Kilsby Williams

FUEL

Advisory Fuel Rates

H M Revenue & Customs has reduced the advisory fuel rates arguing that the cost of petrol has fallen by more than 10% since the rates were last set. The rates are the recommended rates for employers to reimburse employees for fuel and can be used for business travel claims by employees in their company car without incurring additional tax or National Insurance. Alternatively, they can be used where employees repay employers for private mileage in their company car.

For example, a 1400–2000cc petrol car now attracts a rate of 11p per mile (was 13p) and 9p per mile for a diesel car (was 10p). A petrol car with an engine over 2000cc has a rate of 16p (was 18p) and for diesel 12p (was 14p). The rates were effective from 28 February 2007.

VAT Fuel Scale Charges

From 1 May 2007 H M Revenue & Customs introduced new VAT fuel scale charges. Businesses must use these charges from the start of their first accounting period beginning on or after this date. The fuel scale charge will be based on the CO₂ rating of a car.

VANS

The benefit-in-kind for employees with vans has recently increased from £500 to £3,000. As long as H M Revenue & Customs' private use condition is met then no benefit-in-kind will be due. Beware that certain double-cab pick-ups, Land Rovers and similar vehicles may not be classified as vans for tax purposes and may attract a car benefit. If you want further information to clarify the position please contact us.

May 2007

There has recently been a large increase in the number of cases of identity fraud against companies. The particular instance we would like to bring to your attention is where criminals identify from Companies House a suitable company and change its registered office without the directors’ knowledge. Using the company’s favourable credit rating the criminals then order goods to the new registered office and disappear with them, leaving the company with the invoice. Similar actions can result from simply changing the names of existing directors.

Companies House has recognised this weakness and has developed a system for companies to protect themselves. It involves the online filing of documents. It also notifies you immediately when the company’s details are altered or amended at Companies House.

The registration process is simple but needs completion online at www.companieshouse.co.uk. by clicking on the web filing section within online services and following the instructions.

We strongly recommend that you use this service as many companies have already been caught out. Please contact us if you need any assistance with this.


February 2006

The scheme offers loans to SMEs in England and Wales looking to invest money in energy saving projects. Loans of between £5,000 and £100,000 are available. In addition they are:

-  interest free;

-  unsecured;

-  with repayment periods of up to four years; and

-  no arrangement fees.

The loans are intended to encourage companies to invest in energy saving equipment that either upgrades or replaces existing facilities. Any project where the cumulative value of the energy savings resulting from the project over the first five years exceeds the capital value of the loan, may qualify.

Examples of this could be:

-   energy saving lighting;

-   boiler, heater or lighting controls;

-   building insulation;

-   insulation for boilers, hot water tanks and pipe work; or

-   energy efficient machinery.

In addition, the loan could work in connection with a grant application.

If you are considering any such capital expenditure, please contact us to see what assistance there is available to your company.


May 2006

H M Revenue & Customs is making an increasing number of enquiries into businesses’ tax affairs, often resulting in further tax interest and penalties.  Key areas it is looking at are:

Research and Development

Research and development claims provide enhanced tax relief.  H M Revenue & Customs will challenge the nature of the product and work undertaken to ensure that each claim satisfies all of the qualifying criteria. Technical advice needs to be taken when evaluating such a claim.

Termination Payments

It is aggressively targeting termination payments paid to employees and is targeting companies where it is aware that there have been redundancies. The problem arises where a payment has been treated as £30,000 exempt. If challenged, tax, NIC interest and penalties could become payable by you the employer! Such challenges can often be successfully resisted with good advice.
 
Accounting Practice

We are seeing an increasing number of enquiries into accounts and accounting practice. Popular areas of enquiry are – provisions, bad debts, repairs, capital expenditure and employee remuneration. The tax treatment of accounts entries is also increasingly following the accounts treatment. This provides opportunities. Care therefore needs to be taken when preparing accounts, not only to avoid further tax arising out of an enquiry, but to maximise tax planning opportunities.


March 2006

H M Revenue & Customs is encouraging businesses to submit Returns electronically by offering very attractive cash-flow and filing advantages as follows:

-  An additional seven days to submit your VAT Return.

-  Payment for the VAT declared will be collected automatically by direct debit.

- The direct debit will not be taken from you bank account until three working days after the Return was due. i.e. at least 10 days after the month end.

-  Early submission of a Return will not result in VAT being collected early. It may be useful to submit early if the filing date falls at an inconvenient time for your business.

If you think your business could benefit from electronic filing of your VAT returns, please contact us.


June 2007

H M Revenue & Customs has introduced major changes to the procedure for reclaiming VAT on employee expense claims with effect from 1 January 2006.  If you do not follow the new system you will jeopardise your VAT recovery.

To comply with the new rules, employees must provide a VAT invoice for fuel purchased to support their fuel or mileage claims.

We believe local VAT offices will take a strong view if supporting VAT invoices are not held to support employee expense claims, so please be prepared before your next inspection.

January 2006