HM Revenue and Customs are currently undertaking a blitz on Corporation Tax underpaid as a result of the existence of associated companies. 

Companies are associated if they are under the control of the same person or a group of connected individuals. The effect of having an associated company is that the 19% tax band (£300,000) is divided by the number of associated companies. This catches people out who set up limited companies for a one off project. For example a company with profits of £200,000 and no associated companies pays tax at 19%. But a company with an associated company (even if that company has made no profit or even a loss) pays tax at 19% on the first £150,000 (£300,000 divided by 2) and 32.75% on the next £50,000.

If you are considering a new business venture and want to benefit from limited liability status, please contact Wes Mason for specialist advice on how this can be done in the most tax efficient way.

Changes to employee’s holiday regulations

Some small firms could be hit hard after the Government made the decision to force employers to guarantee their employees time off for bank holidays on top of the current statutory leave.

Employers that currently include bank holidays as part of the legal minimum of 20 days annual leave a years will now have to grant their employees an additional 8 days off a year. Employees will get an extra 4 days off a year from 1st October and the remaining 4 days from October 2008.

The decision that was heavily backed by the unions will benefit 5.9 million workers but businesses have warned that it will cost industry GBP 4 billion. It is expected that employers may clamp  down on workers who take sick days,  in order to counter the rise in their costs.

To read the full article please go to http://www.fsb.org.uk

Remember the 31st January deadline for getting your self-assessment personal and partnership tax returns to the Inland Revenue.

Quote of the week

"Planning without action is futile, action without planning is fatal "

(Unknown)