What is a dormant company? Per the Companies House, a company is dormant if it had no significant accounting transactions during an accounting period. A ‘significant accounting transaction’ is one which a company would usually enter in its accounting records except for the following: 

o   Annual return fee; fees paid to the Registrar of companies for a name change or for re-registration
o   Payment of penalty for late filing of previous accounts
o   Receipt for payment for shares taken by members

There must be no significant transactions for the entire accounting period. This means that a company is not dormant if for example - it received interest on the company bank account or paid accounting fees. Any such transactions will mean that the company has to file accounts and corporation tax returns in the normal way.

HMRC’s definition of a dormant company is slightly different -per HMRC,“… a company that’s not active, not liable for Corporation Tax or not within the charge to Corporation Tax is a dormant company"

Filing requirements : 

All dormant companies, even those who have not traded, must file annual accounts at Companies House. However, the big advantage of being dormant is that you don’t need to provide as much information as you do for an active company.

The dormant company would need to continue filing annual return with the Companies House every year. In addition, it would need to notify HMRC separately of dormancy by submission of CT41G Dormant Company Insert. 

A company can remain dormant indefinitely so long as Companies House filing regulations are adhered to.

When you take on a new employee, you must get specific information from them and report it to HM Revenue & Customs (HMRC) the first time the new employee is paid. Usually most of the information is available on the new employee's P45 which get issued by their previous employer.
However there may be occasions when the new employee won't be able to give a P45. In such cases, still you must use the correct tax code and report their details to HMRC via a Full Payment Submission (FPS) the first time you pay them.

If your new employee doesn't have a P45, you must ask them to submit a declaration, in which they select one of the following situations that apply to them. According to the situation they choose, the tax code given against the respective criteria should be applied : 

• This is their first job since last 6 April and they have not been receiving taxable Jobseeker's Allowance, Employment and Support Allowance, taxable Incapacity Benefit, state pension or occupational pension (1000L cumulative)
  
• This is their only job, but since last 6 April they have had another job, or have received taxable Jobseeker's Allowance, Employment and Support Allowance or taxable Incapacity Benefit. They do not receive state or occupational pension  (1000L on a week 1/month 1 basis)
  
• They have another job or receive a state or occupational pension (BR cumulative)
  

You must keep a written record of their answers for the current and previous three tax years, and the information should be reported to HMRC via the FPS. Where the employee doesn't complete the starter declaration as above, the tax code (0T week1/month1) has to be applied.

From 6th October 2014 HMRC will apply penalties for late submission of FPS or EPS. Full Payment Submission (FPS) is filed by the employer each time they pay an employee, whether this is weekly, monthly or any normal payroll date. Employer Payment Summary (EPS) on the other hand is used to report statutory payments that are recoverable eg. SMP or to inform HMRC that no employees have been paid.

HMRC will send employers a filing penalty notice by letter quarterly at the end of July, October, January and April, where penalties have been incurred. The size of the late filing penalties depends on the number of employees within the PAYE scheme  eg. £100 for 1 to 9 employees, £200 for 10 to 49 employees etc.

These rules apply to each PAYE scheme, rather than each employer. To avoid the penalty, you should 

• make sure that all submissions due for all of your PAYE schemes are fully up to date by 5 October 2014. 
• Submit an FPS each time you make a payment to an employee, on or before the date that you pay them. 
• If you don’t need to send an FPS because you did not pay any employees in a tax month, it is important that you tell HMRC by sending a nil Employer Payment Summary (EPS) by the 19th of the following tax month

For more information, refer HMRC guidance at http://www.hmrc.gov.uk/payerti/reporting/late-reporting.htm

Banks and building societies usually deduct 20 per cent tax from the interest they pay on most types of savings. However if you're on a low income and have savings, you can register to have the savings interest paid tax free and also claim back any tax that you have already paid.

To register to get interest on your savings tax-free you need to fill in form R85 (PDF 721K) and send it to your bank or building society. This applies if your total taxable income is less than your tax-free Personal Allowance. 

If your taxable income is only slightly higher than your tax-free allowance(s), then some or all of your savings interest may be taxable at 10 per cent - the 'starting rate for savings'. If this applies, you'll probably be able to claim the difference between the tax that was deducted and the amount that's actually due. 
To do this you'll need to fill in a form  R40 (PDF, 102KB) Tax Repayment Form. This form has to be done for each year you think you paid too much tax.

Your income and tax allowances can change from year to year - and during the year. So you may notice that your income goes up and your tax allowances no longer cover it. If this happens it's important you tell your bank or building society straight away so they can start taking tax off your interest. This way, you can avoid ending up with a tax bill at the end of the year.


Real Time Information (RTI) is a new system of PAYE reporting which started for most employers last year (April 2013)

Under RTI, employers with PAYE schemes have to send details to HMRC every time they pay an employee, at the time they pay them, and notify HMRC when no such payments are made in a tax month. The information must be sent to HMRC online, and you use a Full Payment Submission (FPS) to do this.

The payroll software you use will generate the RTI reports you need and submit payroll information online. These include details of:

• the amount you paid your employee(s)
  
• deductions, such as Income Tax and National Insurance contributions (NICs)
  
• starter and leaver dates if applicable
  

RTI has been the biggest change to PAYE processes since 1944. With its introduction, end-of-year forms P35 and P14 have been made redundant and the starter and leaver process is simplified by using FPS to communicate to HMRC. 

The tax coding, P60s, expenses and benefits reporting (through P9/P11) and the payment deadlines to HMRC still remain as before

A tax code is used by your employer or pension provider to calculate the amount of tax to deduct from your pay or pension.
It is usually made up of several numbers and a letter, for example: 1000L.

If you multiply the number in your tax code by ten, you will get the total amount of income you can earn in a year before paying tax.
For example, the tax code 117L means:

• you are entitled to the basic Personal Allowance
  
• £1,170 must be taken away from your total taxable income and you pay tax on what's left
  

If your tax code has two letters but no number, or is the letter 'D' followed by a number, it is implies you have two or more sources of income and all of your allowances have been applied to the tax code and income from your main job or pension.

Some commonly used tax codes and what they mean :

• 1000L - For people who are eligible for the basic Personal Allowance for the tax year 2014 - 15. It is also used for 'emergency' tax codes.
  
• BR - is used when all your income is taxed at the basic rate - currently 20% (most commonly used for a second job or pension)
• NT - when no tax is to be taken from your income or pension

The tax code spreads your tax-free amount equally over the year so that you get about the same take-home pay or pension each week or month.

Account reconciliation is defined as the documented explanation and analysis of the ending balance of a general ledger account

Account Reconciliations are performed for many reasons, including:
• To ensure transactions are reported on the general ledger on a timely and accurate basis.
• To identify, document, track and explain transactional differences between general ledger and sub-ledger balances and/or other independent sources.
• To identify and guard against fraudulent activity and reduce losses.

In conjunction with the account reconciliation process, the expectation is to conduct root cause analysis on any operational defects highlighted and identify process improvement projects to address them.

Format of Account Reconciliations:
There are various tools and processes available in the market place to perform account reconciliations. However, the underlying criteria that these tools work on are the same in most cases. 

A simple account reconciliation format, for example for fixed assets account is given below:
      
F/A General Ledger Balance (1)                                              92               

Independent Source Supporting Balance:
Fixed Assets Register                                                              100

Total Supported Balance (2)                                                  100 

Difference between GL and Supported Balance (1-2)       (8)                

Difference explained by:

Assets Purchased not accounted                                          (15)                
Mis-posting of Depreciation                                                        7
Total difference explained (3)                                                 (8)                 

Unexplained Difference (1-2-3)                                                0

Account reconciliation is a valuable control tool in the finance and controllership process, and if used properly and regularly – can help several companies maintain the integrity of their financial statements and ensure compliance with laws and principles.

Normally, employers can reclaim a minimum of 92% of certain statutory payments that are paid to employees.

If you are a small employer though, and if you pay your employees statutory pay (maternity/paternity or adoption), you are entitled to claim 100% of the payments made plus an additional 3% Small Employers' Relief (SER).

Who qualifies as a Small Employer for this purpose? 
Qualification depends on the employer’s total Class 1 national insurance contributions paid to HMRC in the previous tax year. Normally, your business qualifies for this relief if your NI liability was £45,000 or less in the completed tax year preceding the employee’s qualifying week.
HMRC can confirm your small employers’ relief status.

The ‘Employment Allowance’ is part of the Government's ongoing package of support for businesses in the UK. It aims to encourage the employment of new staff.

From 6th April 2014, employers and charities are entitled to claim back (i.e. reduce) up to £2,000 per tax year from their employers Class 1 National Insurance (NIC). It is expected that up to 1.25 million businesses and charities will benefit from Employment Allowance.

Employment Allowance is for nearly all employers that pay Class 1 National Insurance contributions on their employees’ and directors’ earnings. A few selected employers like those who employ someone for personal, household or domestic work (nannies, chauffeur for example), public authorities aren't eligible for this allowance though.

You can use your own 2014 to 2015 payroll software or HM Revenue and Customs’ (HMRC’s) Basic PAYE Tools for 2014 to 2015 to claim the Employment Allowance. Once made, HMRC would automatically carry forward your claim each year.

An employer can make the claim at any point in a tax year and if the claim is missed in a tax year, has up to 4 years after the end of the tax year in which the claim applies to make the claim.

Should you need further assistance in this area, we would be happy to explain how the Employment Allowance will affect your own particular circumstances. To find out more, please contact us by clicking here