A tax on banks? A view from a bishop and a writer
The Sunday Times (London, 14th March, 2010) had an interesting piece on what to do about taxing financial institutions in the hope of getting some money for re-distribution to the less well off. Rowan Williams, the Archbishop of Canterbury, and Richard Curtis, the writer, comment on a proposed “Robin Hood” tax. The tax, which would be levied at 0.05% (that’s 50p/c per £/€1,000) on certain financial transactions could yield £250 billion (yes billon) per annum. Williams and Curtis, neither of whom are obvious financial or economic experts feel thus amount of money could go a long way towards improving social services (education, health, transport etc.) in a developed country like the UK. The also suggest some money could be given to developing countries. Given it’s an election year in the UK and how the UK taxpayer has, like other European taxpayers, bailed out the banks this sort of thing might become an issue on the doorsteps. Read the full article here
Settling your tax debts
As the old saying goes, “only two things in life are certain, death and taxes”. In the current economic climate, many businesses are dying off, but the taxes associated with them don’t necessarily “die” so quick. Getting into debt with the tax authorities is never a good idea, but if your business is failing this may be inevitable. Over the years I have had some experience with tax authorities (mainly the Irish Revenue Commissioners), so here are some tips:
1. Contact the tax authorities as soon as possible. Informing them not only buys some time, but it may also begin a negotiation process.
2. Assess the taxes owed. Once you know what is owed, you’re in a better position to see how bad the problem is.
3. Assess all assets and liabilities of your business. If you are a sole trader or part of a partnership, assess all personal assets, liabilities and living expenses. Undoubtedly the tax authority will do this exercise so you might as well be one step ahead.
4. From 2 & 3, you should be able to start a negotiation process. As I said in 1 above, by contacting the tax authority early, you have a much better chance of doing some kind of deal.
5. If you can make a deal to pay a lower amount than you owe, or to pay by instalments, be sure to stick to the arrangement or inform the tax authority if you have problems.
While dealing with tax debts is not the nicest thing in the world, try to be honest and do a realistic deal where possible. Ignoring the problem makes it worse. And, particularly if you are a sole trader, ignoring a tax debt can affect any future business prospects.
Do I need to register for taxes?
Once you have set up your business, you will have to register for the collection and payment of various taxes. Here’s a very quick guide on what you need to watch out for.
Income taxes
If your business operates as sole trader or partnership, you will have to register for income tax. This is typically in addition to income tax you pay as an employee under the PAYE system. If your business is a limited company, you will need to register for corporation tax, which is a tax on the profits of a company
Value added tax (VAT)
VAT is a tax on goods and services. When the turnover of a business exceeds a certain amount (currently £70,000 in the UK), it is legally required to register. VAT is charged on sales and VAT on purchases can be deducted. Any surplus is paid to the tax authorities on a regular basis.
Payroll taxes
If you have employees, you need to register as an employer and collect PAYE and National Insurance from employees and also pay an employer’s National Insurance contribution. You should register when you have your first employee.
A good thing to do is look at the website of your tax authority. For example, HM Revenue & Customs provide simple guidelines for new businesses – see http://www.hmrc.gov.uk/businesses/iwtregister-a-new-business.shtml . Follow these guidelines and get your business registered sooner rather than later.
Martin's accounting blog 