HMRC Puppy Taskforce – Not as cuddly as you may imagine

HMRC Targets Puppy Breeders: Letters sent to millions

HMRC is sending out letters to millions of people who they believe have not declared income from breeding and selling puppies. These could come as quite a shock when you receive one out of the blue, and some of the language used in the letters is meant to worry you.

HMRC has changed legislation so that selling platforms must provide them with information about who is selling on their platforms. However, this is only one source of information they have used. This information is in the public domain, so even before the change in legislation, the evidence is out there.

Registrations with the Kennel Club and social media are good sources of public information. There are even rumours that information could also be coming from pet insurers and the RSPCA.

If you have received a letter, HMRC is suggesting you file a voluntary disclosure. They won’t give a time scale of how far to go back. In the UK, the tax system is self-assessment, so they expect you to provide all the information for as long as you have been receiving income, in this case from breeding puppies.

If you regularly breed puppies, you should file a self-assessment tax return, as this is likely to be classed as a trade.

What information do you need to supply to HMRC?

• All the money you received for the pups/kittens
• All the costs you incurred, including vet bills, mating fees, microchipping, injections, etc.

However, if you had a one-off litter, you could argue that this isn’t a trade at all. If you didn’t receive more than £1,000 in total for the pups in that tax year, you wouldn’t need to declare the income.

What if you’ve missed previous declarations?

Unfortunately, the bad news doesn’t end there either. If you receive a letter and make a voluntary disclosure, the likelihood is that the taxable income you then declare is from a previous tax year, meaning you should have already declared this income. As a result, you are likely to incur penalties (fines for not declaring the income) and interest on any tax not paid. If you have been breeding for several years, this could add up.

These rules are not just for the sale of puppies but cover any kind of income—from breeding to rental properties, to selling on eBay, to name a few.

Some big changes in information for Limited Companies held by Companies House came in this year (2024). These include the address you can have as your registered office, and the new requirement for a valid email address to facilitate communications

Information directly from HMRC :

New rules for registered office addresses

From 4 March 2024, there will be new rules for registered office addresses which mean companies must have an ‘appropriate address’ as their registered office at all times. An appropriate address is one where:

• Any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company

• Any documents sent to that address can be recorded by an acknowledgment of delivery

These changes mean you will not be able to use a PO Box as your registered office address from 4 March 2024. You can still use a third-party agent’s address if they meet the conditions for an appropriate address.

If you’re currently using a PO Box as your registered office address, you’ll need to change it by 4 March 2024. You can change your company’s registered office address online, using your company’s authentication code.

Companies that do not have an appropriate registered office address could be struck off the register. When we identify an inappropriate registered office address, we’ll change it to a default address held at Companies House. The company must then provide an appropriate address, with evidence of a link to that address, within 28 days. If we do not receive this evidence, we’ll start the process to strike the company off the register.

Registered email address

From 4 March 2024, there’ll be a new requirement for all companies to give a registered email address to Companies House. This email address will not be published on the public register.

From 4 March 2024, new companies will need to give a registered email address when they incorporate. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from 5 March 2024. Our online services will prompt you to supply a registered email address when you file your next eligible confirmation statement.

We’ll use this email address to communicate with you about your company, so you must choose an appropriate email address. You can register the same email address for more than one company.

You’ll be able to change your registered email address through our new ‘update a registered email address’ service. You’ll need to be signed in and authenticated to do this.

Companies will have a duty to maintain an appropriate registered email address, in the same way as their registered office address. Any company that does not do this will be committing an offense.

We’ve had reports of suspicious letters claiming to be from Companies House. The letter claims you need to make payment for Enhanced Web Filing Access.

Please do not follow any instructions in this letter. It’s a scam.

Read how to report a suspected scam to Companies House.

Companies House are running stronger checks on Company names which give a false of misleading impression to the public. 

They can now reject an application to register a name where they have reason to believe. 

• The name is intended to facilitate fraud. 
• The name is comprised of or contains a computer code. 
• The name is likely to give the false impression the company is connected to a foreign government or an international organisation whose members include two or more countries or territories (or their governments) 

Companies House can also direct companies to change their name. If a company fails to change its name within 28 days, they can now determine a new name for the company, for example, changing the company name to its registered company number. 

We can suppress a name from the register while a company responds to a direction to change its name. 

These changes have been introduced under the Economic Crime and Corporate Transparency Act. For more information click the link https://bit.ly/3wumWRe 

From April 2023, businesses will pay 25% corporation tax on profits above £250,000. Smaller entities with profits of up to £50,000 will remain at the previous 19%. Those with profits between £50,001 and £249,999 will pay a marginal rate of between 19% to 25%, depending on the level of profits.  

The short answer for business owners who are basic rate taxpayers is that paying dividends is nearly always the better option, regardless of changes in the Corporation Tax rate the company pays. This is because dividends do not attract NICs and offer tax advantages for lower rate taxpayers. 

However, unlike paying salaries, the business must be making a profit (after tax) to pay dividends. 

If you would like more information, please contact your accountant on 0113 2864486. 

HMRC takes its responsibility seriously to make sure that individuals and businesses who can pay, do so on time. They provide extra, bespoke support to those facing financial hardship or who have personal difficulties. 

If you’re finding it difficult to make a tax payment you should ask HMRC about affordable monthly payment options, called a Time to Pay arrangement. They will always try to work with you to negotiate a time to pay arrangement for tax you owe based, on your income and expenditure. 

Time to Pay arrangements are based on the specific financial circumstances of whoever owes a debt, so there is no ‘standard’ Time to Pay arrangement. They will look at what you can afford to pay and then use that to work out how much time you need to pay. 

A Time to Pay arrangement can cover all outstanding amounts overdue, including penalties and interest.  

The arrangement is designed to be flexible and is not a fixed, formal contract and can be amended over time, should your circumstances change. 

Please take note.  

• HMRC are now back fully chasing businesses and individuals for arrears of VAT, PAYE, Corp Tax and Self Assessment 
• HMRC Field Force Agents are back calling on businesses and individuals unannounced. 

Individuals 

HMRC will decide your ability to pay using an ‘income and expenditure assessment’ form. This looks at your income, disposable assets and expenditure to help them work out your disposable income.  

HMRC typically expects you to pay no more than 50% of your disposable income. This may be higher if you have a very high disposable income. There’s no upper limit on the amount of time that someone can have to pay. 

Businesses 

Business finances are often complex, so they’ll ask you to tell them what you think the business can afford to pay. 

After they have looked at your proposal, they’ll ask you questions about it to make sure it’s affordable and pays off the debt as quickly as possible. 

The length of the arrangement will depend on: 

• How much your business owes 

• The business’ financial circumstances 

The arrangement will be reviewed regularly and can be adjusted over time. 

For more information click https://bit.ly/44rZgta  

You may be aware that our chosen corporate charity is The Give a Duck Foundation.  A fabulous little charity, that supports children who have been diagnosed with cancer throughout the UK.

We have donated 238 ducks to date, and want to give many more.

As you know, we give a duck every time we take on a new client.

But did you know, that we also give ducks when we receive a referral from a current client.  So, if you like the service we provide, and think someone you know may benefit from being our client too, then just ask them to mention you when they get in touch and when they sign up, we will donate more ducks to this wonderful charity.

If you want to donate directly to the charity, or find out more about the wonderful work they do, then please click the link below.

https://www.giveaduck.org.uk/about/

From 1^st April 2024, the National living wage has gone up to £11.44 per hour for employees who are 21 and over. This is an increase of £1.02 per hour from the previous rate of £10.42 per hour for those 23 and over and £1.26 per hour for those 21-21 year olds.

National Minimum wage has also seen a higher than inflation hike.

18-20 year olds – the rate has increased to £8.60 per hour – an increase of £1.11 or 14.8%.

Under 18’s – the rate has increase to £6.40 per hour – an increase of £1.12 or 21.2%.

If you have any questions regarding this, please call Sindy on 0113 2864486

From 6^th April 2024, the threshold at which child benefit begins to be withdrawn increases from £50,000 to £60,000. This is the first increase since it was introduced in 2013. 

The earnings at which the benefit is withdrawn has also increased from £60,000 to £80,000. 

If you have income between £60,000 and £80,000, you will be required to pay back 1% of the child benefit received for every £200 of income, over £60,000. Once you are earning £80,000, the whole of the child benefit received will be repayable to HMRC. 

Child benefit is due to rise to £25.60 per week for the first child and £16.95 per week for each additional child in April 2024. 

If you have any questions about this, please call Sindy on 0113 2864486