Old McDonald’s Had A Raid…

McDonalds Raid

McDonald’s always seems to be in the news about something. Whether it’s the fact that their burgers don’t seem to decay, or the amount of salt they put on their fries, despite their popularity people do seem to enjoy complaining about them.

But a few weeks ago there was really something to complain about.

The French headquarters of McDonald’s was raided by police and tax crime officials as part of a tax probe. Documents were seized during the raid which was carried out after officials grew suspicious that the tax accounts at the fast food chain were not what they should have been. The thinking is that McDonald’s tax bills have been unlawfully lowered due to it funnelling earning into Luxembourg. This is where McDonald’s European headquarters are based, so initially perhaps it could be seen as above board.

The person behind the raid is European Commissioner Margrethe Vestager. The commissioner has carried out similar probes in the past against Fiat Chrysler and Starbucks after their tax arrangements were called into question. Both companies were found to be guilty of purposefully and unlawfully lowering their tax bills, and were ordered to pay up to £22.8 million. This money was a combination of fines and backdated taxes.

A McDonald’s spokesman has said that not only does the company pay all of its taxes – with an average rate of 27% – but it also pays taxes on property, social components and various other resources too. They insisted that although the majority (75%) of the restaurants were franchises, they too paid everything that was owed.

The outcome of the investigation should be interesting – and since Vestager has been through all of this before, the results shouldn’t take too long to come through.

What Are Business Rates?

Business rates are what business owners pay when they are the occupiers of a non-domestic property – that is, they own or rent a shop, office, or other business building that isn’t part of their home. The rates payable depend on the size of the business and the area in which is it located, and there are specific ways to work out how much is owed.

Since April 2013, rather than the money gathered from business rates (also known as non-domestic rates) being paid into one central pool that was then redistributed by the government, the local authority is able to keep around half of the money collected to be used within the local economy. Everything that is left over goes to the government where it is then re-allocated through grants.

It is possible to pay your business rates through 12 monthly instalments if that is easier for your cashflow. As well as this, charities and not for profit organisations can receive some discretionary payment relief.

Business rates are calculated using the multiplier that is set by the government. This is checked each year and is often changed to keep it inline with inflation. There is a special small business multiplier for those businesses with a rateable value of under £18,000. For some businesses with a rateable value of less than £12,000 there is complete business rate relief benefit.

The rateable value of a business is set by the central Valuation Office Agency, and is used to calculate all business rates across the UK.

The Backpacker Tax – Yes or No?

The Australian government recently put forward plans to increase the tax payable by foreign travellers who also work in the country. But, after complaints from native farmers, the tax, known as the ‘backpacker tax’, may now be scrapped, or at least reviewed.

Farmers are worried that if the amount of tax to be paid increases, they won’t be able to find anyone who is willing to do their harvesting work for them when the time comes. It will simply not be worth any traveller’s while to take such a job when so much of their money will go to the government.

And since the Conservative government depends in large part on the votes from rural communities, they have decided to call a review on the tax, and to see if there is a better way to do things. They will reconsider the tax rise in either October or November, after an election that is due to take place on 2nd July.

It isn’t just the farmers who are up in arms about this potential tax; The Green party is also less than pleased about it. They suggest that the government is looking at a short term increase in tax revenue and ignoring the long term implications for the farmers and producers. Of course, they remind everyone, that these long term issues for growers also mean issues for the government that depends on revenue from them.

The proposals for the tax were that anyone working on a holiday visa would have to pay 32.5% on every dollar that was earned, starting on 1st July. The current tax rules are that nothing is due on the first AUS $18,000 that is earned, and only after that figure is the tax payable. This seems to fly in the face of the special visa that is given to travellers who work for three months on a farm. These second visas allow for a second year in Australia. But it is likely that backpackers would rather go home early than pay such a high amount of tax.

Do Directors Need To Complete A Tax Return?

This sounds like a fairly easy question to answer – it’s either a yes or no, and that’s it. A company director either should complete a tax return, or they don’t have to. Either way, it’s a straightforward thing that doesn’t need much thinking about.

Or is it?

Because it seems that there are two schools of thought on this particular subject.

Some believe that a director doesn’t need to complete a tax return at all, and the fact that these directors are not being asked to specifically by HMRC (ie, they are not receiving a letter alerting them to the fact that it needs to be done) seems to bear that out. The reasoning behind this idea is that, sometimes, a director will only be taking a small salary, and the rest is ‘topped up’ with dividends, which are tax free. And although if this salary rises above the higher tax rate level then he or she will need to pay more tax and notify HMRC, there is no legal requirement for them to register for a self assessment tax return.


Except for the fact that, even though HMRC aren’t sending out the letters as they do to others, they do say on their website that company directors ought to register (even if they don’t actually pay much tax). The only company directors who don’t need to send in a self assessment are those who worked for charities, who didn’t actually get paid, and who also didn’t have any benefits such as a car.


So, it seems, is everyone else.

But we suggest that the best course of action for every company director is to register. It can’t hurt. And if you don’t need to send a self assessment, then you’ve saved yourself some admin work. If you do – then you’ve saved yourself a fine!

Selling On eBay – Do You Need An Accountant?

Like most people, you may well have dabbled in the online selling world of eBay. If so, it could be that you do need an accountant. Why? It’s because any kind of extra or ‘side’ business still needs to pay taxes.

This isn’t the case if you only sell the odd old DVD or piece of clothing because you need to clear some space and want some pocket money; but if you regularly sell items on the auction site and make a profit doing so, and if that money is providing you with a living (no matter how small), then it is classed as a businesses, and businesses pay tax.

The same is true of any kind of selling site. If you create handmade jewellery and post it on Etsy for sale, you could be liable to pay tax on the money you make. If you use Lulu or Createspace to self-publish a novel, the government is entitled to their share of the profits. And so on.

It can be tricky to work out the difference between personal selling and business selling, but the main differences are:

  • Why are you selling the item? It is purely for profit?
  • What did you use the item for yourself?
  • How often do you sell items?
  • How much time has occurred between buying the item and selling it?

You may feel that selling items on eBay is a hobby that brings in a little spare cash, but if the answers to the above questions determine that you are running a business then you will need to be registered to sell tax. This is the case even if you are registered as a private seller and not a business seller on the selling site.

Everyone has a personal tax free allowance of £10,000 which means that no tax is payable on the first £10,000 you make. If you have a full time job, however, that £10,000 will already have been used up, which means there is no allowance left for the second business to take.

If you are unsure about whether you should register for tax payments for your online selling, please contact us – we are experts in exactly this type of case and we will be able to advise you.

Children On The Payroll – A Good Idea or A Terrible One?

As always when it comes to children, there are decisions to be made. One that you may not have considered yet is whether to employ them in the family business (assuming they want to join you in the first place).

It’s something worth thinking about since it has its benefits for everyone involved and can save you money in the long term.

The idea of using the company to pay for things so that it can claim back any tax is one that is used by many directors and business owners across the world. It doesn’t always work like that though. If the thing that is being bought might not even be tax deductible, and all you have done is save yourself the expensive of buying it personally. Not that that’s a bad thing, but it may not benefit your company.

But paying for the services of a family member does benefit the company – it gives it another employee to carry out necessary work. And it satisfies HMRC’s ‘wholly and exclusively’ rule (whereby anything that you want to deduct the tax from must be used ‘wholly and exclusively’ by the company). It makes no difference whether the person you are employing is a family member or not. And as long as the salary is at the right kind of level for the work that is being paid for, the company will even be entitled to a tax reduction.

But what if there is no job, or no job that your child has the skills to do? You can create one. There are no rules against it. It can be anything from making the tea to cleaning the warehouse to filing or anything else. As long as the salary isn’t out of line with the work being done, it really doesn’t matter what the job is. It just has to be of use to the company.

If you do it this way, then you’ll be saving money personally as you’ll no longer be handing out cash when the kids ask for it. Plus, it’s a great way of teaching them the value of work, and how to budget carefully (especially if they are paid monthly).

Why Is Offshore Banking Bad?

Considering the news headlines over the past few days, notably the ones concerning the so called ‘Panama Papers’ and the leaked information about which influential figures have money in offshore savings accounts, a lot of people are probably asking that question.

The answer is, it’s not necessarily bad at all. Neither is it illegal.

Offshore banking can be a legitimate way to keep your money safe, and to stop some people from being over taxed. For some people, such as ex pats, it is a good way of having one centralised bank account that deals with various revenue streams from different countries.

However, the problem lies when those putting their money into offshore accounts have failed to declare it to the tax authority in the country that they are resident in. If that happens, and they simply take the money and put it offshore where it cannot be touched, then they are avoiding paying tax, which is an illegal act.

The law states that you must declare all of your income and pay the tax that is owed on it. Once that has happened, you can save it wherever you wish, and if that is in an offshore account then so be it. Although it is possible to use offshore accounts to reduce your tax liability in some circumstances.

Another illegal aspect of offshore banking is money laundering. Money laundering is how criminals make their illegally obtained money look totally legitimate. It can be complicated, with many different accounts, names, and places involved, and since offshore accounts are seen as being less intruded upon (or at least they were!) than other accounts, laundered money is often ‘washed’ through them, coming out clean and untraceable on the other side.

So, in essence, offshore banking isn’t immediately bad, illegal, or immoral. But they can be, which is why it is important to have proper records, all documents and receipts, and proper accounting files should you wish to go down that route just in case.

What Is Married Couple’s Allowance?

Married couple’s allowance is something that not everyone is aware of but, if you meet the criteria, you could save up to £835.50 a year (with a minimum saving of £322 each year). In order to be eligible, you must be married or in a civil partnership, you must be living with your spouse or civil partner (unless you are separated for any reason apart from a formal separation, including a separation due to illness, old age, work that takes one of the couple away from home, prison, training, education, or the armed forced), and at least one of you must have been born before 6th April 1935.

If the marriage took place before 5th December 2005 then the amount of allowance is calculated using the husband’s income. If the marriage or civil partnership took place after that date, then the amount is calculated using the highest income.

The Married Couple’s Allowance is a way to reduce your tax bill, and there is a handy calculator on HMRC’s website which will help you to work out what you are entitled to. Take a look here: https://www.gov.uk/calculate-married-couples-allowance.

It is easy to claim for Married Couple’s Allowance using your self assessment form as there is a section on the form for exactly this allowance. However, if you don’t normally fill in a self assessment form, you will need to get in touch with HMRC. They will want to know the date and details of your wedding or civil partnership ceremony, as well as details about your spouse or civil partner. This will include their date or birth and income.

If you find at the end of the year that you haven’t paid enough tax or that your tax bill isn’t enough to claim the allowance, then it can be transferred to the following financial year. You can also share the Married Couple’s Allowance with your spouse or civil partner, or you can transfer the entire allowance into their name.

The Scottish Bed Tax: Will It Happen?

The Scottish Tourism Alliance is worried, and perhaps with good reason. An idea for a ‘bed tax’ for all visitors who would go to Edinburgh would, experts say, be the death knell for tourism in the area. As lovely as the city is, an extra levy on top of what tourists already have to pay would potentially leave its hotel bed empty for most of the year – even with the lure of the Edinburgh Festival and Edinburgh Fringe.

The Scottish Tourism Alliance is hopeful that the Scottish Government would reject any bid regarding this additional tax, even though the initial idea behind it would be to give the money raised (in part) to the festivals themselves, even creating a specific marketing strategy. One of the questions raised asked whether these world famous festivals really need any additional marketing money given to them since so many people already know everything about them.

The scheme, being discussed between senior councillors in Edinburgh and those in Westminster, is still in the very early stages, and nothing is sure at the moment. It is hoped, however, that should such a levy be introduced, it would not be passed directly on to the tourists who come to Edinburgh, already an expensive city to spend time in. Not only that, but it would become the only city in the UK to introduce such a tax, which would, the Scottish Tourism Alliance worries, tend to lead visitors to look elsewhere when they are thinking of booking their break away.

An idea similar to this has been brought up in the past, but the Scottish government decided against it.

Would you visit Edinburgh if it introduced a ‘bed tax’ for tourists? Would it make you think twice, and perhaps look elsewhere? Or would you pay it anyway because you wanted to visit Edinburgh specifically? Let us know your thoughts.

The SA302 Form: What It Is, Why You Need It, And How To Get One

You may have heard of the SA302 form. If you are self employed and have sent in your returns in paper form rather than online, you will definitely have heard of it. So what is it? The SA302 form is a summary of the income that you have reported to HMRC. It is hard copy certification  that shows how much income you declared, and it is used to verify the income of those who are self employed and therefore won’t have a monthly payslip, or even a guaranteed monthly income.

Mortgage lenders are particularly keen to see your SA302 as this is the quickest, easiest, and most trustworthy way to see what you earn, and therefore what you may be able to borrow when it comes to buying a house. If you file your return online, you won’t be sent this summary, and you will have to download or request the correct forms from HMRC in order to pass these to the mortgage lender when they are requested. Many mortgage lenders want to see two to three years’ worth of the SA302 to confirm your income.

If you have trouble obtaining a form, then ask your accountant who will be able to get it for you, or call the HMRC Self Assessment Helpline (0300 200 3300).

When applying for your SA302, you will need to give a number of details to the operator. These include your name, address, date of birth, National Insurance Number, and your Unique Taxpayer Reference (UTR).

Even if your lender has not asked to see three years’ worth of forms, it’s always best to be prepared, just in case the tax year they are talking about is not the one you are talking to HMRC about (or the one that relates to the form you have found).

An important point to remember is that you must keep the information held with the HMRC up to date. Due to the HMRC rules, only the address that is registered with them can be used to send documents – including the SA302 form. A little tip in order to start the mortgage process moving faster is to ask HMRC to send copies of the document urgently (via fax, usually) to your mortgage lender. Although the lender will still need to see the original, this at least means that they can start the process.

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