MYOB e AccountEdge - Trucchi del mestiere 1. Introduzione software AccountEdge è per le piccole imprese di gestione finanziaria e di bilancio. Questo manuale fornisce indicazioni su alcuni degli aspetti più complessi e adattamenti. Tuttavia non intende essere una guida completa di quanto è un sofisticato programma (nonostante la sua facilità d'uso). Questo manuale è stato scritto principalmente per gli utenti del Regno Unito. Molti dei punti possono essere adattati per gli altri paesi, in particolare quelli che nelle amministrazioni in cui si deve tenere conto di imposta sulle vendite, GST o IVA. Il manuale è stato scritto in origine per la contabilità, MYOB V11, e MYOB AccountEdge. E 'stato aggiornato e ora vale anche per tutti AccountRight, Contabilità Plus e prodotti AccountEdge tra cui Mamut, MYOB e acclivity. La parola AccountEdge è utilizzato in tutto ma le istruzioni si applicano anche a queste varianti di MYOB. Siamo felici di accogliere commenti o miglioramenti a queste procedure. Si prega di e-mail all'indirizzo di amministrazione simpleaccounting. co. uk Questo manuale è stato scritto da semplice contabile Ltd (SAL), una società britannica con una particolare passione per tutte le varianti di questo software. 2. Navigazione Navigazione in AccountEdge è semplice. E 'fondamentale che si capisce la navigazione prima di iniziare a esplorare la funzionalità del sistema. La navigazione è insolito fra i software di contabilità, perché si basa su registri. Ogni registro è basato su un piccolo ruolo specifico processo di business. Non è un'interfaccia che molti altri programmi per la contabilità generalmente seguono certamente non con l'efficacia che AccountEdge è stato progettato. Cercare di comprendere le seguenti sezioni prima di intraprendere le procedure più dettagliate in seguito. Per entrare AccountEdge In Windows andare su Start - gt Tutti i programmi - gt AccountEdge e cliccare sull'icona AccountEdge. Su un Mac, fare doppio clic sull'icona del desktop AccountEdge. In alternativa cliccare sull'icona Applicazioni. Questo sarà quindi la schermata di benvenuto di serie da cui è possibile fare clic su Trova per individuare il file di dati dell'azienda. Una volta individuato il vostro file di dati sarà quindi necessario aprire e inserire il nome utente e la password. Tenere un registro di dove il file di dati viene memorizzato se si utilizza AccountEdge. Se si utilizza acclivity o Mamut il software ricorderà la posizione del file di dati utilizzato per ultimo. Si limita a colpire aperta sulla schermata di benvenuto standard. Lasciare il sistema Per lasciare il sistema su un Mac, andare a AccountEdge e quindi chiudere sul fondo. Su un aspetto PC per l'istruzione di file nell'angolo in alto a sinistra e sotto HIT Quit. La navigazione all'interno AccountEdge Se il nostro consulente ti ha visitato, avrà spiegato a voi la differenza tra libri, la barra dei menu nella parte superiore dello schermo, le funzioni di base di ciascun registro e le opzioni di indagine ai piedi del centro di comando . Tenete a mente che theres di solito più di un modo per accedere a qualsiasi routine, operazione o funzione. Backup e verifica Come si lascia il file di dati AccountEdge chiederà di verificare il file di dati (che verifica la presenza di errori e corruzioni) ed esegue il file su. È consigliabile eseguire cerniere regolari del file di dati. Sul Mac, AccountEdge utilizza un programma interno chiamato Aladdin Stuffit. Sul PC, AccountEdge utilizza una versione interna di WinZip che viene etichettato Backup. Immaginate di avere una serie di voci molto poveri o confusi. Si potrebbe piuttosto piuttosto ripartire da una versione del file rispetto alla settimana precedente. Se è così i file StuffIt o Zip possono essere ripristinati da dentro AccountEdge. Questo è particolarmente utile se si dispone di un danneggiamento nei dati. E 'una buona idea per mantenere più backup per questo motivo. 3. Banking Per utilizzare AccountEdge, l'obiettivo principale deve essere quello di mantenere un accurato riconciliazione bancaria. E 'importante che si inizia a immettere le transazioni di far quadrare le ricevute contro i pagamenti banking. Enter bancari effettivi contro i pagamenti effettivi uscire. Controllare questi contro l'estratto conto per mantenere le prenotazioni fino ad oggi. Fare la riconciliazione almeno ogni mese (o ogni settimana nelle organizzazioni più frequentate). Nulla in contabilità conta tanto quanto mantenere la riconciliazione bancaria stretto. Estratti conto In genere suggerisco di ottenere i vostri estratti conto bancari fisici inviati alla fine di ogni mese. È possibile conciliare facilmente e regolarmente. Ottenere stati trasmessi, in linea con i tuoi IVA e periodo tassa professionale estremità. Spendere soldi quando si immettono i pagamenti si consiglia inizialmente di utilizzare spendere soldi principalmente o totalmente. Dont utilizzare il registro degli acquisti a meno che davvero necessario - si crea più lavoro. Inoltre lascia la transazione meno facilmente modificato rispetto a quando si utilizza spendere soldi. Fondi Undeposited cancellare qualsiasi valori del conto bancario (fondi undeposited). In genere sconsiglia di utilizzare i fondi Undeposited a tutti. Noi di solito alterare i valori di default su tutti i file di dati che esaminare o creiamo. Questo vi impedisce di creare transazioni fondi undeposited all'interno del sistema. Prenota ricevute direttamente alla banca - è meno confusione. Banca Riconciliazione: Metodo semplice Inizialmente si dovrebbe abituarsi ad usare il registro di banca. Questo ha un totale corrente sul lato destro. Si prega di ottenere questo per abbinare il vostro equilibrio estratto conto bancario alla stessa data. Dire, avete prenotato un pagamento controllo sulla data in cui lo ha emesso. Ci sarà uno scarto temporale tra la data emesso l'assegno e la data in cui è cancellato il vostro conto in banca. Questo getta il conto bancario in esecuzione totale sulla relazione registro banca, se si inserisce il controllo sulla data di emissione. La risposta è semplice. Inserire il controllo sulla data di liquidazione. Al giorno d'oggi la maggior parte dei pagamenti vengono effettuati da BAC - così la data di liquidazione è noto in anticipo. Quindi mettere le voci in quanto cancellare la banca. Se il controllo cancella in ritardo è possibile modificare la data successiva. Se si finisce con le operazioni ridondanti si possono cancellare o posteriori alla them. banked. Non importa se i pagamenti sono sbagliate, le codifiche IVA incoerente, o se la contabilità è fuori. La chiave è quello di inserire ogni transazione sulla sua data di liquidazione, non la data del pagamento assegno o BAC è stata sollevata o la data del deposito era riconciliazione bancaria: Metodo completa A più lungo termine, potrebbe essere necessario utilizzare la funzione di riconciliare i conti per le riconciliazioni più complesse . La ragione per l'utilizzo di questa funzione è che se si dispone di differenze temporanee tra la data bancario e le date di liquidazione di valori significativi di ricevute di vendita e verificare i pagamenti. Vai a conciliare i conti. Ottieni il tuo ultima dichiarazione. Digitare nel nuovo equilibrio dichiarazione, la data estratto conto bancario, e il nuovo valore alla fine del conto bancario. Si entra la bilancia dalla dichiarazione stampata dalla banca. La sfida è quella di ottenere l'equilibrio dichiarazione calcolato (che è il calcolo AccountEdge) ad accettare il calcolo Banks. Quando l'estratto conto arriva fisico che devi fare il ticchettio e colpire attraverso la procedura di riconciliare i conti, e verificare gli elementi sui libri hanno effettivamente eliminato. Anche nelle riconciliazioni bancarie, si noti che alla fine di ogni mese è possibile ricevere una piccola quantità di interessi bancari. Non dimenticate di inserire tale perché altrimenti la vostra riconciliazione bancaria sarà di nuovo fuori. Una volta eseguito il riconciliazione c'è più lavoro da fare. Cancellare eventuali operazioni più vecchie che avete sullo schermo Riconciliare i conti. Quelli che sono datato più vecchio di circa 2 mesi di età sono altamente sospetto. Normalmente si dovrebbe invertire questi. Può essere fonte di confusione se semplicemente eliminarli. Assicurarsi che non stanno andando a cancellare, ma se alzare successivamente poi rientrare con una data più recente. E 'davvero importante che si stampa fuori dal rapporto di riconciliazione quando si registra la riconciliazione. Vi consiglio di base con gli estratti bancari. File questi manualmente in un raccoglitore ad anelli. Poi si chiude il periodo di off anticipando la data bloccato nelle preferenze. I trasferimenti tra conti bancari per trasferire denaro tra conti bancari, si consiglia di non utilizzare la funzione di trasferimento di denaro. Un po 'confusamente questo pulsante si trova sul libro mastro conti con le versioni più recenti. Questo tasto funziona solo per il trasferimento di sterline tra conti bancari Sterling. Si consiglia di spendere soldi invece di utilizzare Money Transfer a tutti. Questo lascia la transazione come una transazione modificabile. E 'più flessibile. Per esempio, se si sta trasferendo tra diciamo un conto in euro e il vostro conto in banca Sterling, è possibile utilizzare spendere soldi come una transazione di Euro. Impostare la valuta di Euro. Inserisci il trasferimento proprio come se fosse un controllo di valuta estera. Inserisci l'importo di euro, il numero di controllo come TFR, e il memo: Trasferimento da Euro sul conto bancario Sterling. Il numero di conto nell'analisi è l'account Sterling stesso. Alterare il tasso in modo tale che la sterlina ha ricevuto è uguale l'importo trasferito in dopo le spese bancarie. Assicurarsi che l'analisi di IVA è N-T. Il denaro ricevuto per il torto ditta Molte aziende hanno in realtà due imprese operanti negli stessi locali. Dire, se si riceve il denaro sul conto bancario della società di 1 da un cliente della società 2. Il trattamento più semplice è la seguente: le offerte con la ricezione nella AccountEdge per l'impresa 1 come denaro di ricezione. Prenotare la ricevuta come addebitare sul conto bancario. Pubblica il credito per lo stesso conto bancario. Banca ricevuta in azienda conto bancario 1s. Sollevare una ditta di 1 assegno di società 2 per l'intero valore della ricevuta sbagliata. Non prenotare questo controllo in conti 1s impresa. Bank la ditta 1 assegno sul conto bancario società 2. In compagnia 2 registrare la ricezione del controllo da impresa 1 come se fosse una ricevuta da parte del cliente originale nel registro delle vendite Company 2. Quando si arriva alla riconciliazione bancaria dell'impresa 1, sia il debito e di credito le voci sono da un ricevimento. Questo vi permetterà di conciliare sia il denaro da parte del cliente e il pagamento alla società 2. sarà disponibile separatamente per conciliare una contro l'altra le due voci. La ricevuta originale sarà da parte del cliente in azienda 1. Nel frattempo il pagamento contro la ricevuta sarà l'assegno o il pagamento BACS che avete fatto dalla ditta 1 a società 2. Operazioni ricorrenti Abituarsi a salvare le transazioni, come spendere i soldi per l'uso in dopo mesi sulla lista transazione ricorrente. Monitorare con attenzione le prossime date di scadenza. In generale, tutte le transazioni devono avere il Salvataggio modifiche quando mi registrare questo box transazione ricorrente evidenziata nella tabella di marcia. Se si lascia questo spuntata allora il modello ricorrente non sarà modificato quando lo si utilizza prossimo. 4. Carte di credito prestiti sosteniamo l'uso della carta di credito conti nominali in un'ampia varietà di modi - molto più ampio di una AccountEdge tradizionale set up. Stranamente non utilizzando sei pagando una carta di debito prepagata affari, o se si utilizza una carta di credito aziendale, ma pagare il saldo ogni mese. Pagando una carta di credito Bill Diciamo sei pagando una società di carte di credito aziendale in pieno ogni mese. Non utilizzare un account di carta di credito. Non utilizzare l'impianto di trasferimento di denaro sui conti libro mastro. Non utilizzare spendere soldi per trasferire denaro in un conto di carta di credito separata. Questo è quello che si potrebbe avere fatto in passato. Invece considerare l'operazione come si verificano alla data del pagamento dal conto bancario. Semplicemente codificare il pagamento come spendere soldi sul conto bancario. Rendere la scissione come simile alla sintesi carta di credito ogni mese, come si può. Pagando una carta di debito prepagata Ora immaginate di pagare le bollette utilizzando una carta di debito prepagata affari. Anche in questo caso non utilizzare spendere soldi per trasferire denaro in un conto di carta di credito separata. Invece aprire un nuovo conto bancario per ogni carta di debito prepagata. Effettuare pagamenti utilizzando spendere soldi dal conto bancario per la carta di debito in questione. Utilizzando i conti nominali carta di credito per prestiti è necessario conciliare regolarmente i conti bancari di responsabilità (ad esempio conti ipotecari). È necessario conciliare queste proprio come se si trattasse di un conto bancario. Vi suggerisco di prenotare gli estratti conto dei mutui avete ottenuto ed elaborarli utilizzando riconciliazione di banca. E 'quindi una buona idea per ottenere un affermazioni regolari per eventuali prestiti o mutui. Ottenere la dichiarazione trimestrale o almeno una volta all'anno. Hai bisogno di questo valore deve essere dimostrata quando si fa la fine di riconciliazioni anno. Ciò è essenziale se si cerca di recuperare l'imposta sugli interessi del prestito pagato. E 'importante ottenere una dichiarazione, o almeno una valutazione dei crediti al telefono, della somma che si deve pagare per il vostro prestito dalla sua banca alla fine del vostro esercizio. La differenza tra i pagamenti si fanno e la riduzione del finanziamento in essere deve essere caricata come interesse commerciale, e quindi recuperabili contro la vostra fattura fiscale Corporation. prestiti infragruppo Questi sono comuni anche in strutture realtively semplici - ad esempio, una società di persone o ditta individuale possiede una piccola società a responsabilità limitata. accordi aziendali complesse possono iniziare a sorgere - con il passare dei costi tra le due entità, i prestiti per alleviare le carenze dei flussi di cassa, ricariche del personale, pagamenti ai fornitori pagati dal conto bancario sbagliato ecc utilizzare un tipo di carta di credito per ogni prestito infragruppo intercompany o il prestito. Il pagamento di denaro, o la registrazione di interesse, allora diventano i pagamenti in contanti e ricevute quasi. Crea un conto in ciascuna delle due file di dati coinvolti. Poi l'equilibrio ad ogni fine mese, deve essere uguale ed opposta in ogni file di dati. Questo agisce come un controllo che la contabilità è speculare tra i due sistemi. Così, per esempio la sovvenzione personale ricevuto da un membro del gruppo viene recuperato come costo imponibili nel costo del personale incaricato nell'altro file di dati. Imposta sul costo pagato poi diventa recuperabile o da pagare sulla vostra dichiarazione dei redditi di business. È necessario decidere se il saldo è soggetto a interessi. Questo a sua volta ha bisogno di un valore da impostare in modo che la si può calcolare gli interessi da pagare. Si dovrebbe riconoscere che c'è una passività in essere sotto forma di un riconoscimento o un accordo. Che possono poi andare nel file per ogni attività. Possiamo fornire l'accordo. Utilizzando i conti della carta di credito per i depositi Fornitore Si può inviare anticipi a fornitori, che non sono strettamente legati a singole fatture. Potrebbe essere necessario fare progressi in una valuta diversa. Questo è ancora un altro uso per il tipo di carta di credito. Questo è utilizzato per registrare i progressi. È possibile trasferire denaro sul conto anticipo, proprio come si usa spendere soldi per registrare una spesa. L'enorme vantaggio del tipo carta di credito viene visualizzata quando il fornitore alla fine si fatture. La fattura può essere pagato utilizzando pagare le fatture. La funzione di pagare le fatture può avere una carta di credito situato in alto a sinistra. Così l'acquisto può essere parte pagato con l'uso dell'anticipo. Il saldo può essere pagato con un pagamento bancario, come al solito. È necessario conciliare il tuo account anticipo contro le dichiarazioni dei fornitori proprio come se l'anticipo fosse un conto in banca. Acquisto a riscatto Avete bisogno di una società di un acquisto per la qualsiasi auto comprata su HP. Il prezzo è il valore eccezionale su HP. Nessun IVA può essere recuperato per l'acquisto di qualsiasi auto, né la vendita di auto di seconda mano. Prendi il disegno di legge di acquisto e di tutti i relativi costi sommati. Includere l'IVA 8211 questo non è consentito contro la dichiarazione IVA. L'importo totale a carico è quindi una passività HP e ha bisogno di essere al accreditato sul conto di responsabilità 28xxx. La società HP solito aggiunge alcune ulteriori oneri che devono essere addebitati al conto spese bancarie, di solito 6-9xxx. accordi HP tendono a capitalizzare l'interesse, ma non possono essere addebitati al conto economico fino a quando non viene effettivamente sostenute. Mettere l'interesse in una seconda carta di credito a fianco l'importo del prestito. L'utilizzo della carta di credito per spese Direttore pagato un conto di prestito direttore può essere utilizzato per il direttore di registrare le spese. In particolare un regista tenderà a pagare direttamente per le piccole spese. Spesso si concluderà con un piccolo sacchetto di ricevute di spesa. Potrebbero essere chiesto di compilare un modulo di spesa personale, simile a qualsiasi altro dipendente. Tuttavia, se le spese sono in ordine e se il personale di contabilità prendere confidenza con l'ingresso di trascorrere le transazioni di denaro Può essere molto più facile per trattare l'account direttore di prestito come se si trattasse di un altro conto bancario. Io suggerisco di usare tipi di account con carta di credito per questi tipi di scopi. È necessario conciliare regolarmente i conti di prestito regista. Se questi si trasformano in debitori a fine anno poi imposte speciali società può diventare causa. È necessario quindi di conciliare questi proprio come se si trattasse di un conto bancario. Se si rimborsare gli account di prestito direttore scoperti entro 9 mesi di fine anno si può cercare di recuperare l'imposta sulle società sul beneficio del prestito senza interessi. Vedere Direttore prestito account nella sezione 7 qui di seguito. Registro delle vendite può essere utilizzato per un certo livello semplicemente utilizzando Inserisci vendite e ricevere pagamenti. Le note di commento usi più dettagliate. Emailing un acknowlegement ordine di vendita nel formato appropriato È possibile inviare acknowlegements ordine di vendita dal sistema direttamente al cliente. Prima di email la vendita o citazione, si può anche bisogno di modificare il formato di stampa. Per esempio un formato adatto per la stampa su supporto cartaceo su carta intestata non avrà tante informazioni come un formato PDF che è stampato su carta normale dal cliente. Per e-mail, vai a nome del cliente, e dovrebbe quindi essere visualizzato l'indirizzo e-mail. Seleziona il tuo modulo. Se si è nella citazione individuo che si desidera e-mail, e quindi è possibile controllare sotto di stampa che la forma è il nome del formato fattura (o modulo) che si desidera utilizzare. Dont colpito Print - invece andare Invia a, e-mail. Quindi digitare l'indirizzo di posta elettronica se eccedente già stato inserito nel dettagli della carta sarà quindi avere la possibilità di inserire uno nuovo. Poi ha colpito Invia. Potreste scoprire che le impostazioni di sicurezza di MS Outlook o Apple Mail richiedono l'e-mail di conferma. Cancelleria personalizzata: Modifica del formato di SalesDelivery Note È inoltre possibile trovare Personalizza, sotto il programma di installazione, Personalizza Forme e poi o ordini di vendita o dichiarazioni. È possibile modificare le forme che avete ottenuto bozze di dall'interno del sistema-pozzo fornire felicemente consulenza e supporto. Può essere utile usare gli ordini di vendita, come bolle di consegna, invece di bolla di accompagnamento (voce). Si potrebbe avere diversi stili del documento in base ad ogni fase del flusso di lavoro aziendale. Diciamo che sono tre fasi di lavoro - ordini di lavoro, lista di prelievo e quindi foglio di lavoro di produzione. Tutti e tre i formati potrebbero essere numerati in base al loro posto nel processo. Questi documenti potrebbero quindi essere tutti derivati da quella vendita. È possibile modificare l'aspetto dei documenti di vendita che utilizzano personalizzare fatture. È possibile modificare i formati se si preme il pulsante printemail fatture e poi preme il pulsante Personalizza nella parte inferiore della finestra successiva. Sarà necessario personalizzare le fatture intorno al vostro attività di cancelleria, in particolare se si è formata una nuova società a responsabilità limitata. C'è una spiegazione sul Centro MYOB di quanto richiesto in una fattura. E 'bene se è possibile ottenere una versione elettronica del logo. È necessario l'accesso ad esso per la personalizzazione per le e-mail di acquisto ordini fatture ed estratti conto. È necessario copiare il file. FRM per ogni disco rigido per loro di essere efficaci. Salvare questi nella cartella moduli personalizzati. Tutti i file del modulo devono essere copiati nella stessa posizione che è possibile rintracciare usando Dati aziendali Sindaco sul centro di comando Account. Su un Mac si prega di utilizzare la cartella forme in ApplicationsMYOBPlus18forms. Ordini: un avvertimento Fare attenzione a non utilizzare il sistema di ordine di vendita fino a quando sei abbastanza fiducioso sulla gestione delle riconciliazioni bancarie. Se si utilizza il sistema di ordine e di accettare depositi contro di loro il amendability le ricevute di vendita viene rimosso. La ragione è che quando l'ordine si trasforma in una vendita, protegge tutti gli incassi e le voci di vendita che sono coinvolti. È quindi possibile modificare solo questi attraverso inversioni, che sono complicate. Uso ordini possono rendere conciliare la banca più difficile. riconciliazione bancaria è effettivamente necessaria per il rispetto di IVA come quella è una questione giuridica, deve avere la priorità. La registrazione proforma fatture o ordini di vendita Ci sono due modi alternativi di registrazione di un deposito di vendita o fattura proforma. È possibile avere due fatture separate, una per il deposito e uno per l'equilibrio. In alternativa è possibile eseguire il proforma come un ordine di vendita. Allora prenotate una ricevuta di deposito contro l'ordine di vendita. Questo è poi trasformato in una fattura di vendita al punto che il lavoro è stato completato. Il deposito costituisce quindi un pagamento parte contro il saldo. Il saldo applicata poi lascia una figura nuova rete. Se avete la personalizzazione della fattura corretta il valore netto ancora venire in da parte del cliente verrà stampato. Il deposito originale è quindi una transazione chiusa. Il nostro consiglio è di non far ricorso a depositi ordine di vendita come in 2. sopra. Essi spesso creano difficoltà. Dont utilizzare giallo ordini di vendita a meno che il riconciliazione bancaria è definitivamente stretto e si solo raramente hanno resi su vendite. C'è un'alternativa all'emissione di ordini e cristallizzando depositi quando si trasformano in una fattura di vendita. Si potrebbe invece impartire direttive in una fattura di vendita al punto di ricezione, e quindi emettere una nota di credito in caso di vendita non riescono a crystalise. Indietro Ordini si può dedurre voci fuori l'ordine e metterli nella colonna Order Back se sono fuori stock in vostri fornitori. Su questo distacco crea un altro ordine progetto di vendita per gli elementi che havent stato ancora spedito. Essere consapevoli che questo secondo ordine avrà lo stesso numero di fattura di vendita come la prima fattura. Vendite Entrate di cassa utilizzando un foglio Incassi In determinate circostanze, è più facile per entrare le vendite attraverso Banking, ricevere denaro che attraverso registro delle vendite. Impostare questa vendita come ricevuta reccuring contanti. Vai a ricevere denaro. Cercare il tasto ricorrente Usa. Poi sovrascrivere il numero di CR con il numero effettivamente ai piedi di ogni slittamento di credito Bank Giro. Questo aiuta la riconciliazione bancaria. Per una ripartizione complesso di vendite per contanti è necessario un foglio di incassi giornalieri. voucher di vendita sono ricevute, che non creano transazioni bancarie. Questi non sono gli incassi, ma sono ancora reddito VATable o imponibili. Diventano reddito e l'IVA imponibili al punto che riceviamo il voucher non il punto facciamo il recupero. Al punto di vendita originale la deduzione dal ricevimento della banca deve essere prenotato a un conto di vendita buono banca specifica. La clearance di questo buono è poi un ricevere denaro sul conto bancario principale dal conto buoni. Time Billing: informale Ci sono diverse opzioni con la vendita di tempo. È possibile utilizzare la fatturazione tempo utilizzando il tasso di impiegato-fatturazione. In alternativa è possibile utilizzare altre funzioni di AccountEdge per produrre un sistema di fatturazione tempo più semplicemente. Si possono avere attività in oggetto o le fatture stile professionale. 1.You può evitare di usare il tempo di fatturazione del tutto. Si potrebbe semplicemente usare codici articolo. È possibile aggiungere codici articolo per registrare le vendite standard (come ad esempio le spese mensili o iniziali di set-up o di tasse annuali di rinnovo del dominio o tasse di hosting). Tutti i tipi di servizi e funzioni di questo tipo possono essere inseriti come codici articolo. E 'importante che i servizi sono contrassegnati vendo soltanto questo articolo. È possibile creare oggetti specificamente in modo che possano essere fusi con le fatture tempo-fatturazione. Questo metodo ha lo svantaggio di non registrare il tempo speso su ogni progetto ogni giorno. Utilizzando elementi dà una più ampia gamma di opzioni di prezzo di vendita. AccountEdge consente di intraprendere tiering dei vostri clienti in sei livelli di prezzo. I prezzi associati a questi livelli possono anche essere legati volume. 2. Se si sente che il tempo di fatturazione è troppo dei pesi massimi una soluzione, una casa a metà strada è quella di utilizzare le fatture professionali. Questo formato consente di citare una data e poi immettere tutta una serie di attività nei campi di descrizione. Questo ti dà qualcosa di un po 'come una fattura di tempo-fatturazione senza dover inserire l'attività scivola necessaria per l'intero sistema tempo-fatturazione. Le vendite di articoli possono essere aggiunti nella stessa fattura. Time Billing: utilizzando il modulo ci sono un sacco di opzioni all'interno di questo modulo. Si potrebbe avere una attività generica per ogni cliente. Questo può essere contrassegnato Usa tasso di fatturazione del cliente di addebitare al cliente per il lavoro tradizionale. Si possono avere altre attività incaricate, a tassi specifici per il lavoro di alta qualità. Diciamo che si carica in più per un servizio specifico. Dire che si desidera anche avere un tasso differenziale tra i clienti premium e forse alcuni enti di beneficenza con i quali hanno negoziato un tasso di sconto. Se si vuole livello questo è possibile specificare diversi codici di attività. Si potrebbe caricare il lavoro premium via utilizzando il metodo di fatturazione tempo. Ogni servizio avrebbe una specifica attività. Si potrebbe segnalare questo servizio con Usa tasso di fatturazione dei dipendenti. Si potrebbe quindi avere due dipendenti separati, da soli, uno chiamato principale e uno chiamato Carità Rate. L'uso combinazione del dipendente e il codice attività vi darà la matrice dei tassi di default per cliente. Questo è tutto senza ricorrere a regolare il valore fatturabile direttamente, o che modifica il tasso di default. Concessione reddito che si può codificare sovvenzioni come un spese negative per compensare i costi della linea che il contributo pubblico finanziava. Tuttavia, se la concessione è incondizionata poi metterlo in un 8-range altri redditi separata. Assicurarsi che la ricevuta isnt tassato. Assicurarsi che i relativi costi sono N-T sia per tassa professionale e l'IVA. Perché pagare tassa professionale o l'IVA sui soldi che hai ricevuto da parte del governo, solo per dare loro il denaro a loro volta Dichiarazione Personalizzazione Si consiglia di utilizzare la scheda di attività con i clienti. Se si dispone di accordi finanziari complessi con i clienti questo è un modo di dare loro una certa fiducia nel sistema finanziario. Questa chiarezza può aiutare se si finisce in una disputa con un cliente. Riconciliazione - Mantenere la vendite Registro Cancella Tenere revisione registrano le vendite, in particolare la scheda rendimenti e dei crediti. Piazza off eventuali resi e dei crediti in essere. Quando si entra in una nota di credito è necessario abbinare immediatamente. Inserisci l'importo che youve rimborsato sotto dell'importo richiesto, o utilizzare le vendite di contabilità nota di credito di routine per applicare il credito per una vendita. Regolarmente cancellare gli ordini in sospeso dal registro delle vendite. Rimuovere regolarmente ogni fatture ridondante aperte o crediti in sofferenza con note di credito. Le vendite ricorrenti è possibile creare nuove transazioni ricorrenti molto facilmente. Si va in Trovare le transazioni, inserire il numero di fattura, aprire la fattura che si desidera salvare. Hit Salva con nome ricorrente per salvare una fattura di vendita del modello che può essere utilizzato più e più volte. 6. Gli acquisti È necessario subordinare l'introduzione degli ordini di acquisto nel sistema. Un'alternativa più semplice è quello di inserire gli acquisti come fatture separate e prenotazione gli acquisti di azioni solo al ricevimento della fattura. Quando il conto fornitori arriva andare al registro degli acquisti, andare a Ordini e trovare il modo per la voce che si stava viene addebitato. Controllare il valore ordine e il numero modificare, se necessario. Aggiungere un numero di fatturazione dei fornitori e premere il pulsante di acquisto. Trasformandola in un blu, che implica che l'ordine è stato ricevuto e accettato e che la fattura può essere pagato. Acquisto manuale Ledger Per semplicità di solito consiglia nuovi clienti inizialmente mantenere un acquisto contabilità manuale. Mantenere tutte le fatture che devono ancora essere risolte in un raccoglitore ad anelli. Tale documento file di Acquisto Ledger è il proprio record di persone che devono soldi a. Bisogna tenere il passo di questo file manuale. In tal caso non avete bisogno di duplicare questo acquisto libro mastro nel sistema AccountEdge. File le fatture nell'ordine è necessario pagare loro. Ma non li digitare in AccountEdge fino a quando non sono pagati. Utilizzando la procedura manuale è possibile risparmiare tempo sterzo chiaro del libro mastro acquisto. È sempre e solo di inserire le spese, comprese le spese di visto, le utenze e le spese di telefonia mobile, utilizzando spendere soldi. Si registra solo questi costi nel punto in cui li hai pagato. Tuttavia, se i creditori iniziano a costruire questo metodo inizierà a fallire. Entrando Salari Abbiamo riconsiderato la nostra consulenza sul modo in cui gli utenti dovrebbero essere entrando transazioni salari nel software AccountEdge. We8217ve cambiato le nostre menti su riviste complicate. Non abbiamo mai consigliato l'uso di un account di controllo stipendio. E perché don8217t il PAYE, NI, Student Loan, pensione e guadagnare passività attacco alzare accanto alle altre passività nei confronti di un business Invece di utilizzare riviste suggeriamo di inserire la retribuzione netta come spendere soldi alla data del pagamento. Questo sarà quasi sempre essere nel mese per il quale il salario o lo stipendio era dovuta. Non entrare nel retribuzione lorda come potremmo hanno consigliato prima. Inserisci l'importo dovuto a titolo individuale per ogni salariato, o in forma aggregata per tutto il personale insieme. Prenotare tutti i costi per 6-1xxx N-T. Quindi aggiungere un'altra fattura di acquisto per il PAYE e NI, prestiti agli studenti. Anche in questo caso la prenotazione tutti i costi per 6-1xxx N-T. Si noti che la carta utilizzata ha bisogno di essere 8216HMRC PAYE8217 o simili. Eventuali altre detrazioni (pensione, attaccamento dei guadagni, sottomarini associazioni sindacali o simili) devono essere inseriti con gli acquisti simili e carte simili. A volte il personale può soffrire deduzioni perché essi stanno pagando indietro galleggianti o anticipazioni. Se è così inserire la retribuzione netta dalle buste paga solo con un spendere soldi. Inserire un ricevere denaro per l'importo che si deve dedurre dal loro salari. Poi effettivamente pagare il personale della retribuzione netta meno l'anticipo. Consultare la guida per maggiori dettagli su come prenotare carri personale. Se si dispone di spese da pagare al personale, allo stesso tempo entrare una seconda spendere soldi nello stesso giorno. Prenotare il costo per 6-2xxx. Rimborso delle spese di utilizzare codici di lavoro che potrebbero essere nella posizione di dover stendere denaro per conto di un cliente. È possibile utilizzare il lavoro di codifica per reclamare rimborsi spese corrisposti. Vai alla lista dei posti di lavoro e spuntare costi rimborsabili pista. Utilizzare la funzione di rimborsare al fine di evitare ogni possibilità si potrebbe perdere i costi che youve disposti. E 'più facile a venire al conto finale per un cliente ricariche utilizzando questo strumento. Questa funzione è particolarmente utile se le spese cominciano a diventare molto complessa. Per fare questo creare un codice di lavoro, in particolare il nome del cliente al quale si sta andando per ricaricare le spese previste, e selezionare la casella spese rimborsare. Quando si arriva alla fine del lavoro, andare in vendite, immettere una vendita e mettere il nome di clienti. Poi premere il pulsante in basso dicendo rimborso. Questo creerà una fattura di vendita interamente basato sui costi youve sostenute, ma non ancora rivendicato. Ricorrenti acquisti quando si entra nel acquisti, provare ad utilizzare i modelli ricorrenti. In genere li si utilizzerà come una buona prima bozza dei numeri e oggetti tipicamente usati da quel particolare cliente. Tutti gli acquisti sul listino transazioni ricorrenti devono essere modificate attraverso Modifica pianificazione. Selezionare la casella Salva le mie modifiche quando mi registrare questa transazione ricorrente. Se si lascia questo spuntata allora il modello ricorrente non sarà modificato quando lo si utilizza prossimo. Condizioni di pagamento può essere utile per fare una rapida analisi costi-benefici di pagare i fornitori settimanale o mensile. sconti di pagamento sono talvolta disponibili da fornitori per pagare loro presto. Pagare i fornitori di frequente e tempestiva può aumentare le spese bancarie e ridurre il flusso di cassa. C'è un equilibrio da trarre. Use Stock Alert to track your stock needs You need to make the entry of purchase orders into the system. A simpler alternative is to enter the purchases as separate bills and booking the stock purchases only on the receipt of the bill. Using Stock Alert has the advantage of allowing you to create Purchase Orders automatically. This shows the amount of stock on hand plus the amount of stock on order. It also compares this to the stock you need so helping you to judge the timing of orders of fresh material. The Purchase Order created this way will also include other items you buy from the supplier where there is a shortfall. You can email orders directly out of this system using the Send To button. When entering the purchase orders to your supplier, you can print them on the hoof by using the Send To button. Alternatively you can go back to the Command Centre and use Print or Email Purchase Orders. 7. B ookkeeping for Staff Wages Recovering Expenses through a quasi bank account You can use a bank or credit card account to pay staff or directors expenses. This control account can be inamed after the employee who paid. Essentially the staff member acts as a bank account. If this nominal account is not zero, do a reconciliation. Please check that the amounts that staff have paid equal what the receipts show has been paid less what you have paid the staff. Staff Wage Advances You may issue advance wages or expense floats. Say you give a staff member pound100. If you book this to wages and you were subject to a PAYE investigation, they would expect to be able to recover Employers National Insurance and PAYE from the amount paid. If you book floats as non-staff expenses, then you wont get the corporation tax relief because you havent got a receipt to justify the expense that youve paid. If you do have to issue an advance, then it is important that it is recovered, either from the staff payroll in the case of a wages advance, or from the expense return, in the case of an expense float. So the only legal thing you can do is to book these floats and advances as staff loans. The account that we suggest you use is account number 1-7950. It is important that you keep this account clear to zero as much of the time as possible. Let us say you want to recover the balance of a pound100 given as a float to a member of staff. You have to recover the pound100 from the advanced wage payment account 1-7950. This was given to her to be able to afford some offsite business expenses. The expenses must be booked at the time that the receipts come back with the expense claim. The expense claim must be entered for the full value of the expenses that are being claimed, including the reasonable VAT. The recovery of the loan must be entered as a negative line in a Spend Money payment for the individual receiving back the balance. Say they claimed pound126 worth of expenses, for which theyd already had the pound100 expense float. You would enter the expense as a series of expense lines totalling pound126. You then put in a negative line for pound100 coded back to, say, 1-7940, to clear the outstanding float. The balance of pound26 goes to the staff member as a balancing payment. Recovering Expenses through a quasi bank account You can use a bank or credit card account to pay staff or directors expenses. This control account can be inamed after the employee who paid. Essentially the staff member acts as a bank account. If this nominal account is not zero, do a reconciliation. Please check that the amounts that staff have paid equal what the receipts show has been paid less what you have paid the staff. 8. Staff Travel Expenses The car mileage costs repay the costs of running a staff car. The company doesnt buy the car, the employee does. If you havent got one create a new nominal account for the car costs. We first need to check that this is a car that is being run by the employee. Normally for limited companies the tax-effective way of expensing a car is to pay 45p per mile under the fixed-profit car scheme. In the SAL standard template, mileages can be charged to account number 6-2100. The account name is Staff mileage. If your datafile features Travel Expenses somewhere else in the expenses range, post the mileage charge to a new nominal account beside that instead. You might be leasing a car in the name of the business. Set up two new accounts - one for the asset for the car, and another for the expenses for the car. This should be held in a different account to travel expenses. Inland Revenue approved mileage rate The standard HMRC rate of 45p per mile (up to 10,000 miles) more than covers the petrol cost. It is paid completely tax-free. You are, however, obliged to keep a record of your business mileage. If youre recovering VAT on the mileage costs, you also need to keep VAT receipts of your petrol purchases. Strangely you dont use these receipts to match your actual VAT claims. Lets imagine you are not currently reclaiming VAT on mileage. Say the amount you are currently claiming is 45 per mile exempt. How much is that worth to your business The answer is the corporation business tax relief and that is all. The 45p covers petrol on which there is input VAT charged. The petrol will typically come to about 16p per mile. That 16p will have attracted VAT of perhaps 2.7p. Add 20 of the remaining 42.3p business tax. 8.4p 2.7p 11.1p recoverable. Your business can increase your effective tax recovery up to 11p per mile simply by obeying the VAT regs and then putting in a reclaim on your VAT return. To get VAT back you should keep a mileage record, identical to the one you should keep anyway for the corporation tax. The VAT that you claim should be a reasonable proportion of the mileage allowance related to the petrol element only. You cannot get the VAT on other things like (for example) repairing an employee or directors car, insurance services, road tax, depreciation, etc. You also need to keep VAT receipts for your petrol. This is why people collect VAT receipts at garages. Just collect them, put them to one side. As long as they exceed the value of the claim you are fine. The simplest way to do the bookkeeping is therefore to code your mileage claims to reduced rate VAT code Reduced rate, not No Tax. 9. Capital Expenditure Simple Accounting Limited recommends against booking assets direct to your Balance Sheet. Put all capital expenditure through an other expense account at 9-7000. You could simply disregard this cost in future as an asset. You might put assets on a list for insurance purposes. You can also keep a list in Accountedge by keeping a record of all the account transactions in the relevant nominal account. This relates closely to the written down value per your capital allowances and your corporation tax calculation. If the Net Book Value (NBV) is deminimis (under pound1,000) it can be written off in both your books and tax accounts. If you have significant assets we usually fix the fixed assets to the written down value (WDV in the corporation tax return). To shift to this policy we need to obtain a copy of the last corporation tax return and the supporting calculation from your external accountant. You can reset the value of the assets to their WDV by entering extra depreciation by journal. Book the monthly cost of these into a specific 9-xxxx range nominal account, using Spend Money. Add the VAT and reclaim it that source on each payment you make or the date you make the payments. Items and Pricing Item lists can help make your sales more systematic. You could shift to recording some of your basic pricing inside the customers card. You could use the items list for services. If you get those meshing, then you dont have to remember all your prices by yourself as they are all recorded in the system. Stock Counts by Bay or Shelf If you have lots of stock it is useful to have the stock counts subdivided by shelf number in the various bays in which youre holding stock. Get the shelf numbers keyed into the items list. Then the stock-take itself doesnt become a massive job deal with it shelf-by-shelf. You can then run off the stock count sheet by location, bit by bit across the whole of the premises. Do the stock count and note down the amounts that are actually in stock for that particular location. Then you enter those counts via the Count Stock routine. When youre doing a stock write-off, it should be confirmed that the person responsible agrees. You enter the amount that youve got in stock as Counted, press the tab key, hit the Adjust Stock button. The default write off account number is in the 5-xxxx range. This write off is a cost - just like any other bill. Stock Listing if You Have Lots of Stock The way that you can look for stock can affect the way you enter codes. For example the Item List may not work effectively because the items are listed by item number. The Item Register allows you to search for an item (rather than all items). You can then click on the down arrow to the right of the field where the item number goes. Then type in the first two of three letters of the item name. This list gives you all of the item names in strict alphabetical order, irrespective of item code. Pick one, and then this will allow you to view all the recent transactions made with that item number over the past months. This routine is more memory hungry. Stock Type You should move to having one custom list field used to identify the class of each line of stock. Another field can give the location of the basic stocks of each line. Do You Have Lots of Inactive Stock codes Take the inactive stock codes, prefix them with a Z and turn them to inactive. You cannot delete them if there are stock transactions, which are still archived in the datafile. However you can replicate them with new stock codes. Often you will want these to be the same as original code but with the I stock this item box unchecked. You should then be able to reuse the code for item style purchases and sales. 11. VAT Bookkeeping VAT Cashbook If the VAT inspectors were to call suddenly, they may ask you where your VAT cashbook is. This may have been a spreadsheet before you started with Accountedge. Now it is an Accountedge report. You should also use the opportunity of each quarter or year end to get your VAT filing in order. Take a copy of the VAT return you submit whether manual or online. Print off a VAT Detail report to check against. File it behind your copy of the VAT return, so that you can make sure that it is exactly right. The Sales Tax Detail report is your VAT Cashbook which you are legally bound to keep. Youve got to ensure that the Sales Tax Detail reports exactly match what has been entered in your previous VAT returns at each period-end. This is the case even if you get a subsequent adjustment, such as a late arriving purchase invoice or a correction to a previous sale. You should try to make the change into the following VAT quarter. File all of these papers in a lever arch file. You have to allow inspection of this cashbook should the HMRC come to investigate you. 12. VAT Schemes The first objective must be to make sure that you have simplified the VAT reporting as much as possible. Accrued Accounting Many businesses end up with accrued quarterly accounting by default. They do not consider the schemes that the HMRC offer to simplify your reporting requirements. This is where you pay VAT on sales you have invoiced out. Correspondingly you claim VAT on purchases when you are billed, not when you have actually paid the bill off. If you are on this scheme print off VAT Return and use it to complete the Sales Tax Summary. You run this report from the Index to Reports. Check the report balance agrees to the amount on the VAT Due account. Bookkeeping at an Accrued Accounting Period End The VAT Due liability crystallises at a period end, because you are issuing a VAT return to the HMRC. At this point journal the balance out of VAT Due (debit) and credit it to the VAT Due on Next Return Account. Date the journal the last day of the quarter. This should reduce the balance on VAT Due to nil. Flat Rate Accounting This scheme is where you only pay VAT based on a fixed percentage on your gross sales. In this case all your transactions need to be coded to NT. Retail Scheme Accounting If you are in retail there are other schemes which ease that calculation of turnover. Cash Accounting If you have a large debtor value outstanding then you could save money by converting to cash accounting. This excellent scheme is where you only pay VAT on sales you have actually been paid for. Correspondingly you only claim VAT on purchases you have actually paid off. There is an pound1.35m pa turnover threshold. If you are on this scheme print off Sales Tax Summary Cash and use it to complete the VAT return. Bookkeeping at a Cash Accounting Period End The VAT Due balance crystallises on the last day of the VAT period because you are issuing a VAT return to the HMRC. So we need to issue a purchase to take the balance out of VAT Due and leave it as a purchase on the Trade Creditors until it is settled. However, there is a twist if you are on cash accounting. An element of the accrued VAT isnt going to be payable. This is the VAT Cash accounting element. You hold this value aside in a second VAT liability nominal account. Take this to a VAT - Cash accounting element account. The period end purchase is dated the last day of the VAT period and therefore has two lines: The amount that is debited to the VAT Due account is the balance on that account at the period end. The difference between the VAT Due account and the Box 5 figure mentioned above. Annual Accounting This is also an excellent scheme, which I recommend to most clients turning over less than its pound1.35million per annum threshold. Most businesses account for VAT quarterly. If you are on this scheme then, during the year you pay annual instalments on an estimated basis. Say your typical annual payments total pound50,000. The HMRC will agree a figure with you of, say pound5000 per month for each of ten months. The bookkeeping is easy You book these payments to a liability account - VAT Payments on account. To trace the outstanding balance it is easier to set this nominal account as a credit card account type. Bookkeeping at an Annual Accounting Year End Then you come to the end of the year. During that year all of your real VAT liabilities have been building up in the VAT Due account. This is the account you should already be familiar with. When you get to the end of the year, check that the balance on the VAT Due nominal account agrees to the Sales Tax Summary Report. Then run the cash or accrued process as described above, depending on which form of annual accounting you are on. The amount payable at the end of the annual accounting period therefore becomes the difference between the purchase you create at the end of the accounting period and VAT Payments on account. Code the final payment as a pay suppliers transaction to pay the VAT so as to clear these two nominal accounts down to nil. Annual Accounting cashflow advantage Say your VAT year is also the calendar year. Say you have a liability in one year, (i. e. over four quarters) of pound50,000. This would equate to pound5,000 per month. These are paid in nine monthly instalments and a balancing payment also of pound5,000 at the end of February 2014. When you start your scheme you can negotiate the payment with the HMRC dependent upon your last four quarterly returns. Imagine you expect to significantly increase your turnover in 2013. The scheme will save you cashflow for VAT on any growth that you have above the actual for the previous year. The VAT instalments you pay in 2013 will be assessed only on the basis of your 2012 liability. You retain the cashflow advantage until Feb 2014 Choice of VAT scheme for simple accounting Under annual accounting you can account for transaction dates more simply than before. Precise booking at quarter ends no longer matters. If you move to VAT cash accounting, we suggest that should you enter all receipts and payments on the date that they clear on the bank statement. Do not worry about the date on which cheques are written. Post them on the date that they are reconciled. If you are going to cash VAT accounting that will be acceptable to HMRC. The bank reconciliation can then be matched through the bank register module. If you are on cash accounting we also suggest you enter your overheads as spend money transactions. Use the cash ledger and avoid using the purchase ledger. These overhead payments include payments to yourself, dividends, repayments of any directors or incorporation loans, payments of expenses to your staff, payments of standard expenses you need for the business, the monthly standing orders, utilities etc. All this simplifies the bookkeeping considerably. So we often suggest clients apply for annual accounting for VAT (which you need permission for) and use cash accounting (for which permission is not required). 13. Preparing a Backdated VAT Return If you subsequently change your mind about the VAT status of a lot of historic transactions you might decide to amend them inside Accountedge. This would retrospectively alter your VAT report. Running the reports at the time you compose a new VAT return leaves a nice clean trail as to what you have done. Here is the procedure: Let us imagine you wish to correct for errors all the way back to the point you registered for VAT. Say you wish to doo this all in one return. Let us assume this was 1st July 2014 and you are now preparing the return for Sept 2016. Prepare a spreadsheet with nine rows, equivalent to the nine boxes of the VAT return. Then prepare the equivalent VAT Accountedge reports (after youve done the debtors, creditors and bank reconciliations) from the 1st July 14 to 30th September 16. Next, trace through your paper records and establish what figures you previously reported. Enter to the spreadsheet the figures you entered into each box for the VAT returns sent in September 14, December 14, March 15, June 15, Sept 15, Dec 15, March 16, and June 16. Those eight returns should be added together. Deduct the sum of those eight returns from the sum of the VAT reports from 010714 to 300616. The difference figures, which could all be positive or negative, are those figures that should be added to the Sept return in each box in the VAT return to September 2016. This will correct the reports cumulatively. It may enable you to reclaim any missed VAT inputs. This is common. Many businesses fail to properly claim from periods before they registered and in their first year of trading. 14. VAT for Imports and Exports on AccountEdge There was a change in reporting rules for VAT returns in Jan 2010. Imports purchases from either the EU or elsewhere in the world have now become particularly complicated to report. The HMRC has previously been mainly worried about actual goods from the EU only. Now they are apparently worried about all the purchases you may make from abroad. The most common mistake is coding transactions which are outside the EU. Strangely you are now required to account for deemed VAT on services imported from (say) the USA in a similar way to the purchases you make from the EU. UK small business owners often don8217t know how to make the declaration on the turnover boxes of the VAT return report (boxes 5, 6, 7 and 8). This could lead to a VAT inquiry by the HMRC. Unfortunately we have known for some time that Mamut AccountEdge and earlier versions of MYOB are not fully compliant with HMRC8217s very complex reporting rules. You may be used to some old rates in either MYOB 13-19. Typically an MYOB datafile would include these codes: The reasoning behind this wide variety will become clear as you go through this briefing. The main objective is to record your VAT transactions in such a way as to allow your VAT report to be easily composed. We now need to use the variety of Goods and Services VAT codes in the function 8216tax codes8217 under 8216lists8217. To keep the transactions in line with these we need to get the default codes correct in all the various parts of the software. The default VAT coding for an Acclivity transaction is set by the client, the supplier (called vendor in Canadian) or the item you sell. It does not work from the nominal account. This is why we are particularly keen for you to use the template Acclivity AccountEdge datafile we create. The suppliers have the correct VAT codings already set for you. The default nominal codings are also set. It now becomes important that you do not enter transactions without the correct card. A) Reporting VAT with Imports and Exports There is a short cut to reporting these transactions if you are using the codes above. We have created a spreadsheet which can be supplied to work alongside this series of guidelines. Go to the spreadsheet page marked 8216Base Data8217. Run off the GSTVAT summary report. Rekey the taxes paid and received into columns G and H and the turnovers into boxes E and F. Now go to the page marked 8216Return8217. Print off the page and use it to compile your VAT return. Save the spreadsheet as the justification for the figures you entered into the VAT return for the accounting period. Note that the 8216Return8217 page may give warnings in red. With the spreadsheet, the VAT codes and Acclivity AE you can complete the VAT return accurately. You can simply buy the spreadsheet off us. Using the codings given above, this will give a right VAT return each time every time. If you want to take this course skip to section E below. B) Imports Purchases The basic rules are as follows. If you are buying from within the EU, a supplier is obliged to zero rate VAT to your business. You normally prove you are a business by reporting your VAT number to that supplier. For example if you import adwords as a business supply from Google, a business that is registered for VAT in Ireland, you should be able to avoid paying Irish VAT. You still have to record the purchase as both a sale and a purchase with a deemed income and a reverse charge for the VAT. In Mamut Acountedge you can use the preset ECP code you are buying goods from the EU. This is a special type of VAT code labelled 8216VAT 8211 EC Purchases8217. This has the effect of adding the deemed VAT to both the sales VAT (box 2) and the purchase VAT (box 4). As long as you code the purchase, or the payment of the bill with the ECP code then it is all sorted for you. The accounting is invisible within the system. You do not then need to worry about how the return is composed. The reporting problem comes if you are importing a service whether or not the service has come from the EU. Using the example above - the HMRC expects the purchase and sale reverse to put the VAT into boxes 1 and 4, not 2 and 4 as it is with goods. There is no suitable code to do this within Mamut Accountedge 8211 so you have to code as for goods and do a manual reallocation. In Acclivity or in datafiles managed by Simple Accounting simply use the codings given above and key into a spreadsheet. Use CZ or C - Net: box 7 a No suitable code is available in the Mamut AccountEdge standard setup. In Mamut AE use code ECP and manually move the VAT from box 2 to box 1. Similarly you move the Net from box 9 to box 6. This may be easier if you create a second code like ECP but for services only. b The VAT here is usually recovered by the HMRC through a freight handler at the point of entry to the UK. VAT in this section has to have been paid and receipted before it can be reclaimed from the HMRC. Sometimes VAT is imposed on the cost including Duty. If so use S for that part of the cost. C) Exports Sales The basic rules are these. Goods or services sold outside the EU are No Tax. Services are zero rated if you are selling to a business in another EU country. You usually need proof that the service is a business supply - you can prove this most easily if you have a valid VAT number for them. If you are selling non business services or any goods to the EU to individuals (rather than businesses) then you have to charge VAT at the rate prevailing in the customers country. If you are selling goods to the EU and your customer is VAT registered, then you charge no VAT. However you have to declare the VAT turnover in box 8. In this case only you use the standard AccountEdge EU sales VAT code ECS. If you sell goods abroad you have to complete an EC sales report (see chapter 15). Exports Sales to: a If you should have obtained the goods or service for a business then you should be able to reclaim the VAT from the foreign tax authority through the HMRC portal. When you recover it, book the receipt as a No Tax reduction in the cost of an expense. Input tax reclaimed from foreign tax authorities through the HMRC portal falls entirely outside the scope of VAT. 15. VAT EC Sales list and Intrastat A) EC Sales List Export of Services Technically if you make any export of services to businesses in any EU states which have been zero rated, you are required to report the fact on a monthly EC Sales list. Only zero-rated sales to EU VAT registered businesses count. This regulation only applies when you sell goods to the EU at zero rate and therefore, you have made a declaration in box 8. You are obliged to check the validity of an EU customer and verify their VAT registration number before you sell anything to them zero rated. Use Registration Status check service on 0845-0109000 or look at the VAT checking service on the European Commission Website . Any box 8 transaction on your VAT Return triggers the need for a return EC Sales list. The turnover threshold is therefore zero. Export of Goods If you make any export of goods to businesses in any EU states which have been zero rated, you are required to report the fact on a monthly EC Sales list. However sales of goods to EU countries only have to be reported quarterly for smaller businesses. If you export pound35,000 annually you would have to complete the form quarterly not monthly. Predictably many businesses fail to report small sales abroad of this nature. They simply do not want to get involved in the HMRCs systems, potential fines for mistakes, risk etc. It is a sad feature of the UK tax system that those businesses who report according to all the HMRCs myriad regulations are at more risk of fines for non compliance than those who dont. Export of Services If your business is small and only makes a low level of supplies of services (ltpound11,000pm) to VAT-registered customers in another EU country you may not need to fill in the full ESL. You can contact HMRC and ask for permission to submit a simplified annual ESL. If the value of your supplies to customers in other EU countries arent more than pound35,000 a year, then you can complete the form quarterly. If you are selling goods to an individual who is unregistered that lives in the EU, then you must charge the standard rate. The net also has to be reported in box 6 only. If the card that has been ticked has an 8216EC Customer8217 then you can trip up here because an S code will post the net to both boxes 6 and 8. You may then get questioned if you have not returned an EC Sales list. It is therefore best if you (counter intuitively) do not flag private EU consumers with the EC Customer flag. Mamut AccountEdge Please note that the failure of Mamut AccountEdge to properly record these two sorts of transactions has been reported to the staff at Mamut. Misunderstanding the EU customer and the EU supplier on the sales and purchases cards A card should only be ticked as an EC Customer if it is a customer whether registered or not for its VAT in its own country to sell goods that are exported from the UK. Similarly you should only tick the EC Supplier box on a card if that supplier is sending you goods to be imported into the UK from the European Union (whether the supplier is registered or not). The critical thing is that the requirement is for goods to be declared not services. So Google is based in Ireland, it may be selling you a service from somewhere else in the EU, but it is not an EC supplier in the AccountEdge coding. Strangely it is an EU supplier in that it will zero rate its supplies to you. Therefore you need to reverse charge deemed VAT on the supply. You need to record all of the EU customer and EU supplier VAT numbers along with their country prefixes. B) EC Intrastat This is a more complex report that more extensive traders are required to complete. The threshold for this is much higher than most small businesses will need. If you sell pound250k pa goods (ie excl services) exports to EU you have to submit an Intrastat sales list. If you buy pound1500k pa goods (ie excl services) imports from EU you have to submit an Intrastat purchases list. AccountEdge can help you with this. Sales of these larger values of products are coded by type as well as supplier and customer. If you need to provide this, Acclivity AccountEdge can help. It can be made to generate reports from which Intrastat should be relatively easy to compile providing you have commodity codes that are easily sorted by customer. This may be sufficient if you export import a relatively narrow band of items. At the moment AccountEdge does not directly support the reporting that is necessary to fulfil those requirements which are quite onerous and have to be completed every month. These are reconciled to the company8217s VAT (return boxes 8 and 9 to be specific). Intrastat Reporting add on Intrastat is a report for those importing larger values of products. If you need to provide this AccountEdge can help. You need to record all of the customer and foreign supplier VAT numbers with their country prefixes. AccountEdge can support EU sales list and full Intrastat returns. One of the custom Item List fields in each of the items will have to be used to allow the report to generate the appropriate Intrastat code for each sale. Reporting thresholds for Intrastat Goods only pound1,500,000 pa imports or exports pound250,000pa. Then you have report values. Tested against boxes 8 and 9. 16. Vat Procedure for Period Ends Accounting at VAT Period Ends is a formal AccountEdge procedure. The procedure is the same whether you are on VAT quarterly accounting or for those on annual accounting. The first priority is to do the bank reconciliation. Ideally this should be on the exact date of the VAT period end. There is advice on how to do reconciliation here. You should make sure your bank accounts all reconcile to the relevant statements - the bank statement balance to the bank reconciliation or ideally the bank register. Then run the Debtors Reconciliation Detail. The debtors reconciliation report compares the balance of debts as at the period end date with the amount outstanding in the trade debtor nominal account as stated in the balance sheet. Obviously there should be no imbalance nor any illogical or uncollectable values. Then do the same on the creditors side. Look at the purchases register and check the open purchases. Are they all logical and genuinely due Then display the report Creditors Reconciliation Detail. Check through it and make sure you have sensible recent values and no out-of-balance figure. Will all these creditors all actually be paid You need to run through a report called the Vat Exceptions report. Run it for both cash and invoice transactions. Examine all the transactions which look odd, highlighting them with the magnifying glass that appears when you move the mouse arrow over the report. When you are happy with the VAT Exceptions reports then you run the VAT Detail cashbook. Look at the individual lines and see if there is anything important that is missing. Check if any value looks odd or if there is a transaction that is falsely zero-rated. An obvious thing is your mileage will be in units of 45p. Using the VAT Detail report, you might notice that you paid exactly the same payment twice within a few weeks of each other. This would be odd. If you are on cash accounting make sure your VAT outstanding on your debtors and creditors looks roughly right. This in turn means that your debtors and creditors have to be correct overall. Any mis-invoiced sales have to be reversed or amended. Then display the VAT Summary or the VAT Return report. Chack that the value of VAT to be declared during the period agrees to the movement on the VAT Due account during the same period. If it doesnt agree there is a rogue entry that you will have to rekey. If the opening balance on VAT due during the quarter doesnt equal zero then there is an adjustment to be made for the previous period. Manually add this to your return. Then display the Sales Tax Detail or the Sales Tax Cash report. Check you are happy to pay the VAT due (ie the difference between the two final column totals). Then finally do the same with the Sales Tax Summary or Sales Tax Summary cash report on a pdf, or print it. Fill out the VAT return, usually online. Keep a printed copy and file it with the VAT Detail Report. Entering a VAT Purchase Now that you are content that the VAT reported from the system is correct, you need to enter the liability to the HMRC. A period end VAT purchase is entered as a standard recurring transaction in all Simple Accounting datafiles. It is important to keep the alert on so that the administrator is reminded to run the purchase as it falls due. Also, tick the box at the bottom which says Save my changes. The purchase must be coded as No Tax. The period end purchase is dated the last day of the VAT period and usually has one line: The amount that is debited to the VAT Due account is the balance on that account at the period end. This is also the same as the box 5 figure on the VAT Return. However there is a twist if you are on cash accounting (see VAT Schemes below). An element of the accrued VAT isnt going to be payable. This is the VAT Cash accounting element. You hold this value aside in a second VAT liability nominal account. This purchase totals the same as the box 5 figure on the VAT Return Cash. This report is on a cash basis. The purchase then has two lines: The amount that is debited to the VAT Due account is the balance on that account at the period end. The difference between the VAT Due account and the Box 5 figure mentioned above. When youve finished the VAT period-end, it is very important that you put on the lock period function. You find this function under Setup, Preferences, Security. Please advance it to the current quarter-end to prevent retrospective alteration of the VAT cashbook. All this may seem fearsome but it only has to be done at a VAT period end. As long as balance on the VAT Due account is nil at each period end the justification for each VAT return is transparent. The outstanding liability for the past VAT periods is separated from the VAT liability building up for the current period. The year-end justification for the VAT balance should ideally become the VAT Return itself. Semplice. The huge advantage of this procedure is that the VAT system doesnt need further reconciliation. The system self-reconciles. If you move to VAT annual accounting all this can become part of the year-end accounting job. The chances are that your accountant would do this for you. Before you move on amend the set-up preferences - go to Setup, Preferences, and Security. Then and set the lock period forward to the end of the quarter that has just shut. This prevents you from making any amends on that closed quarter. 17. VAT Treatment of Particular Classes of Expenses You have to consider the VAT coding in Accountedge in line with the way that the VAT Return is going to be composed. There are several common problems. a) Misunderstanding the differences between Exempt, Zero rated and No Tax It is important to be precise about the reason why a transaction doesnt bear VAT. Code items zero only if they are: public transport certain forms of printing e. g. leaflets, books, magazines childrens clothes raw food Note that imports inside the European Union are usually reverse charge and so have to be coded with the IEG or IES codes (see section above). If the cost is not one of those things then consider coding it as exempt. Examples include: air fares bank charges education finance leases insurance payments interest receipts and payments local authority taxes parking charges postage from the Royal Mail rents (can also be standard) If the purchase is from a business that is not VAT registered then the code is exempt. Any other item within the UK is no Tax, if it has no bearing on VAT. This includes: bank transfers dividends government grants received national insurance payments of Tax, Paye, National Insurance, CIS, Vat, Corporation tax to the HMRC pensions repayment of loans salaries wages directors accomodation second hand items VAT cannot be claimed on directors accomodation at all. You have to code second hand items for suppliers and customers as exempt. b) Entertaining and Subsistence are different If you need to entertain a customer or a supplier then the VAT you incur is not allowable. Code the cost as exempt. If you are away for a night to visit a client away from your place of work, and you need to eat then that is subsistence. VAT is recoverable. If you need to stay in a hotel that is accommodation, VAT is recoverable. The cost is usually allowable against corporation tax but may have to be declared on a P11d (see dispensations). c) VAT on vehicle costs If you are a company you can only get the VAT back on company vehicles if they are on contract hire - and even then the input tax is restricted to 50. The maintenance of such vehicle costs are fully allowable. If the car is owned by the employee then the mileage allowance is the only cost the company can legitimately pay the employee. CM. Meanwhile for a sole trader or partnership you can get VAT on motor costs in proportion to the business proportion of the owners use of their car. CM. d) VAT coding There are many occasions when clients simply miscode an expense. Have a look at this list for common errors. An alphabetic list of VAT liability of specific expenses: Air travel: Zero-rated. CZ Businesses rates: No tax. Bank Charges: Exempt: C - Bank Interest: Exempt: C - Bank Transfers: No Tax Business cars hired for personal vehicles in partnership or sole trader: Zero-rated Christmas party: Standard rated. CS Company cars bought from a VAT registered supplier: Exempt (the input VAT on company cars is disallowed).C - Company car operational leases: for company cars half the input tax is reclaimable: 50 Company car expenses: Standard rated where appropriate CS (But not vehicle excise duty, or car insurance: C-) Company vans: Standard rated (import tax on vans is also allowable). Corporation tax payment: No tax. Credit card bill - if the expenditure is booked separately and the payment is simply recharging of the credit card accounts: No Tax. Otherwise standard or exempt according to the nature of the individual transactions on the statement. Credit card processing charge: Exempt C-.(Hire of credit card machine: Standard rated CS). Employer NI: No Tax Insurance: Exempt (including IPT): C - Transfers between bank accounts: No tax Entertainment for suppliers and customers: Exempt (the input VAT is not reclaimable).C - EU sale: goods or services sold to an EU unregistered individual SS EU sale: services sold to an EU registered business: XES EU purchase: supplier: purchases on which the EU supplier has put the VAT payable in their own country (for example a hotel bill paid in Germany): Exempt EU sale: goods sold to the EU unregistered per individual EU sale and you have to amend VAT charge manually in each sales invoice or receive money transaction Export of goods sold to an EU registered business: XEG Export of goods to a VAT registered businesses or individuals in the EU: zero rated: XEG. Ensure card is ticked EC Customer Export of services to un-registered businesses or individuals in the EU: Standard rate: SS. Ensure card is not ticked EC Customer Export of goods to un-registered businesses or individuals in the EU: standard rated: SS. Ensure card is not ticked EC Customer Finance charges exempt: C-. Goods bought from the EU purchases of goods from an EU registered business: IEG. Google Adwords: IES IES: reallocate deemed VAT boxes 1 and 4. Hotel accommodation for employees away on duty: usually Standard: CS Import of services bought from the EU: IES Imports of goods bought from the EU: IEG Import from an EU supplier on which the EU supplier has put VAT payable in their own country (for example a hotel bill paid in Germany): Exempt: C-. If you are able to recover the foreign VAT then code as CS when recovered. Interest - exempt: S - Mileage allowance paid to employees driving their own car, petrol lt2000cc (usually 6.2 of 45p): Reduced rate: CM. Mileage allowance paid to employees driving their own petrol, gt2000cc car (usually 9.3 of 45p): reduced rate: CM Mileage in a company vehicle where the driver pays the petrol (this is equivalent to a standard allowance of 14 pence per mile): CM National Insurance: No Tax. Overtime: No Tax. PAYE: No tax. Pension payments: No Tax. Personal vehicles purchase price in partnership or sole trader 0.(unless it is an operational lease - VAT: 50. CH) Petrol put into a pool car: Standard rate. Petrol put into a company car: Standard rate but is subject to the VAT fuel scale charge: CS. Public transport: Zero-rated: CZ. Refreshments bought for staff training day: Standard rated. Salaries: No Tax Services bought from the EU zero rated: IES Subsistence (food bought for Staff leaving party or employees who are working away from their normal premises): CS Subsistence at a staff training event: usually Standard rate: CS. Wages: No Tax VAT payment: No Tax. Visa card bill payments if the expenditure has already been analysed in AccountEdge the payment is simply payment of the credit card accounts balance - no tax. Otherwise standard or exempt according to the nature of the individual transactions. 18. Building Industry Retentions Treatment When you charge your sale, the total amount of income includes the retention. When you agree to a retention then you are also agreeing to claim that retention later. It is a debtor for the duration. The original sales invoice therefore has a line for the retention. It should deduct the retention as a new debtor nominal account. The point at which you eventually claim the retention back off the client is when the debt clears with a new sale. The retention is only a debtor to the tune of the amount of the retention on the original invoice. If the retention subsequently varies then it is only the amount that was on the original invoice that gets credited to the retention debtor account. Any difference is either extra income or extra cost. The key is to put in each recovery of each retention in as an advanced sale invoice. There are two reasons for this: You make sure that you are correctly billing off the amounts you have allowed to be charged against your previous sales as retentions. The values there are all reconciled. It is clear the amounts you are deducting are equal to the charges you are eventually going to make. By putting them in as an advanced sale, you are also forcing yourself to reconsider at some point in the future when the retention is actually going to be paid. Eventually you have to claim the retention from the client. If you have further snagging work to do, you can postdate the invoice once again. If the value is different you can amend the invoice. But bear in mind you must not amend the line that goes to the debtor retention account. You just put in an ancillary cost of sales line, so the debtor retention eventually clears. If you get a retention against a firm that has gone bust then you have got to credit the retention debtor by means of a credit note, perhaps at your year end. Holding the retention debtor account at Nil This is the key to operating this system generally. Operate the retention debtor control account on a nil basis. To operate this procedure please put in advanced sales so that the retention debtor eventually works its way back down to nil again. The huge advantage of this procedure is that it requires no subsidiary records, spreadsheets or reconciliations. To check that you do actually issue the retention invoice you need an additional procedure. You need to get used to printing your invoices through the sales ledger, using the print email invoice option. This is below the sales register on the sales ledger. If you go into advanced filters and leave the unprinted box ticked and then print, the system gives you a review sales before delivery box. If any of the sales invoices there are retentions you can then decide whether or not to print or post them or whether to amend them. Say you booked it in as a sale of pound100,000 (net of VAT) less 5. The retention debt is pound5000. Say the retention was not fully claimable. Lets say after the work is finally certified you can only claim pound3500 of that pound5000 retention. You still have to raise an invoice to clear the debt of pound5000. You also have to put in a credit to cost of sales for the pound1500 difference for the loss on the retention. Therefore, raise a sales invoice for pound3,500. The first line of pound5,000 is posted as a credit to the retentions accountdebtor. The second line of pound1,500 is debited to costs of sale. That way the original pound5,000 is as cleared from the retention debtors, but the reclaim is only pound3,500. pound5,000 is posted as a credit to the retention account, so the retention debtor is returned to nil. 19. Dividends If you are going to be taking out money from the firm you must get it approved by the company, or it could be regarded as remuneration. Board minutes protect you from any accusation from the Inland Revenue that dividend payments are either remuneration or director beneficial loans. Have a look at the page which talks about dividends. During the year book any dividends into an account under Other Expenses. When it comes to the year end you tot up the contents of that 9 account for the whole year. Let us say during the year you have paid yourself twelve lots of pound1000. Thats pound12,000 which you debited to the Dividends Account and charged (credited) to the bank. Dividends Minutes So, run off a Profit and Loss report for your Board meeting. You can do that electronically as a PDF, so you end up with a soft report that you can reproduce at any time. You can email it which gives it a date. You cannot lose it like you can a piece of paper. Perhaps you do both. As you have stripped the dividend, the PL should show an operating profit of at least pound12,000. You can use the pound12,000 profit as a justification for the Board minutes that you draw up. You could use the template that exists on my Resources section on my website simpleaccounting. co. ukresources You take draft dividends minutes and tax certificate off my website. Make sure you get these filled in, simpleaccounting. co. ukresources The dividend that is agreed might not be pound12,000. You might decide you have done well and you are actually going to award yourself pound14,000. You can pay yourself the extra pound2,000 immediately after the year end. We now need another journal that takes the dividends not as paid but as approved by the Board meeting. Say on the 31 March 2016 you post a journal for pound14,000. You debit the dividends account with the pound14,000, credit the liability account with the pound14,000. The difference between the pound12,000 journalled over initially and the pound14,000 that you have just approved is owed to you. It is therefore correctly shown as a liability in Directors Loans Account. The minutes for your dividend need to say that you can withdraw the dividend as the cashflow of the company allows. If you dont feel happy doing all this, we can do that together at the year end. Generally we have to visit you for you to hold a Board meeting with us as a minuted attender. 20. Management Accounts Run the reports and check in roughly the order I give below. This will get the data file sorted out prior to management accounts being prepared. Company Data Auditor Firstly, I would run the Company Data Auditor. This tells you things like when the datafile was last verified. It also warns you when you last reconciled the bank accounts. The next stage of the Company Data Auditor is the data exception review. This checks issues like whether the list of outstanding sales invoices agrees to the nominal ledger control account for debtors. Where it finds an error, it puts up a red question mark and invites you to inspect the report. Procedure for period ends For management account or the year-end, the first priority (as always) is to do the bank reconciliation. Secondly when this is done you go to Index to report and then run the sales Receivables Reconciliation Detail. The Receivables Reconciliation report compares the balance of debts as at the year-end date and amount outstanding in the debtors nominal account as stated in the balance sheet. Obviously there should be no imbalance. Then examine other Debtors reports. Debtor days report is quite revealing. You can find this under Sales, Customer payments. Thirdly, we do the same on the creditors side. Look at the purchases register and check the open purchases. Then display the report Payables Reconciliation Detail. Check through it and make sure you have sensible recent values and no out of balance figure. Old Sales and Purchase Orders Clear all of the orders currently sitting in the sales and purchases register. Those that have been paid proforma should have an effect on the VAT if the order has been fulfilled. Receipts for these can easily cause an imbalance on the customers ledger that then cannot be cleared. You must make sure that all paid orders are crystalised as invoicesbills. Otherwise you will misdeclare your VAT. This is the main reason why Simple Accounting Limited does not recommend use of the sales and purchase orders as a way of recording proforma deposits. When you have checked through these stages, I would run the balance sheet. I would hit Analyse, Balance sheet, and then Filters. Set this year and last year, and make the selected period the quarter-end. See if there are any values or changes which seem unreasonable. When you have finished doing the reviews of the balance sheet, then review the Profit and Loss account in a similar way. Fixed and Variable Costs Costs are either pure fixed (as in the case of rent, rates, mortgage interest), semi-fixed (as in the case of labour or advertising) or variable (as in the case of subcontracted labour, costs of goods sold, and postage). If you want to analyse these in detail then split them by nominal account. This would require you to split items with more than one element into separate nominals (e. g. temporary manual labour go in one nominal, regular salaries go into another nominal). This would be simpler than a transaction-level analysis. Budget Report The Accountedge report you need is in Reports, Accounts, Profit and Loss, and Budget Analysis. Make the report cumulative from the beginning of the year through to the end of the current quarter. Hit Report Fields and remove the percent difference key. Go to Finishing, leave Rounding blank. Hit Include Account Numbers and hit Include Zero Balances. Drop this into one of the standard management accounts spreadsheets that we can devise for your accounts structure and send to you. This will update the figures for the past quarter. Open the template Excel spreadsheet to compile your management accounts. I suggest that you then do a review with your directors against the budget. If necessary, either reset the budget or reconsider the entries that have been made, or take whatever decisions arise from the figures 21. Before Year End I suggest that accruals are generally limited to pound500 per month or more. You can enter these using Record Journal Entry. Post the bill, when it arrives, to the accrued account in the liabilities. If you avoid doing accruals then the profit and loss report turns into an account which is more like a cashflow report. Year End File When you come to the year end, our standard practice is to create a year-end file. This is a paper record for the future. You put all the calculations that you have made relating to the year end in one single place. You print off the Balance Sheet and the Profit Loss from Accountedge to then show them to the external accountant. You can collect copies of the various things we use in the year end file for the forthcoming year end. Put them in a year end folder that we create for you Put copies of the following: Bank Statements at year end date Business Credit card statements Petty cash balance Receivables Reconciliation Detail Payables Reconciliation Detail Photocopies of bills accrued or prepaid Dividend minutes VAT return dated the same day as the end of the year Confirmed stock listing for the end of the year Copy of each HP agreement Lease agreements and any of the other notes PAYE year end statement (Employer Account Reconcilliation) Copy bills of assets bought Put an up-to-date copy of the employers liability certificate in the audit file. We also need evidence of who you are for anti - laundering checks. The resulting file is particularly useful if you change your accountant, sell your business, suffer a tax investigation or die. If you are on VAT Annual Accounting get the return printed. Put a copy of the reconciliation of the main bank account as at the year end. Provisions for Year-end You need to consider if provisions must be made for capital expenditure between now and the end of the year. 22. After Year End How we operate Simple Accounting Limited operates in a different way to other external accountants. Most external accountants create their own set of books on specialist final accounts and tax calculation software. These effectively duplicate the cashbook and the purchase and sales ledger daybooks that are kept locally by a client on Accountedge. That is not the way we operate. Instead, everything is squared, even the books themselves. Accountedge has to be right, and verifiable. The balance sheet and the profit and loss account that comes out of Accountedge have to be justifiable, line by line. All these exact balances are used in the final accounts. There are no separate year-end figures as every year-end adjustment is squared back in the Accountedge system. At the year-end, therefore, we want a balance sheet that has been worked jointly by you and us. We need each of the lines to be verified externally. The denominated currency of the share. Currency Peg A countrys or governments exchange-rate policy of pegging the central banks rate of exchange to another countrys currency. Currency has sometimes also been pegged to the price of gold. Currency pegs allow importers and exporters to know exactly what kind of exchange rate they can expect for their transactions, simplifying trade. Current Liabilities Company declared liabilities which are due to be settled within the current financial year. Current Ratio This is used to calculate the ability of a company to meet its short term debt obligations. It is calculated by dividing its current assets by its current liabilities. The higher the current ratio, the more likely a company will be able to meet its obligations. D Back to top Repayment of bonds or other debt securities on or before their maturity date. RedenominationRenominalisation The process whereby a countrys currency is recalibrated due to significant inflation and currency devaluation. Certain currencies have been redenominated a number of times over the last century for various reasons. A recent example of redenomination was when the euro was introduced and the denomination of many European securities had to be changed to the euro. Registered Security The name given to securities whereby ownership is registered with the issuing company or their agent. Transfer of ownership can only take place with the owners consent. Regulatory News Service (RNS) The London Stock Exchanges service which ensures that price sensitive information from listed companies, and certain other bodies, is distributed to all RNS subscribers at the same time. Relative Strength Index The Relative Strength Index (RSI) measures a share price relative to itself and its recent history. It is calculated as the average of the prices for days where the price rose divided by the average of the prices for days where the price fell. The RSI ranges between 0 and 100. Relevant UK Earnings For most people, this is their salary before tax or, if they are self-employed, their taxable profit. It does not include, for example, interest on savings, dividends on shares or pensions. Relevant UK Individual Includes someone who is resident in the UK at some point in the current tax year or has Relevant UK Earnings. Rematerialisation The process of transferring a security held in electronic form to a certificated form. Retention of Income Accumulation units in a fund do not pay physical dividends. Instead, on the ex-dividend date, the unit price is adjusted upward to reflect the dividend distribution. These adjustments will increase your tax cost for the holding and will appear on your Stock Movements page and your Securities Report as Retention of Income. Retirement Annuity Contract (RAC) Prior to 30th June 1988, people not in pensionable employment (employment where no pension scheme exists) or people who were self employed were able to qualify for tax relief for contributions made to a pension scheme known as a retirement annuity under sections 226 of the Income and Corporation Taxes Act 1970. Although RACs were replaced by personal pension plans from 1st July 1988 those already in force may continue to operate. Return of Capital A return from an investment that is not considered income. The return of capital is when some or all of the money an investor has in an investment is paid back to him or her, thus decreasing the value of the investment. Return on Capital A ratio used in the assessment of the performance of a company and quantifies how well a company generates cash flow relative to the capital it has invested in its business. Return on Capital Employed (ROCE) A measure of the returns that a company is realising from its capital. Calculated as profit before interest and tax divided by the difference between total assets and current liabilities. The resulting ratio represents the efficiency with which capital is being utilised to generate revenue. Rights Issue An offer made by a quoted company to its shareholders to enable them to buy new shares in the company at a discount to the market price. Existing shareholders are usually offered shares in proportion to their existing holding. For example in a one for five rights issue, a shareholder would be invited to buy one new share for every five shares already owned. The new shares are offered at a discount to the current market price. Risk and Reward A ratio used to compare the expected returns of an investment with the amount of risk undertaken to capture these returns. This ratio is calculated mathematically by dividing the amount of profit the investor expects to have made when the position is closed (i. e. the reward) by the amount they could lose if the price moves in an unexpected direction (i. e. the risk). S Back to top The sale date refers to the date on which the holdings were liquidated, or alternatively the target date on which it is planned that the holdings be liquidated. Scrip Dividend The issue of additional shares by a company to shareholders in lieu of a dividend. The shares have an equivalent cash value to the dividend. No dealing charges or stamp duty is payable on the issue of the new shares. Scrip Issue An issue of shares made by a company free of charge to existing shareholders. Also called a fx issue. The Stock Exchange Automated Quotation system (or SEAQ) is a system for trading mid-cap London Stock Exchange (LSE) stocks. Stocks need to have at least two market-makers to be eligible for trading via SEAQ. Only stocks that are not listed on the FTSE100 can be traded on SEAQ. SEATS Plus SEATS Plus is a trading system that handles the trading of all AIM and listed UK equities whose turnover is insufficient for the market making system or the Stock Exchange Electronic Trading Service (SETS). The sector in which the stock is listed on the London Stock Exchange, for example mining, software and computer services. A financial instrument which represents an ownership position in a publicly traded corporation (stock), a creditor relationship with a governmental body or corporation (bond) or rights to ownership as represented by an option. Self employed People who run their own business and take responsibility for its success or failure. They can decide how, when and where they do their work, but can hire other people to do some or all of the work at their own expense. Self Invested Personal Pension (SIPP) The name given to the type of UK-government-approved personal pension scheme, which allows individuals to make their own investment decisions from the full range of investments approved by HM Revenue Customs (HMRC). SIPPs, in common with personal pension schemes, are tax wrappers, allowing tax rebates on contributions in exchange for limits on accessibility. The HMRC rules allow for a greater range of investments to be held than Personal Pension Plans, notably equities and property. Rules for contributions, benefit withdrawal etc. are the same as for other personal pension schemes. The automated trading system introduced in 1997 for the largest companies quoted on the main list of the London Stock Exchange. Trades through SETS match buyers and sellers automatically, cutting out the need for a market maker, theoretically meaning a narrower bid-offer spread. Settlement Payment of cash for securities bought and delivery of securities against payment. Settlement Date The date by which the buyer of a security must pay the seller. The settlement date depends upon the type of security traded. For example, stocks usually have a settlement date three days after the trade date but government bonds must be settled on the next trading day. Share Certificate A certificate which confirms ownership of a shareholding. If shares are held in certificated form, the certificate must be delivered to the market upon sale. Share Incentive Scheme Introduced to the UK in 2000, they offer employees the opportunity to participate in the success of the company for which they work. Contributions are taken directly from salary before tax and national insurance are deducted with the scheme running for a period of 3 years. After 3 years, the saver has several options available. Firstly, they can buy shares in their company at a pre-determined price and then sell them immediately. Secondly, keep the shares purchased or thirdly have the savings returned in full. Share Option A right to buy or sell shares at an agreed price at a time in the future. Shareholders Funds The capital employed in a company, calculated by deducting the book value of the liabilities from the book value of the assets. Also called net assets, net worth and shareholders equity. A unit of ownership in a corporation or financial asset. While owning shares in a business does not mean that the shareholder has direct control over the businesss day-to-day operations, being a shareholder does entitles them to an equal distribution in any profits, if any are declared in the form of dividends. A share can be quoted or unquoted and ordinary or preference shares. Shell Company Non-trading firm formed (and often listed on a stock exchange) as a vehicle to (1) raise funds before starting operations, (2) attempt a takeover, (3) prepare for a public offering of shares, or (4) provide a front for an illegal business. The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short. Small Cap Stock A small-cap stock has a low market capitalisation when compared to those listed on the FTSE100. Investors may perceive a small-cap stock as having greater growth potential than a large-cap stock. A small-cap stock may be more likely than a large company to adopt or create innovative new technologies or services. A small-cap stock often has a lower level of institutional interest, as many funds have limits on the percentage of a company they may own. This in turn increases the trading volatility of a small-cap stock, potentially allowing for more extreme (more profitable) entries and exits. Small Self Administered Scheme (SSAS) A SSAS is a company pension scheme where the members are usually all company directors or key staff. A SSAS is set up by a trust deed which allows membersemployers greater flexibility and control over the schemes assets. The difference between which the price of a stock is bought and sold. Some collective investments, such as Unit Trusts, also operate bidoffer spreads. Stakeholder Pension Plan Stakeholder pensions aim to provide a low-cost, transparent and flexible way for people on low incomes to make additional provisions for their retirement. Money invested in stakeholder pensions is invested in the stock market. On retirement a quarter of the accumulated capital can be taken as a tax-free cash sum, with the balance to be used to purchase an annuity. Stamp Duty Stamp duty is payable on purchases of shares using a stock transfer form, on some transfers of interest in partnerships and on land or property tansactions entered into before 1 Dec 2003. Stamp Duty Reserve Tax (SDRT) SDRT is a tax on shares and securities when you buy through the stock market or a stock broker. Standard Poors An international agency which provides credit ratings and research. State Earnings Related Pension Scheme (SERPS) Introduced in 1978, SERPS was a top up to the basic state pension with the amount received dependent upon the National Insurance Contributions paid. In 2002 it became the State Second Pension. Stepped Preference Shares Preference shares with dividends that increase annually by a specified amount and with a predetermined capital return. Stock Description The name and classification of the security held. The company name is detailed first followed by the abbreviated version of the type of share held (e. g. ORD means Ordinary Share) and then the currency that the share is held in (e. g GBP sterling) Stock Exchange Daily Official List (SEDOL) A unique identifier assigned to all securities trading on the London Stock Exchange and other smaller exchanges in the UK. The SEDOL is seven characters in length and comprises a combination of letters and numbers. Live streaming of share prices is available when logged in and when the portfolio is ordered by holding alphabetically, rather than by a numeric value (which would cause the order of rows to change constantly). The prices you see are those that the traders see on their trading screens. An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues shares for the first time, it selects an arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues shares for the first time, it selects an available ticker symbol for its securities which is then used to place orders - each symbol is unique. For example, the shares for Microsoft are listed as MSFT. T Back to top A corporate action where one company makes a bid for another. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares. HMRC apply a number of rules when determining the cost for UK tax purposes. The Tax Cost represents the cost of the holding once such rules have been applied. A FTSE index launched in 1999 by the London Stock Exchange to reflect the growth at that time in internet and technology stocks. To be included, a company must be committed to technological innovation and listed on the exchange. It includes biotechnology companies as well as internet stocks and software companies. The TechMARK 100 is a subset of the TechMARK all-share and both have an upper market cap limit so as to exclude the largest companies. Tender offer An offer to purchase some or all of shareholders shares in a corporation. The price offered is usually at a premium to the market price. Terminal Illness An advanced or rapidly progressing incurable illness. In the opinion of an attending consultant andor Chief Medical Officer the life expectancy of the sufferer would be no more than 12 months. Tax Exempt Special Savings Account a former tax-free savings scheme(available 1991-99). Total Expense Ratio The Total Expense Ratio (TER) accounts for all the costs in running an investment fund. As well as the Annual Management Charge, the TER would include trading fees, legal fees, auditor fees and other operational expenses. The TER is expressed as a percentage and is calculated by dividing the monetary cost of running the fund by the funds total assets. Tracker Fund An index fund that tracks a broad market index or a segment of it. Such a fund invests in all, or a representative number, of the securities within the index. Also know as an index fund. Trade Cut-off The time by which you must place your trade on the website in order for it to execute within the next available valuation point. Trade Price The last known trading price. Trade Time The time at which the last deal for the security was completed. Trade Type The coding applied to the trade confirming the transaction that has been completed. A - An automatic trade generated by the system through automatic execution. U - Uncrossing Trade - this is used for the single uncrossing trade, detailing the total executed volume and uncrossing price as a result of a SETS auction. N - Negotiated Trade - LSE uses an Automated Trading Service (ATS) to execute our real-time online deals. Restrictions imposed by the ATS may mean that certain stocks or order sizes cannot be traded automatically. If this is the case then you will be given the option to place a Negotiated Trade order. The order will be forwarded electronically and securely to our dealing team. They will manually execute your order as soon as possible and at the best price available in the market at the time of dealing. O - Ordinary Trade - the transaction that was not covered by any of the other trade types listed. T - Over the Counter Trade - a security which is not traded on an exchange, usually due to an inability to meet listing requirements. S - Systematic Internalises - are obliged to publish prices for trading with their customers and are allowed to improve prices when dealing in retail size or with retail clients. CT - The trade reported for a transaction previously executed automatically through the order book. LC - Late Correction - the error trade reported that has been last corrected. OC - OTC Trade correction. SC - SI trade Correction. Trade Volume The quantity of the security traded at the last known price. Transfer Value The monetary amount available which can be moved to another financial product. For example, the proceeds of a Cash ISA can be transferred to a Stocks and Shares ISA. Refers to the direction of security prices. An uptrend is a succession of higher highs and higher lows. A downtrend is a succession of lower highs and lowers lows. Trends are classified as Major (one year or longer), Intermediate (one to six months) and Minor (one month or less). U Back to top Underlying Asset In a derivative or warrant, the security, property, or other asset that gives value to the derivative or warrant. For example, in an option giving the right to buy stock in a share, the underlying asset is the share. An underlying asset may mean many things, such as a physical commodity, a security, a piece of land, or part of a business. Unit Price Latest price of fund holdings. Unit Trust Unit trusts are collective funds that allow private investors to pool their money in a single fund, thus spreading their risk across a range of investments, getting the benefit of professional fund management, and reducing their dealing costs. Unit trusts are open-ended in contrast to investment trusts, which are closed funds. Different trusts have different investment objectives: for example investing for income or growth, in small companies or large, and in different geographical regions. Unquoted Shares Unquoted shares are shares which are not traded on stock exchanges or other regulated financial markets. The current value of the total number of shares listed for the security. Value Investing The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the companys long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated. View as Pop-Out A comprehensive view of the investments in your account. Volatility The extent to which the price of a security or commodity, or the level of a market, interest rate or currency, changes over time. High volatility implies rapid and large upward and downward movements over a relatively short period of time low volatility implies much smaller and less frequent changes in value. The amount of trading sustained in a security or in the entire market during a given period. Especially heavy volume may indicate that important news has just been announced or is expected. W Back to top The W-8BEN form is provided by the United States Internal Revenue Service (IRS), and its purpose is to allow non-US persons to receive a reduced rate of taxation on any US-sourced income. For the purposes of share-dealing, US-sourced income refers to income (dividends, interest etc) received from businesses registered or incorporated within the US. If you require a W-8BEN form or a replacement W-8BEN form, please contact us and we will issue you one, alternatively you can download the form here. For an example of how to complete the W-8BEN please see here. A certificate, usually issued along with a bond or preferred stock, entitling the holder to buy a specific amount of securities at a specific price at some point in the future. The set price is usually higher than the price of the security at the time the warrant is issued. In the case that the price of the security rises to above that of the warrants exercise price, then the investor can buy the security at the warrants exercise price and resell it for a profit. Otherwise, the warrant will simply expire or remain unused. Warrants are listed on options exchanges and trade independently of the security with which they are issued. The percentage of the investment applied to your basket of funds. X Back to top Charles Stanley Direct is a trading name of Charles Stanley amp Co. Limited. Registered in England No 1903304. Registered Office: 55 Bishopsgate, London EC2N 3AS. Authorised and regulated by the Financial Conduct Authority (No. 124412). Member of the London Stock Exchange. Prices, News and Fundamentals provided by Thomson Reuters. Investors should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, and the income derived from them, may fall as well as rise and the amount realised may be less than the original sum invested. Capital at risk. Income derived may fall or rise and you may get back less than invested. Guide to UK taxation for foreign investors 1 Introduction Use of the report Hooper amp Co (including its partners, employees, agents subcontractors and employees) accepts no responsibility and shall have no liability in contract, tort or otherwise to any party in relation to the contents of this report. Any use of this report is entirely at their own risk. 2 Taxable presence A foreign business operating in the UK does not automatically create a taxable presence in the UK. In order to fall within the charge to UK corporation tax an overseas entity will need to be trading in the UK through a permanent establishment. There is a distinction between trading 8216 with 8216 the UK and trading 8216 in 8216 the UK. A company which is trading 8216 with 8216 customers in the UK is only likely to create a taxable presence in the UK if it also fulfils the relevant functions detailed below. A company merely purchasing from or selling to UK customers is unlikely to create a taxable presence through these activities but would need to characterised as trading 8216 in 8216 the UK to become taxable here through the creation of a permanent establishment. A non-resident has a permanent establishment in the UK if: it has a fixed place of business here through which the business of the company is wholly or partly carried on, or an agent acting on behalf of the company has and habitually exercises here authority to do business on behalf of the company (as long as that agent is not of independent status acting in the ordinary course of his business). It is therefore important to review contractual capacity in cases where sale are made by UK based agents Fixed place of business through which the business is carried on If there is no business being undertaken though a fixed place in the UK then no permanent establishment can exist. It is therefore important to determine where the business is carried on. Case law establishes that simply seeking orders within the UK (directly or indirectly) is not by itself evidence of trading in the UK. In Grainger v Gough it was held that trading with a country through seeking orders there is not the same as trading in that country: In the first place, I think there is a broad distinction between trading with a country, and carrying on a trade within a country. Many merchants and manufacturers export their goods to all parts of the world, yet I do not suppose anyone would dream of Saying that they exercise or carry on their trade in every country in which their goods find customers If all that a merchant does in any particular country is to solicit orders, I do not think he can reasonably be said to exercise or carry on his trade in that country However, even if contracts are not concluded in the UK, the trade may be carried on in the UK. Whilst the place where contracts are concluded is important, it is not decisive. In the Court of Appeal in F L Smidth amp Co v F Greenwood it was held (without subsequent objection from the House of Lords) that There are indications in the case cited and other cases that it is sufficient to consider only where it is that the sale contracts are made which result in a profit. It is obviously a very important element in the enquiry, and, if it is the only element, the assessments are clearly bad. The contracts in this case were made abroad. But I am not prepared to hold that this test is decisive. I can imagine cases where the contract of re-sale is made abroad, and yet the manufacture of the goods, some negotiation of the terms, and complete execution of the contract take place here under such circumstances that the trade was in truth exercised here. In conclusion, the business will be carried on through the fixed place in the UK if it is the location where 8220the operations take place from which the profits in substance arise8221 (L Smidth amp Co v F Greenwood). There is unlikely to be a business carried on 8220in8221 the UK if the activities are restricted to taking orders from UK customers delivering goods to UK customers purchasing goods from UK suppliers This is also reflected through the definition of 8220preparatory and auxiliary8221 activities (see below). However, there is no requirement that contracts actually be concluded in the UK in order to the business to be carried on 8220in8221 the UK. The domestic law definition goes on to give some non-exhaustive examples of places of business that are deemed to be fixed places of business such as: a place of management, a branch, an office, a factory, a workshop, an installation or structure for the exploration of natural resources, a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, a building site or construction or installation project. The place of business does not have to be rented or owned by the non-resident company itself, but simply has to be available for use by its employees The personnel carrying on the business through the fixed place can be (a) employees of the non-resident company or (b) contractors who are engaged by the non-resident company Either would have the required capacity to carry on the business of the non-resident In order that a non-resident company has a 8220fixed8221 place of business, it must undertake activities through the same place for a period of time. A non-resident company will not generally have a permanent establishment if it merely undertakes a single transaction from a particular location. Automatic equipment Automatic equipment may be located in another company8217s premises, and operated and maintained by their employees. If the non-resident company continues to receive all of the income from the equipment, a permanent establishment may nonetheless exist because the equipment is still operated and maintained 8220for its own account8221 Dependant agent A permanent establishment may also exist in the UK if there is a 8220dependent agent8221 in the UK. This is defined as 8220an agent acting on behalf of the company has and habitually exercises there authority to do business on behalf of the company8221. The authority of the agent to conclude contracts may be written, verbal or implied (ie it is implicit by virtue of the enterprise taking no active involvement in the negotiation or conclusion of contracts). However, this specifically refers to agents who conclude contracts with customers. Contracts concluded for the purposes of establishing the business in the UK (for instance the rental agreement to obtain premises) will not fall within this definition. It is necessary that the agent 8220habitually8221 concludes contracts on behalf of the non-resident company. If occasional contracts are concluded, then this may not give rise to a permanent establishment, as it would not have the necessary degree of permanence. An agent will be treated as concluding contracts even if he does not actually sign the contract. The negotiation and agreement of key contractual terms will constitute 8220conclusion8221. Some of the UK8217s older DTAs contain a different definition of dependent agent, which requires that the agent 8220negotiates and concludes8221 the contract 8211 conclusion of a contract in this case would not include the negotiation as it is separately identified. This should be contrasted with the situation where some terms of a contract are negotiated in the UK, but the majority of the contractual terms are negotiated outside the UK. Employees of a non-resident company can attend occasional meetings in the UK to discuss contractual terms without necessarily creating a permanent establishment in the UK. Independent agent An independent agent, such as a broker or general commission agent cannot constitute a permanent establishment of a non-resident enterprise provided he is independent of that enterprise, both legally and economically, and acts for the non-resident enterprise in the normal course of business. Preparatory or auxiliary There is an exception to the permanent establishment rule if the activities performed in the UK are preparatory or auxiliary in character, commonly referred to as a 8220representative office8221. Examples of activities which may be preparatory and auxiliary include: (a) preparing company management profiles (b) maintaining industry information databases (c) assisting with financial analysis (d) monitoring industriescompanies (e) researching market data (f) providing information and analysis (g) maintaining client contact database (addresses, profiles etc) It is important to consider whether the activities undertaken in the UK are preparatory and auxiliary in the context of the company as a whole. Where, for example, the company8217s business is to provide market research data to its customers then undertaking market research in the UK would not be preparatory and auxiliary 3 Branch or subsidiary Having concluded that a taxable presence has been created in the UK there are a number of trading vehicles in which to choose to operate from including a branch, privatepublic limited and unlimited companies and the relatively new European public limited company, the Societas Europaea. Which vehicle is most appropriate for you will depend on a number of factors including the tax regime in the country of residence of the parent company, and the availability of tax treaties between the UK, and the countries of residence of other group companies with which the UK will be transacting. The following table compares the key aspects of the two most common UK trading mediums, a branch and the private limited company. It should be noted that a UK limited company can also be treated as a branch for US tax purposes through the 8216check the box8217 election. The follow table illustrates the key tax and legal differences between branches and subsidiaries. UK Branch of an Overseas Company There are special rules for periods shorter than a year. A company is required to estimate its tax liability for the current accounting period and make instalment payments based on that estimate. If the estimate changes, the company will need to recalculate its instalment payments based on the revised figures to ensure interest and penalties do not arise for underpayment of tax. For a 12-month accounting period each payment should be one quarter of the anticipated corporation tax liability for the year. Companies need to calculate payments quickly, as interest and possibly penalties are charged on late paid tax. Any underpayments should be corrected at the earliest opportunity and this can be achieved at any time by making a 8220top-up8221 payment. If it is discovered that too much tax has been paid by instalments, a claim for repayment can be made. Groups of companies can surrender overpayments between group members (ie offsetting amounts overpaid by one company against amounts underpaid by another company in the same group). There are also Group Payments Arrangements that allow groups to make instalment payments on a group-wide basis, rather than company by company. Such arrangements can be utilised to minimise exposure to interest charges on late paid tax and record keeping requirements. The rates are summaries as follows: Full rate of corporation tax(before 31 March 2008) Companies should keep adequate records regarding their calculations of the instalments due (including estimated profits) in case of enquiries being instigated. Interest is charged on late payments at a rate higher than that received on credit interest on overpayments. Interest paid is deductible for tax purposes in the year of payment and interest earnt is chargeable to corporation tax in the year of receipt. Where a company 8220deliberately or recklessly8221 fails to pay an instalment payment as required, a penalty can be levied of up to twice the amount of interest due on the late payment. UK corporate tax rates The UK corporate tax system is based on a single rate applied to all chargeable profits. The rate is determined by the level of total profits. The full rate of corporation tax is applied to all profits where the chargeable amount exceeds the upper limit. The small companies rate is applied to all profits where the chargeable amount is below the lower limit. Profits falling within the upper and lower limits are subject to the full rate of corporation tax less a calculated deduction, the effect of which is to taper the effective tax rate from the lower rate to the full rate as profits approach the upper limit. The limits are pro-rated for tax return periods of less than 12 months and apportioned between associated companies, reducing any advantage of the small company rate for large groups. An Example Company A has chargeable profits of 130,000 for the 6 month period to 31 March 2009. Company A has 5 associated companies. The upper rate of 1,500,000 is reduced by 612 for the short accounting period 750,000. The reduced upper limit is apportioned between the 6 companies (5 self) 125,000. As the profits chargeable are greater than the restricted upper limit tax is chargeable at the full rate of 30 39,000. If the company was not required to pay by instalment the tax would be due in full on 1 October 2007. If the company was required to pay by instalment the tax would be due: 14th January 2007 19,500 14th April 2007 19,500. You will note that there are only two instalments. This is because, even though instalments are due 3, 9, 12 and 15 after the start of the period, all tax must be paid within 3 months from the end of the period. The total liability is divided between the number of instalments between these two dates, in this case two being 6 and 9 months after the start of the period. Calculation of profits chargeable to corporation tax Profits per the financial statements, provided they are prepared in accordance with UK GAAP or IAS form the basis of UK tax computations. These profits are adjusted for expenses and allowances either not allowed as a deduction for tax purposes or not reported in the financial statements. Non deductible expenses include specific items such as entertainment of customers and general expenses not directly applied for the generation of trading profits including the costs of incorporation of a company and associated legal fees. Capital allowances Depreciation is not an allowable deduction for tax purposes. Instead an annual writing down allowance is given for the purchase of qualifying items, such as plant and machinery, at a rate determined by the HMRC each year. The annual rate of allowances range from 6 to 100 subject to the type of asset acquired and the date of purchase. Research and Development allowances Expenditure on RampD that meets strict criteria is entitled o additional allowances, this time dependant on the size of the company incurring the expenditure. Claims are made by reference to a companys accounting period and must be for qualifying expenditure in excess of 10,000. There is no upper limit on the amount of the claim. Small companies may deduct an additional 50 of RampD expenditure from chargeable profits or elect for a cash credit from HMRC where they have losses in the accounting period. The cash credit is equal to 24 for every 100 of expenditure. Large companies may deduct an additional 25 of RampD expenditure from chargeable profits but can not elect for a cash credit. 6 Transfer pricing Transfer pricing refers to the pricing of goods, services, funds and tangible and intangible assets transferred within an organisation, between internal divisions or to cross border associates. Since the prices are set within the organisation, they are deemed to be controlled i. e. the typical market mechanisms that establish prices for similar transactions between third parties may not apply. The transfer prices selected will affect the allocation of the organisations total profit among the different parts of the group. This has provided scope in the past for multi-national entities to manipulate internal pricing mechanisms setting transfer prices on cross-border transactions in a way to reduce their taxable profits in high tax jurisdictions and to increase their taxable profits in lower tax jurisdictions. These practices created major concerns for tax authorities, leading to a rise in transfer pricing regulations and enforcement, and making transfer pricing a major tax compliance issue for multi-national companies. There is general common consent between tax and other fiscal authorities that to achieve a fair apportionment of taxable profits across international borders, transactions between connected parties should be treated for tax purposes by applying the amount of profit that would have arisen, if the same transaction had been carried out by unconnected parties. This pricing strategy, which is expected to be observed between independent trading partners, is referred to as the arm8217s length principle. Transfer pricing rules and guidelines, in the UK and elsewhere, therefore require that this principle is recognised when calculating taxable profits. Exemption for small and medium sized enterprises Small enterprises are those with fewer than 50 employees and either turnover or gross assets not exceeding 10m. Medium-sized enterprises are ones that are not small but have fewer than 250 employees and either turnover not exceeding 50m or gross assets of less than 43m. It is important to note that for these purposes the employees, turnover and assets of all the connected parties, UK and otherwise, will be taken into account. The definition of connected parties is widely defined for the purposes of applying the small and medium sized thresholds. The transfer pricing rules will not generally apply to small enterprises, although they will apply where the transaction takes place with an entity in a jurisdiction that does not have a suitable tax treaty with the UK. The rules also give HM Revenue amp Customs (HMRC) the power to enquire and make transfer pricing adjustments on medium-sized enterprises in 8220exceptional circumstances8221. Please note that the small and medium-sized exemption applies only within the UK rules, and an overseas counterparty to a transaction may well not benefit from a similar exemption in their own country. Exemption for dormant companies This is not a blanket exemption, rather it applies to transactions where the dormant company is 8220potentially advantaged8221. So for instance a loan balance where the debtor is an active company and the creditor a dormant company would not be exempt because the active company is the party that is potentially advantaged. Also the exemption only applies to dormant companies that were dormant throughout the pre-qualifying period, being (in general) the period ending 31 March 2004. Companies that become dormant after this date would not fall within the exemption. Documentation The obligation to maintain appropriate documentation arises from the requirement under self assessment to keep and preserve 8220all such records as may be requisite for the purposes of enabling8221 the taxpayer 8220to make and deliver a correct and complete return8221. HMRC has made it clear that the documentation they will expect taxpayers to maintain to support their transfer pricing policies will be that which any 8220prudent businessman8221 would keep for transactions of a similar level of importance and complexity. Guidance on how HMRC interpret the record-keeping requirements of the self assessment provisions for the purposes of the transfer pricing legislation is available. In the event of a transfer pricing adjustment, HMRC identifies the following classes of records as being relevant in considering whether a penalty should be applied: primary accounting records tax adjustment records records of transactions with associated businesses. A key feature of the rules is that evidence to demonstrate an arm8217s length result need only be produced upon HMRC request. Thus it is likely that taxpayers will not need to find suitable third party comparables when filing their tax return provided that they have good grounds for considering that the tax returns are being prepared on an arm8217s length basis. Once again, the rules differ in other jurisdictions, and it is worth commenting that many jurisdictions do have a requirement to prepare third party comparables when filing their tax returns or even at an earlier point in time, for instance contemporaneous with the intra-group transactions. A tax return will be incorrect unless transactions reflected within it reflect arm8217s length prices. It is necessary to determine the correct arm8217s length price for each inter-company transaction prior to the filing date, for each separate tax return. As noted above, evidence to demonstrate an arm8217s length result need only be produced upon HMRC request (although best practice is that it should be available at the time the return is submitted as it gives the taxpayer the evidence needed to know that its tax return is prepared on the arm8217s length basis). Such requests are however, frequently accompanied by deadlines such as within thirty days of the enquiry letter. In practice, therefore, it is advisable to maintain documentation that is contemporaneous with the transaction concerned. HMRC enquiry into a company8217s transfer pricing HMRC have given some pointers towards the factors that will be considered when deciding whether to make an enquiry into a company8217s transfer pricing arrangements. These include: where the amount of tax at stake is large where there is a significant difference in the marginal tax rates borne by the related parties that are transacting, e. g. where one of the companies is loss making or where one of the transacting parties is located in a low tax jurisdiction. In general, the more that a taxpayer8217s revenue or costs derive from related party transactions, the more likely it is to be selected for an enquiry The general self assessment rules relating to the imposition of penalties for incorrect returns applies to errors in a return that relate to transfer pricing. Where a return is incorrect due to 8220fraud or neglect8221, this can mean a penalty of up to 100 of any further tax payment (which may be nil if the taxpayers can relieve the additional tax with brought forward or group issues). HMRC issued guidance on the circumstances in which they will apply the penalty provisions in December 1998. The guidance specifies that penalties will not be imposed where the taxpayer has made an 8220honest and reasonable8221 attempt to comply with the arm8217s length standard. The examples that HMRC use in the guidance indicates that this would involve finding third party comparables and 8220seeking professional help where they know they need it8221. In addition to the tax-geared penalty, HMRC may impose a fixed penalty of 3,000 a year for each taxpayer, for failure to maintain adequate transfer pricing documentation. Although the exemption for small and medium sized enterprises avoids the imposition of a tax-geared penalty, the fixed penalty for inadequate documentation may still apply. As the UK structure of limitations is six years, taxpayers may suffer penalties and interest on a multiple year basis. Advance Pricing Agreement (APA) This arrangement will enable UK companies to agree in advance with HMRC (and potentially other tax authorities as well) that their transfer prices are acceptable for a pre-determined period of time. HMRC guidance, however, makes it clear that APAs are designed to assist taxpayers with 8220complex8221 issues generally only where there is significant doubt as to the manner in which the arm8217s length principle should be applied or where there is difficulty in establishing a market comparable. APAs are therefore unlikely to be of everyday practical use to the average inbound or outbound investor. Similar options for the taxpayer include an Advance Thin Capitalisation Agreement and a 8220Code of Practise 108221 post transaction ruling, typically needed for simple costs plus service arrangements and interest deduction claims. Pricing Methods Recognised by HMRC HMRC recognises the five transfer pricing methods outlined in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, namely: comparable uncontrolled price cost plus method resale price method transactional net margin method profit split It is also prepared to recognise other methods where these reflect the typical commercial arrangements within an industry. The Pricing of Typical Inter-Company Transactions A Inter-Company Transfers of Product In order to determine which of the five transfer pricing methods recognised by HMRC apply to the pricing of inter-company transactions of products it is necessary to undertake a functional analysis of the parties involved. A functional analysis involves identifying: the functions performed by each party to the transaction the assets owned and brought to bear by each of the parties 8211 these may not necessarily be tangible assets but can include intangible asserts such as brands, customer lists, patented and un-patented technical know how etc the risks borne by each party e. g. credit risk, market risk and stock obsolescence risk to name but a few. On the back of the functional analysis an appropriate transfer pricing policy can be designed by applying one of the five recognised OECD methods. It is important to note that whilst two businesses may nominally appear similar e. g. both businesses may be, say, manufacturers, the pricing method applied to them may be very different if they have different function, risk and assets profiles. For example, a manufacturing company operating on a contract, low risk basis, without any intellectual property (IP), may be remunerated on a cost plus basis whilst a high risk bearing, function rich, IP owning manufacturer may use the profit split approach. A similar range of pricing mechanisms may apply to distribution businesses. For example, a business that does not contract with customers, does not own any warehouse facilities and only provides information to potential customers may be remunerated on a cost plus basis, whereas a distributor with a warehouse, bearing all the associated risks of contracting with customers with responsibility to develop the local market may be remunerated on the basis of a gross margin. The key part of defending the selected policy is to set out the evidence of why the policy meets the arm8217s length standard. Depending on the methods applied this could be in the form of evidence of transactions undertaken by the group with third parties or could be evidence gathered as part of a benchmarking study. Facts and circumstances of each case will determine the exact information needed. B Management Services The typical way to remunerate the provision of inter-company management services is to use the cost plus methodology. In the absence of any comparable transaction with a third party, UK groups usually charge the actual cost of providing the service (including a fair apportionment of the relevant overheads), plus an arm8217s length profit mark-up, to the recipient of the service. Where there is no direct way of calculating how much of a particular service was provided to each related party then the group has to apportion the central costs across the recipients, e. g. central human resources costs are often apportioned on the basis of headcount etc. Certain centrally incurred costs should not be recharged to group companies and these are discussed in more detail below. Shareholder Activities 8211 If a group member performs an activity solely because of its ownership (direct or indirect) in one or more of its group members, then this type of activity does not necessarily justify a charge to the recipient company. Where the recipient would not need or require the service if it were not a member of a group, it would not pay for it at arm8217s length and therefore no fee should be charged Incidental Benefits 8211 In some cases an intra-group service performed by a group member relates only to some group members but incidentally provides benefits to other group members. Examples of this include analysing whether to reorganise the group, to acquire new members, or to terminate a division. These activities may constitute intra-group services to the particular group members involved, but they may also produce economic benefits for other group members not involved in the object of the decision by increasing efficiencies, economies of scale or other synergies. The incidental benefits ordinarily would not cause these other group members to be treated as receiving an intra-group service because the activities producing the benefits would not be ones for which an independent enterprise ordinarily would be willing to pay. Other Activities 8211 Where intra group services are provided and the activities provide a clear benefit to group members, then a fee should be charged for these services. In short, the test is whether an independent enterprise in comparable circumstances would have been willing to pay for the activity if performed for it by an independent enterprise, or whether the recipient would have undertaken the activity itself. Development of intangible assets 8211 where a taxpayer recovers the cost of developing intangible assets through a royalty or uplift in product price to related parties, then it should not make an additional charge to related parties for developing those intangible assets. C Inter-Company Loans There is potential for the UK transfer pricing rules to apply whenever one company has lent money to another group company even if the amounts are not in the form of a formal loan. For example, long term trading balances can be characterised as loans and interest imputed thereon. In pricing inter-company loan facilities and determining how much interest payable will be deductible in the UK, there are three elements to consider 8211 they are of course not separable, but it is helpful to look at each aspect distinctly: The quantum of the borrowing 8211 when assessing the arm8217s length amount of the inter-company borrowing, HMRC would look at the amount of lending that would have been agreed between third parties in the same circumstances. The interest rate 8211 HMRC will look at the rate charged and the deductibility of interest will be considered in the light of the arm8217s length range of interest rates applied between third parties for loans made under comparable circumstances (e. g. purpose of loan, credit rating of borrowing, amounts etc). The guarantee rate 8211 whether a guarantee fee is required to be charged and if so whether the fees paid fall within the arm8217s length range. 7 Value added tax Introduction VAT is a tax on consumer expenditure and is collected on business transactions. In the UK, the standard rate of VAT is 17.5. Depending on the goods, different rates may apply i. e. reduced rate (5), zero rate (0), or the item could be exempt from VAT. The basic principle is that VAT is charged at each and every stage of the supply of goods andor services. This charge of tax is known as output tax. If the client is registered for VAT, all VAT incurred on supplies (VAT incurred is known as input tax) used for business purposes can be recovered from HMRC. Thus the broad effect is that the business should not be affected and that the VAT charges are actually borne by the final consumer. In the UK, if you have a taxable presence for corporation tax you are also likely to be within the charge to VAT. You would be required to register for VAT if the turnover of the UK entity exceeds the VAT registration threshold, currently 64,000. If your turnover exceeds 64,000 (subject to change every year) in either the past 12 months or in the next 30 days, you will be compulsorily required to register for VAT. However, if this is not the case, you may still be able to voluntarily register for UK VAT. The advantage of registering for VAT is that input tax incurred on expenses can be recovered. If you are not currently trading but intend to do so in the future, we could apply for you to register for VAT as an intending trader. The advantage of this would be to recover input tax incurred on initial setting up costs. However, we would need to demonstrate to the UK tax authorities that client intends to trade in the future by way of contracts with potential clients, etc. Consequences of registration Once registered for VAT in the UK, there are a number duties required to be performed as follows: Issue valid VAT invoices Submit quarterlymonthly VAT returns to HMRC Make payments to HMRC on a timely basis if their output tax exceeds input tax Keep key accounting records for a minimum of 6 years such as invoices, documentation relation to importexport, etc Submit EC Sales Lists, Intrastat Declarations, Supplementary Declarations, if applicable. VAT Returns VAT registered companies in the UK are required to file UK VAT returns either quarterly or monthly using a VAT 100 sent by HMRC. VAT returns reflect all the sales and purchases and VAT incurredcharged in the VAT return period. Monthly returns canbe submitted if the business is likely to receive repayments of VAT. VAT returns are normally due on the last day of the month following the end of the VAT return period. If the company is in a payment situation i. e. its output tax exceeds its input tax, the client will also be required to make the payment to HMRC by the last day of the month following the end of the VAT return period. For example, if the VAT return covers the three months ending September, the VAT return and payment to HMRC must be submitted and paid by 31 October at the latest. Failure to submit VAT returns andor make payments to HMRC on time can give rise to penalties being imposed by HMRC. Online submission of VAT returns VAT returns can also be submitted online. If the client submits VAT returns online, they will also be required to make electronic payments to HMRC. The advantage of online filing is that it quick and easy to use and that HMRC also give you a seven day grace period for the submission of the return and payment of tax. Thus, if the client were to file their VAT return online, following from the above example, they will be required to submit their online return and make the payment by 7 November at the latest. Submission on online VAT returns in the UK will become compulsory from 2010. In the UK, for VAT purposes, income is split between taxable and exempt income. Since you are making both i. e. taxable and exempt supplies, you will not be able to reclaim VAT incurred on making the exempt supplies. As a result, you will be deemed to be partly exempt. A partly exempt business will normally have to apply a particular partial exemption method to determine the recoverable proportion of the VAT incurred. Determining and where appropriate agreeing a method, should be done prior to the first VAT return being submitted. Group reorganisation Connected companies can be eligible to be treated as members of a VAT group provided that: they are corporate bodies established in the UK and are under common control (Companies Act 1985 s 736). There are several consequences to being part of a VAT group, namely: Any business carried on by a member of the group is treated as though carried on by the representative member. A VAT group must have a representative member which must account for the group8217s output tax and input tax. However, all members of the group are jointly and severally liable for any tax due from the representative member A VAT group also eases administration since only one VAT return needs to be completed. Any supply of goods or services by a member of the group to another member of the group is disregarded for VAT purposes which makes it administratively easier and also provides cash flow savings. The broad effect of VAT grouping, therefore, is to merge the separate legal identities of companies into one entity for VAT purposes. As a result intra-group supplies are ignored altogether for VAT. This treatment eliminates VAT costs where taxable supplies are made by one client to another client which is either partly exempt or non-registered. Land and Property Capital Goods Scheme If the property8217s value is in excess of 250,000 or if you has carried out refurbishments on the property exceeding 250,000 over the last 10 years, the property could be subject to the Capital Goods Scheme (CGS) adjustment. The CGS is a mechanism for apportioning VAT recovery on certain capital expenditure over a period of 10 intervals (broadly, of periods of one year each), based on use to which the building is put. Under the scheme, businesses are required to make adjustments to VAT recovered in acquiring capital items where the use of the items changes between taxable and exempt use. Option to Tax 8211 if the property has been opted, please insert below. Property is generally exempt from VAT. However, commercial land or property can be elected to opt to tax or 8220waive the exemption8221. An effective option to tax enables VAT recovery on costs incurred, (including purchases) but means VAT must be charged on rental or sale of the property. Before deciding on whether the land or building should be opted, it is important to consider the whether the tenants would be able to recover the VAT that may be charged on rent if the building was opted. If the tenants are registered for VAT, this may not be an issue. However, if the tenants are not registered for VAT, the VAT charged on the rental will be an additional cost to the tenants since they will not be able to recover the VAT incurred. International trade EC VAT Registrations If you buy or sell goods tofrom other EU member states, there may be a requirement for you to register for VAT in those countries. However, there are various conditions and scenarios we will have to consider before we can fully advise you on this matter. EC Sales Lists (ESL) If you make supplies of goods to VAT registered traders in other EC countries transfers its own goods from the UK to other EC country or is the intermediary in a triangular transaction between VAT registered traders in other EC countries, you will be required by HMRC to submit EC Sales Lists (ESLs). ESLs are statements containing details of individual transactions. Supplementary Declarations (SDs) If the client8217s annual value of intra EC trade exceed a certain threshold, you will be required to prepare and submit Supplementary Declarations (SDs). It is important to note that the threshold applies separately to: Dispatches of goods to other EC countries and Arrivals of goods from other EC countries. The current threshold, beyond which SDs need to be made is 225,000 for both dispatches and acquisitions. Reverse charge If you supply goods to other EC VAT registered traders, there may be scope to reverse charge the supplies and avoid the need for you to register in those EC countries. However, we would need to consider individual transactions to advise fully on this matter. Customs Duty Another matter to consider is Customs Duty and ensuring all necessary records are kept. In the UK, the client will be required to pay duty upon importation of goods. In order to avoid paying duty every time a shipment comes in, we have an arrangement known as Duty Deferment. The client will need to apply for such an arrangement. Once approved, duty can be paid monthly to Customs and Excise, normally on the 15th of the month following. Distance selling If you supply and deliver goods to a non-taxable person in another EC Member State this is referred to as distance selling. Depending on the level of turnover, you may or may not be required to register for distance sales in various EC member states. It is important to note that distance selling can only occur between Member States, so that mail order sales to the UK from outside the VAT territory, for instance from the Channel Islands, are not distance sales. Since the client8217s distance selling turnover in insert member state exceeds insert registration threshold, they are required to register for distance sales. 8 Employment taxes Individuals that are working in the UK for a period that exceeds 30 days are strictly subject to UK withholding on all their earnings. However, HMRC has issued guidelines as to when they expect PAYE to be operated. It should be noted that without prior agreement from the UK Tax Authorities it is necessary to operate PAYE on 100 of earnings. It is generally the case that the UK withholding requirements are applicable regardless of whether the individual is actually paid by a UK or non-UK resident employer. If the non-UK resident employer has a presence in the UK, such as a branch, this withholding responsibility falls on the employer. If the employer does not have a presence the withholding responsibility falls on the UK company obtaining the benefit of the individuals services. There are also strict employer filing requirements for the year-end forms, P35, P14, P60 and P11D. If coming for less than 6 months, and the costs are borne by home country and remuneration paid by home country. Regardless of duration of assignment to the UK, if costs or remuneration borne by the UK and the relocated staff are not tax equalised. Regardless of duration of assignment to the UK, if costs or remuneration borne by the UK and the relocated staff are tax equalised. Short Term Business Visitors Agreement It may be possible to relax strict PAYE requirements for relocated employees on short term business visits to the UK. If you have staff who are considered resident in a country with which the UK has a Double Taxation Agreement, it is likely that they will qualify for Treaty Relief under the Dependent Personal ServicesIncome from Employment Article (usually Article 15). Provided that the relocated staff are: coming to work in the UK for a UK company or the UK branch of an overseas company expected to stay in the UK for 183 days or less in any twelve month period it can be shown that for specifically named employees the UK company or branch will not in fact ultimately bear the remuneration specified. It is possible to apply for a Short Term Business Visitors (STBV) Agreement with HMRC and therefore not have a UK PAYE withholding requirement. Therefore, there is no requirement to operate a UK payroll or file self-assessment tax returns with HMRC. An agreement must be applied for and authorised with HMRC before a company can operate under this Agreement, and the company must fulfil certain reporting requirements as specified in the agreement. These arrangements will not apply where the expense of the remuneration is passed on to another UK company or branch and not recharged overseas. It is possible to apply for a dispensation from HMRC in certain circumstances where remuneration is either delivered or borne by the UK company or branch. Regular PAYE Withholding and UK payroll A regular UK payroll is operated on a typically on either a weekly or monthly basis. UK tax withholding (PAYE) and National Insurance Contributions (NICs 8211 if relevant) are withheld against 100 of earnings. Modified PAYE Scheme Introduction An alternative to the strict withholding system in the UK is a plan known as a 8220Modified PAYE Scheme8221. The UK authorities have issued guidelines as to when it can be used, it is designed specifically for employers seconding tax equalised employees in to the UK that stay on their home country payroll. What is tax equalisation Tax equalisation is a process whereby an expatriate assigned from their home country to a foreign country (in this case the UK) and is placed in the same position as he, or she, would have been had they remained in their home country i. e. the employee is neither better off nor worse off as a result of the assignment. How does the scheme work A best estimate of salary, fxes and benefits in kind is made at the beginning of the year in respect of your expatriate staff. Relief can be taken for any days worked outside the UK where the expatriate has the appropriate residence status. In addition, relief can also be taken throughout the year for employee contributions into a correspondingly approved foreign pension scheme. During the year, adjustments need to be made where there are new arrivals and departures. PAYE is calculated on the basis of these estimates and paid over in the usual manner each month, although quarterly payment schemes are available in repeat of smaller (5 or fewer) expatriate populations. Before the end of the tax year, usually between December and March, a review will be carried out to take account of any material changes and in particular, to ensure that any calendar year end fxes are accounted for. After the end of the tax year, any additional tax found due is calculated on the Self Assessment tax return and paid by 31 January following the end of the tax year. The main advantages of the scheme are that: it offers PAYE failure protection and relaxation of the submission date for forms P11D (return of expenses and benefits). instead of providing accurate information to your payroll agent or payroll department on a monthly basis, it will only be necessary to provide estimated information twice a year. Additional information would of course be required to cover new arrivals and departures. the estimate for the year will include all remuneration (e. g. salary and fxes paid in the UK and elsewhere) as well as benefits (e. g. company car benefit, company loan benefit, house rental paid by the company on employerlandlord leases etc.). Accordingly, there should be fewer large underpayments or overpayments on Self Assessment returns. This may help your company account for tax liabilities with more accuracy and certainty and avoid large accruals of income tax. provisional relief is available for resident but not ordinarily resident employees for non UK workdays without a formal claim on each individuals behalf, offering significant cash flow advantages for your business. In addition, relief can be taken for employee pension contributions into a correspondingly approved foreign pension scheme. Other Specialised Payroll Options By concession in agreement with HMRC it is possible to operate PAYE on a reduced portion of earnings. For example, it should be possible to obtain agreement from the UK authorities to only operate PAYE on 75 of the earnings for an individual who will only be subject to UK tax on 75 of their income. From an practical and operational point of view, it may be possible to operate a home country payroll alongside a regular UK payroll, in other words operate a 8216shadow8217 or 8216dummy8217 payroll in the UK. If an individual or hisher employer has overseas connections, the national insurance (NI) position can be quite complicated. Liability to UK national insurance contributions (NICs) generally depends on the individual being present, resident or ordinarily resident in the UK. The normal rule is that work carried out in the UK is liable to UK NICs. The contract of employment may be made under foreign law and the employer may be located abroad, but these factors on their own do not override the basic rule. The nationality of the worker is only relevant under certain EC regulations or reciprocal agreements. If an individual comes to the UK to start a new job, heshe is subject to UK NIC rules immediately. If, however, the job relates to a secondment, the individual may be allowed to contribute to the home country8217s social security system for 52 weeks, or longer if the appropriate agreement allows. These periods can be extended in certain circumstances. There are exceptions where a worker is replacing another secondee or has employments in two or more countries. It should also be noted that the worker8217s home country may not have the same rules as the UK. Whilst a worker may only start to pay UK NICs after 52 weeks, there may be a liability under their home country8217s social security system for a different length of time. Secondary (employer8217s) NICs generally follow the primary (worker8217s) NICs, ie if the worker is liable to pay UK contributions so is the employer, provided the employer is resident, present, or has a place of business (see below) in the UK. The secondary contributor is also responsible for collection and payment of the primary contributions. In the very rare case where there is no liability to secondary contributions, the worker may be required to make direct payment of the primary contributions. For the situations when cross-border issues arise, the rest of the world is divided into three groups: the European Economic Area (EEA) 8211 the EU member states plus Iceland, Norway and Liechtenstein. EC regulations prevail over both UK law and existing reciprocal agreements between EEA States, unless stipulated otherwise. The EC regulations provide that a person should not be liable to the contribution regulations of more than one State at a time. Broadly, workers coming to the UK for 12 months or less may remain subject to the other State8217s social security system if they are not replacing another worker. A form E101 is needed to certify the position. If the UK employment is unexpectedly extended, the form E101 can be extended for a further 12 months, or beyond in very limited cases. non-EEA countries with whom the UK has a reciprocal agreement or double contributions convention For this category of worker, liability for a temporary posting generally stays with the 8220home8221 country if the UK stay is expected to last less than a certain period, often two years but in some cases five years. Note that this test is based on the expectation at the outset, whereas the change of jurisdiction at 52 weeks mentioned earlier is not linked to how long the posting is likely to last. countries not in the first two groups. If such workers come from countries not in categories 1 and 2 above, it is the UK rules which determine their liability. Usually, they will not be liable to UK NICs for the first 52 weeks if: they are not normally employed in the UK and the employer8217s place of business is outside the UK (regardless of whether they also have a UK place of business) and they are not normally resident in the UK 8211 this term is slightly different for NI purposes from the usual direct tax meaning. Otherwise, there is a liability to UK NICs from the first day. There are detailed rules for returning home for holidays, paid or unpaid, sick leave and other temporary presence in the UK or absences abroad. UK Tax Registration and Compliance Individual Arrival and Departure Formalities Upon arrival in the United Kingdom, individuals are required to register with HMRC. This registration involves completing and submitting Form P86, an Arrival in the United Kingdom questionnaire. The responses on this questionnaire are important, as they determine the individuals tax status while in the UK and their liability to UK tax. Upon departure from the United Kingdom, individuals are required to deregister with HMRC. This registration involves completing and submitting Form P85 or P85(s), a Departure from the United Kingdom questionnaire. Individual Compliance The United Kingdom does not use the calendar year for tax purposes. The UK tax year, for income tax purposes, runs from April 6th to the following April 5th. The UK operates a system of self-assessment and personal tax returns for the current tax year must be submitted by January 31, the following year, for example for 200708 the tax return must be filed by January 31, 2009. Any remaining balance due should be paid by 31 January following the year of assessment. The self-assessment tax regime also includes automatic penalty provisions for late payment and filing of tax returns. Assignment Planning Opportunities Provision Of Housing Lease Premium Arrangements Where employers provide housing for employees a taxable benefit accrues to the employee calculated as the higher of: the rent paid by the employer and the deemed rateable value. However when the cost to the employer (at time of occupation by that employee generally) of the accommodation exceeds 75,000 there is an additional deemed taxable benefit to the employee consisting of the excess cost over 75,000 multiplied by the official interest rate. Where the property is owned outright by the employer, the cost can be significantly in excess of the 75,000 threshold and the resultant benefit can be very large. Ordinarily where rent is simply paid on behalf of the employee, by the employer, then the taxable benefit is the rent paid by the employer, assuming the property is being let commercially. This planning opportunity considers the possibility of reducing the employees taxable benefit by the employer purchasing a lease by paying an up front premium. The employer could, instead of paying a market rent for the accommodation, purchase a short-term lease by paying a premium (ideally less than 75,000) at the commencement of the lease and then paying a minimal ground rent under the lease. In these circumstances the employees taxable benefit would be limited to the higher of the minimal ground rent and the deemed rateable value. Provision of accommodation and per diems free of UK tax The UK has a rule for tax free reimbursement of away from home expenses for employees that are away from there normal place of work for a temporary period of time for business purposes. Such expenses can only be claimed if the assignment length is not expected to exceed 24 months. Hence, for assignments that are expected to last no more than 24 months, it may be possible to provide accommodation and per diems free of tax in the UK. Corresponding approval for Foreign Pension Plans While on assignment to the UK, individuals typically remain in their home country benefit programs. To ensure that individual8217s contributions made to their foreign pension plan are tax deductible and any employer contributions are not considered taxable income it is necessary to seek approval for the plan from the from HMRC. Establishing Favourable Residency Status There are three levels of tax residence in the UK, which will influence how an individual is taxed while working in the UK (although it is important to remember that, subject to the mitigating effects of a double taxation agreement, an individual who is not resident will be liable to UK tax on income relating to UK duties). These three levels are resident, ordinarily resident and domicile. We are detailing briefly each of these below. An individual will be considered resident in the UK for each tax year that he or she spends more than 182 days in the UK. If the individual expects to be here for 2 years or more on arrival, he or she will be resident from date of arrival until the date following the day of departure. Once resident in the UK then an individuals earnings fall within the scope of UK tax. The extent to which they are taxable in the UK will also depend on their ordinary residence status. Not Ordinary Residence An individual that comes to the UK and intends to be here less than 3 years will generally be considered not ordinarily resident. It is important to note that if a person buys a house in the UK heshe will be ordinarily resident in the UK. The benefit of being not ordinarily resident is that earnings relating to non-UK workdays will not be subject to UK tax provided they are paid outside the UK and are not remitted to this country. For example, an individual working in the UK with total earnings of 100,000 who is working outside the UK 25 of the time will only be subject to UK tax on 75,000 of their earnings provided at least 25,000 is paid outside the UK and is not remitted. If a person is ordinarily resident this simple income splitting plan it not available. An individuals domicile status in the UK currently depends upon their long-term intentions. Generally, individuals who are coming to the UK to work for a limited period of time and who have no previous ties with the UK will not be considered domiciled in the UK. The benefit of being not domiciled in the UK is that investment income is not subject to UK tax unless it is either remitted to the UK or is sourced in the UK. It is also essential that, among other things, a person is not domiciled in the UK if there is to be available in the UK a deduction in respect of a non-UK company pension plan. Employment of foreign nationals in the UK European Community law gives European Economic Area (EEA) nationals a right to live and work in the United Kingdom without work or residence permits subject to certain limitations for residents of the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. Non EEA nationals usually require a work permit issued by the Home Office and which must be applied for by the UK employer on behalf of the foreign national. Work permits are issued for a specific period up to a maximum of five years. 9 Financing Financing creates a number of tax issues. Setting up a business centre in the UK is likely to require external funding either from independent institutions or parent companies. Key areas are highlight below Transfer pricing As outlined earlier in this report, intra-group interest payments must be arms length in order to secure a tax deduction for those payments. Thin capitalisation in relation to branch and subsidiary company funding A company is said to be thinly capitalised when it has excessive debt in relation to its arm8217s length borrowing capacity leading to the possibility of excessive interest deductions. The arms length borrowing capacity of a company is the amount of debt which it could and would have taken on from an independent lender as a stand alone entity rather than part of a group of companies. In establishing the arms length borrowing capacity it is therefore necessary to view the borrower as a separate entity from the larger group of which it is part. Funding a company with excessive intra-group or parentally - guaranteed debt is likely to lead to excessive interest deductions by the borrower. UK legislation on thin capitalisation seeks to counteract any tax advantage achieved by these excessive deductions. In this scenario, tax relief is limited to the interest that would have been paid on an arm8217s length loan at market rates of interest. It is understood that start up businesses need additional funding and this is normally factored into a thin capitalisation assessment. It will however be necessary to review subsidiary funding after this initial start up period. A similar provision is also applied to branches where loans made to the branch are greater and those that would have been obtainable had the branch been a UK company managing only the UK permanent establishment. Withholding tax The UK requires that interest payments made to an overseas entity are made with deduction of basis rate tax. This requirement is overruled where the UK has ended into a double taxation agreement with the receipt country and that agreement contains an interest article which reduces or eliminates the UK8217s taxing right. The reduced rates may be given by way of relief at source or by repayment of tax deducted but, the recipient must apply for this relief. It is not automatic. Where the relief is given at source, authorisation will be issued to the payer, the UK entity, once the recipient8217s application has been agreed. Until clearance is given, it must be assumed that the treaty will not apply. If interest is paid gross without clearance, then an assessment may be made on payer that failed to withhold tax to recover lost tax, interest and penalties. There are also exemptions for withholding tax on interest on short term debts of less than one year. Loan relationships for unallowable purposes Regardless of whether a non-resident recipient of UK interest suffers UK withholding tax, it does not guarantee deductibility for the payer if the loan is for an unallowable purpose . An unallowable purpose is a purpose which is not amongst the business or other commercial purposes of the business and includes, for instance, where the UK branch of a company resident outside the UK was paying interest on a loan which was being used to fund activities of the company unconnected with the UK branch or where the loan has been put in place, the sole or main purpose of which is the avoidance of UK tax. Inter-company loan accounts Inter-company loan accounts are subject to the same restrictions as third party loans with regard to transfer pricing and the deductibility of interest. Additional issues arise where inter-company debts are written off by the lender. A debt provided to provide finding to a branch, subsidiary, or indeed a parent, is generally tax natural for tax purposes in that neither the lender nor recipient is subject to tax or entitled to a deduction where the fund debt is written off. Where an inter-company debt has arisen through trading transactions, the write off of the debt is not an allowance deduction in computing the profits of the lender but may be a taxable receipt in the hands of the recipient of the loan. This is likely to be relevant for foreign direct investment in the United Kingdom as it will be the UK entity that will be in receipt of goods and services from the parent and likely to have outstanding trading balances. It is important to the note that this provision should only apply if the debt is formally waived by the lender and the provision of a bad debt in the lender accounts should not trigger a charge. Interest and Royalties directive (IRD) Businesses trading within the EU are subject to the IRD which became effective in 2004. Under the IRD no withholding tax is generally not applied to interest and royalty payments between residents of the EU and will apply to most companies under common control. The regulations include Switzerland. 10 Audit and accounting Subsidiary A UK subsidiary must prepare annual financial statements prepared in accordance with UK GAAP or IFRS and file with Companies House. Filed accounts are available for public inspection. The deadline for filing the financial statements is ten months after the year-end for an unlisted and eight months for a listed company. A statutory audit may be required if the worldwide group has 2 of the following: revenues exceeding 5.6m per annum and gross assets exceeding 2.8m gt50 employees A basic small company audit would cost from 7,000 to 10,000. The branch is not required to prepare financial statements other than for the purposes of drafting a company tax return, however, the non resident parent company must file a copy of its audited accounts in the UK. If the parent company does not prepare published accounts, it must instead prepare and deliver financial statements to Companies House as if it were a company registered in the UK. These must relate to the parent company and not solely of the place to business or branch Filed accounts are available for public inspection in the UK. Compliance Both subsidiaries and branches are required to file with Companies House an annual return confirming changes to members, share capital and similar statutory information. Like financial statements, annual returns are available for public inspection. Theses returns are independent from the filing of financial statements and tax returns and are required every 12 months form the date of incorporation or registration. The UK activates is also likely to require ongoing bookkeeping services which may comprise the completion of VAT returns and management financial statements. 11 Pensions In 2001 the UK introduced legislation that employers must offer their employees access to a stakeholder pension scheme. The rules will generally apply to any business with 5 or more employees. As an employer you would be required to: designate (formally choose) a stakeholder scheme. provide employees with information about the scheme. make deductions from an employees salary for their pension contributions to the designated scheme if they want it. Employers are not required to comply from the first day of employment but the requirement becomes mandatory after an employee has been working for an employer for three months. Employers are not compelled to contribute into stakeholder schemes on behalf of their employees. Exemptions are available to employers with occupational pension schemes which meet certain conditions. The Pensions Regulator is not likely to enforce penalties on employers who have not given their employees access to a stakeholder pension scheme, as long as the employer can show that they are currently putting a scheme in place. The Pensions Regulator will consider fining employers who deliberately ignore their responsibility or avoid sorting out the problem. The Pensions Regulator can fine employers up to 50,000.
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