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August questions and answers
Newsletter issue - August 2020.
Q. I am a sole trader trading as a graphic designer. I am voluntarily registered for VAT and I have several commercial clients who are also registered for VAT. Due to the coronavirus outbreak my graphic design business is very quiet, so to supplement my income I want to buy and sell bicycles to private individuals. Can I run the bicycle business as a different non VAT-registered business whilst keeping the graphic design business registered for VAT?
A. HMRC's VAT Registration manual at VATREG02200 states that 'In all cases it is the person (natural or legal) rather than the business which is registered, so a trader must take into account all their business activities'. Therefore, in your situation it may be beneficial to deregister the graphic design business for VAT purposes. You can always re-register as and when this side of your business picks up again.
Q. My father died in 2019 and my brother and I inherited a small commercial business unit. Probate is nearly complete now. If we sell the property in the future, will capital gains tax be payable on the disposal proceeds?
A. The acquisition value for future capital gains tax computation purposes will be the market value at the date of death. This is known as the 'probate value'. Capital gains tax will be calculated under the normal rules on any increase in value from that date until the date of disposal.
Q. How long do I need to keep VAT records for?
A. VAT-registered businesses must:
- keep records of sales and purchases;
- keep a separate summary of VAT; and
- issue correct VAT invoices
In the UK, VAT records must be kept for at least six years (or ten years if the trader uses the HMRC VAT mini-one-stop-shop (VAT MOSS) service). VAT records may be kept on paper, electronically or as part of a software program (e.g. book-keeping software) - but whichever method is used, the records must be accurate, complete and readable. HMRC can visit businesses to inspect record-keeping and impose penalties if the records are not in order.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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