HMRC Produces First Ever 'Super Podcast'

This month, HMRC launched it's first ever 'Super Podcast'. In it, HMRC experts, Stephen Banyard and Don Macarthur discuss forthcoming VAT, PAYE and Corporation Tax filing.

You can check out the podcast below:

http://podcasts.hmrc.gov.uk/audio/21-HMRC_Superpodcast.mp3

If you prefer, you can view a transcript of the podcast at the following link.

http://www.hmrc.gov.uk/podcasts/super-podcast.pdf

HMRC Advisory Fuel Rates Change Again

On 3 January this year, we blogged on the new HMRC advisory fuel rates. These are the rates used to calculate the VAT element of any vehicles mileage rates claimed, such as those under the Fixed Profits Car Scheme.

This original article can be revisited at; http://1staddition.blogspot.com/search?q=Mileage+rates if you want to check out the specifics.

As of 1 December 2009, these rates have, once again, changed. The revised rates are now available on the HMRC web site, at the following link; http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

Proposed VAT Rate Reduction. Is It All Good?

This afternoon, in the Pre-Budget Report, one of the hugely anticipated announcements is the reduction in the standard VAT rate, from 17.5% to 15% (the minimum rate allowed without EEC approval).

It is expected that this will provide a kick start to the ailing economy, increasing consumer spending in the run up to Christmas.

But is it good news for everyone? What about those companies currently operating a Flat Rate VAT Scheme? Potentially, depending on the changes made, this could be a disastrous move for companies in that position.

So how will this arise?

Well, if we are paying under the Flat Rate Scheme, we pay a fixed percentage of turnover to HMRC, regardless of what we charge to our customers / clients.

A typical consultancy business, working from home (with a first year 1% discount) will currently be paying 10% of their turnover to HMRC, in the form of VAT. At present, they are charging 17.5% on their sales, giving them a 7.5% surplus.

If the rate reduces, as planned, they will still pay (unless changes are introduced) 10% to HMRC, but will only charge, on sales, 15%. This reduces the surplus to 5% of turnover.

Based on a turnover of £100,000, this reduction will cost the average business some £2,500. This could, however, be as much as £5,625, for a company operating at the upper threshold of £225,000.

So. We await the announcement with bated breath.

Will the Chancellor reduce VAT? If so, will he ammend the Flat Rate Scheme rates to compensate?

If not, there could be a large number of unhappy small business owners out there.

Watch this space.

***UPDATE***

It would appear that the flat rates are reducing, but (surprise, surprise) not by the same as the standard rate.

For example, the standard flat rate for 'other business services' has reduced from 11% to 9.5%, representing only a 1.5% fall, compared with a 2.5% fall for the standard rate. This means that anyone in this situation will be worse off to the tune of 1% of their total turnover.

Yet another stealth tax, the sceptics amongst you may be thinking.

Details of the new flat rates can be found at the following link, and are contained within Annex E.: http://www.hmrc.gov.uk/pbr2008/vat-guide-det.pdf