Now that we are in Tax Return season, my inbox of questions has started to multiply, so here’s a selection of the questions received in the last few weeks that I hope you will find interesting. The Topics today:
- Card machine printouts – keep or not?
- Can I claim Maternity Pay if I don’t pay tax?
- Can I recover lost pension years?
- Are garden sheds tax deductible?
- Can I buy a company car, sell it and re-buy it personally?
Card machine printouts – keep or not?
I run a small VAT registered retail business. The gov.uk site (www.gov.uk/vat-record-keeping/vat-records) says: ‘You must also keep general business records such as bank statements, cash books, cheque stubs, paying-in slips and till rolls’. But do I have to keep the merchant’s paper copy of every printout from our card machines? Individual slips are produced for every transaction and there is a lot! I would prefer just to keep the daily summary, which I assume would be seen as the equivalent of a Z reading from a till. The problem is I can’t find anywhere that says we can definitely dispose of the individual slips, can I?
Answer
Good news; you can scan and save them; this is perfectly acceptable to HMRC, providing they are stored on a “safe platform”. Having said that, I have been involved with many HMRC tax enquiries into clients over the years and I haven’t met an Inspector yet who, when presented with the daily summary, has asked to see the individual slips. The basic problem is that HMRC has not upgraded its requirements for keeping records for the digital age.
Can I claim Maternity Pay if I don’t pay tax?
I’m the sole Director of my own small limited company and take a salary of £12,000 p.a. which is below the tax threshold and I have recently discovered that I’m pregnant (unplanned!). I’m really worried that my financial ship may sink if I can’t get Maternity Pay, even though I do not pay tax, is there any way I can claim?
Answer
Yes, you can. Even though your salary is below the tax threshold, you will have paid National Insurance which gives you the entitlement. Normally you would recover the Maternity Pay by deducting it from the tax and NIC remitted to HMRC each month, however, if this is insufficient to cover the Statutory Maternity Pay due you can apply at https://www.gov.uk/recover-statutory-payments/if-you-cant-afford-to-make-payments for advance funding to cover the shortfall.
Can I recover lost pension years?
I am within 5 years of my state pension retirement age and recently applied for a pension forecast. To my horror, I discovered that according to HMRC, they have no record of my paying any NI contributions for 4 years in the early nineties and my pension will be reduced as a result. I was employed for all of the years in question and know that I paid NIC, as had my employer, but HMRC said it had no record of that employment and have told me that I would have to provide the 25+-year-old records to prove my NIC record was incorrect. Is there anything I can do?
Answer
This is a recurring issue with HMRC, and I’m not sure whether they’re incompetent or just lazy. My advice is that if you make an official complaint, they will invariably find the missing records on their archive microfilm storage. If you want a pension forecast, go to https://www.gov.uk/check-state-pension
Are garden sheds tax deductible?
I am a professional clarinettist and do some teaching as well and have had several comments from neighbours that whilst they admire my playing, unfortunately, my practice sessions and especially when my students play can be a bit noisy. I don’t want to upset the locals so I’m planning to buy a large sound-insulated garden shed for my garden which I believe will solve the problem. Is this allowable against tax?
Answer
Yours is a similar question to one I was asked a few years ago from another musician who wanted to buy a gazebo for teaching purposes and the answer is yes; providing that the ‘shed’ is clearly set up for music practice/teaching and is not also a repository for garden tools etcetera.
Please see: https://www.morganjones.co.uk/2015/09/uk-tax-questions-answered-8/
Can I buy a company car, sell it and re-buy it personally?
I have what I believe to be a clever cunning plan. What I intend to do is:
- Buy a new car for £50k via my limited company
- Sell the car for a loss of say £25k a few months later to a garage
- Then buy the same car from the car dealer on a personal basis for say £26k
I have calculated that the £25k write-off against company profits, less than £1,000 profit to the garage will save me overall £3,750. Do you see any flaws in my plan?
Answer
Ignoring the moral elephant in the room, there are no rules to stop you or your company buying and selling whatever you like. Your company’s accountant will make the necessary tax adjustments to the company accounts to ensure that everything is above board.
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.
