Category Archives: News

When does a hobby become a trade

An example may illustrate the answer to this question.

Harry updates his iPad and decides to sell his old one – he does not use the iPad for his employment or any business, it’s used purely for recreational purposes. He sets up an account on eBay and manages to sell for a reasonable price. Encouraged, he sells a number of other, no longer used, personal items on the same eBay account.

At this point, it would be difficult for the tax office to argue that Harry was engaged in a trade.

Harry then has an opportunity to buy an iPad from a friend, and the price his friend wants is reasonable, so reasonable that Harry is tempted to...

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Claim back pre-registration VAT

It is possible to reclaim VAT you have paid on any business purchases before you have subsequently registered for VAT. In fact, once you have registered your business for VAT the first thing you should consider is the possibility of reclaiming input tax on purchases of goods and services prior to registration.

This article summarises the issues you will need to consider for the two categories: goods and services.

There’s a time limit for backdating claims for VAT paid before registration. From your date of registration, the time limit is:

  • 4 years for goods you still have, or that were used to make other goods you still have
  • 6 months for services

You can only reclaim VAT on purchases for...

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Tax Diary June/July 2017

1 June 2017 – Due date for Corporation Tax due for the year ended 31 August 2016.

19 June 2017 – PAYE and NIC deductions due for month ended 5 June 2017. (If you pay your tax electronically the due date is 22 June 2017.)

19 June 2017 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2017.

19 June 2017 – CIS tax deducted for the month ended 5 June 2017 is payable by today.

1 July 2017 – Due date for Corporation Tax due for the year ended 30 September 2016.

6 July 2017 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July...

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Tax due next month

Are you self-employed? If you are, you may need to make your second payment on account for 2016-17, due date for payment is 31 July 2017.

This second payment on account will have been based on 50% of your combined Self Assessment tax and Class 4 NIC liability for 2015-16. Which raises an interesting question.

What if your actual Self Assessment liability for 2016-17 is higher or lower than the liability for 2015-16? From a cash flow perspective, the outcome is win-win in both cases. Let’s consider the two options in more detail:

2016-17 liability is higher than 2015-16

In this case your taxable profits will have increased, year on year, and after your January and July 2017 payments...

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