Whatever your business sector you must prepare annual accounts which report on business performance and activities during the financial year.
What you may be unaware of, is that businesses are allowed a free choice of when to end an accounting year.
So, for 2012/13 tax, accounting dates can vary between 6 April 2012 and 5 April 2013. The date that you choose may be dictated by commercial reasons, but also by external factors such as interest rate movements, inflation, changes in rates of tax and changes to the tax system.
Generally speaking, using a date towards the end of the tax year leads to the simplest application of a current year basis of assessment, although this leaves very little time before tax is payable. Alternatively, businesses expecting an upward trend in profits may benefit from cashflow advantages if their accounting date is set on or shortly after the beginning of the tax year, although this also has its disadvantages including increased liability should the business cease less any applicable overlap relief.
Do you need us to review your accounting date?
HMRC have rules regarding what constitues proof of expenditure including VAT that you can reclaim. The proof required for purchases over £250 are more strict than those for purchases under £250.
For purchases above £250 the VAT invoice must show:
When RTI comes into force in October 2013, employers will be required to send HMRC payroll payment information that includes information on the amounts paid and the number of hours. The submissions are made when the payroll is processed, which will have to be weekly or monthly to allow the Department of Works and Pension to use the information to calculate Universal Credits payments.
The monthly reporting to HMRC will be a problem for small companies which pay a small salary below or equal to the personal allowance (£8105) as there is a requirement to log hours worked, which could breach national minimum wage rules
Before RTI it was possible to declare a low salary as an annual payment, however under RTI if a monthly salary is taken this will need to be reported monthly even if there is no tax payable.
This scheme is going to be an administrative burden on accountants and owner businesses, the scheme is already being piloted and planned to be online by 6th October 2013
HMRC have prepared a webinar on RTI which can be found at http://www.hmrc.gov.uk/webinars/pre-recorded.htm
How good is your record-keeping?
HMRC has announced it is planning a programme of Business Records Checks that will review both the adequacy and accuracy of business records within small and medium enterprises.
The Revenue have stated that they will charged penalties for accounting records that are not adequate.
To ensure your records are adequate enough, the Revenue have issued guidance on what they would expect someone to keep.
Licenced Accountant in Brighton