Author Archives: accounts

How VAT Payments on Account Work

Businesses owing over £2.3 million in VAT annually must make advance payments on account. These are based on the previous year’s VAT liability and paid in instalments. Late payments incur penalties, but adjustments may be possible for fluctuating liabilities.

The payments are usually based on the previous year’s VAT liability, and businesses are required to pay 1/24th of their estimated annual liability to HMRC by the last working day of the second and third months of the VAT quarter.

For example, if your VAT quarter ends on 31 March, your payments on account for that quarter will be due by 31 May and 30 June. Businesses that fail to make these payments on time will be subject to interest and penalties.

The payments on account and the balancing payments must be made electronically and cleared funds must be in HMRC's bank account by close of business on the due date. Businesses making POA do not benefit from the seven extra calendar days allowed to other VAT registered businesses for paying electronically.

The payment amount is calculated by HMRC based on the previous year’s VAT liability. If your liability changes and fluctuates by more than 20%, you may be able to request an adjustment to reduce your payments. This request must be approved by HMRC, and any adjustments will only be applied once HMRC has confirmed that the changes are valid. If the amount of VAT payable is higher than anticipated, the payment on account may increase, but it cannot exceed your total VAT liability from the previous year.

Source:HM Revenue & Customs | 10-03-2025

Child Benefits for over 16s

From April 2025, Child Benefit increases to £26.05 for the eldest child and £17.25 for others. Payments stop after a child turns 16 unless they continue in approved education or training. Parents must update HMRC by 31 August to avoid disruptions.

Taxpayers entitled to the child benefit should be aware that HMRC usually stop paying child benefit on the 31 August following a child’s 16th Birthday. Under qualifying circumstances, the child benefit payment can continue until a child reaches their 20th birthday if they stay in approved education or training. This must be confirmed to HMRC, or payments will stop.

Approved education must be full-time, with more than 12 hours per week of supervised study or course-related work experience. Approved education includes A levels, T levels, Scottish Highers, NVQs up to Level 3, home education (if started before 16 or after 16 with special educational needs), study programmes in England, and pre-apprenticeships. The course must be started before the child turns 19.

Child Benefit cannot be claimed if your child is:

Studying for a university degree or BTEC Higher National Certificate (advanced course)
On an apprenticeship (unless it’s a Foundation Apprenticeship in Wales)
Undertaking a course with an employer’s agreement (e.g., to secure a job or gain skills for an existing job)

Approved training should be unpaid and can include:

Wales: Foundation Apprenticeships, Traineeships, or the Jobs Growth Wales+ scheme
Scotland: The No One Left Behind programme
Northern Ireland: PEACEPLUS Youth Programme 3.2, Training for Success, or Skills for Life and Work

Courses that are part of a job contract are not approved.

HMRC sends a letter in your child’s last year at school asking you to confirm their plans. The letters include a QR code which, when scanned, directs them straight to GOV.UK to update their claim quickly and easily online. This can also be done on the HMRC app.

Parents have until 31 August 2025 to tell HMRC that their 16-year-old is continuing their education or training, and to continue receiving Child Benefit. No child benefit is payable after a young person reaches the age of 20 years.

Source:HM Revenue & Customs | 10-03-2025

Government backed Start-Up Loans

The Government-backed Start-Up Loans scheme offers unsecured loans of £500 to £25,000 per person (up to £100,000 per business) to help entrepreneurs grow. With a fixed 6% interest rate and mentoring support, it's a great funding option for new businesses.

Securing financing to start or grow a business is one of the most vital steps in ensuring success. Finding funding can often feel challenging, especially when traditional options like mainstream bank loans may not be available or come with strict conditions, such as requiring personal guarantees or offering security. Fortunately, the Government-backed Start-Up Loans scheme offers a great alternative.

This scheme provides personal loans to individuals looking to develop their business offering a range of benefits to support new entrepreneurs. Not only can applicants receive an unsecured loan (meaning no assets or guarantors are required), but they will also be paired with a business mentor for up to 12 months to guide them through the early stages of their business journey.

Business owners or partners in a business can individually apply for loans ranging from £500 to £25,000 each. A maximum loan amount of £100,000 is available per business if multiple business partners are involved. The average loan amount is around £7,200, with a fixed interest rate of 6% per annum. Loan repayment terms range from 1 to 5 years, and there are no application or early repayment fees.

To be eligible for the Start-Up Loan, applicants must meet the following criteria:

You live in the UK
You are 18 years of age or older
You own (or plan to start) a UK-based business that has been trading for less than 36 months.

Source:Other | 10-03-2025

Beware of rushing to judgement before terminating employment.

A Tribunal has ruled that a deputy security manager was unfairly dismissed, despite performing “no prescribed tasks” while ‘working from home’, many hundreds of miles from his place of work. Mr. Kitaruth travelled from London to Cornwall to visit with his parents for four days, during which the hearing found no evidence that he did any work.

When his line manager, Mr. Stride of OCS Security Ltd., summoned him to a mid-week meeting in the office he learned of Mr. Kitaruth's location leading to his subsequent dismissal for "gross misconduct". However, Mr. Kitaruth won his case for unfair dismissal after the Tribunal found that the company had failed to interview the line manager during their investigation.

Mr. Kitaruth told the Tribunal that he had an informal arrangement in which he verbally agreed with Mr. Stride on the dates that he would ‘work from home’, as August was a quiet month at the conference centre. The Tribunal found that Mr. Kitaruth “genuinely believed he had been given permission” although there was possibly of a misunderstanding arising between himself and his line manager, as evidenced by the message train on WhatsApp. Despite the pretext of 'working from home' there was no evidence that he had performed any tasks and, although he responded to "calendar invites, phone calls, liaising with the officers and emails,” he did not do so in a timely manner.

Judge Tamara Lewis noted that it was “extremely poor practice” for the company to take just six weeks to investigate and dismiss Mr. Kitaruth, and then to take a further seven and a half months to hear and reject his appeal. Moreover, the Judge found that "no reasonable employer would have failed to interview Mr. Stride formally before reaching a decision to dismiss the claimant," and hence, "For this reason, the dismissal was unfair.”

Employers should always publish, adopt, and follow to the letter any formal disciplinary procedures before terminating the employment of any contracted employee.

Source:Other | 11-03-2025

Changes to online filing of accounts at Companies House

The Online Accounts and Company Tax Return (CATO) service is scheduled to close on 31 March 2026.

This service has enabled businesses to file their company accounts and tax returns simultaneously with both Companies House and HMRC. However, due to its outdated nature and misalignment with modern digital standards and recent changes in UK company law under the Economic Crime and Corporate Transparency Act (ECCT Act), the decision has been made to discontinue it.

Key Actions for Businesses:

Download Past Filings: It's advisable to download and save at least three years of your company's account filings before 31 March 2026, as access to previous submissions will not be available after this date.
Explore Software Options: Begin researching and selecting suitable commercial accounting software that meets the filing requirements for both Companies House and HMRC. Transitioning to software-based filing can offer enhanced features, improved accuracy, and better integration with your financial records.

This shift aligns with the broader Making Tax Digital (MTD) initiative, aiming to streamline tax compliance through digital tools. While adapting to new software may present challenges, the benefits include increased efficiency and reduced errors in tax filings.

For detailed guidance and updates, visit the official GOV.UK website.

By proactively preparing for this transition, businesses can ensure continued compliance and take advantage of the efficiencies offered by modern digital filing systems.

Source:Other | 09-03-2025