DJ writes: I have just filed my company accounts and corporation tax return for 2016 and I was overdrawn on my director’s loan account. I have since identified about £15,000 of expenses I paid on behalf of the company. Can I amend my corporation tax return to reduce my payment?
The filing of amended accounts and corporation tax returns is permitted within certain deadlines, writes Jamie Sherman, partner at Kingston Smith LLP. Here, the corporation tax saving of about £3,000 is substantial, so it is well worth considering. A further cashflow advantage may be available as your director’s loan account was overdrawn.
You have up to 12 months after the original deadline to amend the tax return and file it with HM Revenue & Customs. If you have yet to pay your corporation tax, file as soon as possible to prevent an overpayment to HMRC, because it will be expecting a payment as per the original return.
With the financial position of the company changing, amended accounts will need to be lodged with Companies House in paper form, which can be done at any time. These will then align with the revised figures reported to HMRC on the corporation tax return. The new accounts must state “amended” throughout.
The original accounts will remain available at Companies House and can be removed only with a court order. Amended accounts may raise questions if you try to obtain finance, so it is best to avoid them in future.
MS writes: I am thinking of retiring. However, none of my staff is in a position to buy the company from me. I don’t want to have to pay redundancy because they are all long-serving. Could I ask them to go self-employed and, if so, would this remove all liability?
It is not unusual to explore all alternatives to try to avoid redundancies, writes Peter Done, managing director of Peninsula. However, an employer’s action has to be lawful.
The status of staff will not be determined by the label placed on them, whether by the employer, the contract or the individuals themselves.
The leading legal case here is Autoclenz v Belcher (2011), where the Supreme Court decided the terms of a written agreement between the parties, which classed the individuals as self-employed contractors, could be disregarded because they did not reflect what was actually agreed or how the relationship between the parties was conducted in reality.
There are various ways of deciding if a person is really self-employed. One factor is whether they have the unfettered right to substitute themselves; could someone else turn up and do the job without prior approval or scrutiny from the employer? If personal service is needed, the individual is likely to be classified as a worker.
Another area is whether the individual is in business on their own account. An important point is: who takes the financial risk in the arrangement?
Wrongly classing individuals as self-employed will leave the business open to staff bringing claims to determine their correct status and their rights.
The extent of employment rights will depend on whether the individual is self-employed, a worker or an employee. Members of staff could also view the reclassification as conduct that breaks their contract of employment, entitling them to resign and claim constructive dismissal.