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Frequently asked questions
Need some help? Take a look at some of the questions we get asked the most.
How often do you need to complete a Self Assessment Tax return?
You should complete your Self Assessment Tax return annually.
When does the Tax year run from and to?
The Tax year starts on the 6th of April and ends on the following 5th of April.
When do Self Assessments have to be submitted by? (Paper/Online)
31st of Oct for paper returns and 31st of Jan for online returns.
What is a UTR number?
A UTR number is a unique taxpayer reference number. It is 10 digits long and you are given one by HMRC when you register for self-employment.
What is a business expense?
A business expense is an expense incurred wholly and exclusively for the purposes of the business/trade.
What types of National Insurance do self-employed people need to pay?
Class 2 and 4.
What are payments on account?
A payments on account is a Tax payment made twice a year by self-employed people who are likely to have a Tax bill, in order to spread the cost of the year's income Tax owed. It is calculated by looking at your previous year's tax bill, and is due in two instalments. The payment on account can be thought of as a way of paying off some of your tax bill in advance
What is Tax relief and how does it work?
Tax relief means that you pay less Tax to account for money that you have spent on business expenses. Your income is reduced by the amount of expenses that you claim, therefore reducing the amount of Tax you pay.
Why does IN-SYNC Tax complete HMRC checks for every client?
We complete HMRC checks to ensure that there is nothing on a client's HMRC account which could affect their refund.
What does it mean if I have remissions with HMRC?
It means that you have a prior year’s debt with HMRC (Normally more than 4 to 5 years ago) that has never been repaid. HMRC have stopped actively pursuing the debt, however if monies become available on your account (e.g. a refund from a tax return) it is highly likely that this will be taken to cover the debt.
What are the penalties for filing a late return?
If you miss the deadline you will immediately receive a £100 penalty from HMRC. If the return is still not received within three months of the filing date you will be charged £10 a day (up to £900). If it is still not received by six months (31st July) you will receive an additional £300 penalty, and a further £300 penalty is also charged after 12 months. Please be aware that interest will also be due on top of these penalties made by HMRC.
How long do you have to amend a submitted return?
You have up until a year after the submission deadline. For example, if you are filing your 2016/17 return the deadline is 31st January 2018, meaning you would have until 31st January 2019 to amend the return.
Do I receive any HMRC Investigation Insurance on a Tax return submitted via IN-SYNC Tax?
Yes, HMRC Investigation Insurance is included. In the event of a Tax return we have submitted becoming subject to an investigation by HMRC, you do not have to pay us any additional fees for our assistance, services or advice.
Can you produce a set of profit and loss accounts?
Yes, we can provide you with a set of ‘Trading Accounts’ which is a document recognised by banks, loans and mortgage lenders as proof of your business account for the relevant period. Trading accounts can only be produced for years that we have submitted. Additional fees may apply.
What is a Limited Cost Trader?
You’re a Limited Cost Trader if the amount you spend on relevant goods including VAT is either:
Less than 2% of your VAT flat rate turnover (in a prescribed accounting period)
Greater than 2% of turnover including VAT, but less than £1000 per year (if the prescribed accounting period is one year). If it is not one year e.g. quarterly VAT returns, the figure is the relevant proportion of £1000, for a quarterly return this is £250
What is the expenses test?
In order to continue benefiting from your current FRS percentage based on your job title, you will need to prove that your qualifying business expenses are both: More than £1,000 per year; and greater than 2% of your turnover, reviewed each quarter, inclusive of VAT.
What are the qualifying expenses?
Only certain expenses can be used to meet the requirements of the test, which HMRC calls ‘goods’. Examples of these are: Materials used for your job, for example any consumables, timber, fixings, cables, hardware, aggregate, etc; Equipment and tools, for example hand tools, testing equipment, certain power tools, etc; Hire of any plant, powered equipment, etc; Health & safety equipment and clothing, including personal protective equipment; stationery, materials and books.
What expenses can’t be used for the test?
Any ‘capital expenditure’ (i.e. large purchases that generally have a useful life of more than one year, for example a laptop or mobile phone); Food or drink purchased whilst out of the house for work; Vehicles, vehicle parts and fuel (except where the business is one that carries out transport services, for example a taxi or courier business).
What is VAT?
Value Added Tax, or VAT, is a business Tax that is charged on the sale of goods and services in the UK and the European Union. The standard rate of VAT is 20%, however certain goods and services are charged at 5% or 0%. VAT collected by VAT registered businesses is reported and paid over to HMRC every quarter.
What is the VAT Flat Rate Scheme (FRS)?
The Flat Rate Scheme is a simplified form of operating VAT designed for smaller businesses and the self-employed. It works by charging VAT, at the relevant rate, on all your invoices and paying over to HMRC at a fixed percentage, depending on your trade or profession. For example, if you’re in Construction then you pay VAT over to HMRC at 14.5% and Couriers or Taxi Drivers pay over at 10%. The difference between what you charge, and what you pay to HMRC you get to keep. We’ll give you advice to help you get the best benefit from your FRS registration.
Will I need to be VAT Registered?
Yes. To claim back any VAT on the FRS, you first need to be registered for VAT. This is nothing to worry about - as IN-SYNC Tax are acting as your VAT Agents we will do everything for you. We will invoice your engager (providing we work with them), we will submit your VAT Returns and make payments into your bank account when a refund is due.
I'm not a limited business, can I still register for VAT?
You do not need to be a Ltd business to be VAT registered. As a self-employed sole trader you are, in fact, your own business. You work for yourself and are entitled to the benefits of being VAT registered.
I can't be VAT registered, I don't earn enough...
This is a common misconception with VAT. Correct, there are VAT thresholds, but you can voluntarily register for VAT to claim back the benefits. If you earn over £85,000 it is compulsory to be VAT registered, however, if you earn less than that, you are able to voluntarily register for VAT.
How far back can you go?
You may be able to backdate your VAT registration by up to four years, depending on your circumstances.
Will I get a VAT bill?
The only reason you will get a VAT bill is if your VAT Return is submitted late. IN-SYNC Tax is committed to ensuring that all of our clients are compliant with HMRC and we endeavour to get all VAT Returns submitted on time. Although we ensure you remain compliant, it is a 2-way street; you will need to ensure that you are in constant contact with us, advising us if you move contractor, go on holiday, move address, etc.
Is there a fee involved?
As with any service, there is a fee. You will never need to pay the fee out of your own pocket, we will take our fee from your total reclaim amount. Our fee is a percentage (30% + VAT) and we will need to cover our minimum fee before any payments can be made out to you. Your refund will build up alongside our fee and once this has been covered you will receive a lump sum payment. You will then receive ongoing quarterly refunds.
I have moved contractors, what do I need to do?
You will need to advise IN-SYNC Tax where you are currently working. We work with a lot of contracting businesses throughout the UK, so chances are we can invoice them directly. However, if you do not work with one of these companies then we can either deregister you, or you can start to charge VAT yourself.
How long will it take me to receive my refund?
This all depends on how much VAT IN-SYNC Tax are able to invoice for. Our fee is gathered from the invoicing that we do, so the more we can invoice for, the quicker a payment will be due. The further we are able to backdate your VAT registration, the quicker a VAT payment will be due. A payment is due once our fees are covered.
Can I deregister from the FRS?
Yes, provided your annual turnover is below £85,000, you can voluntarily deregister from the FRS. All that you would need to do is contact our friendly customer services team and IN-SYNC would liaise with HMRC and take care of all the necessary administration on your behalf.
What is the Construction Industry Scheme (CIS)?
If you’re self-employed and work in the construction industry or on site as a plumber or heating engineer for example, you’d fall under the CIS. Construction workers who are subcontracted by contractors will have CIS deductions taken towards tax and national insurance, which are then passed through to HMRC. These Tax deductions can then be calculated at the end of the Tax year in your Self Assessment, allowing you to claim a CIS Tax refund on any CIS deductions you’ve overpaid. It can sound daunting, but having the support of experienced Tax experts makes the experience a doddle.
I work in the construction industry, do I qualify for the CIS?
The Construction Industry Scheme is designed for self-employed people working in construction. CIS work according to HMRC includes work undertaken to permanent or temporary building structures, or civil engineering work like roads and bridges for example. Construction work, as far as CIS is concerned at least, includes: Site preparation and the provision of access works or laying foundations, building work, alterations, repairs and decoration, the installation of heating, lighting, power, water and ventilation, subsequent cleaning of site following completion of construction work and any dismantling or demolition works required.
How do I claim a CIS Tax refund?
Claiming your CIS Tax refund is far easier than you might think. At the end of each Tax year, you need to submit a Tax return to HMRC. From this process you’ll know exactly what Tax and National Insurance you owe which is offset against any tax deductions you’ve already paid. In most cases, this will entitle you to a tax refund, if you're under the CIS. If you’d like tax experts to take care of this for you, contact us and one of our dedicated consultants will talk you through every step over the phone. We’ll then start preparing your tax return right away and in many cases, can submit on the same day
Do I need to pay upfront to get my CIS tax refund?
No. All of our charges for completing your CIS tax return are automatically deducted from your Tax refund figure, so you won’t need to find a penny in advance (so long as your refund sufficiently covers our fee).
Can I get my Tax refund early?
Yes, our sister company IN-SYNC Credit Services may be able to pay your CIS Tax refund into your bank account as soon as we have your expenses and income information – Perfect if you need a little bit of extra cash for a rainy day.
How do I know what I’m due back from my tax refund?
The refund you may get back depends on three things: Your CIS deductions, total earnings and business expenses. The average Tax refund for our customers is £2,300. In some cases you can receive several years of overpaid refunds — if you’re eligible, CIS Tax can even be claimed back for the previous four years. As a CIS worker, you’ll be required to make contributions for Tax and National Insurance each month. The amount of Tax you pay is typically 20%, but will be determined by HMRC when the contractor you work for verifies your UTR number. Your refunds calculation starts by looking at your total income for the year and deducting any allowable business expenses. When you know exactly how much profit you’ve earned for the Tax year, you can then work out how much of it you have already paid. Remember, you will take into account your Tax-free earnings and any National Insurance contributions too. Finally, once you know your income, profit, Tax and National Insurance contributions, you’ll take the difference between the Tax you've already paid and the actual figure you’re required to pay. This will show you whether you’re entitled to a refund, or subject to a liability.
I’m PAYE, am I still eligible for a CIS Tax refund?
No, if you pay PAYE Tax as an employee of a company, you won’t be eligible as you will already pay the correct Tax according to your Tax code.
How much Tax is deducted if I am registered for CIS?
CIS registered operatives will pay a 20% Tax rate.
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