is advisable to check each contract you undertake, to ensure the company meets the contractual requirements. You should also consider permanent health insurance as sickness cover. Other insurances can be provided by the company including life cover and personal liability.
Is what I am planning to do “Tax avoidance” or “Tax evasion”?
Tax avoidance is where you use legitimate and legal means to use the tax system to your best advantage. Tax evasion is where you go outside the law to gain an advantage. In general terms if you are doing something that you do not wish to be disclosed to the tax authorities or that you hope they will not find out then you are treading on thin ice and should think carefully about what you are doing. If you have any doubt then you should urgently seek advice.
Posted in: FAQ