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Your new tax year toolkit

As the new tax year begins, we provide top tips for tax excellence.

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Get your glad rags on, everyone! The season is finally upon us! That’s right, the real silly season – the new tax year! Kicking off festivities in the UK on April 6th, the new tax year demands serious focus, planning, and organisation from businesses.

While the new tax year date varies depending on where in the world you are – for example, many countries’ tax years align with the calendar year, as is the case in Argentina, Brazil, Chile, Colombia, Ireland, and St. Vincent and the Grenadines, to name a few. The United States’ fiscal year also aligns with the calendar year, with tax season falling from January 29th to April 15th.

No matter where you are, it is key to ensure that you have the correct measures, habits, and infrastructure in place to guarantee 100% compliance, especially if you have entities in multiple countries, and are, therefore, subject to numerous tax laws.

Ensuring you are completely tax compliant and ticking every box can be daunting, but, as ever, Mauve Group is here to help.

Read on for some top tips on how to make sure the upcoming tax year goes smoothly for your business.

Get set up correctly

When setting up a business in the UK, you must register for self-assessment with HM Revenue & Customs (HMRC). Ensure you register ahead of the deadline, to keep things easy for yourself and steer clear of any missteps.

Another example of considerations to make when getting your business set up for tax can be seen in the steps taken when setting up a company for tax in Brazil, where the Brazilian Internal Revenue Service (IRS) manages the federal tax system, including social security contributions and customs taxes.

Companies resident in Brazil are taxed on their international income, while PwC notes that “non-resident companies are generally taxed in Brazil through a registered subsidiary, branch, or PE, based on income generated locally.” In addition to this, non-resident companies can be subject to withholding tax (IRRF) on income generated within Brazil.

Meet deadlines

As mentioned, it’s important to meet all deadlines set by HMRC or the equivalent tax body in your country of business. For UK businesses, it is important to remember that if you own your company, the annual accounts and Confirmation Statement should be included, and company directors should also complete a personal tax return.

In the UK, if you’re a sole trader or half of a partnership, you should submit your self-assessment tax return and any liabilities by the end of January annually. All UK businesses are obliged to file quarterly VAT returns and payroll submissions.

Alternatively, in Argentina, businesses must pay monthly instalments, starting from the first month after the due date of filing of the tax returns. In Chile, the Chilean IRL expects all business’s annual tax returns to be filed before April 30th. It is important to remember that there are a number of sworn statements with varying deadlines, which must be filed between March and June of each year.

It is inadvisable to pay your tax late, as no matter where your business is operating, you will incur penalties – the severity of which will be dependent on where you are and on how late you file. For example, penalties vary between US states, and range from 5% to 25% of the tax due and can exceed $50,000 for the largest organisations. In China, late payments and filings can incur a daily fine of 0.05% of the amount of tax due.

Keep meticulous records

Meticulous record-keeping is a serious tax requirement. So, it is key to keep clear, concise, and accurate records of all your business income and outgoing expenditure. The HMRC advises to retain any and all paperwork pertaining to taxes for at least six years, while Colombian businesses are advised to retain paperwork for ten years.

If trading alone as a sole trader, it is recommended to separate personal and business finances – therefore, ensuring all business income and expenditures are accounted for.

Register for VAT

Even if your company’s turnover didn’t meet the UK’s VAT threshold, registering for VAT means you can reclaim VAT on purchases. You may also be due a VAT repayment, dependent on your business operations.

In Colombia, national taxes such as corporate tax and VAT are overseen by the National Tax and Customs Directorship (DIAN), while local agencies collect local tax such as real estate tax. In order to register for VAT in Colombia, you must request to be in the Unified Tax Registry (Registro Único Tributario) (RUT) and DIAN then issues a tax identification number (Número de Identificación Tributaria).

Avail of tax relief and allowances

You’re more than likely entitled to some forms of tax relief or tax allowances, so make sure not to overlook these when filing your taxes. A full list of the UK’s available corporation tax allowances and relief can be found here.

Tax relief and allowances vary from country to country. For example, in Canada, corporations can claim credits such as air quality improvement tax credit, or the federal foreign business income tax credit.

Save for tax

Opening a dedicated savings account to save for your tax payments, means that you are ensuring you won’t spend money needed for essential tax contributions.

Seek professional advice and support

Availing of the services of an accountant can vastly improve efficiency and can help you keep your business affairs in order. Accountants can ensure that all necessary paperwork is submitted in a timely and compliant manner. It is important to remember, however, that everything filed is your responsibility and any discrepancies will be yours to account for.

An accountant can also advise your business on how changes to legislation and regulation my impact your business.

If you’re seeking support with tax compliance for your global business, contact our team today to find out how we can help.