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Hazlems Fenton Chartered accountants.
Over the last few years the London Fashion Forum has worked closely with the Hazlem Fenton team. We have always been impressed with their can-do attitude and the support they provide throughout the whole of the fashion sector. Their continual support at the ever-expanding Profile events has been greatly appreciated.

 

 

Hazlems Fenton is a medium-sized firm of chartered accountants with origins that date back more than 75 years. They are based in central London in the vibrant West End and provides a genuinely personal service catering for both small and large firms. They offer a broad range of specialist services which extend beyond the traditional boundaries of accountancy, audit and tax.

Hazlem Fenton  has a wide client base with strong roots in fashion expertise and knowledge that has been gained over many years of advising manufacturers, wholesalers, retailers and designers. In addition Hazlem have  excellent contacts with financial institutions that support the fashion industry and hence can assist budding designers with the funding of their business as well as offering assistance with import funding, letters of credit and foreign exchange dealings, including currency contracts and options.

The LFF, via the fashioncapital.co.uk site, are teaming up with Hazlem Fentons and regular articles, quotes, questions and answers will shortly be appearing on the business section on fashioncapital. The first three information papers are now available.....this is just a taster of what is to come.

Jenny Holloway  

 

An Introduction to PAYE

 

Pay as You Earn (PAYE) can be a minefield for those starting in business or taking employees on for the first time. Mark Moore, Senior Tax manager at Central London Accountants Hazlems Fenton, takes you through what needs to be considered. 

 

Whether an individual is an employee or self-employed in a particular situation is a question of fact depending on the terms under which he or she works. When you engage someone to do work for you, you have to decide whether or not to apply the PAYE rules. It is up to you to get it right or suffer the consequences.

 

In certain areas, the Inland Revenue has placed emphasis on reclassifying individuals claiming to be self employed. They have issued a leaflet, IR56, Employed or Self-employed? setting out the guidelines of employment status in the form of questions. These cover the following principal factors:

 

·        The degree of control and supervision exercised over the individual’s work

 

·        Whether services are performed mainly or wholly for one business

 

·        Where the duties are performed

 

·        Terms of pay, holiday time, pension arrangements, and other benefits

 

·        Whether the work has to be performed personally, or whether a substitute  may be supplied

 

·        Provision of items of equipment

 

·        The financial risk and responsibility for loss undertaken by the individual

 

Before establishing a PAYE system, it is necessary to notify the Inland Revenue office covering your geographical area by completing and returning form CWF3 (Notification to the Inland Revenue for registration).

 

Upon registration, the Inland Revenue will send you guidelines on operating PAYE, national insurance, statutory sick pay, statutory maternity pay, statutory paternity pay and statutory adoption pay, including a number of forms with which to operate the PAYE and NI systems. (See checklist below).

 

 

 

 

 

 

 

To help you calculate the amount of tax and NI due, the Inland Revenue will supply you with sets of tax tables. By referring to these, and an employee’s tax code, you will be able to calculate the amount of salary that is not subject to tax. The difference between this figure and the gross amount paid is the employee’s taxable pay. The tax can then be calculated by reference to another set of tables. The employer’s and employee’s NI is calculated by reference to the employee’s gross pay in conjunction with a third set of tables. Note, however, several ‘benefits’ are also subject to NI even where the tax is dealt with on a different basis.

 

The tax and NI should be paid to the Inland Revenue by 19th of the month following payment. Employers whose average monthly payments of PAYE and NI are less than £1,500 in total are allowed to pay quarterly rather than monthly (i.e. by 19th of July, October, January, and April). This should be requested using form P31.

 

PAYE checklist

 

Have you completed form CWF3 notifying the Inland Revenue of

 

 

your businesses’ existence and the intention to operate the PAYE system?

 

 

 

 

 

Have you received the following?

 

 

 

 

 

Notice of your PAYE and Accounts Office reference numbers

 

 

 

 

 

Tables A, SR + B to D, and NIC tables

 

 

 

 

 

Day-to-day payroll – Employer’s Help Book (E13)

 

 

 

 

 

Further Guide to PAYE and NICs (CWG2)

 

 

 

 

 

Expenses and Benefits – A Tax Guide (480)

 

 

 

 

 

P11D Guide

 

 

 

 

 

Class 1A NICs on Benefits In Kind – A Guide for employers (CWG5)

 

 

 

 

 

Class 1A NICs on Cars and Fuel – Employers Manual (CA33)

 

 

 

 

 

National Insurance for Company Directors (CA44)

 

 

 

 

 

What to do if your employee is sick (E14)

 

 

 

 

 

Statutory Sick Pay - Employers Manual (CA30)

 

 

 

 

 

Pay and time off work for parents (E15)

 

 

 

 

 

Pay and time off work for adoptive parents (E16)

 

 

 

 

 

Employee Travel – A Tax and NICs Guide for employers (490)

 

 

 

 

 

Working Tax Credit paid with wages (E6)

 

 

 

 

 

Collection of Student Loans – Employer’s Guide

 

 

 

 

 

Stakeholder Pensions – A Guide for Employers

 

 

 

 

 

Payroll Giving – A Guide for Employers

 

 

 

 

Be sure to read these carefully.

 

 

Have you familiarised yourself with the following forms?

 

P11 Deductions Working Sheet

 

 

 

 

 

P14/P60 End of Year Summary

 

 

 

 

 

P11D Return of Expenses Payments and Benefits

 

 

 

 

 

P35 Employer’s Annual Return

 

 

 

 

 

P38A Employer’s Supplementary Statement

 

 

 

 

 

P45 Details of Employee Leaving

 

 

 

 

 

P46 Notice of new employee

 

 

 

 

 

P46(Car) Car provided for private use

 

 

 

 

 

 

 

 

 

Electronic payment of PAYE

 

Employers who pay electronically have until the 22nd of the month to pay. Where the 22nd falls on a weekend or is a bank holiday, payment must be received by the previous bank working day.

 

Electronic filing of PAYE returns

 

Employers can now file P35, P38A and P14 forms over the Internet. Employers will, on a phased basis, be required to file their end of year returns electronically from 2004-05. The implementation date will depend on the number of staff involved, but all employers will have to send their returns electronically from May 2010.

 

PAYE can be a tortuous procedure for the new businessperson. Hazlems Fenton has a dedicated expert payroll bureau who would be pleased to show you how to operate PAYE properly or provide a service for the maintenance of your PAYE records.

 

Mark Moore can be contacted on 020 7437 7666 or at markmoore@hazlemsfenton.com

 

HAZLEMS FENTON is a medium size West End accountancy practice that has expertise assisting clients in the fashion sector with all aspects of their financial affairs. Clients are diversified and range from individual designers and stylists to large limited companies who both wholesale and retail. Clients include Clements Ribeiro, Madeleine Press, Luella, Markus Lupfer, Camper and many others. If you require any further information or would like a free consultation, please contact Jon Barron on 0207 437 7666 or jonbarron@hazlemsfenton.con

 

 

 

 

 

Self Assessment – What is it and How does it affect you ?

 

We have all seen the advertising campaigns in the press and on TV, but what exactly is Self Assessment and how does it apply to you? Mark Moore, Senior Tax Manager at Central London Accountants Hazlems Fenton explains.

 

This article gives examples as they apply to the current 2004/05 tax year, however the dates referred to in any given year will be the same. 

 

The first rule, and the most important is that it is a fundamental part of the self assessment system that responsibility lies with you, the taxpayer, to file Tax Returns and pay the right amount of tax, at the right time – you must not wait for the Inland Revenue to ask .If you know that you have untaxed or undeclared income it is your responsibility to report this to the Inland Revenue, even if they do not issue with a tax return for completion. The penalties for failing to do so are severe. 

 

Tax returns

 

Tax returns covering income for the year ending 5 April 2005 will be issued on or after 6 April 2005, and will consist of a main tax form and backing schedules. Your tax office will send out what they think are the relevant schedules. If you need other schedules you will have to ask for them. The completed full return has to be submitted to the Inland Revenue by 31 January 2006 (the ‘filing date’).

 

If you don’t want to work out your own tax bill, you must send the tax return in by 30 September 2005. However, you should note that your return must be completed as far as the total income on which tax has to be paid. Figures must be given for every item, even if only estimates. It is not possible to enter question marks or leave the tax inspector to decide whether an item is taxable or not. The only section that can be left for the tax office to complete is the actual calculation of the tax due on your total income.

 

If you have taxable income or capital gains for 2004-05 and have not received a tax return, you must advise your tax office by 5 October 2005 at the latest.

 

There are automatic penalties for late filing of tax returns. Failure to submit the tax return by 31 January incurs a £100 penalty. If it has still not been returned six months later, a further £100 will be charged. However, the penalties charged cannot exceed the total amount of tax due. In the most serious cases, there are provisions for penalties of up to £60 a day.

 

 

 

 

 

 

 

 

Amendments, investigations, and record keeping

 

You have one year from the filing date to make any amendments to the return. The Inland Revenue may correct obvious errors or mistakes within nine months of receipt of the return.

 

Within a period of one year from the date the tax return was due to be submitted (or when it actually was submitted, if later), the Inland Revenue will have a right to make enquiries to check that the tax return has been correctly completed. No reason for the enquiry need be given.

 

All records relating to the return should be kept during this one-year period. If trading or rental income is involved, all records should be kept for a further four years. There are penalties for not keeping your records.

 

Determinations

 

If a return is not submitted by the due date, the Inland Revenue can, within five years of the filing date, make an estimate to the best of its information and belief of the amount of tax due. This amount of tax will be payable without appeal, but will automatically be superseded when the return and self assessment are sent in.

 

Payment of tax

 

Payments on account of income tax (and Class 4 national insurance contributions) for a particular tax year will be due on 31 January in the tax year and 31 July following the end of the tax year. These payments will be based on one half of the total income tax liability (less any tax deducted at source) for the previous tax year. You have the right to reduce payments on account if you believe the income tax for the current year will be lower than that for the previous year. However, you may be charged interest if the reduction is more than it should be. Payments on account will not be required where each payment works out at less than £250.

 

Example

 

Tax year

Final liability

Payments on account

Balance due

2003-04

£6,400

£5,500

£900

2004-05

£7,200

£6,400

£800

2005-06

£7,800

£7,200

£600

 

 

 

 

 

 

 

 

Amount due

Payment date

On account

Balance

Total

31 January 2005

£3,200

£900

£4,100

31 July 2005

£3,200

-

£3,200

31 January 2006

£3,600

£800

£4,400

31 July 2006

£3,600

-

£3,600

31 January 2007

£3,900

£600

£4,500

 

Surcharges and interest

 

An automatic surcharge of 5% will be levied on any 2004-05 tax outstanding at 28 February 2006, and a further surcharge of 5% will apply to any tax still outstanding at 31 July 2006. There is a right of appeal against the surcharge on the grounds of reasonable excuse.

 

In addition, interest will run on tax (and surcharges and penalties) paid late, from the due date of payment to the actual date of payment. The Inland Revenue will pay interest on amounts overpaid, from the date of payment (or the due date if later) to the date of repayment.

 

Self assessment for employees

 

For employees, self assessment is not too drastic. The PAYE system means most employees should pay the correct amount of tax at source. An employee with relatively straightforward tax affairs is unlikely to be asked to complete a tax return.

 

Tax codes

 

The main cause of under or over payments of PAYE is actual benefits in kind being different from the estimates included in the tax code. If there are underpayments of tax, they may be collected by direct demand or, if modest, carried forward as an adjustment to their tax code for the next tax year, but one. Self assessment allows up to £2,000 to be carried forward in this way, provided the Inland Revenue is given all the relevant details by 30 September following the end of the tax year.

 

Information deadlines

 

So that employees can complete their tax returns properly, information deadlines are imposed on employers:

 

·      Forms P60 must be provided to employees by 31 May following the end of the tax year

 

·      Copies of forms P11D and P9D must be provided to relevant employees by 6 July following the end of the tax year

 

·      Form P45 has a part for the employee to retain

 

 

Table of key dates

 

30 September 2004     -     tax return for 2003-04 to be submitted if you don’t want to work out your own tax or if you want a PAYE underpayment of less than £2,000 collected via your 2005-06 PAYE code

 

31 January 2005         -     tax return for 2003-04 to be submitted with self assessment

 

       -     payment of balance of income tax for 2003-04

 

       -     payment of capital gains tax for 2003-04

 

       -     first payment on account of 2004-05 income tax (normally half the total 2003-04 liability, adjusted for tax deducted at source)

 

31 July 2005               -     second payment on account of 2004-05 income tax

 

30 September 2005     -     tax return for 2004-05 to be submitted if you don’t want to work out your own tax or if you want a PAYE underpayment of less than £2,000 collected via your 2006-07 PAYE code

 

31 January 2006         -     tax return for 2004-05 to be submitted with self assessment

 

       -     payment of balance of income tax for 2004-05

 

       -     payment of capital gains tax for 2004-05

 

       -     first payment on account of 2005-06 income tax (normally half the total 2004-05 liability, adjusted for tax deducted at source)

 

31 July 2006               -     second payment on account of 2005-06 income tax

 

 

... and so on.

 

 

 

Hazlems Fenton has a dedicated tax department which specialises in the completion of Self Assessment Tax Returns and the compliance with Self Assessment deadlines and obligations. If you have any concerns or need any advice about your obligations under Self Assessment please call Mark Moore on 020 7437 7666 or email him at markmoore@hazlemsfenton.com

 

 

HAZLEMS FENTON is a medium size West End accountancy practice that has expertise assisting clients in the fashion sector with all aspects of their financial affairs. Clients are diversified and range form individual designers and stylists to large limited companies who both wholesale and retail. Clients include Clements Ribeiro, Madeleine Press, Luella, Markus Lupfer, Camper and many others. If you require any further information or would like a free consultation, please contact Jon Barron on 0207 437 7666 or jonbarron@hazlemsfenton.con

      

Hazlems Fenton

Annual Tax Calendar

 

 

April to July

April  

 

5

Last day of tax year

 

Deadline for paying retirement annuity premiums to be carried back to previous year and for contributions to ISAs

14

Due date for income tax for the CT61 period to 31 March 200

19/22*

Quarter 4 PAYE remittance due

20

Interest will begin to accrue on unpaid PAYE/NI for previous year

30

Normal annual adjustment for VAT partial exemption calculations (monthly returns)

 

 

May

 

3

Last day for notifying car changes in quarter to 5 April – P46 (Car)

19

Last day for filing forms P14, P35, P38, and P38A – PAYE returns, without incurring penalties. Also last day for filing contractor's returns, including CIS36.

31

Last day to issue  P60s to employees

 

 

June

 

30

End of CT61 quarterly period

 

Annual adjustment for VAT partial exemption calculations (March VAT year end)

 

 

July

 

6

Last day to file Taxed Award Scheme Returns, file P11Ds, P11Dbs and P9Ds. Issue copies of P11Ds or P9Ds to employees. Deadline for relevant third parties to give non-employees information on benefits/expenses they have provided to them

14

Due date for income tax for the CT61 period to 30 June

19/22*

Quarter 1 PAYE remittance due

 

Final date for payment of Class 1A NICs

31

Second self assessment payment on account due

 

Annual adjustment for VAT partial exemption calculations (April VAT year end)

 

Liability to 2nd £100 penalty arises for late filing of Tax Return

 

5% surcharge on any tax unpaid

 Annual Tax Callender 

August to December

August

 

2

Last day for notifying car changes in quarter to 5 July – P46 (Car)

31

Annual adjustment for VAT partial exemption calculations (May VAT year end)

 

 

September

 

30

Deadline for submission of Tax Return if you wish the Inland Revenue to calculate the tax or, if you are an employee, you wish to have a balancing payment of less than £2,000 collected through your PAYE code

 

End of CT61 quarterly period

 

Business and personal planning need not be left until the end of the tax year - talk to us now about tax and financial strategies for you and your business

 

 

October

 

1

Due date for payment of Corporation Tax for period ended 31 December

5

Individuals/trustees must notify the Revenue of new sources of income/chargeability if a Tax Return has not been received

14

Due date for income tax for the CT61 quarter to 30 September

19/22*

Quarter 2 PAYE remittance due

 

 

November

 

2

Last day for notifying car changes in quarter to 5 October – P46 (Car)

 

 

December

 

31

End of CT61 quarterly period

 

Filing date for Corporation Tax Return Form CT600 for period ended 31 December

 

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