VAT on E-books

Coffee and Vodka is available only as an e-book via Amazon and therefore carries 3% VAT.

The lack of harmonisation across the EU never fails to surprise me. I understand that it is extremely difficult to achieve unity between the 28 states; still we have been doing it for a while now, so you’d think some kind of standardisation of taxes at least would be in force by now.

Not so.

At the moment VAT on e-books is charged at different rates in different EU countries.

In the UK e-books carry 20% VAT while print books are free of tax. In France e-books have 5.5% VAT, while in Luxembourg where Amazon is based, the VAT is charged at 3 percent.

This week, however, according The Bookseller magazine, the European Council is going to debate the issue, with the aim of harmonising VAT on e-books across Europe.

Related to this issue is a new EU regulation coming into force in 2015, which states that VAT has to be charged at the rate in force in the country where the book is sold, not in the country where the e-store is based. This will make pricing decisions more complicated, but, on the other hand, if the UK becomes VAT free for e-books, it will also reduce the price of the books sold to UK readers.

Here’s hoping that the European Council will come to the right decision for us, and that e-books will in the future be charged at 0% rate VAT, to make them equal to print books. Because, even if e-books are generally cheaper than print books, surely there is absolutely no reason to charge VAT on the digital content if the print copy doesn’t carry it?

Here’s a link to The Bookseller article for more information.

Complete your tax return now!

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Now that summer is on its last legs, it’s time to think about completing your self-assessment tax return. Oh yes!

I know it’s nowhere near the deadline of 31 January 2014 yet, but just think how smug you’ll feel when all your tax affairs are in order before the huge HMRC posters go up after Christmas! (Sorry I mentioned the C word, but I promise I won’t tell you how many shopping days are left…)

There are several benefits of being ‘unfashionably early’ as one of my clients puts it.

1. If you owe any tax, you can pay it and avoid the 3% interest; or if you need to budget for a tax bill, you’ll have time to do so.

2. If you have paid too much tax up front in payments on account, you can get a nice little cash bonus. Since the interest the HMRC pays to you for tax overpaid is much less than the interest they charge (isn’t that just always so?), it makes sense to have your money out of the HMRC coffers as soon as possible.

3. If you are self-employed, as soon as you do your tax return for this tax year, 2012/13, you will know how much you need to pay on account for the next tax year.

4. If you are on PAYE and have to complete a tax return, the more time you give HMRC to  collect any tax owed, the less effect this has on your monthly pay. Similarly, if you’ve overpaid tax, it makes sense to complete your return now and have any money back as soon as possible from HMRC.

4. Finally, it’s much easier to complete a tax return and to find all the relevant paperwork, invoices, receipts etc., when the transactions are in fresh memory. Time doesn’t always heal…

If you need help filling your 2012/13 tax return, you know who to contact!

Enjoy the rest of the summer!

Don’t forget your tax return!

Tax Innter Peace_0

Timing, the secret of comedy…

While David Cameron, speaking in Davos, is berating the big companies on evading UK business tax, here in the UK, HMRC is running a ‘zen’ advertising campaign to get us ‘ordinary’ people to complete our tax returns on time.

If you have any income that is not taxed under a PAYE scheme, or you are self-employed, are a high earner or need to claim work-related expenses against the taxes you pay, you need to fill in a Self-Assesment Tax Return. A full list of who needs to fill in a tax return is here. The penalty for a late submission is £100 so it’s best to get your return in, even if you submit it with estimated figures.

It’s useful to note, however, that the tax you owe is also payable on the 31st January, so if you have estimated your income and expenses, and you pay too little tax, HMRC will charge interest on any balance unpaid.

Also, if it’s your first time submitting an online return (it’s now too late to get a paper one in – you’ll pay the penalty if you do), you’ll need an access code sent to you by HMRC after you’ve registered online. This can take 7-10 days. It’s now 6 days until the returns are due in, so time is of the essence here. But, in a concession to first-timers, the tax office told me personally that they will not issue fines for late returns for anyone who signs on (for the first time) before 31st January, and gets in their return before 14th February.

You still need to pay your taxes by the 31st of January, the tax man told me.

There’s no such thing as a free lunch – or coffee.

VAT on books

Now this is a subject where my two worlds collide – VAT on books. Both my Accountant’s and indy writer’s interests were alerted when I read today in The Bookseller about the latest news on this strange taxing anomaly.

There’s no VAT on books, is there? I hear you enquire. That’s right, there isn’t, unless these books are in digital form, in which case, in their infinite wisdom the HMRC have decided they need to charge the consumer 20% on their reading pleasure. (As if we struggling indy writers didn’t have enough troubles on our plate.)

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The Englishman costs £1.91 – with zero VAT it’d cost just £1.59.

But it’s not as simple as that.There is a very small glimmer of hope in this area, however. A law firm, Berwin Leighton Paisner believes that they can take the HMRC to task on charging different rates of VAT on the same reading material. Their case will be heard in mid 2013.

HMRC have publicly claimed that if they have to change the VAT on e-books they will also have charge VAT on physical books. In other words, parity will mean VAT would be charged on all books, whether digital or physical. Obviously no-one wants this.

The tax man has pointed out that it’s illegal under the European Court of Justice to extend UK’s scope of zero-rated VAT. But the lawyers BLP argue that removing 20% VAT from e-books means that the Government would only apply an existing concept (of zero rated VAT) to a new technology product in the same category.

I sincerely hope that BLP win their case and 20% VAT is removed from e-books. To me, as an accountant and a novelist, it makes no sense at all to charge VAT for one but not for the other.

Forewarned is forearmed!

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During my professional career in accountancy, the tax man has had several what I would call ‘pet hate sectors’. In order to be efficient, (and I also suspect for political reasons) HMRC chooses one or several sectors in business at a time, and then sets out to investigate them in detail.

Sometimes this is in order to crack down on plain and simple tax evasion, sometimes it’s to go after a part of the economy which is cash based and therefore seen as part of the black economy. Sometimes they even issue amnesties to flush out unpaid tax at a lower penalty rate. (Last year’s Plumbers Tax Safe Plan is a good example)

But beware, when HMRC chooses a business sector, it comes down on it like a ton of bricks. (see the recent jailing of a plumber who’d never paid tax)

So be forewarned and read this excellent article on the AAT blog this week about HMRC task forces to see what the tax man has his eye on this time.

Or, alternatively, seek the advice of a good accountant who will warn you if your business sector is under the (possibly unwelcome) gaze of the tax man and make sure your tax affairs are in order.

Tax deadlines are looming

There are a few deadlines in October which you should be aware of if you are self-employed, administer a trust, or are a director of a company, or otherwise have a slightly more complicated tax life!

If you have become self-employed in the last tax year (before April 4th 2012), ie. you do not pay tax and National Insurance through an employer run PAYE scheme, you need to let the HMRC know about this before October 5th 2012. The form that you need to fill in is called CWF1  (SA1 for non self-emplpyed income and SA40 for partners). You can download this from the HMRC site, but you need to post it, so this is urgent. When you’ve done this, the tax office will issue you with something called Unique Tax Reference, or UTR, which will become your ID number when you deal with the tax office. If you fail to notify the HMRC about your self-employed status, there are penalties, so it’s a must do!

If you have already been sent a Tax Return for 2011/12, and you wish to submit a paper return, and you wish the HMRC to calculate your tax, you have to do this by the end of October. This is the same for all self-employed people, company directors, trusts and others who are required to fill in a Self Assessment Tax Return.

But if you can file your return online, and wish the tax you  may owe to be collected through your PAYE code (if you for example have dividend or rental income on top of that charged through PAYE, or if you are a Company Director, or employee with benefits in kind such as a car), and you owe less than £3,000, the deadline is 31 December 2012. If you need help to ascertain how much you owe, ask your friendly tax adviser for help!

For all others who need to fill in a Self Assessment Tax Return, the online deadline is 31st January 2013.

If you have any queries, please don’t hesitate to contact me on helena@halmeaccounts.com

Next time I will be posting about Payments On Account, and how to reduce them.

A free seminar on pensions

We all know we should pay more into our pensions, but how should we do this in the most tax efficient way? My professional organisation, AAT, runs a series of FREE events in London aimed at both members of the AAT, and general public. The first event of the autumn is a particularly wide appealing one on pensions. The speaker, Michael Steed, is well known for his engaging speaking style. He’s Member of the AAT and Fellow of the Chartered Institute of Taxation, and is a specialist presenter of technical courses – in tax, innovation in business and business development.

Please RSVP David Frederick david@marcus-bishop-associates.co.uk or Kelly Slater kellys24@hotmail.co.uk  if you’d like to attend this free event on 20 September at  Southbank University at 7pm. As well as informative discussion and networking during the event, there will also be refreshments.

LONDON BRANCH 

Seminar

Pensions

Where are we now? 

Presenter

Michael Steed 

Date

20 September 2012

Start

19:00

End

20:30

Venue

London South Bank University

Castle Lecture Theatre

London Road Building 100-116 London Road,

London SE1 6LN

Contact

David Frederick
david@marcus-bishop-associates.co.uk

Kelly Slater
kellys24@hotmail.co.uk

Employee tax forms – P11D’s

It’s that time again when the annual P11D forms are due to the Inland Revenue.

Here is a quick reminder who has to fill in these forms and why we have to do it.

The P11D Form is a declaration made by employers on any benefits in kind or ‘emoluments’ that the employee has received over and above the salary and benefits included in the payroll and where the tax has been deducted through the PAYE system.

P11D must also be completed for most Directors of a company, as well as any employees who earn more than £8,500 per annum. (There’s also a form for employees who earn less than this, P9D)

Employee benefits which have to be declared include:

  • Private medical insurance
  • Company cars and fuel
  • Shopping or travel vouchers
  • Interest-free or low interest (below 4% pa) loans
  • Living accommodation provided by the employer
  • Services provided by employer, such as telephone lines or holidays
  • Goods given to the employee. This includes any clothing provided which does not include a company logo and can be classified as a uniform.

All benefits in a P11D must be cost including VAT and many of the charges also attract Class 1A NIC contributions which must be made by 19 July (or 22 July if payment made electronically).

The deadline for submission of P11D forms is 6 July 2012.

The P11D forms and more detailed information can be found on the HMRC website. P11D’s can still be submitted in paper form, but most payroll software will allow filing of the P11D’s online.

As always, if you require any help with tax or accountancy matters, contact us on +44 (0)7860354405 or helena@halmeaccounts.com

Halme Accountancy

Friendly personal service in Tax, Accountancy and Business Consultancy.

- AAT Licenced Member in Practise

- HM Revenue & Customs registered agent for Self Assessment and Corporation Tax

- PI Cover for your peace of mind

Contact:

Halme Accountancy

23 Fuller Court

149 Park Road

London N8 8JD

07860354405

info@halmeaccounts.com

Helena Halme is licensed and regulated by the AAT under license number 5488

If you are here because you were looking for Helena’s London Life, I’m sorry. This link should get you back to my other blog.

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