Have you overpaid National Insurance?

Have you overpaid National Insurance?

If you used to run a sole trade business in the last few years and either transferred it to a limited company or ceased trading, you could well have.

This year in particular, I have seen a worrying trend. HMRC’s systems are so disjointed that even though you may have ceased your sole trade business during a particular year, you will still be charged Class 2 National Insurance for the whole of that year.

Having spoken to numerous different departments at HMRC, the problem arises from the different systems in use by the income tax office and the NIC office. Putting your date of cessation within your tax return makes no difference to the amount of Class 2 NIC charged and, in every case I have seen, this leads to the taxpayer being charged more than they should be.

You can bet that if the tables were turned, and you owed HMRC any extra Income tax or National Insurance, they would come after you with more penalties and interest than you can shake a stick at.

My advice if you transferred your sole trade business to a limited company, or ceased trading, in the last few years would be to check if you have been charged the full amount of Class 2 NIC for that year.

If you have, it is always worth getting the overpaid National Insurance returned to you before you lose the right to appeal!

Royal Mail Postal Claims

In my experience, since the privatisation of royal mail, lost parcels have not only increased, but the rate of claims for these have also dropped.

Unreceived parcels could be the downfall of any eCommerce business. Be that through amazon suspension (through no fault of their own) or the damage it can do your reputation in a cutthroat industry.

Making a postal claim can be a cumbersome process. Not only do you need to prove the items value, you also need a proof of postage. A drop and go manifest sheet or a tracking number will suffice but, pulling these together can be a massive burden on your time.

Recently, I complete a postal claim for 65 lost parcels. This needed around 130 pages of documents to validate the claim which, as you can imagine, took a while to pull together. As you only have 80 days once the parcel has been sent to make a claim (reduced from 90 not too long ago), this is often the biggest reason many businesses don’t claim for lost parcels. This can only lead to lower profit margins.

My advice to any businesses would be to claim for each and every lost or damaged parcel. You don’t need to claim for each individually using the online form, any business seller can use the business multi claim form available on Royal Mail’s website. Even if you don’t have a Royal Mail business account number.

To make the pulling the information together as easy as possible, keep your proof of postage and your purchase invoices in an organised cloud file. This will allow you, or anyone you ask, to complete the postal claim with the lowest effort required. Saving you time but also allowing you to claim back what is rightfully yours.

Royal Mail Claims - https://bit.ly/2F43Gi0

Cryptocurrencies

Does your business accept payments in bitcoin?

Cryptocurrencies, like Bitcoin, are fast becoming a modern way of accepting payments. However, most people don’t realise that the tax implications are vague at best.

Back in the day, people could rely on their sterling to purchase pretty much anything, from high street shops to online retailers. Even if the store you were purchasing from was based in another country, providers like PayPal made it easy to exchange your pounds at whatever the current exchange rate was.

A few years ago, this all changed with cryptocurrencies. Bitcoin entered the market, with others soon following suit. Now there are hundreds, if not thousands, of businesses accepting payments with cryptocurrencies and a few are even creating their own!

With the big rise in Bitcoin’s value last year, do you realise that the gain you made is taxable?

Currently there is no concrete guidance from HMRC as to how these new “assets” are treated as they are not considered cash, or even financial assets in some circumstances!

This leaves us with the dilemma of how is it treated? The simple truth is that it depends on the reason for the currencies being held. If they are received as income for a sale of goods or services, they are considered income and thus taxable as income tax, along with the obligation for VAT.

If the currency is held for investment purposes, the gain that arises is classified as a capital gain and thus, subject to capital gains tax (or as a chargeable gain for limited companies).

This creates a problem that will only be solved once concrete guidance is issued which so far, does not look to be anytime soon!

One thing that is for certain though is that it is taxable in one form or another.