VAT adjustment for private use

VAT adjustment for private use

VAT adjustment for private use is to be made when calculating your VAT payable to or refundable from HM Revenue and Customs (HMRC). The rule for claiming all VAT input tax paid on your business expenses are that the expenses must be incurred solely exclusively for your business.

The VAT input tax on the private use cannot be reclaimed and therefore VAT adjustment for private use must be made in your VAT return.

An example of this would be telephone charges where the business is run from home. If a telephone bill was received for £100.00 plus VAT, one third of this would be considered private use. Accordingly, one third of the VAT input tax cannot be reclaimed from HM Revenue and Customs.

The easiest way to account for VAT adjustment for private use is to reclaim all the input tax in the VAT records and when preparing your VAT return make a deduction from the total input tax, disallowing for the private use proportion of the tax that the business is not entitled to reclaim. Do keep a clear record of how the disallowed amounts are calculated. HMRC may ask for the breakdown.

Seek accountants help or contact HMRC directly if you have any questions about VAT return compliance.

Avoid LLP late filing penalty

Avoid LLP late filing penalty

Avoid LLP late filing penalty by submitting your LLP accounts with Companies House on time.

Your LLP’s accounts filing deadline

Companies House website publishes your LLP’s accounts filing deadlines. The filing deadline is nine months after your accounting reference date. The accounting reference date is your LLP’s year end date.

If you do not remember your LLP’s account filing deadlines, you may contact Companies House directly or ask your accountants.

Mark in your diary or calendar to remind you in good time of your LLP’s accounts filing deadlines and also factor in the time to gather all the information and accounting records for your accountants to prepare your LLP accounts.

Reminders from Companies House

Companies House send reminders to your LLP’s registered office address to remind you of your LLP ‘s accounts is due. It is important that you can access to mails send to your registered office address.

If you are no longer able to access mails sent to your LLP’s registered office, it is time to change that address to a new registered office address. You must inform Companies House of the change.

Send LLP accounts by post

Allow enough time to ensure that your LLP accounts reach Companies House before the filing due date. If your filing deadline expires on a Sunday or Bank Holiday, the law still requires accounts to be filed by the due date.

If you are using UK post office or Royal mail service, please note that First-class stamp does not guarantee next day delivery, so please consider guaranteed methods of delivery to ensure your accounts arrive on time. Your LLP is liable to pay late filing penalty even if your accounts is delayed by the post service.

Alternatively, seek accountants help with your LLP accounts.

Appoint or remove LLP partner

Appoint or remove LLP partner

Appoint or remove LLP partner in your limited liability partnership (LLP) must be communicated with Companies House within 14 days.

You must submit the correct Companies House forms to Companies House when your LLP partner resigned from office or you have appointed a new LLP partner for your LLP.

Any changes to your current LLP partners’ personal details must also be reported with Companies House.

You may notify Companies House of any changes to your LLP partners by post or through web filing service.

Below are the Companies House forms for notifying Companies House of your LLP partners.

Form referencePurpose
LL AP01Appointment of an individual member
LL AP02Appointment of a corporate member
LL CH01Change of individual member’s details
LL CH02Change of corporate member’s details
LL TM01Termination of appointment of member

You may send your Companies House forms to notify the changes in your LLP partners by post if you wish.

Below are the Companies House offices:

Cardiff office:
Companies House
Crown way,
Cardiff
CF14 3UZ

Edinburgh office:
Companies House
4th floor, Edinburg quay 2,
139 Foundainbridge,
Edinburg
EH3 9FF

London office:
Companies House
4 Abbey Orchard Street
Westminster
London
SW1P 2HT

Belfast office:
Companies House
1st floor, Waterfront Plaza,
8 Laganbank road,
Belfast BT1 3BS.

Starting a business guide

Starting a business guide

Starting a business guide to help you to get started with your business.

Starting a business is an exciting journey to embark on and it gives you a sense of total freedom. You tell yourself what to do and you are in control of your business and your time.

Here are the questions to help you get started with your business.

Step 1 : What business structure is suitable for your business?

Choosing the right form of business structure when starting out your business is important. Considerations should include the legal, tax, and business administration aspects of the legal entity you are going to use.

  • Sole Trader or Limited company – suitable for one man business
  • Conventional Partnership or Limited Liability Partnership – if more than one person jointly interested in business

If you decided to use a limited company for your business, you may incorporate your company directly with Companies House or use an accountant’s service. Your company registration is usually can be completed within one business day.

Step 2: How are you going to finance your business startup?

Financing your business is another important thing in starting your business. The startup capital required is dependent on your business.

For example, if you can use your personal computer for the business you may not need to buy new computer equipment.

However, if your business required you to have an office then obviously bigger sum of startup capital is required as signing up for serviced office lease required at least 3 months rent deposit and 3 months rent in advance. Some commercial property agents may willing to negotiate the lease terms but you still have to prove that you are capable of paying the office rent.

You may consider to use own cash/savings, loans from friends and family and you may sell your surplus personal assets for cash.

Borrow from banks and financial institution is another option. You will need to prepare a business plan to outline your business commercial viability.

Step 3: Who can help your business

Accountants can assist you to setup your accounting records system right from the beginning and advise on your business related financial matters.

Solicitors could advise you on your business contracts and preparing legal documents for you.

Business Link. It is a UK government supported organisation that provides useful information to businesses of all sizes.

Step 4: How much would it costs? – Accountants’ fee

Traditionally accountants charge their fee by the hour. There are also accountants offer fixed fee accounting services.

Whether fixed fee or charge by the hour, ask for couple of quotes to compare. Understand what included in the quote and what is extras.

If you intend to use limited company for business, it may be a good idea to seek accountants’ advice as soon as your company have been setup.

Step 5: Do you have to register for VAT?

You are not required to register for VAT if your sales are below the VAT registration threshold or if you only make “exempt” or “out of scope” VAT products and services.

However, you may opt to register for VAT voluntarily if it is beneficial to your business.

Step 6: Should you rent an office or work from home?

Many startup businesses are run from home. There are benefits working from home.

May be, consider taking up an office when your business can take care of itself – start generating sales and have sufficient cash.

Now that you are ready to start your own business, may good luck and good fortune be yours way. If you require any help please do not hesitate to contact us.

Limited company or sole trader

Limited company or sole trader

Limited company or sole trader for your business. Let discuss the advantages and disadvantages of the two form of business structure.

There are two types of limited company. They are private limited company and public limited company. Private limited company registration with Companies House is relatively easy and straight forward. There are more legal administration requirements to satisfy for registration of a public limited company. The minimum share capital required of a private limited company is £1 and for a Public limited company is £50,000.

Limited liability

Private limited company for business is the most popular choice for many new business. The main benefit of trading using a limited company is that of it is the company itself that shoulders the liability as opposed the person running the business. This is because the company and the owner of the company are considered a separate legal entity. The owner’s liability is limited to the amount he/she invested in the share capital of the company and any guarantees he gave when raising finance for the business.

As with a sole trader or proprietorship, the sole proprietor is exposed to unlimited liability. This means that any business debt can be met from the sole proprietor’s personal assets if his/her business fails.

Continuity

Trading as limited company also provides continuity of the business. The ownership of the company can be transferred easily whereas for sole proprietorship business normally ceases when the business owner wants to retire or death.

Company Law

The recent changes to Companies Act 2006 have made it even more attractive for sole proprietors to incorporate their businesses. The requirement to appoint a company secretary for a private limited company is now optional. This means that a single person can setup a limited company by himself. He can be the sole director and also the sole shareholder of the company if he/she wishes. However, the person must not be an undischarged bankrupt or disqualified by a court from holding a directorship.

Stability

Many financial institutions, banks and suppliers viewed limited company as being a form of more stable business entity compared to a sole trader. This is partly because the company accounts, shareholders and directors details are available for public inspection independently at Companies House and limited company must follows company law when comes to filing Companies House forms and accounts with the Registrar. There is a standards set by law.

Administration

Limited company must deliver confirmation statement and company accounts to Companies House every year and submit corporation tax return with HM Revenue and Customs. Also, maintain statutory books and notify Companies House when there is a changes in the registered office or director and so on.

Failure to fulfill these legal obligations, the director of the company can be prosecuted and are subject to fines of up to £5000 for each offence. There is also a late filing penalty for delay in filing company accounts to Companies House.

For sole proprietorship, the owner is to file self assessment return with HMRC only. No documents required to be filed with Companies House.

Redeem shares

Redeem shares

Redeem shares is allowed if your company have issued redeemable shares with the agreement that your company will buy them back at the option of your company or your shareholder after a certain period of time.

You can only redeem paid up redeemable shares.

Your company directors may, if authorized either by your company’s articles or by a resolution, set the terms of your shares redemption.

The terms of redemption of shares must be stated in your company’s articles.

Your company must submit the Companies House form SH02 together with a statement of capital to the Registrar of Companies within a month of your redemption.

The form SH02 can also be used to give notice of consolidation, sub-division and re-conversion of stock into shares.

The changes in your shares capital as a result of your shares redemption must be included in your confirmation statement.