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December Question and Answer Section
Newsletter issue - December 2012.
Q. I registered as self-employed in 2005, but as I didn't have any income I ignored the tax returns the tax office sent me. When they demanded £1,000 tax for each year I got my act together and sent in the completed tax returns which showed no tax due. Now the Taxman won't cancel the tax demands issued for the years before 2008/09. What can I do?
A. You have been caught by the tax law here. The years before 2008/09 are 'out of time' and the Taxman doesn't have to cancel the tax demands for those years. Although you may be able to appeal for the tax demands to be cancelled under 'special relief', but you need to show it would be unconscionable for the Taxman to collect the excessive tax. This is a very high hurdle to clear.
Q. From 1 January 2013 Independent Financial Advisers (IFAs) are not permitted to charge commission, and should instead charge fees for the advice and services they provide. Do firms of IFAs have to charge VAT on all the advice they give or is some advice exempt from VAT?
A. The VATman's guidance says the IFA's advice-only services will be subject to VAT, but if the fee is for an introduction to an exempt financial service, that introduction fee will be exempt from VAT. As an IFA you need to sort out exactly what you are charging for:
- general advice
- introductions to exempt services (such as to authorised dealers in securities) or
- introductions to services which are subject to VAT such as discretionary investment manager services.
We need to discuss your particular circumstances in detail to sort out the VAT position.
Q. I got divorced in 2007, but I still jointly own my former family home with my ex-wife. We agreed she would live there with my daughter until she finished her school exams. The house is now about to be sold. Will I have to pay capital gains tax on my share of the profit made?
A. You can escape tax on the gain made on your former home if all these conditions are met:
- Since you left the property your former spouse has occupied it as her main residence.
- The agreement for your ex-spouse to stay in the home was made either under a court order, or as part of your divorce.
- You haven't elected for another property to be your main residence for any part of the period since you ceased living in your former home. If you have acquired another property in the meantime, you need to think carefully about which property you claim capital gains tax relief on, as this relief can't be applied to two properties for the same period.
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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