How much can I earn before I become a higher rate taxpayer?

How likely is it that my affairs will be investigated by the Inland Revenue?

Should I do business as a self-employed person or would a limited company be better?

Why a Chartered Accountant?

What are the hours of business?

Q. Do I need to submit a tax return?

A. Most employees do not unless they are higher rate taxpayers. Anyone who has a business must submit a tax return. It is the taxpayer's responsibility to inform the Inland Revenue of the need for a return to be issued.


Q. How much can I earn before I become a higher rate taxpayer?

A. Currently income above £34,305 (2000/2001 rates) is taxed at 40% which is the highest rate of tax. A summary of various tax data can be obtained by clicking here.


Q. How likely is it that my affairs will be investigated by the Inland Revenue?

A. Tax returns for both individuals and companies operate on a self-assessment basis and therefore most returns are not reviewed in detail by the Revenue on submission. However, some returns are selected for investigation by means of an Inland Revenue enquiry which can be random, specific or in depth. This will be conducted by an Inspector of Taxes who will raise queries and examine the business records in depth. As a result of the change to self assessment there is little doubt that individuals and companies will have a higher risk of becoming the target of a tax investigation in the coming years! All businesses can expect to be reviewed on a periodic basis particularly those within certain sectors such as the Construction Industry or Farmers.

The Inland Revenue has been given increased powers and resources to obtain the information they require and now no longer are required to give a reason for investigating your affairs.


Q. Should I do business as a self-employed person or would a limited company be better?

A. The advantages and disadvantages of a company include the following:

Advantages of a limited liability company

The main advantage of a limited company is that the liability of its owners in the event of insolvency is limited to the share capital issued, in other words the other assets of the shareholders are safe from the creditors of the company.

Usually banks will ask for personal guarantees from the directors/owners of a small company before lending money, so that limited liability will not protect against their claim, but it will be effective against some other creditors. This protection is lost however if the directors have been trading recklessly or fraudulently or if proper books of account have not been kept.

Rates of Corporation Tax at 20% for small companies are lower than personal income tax rates, but it should be noted that when the profits are taken out as salary or dividend they are taxed at personal rates. There can be a certain perceived substance in trading through a company which can have significance in some areas of business activity.

A company is allowed to make contributions to a pension scheme for a director to a level greater than is permitted a self-employed person. A business operated through a company can be more flexible in terms of dividing ownership.

Disadvantages of a limited company

A limited company must have its accounts audited, which means that the Accountants must express an opinion as to whether the accounts present a true and fair view of its trading results and balance sheet. This involves them in a great deal of work not required of a non-audit case and therefore necessitates a larger fee.

A better level of bookkeeping and records is expected of a company. A limited company must file an annual return with the Companies Office to which abridged accounts must be attached. These accounts are open to public scrutiny, but contain limited disclosures, a Balance Sheet, Audit Report and Notes to the Accounts, but no Profit and Loss Account or Salaries figure.


Q. Why a Chartered Accountant?

A. Don't take chances with your financial affairs. Accountancy is a professional subject, you need to deal with someone who has professional qualifications, experience and integrity. It can take years before the mistakes made by an unqualified accountant come to light - and by then it may be too late to correct them. So for peace of mind, only use a qualified accountant.

Chartered Accountants have come through a rigorous regime of training and examinations and have had wide practical experience which they can use for your benefit. They are financial experts, with the knowledge and integrity to give you high quality independent advice on any aspect of your financial affairs.

While some Chartered Accountants work in high finance and with very large companies, most work for small and medium sized enterprises. They deal with local businesses, small companies, personal taxation and people who need advice on investments and pensions.


Q. What are the hours of business?

A. We are open Monday to Friday 9:30am to 5:00pm. We do not close for lunch and are closed on public holidays.