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Specialist accountants for Limited company contractors and freelancers

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By PaperRocket Accounting, Aug 14 2018 02:41PM

As we spoke about in our last blog, last Friday, the government consultation on how to tackle IR35 non compliance in the private sector closed. At this point in time, HMRC are analysing the feedback received via this consultation, although whether they pay much attention to it remains to be seen.


Whilst HMRC seem to be convinced that extending public sector reforms (introduced in April 2017) to the private sector would help tackle non compliance and claw back some of the £millions that they believe this non compliance is costing the Treasury, many industry experts vehemently disagree.



‘Don’t do it, and definitely don’t do it anytime soon’


This was the response from IPSE (The Association of Independent Professionals and the Self Employed). IPSE believe that these reforms would be “short sighted”, especially in light of the ongoing uncertainty around Brexit and the effect that will have on the UK economy and workforce. They believe that this measure will damage the UK’s flexible workforce which is arguably our greatest competitive advantage.


In their response, they do concede that it is looking more likely that the government will roll out these reforms than not, so their main recommendation is to not do it too soon. With the lack of public faith in HMRC’s CEST tool, as well as HMRC losing in a number of IR35 tribunals recently, IPSE poses the excellent question “how can the government expect businesses to make complicated IR35 determinations when HMRC, with all its expertise and resources, can’t do it”?



‘Do not extend the off-payroll reform to the private sector’


The response from contractor insurance providers Qdos Contractor focussed strongly on the effect that the reforms have had in the public sector thus far- reforms which they say have had a “significant, detrimental impact on thousands of workers who were genuinely operating outside IR35”. They included survey responses from contractors, as well as a number of detailed written responses to support their case.


They believe that HMRC already have the tools to hand to enable them to identify where they feel there are potential risks earlier, and they “strongly believe that a case-by-case assessment… is the only manner in which to apply IR35”.



Proposing an ‘innovative solution’ instead


The FCSA (Freelancer and Contractor Services Association) took a different tack with their response to the consultation and instead proposed an alternative to the proposed reforms- the ‘Enhanced Reporting and Enforcement Solution’. This will allow personal service companies to retain responsibility for IR35 status, but will just tighten up compliance by getting end hirers and intermediaries more involved through sharing information which in turn, will be reported quarterly to HMRC to allow them to undertake more targeted enforcement activity.


The FCSA claim that HMRC’s various assumptions regarding how many PSCs are non compliant and how much this non compliance costs the treasury are over inflated and just being used to “push through legislation outside of the allowable timescale”.


So, whenever the outcome of the consultation feedback is announced, there are going to be a lot of people with a lot to say about the result- whatever that may be.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Aug 9 2018 12:55PM


As discussed in our previous blog, back in May, the government announced that they were launching a consultation on how to tackle non compliance within the private section in relation to IR35.


The full consultation document can be found here as well as ways to respond with your own opinions and suggestions on this subject. The consultation closes tomorrow (10th August 2018), so we are urging anyone working in the private sector who will be affected by this reform (whether it be contractors or end clients) to read through the documentation and contact HMRC with any objections you may have.


With the chaos that has been caused in the public sector with the IR35 reforms brought in in April 2016, as well as more recent concerns over the validity of HMRC’s CEST tool (an online system promoted by HMRC for contractors/end clients to determine IR35 status), there is certainly a sense of unease around the contracting community about the effect that extending these reforms into the private sector may have.


The contracting community is rife with speculation about whether these reforms are going to be announced in the next Autumn Budget or not. All we do know is that currently, we do have an opportunity to make our voices heard to those in charge (whether they listen or not is another question!) so if this is something that you feel strongly about, we would implore you to make your feelings known here.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Jul 30 2018 10:17AM

If you run a limited company, you may have heard of, or even completed yourself, something called a confirmation statement. But what exactly is it? And is it the same as the annual accounts, or even an annual return?



What is a confirmation statement?


Before June 2016, all limited companies were expected to complete an 'annual return’. However, since then, the annual return has been scrapped in favour of a confirmation statement, which serves the same purpose, but in a much simpler format.


The company confirmation statement contains statutory information, such as your company’s address, the directors’ names, shareholding information, and a record of PSC’s (People with significant control) over the company. The statement simply acts as a way for the director to confirm that Companies House is holding correct and up to date information on that company. Alternatively, if there are changes required, this can be done either by completing the relevant form at the time of the change, or when the statement is filed.



Is it the same as the company accounts?


In a word, no! The confirmation statement includes no financial information regarding the company and is completely separate to the company accounts. It is simply a record keeping exercise, rather than a declaration of accounts.



Do I need to complete a confirmation statement?


If you are a director of a limited company, then yes, absolutely. Whether your company is dormant or trading, you are required by law to complete a confirmation statement for your company.



When do I need to complete the statement?


Generally, your confirmation statement will need to be filed around the anniversary of your company formation. However, this can be changed, so the best thing to do is to check on Companies House as this will show you both the made up date (the date for which you are providing the information) and the filing deadline date. You will have 14 days from the made up date to file the statement- failure to do so could lead to the company being struck off the register, and even prosecution.


The easiest thing to do to ensure that you do not miss the deadline is to sign up for email reminders from Companies House. This can be done online via their webfiling service, and will mean that you will receive a reminder when it becomes due.



How do I file my statement and how much does it cost?


The easiest way to file a confirmation statement is online via the webfiling service. This will cost £13. Alternatively, a paper statement can be completed, but this costs £40.


At PaperRocket, we will take care of the filing of your confirmation statement on your behalf, whatever fee package you may be on, ensuring that your statement is filed both on time, and accurately.




PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Jul 24 2018 07:58AM

At the beginning of the current tax year, the Scottish tax system had its biggest shake up in years, with the introduction of new starter and intermediate rates of tax. However, this has not been welcomed by many who fall into the new intermediate tax band as it means that anyone in Scotland earning over around £26,000 will now pay more tax than people earning the same living elsewhere in the UK.



The new Scottish tax brackets


Band Name Band Rate of tax

Starter Rate £11,850 - £13,850 19%

Basic Rate £13,851 - £24,000 20%

Intermediate Rate £24,001 - £43,430 21%

Higher Rate £43,431 - £150,000 41%

Top Rate £150,001 + 46%



The problems that have arisen


These differences in tax rates in Scotland now mean that lower earners pay slightly less tax than those elsewhere in the UK, but middle and higher earners pay more.


The UK government has said that as a result of these changes, around 70% of its military personnel in Scotland will now be paying more tax than their colleagues based elsewhere. The MoD claims that around 8000 personnel will be negatively effected, and there is concern that this would have an impact on recruitment and retention.


Scottish Finance Secretary Derek Mackay argues that “armed forces families in Scotland benefit from services not available elsewhere in the UK, such as free school meals, prescriptions and eye tests, and tuition fee and living cost support in higher education when they are ordinarily resident.”



What action is being taken?


Defence Secretary Gavin Williamson has said “It is completely wrong for the brave men and women of our Armed Forces to be punished for serving in Scotland by unfair raids on their pay packets by the Scottish Government.”


As a result, the MoD now says that any personnel negatively affected by these tax rises will now be compensated by way of an annual ‘mitigation payment’ of between £12 and £1500 to ensure that no one has to pay more because of where they are deployed/based. The case for this financial mitigation will be reviewed annually.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Jul 17 2018 02:15PM

Until you have actually gone through the application process and had confirmation that your company has been set up by Companies House, you will be unable to open a company bank account. But what does that mean in respect of any business related expenses that you may have personally incurred in the lead up to forming your company?


It is very common to incur expenses before your limited company has even been formed. These could include:


• Travel to a client interview/recruiter

• Business Insurance

• Accountancy costs

• Office rental

• Equipment, such as computers, laptops, phones.



So, can I reclaim these from my company?


In short, yes. As long as they, as with any business expense, were incurred wholly, exclusively and necessarily for the purpose of the business.


From a bookkeeping/tax perspective, these pre-trading expenses will be treated as having been incurred on the first day of trading.


One exception to this is training costs- you are not able to claim any cost for training courses until after you have started trading.


It is also a little trickier for existing personal assets that you wish to transfer to the company. So, for example, if you already have a laptop/computer that you now want to transfer to your company, you would have to effectively sell it to the company at the current market value (i.e. not what you originally paid for it). You also won’t get the full 100% Annual Investment Allowance for that asset in the corporation tax return, but instead will have to claim the standard Writing Down Allowance.



And will they receive corporation tax relief?


As long as a) they would have been tax deductible if you incurred them during your current trading, and b) they were incurred within 7 years prior to the company formation date, then yes, they will receive corporation tax relief when your first corporation tax return is prepared.


The exception to this is the cost of the company formation itself (£12 if registered online, £40 if registered by post using form IN01).



And what about VAT?


Provided you register for VAT, then yes, you are able to reclaim the VAT on any vatable expenses incurred. You will be able to reclaim the VAT on costs incurred before registration of up to:


- 4 years for any goods/capital items purchases

- 6 months for any services received


As with any business expense, you must ensure that you retain the receipt for any pre-trading expenses claimed.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


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