September Question and Answer Section
Newsletter issue - September 2013.
Q. Please help, I'm so worried. I've received several threatening letters from the Taxman demanding money, but I'm sure I'm up to date with my tax payments. I'm terrified the bailiffs will turn up on my doorstep and demand payment. What should I do?
A. Let us see the Taxman's letters and we will try and sort the matter out for you with the Tax Office. In the meantime, keep this number to hand: 0300 200 3862. If bailiffs do turn up ask to see their photo ID cards, take a note of the ID numbers and call that number to confirm whether the bailiffs are genuine. Also collect evidence of the tax payments you have made recently, such as bank statements. These may be enough to prove to the bailiffs that you have paid the tax you owe.
Q. I need to get a high-end computer for my business which will cost about £2,200, but I use the VAT flat rate scheme for small businesses which doesn't allow VAT reclaims. I've heard that I can claim back VAT charged on expensive items under the flat rate scheme, is that true?
A. Yes, under the flat rate scheme you can claim back VAT charged on the purchase of capital goods, which are items you will use in your business over a number of years. It must be a single purchase from one supplier with a VAT inclusive total of at least £2000, but that invoice can include several items bought together such as; screen, computer, and printer. The items must not be purchased for resale or for lease or hire.
Q. My company pays me the regular mileage rate of 45p per mile for business journeys I make in my own car. However, to reach certain customers I need to drive on mainland Europe which requires extra car insurance which is quite expensive. Can my company reimburse me for the cost of that extra insurance without any extra tax?
A. The regular mileage rate is supposed to cover all the marginal costs of using your personal car for business, including insurance. So if the company reimburses you for the extra cost of this insurance in addition to the mileage payment, that would be a taxable benefit in kind.
We need to look at the distances you are driving in Europe, and for what periods. If the time spent abroad is relatively short, it may be more economical for the company to hire a car for you while you are abroad. However, there is no substitute for crunching the numbers.