June 28th, 2012

Bad news for the self employed. Good news for accountants

The Government must be feeling a bit guilty at the moment. After the Jimmy Carrgate scandal accountants have been getting a bad press for promoting legal, but ‘morally repugnant’, tax avoidance schemes. So, with the possibility of this line of work drying up how are we going to pay for the golf clubs and comedy socks in the future?

Enter the Universal Tax Credit. Disappointingly, this isn’t a tax break available across the Universe but a new ‘simple’ tax credit to replace a number of existing tax credits. I’ve had a brief read of the draft legislation and it looks like it could be fertile ground for accountants – which in this case means bad news for the self employed.

Some of the key points are:

– A monthly reporting requirement to the DWP. Yep. I did write monthly.
– A seven day deadline for filing the monthly report. Yep. I did write seven days.
– A different basis of calculating income to that used for income tax. Yep – you get the idea.
– A new term – ‘reasonable’ – applied to whether expenses are deductible.
– A 12 month start up period which could mean quarterly interviews to explain why you’re not making much money.

I think many self employed people will simply not bother claiming the UTC – it’ll be seen as too much hassle on top of all the other red tape they have to deal with (high fives all round at the Treasury). There’ll also be a real opportunity for savvy accountants to earn some fees from steering clients through a tax system that’s been made too complicated for them to deal with it themselves. Phew, now where’s my Homer Simpson sock catalogue?

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Universal tax credit

by
Managing Director

Jonathan trained as a chartered accountant with Price Waterhouse (now PWC) in Liverpool before becoming a small business services manager for Grant Thornton in Warrington. He also spent three years as the financial controller for Brookside and Hollyoaks (not that he ever mentions it!).

Jonathan is recognised as a specialist in the entertainment industry and is often called upon to provide training courses and seminars for media professionals. He's also a bit of a technology geek and has been recognised with the accountancy industry as one of the most progressive accountants in the UK.
Outside of work Jonathan is very proud to be the Treasurer of the Tim Parry Johnathan Ball Foundation for Peace and to be on the Council of the Liverpool Institute of Performing Arts (LIPA)

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