Tales of Mr P.

December's Q&A Corner

2011-12-12T11:19:00.000Z

Q. I own a number of rental properties; a mixture of self-contained flats and houses. I've received an email from a property expert that says I can claim capital allowances as a percentage of the cost of these properties, which will produce a guaranteed tax refund for me. Is that true?

A. No, this is not true. Capital allowances cannot be claimed for equipment or fittings used within residential properties, which the Tax Office refer to as 'dwelling-houses'. There is an exception for properties that qualify as furnished holiday lettings, when each letting must generally be for short periods of less than 30 days. If you make a capital allowance claim for your rental properties it may be passed by the Tax Office, under their 'process now, check later' system. But when the Tax Inspector checks your claim it will be refused, any tax refunded will have to be repaid with interest, and penalties will be charged. This can happen up to 20 years after you submitted the incorrect claim!

Q. My employer has given me a form P11D, which shows that I am taxed on the cost of my smart phone. I thought each employee could have one tax-free mobile phone, so why am I taxed on my only mobile phone?

A. Tax Officials think smart phones are computers rather than phones, so don't want to apply the 'one free mobile per employee' rule, when the mobile phone is a smart phone. However, this can work in your favour if the private use of the smart phone provided by your employer is insignificant. Where any computer equipment is provided to you solely for work purposes, and there is no significant private use, there should be no tax charge. This tax-free treatment doesn't apply where the contract for the mobile phone is in your own name and not the company's name. In that case, where your employer pays for your smart phone the cost is taxed as if it was part of your salary. To remedy this, make sure your next smart phone contract is made between your employer and the telephone provider and you are not a party to that contract.

Q. I work as a nurse in a NHS hospital. My professional organisation tells me I can claim tax refunds for the last 6 years, for the cost of the particular shoes and socks I need to wear for work. Is there a limit on what I can claim?

A. There are set limits for such costs, known as flat rate expenses, which vary according to the taxpayer's profession and work description. The full list of tax claimable flat rate expenses can be found here:

http://www.hmrc.gov.uk/manuals/eimanual/EIM32712.htm.

Nurses can claim £100 per year as a flat rate expense against their taxable income for uniforms without any receipts but in addition can claim £12 per year for the cost of shoes and £6 per year for stockings or tights. The £100 figure was £70 per year from 2004/05 to 2007/08. However, you need to make your claim quickly, as the deadline for claims relating to 2005/06 is 31 January 2012. The deadline for 2006/07 is 31 March 2012, and for 2007/08 it's 5 April 2012. However those deadlines only apply if you were taxed under PAYE, and did not submit a self-assessment tax return for those tax years. If you did submit a self-assessment tax return for the year the claim relates to, your claims period is already limited to 4 years from the end of that tax year. In that case the earliest year you can claim for is 2007/08, and the claim must be received by HMRC by 5 April 2012.

Question and Answer Corner - October

2011-10-12T12:23:00.002+01:00

Riots, Refunds and Restricted PAYE - it's all happening in this month's Q&A!

Q. My cafe was badly damaged in the recent riots, but my loyal customers have collected £3,000 to help me open the business as quickly as possible. How should I treat this sum for tax purposes? Is it a personal gift, or a contribution to be set against my repair costs?

A. This gift from your customers should be treated as income for your business for income tax or corporation tax purposes. You are likely to have a lot of repair expenditure to set against your income for the current period, so you may well not have a profit to declare even after including the gift as income.

Q. I've received a tax refund for 2010/11, but I'm worried that it's not correct as I usually have tax to pay each year. Also I haven't even submitted my 2010/11 tax return yet.

A. You are right to be worried about the tax refund, as the Taxman's computer has issued some incorrect refunds recently. If you normally complete a self-assessment tax return but also have some income taxed under PAYE, the computer should wait until your tax return has been submitted before calculating the tax to be refunded. In a few cases this has not happened, and the tax refund has been based only on the taxpayer's PAYE income. Please ask us to check the tax calculation that should have arrived with your refund cheque.

Q. The Tax Office has written to me saying £2,800 tax I owe will be collected by restricting my PAYE code for 2012/13. What does this mean?

A. The Taxman is now permitted to collect up to £3,000 of unpaid tax or overpaid tax credits through PAYE codes. Your PAYE code tells your employer how much of your income to treat as tax free, and thus how much tax to deduct from the rest. A common PAYE code for 2011/12 would be 747L, which gives you tax free income of £7,475 for the year. If you owe £2,800 in unpaid tax, and your highest marginal tax rate is 40%, your tax free income will be reduced by £7,000 (£2,800/ 40%), leaving you with tax free income of £475 and a PAYE code of 47L. The numbers will be slightly different in 2012/13, but essentially you will pay more tax each month from April 2012 until the tax debt is eliminated.

September's Question & Answer Corner

2011-09-08T13:31:00.002+01:00

So....summer is drawing to a close and autumn hails the start of the count down to tax season! At least you've got your favourite purple envelope to answer some tricky tax questions for you!

Q. I received my self-assessment statement and payslip on 17 August 2011, which shows tax due to be paid by 31 July 2011. I paid the tax due as soon as I could, but I am now worried that I will get charged interest and a penalty for late payment.

A. The late issuing of these statements was due to a lack of paper at HMRC's printers! As the delay was essentially their fault HMRC has decided to waive the interest due, as long as the tax payment is received by 27 September 2011. However, this interest free period only applies to the second payment on account of income tax for 2010/11, due by 31 July 2011. Any other late tax payments, such as tax due by 31 January 2011 will accrue interest as normal.

Q. My son worked for a company that has gone into liquidation. The Tax Office are refusing to acknowledge the student loan repayments which were deducted from his salary in 2010/11 and pass those repayments on to the Student Loans Company. What can he do to get his student loan records corrected?

A. This can happen when the company folds before submitting its end of year PAYE return: form P35. This form shows the totals for all the deductions taken from each employee during the year. Your son needs to provide HMRC with any evidence he has of the student loan repayment deductions, such as original payslips or his form P60 for the tax year. HMRC should then pass this information onto the Student Loans Company who will correct his payment record.

Q. I recently applied for VAT registration for my business as the turnover had exceeded the compulsory registration threshold. Now I've had a call from the VAT office asking to come and see me. What have I done wrong?

A. A visit to a newly registered business is now normal practice for VAT officers, particularly where the first VAT return shows a repayment due. The VAT inspectors will want to see the invoices for your first VAT period, and be assured that you know how to keep adequate business records. We can sit in on the VAT visit to provide back-up for any difficult questions if you wish.

August's Question and Answer Corner

2011-08-03T15:01:00.002+01:00

Hello! I can't believe that it's August already! Time flies when you're having fun with purple envelopes!

Here are the Q&As for August - keep 'em coming folks, I do love a tax riddle!

Q. I've heard I could reduce inheritance tax by leaving money to charities in my Will. How does this work? Do I have to leave a minimum amount?

A. Any bequests to charities in your Will are free of inheritance tax (IHT). This means the executors of your estate will only pay IHT at 40% on the value of your estate after deducting the following:

- gifts to charities,

- gifts to your UK domiciled spouse; and

- your available nil rate threshold.

For deaths after 5 April 2012 it is proposed that the rate of IHT paid will be reduced to 36%, if at least 10% of the net estate is left to charity. Your net estate is the amount on which IHT would be charged without considering the charitable gifts. You may need to redraft your Will to ensure your estate qualifies for this tax discount.

Q. I earn £30,000 p.a. taxed under PAYE, but also have a variable amount of rental income. I have read that 40% tax applies above £35,000 but I've also been told I can earn £42,475 before paying 40% tax. How much rental income can I receive before paying 40% tax?

A. The 40% tax rate applies in the current tax year (2011/12) on taxable income above £35,000. This is your total income (earnings, rentals and any interest or dividends) less your tax free allowance of £7,475 and any other valid deductions, such as expenses relating to your rental income. So you can have gross income before deductions of £42,475 (£35,000 + £7475) before you have to pay 40% tax. However, you must declare any rental income you receive to HMRC.

Q. My employees are occasionally required to work late in the evening. If I pay for taxis to take them home is that cost tax allowable for the business and will the employees be charged tax on the taxi fare?

A. Where an employer pays for the travel costs of an employee for a journey between home and work (i.e. commuting), that cost would normally be a taxable benefit in kind for the employee. However, there is currently a particular tax exemption for late night taxis used when the employee is required to work past 9pm, and at the time the employee finishes work either public transport was unavailable or it would be unreasonable to ask the employee to use it, or car sharing arrangements have broken down. In this case the cost of the taxi is not taxable on the employee. But you can only use this tax exemption up to 60 times per year per employee. You need to keep accurate records of why each employee took a taxi to get home and the timing of those journeys.

This tax exemption for late night taxis is due to be abolished from April 2012, so you may need to reconsider your employees' travel arrangements in future. The cost of taxi journeys for employees on business or to or from work will always be tax allowable for the business.

July's Question and Answer Corner

2011-07-04T14:19:00.003+01:00

Thanks for all of the questions that you've been submitting to me on Twitter! It's always nice to know that people have the time to Ask Mr P about the odd tax niggle!

Here are some of the answers that I just simply couldn't fit into 140 characters!

July’s Question and Answer Corner

Q. I've always prepared the accounts for my own company and submitted them to Companies House and the Tax Office with no problems. However, this year the Taxman sent back my company's accounts and tax return saying they were in the wrong format. I'm confused. What have I done wrong?

A. Company accounts for periods ending after 31 March 2010 that are sent to the Tax Office on or after 1 April 2011 must be submitted online in iXBRL format. Please ask us if you would like help in submitting your company accounts and tax return online.

Q. My company pays a business subscription to Linkedin, the business networking site. It allows me to make business contacts that generate work for me. Is the Linkedin subscription a tax allowable expense for my company?

A. The Linkedin subscription is tax allowable for your company as it is a means to generate work for the business. However, there may be a benefit in kind charge for you if the Linkedin subscription is raised in your name rather than in the name of your company. If this is the case the company is paying your personal liability (the subscription fee). As Linkedin does not appear on the list of approved professional organisations whose subscriptions are tax allowable for employees, there will be a personal tax charge.

Q. My wife and I acquired a cottage in 2002 and let it as furnished holiday lettings from 2005. We ceased advertising the property this year and it is now on the market. Will we get the lower 10% rate of capital gains tax on any profit we make on the property sale?

A. Yes, as long as the property is sold within three years of the date the holiday lettings business ceased you should both qualify for entrepreneurs' relief on the gain. This relief gives you the lower 10% rate of CGT after deduction of your annual exemption, for gains of up to £10 million per person.

June's Q&A session

2011-06-01T11:28:00.001+01:00

As always, here are the more in-depth answers to a few questions I've had this month. Keep them coming folks!

June Question and Answer Session

Q. In 2009 my family and I moved out of the home I owned and rented a house near my daughter's school. I have recently sold the original home. Do I qualify for the capital gains tax exemption on that property, even though I wasn't living in it when it was sold?

A. Yes you do qualify for the tax exemption. As you sold your former home within three years of moving out, all of the gain arising on the sale of property will be exempt from capital gains tax. This assumes you occupied the property for all of the period that you owned it, before you moved out. You do not have to declare the gain on your tax return.

Q. On 15 April 2011 I received severance pay of £80,000 equal to my annual salary, but I was surprised that £23,000 was deducted as tax. I was led to believe the first £30,000 would be tax free and the rest would be taxed at 20%. Can I reclaim the excess tax deducted?

A. It is likely that the first £30,000 of your severance award was tax free, if it was a genuine redundancy payment. This is not always the case as a number of strict conditions must be met.

In the past when such severance payments were paid after the individual had received their P45 form, a BR (basic rate) tax code was applied to the payment which meant only basic rate tax at 20% was deducted. However, since 6 April 2011 employers are required to apply an OT tax code on a month 1 basis to such severance payments. This means that tax is deducted at the basic, higher and additional rates without the benefit of the personal allowances. The month 1 basis means only 1/12 of the basic rate and higher rate limits for the year are taken into account.

The taxable part of your severance payment (£50,000) would have generated a tax deduction of £23,166 using an OT code as follows...

Basic rate: 35000/12 = 2916.67 x 20% = 583.33
Higher rate: 115,000/12 = 9583.33 x 40% = 3833.33
Additional rate: (50,000-9583.33-2916.67) x 50% = 18,750.00
Total = £23166.66
You can reclaim the excess tax charged in your tax return for 2011/12.

Q. I've received a letter from the Taxman asking for my tax return for the year to 5 April 2010 to be submitted. But I submitted that tax return in September 2010, and I've paid all the tax due for that tax year. Do I have to submit that form again?

A. No. The letter you have received from the Tax Office is a mistake. About 40,000 of these standard letters (Notices SA316) have been printed with the wrong tax year: 2009/10 rather than 2010/11. You should receive another notice SA316 asking for the tax return for 2010/11, and a letter of apology concerning the mistake.

Mr P's Question and Answer Corner! - May 2011

2011-05-03T11:00:00.002+01:00

Well, it's been a busy month here at Mazuma HQ. We've opened up our office in the USA and we've started to send out reminders to all our clients about their self assesment tax returns. I can't quite believe that we're into a new tax year and so far through 2011 already; I've been such a busy little envelope that time has just flown by!

Anyway, here are the slightly more complex questions that people have been asking me about on Twitter. If you want to ask me a question, then check out the rules for Ask Mr P and fire away!

May Question and Answer Section

Q. My business is to become VAT registered from 1 June 2011, but before that I will be taking delivery of a piece of equipment which will be used by the business for a number of years. Can I reclaim the VAT charged on the cost of the equipment even though the purchase was made before my VAT registration came into force?

A. Yes you can. VAT on equipment and goods purchased up to 3 years before you became VAT registered can be reclaimed, if you still held that equipment or goods at the date VAT registration became effective. You must also have the original invoice. You can reclaim the VAT paid on your first VAT return, or on any VAT return within the first three years of becoming VAT registered.

Q. Help! I've received two tax calculations from the Taxman that say I owe £4,500 for 2007/08 and £7,200 for 2008/09. I didn't complete tax returns for those years as I was employed in several short-term contracts. What should I do?

A. First compare the tax computations. The calculation for 2008/09 probably includes the tax due brought forward from 2007/08, so you may only owe £7,200 not £11,700 (£7,200 + £4,500). Next try to find your P60 and P45 forms, and any payslips for those tax years, and check the figures on those forms against the tax calculations. We can help you with this. Don't worry if you haven't retained those papers as the law only requires you to keep then until 31 January 2010, or 31 January 2011 for the later year.

If you had good reason to believe that your tax affairs were in order for 2007/08 you may be able to ask HMRC to write-off the tax underpaid from that year under Extra Statutory Concession A19. You can also ask for the tax for 2008/09 to be collected over 36 months, if it is actually due.

Q. Last year my company bought a second hand Mercedes AMG for £68,000. This has proved to be an expensive taxable benefit, so I'm trading it in for a cheaper model. I hope to get about £40,000 in the part-exchange and pay an additional £5,000 for the new car. What capital allowances will my company be able to claim for the old and new cars?

A. The Mercedes AMG has CO2 emissions of more than 160g/km so the purchase price would have been added to your company's 10% capital allowances pool. Capital allowances of £6,800 (10% of £68,000) will have been claimed for the first year of ownership. The trade-in value of £40,000 will be deducted from the pool leaving a balance of £21,200 (£61,200 -£40,000). This balance will be reduced by capital allowances of 10% for this year, and 8% from 1 April 2012, until the balance is less than £1,000 or company ceases to trade. So it's going to take a long time to get full tax relief for the value of the Mercedes.

If your new car also has CO2 emissions of 160g/km or more, the cost of £45,000 will be added to the 10% pool, and annual writing down allowances will be given as for the Mercedes. To avoid this problem with the new car you could look at either buying it privately, or getting the company to lease it.

April's Question & Answer Corner

2011-04-01T14:50:00.002+01:00

It's that time of the month when I expand a little on some of the questions that I've been asked over the last month. I promise there aren't April Fools!

Q. I generally invoice about £5,000 per month, some £60,000 per year, so my business is not yet VAT registered. However, from 1 April a new customer will provide an additional £2,000 of sales per month. When exactly will I have to register for VAT?

A. You currently have a margin of £13,000 between your regular sales and the new VAT registration threshold of £73,000 (from 1 April 2011). Your new income will fill that margin in 7 months. If your regular sales remain constant your turnover for the past 12 months will exceed £73,000 in mid October 2011. You will need to register for VAT by 30 November 2011. As the VAT registration process can take at least a month, you should send in your application for VAT registration (online or in paper form) as soon as you realise your sales have exceeded £73,000. On that form be careful to state the date from which you become liable to register for VAT, even if that is some weeks in advance.

Q. My PAYE tax code is 647L, but the websites I've looked at say it should be 747L, which is correct?

A. The personal allowance for individuals aged under 65 for the tax year 2010/11 (which ends on 5 April 2011) is £6,475. If you have no deductions to set against your personal allowance your tax code for 2010/11 should be 647L. The standard personal allowance for the tax year 2011/12 (from 6 April 2011 to 5 April 2012) will be £7475, so your tax code for 2011/12 will be 747L.

Q. I work through my own UK company that has secured a 6 week contract to be performed in Amsterdam. I plan to stay with my cousin in Amsterdam while working on that contract. As I won't have receipts from a hotel, what can I claim as expenses?

A. HMRC set benchmark scale rates for business trips in most countries. These cover costs for accommodation, meals, and other sundry expenses known as the residual rate. Your company can reimburse your expenses at the benchmark scale rates without receipts. However, if you are staying with a friend or relative and do not pay for accommodation or meals you can only reclaim 10% of the residual rate for the area. Where you pay for some meals (e.g. lunch) you should claim the specific meal rate or the actual expense supported by receipts. On top of these expenses you can also claim personal incidental expenses of £10 for every night that you are working abroad.

Mr P's Questions and Answers

2011-03-01T13:30:00.002Z

Here are some of the questions I've been asked over the month via Twitter and the #askmrp campaign! These are the ones that needed a little more than 140 characters to give a full answr. Keep them coming folks!

Q. I've been told I will have to pay all my business taxes online very soon. How can I do this if I don't have internet banking?

A. It will be compulsory to pay corporation tax electronically from 1 April 2011, and to pay all VAT due electronically from 2012. However, there are no plans to make all PAYE or CIS payments electronic, yet. Electronic payments include direct debits, debit and credit card payments. You don't have to have internet banking, you can set up electronic payments with your bank by using telephone banking.

If you would rather pay your tax bills by cheque you can do so using a Bank Giro payslip at your own bank branch. This counts as an electronic payment, as do similar payments made at the Post Office counter by cheque, cash or debit card. You need to order the Bank Giro payslips specific to your business from HMRC.

Q. My rental property makes a profit of £2,400 a year. I checked the HMRC website and it says I don't have to complete a tax return. Does that mean I don't have to pay tax on my property profits?

A. Although the HMRC website (www.hmrc.gov.uk/sa/need-tax-return.htm) says you don't have to complete a tax return if your income from property is less than £2,500, you should scroll down and read the text under 'Things to check if you don't need a tax return'. This makes it clear that you must tell the Tax Office about any new sources of income. The deadline for reporting new income is 5 October following the tax year in which the new income first arose. If this date passed sometime ago you need to contact the Taxman as soon as possible and declare all your income and expenses relating to your let property. The Taxman may decide to charge you a penalty for failing to declare your income at the right time.

You do have to pay tax on your property profits, but if the amount owing is small compared to your salary, it may be deducted through your PAYE code. In this case you don't need to complete a tax return each year, but without an annual tax return the Taxman will not know to vary your tax code if your rental profits increase or decrease.

Q. I try to run my business on green principles so all the company cars are hybrid petrol/electric models. But I've heard that the car benefit is going to increase for all these cars from April, how is this going to affect my employees?

A. The good news is where your hybrid cars have CO2 emissions levels of 120g/km or less, the taxable benefit will remain at 10% of the list price. The tax increase will only apply to cars with higher CO2 emissions. Hybrid petrol/electric cars in this category currently get a 3% reduction in the percentage of list price that forms the basis of the car benefit charge for employees. From 6 April 2011 that discount will be removed, and the regular 1% increase in list price percentage will apply to all cars. For example the taxable benefit for a hybrid car with CO2 emissions of 179g/km is currently 21% of the list price. From 6 April 2011 the benefit for this car will increase to 25% of its list price.

February's Q & A Corner

2011-02-01T10:25:00.002Z

Thanks to everyone for continuing to send in such a great range of questions to me through Twitter. It really is great to know that I can be of assistance!

Here is a fuller explanation of some of the more complex questions I have been asked over the last month. Keep 'em coming folks!

Q. My husband inherited a house in 1986 when it was worth £40,000. He gave me a half share in the property in 2009 when it was worth £450,000. We sold the property in December 2010 for £460,000, but we never lived there. How do I calculate my share of the profit?

A. As you and your husband were living together during the tax year in which he gave you a half share in the property, that gift is deemed to be made at a value that creates no gain and no loss for your husband. Thus in 2009 he disposed of half the property to you at a value of £20,000, the tax cost of which was half the probate value: £20,000. Hence he makes no profit on his gift (£20,000 - £20,000 = nil). The market value of the property in 2009 is irrelevant. You acquire the half share in the property in 2009 at a deemed cost of £20,000.

When the property was sold in 2010 your share of the proceeds was £230,000 (£460,000/2) and the cost of your half share was £20,000. Your share of the profit (taxable gain) is £210,000 (£230,000 - £20,000). Your husband has also made a taxable gain on the sale of the property of £210,000. You can both deduct an annual exemption of £10,100 from your share of the gain, but the balance of the gain will be subject to capital gains tax.

Q. In January 2008 I formed C Ltd with my wife, we were both directors and held 50% of the shares each. In March 2010 we split up, her shares were transferred to me and she also resigned as a director. C Ltd ceased trading in July 2010, and it will be wound up informally. Can I claim entrepreneurs' relief on the whole of the capital distribution paid to me on the winding up, or will just part of the distribution qualify because I only held 100% of the shares for the last 4 months that C Ltd traded?

A. You qualify for entrepreneurs' relief on gains arising from all your shares in C Ltd, as you held at least 5% of the ordinary shares for 1 year up to the date the company ceased trading, and you were also a director of C Ltd throughout the last year of trading. Therefore any shares you held in C Ltd qualify for entrepreneurs' relief, and you will pay capital gains tax at 10% on the capital distribution (after deduction of your annual exemption of £10,100), rather than tax at 28% or 18%.

Q. I've heard that tax relief on childcare vouchers is changing from April 2011. How can I maximise the tax relief from this scheme while it lasts?

A. Employers can currently supply their employees with childcare vouchers worth up to £55 per week, which are completely free of tax and NI. However, employees who join the childcare voucher scheme from 6 April 2011 will only be able to receive vouchers worth £28 per week, if they pay tax at the 40% rate. Those employees in the childcare voucher scheme before 6 April 2011 will not have the value of their vouchers limited, and neither will employees taxed at the basic rate of 20%

Got a tax questions that's driving you nuts! Just Ask Mr P!

Mr P's Question and Answer Corner!

2011-01-04T11:08:00.002Z

Here are some of the questions that us envelopes have been asked over the last month. I will try and answer and many as possible via Twitter but for a few I've decided to give a fuller answer here!

Q. My employees earn an average of £490 per week, how much more NI will I have to pay for each employee from April 2011?

A. For an employee on average earnings of £490 per week you currently pay employer's NIC of £48.64 per week in 2010/11, but from 6 April 2011 this NIC bill increases to £48.85 per week. That adjustment appears small but it amounts to £10.92 per year per employee. The increase in NIC costs will be much larger for higher paid employees, but smaller for lower paid employees. For an employee on £210 per week, you pay employer's NICs of £12.80 per week in 2010/11, but this will drop to only £10.21 per week in 2011/12.

Q. I had taxable income of about £60,000 in 2009/10, made up entirely of dividends and bank interest. I also pay £2,400 per year into a personal pension. Will I get 40% tax relief on that pension contribution?

A. You will receive higher rate tax relief on your pension contribution if you make the claim on your tax return for 2009/10. A contribution of £2,400 is worth £3,000 to your pension fund as the pension scheme trustees reclaim £600 basic rate tax from HMRC. Your basic rate tax limit will be expanded to £40,400 by the gross value of your pension contribution. Which means £3,000 of dividends which would have been taxed at the higher rate applicable to dividends of 32.5%, will be taxed at 10%, saving you an additional 22.5% in tax, or £675.

Q. Our trade body charges a membership fee in advance for each calendar year, but from 1 December 2010 new members who join online can pay the annual fee for 2011 and become a member immediately, effectively receiving the balance of the 2010 membership period for free. The organisation is VAT registered and the membership fee is subject to standard rate VAT. Is it correct to charge new members 20% VAT when they join online in 2010?

A. The organisation should charge VAT at the standard rate in force at the date of the tax point for the membership subscription. This tax point is the earlier of the date the membership fees is received or the VAT invoice is issued. For new memberships paid for before 4 January 2011, the correct rate of VAT to charge is 17.5%, even where the membership covers the whole of the year 2011.

If you'd like to ask me a question the check out the rules and feel free to ask away!

Preparing for the VAT Increase

2010-11-01T13:40:00.003Z

We know the standard rate of VAT will increase on 4 January 2011 from 17.5% to 20%, but will your business be ready?

It may be difficult for retail businesses to re-price everything displayed in the store over the New Year break, ready for opening on 4 January. Fortunately the law does allow you to make the adjustment from 17.5% to 20% VAT at the till for up to 28 days after the VAT increase. You do need to notify your customers that you are making this adjustment so have a sign advising customers that a price adjustment will be made at point of sale to reflect the increased VAT, and find time to reprogramme your tills before 4 January!

An alternative approach is to increase all your prices before 4 January 2011 to accommodate the higher VAT rate. If you are having new menus printed for winter, now could be a good time to make the price changes.

Where a customer places an order before 4 January 2011 for goods or services to be delivered after that date, you can generally charge VAT at the current standard rate of 17.5%. To apply the current rate of VAT you must either issue an invoice, or receive a payment before 4 January 2011. You should not artificially advance sales by issuing invoices that are not due for payment for six months or more. You will also be caught by anti-avoidance rules if your business is connected with your customer, or the amount due is £100,000 or more.

If you use the flat rate scheme for small businesses you need to check-out the flat rates that will apply from 4 January 2011, as set out on the HMRC guidance website: http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5a

You may find that when you apply the new flat rate to the gross sales made on and after 4 January 2011, you will be worse off than operating outside the flat rate scheme. If this is the case you need to inform the VAT office in writing that you want to leave the flat rate scheme. It's easiest if you do this with effect from the start of your next VAT quarter. If you leave the flat rate scheme you can't rejoin the scheme for at least 12 months.

For specific advice on how to deal with the VAT rate change in your business, please contact us or get on to Twitter and Ask Mr P!

Win an iPad!

2010-09-20T14:37:00.002+01:00

Well, I always knew that my employers Mazuma were generous folk, but now they've only gone and offered to give away an iPad!

I'm trying very hard not to feel threatened; after all, the iPad is rectangular, stylish and super useful...just like yours truly. However, I do have one significant advantage over the iPad....I'm purple!

Anyway, now you can have the opportuntiy of winning an iPad to accompany your favourite little purple envelope. Smashing!

For me details see the Mazuma website here.

TTFN

Mr P
xxx

My very own page!

2010-08-04T13:11:00.004+01:00

It turns out that being a busy little envelope does have its rewards!

Imagine my surprise when I turned up in the Mazuma HQ only to find that one of the humans (a techy one) has created me my very own page on my website!

I've been saying to the humans for ages that I'd like to answer questions on Twitter for free and so they've listened to a humble envelope and set me up my very own page.

I have high hopes and I'm hoping for interesting questions to come through soon, perhaps even some fan mail for Mr P!

Check out my page here and don't forget to follow me on Twitter!

Love,

Mr P
xxx

Scam HMRC emails - don't be fooled!

2010-07-14T14:50:00.003+01:00

A Warning from Mr P!

There are some horrible unscrupulous people out there and now they are trying to swindle money out of you by pretending to be the Tax Man!

HMRC is warning of a significant rise in email scams that offer a tax refund. These emails are designed to throw recipients off their guard by warning that the refunds are subject to a deadline which expires in the near future.

Some emails direct you to a website that looks just like HMRC's official one. Others invite you to either complete an online application or to download, complete, sign and then fax it to the number given. Both versions request your full bank or credit card details.

An alternative scam asks you to call a number to check your eligibility to the refund. Callers will hear a dialing tone but while waiting for an answer they will be charged £6 a minute!

HMRC has not yet adopted email as a way of communicating with the public, so treat any email offering you a tax refund as suspicious and report it to HMRC.

We have seen a significant number of our clients receiving these emails. They look very realistic and even a person who is as savvy as a purple envelope could be fooled by them.

As a general rule, if you are even slightly concerned that an email may be malicious, don't open any files attached to it, click on any links it contains, or telephone any numbers given within it.

Phew, I'm glad I've told you all that, now spread the word. It's hard enough handing money over to the real Tax Man, let alone a fake one!

Love,

Mr P
xxx

Things you'd never do yourself...

2010-06-29T13:41:00.003+01:00

There are some things in life that most of us would never dream of doing ourselves unless we had the appropriate skills and knowledge. I have compiled a list of some of them here for your enjoyment!

Re-wire your own house

Cut your own hair

Represent yourself in court

Give yourself a filling or root canal surgery

Remove your own appendix

Personally hand deliver your own letters

Service your own car

Test your own eyes and then buy glasses based on your results

Build your own extension from drawings prepared by you

Clean your own chimney

The one glaringly obvious ommission from this list is..... you guessed it....

Prepare your own Accounts and Tax Returns!

I won't bang on about it too much, but come on folks! When you can get Mazuma to do it from only £17 a month with their Purpleforce service, why on earth would you want to do it yourself?

'nuff said!

Over and Out,

Mr P

xxx

The Mazuma Promise

2010-06-15T11:18:00.004+01:00

It's all well and good saying you'll provide this and that as a business, but where are the solid promises? Lots of Accountants can't even tie themselves down to how long it will take them to do your bookkeeping and Accounts, let alone make any promises over and above that!

Well, fear not! As always, Mr P has had a word with our Accountants and seeing as customer service is at the heart of our business, we have made a set of promises to our customers.

The Mazuma Promise...

We promise to keep our fees fixed, fair and affordable. We would never charge you based on how much you earned in a year or send you an unexpected invoice.

If you email, text or call us through our dedicated help lines, we promise to respond to you within one business day.

We promise that all our staff are qualified to do the work they do. Whether it is bookkeeping, accountancy or tax advice, our staff range from qualified bookkeepers through to Accounting Technicians and Chartered Accountants, so you'll always have the right person doing the right job for you.

We structure our business so that you get the best possible customer service. This means that if your usual point of contact is away on holiday, that you'll still be able to get an answer to your question.

We promise to speak in Plain English! We don't believe in blinding our clients with jargon.

Finally, we promise to always remember that our clients are the most important part of our business. Without our clients we wouldn't be here and we promise never to forget that!

Now, you can't say fairer than that can you?

TTFN,

Mr P
xxx

Try us out for free!

2010-05-17T15:05:00.002+01:00

As a savvy little envelope I know that the words "free" and "accountant" usually mix together about as well I mix with a shredder! Once again, I have put my foot (well ok, flap) down and told Mazuma that they are so blooming brilliant that people should get the chance to meet one of my purple envelope colleagues for free!

Guess what? They listened! Now you can try out Mazuma's Purpleforce service without having to hand over a single penny!

We know that changing your Accountant, or even hiring one for the first time can be a bit scary.

We know that because we work so differently from standard Accountants, that you might be a little bit nervous about signing your accounts over to us. Isn’t it better the devil you know?!

No! Because we also know that our services are second to none!

So, why not try us out for free?

The taster pack will give you an idea of how our services work and you’ll see the quality of service and speed at which your accounts are processed and your documents are returned to you.

All you have to do is fill out the form, pop your documents in the Freepost envelope provided and send it off to us. In about 5 working days you’ll get your accounts back, simple!

There is absolutely no commitment, no ulterior motive and no catches! We just want you to see what a life of hassle-free accounting would look like for you with Mazuma!

So, go and Get A Quote , put the word "FREE" into the promo code and I will personally instruct one of my envelope buddies to go and see you!

Well, that's another day revolutionising Accountancy under my belt, I wonder what I'll get up to tomorrow?!

TTFN

Mr P
xxx

How many envelopes does it take to grow an accountant?

2010-05-14T14:51:00.006+01:00

Goodness! What a busy week I've had at Mazuma HQ! Literally thousands of my envelope colleagues left the building yesterday, off out on a mission to help small businesses with their accounts.

For those of you lucky enough to be visited by one of us, you might just get something a little like this in the post:

Now don't be alarmed, it's not too difficult, you'll just have to follow these instructions:

Just joking! Of course Accountant seeds don't really exist, but I am trying to get you all to think a little more about what one of us Purple Envelopes could do for you. You see, we don't ask you to slot into our time scales, or charge you unexpectedly, or make you use a spreadsheet or a bit of software. You just have to give us all your accountancy bits and bobs and we'll sort out the rest - marvellous stuff!

Of course, as I have said many times before, being a bit different means that lots of Accountants (especially the ones who look like the chap on the seed packet!) really don't like me very much. I try very hard to stay purple and not let it make me feel blue, but sometimes it can be very difficult. If I had tear ducts instead of an adhesive strip, I might cry a little bit.

Still, I visit so many wonderful small businesses that I never let it get me down for long! In fact, I'm planning on getting out and about much more over the summer months so if you'd like a visit then just message me on Twitter. You can't miss me, I'm the purple envelope called @MrP_Mazuma!

Well, I'd better shuffle off and get Lowri's office tidied up for her. She's been away on holiday so I've been using her office but ssshhhhh, don't tell her!

The cheeky little paperclips had a party last night and invited the shredder along. Needless to say there is shredded paper and unclipped paperwork everywhere and the post-it notes have hidden in the kitchen with the tea spoons by way of a protest.

Honestly, an envelope's work is never done!

Over and Out

Mr P
xxx

Imitation is the sincerest form of flattery...apparently!

2010-05-05T13:02:00.002+01:00

Being a trend setter is great. Everyone wants to be an innovator and not a follower, but whilst it's great to stand out in a crowd, one of the disadvantages of being distinclty different is that people want to copy you. Just look at Madonna, Michael Jackson, Jedward and the like. It's flattering when people like what you do, but when it comes down to business there are rules about this stuff!

As an envelope in the field I get out and about quite a lot. I love meeting other businesses, I even love meeting other accountants when there is a mutual respect for eachother's market! What makes me absolutely purple with rage (although you could never tell) is when other accountants steal my ideas!

Sadly this is not a new occurance. Over the years I've sent out many a letter to naughty folks stealing our hard work. This can range from copying text from our website and tweaking it for their own purposes, to copying our packages and services, to actually pretending to be us!

The thing is, there's only one Mr P and my alliances lie firmly with my employers Mazuma. I know that I'm in demand, many have tried to woo me over the years with the promises of a bigger letter tray, special delivery postage or my own PA (paper assistant), but the fact is that Mazuma were the first to see my potential and envelop me into their world.

So, to all you cheeky scamps who think that you can slip under my radar; be warned! Pilfering text from our website is not just naughty, lazy and unimaginative, it's also illegal! If you care enough to start your own business then at least care enough to come up with your own ideas. We care about our intellectual property and if you nick it, you might just have a rather angry little envelope through your letterbox very quickly!

Over and Out!

Mr P

xxx

How I Keep Accountancy Costs Low!

2010-04-29T19:39:00.005+01:00

You'd think that being an envelope wouldn't give me much sway when it comes to pricing decisions, but you'd be wrong! Yep, us envelopes are in fact the very reason that we keep all the accounting costs low.

Now, it's not just because we are so efficient that we can do this, and it's not just because we are so marvellously clever either (although that does help). The main reason is.....

We're not greedy!

The sad fact is that lots of accountants have been charging far too much for their services for years, and because people tend not to question their accountants (they're super clever, right?), or shop around for another one (why bother, they're all the same....), they never realise that they are being seriously over charged!

I met a man recently who came to me for a quote, which I gladly gave him and he was very pleased with the saving he'd make. However, he said that he'd been with his accountant for nearly 20 years and wanted to see if they could provide him with a similar quote. As it goes, they did, but this didn't make him happy at all. They matched my quote by more than halving theirs, which rather than make the man happy, just made him wonder why they had been charging him so much for all these years. I'm pleased to say that he's now a very happy client of mine, as are some of his friends, although it would seem that his old accountant isn't too eager to be my friend himself!

Want to know a secret? Many medium sized accountancy firms deliberately charge small businesses too much to put them off using their services! They don't do it because they are mean, they do it because small businesses aren't their target market and so they can't afford to do it for less. Now this might not make them mean, but I think it does make them a little bit greedy! They should just make a good arrangement with some smaller accountancy firms who cater for the market they don't want, rather than charge their smaller customers high fees! I may only be a stationery item, but I can see the value of a good strategic partnership, so why can't they?!

We only do work for the market we love - small businesses! That is how us envelopes keep the accountancy costs so low for you, by not being greedy. Clever eh? (Well, it's actually just common sense....)

It's a bold thing for me to say, not many have had the courage to say it before me and I hope that me revealing this doesn't land me in the nearest shredder! I'm willing to take the risk though. If it means that just one small business questions why their fees are high, or more importantly, what they actually get for their money and if it's right for their business, then I'm a happy envelope!

Right, I'm off to organise my paperclips; every time I turn my back the little blighters leap from the holder and scatter themselves across my desk!

Mr P
x

The Blogging Envelope!

2010-04-23T15:05:00.008+01:00

Well people, here I am. Possibly the world's first envelope blogger. And I don't mean I blog about envelopes (gosh now that would be dull). I am Mr P, the original ambassador for Purpleforce, the monthly accountancy service offered by Mazuma. I am the the most useful envelope to ever get pushed through your letterbox, as I can provide you with monthly bookkeeping and management accounts and I can even sort out all your scary Year End stuff too!

All you need to do is pop everything into one of my brothers or sisters every month, post it to us and let Mazuma do the rest.

My wonderful employers here at Mazuma have let me loose on the world, in order to blog about my exploits as a Purple envelope. It really is a lot of fun! I get to go all over the country delivering accounts to clients anywhere from Aberdeen to Portsmouth. I meet fantastic, talented people and I have become an integral part of many successful businesses.

So please drop by anytime you want to read my blog, which will range from the informative to the frivolous, and will let you lucky readers see life from a busy envelope's point of view. For those of you who like their information in 140 character soundbites can also find me on Twitter @MrP_Mazuma, where I update my loyal followers with my daily antics, both massive and mundane.

Who knows where my travels will take me next, but I'll be sure to keep my readers informed and entertained with my Purplexploits!

TTFN!
Mr P.
xx