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September Question and Answer Corner

Newsletter Issue - September 2009

Q. I operate my own company from a room in my own home, and charge the company a small amount of rent for the space it uses. Can I claim rent-a-room relief for that income on my personal tax return?

A. The law says this tax relief can only apply where rent is received from letting 'furnished accommodation in a residence', where that residence is the taxpayer's own home. Although the law doesn't say that the let room itself must be used purely for residential purposes, that is how the Taxman interprets the law. The Taxman says that letting a room as an office does not qualify for the rent-a-room relief, and he will not budge from that view until a taxpayer wins a case on those grounds. So although the law is silent on the matter of what the let room must be used for, the Taxman is clear that he will not agree to rent-a-room relief for office space.

Q. I am a self-employed fitness instructor and I teach classes at a number of locations. What records do I need to keep regarding my motoring expenses?

A. If your turnover does not exceed the VAT registration threshold (currently £68,000), you have a choice as to how to record your motoring expenses. When you use your own car for business journeys you need to note down exactly the number of miles driven. The choice is then whether to charge those journeys to your business at the standard rate set by the Taxman: 40p per mile for the first 10,000 miles per year, and 25p per mile for additional miles, or at the actual cost of using your car. For the actual cost method you need to record the total cost of all costs related to your car from fuel to servicing and any loan interest costs. This total cost is then split between business and non-business parts based on the total business miles driven in the entire year. You should also record any additional costs such as parking or tolls.

Q. My company is likely to fold soon leaving a number of debts including PAYE and VAT owing. Can HMRC demand that I pay those taxes personally after the company closes?

A. Anyone who was a director, manager or company secretary of the company, can be landed with a personal liability notice (PLN) for unpaid NI that was due from the company. The Taxman does not issue a PLN very often, but he will do so if he believes the company intentionally avoided paying NI. A similar power can be used to collect PAYE tax payable by the company, from the directors. If the Taxman believes the company has fraudulently avoided paying VAT he can transfer any VAT penalties to the directors or managing officers of the company.

 

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Dakins Property Services

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Choice Events Limited

All at Beauchamp Charles are very helpful, approachable and easy to talk to. They keep me informed with key dates; I can feel totally confident that I won't ever miss any deadlines! Whoever I deal with, always deal with matters professionally and efficiently and if they are unavailable they get back to me promptly.

FT leisure Ltd

I have worked with Beauchamp Charles as our management accountants for over 20 years and have never received anything less than exceptional service. Their approach is both professional and personal. Finances and particularly tax strategies are a minefield for small businesses; Beauchamp Charles have in-depth knowledge of these area, which is comforting. They pay very close attention to our business activities and have provided financial strategies that have helped our company develop.

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We have used Beauchamp Charles since company formation back in 1998. Beauchamp Charles offers us a one to one service as they are small enough to offer this dedicated service and large enough to do the work and offer best advice. They get to know us as individuals and a business, always giving sound advice. Frederick Thomas Electrical are in a stronger place thanks to the service we get from them.

Barnes Walker Landscapes Limited

We are a small business and had employed the same accountancy firm for many years. Two years ago we took the decision to switch to Beauchamp Charles after several othe local businesses recommended them very highly to us. We have not been disappointed with the service they have provided to us over these last two years.