Claim for money owed to you

If you are owed money by an individual or business, there is a procedure you can use called making a court claim. This was more commonly referred to as taking someone to a 'small claims court'.

Before making a claim, you should try to contact the person or organisation to try and resolve the issue by discussion or by using a specialist mediation service.

If this is unsuccessful and you are making a court claim for a fixed amount, this can be done online or by paper. An online claim can be made at www.gov.uk/make-money-claim. If you are making a claim for an unspecified amount you must download and complete the N1 claim form.

Paper forms need to be sent to the following address:

County Court Money Claims Centre
PO Box 527
Salford
M5 0BY

There are court fees to pay when making a claim. The amount of the fee depends on the size of the claim and whether the claim is made online or by paper. The fees can range from £25 to £10,000.

You may be required to go to court if the person or business you are claiming from denies owing you the money. If you are successful in obtaining judgement, but do not get paid, there are further steps that can be taken including the use of bailiffs to try and get what you are owed.

Reasonable excuses for late payment or filing

There are a number of options open to taxpayers who disagree with a tax decision issued by HMRC. As a first step, it may be possible to make an appeal against a tax decision. There is normally a 30-day deadline for making a claim, so time is of the essence. HMRC will then carry out a review, usually by using HMRC officers that were not involved in the original decision. A response to an appeal is usually made within 45 days but can take longer for complex issues.

In certain cases, it is possible to appeal against penalties on the grounds of having what is known as a 'reasonable excuse'.

HMRC’s guidance lists the following examples of what may count as a reasonable excuse:

  • your partner or another close relative died shortly before the tax return or payment deadline
  • you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
  • you had a serious or life-threatening illness
  • your computer or software failed just before or while you were preparing your online return
  • service issues with HMRC online services
  • a fire, flood or theft prevented you from completing your tax return
  • postal delays that you couldn’t have predicted
  • delays related to a disability you have

However, not receiving a reminder, relying on someone else or making a mistake are amongst the reasons not counted as reasonable excuses.

Seed Enterprise Investment Scheme

The SEIS provides for extensive Income Tax and Capital Gains Tax (CGT) breaks for investors and this greatly encourages much needed seed capital in new businesses. The SEIS is most valuable for taxpayers who can fully benefit from the tax reliefs on offer.

For investors the main benefits of the scheme are as follows:

  • Income Tax relief worth 50% of the amount invested to qualifying individual investors on a maximum annual investment of £100,000.
  • A 50% exemption from CGT on gains reinvested within the scope of the SEIS. The maximum gain to be relieved is capped at £100,000 and the relief will be withdrawn if the SEIS relief is ultimately withdrawn.
  • There is a 100% exemption from CGT on the sale of shares more than three years after the date on which they were issued.
  • An SEIS investment will normally qualify for 100% relief from Inheritance Tax where the usual conditions are met.

The availability of both Income Tax and CGT relief has made the SEIS a very popular scheme. The reliefs are only available where there is sufficient liability against which to set the relief. Under certain circumstances, small business owners can also use the scheme to invest in their own businesses. Of course, investors must consider the importance of picking a good company to invest in and carry out proper due diligence. 

There are a number of conditions which must be met in order to invest in the scheme. For example, the scheme can only be used to invest in small companies i.e. companies with gross assets of no more than £200,000 and with less than full-time equivalent 25 employees. A company can raise a maximum of £150,000 through the SEIS but can go on to use other schemes such as the EIS to raise further funds.

Less is more – MTD regulations relaxed

Starting from April 2019, most VAT-registered businesses that have a taxable turnover over £85,000 are required to keep their VAT records digitally and use Making Tax Digital (MTD) compatible software to submit their VAT return information to HMRC.

There are exceptions for certain businesses that have until the first VAT Return period starting on or after 1 October 2019 to start using MTD for VAT. This includes businesses that are part of a VAT group or VAT division, use the annual accounting scheme or that make payments on account. If your business has a turnover under the VAT registration threshold, you are not currently mandated to use the MTD for VAT service but can opt to do so if you wish.

HMRC also has also announced a number of other relaxations that will help businesses adapt to MTD. For example, HMRC has agreed to give businesses until 31 March 2020 to make sure there are digital links between software products. This means that during the first year of MTD for VAT, businesses who use more than one software programme to keep their VAT records and prepare and file returns will not be required to have digital links between those software programmes. From March 2020, bridging or MTD-compatible software will be required so that this information can be digitally sent to HMRC with no manual intervention.

It has also been confirmed that where a supplier issues a statement for a period, you may record the totals from the supplier statement (rather than the individual invoices) provided all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown. Although, HMRC is keen to point out that it is best practice to record the individual supplies digitally as this means less risk of invoices either being missed completely or being entered twice (as an invoice and as part of a statement).

Pre-trading expenses for a rental business

There are special rules for the pre-trading expenses of a rental business. If the expenses were in relation to a letting, then a deduction may be allowed where the following conditions are met:

  • The expenditure is incurred within a period of seven years before the date the rental business is started, and
  • The expenditure is not otherwise allowable as a deduction for tax purposes, and
  • The expenditure would have been allowed as a deduction if it had been incurred after the rental business started.

This means that, to be allowable, the expenditure must be incurred wholly and exclusively for the purposes of the rental business and must not be capital expenditure. HMRC gives the example whereby rent paid to lease the first rental business property could be allowable under these special rules if it is due before the property is first let, provided the property was acquired solely for the purposes of the rental business.

However, no relief would be allowed where pre-trading expenses were not incurred wholly and exclusively for the purposes of the rental business. Capital expenditure does not qualify for relief but there are also other special rules for capital allowances. Qualifying pre-commencement expenditure is treated as incurred on the day on which the customer first carries on their rental business.

VAT Margin Scheme on sales of vehicles

A Margin Scheme is an optional method of accounting which allows certain businesses to calculate VAT based on the 'value' they add to the goods they sell, rather than on the full selling price.  Without the use of the Margin Scheme, businesses would have to account for VAT on the full selling price of goods within the Margin Scheme.

There is a special Margin Scheme for the sale of second-hand cars and other vehicles. This is covered by VAT Notice 718/1 The Margin Scheme on second-hand cars and other vehicles. If you sell second-hand vehicles on which you were not charged VAT, using the Margin Scheme will save you money. There are certain conditions that must be met in order to use the scheme. This includes ensuring that the vehicles are eligible to use the scheme and that they were acquired under eligible circumstances.

The notice explains when to use the second-hand Margin Scheme to account for VAT on sales of second-hand vehicles. It also explains which vehicles can be sold under the scheme, how the scheme works, how to calculate the margin, and what records must be kept by a business using the scheme.

Companies eligible for Group Relief

Corporation Tax relief may be available when a company or organisation makes a trading loss. Companies that are eligible for Group Relief can transfer losses and certain other deficits to companies within the same group by means of Group or Consortium Relief. The use of Group Relief allows losses arising in the accounting period to be surrendered to a group company for that period. In addition, losses that arose on or after 1 April 2017 and are carried forward to a later accounting period may be surrendered as Group Relief for carried-forward losses.

Companies attempting to either surrender or claim losses for Group Relief or Group Relief for carried forward losses must meet the required conditions.  For companies to be members of the same group, one company must be a 75% subsidiary of the other, or both must be 75% subsidiaries of a third company. The definition of '75% subsidiary' requires one company to have direct or indirect beneficial ownership of at least 75% of the ordinary share capital in another. There are also further qualifying tests that may apply for Group Relief purposes.

The Pensions Regulator targets law-breaking employers

Employers who flout their automatic enrolment pension duties are being targeted with short-notice inspections by The Pensions Regulator (TPR). TPR is using data to pinpoint specific employers across the UK who are suspected of breaking the law, including those who fail to put staff into a pension scheme or who make no, or incorrect, pension contributions.

It is mandatory for employers to take part in the inspections – obstruction of an inspector and failing to provide information when required to do so are criminal offences. Non-compliance could also result in fines or court action.

The inspections will continue over the summer across the UK. Previous rounds of spot checks targeted employers by region, from at-risk business sectors and from random test samples – as well as employers where there was evidence of non-compliance. TPR will also be directly contacting other employers suspected of non-compliance by phone to validate the information held related to them meeting their duties, to ensure they are complying fully.

Employee Car Ownership Scheme (ECOS)

An Employee Car Ownership Scheme (ECOS) is a set of arrangements whereby employees acquire cars from a specified, often single source and within a specified financing framework. The use of an ECOS can be seen as a halfway measure between providing a company car and leaving an employee to make all their car arrangements privately.

An ECOS gives employees similar benefits to having a company car, for example a new car on a regular basis, and/or central organisation of insurance and servicing but is structured in such a way that the normal car and fuel benefit provisions do not apply.

As the normal car and fuel benefit charges do not apply to an ECOS, HMRC is clear that each transaction has to be considered individually for both tax and NICs purposes to identify whether tax or NICs apply. One of the most important conditions that must be met for an ECOS to be in place, is that the ownership of the car in an ECOS is transferred to the employee at the outset otherwise car benefit will be due.

An ECOS may be designed and administered by the employer, by a company within the same group as the employer, or by a third party that specialises in provision of alternative packages to the company car.

Tax on a private pension you inherit

Private pensions can be an efficient way to pass on wealth, but it is important to consider what, if any, tax will be payable on a private pension you inherit. The person who died will usually have nominated you by telling their pension provider that you should inherit any monies left in their pension pot. If the nominated person can’t be found or has since died, the pension provider may make payments to someone else instead.

In general, if you inherit a private pension and the owner of the pension fund died before the age of 75, the benefits left in a private pension can be paid as a lump sum or drawdown income to you, with no tax to pay. If the deceased passed away after the age of 75 the pension will be taxed at your marginal Income Tax rate, so 20% if you are a basic rate taxpayer or 40% if you are in the higher tax bracket and 45% if you pay tax at the top rate. The rates may differ if you are a Scottish taxpayer.

There are restrictions on pensions from a defined benefit pot (usually workplace pensions). In these cases, the pension can usually be paid to a dependant of the person who died, for example a husband, wife, civil partner or child under 23. This rule can sometimes be changed if the pension fund allows, but the inheritance will be taxed at up to 55% as an unauthorised payment.

Take advice if you are in receipt of a relative's pension pot

The rules on inheriting a pension are complex and depend on what type it is and how old the holder was when they died. For example, you may also have to pay tax if the pension pot owner was under 75 but had pension savings worth more than £1,055,000 (the lifetime allowance) when they died. There are also important time limits that must be followed. It is also possible for a private pension you inherit to be passed down to future generations, IHT free. We can help you understand your options. Please note that the rules are different for inheriting a State Pension.