Q & A

10th October 2012

In this week’s blog, we thought we would take a breather from the weighty topics that have been covered recently (such as foreign tax implications, and buying vs hire purchase) and answer some general questions that we’ve received over the past few months. Some of these, you may note, have been discussed in previous blog posts.

Q: My company has received a penalty for late submission of tax return. The thing is, the company has been dormant since its creation, was for the relevant year, and will be for the foreseeable future. I thought that since it is dormant, I shouldn’t have to file a tax return? And how do I appeal against the penalty?

A: You are correct in that only active companies have to submit tax returns. However, sometimes mistakes are made, and dormant companies are sent a request for corporation tax return. If this happens to you, and you feel like this is incorrect (for example, the situation above), then you should get your accountants to write a letter to HMRC explaining the situation and appealing against the penalty. If the company has changed its status (i.e. changed from dormant to active, or active to dormant), you must inform HMRC so they can update their records. If you do not do this in a timely fashion, then the penalty may be upheld.

Q: I am UK resident, non-domiciled and currently using the remittance basis (see previous blog post here). I accidentally remitted a sum of money, is it possible to fix this?

A: The HMRC, in their generosity, have confirmed that they can reverse any accidental remittances, provided that you repay the funds before the end of the tax year, and there are no other relevant transactions. For example, if you remitted £20,000 into a UK bank account, then returned the same amount to the original bank account, that would be acceptable. If the £20,000 was spent in the UK, then another £20,000 was transferred from a different UK bank account, then this would not be allowed to be reversed.

Q: A friend informed me that I have to provide a compulsory pension for my employees, on top of the national insurance contributions I already make! Is this true, and when should I start it?

A: Your friend is correct. From October 2012 onwards, the government is making it compulsory for companies to offer a workplace pension scheme, and automatically enrol any employees, starting with large companies (<250 employees) from October 2012 to October 2014, and then extending the employee range over the following four years – by October 2018, all companies will be covered.

So what does this actually mean for you? Well, unfortunately, it means more expense. All those employees enrolled in the scheme will initially make a contribution of 0.8%, rising to 4% by 2018, and the employer must match this contribution with 1% rising to 3%. This is on top of the already 13.8% National Insurance Contribution, so it is not an insignificant sum.

Despite being automatically enrolled, the employee can opt-out of the scheme, and as such will not have to make the contributions (and neither will the employer), however they will automatically be put back on the scheme after 3 years. This is an effort to encourage saving for retirement, which is getting more and more expensive since people are living longer.

To find out exactly when your company needs to introduce this, please get in contact and we can help you with any questions.