FAQ-Frequently Asked Questions
Welcome to FAQ (Frequently Asked Questions), where we have compiled the answers to the most frequently asked questions about our services. Our goal is to provide you with clear and concise information to help you make informed decisions. At RezEx Accountants, we understand that you may have questions about our offerings, policies, or procedures.
About Rezex Accountants
No, Rezex Accountants operates entirely online. All documents are shared securely by email, signed digitally, and submitted to HMRC and Companies House on your behalf. We have offices in London and Manchester but no in-person meetings are required. We serve clients across the whole of the UK.
General Tax & HMRC
Self Assessment
Corporation Tax
The main purpose of a UTR number is to help HMRC identify tax payers. You will need your UTR number when completing and filing of corporation tax return and when someone is helping you with tax related matter.
A Unique Taxpayer Reference is issued and used by HMRC to identify a particular company or organisation for tax purposes only. It consists of 10 digits.
A Company Registration Number (CRN) is immediately created and assigned by Companies House when a new limited company or LLP is incorporated. It is a unique 8-digit number or 6 numbers prefixed by 2 letters.
CT 603 is a notice HMRC issues to a company to request the filing of a company tax return for corporation tax, including supplementary pages. If HMRC has sent company a ‘Notice to deliver a Company Tax Return’ (form CT 603), then the company must, by law, deliver a Company Tax return (CT 600). The said Company Tax return shall be prepared for the company’s accounting period that is the same as or ends in the period specified in form CT603.
Income in form of dividends paid to a company from earnings on which corporation tax has already been paid by the originating company is called franked investment income.
CT 603 is a notice HMRC issues to a company to request the filing of a company tax return for corporation tax, including supplementary pages. If HMRC has sent company a ‘Notice to deliver a Company Tax Return’ (form CT 603), then the company must, by law, deliver a Company Tax return (CT 600). The said Company Tax return shall be prepared for the company’s accounting period that is the same as or ends in the period specified in form CT603.
If your company has made common law claims concerning tax paid ‘under a mistake of law’. If a restitution award is made, whether because of judgment or an agreement, THE INTEREST element of the award will be chargeable to corporation tax at a special rate of 45% instead of the normal rate (i.e., currently 19%). This interest is defined as restitution interest. It does not apply to any element of the award that represents the repayment of overpaid tax.
A CT activation code is a 12-digit code that is needed to activate your company’s corporation tax account. Once you successfully enrol for the corporation tax online service, you will receive a letter containing the activation code within 7 days of enrolment. The activation code is valid for only 28 days from the date mentioned in the letter and you need to use it before that. If it expires then you will have to request a new activation code online. This can be done by signing in for HMRC online services and enrolling for the services again. But if the code is lost within 28 days, then sign in for HMRC online services and ask for a new code.
You need to file your company’s tax return within 12 months from the end of an accounting period to which it relates.
The corporation tax bill needs to be paid by you within 9 months and 1 day from the end of an accounting period to which it relates.
The Extensible Business Reporting Language (XBRL) is a standard used for tagging business data for computers. It involves applications of computer-readable tags to business data such that data is automatically processed by the software.
Some organisations, such as limited companies, pay Corporation Tax on the profits that they make from trading and investment income. It’s also applicable to other organisations, like societies, associations, clubs and charities. They will have to submit a CT600, along with supporting documents, so that HMRC know how much Corporation Tax is due.
A Company Tax Return is the financial information that most companies file with HMRC each year to report on their earnings, losses, loans and any other factors relevant to their tax liability. Companies use this information to calculate the Corporation Tax that they owe.
Yes, you can make changes to your corporation tax return either online or by post within 12 months from the filing deadline for the corporation tax return for the said period.
Currently, corporation tax rate is 19%.
Yes, you can make changes to the corporation tax return of your company upto 12 months after the tax return filing deadline. This can be done either online or by sending a paper return to HMRC. Suppose you need to make changes in the return for the year ending on 30th November 2017, then deadline for filing the return will be 30th November 2018. Thus amenedments, if any, need to be made upto 30th November 2019.
IR35
A worker is involved in off-payroll working when they work for a client through their intermediary, often a personal service company (PSC), but would be an employee if they were providing their services directly instead of involving the arrangement of providing service through a PSC. An intermediary will usually be the worker’s personal service company. It could also be a partnership, a managed service company, or an individual.
Inside IR 35: The entity inside IR 35 you are required to pay tax & National Insurance Contributions on the entirety of your deemed salary, just like a permanent employee would have.
Outside IR 35: The entities outside IR 35 are deemed to be legitimate companies and they continue to operate and pay tax accordingly (as any other limited company would have).
IR35 or off payroll working rules refer to an anti-avoidance tax legislation designed to collect tax and National Insurance at a rate similar to employment, where the contractor is an employee in all but name.
Check Employment Status for Tax service (CEST) is a tool that has been developed by HMRC to help the user in determining the employment status of a person, i.e., whether the said person is employed or self-employed for tax purpose. It is pertinent to note here that the tool assumes there is a contract in place between employer and employee to see whether the engagement can be classed as employment or self-employment. HMRC claims it to provide accurate results and that it shall stand by the result produced by the tool provided the information input is accurate and the tool is used in accordance with the guidance.
A Managed Service Company (MSC) has a separate set of owners and organisers managing a group of contractors. Management Service Company differs from Personal Service Company. MSC manages and controls the affairs of the business, not the contractor. Further, MSC are subject to different regulations by HMRC.
A Personal Service Company is a limited company set up to provide services of a single contractor. In other words it is generally an “intermediary” taking the form of a limited company. This company is generally owned 100% by the contractor, and he/she is usually the sole director too.
Forming a PSC has many benefits. Firstly, the liability of the sole contractor becomes limited. Secondly, it provides a more formal and professional way to present services to their clients. Also, company form of business structure enables managing taxes efficiently.
VAT
Using the Flat Rate Scheme you pay VAT as a fixed percentage of your VAT inclusive turnover. The actual percentage you use depends on your type of business.
A first year discount. If you are in your first year of VAT registration you get a one per cent reduction in your flat rate percentage until the day before the first anniversary you became VAT registered.
VAT Flat Rate Scheme might not be right for your business if:
- you buy mostly standard-rated items, as you cannot generally reclaim any VAT on your purchases
- you regularly receive a VAT repayment under standard VAT accounting
- You making a lot of zero-rated or exempt sales.
You usually submit a VAT return to HMRC every 3 months. This period of time is known as your ‘accounting period. However, your VAT accounting period will comprise of 12 months in case you have opted for VAT Annual Accounting Scheme.
The due date for submitting the vat return online is 1 month and 7 days after the end of a VAT accounting period.
The due date for submitting the return online and paying HMRC are usually the same – 1 month and 7 days after the end of a VAT accounting period.
If you opt for annual accounting scheme you need to file VAT return only once a year. Your VAT accounting period will comprise of 12 months. The VAT return shall be due in 2 months from the end of VAT accounting period.
You can usually reclaim the VAT paid on goods and services purchased for use in your business.
You may be able to reclaim VAT paid on goods or services bought before you registered for VAT if the purchases were made within certain time limits.
If a business is registered for VAT then it must charge VAT on all its taxable sales. There’s no option to decide not to charge VAT to certain customers.
Value added tax, or VAT, is the tax you have to pay when you buy goods or services.
Businesses with a turnover of more than £85,000 must register to pay and charge VAT on the products and services they buy and sell. Other businesses can choose to register for VAT voluntarily.
When goods or services are zero rated they are still called VAT able supplies. The VAT rate on such goods and services is zero. Hence, a supplier supplying goods at zero rated can reclaim credit on purchases.
When goods or services are zero-rated, they are still called VAT able supplies. The VAT rate on such goods and services is zero. So, if the taxable turnover goes above £85,000 the supplier needs to register under VAT.
The partly exempt business can claim tax credit on capital goods through capital goods scheme. Under this scheme VAT recovery is adjusted based on the taxable use. As the taxable use increases, a further amount of input tax can be claimed and, as it decreases, equivalent input tax already claimed needs to be repaid. Click here to know more about capital goods scheme.
No. VAT is generally recorded, collected, and paid by the seller. But if a transaction is covered under reverse then the VAT will be recorded by the buyer instead of the seller. In such situations, VAT is paid by the buyer directly to HMRC instead of the seller.
However, the VAT reverse charge applies to intra-community EU transactions, and with effect from 1st October 2020, this will also apply to industry services.
MTD refers to Making Tax Digital. With effect from1st April 2019, all the VAT registered businesses with an annual turnover of more than £85,000 were mandated to maintain their VAT records digitally and file the VAT returns through MTD-compatible software. Businesses with a taxable turnover less than the VAT threshold can voluntarily opt for it.
A group of companies connected to each other may choose to file a single VAT return. Such group of companies are treated as single entity and so are called a VAT group.
Making VAT group facilitates two or more eligible persons to account for VAT under a single registration number and allows any one of the eligible persons within the group acting as the representative member.
VAT return is basically a form that depicts the amount of VAT owed to HMRC or the amount they owe to you. It shows total sales and purchases, amount of VAT owed, amount of VAT reclaim, VAT refund from HMRC for a particular VAT accounting period.
Providing the errors meet certain conditions, you do not need to tell HMRC about them – you can simply correct them by adjusting your next VAT return.
You can adjust your current VAT return to correct errors on past returns as long as the errors:
- are below the reporting threshold;
- are not deliberate; and
- Relate to an accounting period that ended less than four years ago. Or you can send form VAT652 to the VAT Error Correction Team.
A VAT-registered number is a unique identification issued to businesses that are registered to pay VAT. Businesses can find their VAT number on their VAT registration certificate issued by HMRC.
A UK VAT number is nine (9) digits long, with two letters at the front indicating the country code of the registered business. For example, for Great Britain (UK), the first two digits of the VAT code are GB.
If you’re dealing with a supplier in another EU country then its VAT number will follow a different format, with its own unique country code. HMRC provides a list of ID formats from European Union member states
From April 2019, VAT registered businesses and organisations with taxable turnover above the VAT threshold of £85,000 are required to:
- Maintain accounting records digitally in a software product or spread sheet. As a result, maintaining paper records has ceased to meet the legal requirements in tax legislation.
- Submit VAT returns to HMRC using a compatible software product that can access HMRC’s API (Application Program Interfaces) platform.
PAYE
You can find on any correspondence you receive from HMRC, like tax forms, payslips, P45 and P60 forms. It is also in the welcome pack you receive when you first register your business.
Your Accounts Office Reference Number is a unique, 13 character code which will be shown on the letter you received from HMRC when you first registered as an employer.
You will be required to put in your Accounts Home Office Reference Number when you intend to make PAYE payments to the HMRC.
Yes, benefits in kind can be payrolled if the employer has registered with HMRC for using the ‘payrolling employee’s taxable benefits and expenses service’. All the benefits can be payrolled except employer providing accommodation and interest free and low interest loans. These needs to be reported in P11D even if you’re payrolling other benefits for the same employees. Further, if company car benefits are payrolled then there is no need of P46.
If the employer intends to payroll benefits and expenses then he/she needs to register for payroll before the start of tax year in which he/she wishes to begin running it.
If benefits in kind are payrolled then there is no requirement of submitting P11D form. However, all the benefits except employer providing accommodation, interest free and low interest loans can be payrolled. Hence, these need to be reported in P11D even if you’re payrolling other benefits for the same employees.
Further, you need to complete and file form P11D(b) to report Class 1A National Insurance contributions on benefits in kind despite payrolling them.
P87 is a form that can be used by employees to claim tax relief for allowable employment expenses. If the allowable expenses are less than £2,500, the employee can claim tax relief through P87 form, but if the allowable expenses are more than £2,500 then these can be claimed only by filing a self-assessment return.
If benefits in kind are payrolled then prima facie there is no requirement of submitting P11D form.
However, all the benefits except employer providing accommodation, interest free and low interest loans can be payrolled. Hence, these need to be reported in P11D even if you’re payrolling other benefits for the same employees.
Further, you need to complete and file form P11D(b) to report Class 1A National Insurance contributions on benefits in kind despite payrolling them.
You must collect and keep records of:
- What you pay your employees and the deductions you make.
- Reports you make to HM Revenue and Customs (HMRC).
- Payments you make to HMRC.
- Employee leave and sickness absences.
- Tax code notices.
- Taxable expenses or benefits.
- Payroll Giving Scheme documents, including the agency contract and employee authorisation forms
The records must be maintained for 3 years from the end of the tax year they relate to. HMRC may check your records to make sure that the employer is paying the right amount of tax. Click here to read more about PAYE and payroll.
EPS refers to Employer Payment Summary. It is basically used to claim refunds/recoverable amounts from HMRC or making declarations to HMRC. Few situations in which EPS needs to be filed are:
- For recovering statutory payments
- For reporting Apprenticeship levy
- For recovering Construction Industry Scheme (CIS) deductions suffered
- For informing HMRC that you have ceased using PAYE scheme, etc.
- For making an election to claim the employment allowance.
EPS refers to Employer Payment Summary. It is basically used to claim refunds/recoverable amounts from HMRC or making declarations to HMRC. Few situations in which EPS needs to be filed are:
- For recovering statutory payments
- For reporting Apprenticeship levy
- For recovering Construction Industry Scheme (CIS) deductions suffered
- For informing HMRC that you have ceased using PAYE scheme, etc.
- For making an election to claim the employment allowance.
FPS refers to Full Payment Submission. FPS is sent to HMRC to inform HMRC about the payments made to employees and the deductions made. It contains information like starter and leaver information, employee details, employee payment and deduction information etc.
FPS refers to Full Payment Submission. FPS is sent to HMRC to inform HMRC about the payments made to employees and the deductions made. It contains information like starter and leaver information, employee details, employee payment and deduction information etc.
Employer Summary Scheme (EPS) needs to be sent to HMRC by the 19th of the following tax month to apply any reduction (for example statutory pay) on what you’ll owe from your FPS.
Full Payment Submission (FPS) needs to be sent to HMRC on or before each payday even if taxes and National Insurance are paid to HMRC quarterly or monthly.
Payroll refers to the process of evaluating employee’s pay, deducting income tax and national insurance contributions and reporting the same to HMRC.
PAYE refers to the system of Pay As you Earn. It is a system used by HMRC to collect Income tax and NI contributions from employee’s pay as they earn it.
A P11D form is sent to HMRC by UK employers outlining the cash value of any work-related taxable expenses and taxable benefits you’ve received over the tax year (6 April-5 April). These are only benefits or expenses that have not already been included in your wages.
Yes, if you wish to deregsiter from payrolling of benefits you can do it before the start of tax year using the online service.
The PAYE reference number is given to every business that registers with HMRC as an employer. It’s a unique set of letters and numbers used by HMRC and others to identify your firm.
This reference is made up of two parts: a three-digit HMRC office number and a reference number unique to your business. It will usually look something like 123/A45678 or 123/AB45678 (though there can be exceptions).
Export-Import
A worker is involved in off-payroll working when they work for a client through their intermediary, often a personal service company (PSC), but would be an employee if they were providing their services directly instead of involving the arrangement of providing service through a PSC. An intermediary will usually be the worker’s personal service company. It could also be a partnership, a managed service company, or an individual.
Common Transit Convention (CTC) allows quicker movement of goods across the borders of common transit countries. The common transit countries are EU member states, Iceland, Norway, Liechtenstein, Switzerland, Turkey, North Macedonia, Serbia. The customs declaration and payment of customs duty needs to be paid only when the goods reach final destination. This facilitates cash flow benefits and reduces administrative burdens.
Compliance
Yes, the companies need to mandatorily report Person with Significant Control (PSC) changes to Companies House as and when they happen. Besides reporting changes to Companies House, companies are also required to maintain a Register of People with Significant Control. If you fail to comply with these requirements you could be committing a criminal offence.
- Filing of dormant accounts to Companies house- Dormant accounts should include a balance sheet and any relevant notes for the past financial year. The accounts will have to be filed with Companies House every year, no later than 9 months after the end of the company’s financial year.
- Filing of confirmation statement to Companies House- You also required to provide an annual confirmation statement for a dormant company every 12 months. The due date for filing a confirmation statement for the dormant company is 12 months from the date the company was incorporated and then needs to be filed every 12 months. It must be filed within 14 days from this date. It is to be filed even if there is no change to the relevant details.
- Filing of dormant accounts to Companies house- Dormant accounts should include a balance sheet and any relevant notes for the past financial year. The accounts will have to be filed with Companies House every year, no later than 9 months after the end of the company’s financial year.
- Filing of confirmation statement to Companies House- You are also required to provide an annual confirmation statement for a dormant company every 12 months. The due date for filing a confirmation statement for the dormant company is 12 months from the date the company was incorporated and then needs to be filed every 12 months. It must be filed within 14 days from this date. It is to be filed even if there is no change to the relevant details.
You can inform HMRC about the dormant status by calling on 0300 200 3410 or you can update the same over the Web chat Or write a letter addressed at Corporation Tax Services, HM Revenue and Customs, BX9 1AX, United Kingdom.
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