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Trading Online FAQs
- If I am already trading electronically,
do I need to let the Inland Revenue know?
In general this will not be necessary as the electronic
trading will be an extension of your existing trade.
If, however, the electronic trading represents a wholly
new venture or is substantially different from the activities
of your existing business, you should contact the Inland
Revenue with the details
- What special allowances can
I claim for my Internet and E-commerce assets?
If your business is small, you may claim 100% first year
capital allowances on your investment in computer hardware,
software and high-tech mobile phones, provided they are
bought between 1 April 2000 and 31 March 2003. This means
you can set the full cost of your investment against your
taxable profits for the period of accounts during which
the items are bought. Set-top boxes, which allow the Internet
to be displayed through a television, can also qualify for
the 100% first year capital allowances.Capital allowances
give businesses tax relief for their investment in capital
assets. They take the place of depreciation in the business’
accounts, which is not an allowable expense for tax purposes.
Contact your local tax office for more information
- What Tax Relief is available
if I lend my employees a computer?
Neither you nor the employee will have any tax or national
insurance contributions to pay on a computer of up to £2,500
in value which you lend to an employee, even for solely
private use. However, the lending arrangements must not
be confined to directors or made on more favourable terms
to directors than to other employees
- Do I need to keep special
records of sales/purchases made electronically?
All records which are required to make a correct and
complete tax return must be kept. This specifically includes:
all receipts and expenses that arise in the course of the
business; all sales and purchases, where the trade involves
dealing in goods; and
all supporting documents (bank statements, books, deeds,
contracts, vouchers and receipts). ‘Documents’
includes
records held on computer.
- Can I keep electronic records?
The Inland Revenue accepts methods which keep the information
in the records in a different form, such as electronically.
This is so long as those methods capture all the information
needed to demonstrate that a complete and correct tax return
has been made and they are capable of producing that information
in legible form.
However, there are occasions where the original record
must be retained, such as documents issued by the Inland
Revenue or those from a third party. The Pay As You Earn
(PAYE) regulations do not provide for information to be
kept in an electronic form.
These documents do not have to be printed out, as long
as original documents can be recovered from the electronic
form and can satisfy the requirements for record keeping
-
Can I use safe methods of
storing information such as encryption?
If you have encrypted the original records in any way,
you must make sure that the original information can be
recovered in an unencrypted form so that you can make
a correct and complete tax return.
-
What if I change my computer
or software?
Businesses need to bear in mind that when they change
or update computerised accounting packages, they need
to ensure they have the software to access the old data.
-
What are the implications
of trading electronically with people outside the UK?
You should maintain records in exactly the same way as
you do for transactions with people in the UK. If, however,
you are setting up a trading structure overseas to administer
this part of your business, there may by additional rules
which you need to be aware of and you should contact your
local tax office for more details.
- If I buy or sell electronically
overseas, will I have to pay tax in those countries?
It is unlikely that simply buying or selling goods electronically
through a web site on a server located in the UK to cus-tomers
in another country will make you liable to corporation or
income tax in that country. But if you carry out any other
activities in that other country you may have a taxable
presence there. Some countries may take the view that a
server located in that country creates a taxable presence
in that country. You are advised to contact the tax authorities
in the country to clarify the position.
Further
Information.
For more information on trading online, contact your local
UK online for business adviser by calling the Infoline on
0845 715 2000 or visit the website at www.ukonlineforbusiness.gov.uk
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