13. Tax

Be prepared

This eight-page briefing provides an introduction to the taxes most likely to affect you in business.

With tax, the sooner the better. The sooner you set up systems for maintaining your records, and the better you keep them, the less money you will need to spend on professional help in dealing with the tax authorities, and the easier it will be to plan for your liabilities.

Nevertheless, it is well worth consulting a tax expert - a qualified accountant, solicitor or tax adviser - for detailed advice. An expert should be able to save you much more in tax than you spend on fees, as well as sparing you time, effort and stress.

This briefing covers:

• Which taxes will affect your business.
• What can be classed as business expenses.
• Your responsibility for calculating and paying tax and NI for your employees.
• Tax breaks for investors in small and medium-sized companies.

Corporation tax is the tax paid by companies on their profits. Unincorporated organisations (such as clubs and societies) also pay corporation tax, if they have taxable income. Partners in both traditional and limited liability partnerships and sole traders pay income tax instead.

If you use accountants to prepare your year-end figures, or auditors to check them, they may calculate your corporation tax liability, too. But you cannot afford to ignore corporation tax until the year end, because your activities during the year could have a significant impact on the final bill.

This briefing explains:

• How corporation tax is calculated.
• When you have to pay it.
• When you can offset losses.
• How to minimise your tax bill.

No defence

Once they understand the basics, many businesses find VAT reasonably straightforward. But there are some tricky areas where it is easy to make mistakes. These can give rise to stringent penalties, and ignorance is no defence.

In this briefing, we assume you know about the basics of VAT and concentrate on some of the more unexpected pitfalls.

The briefing covers:

• Timing and paperwork problems.
• Unreclaimable VAT.
• Exceptions for unusual supplies.
• Where to get help and advice.