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Tax (205)

Self-assessment checklist
The tax return filing deadline is 31 January following the end of each tax year. Use our checklist to reduce the chances of making any errors.Tax returnsSelf-assessment is the current method of reporting your income and capital gains to HMRC each year. It is easy to make mistakes, especially if you are... Read more
DOWNLOAD January 2020
Type: Checklist
Transactions in securities clearance letter
Income and corporation tax anti-avoidance rules apply to a wide range of transactions involving shares or securities in companies. To provide certainty over whether HMRC will consider that a transaction is caught by the anti-avoidance rules, you can apply to it for advance clearance. Anti-avoidanceWhere... Read more
DOWNLOAD December 2019
Type: Letter
Spouse's job description
A business can pay a salary to the spouse or other family member of its owner if they work for it. Having a formal job description will help justify the amount paid if HMRC decides to challenge it.spouse's payThe wages paid to a spouse will be tax deductible for the business if HMRC is happy that they... Read more
DOWNLOAD November 2019
Type: Miscellaneous
Non-audit engagement letter
When you provide accounting and/or taxation services to clients, best practice dictates that you should issue them with an engagement letter to set out your mutual rights and responsibilities.EngagementThe engagement letter (EL) forms the contract for services that you are to provide. In it you should... Read more
DOWNLOAD November 2019
Type: Agreement
VAT reduced rate evidence log
Where you provide construction services relating to buildings, you may be able to charge the 5% reduced VAT rate if you can prove the property meets the necessary conditions.Reduced rateThe reduced VAT rate applies to various types of work on residential accommodation including renovation of a property... Read more
DOWNLOAD November 2019
Type: Form
Transfer of a going concern checklist
If you're VAT registered the default position when selling a business is that you must add VAT to the selling price. However, this won't be the case if the business is being sold as a going concern.Selling a businessSales of assets will be exempt from VAT as a transfer of a going concern (TOGC) if certain... Read more
DOWNLOAD October 2019
Type: Checklist
EIS qualifying company checklist
The enterprise investment scheme (EIS) is a good way to incentivise external investors to buy shares and provide much needed capital for your trading company. Use this handy document as a first step to check whether you can offer investors the lucrative EIS relief.When does a company qualify?There are... Read more
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Type: Checklist
Election to opt out of rental cash basis
Since 6 April 2017 rental property accounts must be prepared on the cash basis if the total of rents and other income you receive from your properties exceeds £150,000 in a tax year. In some circumstances it may be advantageous for you to use the accruals basis of accounting instead. To do this you... Read more
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Type: Letter
Employee contract pay in lieu of notice clause
In the absence of an express payment in lieu of notice clause, you don't have the contractual right to terminate employment summarily upon making such a payment. This doesn't mean you can't do it, but you do need to weigh up all the pros and cons.PILON or damages?In the absence of an express Employee... Read more
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Type: Clause
Property rental business loss relief claim
Individuals, including members of business partnerships, can claim a deduction in the tax liability on general income where their property rental business has made a loss and all or part of that loss results from capital allowances.Amount of loss reliefProperty business loss relief is limited to the... Read more
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Type: Letter
Social investment tax relief advance assurance letter
If you operate a qualifying social enterprise, you could attract potential investors using a government-approved tax relief.When can you request advance assurance?For social investment tax relief (SITR) to apply there are a number of conditions your company needs to meet under Chapter 5B Income Tax... Read more
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Type: Letter
Schedule of pre-registration expenditure
If you trade before you register for VAT, you could claim input tax going back up to four years.Pre-trading expenditureIt is possible for you to reclaim some of the VAT you incur before you register on the first VAT return (when you eventually do). VAT can be reclaimed on pre-registration purchases of... Read more
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Type: Form
Year-end tax planning checklist
tax planning checklist 2017/18Each tax year there are a number of tax allowances, exemptions and rate bands which if not utilised are essentially wasted as you cannot carry them forward. We've put together a handy checklist to help you avoid overlooking anything that might be available to you - particularly... Read more
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Type: Checklist
Entrepreneurs' relief checklist
When you sell or transfer all or part of your business you might be entitled to claim entrepreneurs' relief in respect of any capital gain you make. This means that the maximum rate of tax that will apply will be 10%. However, to qualify there are conditions that you and your business must meet.When... Read more
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Type: Checklist
Holdover relief claim
When you give away an asset for no consideration, or knowingly sell it for less than it's worth, you will be charged capital gains tax based on the market value. However, you might be able to make a claim to hold this gain over depending on exactly what the asset is.When is relief available?There are... Read more
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Type: Letter
Agricultural flat rate scheme letter
If you operate a small farming business, you might qualify for a little known scheme that can give your cash flow a boost.When is the scheme available?The agricultural flat rate scheme (AFRS) is available to a wide range of "farming" businesses. Farming for the purposes of the scheme is very widely drawn... Read more
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Type: Letter
Exchange of joint interest relief claim
If you swap a joint interest in land or buildings to rationalise your ownership for no proceeds, you may be able to defer a capital gains tax charge.ReliefWithout any form of relief on any reallocation of interests, capital gains tax would arise in respect of the interest given up, with the consideration... Read more
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Type: Letter
SEIS reinvestment relief claim
If you make a qualifying gain by investing in certain companies, you could enjoy a capital gains tax exemption.GainsCapital gains tax is payable when chargeable assets are sold, or otherwise disposed of, for proceeds or deemed proceeds that exceed their base cost. However, the seed enterprise investment... Read more
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Type: Key Data
Letter requesting pension charge payment
If you exceed the pensions annual allowance in any tax year, you will be subject to the annual allowance charge. But how can you get your pension provider to pay this?Annual allowanceThe amount of tax-relieved contributions you can make in any tax year is restricted further to the available amount of... Read more
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Type: Letter
Company terminal loss relief claim
If your company incurs a loss in its final twelve months of trading, you could make a claim for a special form of relief.Terminal lossesA company which suffers a loss in its final twelve months of trading can carry back certain losses for 36 months against profits of the same trade rather than the normal... Read more
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Type: Letter
Employee pool car agreement
Banning private use is essential for a car to be considered a pool car by HMRC. A verbal ban may work but it's more sensible to require the employee to sign an agreement that specifically states that the car is not to be used for private use. This will also help convince HMRC that you operate a genuine... Read more
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Type: Policy
Claim to carry back company trading loss
When your company makes a loss the amount is carried forward by default and will be used to offset total profits in the future. Use our claim to get immediate relief for company trading losses.CompaniesThere are a number of conditions that must be satisfied, including that the trade must continue, and... Read more
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Type: Letter
Pre-incorporation losses claim
As your business grows you will probably be advised to consider transferring it to a company at some stage. But what happens to any brought forward losses if you decide to incorporate?IncorporationDespite changes to dividend tax, it is still possible to achieve efficiency through incorporation, but the... Read more
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Type: Letter
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Type: Form
Claim for s.243 small part disposal relief
If you are forced to sell your land to a local authority under a compulsory purchase order, you could benefit from an expanded form of small part disposal relief.Part disposals - generallyWhen you make a part disposal of land you usually work out the taxble gain by apportioning the base cost of the total... Read more
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Type: Letter
Election to aggregate loans
If you have a number of loans to and from your company, aggregating them can save you money.Loan benefitWhere your company lends you money on which you pay no interest, or interest below HMRC's official rate (2.5% since April 2017), it counts as a taxable benefit in kind. Because the official rate is... Read more
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Type: Letter
Agreement to sever a joint tenancy
Agreement to sever joint tenancy Owning a property as joint beneficial owners means each joint owner is taxed on an equal share of income or gains derived from the property. However, if one of them dies, their share automatically passes to the others before any will comes into effect. Severing the joint... Read more
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Type: Agreement
IHT gift from surplus income letter
There is an inheritance tax exemption for monetary gifts made out of your surplus income. To demonstrate that a gift has been made out of surplus income you should send a letter with each gift you make. Write a letterKeep this IHT Gift from Surplus Income Letter with your will to help your executors... Read more
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Type: Letter
Letter withdrawing from flat rate scheme
If you use the flat rate scheme (FRS), you can leave it voluntarily at any time by writing a simple letter to HMRC.FRSIf you operate the FRS, you are free to leave it and change to standard VAT reporting at any time. You might do this if your input tax has increased, meaning the FRS leaves you worse... Read more
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Type: Letter
Company car lump sum contribution agreement
If you wish an employee to contribute towards the purchase price of a company car, it's a good idea to formalise the arrangement. This will reduce the taxable benefit in kind for the car.Capital contributionA capital contribution can be made by a director or employee towards the cost of either the car... Read more
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Type: Agreement
Company car running costs contribution agreement
Company car running cost contribution agreementIf an employee or director makes a monthly contribution towards the company car, this can reduce the taxable benefit providing it can be shown that the contribution is required and is in respect of private use of the car.Monthly company car contirbutionsIt's... Read more
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Type: Agreement
Employer/employee company car fuel agreement
To avoid a tax charge arising where you provide an employee with fuel for their company car, have an agreement requiring them to reimburse the cost.Fuel benefit chargeIn addition to the company car benefit, a director or employee who is provided with a company car may be liable to a fuel benefit charge.... Read more
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Type: Agreement
Letter to HMRC regarding pool car status
A pool car can be very tax efficient but in order to get one past HMRC you'll need to meet some strict conditions. To avoid uncertainty, use this letter to obtain confirmation from HMRC that the terms on which the car is used make it a pool car.No private useGet a pool car past HMRC and you can secure... Read more
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Type: Letter
Employee travel expenses policy
Since 6 April 2016 responsibility for determining whether business expenses reimbursed to employees and directors are exempt of tax and NI rests with the employer. Therefore, it's good practice to have a travel expenses policy in place. Business travelIncluding an Employee Travel Expenses Policy in your... Read more
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Type: Policy
Company van agreement
Unlike company cars, you can provide your employees with a company van for business use which includes commuting to and from the workplace. To ensure no benefit arises, any private use must be insignificant.VansIf your company has the kind of trade that requires you and your employees to attend customers... Read more
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Type: Agreement
Share loss relief claim
Usually, capital losses can only be offset against other capital gains, but in some circumstances losses you incur on certain types of share can be offset against general income.Share lossesLosses incurred on certain qualifying company shares are eligible for special treatment. Provided the conditions... Read more
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Type: Letter
Election for alternative maximum age basis
Companies looking to raise finance via an enterprise investment scheme have to receive their first tranche of funding within seven years of their first commercial sale. However, if the company qualifies as a "knowledge intensive company", this is extended to ten years. In addition, it is possible to... Read more
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Type: Letter
Loan waiver deed
If you lend someone money and later write to them releasing the debt, it will still remain part of your estate for inheritance tax (IHT) purposes. To count for IHT purposes the waiver must be made by deed. Reduce your estateWhere a loan is made between individuals, e.g. parent to child, HMRC will not... Read more
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Type: Document
Checklist of employment status factors
If HMRC decides that an individual contractor should have been treated as your employee, it will ask you to pay the tax and NI that should have beendeducted from their pay through PAYE, plus the employers' NI.  Therefore, it's important to have documentation on file to show why you treated the worker... Read more
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Type: Checklist
VAT voluntary disclosure of error letter
If you discover an error on a VAT return, you will need to correct it. In most cases this can be done simply by amending your next return, but where the error results in an increase in your VAT liability you should always send a letter of voluntary disclosure as this will protect you from penalties.... Read more
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Type: Letter
Letter turning down an interview
There is no statutory obligation to attend an interview with HMRC. If HMRC requests a meeting, but you're satisfied that there's no advantage to having one at this stage of the enquiry, you can write, declining a meeting and explaining why. Probing questionsOnce they have been through your records, the... Read more
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Type: Letter
Request to pay capital gains tax in instalments letter
For individuals, capital gains tax is payable by 31 January following the end of the tax year in which the gain occurred, e.g. 31 January 2019 for a gain made in 2017/18. Usually you'll have enough money from the transaction to pay the tax. However, proceeds may not be received all at once, for example,... Read more
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Type: Letter
VAT surcharge reasonable excuse letter
Reasonable excuse letterHMRC has a wide range of penalties available to it. Many of these can be reduced while others can be removed completely where you have a reasonable excuse for the action which gave rise to the penalty. Having a reasonable excuseMost of the penalties imposed by HMRC will be cancelled... Read more
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Type: Letter
CGT unpaid proceeds claim
If you sell an asset and the buyer fails to pay all or part of the proceeds, and you are unable to recover them, you can claim a reduction for the amount of gain chargeable to tax. Consideration payable after saleWhere you sell an asset and agree with the buyer that payment can be made by instalments,... Read more
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Type: Letter
Election for foreign losses
If you are non-UK domiciled but tax resident here, you may claim the remittance basis. To receive any kind of relief for foreign losses, an election must be made, but this shouldn't be done without careful consideration.DomicileIf you are UK resident, but not domiciled or deemed domiciled, then the availability... Read more
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Type: Letter
Remittance basis election
If you live in the UK, but are not domiciled here, you may benefit from making a claim to be taxed on the remittance basis.Remittance basisA UK resident taxpayer is generally subject to UK tax on their worldwide income. Residence is determined using the statutory residence test. Where you are resident... Read more
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Type: Letter
Dividend checklist
When you want to pay a dividend, there are a number of considerations to take into account to ensure it is valid. Our checklist will help you to establish that your dividends are up to scratch.DividendsDividends are amounts paid to shareholders out of the accumulated profits of a company. Generally speaking,... Read more
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Type: Checklist
Letter requesting partial exemption special method
Could your partially exempt business be paying excessive VAT when you consider how the different activities really contribute to general costs? Use this letter to ask for a unique method of apportionment to achieve a more fair calculation for your business.General ruleIf you make both taxable and exempt... Read more
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Type: Letter
Employee provision of home telephone policy
Employee - provision of home telephone policyIf one or more of your employees work from home and need a landline phone for work purposes, you might agree to provide the equipment and pay the rent and call charges. HMRC may argue that a benefit in kind charge arises because there is bound to be private... Read more
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Type: Policy
Cars and car allowances policy
If you provide your employees with a car you can use a policy to set the terms and conditions of its use. If only a couple of employees have company cars, you might find it easier to include the provision in their contracts of employment rather than a policy in a staff handbook. A company carWhen providing... Read more
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Type: Policy
IHT claim for fall in value relief for land and buildings
Where, within four years of the date of the deceased's death, a property in their estate is sold at open market value for less than probate value, you can make a claim to recalculate the inheritance tax using the sale value instead. ConditionsA number of conditions must be satisfied:a claim must be... Read more
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Type: Letter
Record of gifts
One way to reduce an inheritance tax (IHT) bill is to simply give away your wealth during your lifetime. Keeping a record of the gifts you've made and IHT exemptions claimed will help the executors of your estate tackle any queries from HMRC.Keep a recordTo help your executors it's well worth keeping... Read more
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Type: Miscellaneous
Log of UK visits
If you are non-UK resident under the statutory residence test, you will only be taxable on your UK sourced income. Use our handy log to record your visits to the UK each year.ResidenceResidence is an important concept in UK taxation. If you are a UK tax resident, you pay tax on all of your worldwide... Read more
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Type: Form
Transferring VAT number cover letter
If you acquire the trade and assets of a business as a transfer of a going concern (TOGC), you can apply to keep a pre-existing VAT registration number.TOGCWhen you buy a business as a TOGC you have the option of taking over the existing VAT number as well. You do this by completing a Form VAT68 and... Read more
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Type: Letter
Chattel lease
In order for a gift to be effective for inheritance tax (IHT) purposes, you must be excluded from benefiting, other than to a minimal extent, from the asset given away. However, you can use the asset without jeopardising your IHT position where you lease the asset from the person you gave it to. Not... Read more
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Type: Agreement
VAT return checklist
Making a mistake on your VAT return will result in under or overpaying VAT. This might mean losing out on VAT you can reclaim or underpaying which can result in financial penalties. Our VAT return checklist can help you reduce errors.What to put on your VAT returnThe principle of VAT is that a business... Read more
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Type: Checklist
VAT - request for a written ruling
If you have a VAT problem and can't find the answer in any of HMRC's published guidance, you can ask it for a written ruling. However, HMRC is often reluctant to provide one and it usually directs you to its guidance. To ensure you obtain the written advice you need, make your request in a format which... Read more
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Type: Letter
Request for closure of enquiry letter
If you believe you've given HMRC all the information it has requested, you can ask it to close the enquiry. Your first step is to write a letter asking for the enquiry to be closed or for details of the further information it requires.Stalled enquiryIf the inspector running the enquiry has already dragged... Read more
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Type: Letter
Enquiry - capital statement checklist
During an enquiry HMRC may require a so-called capital statement to be prepared. Preparing an accurate statement is important to settling the enquiry. Use our checklist to help you produce your capital statement.what is a capital statement?If there is difficulty in obtaining business records for earlier... Read more
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Type: Checklist
Amending a personal tax return letter
You are entitled to amend entries on your personal self-assessment tax return within the "amendment window". Where you completed and submitted your return electronically either using HMRC's or commercial software, you can use it to make amendments. However, where you submitted a return in paper format... Read more
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Type: Letter
Election for rent-a-room relief not to apply
Where you let part of your home, HMRC calculates the taxable income for a year by deducting a fixed sum from the rent etc. you receive. This deduction is called rent-a-room relief and is £7,500 (2017/18). However, if your apportioned running costs are more than this, you can elect for this relief not... Read more
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Type: Letter
IR35 - prevention of double taxation claim
An individual can claim a deduction from their taxable income where it includes a deemed payment of salary under the IR35 rules and the same income, or part of it, is in the same or a later year, taxable as dividend income. This prevents the income from being taxed twice. The deduction is made from the... Read more
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Type: Letter
Request for HMRC VAT internal review letter
HMRC operates a VAT internal review system to resolve disputes without the time or expenses involved with a formal appeal. If you wish to use this facility you should apply in writing to HMRC within 30 days of the assessment or decision with which you disagree. Asking for a reviewIf you disagree with... Read more
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Type: Letter
Non-resident CGT charge election
Since 6 April 2015, non-UK residents have been liable to capital gains tax (CGT) on disposals (sale or transfer) of UK residential property. Where this rule applies the cost of the property for CGT purposes (the "base cost") is its value at 6 April 2015. However, an election to use a different base cost... Read more
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Type: Letter
Election for pre-trading debits
Costs incurred on financing your company, e.g. loan interest, before it starts to trade are classed as non-trading debits. Normally, tax relief for these can only be  obtained by offsetting them against non-trading credits, e.g. interest received, receivable after trade commences. However, an election... Read more
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Type: Letter
Flat rate scheme cover letter
If your business is VAT registered, you could be eligible to use the flat rate scheme (FRS) to simplify your accounting. Use our letter to accompany your claim.VAT reportingThe amount of VAT your business normally must account for to HMRC is the difference between the VAT it charges on its taxable supplies... Read more
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Type: Letter
Annual accounting scheme cover letter
If your business completes VAT returns, you could be eligible to join the annual accounting scheme to simplify your reporting.Annual accountingThe annual accounting scheme allows for the submission of a single VAT return for the whole year, rather than the usual four. Your business makes fixed payments... Read more
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Type: Letter
Herd basis election
If you keep animals for production purposes, you might be able to take advantage of the "herd basis" to simplify calculating your taxable profits.ProductionFarm animals are treated as trading stock. For tax and accounting purposes these animals are more akin to capital assets than trading stock, and... Read more
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Type: Letter
Farmers' averaging election
If you carry on a farming or market gardening business, you can elect to average your profits over either two or five years.FarmingBusinesses that depend on a successful harvest are notoriously volatile in terms of profits. One bad crop can mean losing tens of thousands of pounds. Therefore, the Income... Read more
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Type: Letter
Claim for relief for damaged asset
Capital gains tax may be payable on capital sums which derive from assets. For example, compensation payable to you for damage to an asset. However, if you use the amount received to repair or restore the asset, you might be entitled to defer the tax.DamageWhen an asset is damaged or destroyed it may... Read more
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Type: Letter
Intangible assets rollover relief claim
Intangible asset rollover relief claimIf your company sells a chargeable intangible fixed asset, it can give rise to a gain which is subject to corporation tax. The gain cannot be deferred by purchasing tangible assets. However, if further intangibles are bought, rollover relief might be available.IntangiblesIntangible... Read more
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Type: Letter
Letter notifying reduction of EIS relief
Letter notifying EIS relief clawback eventIf you make a qualifying investment under the enterprise investment scheme (EIS), there are a number of things that can happen during the minimum holding period that lead to relief being reduced or fully withdrawn. You need to notify HMRC when this happens.EIS... Read more
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Type: Letter
Option for special method of cost apportionment
If you sell a piece of land which is part of a larger estate, a little known concession could save you some tax.General ruleThe general rule for any part disposal of an asset is that the amount of the original cost attributable to the part sold is determined by the following formula: Where:A = the proceeds... Read more
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Type: Letter
Election for rent-a-room relief alternative basis
If you let a room in your own home, the rent you receive is exempt from income tax if it is less than the rent-a-room limit of £7,500. If the rent exceeds the limit the relief doesn't apply and the taxable profits are equal to income less expenses. However, you can elect to use the "alternative basis".General... Read more
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Type: Letter
Election for land remediation relief
Land remediation relief gives an enhanced deduction for qualifying revenue expenditure spent on bringing land back into use in some circumstances. Use our template letter to treat capital costs as qualifying.ReliefLand remediation relief (LRR) is an enhanced deduction of 150% on expenditure related to... Read more
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Type: Letter
EIS relief claim
When you make a qualifying enterprise investment scheme (EIS) investment, you have the right to offset the income tax relief against your tax bill for the year before you made the investment. How can you make this claim?EIS relief - generallyWhen you make an investment that qualifies for EIS income tax... Read more
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Type: Letter
Notifying HMRC of a capital loss outside self-assessment
If you sell an asset for less than it cost you will have made a capital loss.Usually a capital loss is claimed on your self-assessment tax return. If you don't complete a tax return you can notify HMRC by letter.Losses - generallyWhen you sell capital assets - like shares - for less than you paid for... Read more
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Type: Letter
Disincorporation relief claim
Given repeated attacks on the tax benefits of running a business through a company, you might decide to disincorporate. disincorporating - tax chargesIf you decide to transfer your company business and assets to an unincorporated structure - a sole trade or partnership - corporation tax will be due on... Read more
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Type: Letter
IHT spouse's domicile election
If you are married to a UK domiciled person, but you are non-UK domiciled, the intraspouse exemption for IHT is restricted. However, it's possible to make an election that removes this restriction using our new template letter.restricted spouse exemptionThe general rule for transfers from one spouse... Read more
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Type: Letter
Reducing self-assessment payments on account letter
If you're in the self-assessment system you might be required to make payments on account of each year's tax liability.  However, where you expect your tax liability to be lower than the payments on account you can write to HMRC to ask for them to be reduced.ClaimHMRC automatically calculates each payment... Read more
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Type: Letter
Claim for a capital loss for repayment of a loan as guarantor
Claim for payment under a guaranteeOne way of helping a growing business is to act as guarantor to its loan finance. If things don't turn out as planned and you are called upon to make good some or all of the loan, you may be able to make a claim to treat this as a capital loss.Capital losses - payment... Read more
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Type: Letter
Claim for private residence relief to apply to a former home
When a marriage fails, tax planning is vital and sometimes urgent or avoidable tax liabilities can arise. An example of this is capital gains tax and the matrimonial home. Where one spouse (or civil partner) moves out and transfers their interest to the other as part of the financial settlement, private... Read more
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Type: Letter
Employee loan letter
Where an employee or a director owes their employer more than £10,000 at any point during a tax year, a taxable benefit in kind arises. You need to work out the cash equivalent of this. Use this letter to write to any employees with loans to explain the basis you have used to calculate their taxable... Read more
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Type: Letter
Election for share value to ignore restrictions
If shares are acquired because of an individual's employment, they are liable to an income tax charge on the difference between the market value of the shares and the price paid by an employee, but special rules can apply where the shares have restricted rights. Use this election to have the restrictions... Read more
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Type: Form
Letter revoking VAT option to tax
Revoking a VAT option to tax letterIf you exercise the option to tax a commercial property for VAT purposes it is irrevocable except in a few situations. If you do want to revoke the option, use our letter to help ensure that you send the correct documents and information to HMRC so that it is effective.About... Read more
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Type: Letter
Deduction for deemed employment payment
sA company can claim a deduction from its taxable profits in respect of the notional cost of a deemed payment of salary made for the purposes of IR35. The deduction is allowable for the accounting period in which the deemed payment was made.  Where the deemed payment is made after the company's corporation... Read more
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Type: Letter
Claim to adjust base cost for part disposal of land
When selling a small part of a piece of land you are still liable for capital gains tax (CGT). However, if conditions are met, you can make a claim under s.242 Taxation of Chargeable Gains Act 1992 to deduct the sale proceeds from the base cost of the land instead of treating it as a sale of CGT purposes.Disposing... Read more
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Type: Letter
Election to be treated as domiciled in the UK
Where a married couple or civil partners consist of a UK domiciled individual (UK-dom) and a non-UK domiciled (non-dom) individual, there is a restriction on the amount that any transfers between them will benefit from the spouse exemption for inheritance tax (IHT). An election can be made to be treated... Read more
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Type: Letter
Pension premium record
Knowing how much has been contributed to your pension plan in any tax year is important so that you can calculate any higher or additional rate tax relief you're entitled to and check that you've not exceeded the maximum for which tax relief is allowed (the annual allowance).Keeping tabs on your contributionsFor... Read more
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Type: Form
Election to carry back earn out loss
If you sell a business, an earn-out arrangement might be used to determine the sale price. For example, the buyer might offer the majority of the purchase price on completion of the contract plus more over three years if the business hits turnover or profit targets. You must pay tax on the amount you... Read more
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Type: Letter
Claim for special relief
If you fail to submit a tax return HMRC may estimate the tax payable and notify you of this on determination notice. The tax determined cannot be appealed against and is legally enforceable. The only way to overturn the determination is to submit your self-assessment tax return for the year in question.... Read more
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Type: Letter
Election to transfer stock at less than market value
When an unincorporated business is transferred to a company, any stock (or works in progress for service businesses) is deemed to be sold to the company at market value (MV). This will usually be higher than the original cost, and so a notional profit can arise. This has to be included in the final accounts... Read more
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Type: Letter
Failed potentially exempt transfer - fall in value claim
Gifts between individuals are potentially exempt transfers (PETs) for IHT purposes. This means that there's no IHT to pay at the time, but if you die within seven years the full value of the gift becomes chargeable. This is known as a failed PET. Where IHT becomes payable as a result of a failed... Read more
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Type: Letter
Election to transfer assets at written down value
Where you transfer your sole trader or partnership business to a company, plant and machinery or other tangible fixed assets are often transferred too. Strictly, these assets have to be transferred at market value. Provided certain conditions are met, you can make an election (jointly with the successor... Read more
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Type: Letter
Election for a period of grace to apply to FHLs
Where you own a property which you let furnished as holiday accommodation it can qualify for preferential tax treatment where various conditions are met.When can you use the election?To count as an FLH the property must during a twelve-month period:have been available for letting to the public for 210... Read more
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Type: Letter
Election to disapply incorporation relief
Where you transfer your sole trader or partnership business to a company, this process is often referred to as incorporating your business and it counts for capital gains tax purposes as if you had sold it.When can you use the election?This means that if the assets to which CGT applies, e.g. goodwill,... Read more
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Type: Letter
Election for a period of grace to apply to FHLs
Where you own a property which you let furnished as holiday accommodation it can qualify for preferential tax treatment where various conditions are met.When can you use the election?To count as an FLH the property must during a twelve-month period:have been available for letting to the public for 210... Read more
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Type: Letter
Election for entrepreneurs' relief to apply to QCBs
When you sell a business the purchasing company might offer to pay you with loan notes. This is a loan arrangement but in the form of a security, i.e. like shares. The loan notes pay interest usually at a fixed rate on a fixed amount of capital. They will usually have a redemption date on which the issuing... Read more
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Type: Letter
Election to average occupation of FHLs
Where you own a property which you let furnished as holiday accommodation it can qualify for preferential tax treatment if various conditions are met.When can you use the election?To count as a furnished holiday let (FHL) the property must, during a twelve-month period:have been available for letting... Read more
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Type: Letter
Election to average occupation of FHLs
Where you own a property which you let furnished as holiday accommodation it can qualify for preferential tax treatment if various conditions are met.When can you use the election?To count as a furnished holiday let (FHL) the property must, during a twelve-month period:have been available for letting... Read more
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Type: Letter
Payrolling benefits in kind letter to employee
HMRC usually collects tax on benefits by adjusting an employee's code number so that extra tax is collected, through the PAYE system, each time they are paid salary. Payrolling achieves the same result but without intervention by HMRC. More accuratePayrolling involves you adding a notional amount to... Read more
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Type: Letter
Dividend voucher
When your company pays a dividend it should provide each of the receiving  shareholders with a dividend voucher as a receipt for their records. Issue a voucherWhile not strictly necessary under company law, it's advisable for a company to issue a Dividend Voucher for each dividend (interim or final).... Read more
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Type: Letter
Self-employed pages review
Before filing a tax return it's a good idea to carry out last minute health checks with a view to reducing the chance of it being selected for an enquiry. This is especially important if you are self-employed. Check your answersBefore submitting any return you should compare all your answers with a copy... Read more
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Type: Checklist
Official error claim for tax not to be collected
If HMRC has delayed using information in its possession and this results in you paying too little tax, it can write off the arrears of tax under extra-statutory concession (ESC) A19. However, despite being fully aware of this concession, you may need to "remind" HMRC of it in writing.Extra-statutory... Read more
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Type: Letter
Employee loan record
A taxable benefit may arise where a director or employee is provided with a loan, either interest free or at a favourable rate of interest. Use this document to calculate what, if anything, you need to declare to HMRC.Important to monitorWhere a cheap-rate or interest-free loan is made to a P11D employee... Read more
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Type: Form
Company shares or securities reorganisation clearance letter
Where a company acquires 25% or more of the shares in another, or reorganises its share capital, it can ask for confirmation (clearance under s.138 Taxation of Chargeable Gains Act 1992) that the transaction will not count as a chargeable event for capital gains tax purposes.How to applyAn application... Read more
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Type: Letter
Employee equipment allowance
Where your employees use personally owned or rented equipment for work, you can reimburse them the business element of their costs tax and NI free. Quantifying the amount you can pay without having to apply PAYE can be tricky, especially where there is personal and business use of the equipment.When... Read more
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Type: Form
Employee equipment allowance
  Employee equipment allowanceWhere your employees use equipment for work which they personally own or rent, you can reimburse them the business element of their costs tax and NI free. Quantifying the amount you can pay without having to apply PAYE can be tricky especially where there is personal as... Read more
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Type: Form
Employee business mileage record
Employees and directors are required to keep a detailed record of journeys for which they receive a mileage allowance from their employer or where they claim a tax deduction for business travel. A copy of the record should be retained by the employer and by the individual. Personally Owned carsEmployers... Read more
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Type: Form
Employee expenses claim form
Where an employee or director claims expenses from your business you should ask them to provide details for your accounting and tax records. The need to keep recordsEach employee who claims business expenses over the year should keep all their receipts which match the figures entered on the Employee... Read more
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Type: Form
VAT online filing checklist
If you miss the deadline for submitting your return or paying your VAT, you may be liable to pay a surcharge. Our checklist will help you avoid this type of trouble.Online submissionSince 1 April 2012 all businesses with a few exceptions, essentially insolvent traders and those whose religious beliefs... Read more
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Type: Checklist
IHT transferable nil rate band checklist
Transferable nil rate band checklistWhen one spouse dies before the other, any unused nil rate band can be transferred to their surviving spouse. But HMRC will require details of the inheritance tax history of the first death in order to agree any claim on the second.Transferable nil rate bandIn October... Read more
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Type: Miscellaneous
Purchase of own shares clearance letter
For unquoted trading companies, the amount received by a shareholder on selling their shares back to the company may be treated as capital rather than as a distribution provided certain conditions are met. To prevent any nasty surprises later on, you can apply for advance clearance to determine the correct... Read more
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Type: Letter
Purchase of own shares reporting letter
Regardless of whether you have applied for advance clearance, where capital treatment has been applied to a share buy-back, you must report the transaction to HMRC.Reporting to HMRCOnce a share buy-back has taken place and capital treatment has been applied, the company is required to make a return of... Read more
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Type: Letter
VAT option to tax covering letter
Option to tax letterRenting out land or buildings is usually exempt from VAT. This means you don't charge VAT to your tenants. The downside is that you might not be entitled to reclaim VAT on your property running expenses. By "opting to tax" the property VAT becomes payable on the rents you charge and... Read more
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Type: Letter
VAT invoice checklist
VAT regulations require that all registered businesses issue invoices which contain various pieces of information and details.Valid VAT invoicesIf you are registered for VAT, valid invoices are important for two main reasons:you can be fined if you don't issue these to your customers  you cannot reclaim... Read more
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Type: Checklist
PAYE compliance review audit checklist
PAYE compliance review checklistIf you receive a letter telling you that HMRC wants to carry out a compliance review of your payroll records, use our checklist in advance of HMRC's visit to review your records so that there are no surprises on the day.Prepare for a visitHMRC has a legal right to inspect... Read more
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Type: Checklist
Consultancy agreement
If you're a one-man service company, then you could be caught by IR35 if HMRC deems the contract between you and the client as one of employment rather than self-employment. Having a consultancy agreement in place can provide evidence that IR35 should not apply.One-man service companiesClients will often... Read more
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Type: Agreement
Election to transfer gain or loss to other group company
 Election to transfer gain or loss to another group company Where a company makes a capital gain or loss in respect of an asset, it may jointly elect with another company within the same group to transfer the gain or loss to that company. The effect of an election can be to reduce the overall corporation... Read more
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Type: Letter
Nominating a main residence election
If you own two or more properties which you use as homes, say your main house and a holiday home, you can choose which qualifies as your main residence for capital gains tax private residence relief.More than oneThe general rule is that if you make a gain on the sale of your main residence, then you... Read more
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Type: Letter
Capital allowances election for fixtures in buildings
When a commercial building is sold the seller and the purchaser can agree to apportion part of the price to fixtures which qualify for capital allowances, i.e. plant, machinery and integral features, included with the property. Where an apportionment is made, subject to conditions and restrictions, they... Read more
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Type: Contract
In-year pension contribution - claim for tax relief
Anyone who pays tax through PAYE can obtain tax relief for pension contributions by an adjustment to their tax code. One way to achieve this is to write to HMRC.When to use this formIf you pay contributions to a:pension plan, e.g. a personal pension plan or similar pension arrangement, and pay tax at... Read more
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Type: Letter
Interest payable on loan account minute
Where a director's loan account is in credit, the board can agree to pay interest on the balance. This should be recorded in a board minute.When to use this board minuteIt's advisable to set out the terms and conditions of how much interest will be paid and when, and record this in a board minute - our... Read more
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Type: Document
Director's loan account write-off letter
An overdrawn director's loan account can be cleared by the company if the directors or shareholders agree to write the loan off. However, it must get the paperwork right.Reporting requirementsWhere a director or shareholder's loan is written off, s.415 Income Tax (Trading and Other Income) Act 2005 says... Read more
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Type: Letter
Director's loan agreement
A director shareholder doesn't have to sign a loan agreement when they borrow money from their company. The terms of borrowing can be agreed orally or just implied. However, in certain situations a director is required by company law to obtain permission from the shareholders prior to borrowing company... Read more
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Type: Agreement
Director's loan account record
A taxable benefit in kind may arise where a director is provided with a loan, either interest free or at a rate of interest below HMRC's official rate. Use this document to calculate what, if anything, you need to declare to HMRC.Make a noteWhere a cheap rate or interest-free loan is no more than £10,000... Read more
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Type: Form
Licence agreement
Where your company makes a payment to you in return for being allowed to use your home or other property for its business, you should draw up an agreement to formalise the arrangement. A licence agreement, rather than a lease, provides your business with non-exclusive rights over the chosen part of your... Read more
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Type: Agreement
CGT schedule of capital enhancements
The cost of structural alterations or improvements to properties counts as capital expenses (enhancements). They can be deducted as expenses when calculating the capital gain or loss following the sale of the property. Allocating and recording expenditure There may be a long gap between the time you... Read more
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Type: Form
PAYE - letter of disclosure
If HMRC has told you that one of its officers will be visiting you to carry out a PAYE compliance review, it's advisable to make your own check that your records are in good order. You should notify HMRC ahead of the visit of any errors which have resulted in unpaid tax or NI contributions.write to... Read more
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Type: Letter
PAYE compliance review date not convenient letter
PAYE compliance review - date not convenient letter HMRC carries out thousands of on-site PAYE compliance reviews at the employers' premises every year. The date proposed might not be convenient for you or your payroll staff and you are allowed to ask HMRC to arrange the visit on a date suitable for... Read more
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Type: Letter
CGT EIS deferral relief claim
 Investing in enterprise investment scheme (EIS) shares gives you an opportunity to defer capital gains tax (CGT) that would otherwise be payable.claiming reliefEIS deferral relief, sometimes referred to as EIS reinvestment relief, can be used to delay and ultimately (sometimes) reduce a CGT bill... Read more
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Type: Letter
Childcare voucher salary sacrifice policy
Where childcare is provided by way of voucher, the first £55* per week is tax free if certain conditions are met. Whether you administer a voucher scheme yourself or engage an external voucher provider, you need a policy in place to demonstrate that your scheme meets the requirements. An approved schemeTo... Read more
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Type: Policy
Capital allowances short-life asset election
Tax relief on the cost of equipment you buy for your business is spread over decades unless your purchases are covered by the annual investment allowance. The good news is you can accelerate this dramatically with a simple election.When can you use an election?Businesses are allowed tax relief... Read more
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Type: Letter
Complaint letter
Ultimately, the Adjudicator's Office handles all complaints about HMRC. However, the adjudicator will only examine a complaint if it has been through the proper levels of authority within HMRC first. It's the same letter but to different people. So what should you put in this particular piece of correspondence?Set... Read more
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Type: Letter
Employees using their own cars for business policy
If employees use their own vehicles for business journeys, you should have a company policy which spells out the situation regarding insurance, parking and mileage rates at which you will reimburse them. Tax-free mileageYou can pay any reasonable amount to an employee as compensation for using their... Read more
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Type: Policy
Golden hello payment letter
An inducement payment will sometimes be made to a new employee. Such a payment will normally be taxable. Exceptionally, it may be tax-free if you can demonstrate that the payment is not by reason of the employment. How can you establish this?Lump sum paymentA "golden hello" is a popular term for a lump... Read more
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Type: Letter
Surplus income record
There is an inheritance tax exemption for monetary gifts made out of your surplus income.The exemption relies heavily on identifying the amount of surplus income you have. A simple annual record can be used for this purpose.Gifts from incomeThere is no financial ceiling or percentage restriction which... Read more
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Type: Miscellaneous
Allocation of savings interest agreement
If spouses or civil partners do not want a 50/50 split of savings interest, they can declare that income be split according to each person's beneficial entitlement as detailed in a written agreement.Beneficial ownership of bank account fundsAs a general rule, assets owned by spouses in joint names are... Read more
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Type: Agreement
Appeal and postponement of direct tax
This standard letter can be used to make an appeal against any direct tax assessment, e.g. income tax, corporation tax, capital gains tax etc., but not VAT, customs or other duties.How to use itThe time limit for submitting an appeal is 30 days from the date on the assessment or determination issued... Read more
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Type: Letter
Bank account declaration of beneficial ownership
Interest received on a bank account held jointly with your spouse/civil partner is taxed on you equally, even where the actual ownership of the funds in the account is not 50/50. However, you can send an election to HMRC asking to be taxed on your actual share of interest where it is other than 50/50.... Read more
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Type: Agreement
Overpayment relief claim checksheet
Where you make a mistake in your individual, company or partnership, tax return and the time limit for correcting this under the self-assessment rules has passed, you can submit an "overpayment claim" to recover any tax overpaid. But HMRC isn't obliged to accept every claim.What are the rules?There... Read more
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Type: Checklist
Overpayment relief claim
Where you discover a mistake in your tax return which resulted in you paying or owing more tax than was properly payable, and it's too late to correct under self-assessment rules, you can make an overpayment relief claim. The claim must include the right information or HMRC will reject it. Letter... Read more
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Type: Letter
Unincorporated business trading loss relief claim
If you've made a loss in your sole trade or partnership, you can claim relief for it against tax payable on your other income for that year or the year before. If any loss remains you can claim relief against your capital gains in the year of the loss or the previous year.Trading lossesYou can't offset... Read more
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Type: Letter
Letter to get a tax penalty reduced or suspended
HMRC has the power to reduce a maximum tax penalty to take account of the nature and quality of any disclosure you have made about an "inaccuracy". How do you get this on the inspector's negotiating agenda?What will trigger a penalty?A tax penalty can now be triggered in two possible ways. Firstly, a... Read more
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Type: Letter
Key events chart
If you are subject to a personal tax enquiry, deposits on your bank account statements could be taken to be a second source of income by HMRC. Therefore, it's a good idea to keep an up-to-date record of these rather than relying on your memory, or an expensive exercise by your advisor later.Unidentified... Read more
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Type: Form
Changing interview notes
If you attend an enquiry interview, the tax inspector will make their own notes of what they "think" was said and use them against you if they can. They will probably try to get you to sign them as a true record of what came up at the meeting. Should you?Read the notesNever sign notes at a meeting. Gain... Read more
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Type: Letter
Enquiry - private expenditure record
During a full enquiry into your tax return, if you are self-employed you can expect the inspector to start asking questions about your private expenditure. The presumption is that any "missing" takings from the business will show up as personal expenditure. Providing an accurate summary of your outgoings... Read more
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Type: Checklist
Employee expenses policy
From 6 April 2016 responsibility for determining whether business expenses reimbursed to employees and directors are exempt of tax and NI rests with the employer. To aid with this it's good practice to have an expenses policy in place. Evidence of a legitimate claimHMRC wants to know that you have a... Read more
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Type: Policy
PAYE settlement agreement letter
A PAYE settlement agreement (PSA) can be used where you want to meet the PAYE tax and Class 1A NI liability in respect of small or irregular taxable benefits you provide to your employees. Typically, you are most likely to use a PSA where it would be inappropriate for you to expect your employees to... Read more
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Type: Letter
Alternative interest calculation method letter
Where an employer provides a cheap rate or interest-free loan there's more than one way to work out the taxable benefit - the normal averaging method or the alternative precise method. You can elect to substitute the figure calculated using the normal average method for the alternative precise one.... Read more
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Type: Letter
Mobile phone declaration
The old rule was that you could have as many mobile phones as you liked, tax and NI free. Now it's down to one per employee. If you have more than one, you will need to declare which one is to be your tax-exempt phone.Choose your exempt phoneThe tax exemption for employees who are provided with a mobile... Read more
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Type: Miscellaneous
Sample childcare voucher
Where you offer your employees childcare vouchers as a benefit in kind, you can use a childcare voucher company to administer the scheme and provide the vouchers. Alternatively, you arrange childcare direct with registered childcarers and produce your own vouchers for employees to redeem. Tax-free vouchersThe... Read more
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Type: Form
VAT appeal letter
If you disagree with a VAT assessment or decision made by HMRC, you can, in most cases, appeal against it or ask for HMRC for a review to consider cancelling the appeal. An appeal should always be made in writing and usually within 30 days of the date of the assessment or decision.Resolving disagreementsFirst... Read more
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Type: Letter
Letter to HMRC - problems with online filing
Letter to HMRC  - problems with online filingIf you've missed the deadline for submitting your VAT return online (or paying your VAT electronically), you might be let off the hook where you can show this was caused by IT problems.Explain whyIf you were unable to file your VAT return online because of... Read more
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Type: Letter
Compensation claim letter
Chances are that sometime in your dealings with HMRC he will make an error or be responsible for a delay that costs you money. In these circumstances you can you claim compensation for this.Making a complaintLet's say HMRC comes to call and later issues you with a VAT assessment. You feel that it's wrong... Read more
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Type: Letter
Checklist for challenging an HMRC business economics exercise
In the pursuit of tax collection targets there is now a much greater willingness by HMRC to displace the profits shown by your accounts with an estimate based on a simple business economics exercise. Our checklist can help you identify flaws in HMRC's calculations. Missing incomeA typical example of... Read more
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Type: Checklist
Pool car journey record
For a company car to count as a pool car (meaning that employees who use it aren't taxed on it as a benefit) it must not be used for private journeys. HMRC may ask for evidence of this. You should maintain a log of all journeys made in the car.Proof of journeyTo satisfy HMRC that a vehicle is a pool... Read more
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Type: Miscellaneous
Employee loan agreement
To avoid a payment to an employee/director being treated (and taxed) as additional salary, you could reclassify it as a fixed-rate loan. What documentation will HMRC need to be convinced about this?Inexpensive financeThe income tax paid by a director or employee on a subsidised loan provided by their... Read more
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Type: Agreement
Staff suggestion scheme rules
You might want to reward your employees for certain ideas that contribute to the success of your business. Previously by concession, this is now a statutory exemption. However, there are conditions you'll have to meet.Financially beneficialA little-known way of giving employees tax and NI free cash is... Read more
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Type: Policy
Salary sacrifice policy
If you want to implement a salary sacrifice scheme in your company, make sure you insert the relevant policy in your staff handbook. Scheme particularsIncluding a Salary Sacrifice Policy in your staff handbook is important both to convey the details of the scheme and to point out any drawbacks. For example,... Read more
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Type: Policy
CGT negligible value claim
If you own an asset that has become of negligible value, i.e. worthless, you can make a negligible value claim to HMRC which entitles you to treat the asset as if it were sold for nothing. The effect of this is to create a capital loss. Losses on sharesYou may have made an investment in the past that... Read more
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Type: Letter
Chattels checklist
Anything moveable that is sold with a property is generally not considered to be part of it and so is not subject to stamp duty land tax (SDLT). The purchaser will save SDLT by allocating any of the purchase price to chattels. Equally, a seller can make the sale more attractive by identifying chattels... Read more
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Type: Checklist
Product mix reconstruction
When carrying out a business economics exercise, the tax inspector will often use an industry average mark-up of purchases to selling price to construct a sales figure. But this simple calculation doesn't take into account your business's product mix. Use this template to demonstrate that the inspector's... Read more
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Type: Document
Rental business employee's job description
You can claim a tax deduction for the cost of paying someone, including a spouse or civil partner, to manage a property you let. HMRC may ask for details of their role so you need to justify paying them. Wages of spouseAs long as they don't own a share in the property, you can pay your spouse or partner... Read more
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Type: Miscellaneous
Employees' incidental overnight expenses policy
If an employee has to stay away overnight on business, there are some tax and NI-free expense payments you can make. To achieve this you'll need to have a company policy in place to avoid an employee claiming for the wrong amounts, which is what a visiting tax inspector would go looking for. Expense... Read more
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Type: Policy
Enquiry - notice out of time letter
To start an enquiry into your personal tax HMRC must notify you of its intention within a deadline. Before you reply to any questions HMRC raises, check that the enquiry notice has been issued in time. If not you should respond immediately advising HMRC that it is out of time. Delivered too lateThe... Read more
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Type: Letter
Claim for a capital loss for an irrecoverable loan to a trader
If you made a loan to a business which it cannot repay, the amount remaining outstanding may be treated as a capital loss. HMRC requires conditions to be met before it will accept the loss.What loans qualify?The loan will qualify for loss relief as long as it was used by the UK resident borrower (who... Read more
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Type: Letter
Accounts - obligation for past event note
One tax game that's played every year end involves getting tax relief before you've spent any money. Quite often you don't get the actual invoice in before the year-end. So instead you can include in your accounts a reasonable provision for the estimated costs of what you will eventually pay. However,... Read more
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Type: Document
Dividend waiver
A dividend waiver is a document produced by a sharelder to show that they have given up (waived) their right to one or more dividends that they would otherwise be entitled to. A waiver can be used in income tax and inheritance tax planning but it must be made as a deed or HMRC will not accept its validity.... Read more
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Type: Document
Employee homeworking expenses policy
The increasing tendency for individuals to work from home raises the question of which home-related costs can be reimbursed tax free by an employer. So you'll need a company policy making it clear to your employees which expenses come with a tax bill. Working from homeThere has been a very large increase... Read more
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Type: Policy
Lottery syndicate agreement
Are you in a lottery syndicate? Did you know that any winnings (football pools, National Lottery etc.) by the syndicate leader are potentially chargeable to inheritance tax as part of their estate? So what do you need to put in place before the big win?Protect the syndicate leaderThe good news is that... Read more
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Type: Agreement
Termination payment letter
You need to take account of both the legal and tax issues when drafting documentation for dealing with a termination payment. But if you don't have any employment issues with the departing employee it's arguable that the payment can be made tax free (subject to the £30,000 tax-free limit). Use this... Read more
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Type: Letter
Year-end bonus board minute
Bonuses for employees or directors declared after the year-end may only be accrued in the balance sheet if there was a "legal or constructive obligation at the balance sheet date" to make such payments. All other bonuses declared after the year-end cannot be included in the accounts until the following... Read more
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Type: Miscellaneous
Enquiry - challenging a business economics exercise
There can be many reasons for challenging an HMRC business economics exercise, but you must have good grounds for doing so. Are your records deficient?HMRC's business economics exercise approach to increase taxable profits cannot be justified unless the records have been shown to be deficient in some... Read more
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Type: Letter
CGT rollover relief claim
When you've sold an asset that was used in your business, and this results in a capital gain, it's possible to defer or even avoid tax on this by claiming rollover relief. Selling a business assetCapital gains tax (CGT) applies to profit you make when you sell a business asset. If this results in a... Read more
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Type: Letter
Authority letter to HMRC
If you want someone, for example your accountant or a friend, to communicate with HMRC on your behalf, you must put this in writing. If you don't, he won't be prepared to discuss your VAT or other tax affairs with anyone but you. Getting around a confidentiality issueHMRC isn't allowed to reveal confidential... Read more
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Type: Letter
Annual certificate of interest
If your company pays you interest for lending it money, it must deduct income tax first and provide you with a certificate to show this.certificateThe interest can be paid or credited to the director's loan account on a regular basis to be drawn against later. Generally, the company has to deduct income... Read more
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Type: Letter
Directors' benefits in kind - board minutes and contract clause
Directors' benefits in kind - board minute and contract clauseWhere your company provides a director with benefits in kind, it's good practice for the arrangement to be recorded in a board minute and in the director's contract. remunertation packageThere is no need for any special wording for a board... Read more
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Type: Document
Company trading status report
Business property relief is available on shares in unquoted companies if certain conditions are met. This means 100% of the market value of those shares will escape inheritance tax. However, HMRC can take this relief away if the business consists "wholly or mainly" of non-trading activities such as holding... Read more
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Type: Document
Staff suggestion scheme record
Tax rules permit employers to pay employees a tax and NI-free sum for suggestions to improve the busines. Keep a separate record of such payments to help justify the tax and NI treatment should HMRC make enquiries.Log the ideasThe really clever bit of a staff suggestion scheme is that even if you get... Read more
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Type: Form
Termination payment minutes
You can use company law formalities to support your case that a termination payment is not ordinary earnings and hence not taxable (up to a £30,000 limit). What's involved?Ex gratia minutesIf possible, agreement to make a termination payment, and its approval by the board using Termination Payment Minutes,... Read more
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Type: Miscellaneous
Contract for services
HMRC's aim is to reclassify freelancers such as consultants as employees and insist that PAYE and NI is due on the total amount paid to them. Having a realistic contract for services in place will provide evidence that the engagement is one of self-employment.Contracts for servicesContracts for services... Read more
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Type: Miscellaneous
Electronic devices policy
When removing the Home Computer Initiative back in 2006, HMRC accidentally opened the door to charging tax on private use of any electronic device, such as a laptop or tablet, provided to employees by their company. How can you prevent a tax charge from arising?Computer-related equipmentTablets and laptops... Read more
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Type: Policy
Memo: invoices for motor expenses
How expenses are controlled is always at the top of HMRC's list of questions during a compliance visit. Using our memo should help you to dismiss enquiries about motor expenses very quickly, before they become too detailed.Compliance visitA compliance visit is often referred to as a PAYE visit, i.e.... Read more
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Type: Document
Employee personal appreciation gift letter
There are very few circumstances in which an employee can receive tax-free cash from an employer. But a gift made "on personal grounds" or as a "mark of appreciation" might be one of them. How do you go about proving this to the HMRC's satisfaction?A personal giftWhere cash paid to an employee is a genuine... Read more
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Type: Letter
Letter of wishes to accompany a will
Using a letter of wishes can remove uncertainty for those looking after your money and assets after you die.UncertaintyWhen you draft your will you generally express exactly how you want your estate to be divided up in terms of each individual's share. For example "I leave the residue of my estate to... Read more
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Type: Letter
Deed of assignment of life policy
As part of your estate planning you might want to transfer a life insurance policy to someone else, say a son or daughter. You can do this by assigning the benefits of the policy to them. Share your estateYou cannot give away an insurance policy as such, because the terms under which the insurance is... Read more
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Type: Document
Register of child carers
HMRC imposes a fairly strict record-keeping regime on employers who provide their staff with subsidised childcare as a benefit in kind. For example, the tax and NI exemption which can apply is only given where the childcare is provided by a registered or approved carer. For this reason you should keep... Read more
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Type: Form
Licence agreement (commercial property)
Licence agreement for commercial propertyThere are various reasons why you might not want to offer someone a lease over a property. A licence to occupy land or buildings, unlike a lease, does not convey exlusive right over the property. licence agreementA licence to occupy agreement allows you, as the... Read more
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Type: Agreement
Salary sacrifice letter to employee
Where you enter into a salary sacrifice arrangement with an employee it will only be effective for tax and NI purposes where you have notified them of the consequences. Benefit in kind instead of salarySince 6 April 2017 most salary sacrifice arrangements cease to offer tax or NI savings. However, some... Read more
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Type: Letter
Licence agreement (garage)
Where you use your garage for storage on behalf of your company, it can pay you rent. The arrangement should be formalised by a licence agreement which gives the company non-exclusive rights over the property.Company storageYou will need to record any payment made to you by your company for use of your... Read more
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Type: Agreement
Deed of trust for property
If property is owned jointly, HMRC tax any rental income on each of the joint owners equally. However, a deed of trust can be used to transfer some or all of the beneficial entitlement from one joint owner to the other so that they are taxed on their share of any income or gains derived form the property.... Read more
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Type: Document
Deed of variation
The terms of a will can be varied by agreement among the beneficiaries so that the residue of an estate passes on different terms than those included in the will. This is known as a deed of variation. These are often used to improve the inheritance tax position of the estate.The deedA gift from the estate... Read more
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Type: Miscellaneous
What HMRC is likely to ask
There's a pretty standard set of questions that the inspector will ask at interview. These are mostly designed to undermine the records you've kept and so allow them to make a demand for tax on missing income/profits or over-claimed expenses. So how should you prepare for such an interview? GuidelinesIf... Read more
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Type: Document
Wastage losses record
Wastage/losses recordHMRC typically uses a mark-up of purchases to selling price to construct an anticipated sales figure. However, this doesn't generally allow for wastage/write-offs. So what simple records could you keep about "wastage"?Wasted stockProduct losses can take many forms: discounts and... Read more
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Type: Form
Company's option to buy/sell shares clause
In the event of the untimely death of one of the major shareholders, the surviving shareholders probably won't want the shares to go to the deceased's beneficiaries unless they are already involved in running the company. The shareholders can include a preemption clause in a shareholders' agreement requiring... Read more
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Type: Clause
Letter to chase a tax repayment
Repayments arising from online filing of self assessment tax returns may be stopped for a variety of reasons, and HMRC staff have to look at them before they can be released. Contacting HMRC should help to speed up your repayment.Write or phone?Telephone contact is often the quickest way to get things... Read more
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Type: Letter
Exchange of letters
During routine compliance visits HMRC has asked companies for the names and addresses of any freelancers they use. Protect yourself with an exchange of letters between your company and the freelancer.Proving you've considered statusHMRC would be delighted to be able to reclassify your consultants/freelancers... Read more
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Type: Letter
Capital allowances for fixtures in buildings record
Since April 2014 it has been crucial for prospective buyers of second-hand commercial buildings to ensure that the seller has allocated their expenditure on fixtures to a capital allowances pool before the sale. If they haven't, then the buyer won't be able to claim capital allowances on them. Therefore,... Read more
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Type: Form
Land and buildings tenancy in common declaration
Land and buildings tenancy-in-common declarationYou may need a tenancy-in-common declaration for a variety of reasons. Use it as evidence to satisfy HMRC that the property is now actually owned in unequal proportions.Split to your needsA Tenancy-in-common Declaration is usually used when you would like... Read more
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Type: Miscellaneous
Employee scale rate clearance letter
Where you have a number of directors or employees who travel frequently, you can reduce the administration involved in processing their expense claims by giving them a flat rate allowance to cover items such as lunch and dinner. However, to avoid having to deduct tax on the amounts paid, you'll need... Read more
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Type: Letter
Interim dividend board minute
A company can only pay dividends where it has "distributable profits". Broadly, this means post-tax profit for the current or previous years which has not been paid to the shareholders. The directors must keep records to show they have considered this.dividend timingFor a comprehensive board minute concerning... Read more
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Type: Document
Property management company contract
Company tax rates are lower than those for individuals, so it might make sense to divert some of your rental income from properties you own personally into your own property management company. In order to avoid a challenge from HMRC, there should be a formal contract between you and the company.Property... Read more
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Type: Miscellaneous
Distributable profits board minute
A company can only pay dividends where it has "distributable profits". Broadly this means post-tax profit for the current or previous years which has not been paid to the shareholders. The directors must keep records to show they have considered this.A legal dividendCompany law says that once you've... Read more
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Type: Document
Enquiry - business economics exercise letter
You might feel that the tax demand based on a business economics exercise routine is absolutely outrageous. What measured response should you give?Don't say too muchDuring an enquiry into a tax return there is now a much greater willingness by HMRC to displace the profits shown by your accounts with... Read more
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Type: Letter

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