HM Revenue and Customs (HMRC) has launched a new digital tool to help businesses estimate what registering for VAT may mean for them.

The VAT Registration Estimator has been developed after feedback from small businesses suggested an online tool would be helpful to show when their turnover could require them to register and its effect on profits.

A business must register for VAT if:

• Its total VAT taxable turnover for the previous 12 months is more than £90,000 – known as the ‘VAT threshold’ – until March 31, 2024 this was £85,000
• It expects turnover to go over the £90,000 VAT threshold in the next 30 days
• It is an overseas business not based in the UK and supply goods or services to the UK (or expects to in the next 30 days) – regardless of VAT taxable turnover.

A VAT-registered business must charge VAT on eligible sales and can usually reclaim it on eligible purchases. There are around 300,000 new VAT registrations each year.

HMRC says its estimator can help any business to see what registering for VAT could mean, as well as linking to further information about the registration process. It is also a useful tool for businesses operating below the threshold and considering voluntary registration.

Jonathan Athow, HMRC director general for customer strategy and tax design, said: “We know that the majority of our customers want to get their tax right. We have listened to what businesses have said and the new tool is designed to help them understand VAT registration, including when they might be required to register.

“The VAT Registration Estimator has been developed in partnership with small businesses and trade representatives who tested the online tool and gave feedback before its launch.

“We hope it will support businesses’ understanding of VAT registration, especially when combined with our guidance and other services.”

Kevin Sefton, a member of the Administrative Burdens Advisory Board (ABAB), added: “Businesses need to know before they hit key tax thresholds. Tools and guidance can help them prepare.

“I’m pleased to see this new VAT registration tool from HMRC that helps a business understand the different types of supplies it makes, and what this means for VAT registration.”

HMRC says the estimator is a guidance tool and it allows you to experiment with different inputs and outputs. It cannot provide bespoke business advice.

The team here at WNJ is on hand to advise on all tax matters, including VAT. To discuss any issues raised in this article or any tax issues please contact me on 01772 430000.

The number of employees paying company car tax has risen by 40,000 year-on-year – a 5.5 per cent increase and the first since 2015.

New figures from HMRC also reveal the shift to electric powered cars continued through to 2022/23, with almost a quarter of million company cars now fully electric.

The latest benefit-in-kind (BIK) statistics released by HMRC shows that there were 760,000 employees paying company car tax in 2022/23, compared to 720,000 the previous tax year.

The growth is being attributed, in part, to the growing popularity of salary sacrifice schemes for cars as well as a return to more normal working activity post-pandemic.

HMRC also reveals that the number of company car drivers could be even higher, with “considerable underreporting” after voluntary payrolling was introduced in April 2016.

Directors of companies and employees are liable to pay Income Tax on the value of their company cars and car fuel benefits.

Their employers – or in certain cases other third parties who provide benefits in kind -are liable to pay Class 1A NICs on these benefits. Other benefits may be subject to Class 1 NICs. The taxable value of a benefit depends on its type.

Tax on benefits is usually collected via tax code adjustment notified by HMRC to the employer, based on P11D returns submitted after the end of the tax year.

The new statistics also show the number of reported fuel benefit recipients was 50,000 in 2022 to 2023 the same as the previous year, although there has been as steady decline from 240,000 in 2011 to 2012.

HMRC says the shift towards electric powered cars is expected to be in part behind the decline in fuel benefit use.

The figures also reveal the proportion of company cars using diesel fuel fell to 23 per cent (170,000) in 2022/23.

There are major government incentives on the use of electric vehicles as company cars.

Electric vehicles have the lowest rate of company car tax, with rates starting at two per cent.

From April 2025 onwards, company car tax rates on electric vehicles will increase by one per cent per annum for three years.

In the 2025/26 tax year, the rate for EVs will be three per cent. It will then be four per cent in 2026/27 and five per cent in 2027/28.

However, vehicles which produce CO2, face far harsher tax thresholds with cars producing more than 160g of CO2 per kilometre currently paying a BiK tax rate of 37 per cent.

There are also advantages for employers. Where a new and unused fully electric vehicle is purchased outright before March 31, 2025, the business can claim a 100 per cent first year capital allowance against the business’ profits;

If the vehicle is leased, the full leasing costs of the electric vehicle can be deducted from the business’ profits. The usual 15 per cent restriction for car leasing only applies if emissions exceed 50g/km.

Also, the lower BIK charge for an employee choosing an electric company car will result in a significantly reduced Class 1A NICs charge for the employer, although the saving may potentially be outweighed by the additional cost to the employer of providing an electric car.

• To discuss any issues raised by this article please contact me on 01772 430000

Company incorporation and registration fees will rise in May just weeks after new legislation that has given Companies House greater powers.

The cost of incorporating a company online is set to up go from £12 to £50, while the fee for a postal application will increase from £40 to £71.

The new fees, taking effect from May 1, 2024 follow the new Economic Crime and Corporate Transparency (ECCT) Bill, which has implications for all companies.

Its introduction means that Companies House will be much more active in dealing with non-compliance.

The new and enhanced powers that came into force in March have been described as most significant change for Companies House in its 180-year history.

They include powers to query information and request supporting evidence, along with stronger checks on company names.

There are new rules for registered office addresses. All companies must have an appropriate address at all times – they will not be able to use a PO Box as their registered office address.

There is also a a requirement for subscribers to confirm they’re forming a company for a lawful purpose when they incorporate, and for a company to confirm its intended future activities will be lawful on its confirmation statement.

Companies House has also been given powers to tackle and remove factually inaccurate information and the ability to share data with other government departments and law enforcement agencies.

New criminal offences and civil penalties complement the measures, with Companies House declaring: “Our priority is cleansing the register to remove details of those appointed without consent.”

Companies House chief executive Louise Smyth said: “We’ve known for some time that criminals have misused UK companies to commit fraud, money laundering and other forms of economic crime.

“As we start to crack down on abuse of the register, we are prioritising cases where people’s names and addresses have been used without their consent.

“It will now be much quicker and easier to report and remove personal information that has been misused. This will make a real difference to individuals.”

Companies House says the increase in fees will ensure it can recover the cost of the services it offers. A spokesperson said: “Companies House fees are set on a cost recovery basis. This means our fees must cover the cost of the services we deliver. We do not make a profit on our fees.

The changes include the following:

• Incorporation online – £50
• Incorporation software – £50
• Incorporation software (same day) – £78
• Incorporation by paper – £71
• Confirmation statement online – £34
• Confirmation statement by paper – £62

WNJ has invested in company secretarial software and implemented training procedures to ensure that both matters relating to Companies House and HMRC compliance are adhered to so that client companies can concentrate on what they do best, safe in the knowledge that such matters are dealt with.

Amongst WNJ’s various but sometimes less understood services is the company secretarial support that we offer clients.

In its simplest form, this means assisting the directors of a company ensure that they fulfil their statutory duty to ensure the statutory records of the company are kept up to date, and if there are no changes to shareholdings, directors’ details or the registered office details then the filing the annual Confirmation Statement each year is relatively straightforward.

WNJ can continue to support you with the following service packages:

• Bronze – Registered Office, Registered Email, Assistance with Lawful Purpose Statements and filing of annual Compliance Statements: from £150 plus VAT.
• Silver – as above but also maintenance of statutory records, including share records, dividend documentation including recording minutes, producing dividend vouchers and entering into dividend registers, informing Companies House of any significant changes in the company’s structure or management, for example the appointment or resignation of directors: from £350 plus VAT.
• Gold – as silver but also include non-executive directorship, arranging meetings of the directors and the shareholders. This responsibility will involve the issue of proper notices of meetings, preparation of agenda, circulation of relevant papers and taking and producing minutes to record the business transacted at the meetings and the decisions taken. Compliance with data protection and human resource requirements (we usually refer our client to associated firms of specialist advisors): from £995 plus VAT.
• To discuss any of the issues raised here and how WNJ can assist you please contact me on 01772 430000

The Economic Crime and Corporate Transparency Act, which became law in October 2023, has created a raft of new measures affecting companies and their directors.
It has given Companies House significant new powers to investigate both new and existing companies.

And there are also new rules coming into effect in March that businesses and their directors need to be fully aware of.

The new powers include:

• greater powers to query information and request supporting evidence
• stronger checks on company names
• a requirement for all companies to supply a registered email address
• a requirement for all companies to confirm they are forming the company for a lawful purpose when they incorporate, and to confirm its intended future activities will be lawful on their confirmation statement
• the ability to annotate the register when information appears confusing or misleading
• taking steps to clean up the register, using data matching to identify and remove inaccurate information
• sharing data with other government departments and law enforcement agencies

Registered Office Requirements

From March 4, 2024, there will be new rules for registered office addresses which mean companies must always have an ‘appropriate address’ as their registered office. An appropriate address is one where:

• any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company
• any documents sent to that address can be recorded by an acknowledgement of delivery

These changes mean companies will not be able to use a PO Box as their registered office address from March 4.

Many companies have used PO Box addresses as an alternative to using their own home as the registered office to avoid unwanted visitor and unsolicited mail.

Companies can still use a third-party agent’s address if they meet the conditions for an appropriate address. But those that do not have an appropriate registered office address could be struck off the register.

And if Companies House identifies an inappropriate registered office address, it has the power to change it to a default address held at Companies House.

The company must then provide an appropriate address, with evidence of a link to that address, within 28 days. If evidence of the new appropriate address is not delivered, Companies House will start the process to strike the company off the register.

WNJ’s office at Chandler House, Riversway, Preston, has been used as the registered office for many clients for some time as it helps expediate the correspondence with Companies House and other authorities such as HMRC.

WNJ can also assist in changing the Registered Office as part of its various company secretarial services.

Registered email address

Also from March 4, there will be a new requirement for all companies to give a registered email address to Companies House. This email address will not be published on the public register.

New companies will need to give a registered email address when they incorporate. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from March 5, 2024.

Companies House online services will prompt to supply a registered email address when filing the company’s next eligible confirmation statement.

Companies House will the use this email address to communicate with companies, so it’s important to choose an appropriate email address.

You can register the same email address for more than one company, but it is recommended to select an address that is secure, and not used for personal matters.

Companies can change the registered email address through an ‘update a registered email address’ service using the company’s authentication code.

Companies will have a duty to maintain an appropriate registered email address, in the same way as their registered office address. Any company that does not do this will be committing an offence.

Statement of lawful purpose

When new companies incorporate from March 4, 2024, the subscribers (shareholders) will need to confirm they are forming the company for a lawful purpose.

It is a requirement to confirm the company’s intended future activities are lawful on the confirmation statement.

The intention of these new statements is to make it clear that all companies on the register, new and existing, have a duty to operate in a lawful way. Companies House may take action against your company if it receives information that confirms that the company is not operating lawfully.

Companies House will not accept your documents if these statements have not been confirmed.

Existing companies will need to make a lawful purpose statement when they file their next confirmation statement with a statement date from March 4, 2024. Once again, WNJ can assist in filing the lawful purpose statement.

Companies House has also announced changes to its fees for matters such as Incorporation, filing of Confirmation Statements, Changes of Name Registration, and Striking Off – with fees in most cases more than doubling and in some cases quadrupling.

This is part of its determination, alongside the government, to tighten up compliance issues and ensure it has the resources to perform rigorous checks.

And it is not just Companies House that is clamping down on businesses that do not appear to be fulfilling their legal obligations regarding company secretarial matters.

It has been reported this month that company shareholder and directors suspected of earning dividends without declaring their taxable income are being contacted by HMRC.

HMRC has been investigating company reserves and identifying companies that have made a profit but have depleted reserves, alluding to a dividend payment.

It has indicated that many shareholders and company directors have drawn funds from their companies without the correct procedures to declare the dividends.

Companies must properly document dividends to be compliant with HMRC and company law.

Dividend documents include board meeting minutes, a register of dividends and a dividend voucher for each shareholder.

If a payment does NOT comply with Companies Act requirements for dividends, then HMRC can deem it is not a dividend, but a salary or a loan. This may have many unforeseen tax consequences leading to increased liabilities and potential further investigation.

In the latest letter campaign, HMRC has been writing to company owners informing them that they may need to declare dividend income.

They are being given the option to disclose information on any dividends that have not been declared or inform HMRC if they believe there is nothing more to declare.

Taxpayers will be given 30 days to notify HMRC if there is nothing to declare. This is far easier to manage and prove if the company has complied with the law and has signed documentation to hand.

Penalties charged can be as much as the same amount of tax due if wrong amounts have been submitted, plus interest charged per day for any late payments.

WNJ has invested in company secretarial software and implemented training procedures to ensure that both matters relating to Companies House and HMRC compliance are adhered to so that client companies can concentrate on what they do best, safe in the knowledge that such matters are dealt with.

Amongst WNJ’s various but sometimes less understood services is the company secretarial support that we offer clients.

In its simplest form, this means assisting the directors of a company ensure that they fulfil their statutory duty to ensure the statutory records of the company are kept up to date, and if there are no changes to shareholdings, directors’ details or the registered office details then the filing the annual Confirmation Statement each year is relatively straightforward.

WNJ can continue to support you with the following service packages:

• Bronze – Registered Office, Registered Email, Assistance with Lawful Purpose Statements and filing of annual Compliance Statements: from £150 plus VAT.

• Silver – as above but also maintenance of statutory records, including share records, dividend documentation including recording minutes, producing dividend vouchers and entering into dividend registers, informing Companies House of any significant changes in the company’s structure or management, for example the appointment or resignation of directors: from £350 plus VAT.

• Gold – as silver but also include non-executive directorship, arranging meetings of the directors and the shareholders. This responsibility will involve the issue of proper notices of meetings, preparation of agenda, circulation of relevant papers and taking and producing minutes to record the business transacted at the meetings and the decisions taken. Compliance with data protection and human resource requirements (we usually refer our client to associated firms of specialist advisors): from £995 plus VAT.

• To discuss any of the issues raised here and how WNJ can assist you please contact me on 01772 430000