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faqs frequently asked questions thomson cooper

FAQs

How long do I have before register with HMRC once I start trading?

You must notify HMRC within 3 months to avoid a £100 penalty. If you’re approaching this deadline we can help you get the form in on time.

Why trade as a limited company?

There are tax advantages to trading as a limited company, which Tax Partner Mark Mitchell will be happy to discuss with you. Other advantages include:

  • The personal assets of officers of a limited company are protected should the company run into financial difficulty.
  • Many of the costs and administrative requirements of running a limited company are now not much more than those of a sole trader or partnership.
  • Suppliers and creditors have added confidence in limited companies and indeed many large organisations will only conduct business with limited companies.
  • The ownership of a limited company can be easily divided up through the sale of shares.
  • Selling shares can be a means of generating capital.
  • It may be easier to obtain bank loans or attract investors.

When will I need to charge VAT?

You do not need to charge VAT for any of your goods and services until your turnover reaches the VAT threshold of £85,000 (from 1 April 2017) or you expect to reach it in the next 30 days.

Once your business reaches this threshold you MUST immediately register for VAT and start charging VAT on your goods and services from the day you registered.

What are my duties as company director in a liquidation and when do they cease?

Directors’ duties cease at the date of liquidation, although the director’s full ongoing co-operation and assistance is required by the Liquidator. The company’s directors must:

  • Give the Liquidator information and about the company’s affairs.
  • Provide details of its assets and liabilities.
  • Preserve and hand over the company’s books, records, bank statements, insurance policies and other papers relating to its assets and liabilities.

What do the letters mean at the end of my tax code?

The letter at the end of the tax code refers to your situation and how it affects your tax-free Personal Allowance.

L: applies to most people born after 5 April 1938 with one job.

K: applies to somebody with taxable benefits greater than this year’s Personal Allowance. Although K codes are designed to collect extra tax, the amount of tax collected each pay period cannot be more than half of the earnings for that period.

BR: means that no Personal Allowance is available against this source of income. This generally applies to a second job, where one job is allocated all of the Personal Allowance and the other is taxed at basic rate.

DO: similar to the BR code, except that earnings from this source of income will be taxed at higher rate tax. This applies when HMRC expect other sources of income to exceed the basic rate threshold.