The importance of Receipts

Most business owners are aware that they need to keep receipts if they want to secure a deduction for expenditure for business tax purposes, assuming that the expenditure is allowable for tax purposes.

This is particularly important if you purchase an asset: a vehicle, equipment, computers and so on, as these can be high value items and the loss of tax relief would be significant.

Property owners, who would be subject to Capital Gains Tax (CGT) when the property is sold, are in a similar position.

Although they may keep the receipts for annual expenses that they write off against rents received they should also keep adequate records if they improve their property. Improvement costs are generally taken into account when the property is sold – they reduce any CGT payable.

Imagine, therefore, the consternation of Mr Tobias Ridpath who was denied CGT relief for expenditure on his properties for this reason. Here’s an abridged version of the comments made by the Judge in her summing up.

“We can see it is very likely the Appellant (Mr Ridpath) incurred some expenditure on the properties. The difficulty is that we have no idea how much was spent. We are invited to find that some or all of the bank withdrawals were used in this way. The appellant was unable to point to a single item and explain by way of illustration how the money leaving his account had been spent. [He was given] ample opportunity to provide evidence of expenditure. Indeed we can see that the Appellant was treated very tolerantly... We have no idea why the Appellant was so vague about the expenditure. It is impossible for us to conclude, ..., that he spent some reasonable figure on these works and then guess how much that is or accept what seems to us equally to be guess work by the Appellant about the expenditure.

It is very unfortunate that the Appellant was unable to provide some details of expenses but that was not the case and we have no alternative but to dismiss the appeal.”

Property owners should carefully document any improvements to their properties and keep the records to present to their advisors when the calculation of any capital gains on sale is being considered. In the absence of evidence, it is likely, as Mr Ridpath discovered, that tax relief for capital expenditure will be denied.

Comimg soon - the first year-end under RTI

This tax year has been one of transition; one in which the vast majority of employers began to successfully report information about their PAYE schemes in real time. 
  
With April approaching, you need to start thinking now about preparing to make your final submission for the 2013-14 tax year. 
  
It will be a different process to previous years and it's always best to get ahead of the game.
  
For most employers, the final submission will be their final Full Payment Submission (FPS)showing the very last employee payment for 2013-14.
  
Don't try to send forms P35 or P14 for 2013-14 or later tax years - if you do they'll be rejected !
  
The start of the new tax year will see a number of changes including new in-year penalties for late payment and late filing which were scheduled to be introduced from this April. However, having listened to customer feedback, HMRC has decided to stagger the start of these penalties to give everyone involved more time to adapt to reporting in real time.
  
Under the new extended timetable, employers who are late sending their submissions won’t be charged late filing penalties as long as they bring themselves fully up to date by 5 October 2014.