News from Cryer Sandham Limited
Business and financial news

July 2007

 

B) 2008 code notices/Plld issues

 

We are currently experiencing problems with many 2008 code notices for employees/clients directly relating to the PIIds recently submitted. Whilst in many cases the PI Id's are correct (it is a legal obligation to declare any and all expenses reimbursed - taxable or otherwise) we have discovered that the Inland Revenue have for the first time fully automated this system. The net result is that the 'computers' on receipt of said PIIds are processing all information on them as taxable - this is obviously not correct.

 

We have spent significant amount of our time (and that of the Inland Revenue's) getting all these codes corrected. Should you believe your code notice to be incorrect in this regard please contact us.

 

May we say however that, as long as you are required to complete a tax return, the code notice 'errors' will only ever have a cash flow affect i.e. it will not alter the overall tax found to be payable on completion of the tax return. In the worst case scenario all that the code notice would have achieved is for you to pay too much tax in the year which is then credited back to you once your tax return is filed.

 

C) Small companies rate of tax.

For those affected we are pleased to advise that the Inland Revenue have recently lost the 'Arctic case' in the House of Lords regarding husband and wife dividends. However, and possibly as a pre-emptive strike to this decision, the then Chancellor of the Exchequer Mr Gordon Brown, announced in his budget changes to the small companies rate of tax over the next few years as follows:-

 

Tax Year         Rate of tax                  Proportional

increase

 

            2006/07           19%                             N/A

            2007/08           20%                             5.3%

            2008/09           21%                             5.0%

            2009/10           22%                             4.8%

 

Whilst these changes in themselves do not remove the tax advantages that incorporation may have they will over time reduce such benefits.