Chartered Accountants of Poynton, Cheshire |
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Company VansThere has been a big change to the taxable benefit due on vans. Where an employer provides a van for an employee, which they can use for private journeys, the taxable benefit from 6 April 2007 becomes £3000 per annum. This taxable benefit is not levied if the private use is merely incidental. HMRC have given some guidance on what is incidental but this is not exhaustive so we will be pleased to advise on the situation if you are providing vans that can also be used for private journeys. Filing onlineEvery year, employers are required to send details of the salaries, tax and National Insurance deducted from their employees. These year-end returns have to be submitted by 19 May 2007 to avoid a fine. These documents can be submitted on-line via the internet. Appletons can assist you in this process. If you are a small business - defined by HMRC as having fewer than 50 employees - and you file your P35 online, HMRC will pay you £100 tax-free for doing so. You usually claim this back by reducing your next monthly PAYE payment. Tax TipWhen you buy new equipment for your business, ask whether it is energy or water efficient. Check the list on www.eca.gov.uk to see if you could get a 100% deduction fo the cost in the year of purchase. |
Putting it on expensesMany businesses will incur entertaining expenses as part of their day-to-day running costs. Most such expenditure will include an element of VAT so the question is whether businesses can claim back that VAT on their VAT returns. What is business entertainment?According to HM Customs and Excise (HMCE), entertainment expenditure:
HMCE also states that entertainment costs could include any of the following:
It is impossible to give you a complete list of all the situations that you could meet. The important thing is to apply the rules to each situation. Blocked VATAlthough there is VAT on the entertainment expenditure, HMCE will not allow traders to claim it back on their VAT returns, it is said to be blocked. For example, if a solicitor and her client have a meal at a restaurant that costs £58.75 including VAT, the restaurant will have to pay the VAT element (£8.75) to HMCE on their next VAT return. The solicitor cannot claim that VAT back on her tax return because she was entertaining a client. How does HMCE treat subsistence costs?Subsistence expenditure is incurred when an employer pays an employee for their expenses while away from work on company business, such as going on a business trip or attending a meeting. For example, if an employee is working away from home and has to stay overnight in a hotel, those subsistence costs will usually include VAT. The employer can normally claim back the VAT on the hotel and overnight costs. The important points here are:
If the employee takes a client out for a meal while they are working away from home, that meal would be an entertainment expense. However, because a non-employee is present, the employer cannot claim back the VAT. It is vital that businesses keep good records to show what expenditure was incurred and who attended each event (whether any non-employees were present). We at Appletons have many years experience helping our clients make the most of their entitlements in this area. If you need any advice on whether you can claim back VAT on any entertaining expenses, give us a call! |
Whilst all due care and attention is taken in preparing the articles which appear on this website, no liability can be accepted for any of its contents. It is designed to be of a general nature, and no action should be taken without our specific help tailored to your unique circumstances. |