When you think back to your school days, you might imagine swapping football stickers in the playground and some boring science lessons, but if the Chartered Institute of Taxation (COIT) had its way, your children would also receive compulsory lessons in taxation. A good idea to teach those important financial lessons early, or taking taxation just that bit too seriously? We’re sure that there will be a wide range of opinions on the matter among the clients of our accountants Richmond here at Freelancer Accounting (http://www.freelanceraccounting.com).
The idea of such lessons, according to the body of chartered advisors, is that they would give school children a better idea of how tax works, why it is necessary and the obligations that they will have in their post-school life. The COIT’s recommendation came as it expressed its disappointment at the removal of a specific mention of education on taxes for 5 to 16 year olds from a new version of the draft national curriculum.
The most recent draft of the curriculum does still mention the teaching of “financial skills”, but clients of our contractor accountants will be interested to read that this was not enough for the COIT, which described tax as “one of the least understood areas of personal finance” faced by citizens. The body’s president Stephen Coleclough argued that with most schoolchildren eventually becoming employees, they would need to be able to understand a PAYE coding notice or payslip, in addition to identifying when it is wrong.
He added, in words that might make many of the clients of our IR35 accountants rue their own lack of knowledge of certain taxes prior to becoming self-employed, that many of today’s schoolchildren “will go into business where tax is a key cost and administrative burden that cannot be ignored. An understanding of taxation – how it works, why it is necessary and what the obligations of the taxpayer are – is an essential part of financial education.”
There are various roles that schoolchildren can find themselves playing as adults in relation to tax. These include students needing to understand the by no means straightforward effect of PAYE, investors like those with an interest in investing in ISA and tax credit claimants. The institute therefore emphasized the importance of tax becoming “as familiar a feature of school education as Bunsen burner experiments and football” – something with which many of those using accountants for freelancers may feel inclined to agree.
In addition, the COIT drew attention to about a sixth of the ‘tax gap’ being attributable to error and carelessness on the part of taxpayers, according to HM Revenue & Customs. It said that public education could be instrumental in tackling this. This perhaps suggests that if such teaching ever became a reality, the sons and daughters of those turning to Freelancer Accounting (http://www.freelanceraccounting.com) for accountancy services could yet be rather better informed on tax than their often struggling parents. In the meantime, contact us now for more information on our tax accounting expertise.
So many freelancers and contractors approach Freelancer Accounting (http://www.freelanceraccounting.com) over worries about Value Added Tax (VAT), unsurprising given its reputation as a very complicated tax that is easily misunderstood. Without the assistance of the right PCG accountant, you may struggle to manage your VAT – and now, a study commissioned by Sage shows that significant cash savings are being missed by more than a third of smaller businesses as a result of their failure to claim back the tax, often due to a lack of understanding of the associated rules.
The study found that many of those running smaller businesses are unaware of every item on which it is possible to recoup VAT, resulting in at least half of all owner-managers estimating that they miss out on more than £500 each year. Although business owners tended to be aware that they could deduct tax for everyday office items like stationery and printer ink, they weren’t as likely to know that the same rules applied to certain other purchases, such as petrol. This may explain travel – including that by car – topping the list of the greatest expenses for owners, followed by “food and refreshments” which, like fuel, could also have VAT reclaimed on them in a business context.
Managing director of Sage’s small business unit, Lee Perkins, warned that businesses failing to claim back the VAT to which they were entitled were putting themselves at a competitive disadvantage, adding that “Despite being around for 40 years, the ever-changing nature of VAT has put many business owners off from digging into VAT and fully understanding what can be refunded.” This news suggests the potential value to small traders of enlisting the help of the accountants in Canary Wharf of Freelancer Accounting.
The findings showed that 36 per cent of owner-managers missed out on savings due to the complexities around VAT reclaiming, while 52 per cent think that they and their businesses are down by hundreds of pounds each year as a result of such negligence. It’s all the more of a shame, given the highly efficient and cost-effective VAT service offered by the accountants for contractors of Freelancer Accounting, encompassing the preparation of VAT returns, ensuring that the client is on the most appropriate scheme, representation of the client in meetings with HMRC, dealing with all HMRC correspondence and assistance for the client with registering for VAT.
As a highly regarded provider of fixed fee accountancy services, Freelancer Accounting (http://www.freelanceraccounting.com) can ensure that small traders across London and the South East of England benefit from the most informed and tailored advice on their VAT situation. Contact us now for the help that you need to better understand the reclaiming of VAT.