Tax year end housekeeping

Q. With the tax year end approaching is there any housekeeping that businesses can do to save time at the year end and to make tax savings where possible?

A. If you run your own payroll you can ensure that it is balanced to the end of February and that you have all necessary employee data such as full names addresses dates of birth and national numbers that you will need to prepare the forms P35, p14 and P60.

The form P35 must be submitted to HM Revenue & Customs by May 18 at the latest and may be rejected if the information is incomplete leading to potential penalties. Where your payroll is prepared by your accountant or a bureau they will be in contact with you to check their employee data, and you can help them by providing any information on a timely basis.

The other year end task that employers will need to address is the preparation of forms P11d to report benefit in kind details to HM Revenue & Customs. Again, submission of this form is subject to a strict deadline of July 6 and failure to submit return by that date will give rise to penalties. The rules concerning calculation of benefits provided to employees are complex and many employers prefer to instruct their accountants to prepare the forms on their behalf. However this does not release the employer from their obligation to provide full information to their accountants to enable them to prepare the forms.

Therefore you should that your records are adequate to be able to identify any benefits provided. One area that is always problematic is directors’ overdrawn loan accounts and you should ensure that any loan accounts are kept up to date.

Businesses that have a March 31 or April 30 year end should review any proposed expenditure and consider the timing of that expenditure in order to accelerate tax relief where appropriate. For example, should upcoming purchases of major capital items be made before or after the year end. Relief for capital allowances will clearly be accelerated if the item is purchased before the year end.

You may wish to review your fixed assets register and write off any assets that are damaged or out of date, again to maximise available deductions. Make sure you are using the correct nominal codes: using the right code for certain entertainment, for instance, will mean you can claim back VAT.

There is a wealth of information out there – HMRC and Business Link, for instance, make a number of guides available – but with the tax year end looming closer, you should speak to your advisor for help if necessary.

Anne Wilson, senior tax manager, Pierce.