Once you’ve decided to start a business, one of the first considerations is whether to start up as a sole trader or limited company. There is no easy answer to this and many clients have come to us completely confused about which route to take. The structure of your business very much depends upon the type of business and your expected annual income. We come across many people who have been advised to set up a limited company because it ‘saves tax’, but they haven’t been given an explanation as to why and how it saves tax. It is also important to consider any non-tax reasons for setting up a limited company such as the limited liability protection from creditors, greater options for obtaining external investment and the perhaps more professional image that a limited company projects.Continue reading
How will HMRC know if I don’t report income?
HMRC are increasing their activities to collect revenue lost from tax evasion and plan to recoup almost £22 billion per year by 2014-15. As we all know, they are also cutting costs through job cuts, so just how will they manage to monitor unreported income? The answer is through the use of some very sophisticated technology called ‘Connect’, developed by BAE Systems and which has already won several technology awards.
While HMRC has collected information from employers, banks, insurers and other third parties for some time, the collection and analysis of the data has been a very labour intensive and manual process, where it has often taken a tax officer weeks to build a full picture of a taxpayer’s affairs. The introduction of Connect automates much of the analysis and is both a data collection and data analysis tool, with the ability to draw on and link information from a much wider base.Continue reading