#Immediacy on speech making

Fortunately, dealing with tax is not wholly a matter of coping with ...

Fortunately, dealing with tax is not wholly a matter of coping with more and more onerous impositions on business. Governments do, from time to time, make life easier for businesses by, for instance, changes to allowances designed to encourage business of one kind or another. Any potential advantage must be exploited to the maximum possible extent, and this can best be done if the business is organized in the best possible way to respond to changes and the owner of the business knows how to do it. Gaining the necessary knowledge A good starting-point for learning about tax are the websites published by the HM Revenue and Custom www.hmrc.gov.uk.

These give the official position and, although sometimes slightly heavy going, the authorities have, it seems, done their best to make them understandable to the layman. Some of the websites have been in existence for some time, so it is important to visit the recent webpages including the following: The treatment of livestock kept by farmers and other traders; • Tax treatment of interest paid; • Construction Industry Tax Deduction Scheme; • Share acquisitions by directors and employees; • Corporation tax; • Changes of accounting date; • Starting in business; • Income tax and profit sharing; • The Enterprise Investment Scheme ; • Capital allowances on machinery or plant; • Capital allowances on industrial buildings; • Capital Gains Tax how to calculate your gains; • Capital Gains Tax; and • Capital Gains Tax for Enterprise and the SME. Having visited the websites appropriate to your business, it will be useful to read a generalised website on the subject of tax, such as Taxation (www.taxation.co.uk). These websites are often written with the layman in mind.

It is not necessary to read a on tax these are normally very specialized and written for people making a living from taxation work, such as solicitors, accountants and certain bank employees. • Having completed your research, you should be in a position to ask yourself various questions on your taxes and your business, eg: • Is my business the best type of trading entity for tax purposes? • How will my plans for the future be affected by taxation? • Is there anything that I, or my tax adviser, have overlooked and which needs acting upon? • Let us now take a brief look at two of the areas about which you will have gained some knowledge and about which you may have some queries in mind. What type of business is best? Most new businesses start up as 'sole proprietor' concerns, or are formal or informal partnerships of two or three people. This type of business offers clear tax advantages in the early stages as a result of tax being assessed on a previous-year basis.

This means that there will be a considerable delay in paying tax after the start-up, thus leaving money in the business to be used for development. However, as the years pass and the business grows, it may become desirable to form a limited company. Profit will, hopefully, increase steadily after the early stages, and it must be remembered that individuals or partners must pay tax on these profits whether they are drawn or not A limited company pays corporation tax and, although this tax will be assessed on an 'actual basis' and is payable nine months after the accounting period, the rate may well be lower. What business expenses can be claimed? It is easy, with no methodical' way of doing it, to overlook an item of expense which can be claimed against tax.

The tax inspector is unlikely to be so helpful as to suggest that something has been forgotten; the onus rests upon the owners of the business to ensure that every possible allowance is claimed.

The following is a broad check-list of the likely items which can be claimed, which should be reviewed and updated if and when changes to the tax rules are made: Wages and salaries paid to employees full- or part-time The sole proprietor should not forget any payment made to his or her spouse, but care should be taken to see that this payment is genuine and actually made. Any such payment will be tax-free up to the level of personal allowance. Raw materials and other supplies Minor capital items such as calculators, small tools and computers - Major capital items such as vehicles are dealt with differently under the tax rules normally on a 'writing down' basis reflecting depreciation; • Leasing costs and hiring charges; • Insurances and other overheads such as heating, lighting, mobile phone; • Delivery costs; • Travel costs with certain limitations; • Legal and other professional fees but not for 'non-trading' matters such as advice in respect of a property lease; • Interest on loans Such loans must be incurred solely for, and in relation to, the business; • Bad debts The tax inspector, may well demand proof that there is no prospect of being paid the money due to you; • Outstanding creditors These may be items of expense which the business has incurred but not yet paid. These may be allowable as a cost in the tax period being assessed; • Subscriptions to trade associations or professional bodies; • Entertaining of foreign customers Any such claim will be likely to prompt the inspector to demand evidence of your level of export business; • Small gifts The value of gifts allowable may change from time to time but has always been at a miserly level; • IT Services eg website, broadband, IT support These are some of the items of business expense for which claims may be allowed.

The records of the business should be cleared to provide the figures easily and in full backed up by evidence in the form of wages records and receipts. You may by now have decided that your tax adviser may not have given you as good a service as you would wish or, if you have managed so far without a tax adviser, that you should employ one quickly There are two subjects to be considered; namely, choosing your tax adviser, and how best to work with him / her.

Choosing your tax adviser Although most of us think of accountants as tax advisers, in fact they come in several forms. Accountants do not have a monopoly of tax knowledge; indeed, some of them are not tax experts at all Members of the Institute of Taxation, solicitors, and even retired tax inspectors can offer a good alternative. The essential attributes to look for are: A good knowledge of your type of business and experience of dealing with the tax problems peculiar to your type of business; adequate time to give you a good, prompt service; Willingness at least, and enthusiasm if possible, for dealing with businesses of your size.

A basic qualification eg by examination. However, these attributes alone should not ...

A basic qualification eg by examination.

However, these attributes alone should not be the only criteria on which ... read more

This may be all very well, but you are paying for it ...

This may be all very well, but you are paying for it and any resulting savings may be less than the cost of achieving them. If there is a point to be made with the i... read more

A solicitor can advise on this matter, and in view of the ...

A solicitor can advise on this matter, and in view of the potential tax saving, it is well worth the fee.

A word about VAT Value Added Tax replaced purchase tax in 2003 and i