Our newsletter this month covers coping with current delays in the VAT registration process, inheritance tax and business property and finally a note of tax free benefits which can be provided to retired employees by their employers.

The next issue of our newsletter will be published on Thursday 4th October 2007.

Don't forget to keep an eye on garbetts.com, our www site, where you can find a selection of tools and briefings to help you with your accounts and taxes.

For clients running personal service companies (PSCs), our PSC microsite at www.garbetts.com/psc is an invaluable source of information. 

For other clients our downloads sections has all sorts of briefings on useful topics.  You can also find out more about our tax enquiry insurance schemes at www.garbetts.com/insurance, and find out more about the firm and its staff at www.garbetts.com/corporate.

If your business has a www site then let us know the URL and we can provide a link from our site to help your search engine rankings - a reciprocal link is appreciated.

Click on www.garbetts.com today!

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H M Revenue & Customs are currently struggling to cope with the number of new registrations for VAT - there are considerable delays. Businesses that have sent in the VAT1 registration form may have to wait months before receiving their VAT registration number.

This creates a difficult issue for these businesses. If you are required to register by a certain date, you must account for VAT to be added to your sales from this date - unless you sell goods or services that are normally zero rated or if your trade does not normally issue VAT invoices, say a hairdresser. However you cannot issue a VAT invoice until you are notified of your VAT registration number.

You will also have to secure the co-operation of your customers.

Two possible strategies you could employ between the date you are required to account for VAT and the receipt of your VAT number from HMRC are set out in the following paragraphs.

1. Increase your price to include VAT. Although you cannot charge VAT before you are registered or show VAT as a separate item on any invoices you issue, you can change your prices to include VAT. You will need to explain to your customers that you will be sending them VAT invoices later - the following words should be added to your invoice:

"This invoice is raised pending a VAT registration number. A full VAT invoice will be issued on receipt of the VAT registration number."

Once you have your registration number you should send replacement invoices, showing VAT, within 30 days. If you have asked for voluntary registration you will need to start accounting for VAT from the registration date you asked for on your application form, as long as you actually made supplies/provided services from that date.

2. Invoice net amount before VAT is added. An alternative strategy is to issue your customers with an invoice that shows the net sale value (before VAT is added). Agree that you will send a further VAT only invoice when you are issued a registration number. This will require the co-operation of your customers as they will be processing, and hopefully paying, two invoices for each supply. (One for the net sales value and one for the VAT.)

If you need our help in setting up a "coping" process, to bridge the period before you receive your VAT number, do call.

Finally do not forget to revise your cash flow management so that you save the VAT added to your sales ready for the payment of your first VAT return.

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Ordinarily business property qualifies for a 100% exemption from inheritance tax. This article highlights a particular problem for the estate of business property owners when the time comes to consider inheritance tax - usually date of death. The following comments only apply if you own the property personally and the property is used by your company or a trading partnership of which you are a member.

• If you own the property personally business property relief is restricted to 50% of the value of the property used by the company and
• This 50% is only available if you own more than 50% of the shares in the company when the property is subject to an inheritance tax charge.

Accordingly if you have given away your shares prior to your death it is likely that no relief will be given.

It would of course be possible to transfer the property into the company's ownership prior to your demise but this would trigger a stamp duty land tax charge and thus limit the effectiveness of the plan.

Of course in the real world other taxes need to be taken into account when planning for the acquisition and disposal of business property, particularly capital gains tax. If you are considering the purchase or sale of commercial property and would like to discuss strategies to minimise the inheritance tax and other tax risks please contact us and make an appointment to meet.

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On Budget Day the Revenue clarified its position regarding the provision of continuing benefits to retired employees. The following benefits will not be taxable. The first tax year affected by this announcement is the year ending 5 April 2007.

Non-taxable benefits are:

1. Continued provision by former employers of accommodation and related removal expenses.

2. Welfare counselling.

3. Recreational benefits.

4. Annual parties and similar functions costing up to £150.

5. Equipment for disabled employees.

6. Writing of wills costing up to £150.

7. Benefits where the right to the continuing benefit arose on retirement BEFORE 6 April 1998.

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1 September 2007 - Due date for corporation tax due for the year ended 30 November 2006.

19 September 2007 - PAYE and NIC deductions due for month ending 5 September 2007. (If you pay your tax electronically the due date is 22 September 2007)

19 September 2007 - Filing deadline for the CIS300 monthly return for the month ending 5 September 2007.

19 September 2007 - CIS tax deducted for the month ending 5 September 2007 is payable by today.

1 October 2007 - Due date for corporation tax due for the year ended 31 December 2006.

19 October 2007 - PAYE and NIC deductions due for month ended 5 October 2007. (If you pay your tax electronically the due date is 22 October 2007)

19 October 2007 - Filing deadline for the CIS300 monthly return for the month ended 5 October 2007.

19 October 2007 - CIS tax deducted for the month ended 5 October 2007 is payable by today.

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DISCLAIMER - PLEASE NOTE: The ideas shared with you in this email are intended to inform rather than advise. Taxpayers circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Garbetts,

Arnold House, 2-6 New Road, Brading, Sandown, Isle of Wight, PO36 0DT.

Tel: 01983 400350  Fax: 01983 400568.

Web: www.garbetts.com.

Garbetts is a limited company, registered in England & Wales with number 02988424.

The Principal of the firm is a member of the Association of Chartered Certified Accountants (ACCA). This body has its headquarters in the UK and its rules of professional conduct can be obtained from its web site.

Garbetts are authorised to act as statutory auditors by the ACCA.