Tax Help

[andreacb]

Good Evening

Please could somebody offer me some advise in relation to getting my partners tax account looked at by somebody independant from his accountants. Since November 2007 i have paid £18273 and they say he still owes £11829.59 ! a total of £30102.59 on a turnover per year of approx £83000 before tax for the last 5 years.

I have been sending payments every week to try and clear the account for him but it just never seems to go down. The latest Statement of Liabilities shows from 2005 surcharges of £52.24 & £28.26. Why ? Cannot understand how they offset the weekly payments.

His accountants have never offered any advice they just said keep making the payments.

Am i being stupid to think this is not right or have i got it totally wrong.

Andrea

 

[Jaykay]

Could you be a bit more specific? Tax is calculated based on profit (not turnover). Do you know the profits for the last 2 or 3 years and when is his year end?

Do you know the annual tax bill? (The easiest way is to double the July payment). What you pay and when you pay it does not give a figure, it is what is due which is important!

The 2005 surcharges are 5% of the outstanding tax at 28th Feb and 28th August for that year. They normally set payments against tax first, then surcharges and interest.

Cheers.

 

[andreacb]

Hello Jaykay

The year end is 31st March

2006 Net Profit £21,420 Tax due £4172.10 (After Adjustment)
2007 Net Profit £27,148 Tax due £4172.10
2008 Net profit £25,588 Tax due £4486.50

Thankyou for replying

 

[elaine@cheapaccounting]

Very difficult to give specific advice - there could be interest and penalties due on past years.

You should contact HMRC to obtain a schedule of tax, interest, penalties and amounts you have paid so you can see the overall picture.

Your accountant should do this and take you through it but from your other post, it sounds like this may be an issue for you.

 

[Jaykay]

The year end is 31st March

2006 Net Profit £21,420 Tax due £4172.10 (After Adjustment)
2007 Net Profit £27,148 Tax due £4172.10
2008 Net profit £25,588 Tax due £4486.50

This will sound convoluted but bear with me!

The 2005/06 tax bill will initially be estimated to be whatever the 2004/05 tax bill was. This tax is payable in January and July 2006. When the accounts to 31.03.06 are worked out and the 2006 tax return is completed, this amount will be adjusted in January 2007. Repeat this for each year!

Looking at your profit figures, you can see that the profit jumped up in the 2007 year then back down a bit in the 2008 year. I would expect the tax bills to be roughly:

£4,172 for 2005/06 (I have taken your figure)
£6,350 for 2006/07
£5,850 for 2007/08

Without playing around with reducing payments on account, the tax payments should be approximately:

31.01.07 £2,086 - 1st 2006/07 being half the 2005/06 bill - estimate

31.07.07 £2,086 - 2nd 2006/07 being half the 2005/06 bill - estimate

31.01.08 £2,178 - balancing payment for 2006/07 (£6350 - £4172)
31.01.08 £3,175 - 1st 2007/08 being half the 2006/07 bill - estimate

31.07.08 £3,175 - 2nd 2007/08 being half the 2006/07 bill - estimate

31.01.09 £( 500) - (negative) overpayment for 2007/08 (£5850 - £6350)
31.01.09 £2,925 - 1st 2008/09 being half the 2007/08 bill - estimate

31.07.09 £2,925 - 2nd 2008/09 being half the 2007/08 bill - estimated

He was due to pay:
31.01.07 £2,086
31.07.07 £2,086
31.01.08 £5,353
31.07.08 £3,175
31.01.09 £2,425
31.07.09 £2,925

This will be plus interest and surcharges if any was unpaid at any time.

It begins to make sense when viewed over a number of years but it is not the easiest system!

Hope this helps.
Cheers.