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Deadline looming for those who want to take advantage of the NDO

Deadline looming for those who want to take advantage of the NDO
Choose a Name: The name has to be unique, obviously, and not likely to be confused for someone else’s existing name. The best reference point is the Companies House website – www.companieshouse.gov.uk – which has a simple search facility so you can check your chosen version. Also, try to avoid names that are specifically related to your line of work, just in case you want to change careers later: imagine selling cars though a company called Al’s Bakery.
Decide on Share Ownership: Is this just you, or you and your spouse, or you and two or three other people? This is important, because it defines how to allocate the Ordinary Shares In the company. Dividends are paid in direct proportion to numbers of shares held. A husband and wife typically have 50% each, for example, but if one is already earning money, be aware of the impact of the share income on their tax position. Share allocation can be changed after the event. There are several variations on share management; but for anything other than a simple allocation of ordinary shares, get expert advice.
Register at Companies House: There is an online system you use to set up your company and pay the registration fee. It is fairly simple to use. One question it will ask is who the directors are. For a typical small contractor company you only need one but there’s no reason not to have more. Although not strictly necessary any more, it also helps to nominate a Company Secretary: this could be the same person, but it’s more sensible to have someone else, a partner or relative for example.
Register a Memorandum of Association: Something else to do while you are at Companies House. At its simplest this is a document describing what your company is for and how you wish to run it. You can do it yourself, but the document can have legal implications in a tax investigation so do some online research for a suitable template from sites such as www.simply-docs.co.uk or www.clickdocs.co.uk.
Set up a Bank Account: This has to be a business bank account. Banks are increasingly wary of new business accounts, so you will have to answer some detailed questions and it will help if you have some professional references and a signed contact to demonstrate you actually will have an income.
Register for VAT: You have to do this if your annual income is in excess of a set amount (currently £67,000 pa) but it Is advantageous to register anyway. VAT and the Flat Rate Scheme are discussed in more detail elsewhere.
And that’s it. It sounds complicated but is in fact quite straightforward. You can also take the easy way out; either use a company formation agent, or there are several accountants who specialise in contractors who will set up all if the above for you for a small fee, or even for free, as well as providing expert support. Finally keep track of all your various expenses setting the company up, since you can reclaim these once you start trading.

If you’ve been salting all of your money away in offshore accounts, or hold undeclared funds, you only have one week left in which to notify HMRC if you want to qualify for the discounts offered under the New Disclosure Opportunity (NDO).

Actually the official deadline is 12th March 2010; however, an intent to disclose must be made to Revenue and Customs by November 30th.

The usual charges for non-disclosure are 35% but if you take advantage of the NDO the penalty will only be 10%. That is as long as you have not already been subject to a request from HMRC to provide this information.

The permanent tax secretary, Dave Hartnett, hopes that the lower charges offered by the NDO will be an attractive enough prospect to entice people to come forward and declare their funds. He is predicting about 100,000 accounts might be settled through this process.

However, this optimism is not backed up by many contractor accountants as well as official figures gained by McGrigors, a UK commercial law firm, which show very few people have taken advantage of NDO and the Liechtenstein Disclosure Facility (LDF). The LDF allows people with unpaid tax linked to investments or assets in Liechtenstein to settle their tax liability under this special arrangement. So far there have been only 27 registrations for LDF since registration opened on 1st September. HMRC have refused to release figures relating to the take up of NDO.

The first tax amnesty in 2007 produced about £400m and HMRC have so far collected another £80m from their ongoing enquiries.

© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Hide and Seek by SashaW

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