Q. I have a mobile phone and I understand that if my company pays the phone bill, that it is a tax free benefit. Is that right?

A. Only if the phone is provided by the company is this the case. The mobile phone contract should be in the name of the company. If the contract is in your personal name and your company pays the bill then the private element is liable to both tax and national insurance. It's also worth noting that since 5th April 2006, only one tax free mobile can be provided to an employee. Previously, any number of mobile phones could be provided to both employees and their families.

Q. I run my own business as a printer but my wife and son (aged 15) don't have any income. Could I pay them a wage to cover their personal allowance so they don't pay tax and claim this as an expense to reduce the tax I pay.

A. There are three main things to be aware of in doing this from a tax angle...

1. The wage must actually be paid. Ideally into their own bank account, rather than a joint bank account with yourself.
2. The wage must be for work done and reflective of the level of work done. In other words, what you would have to pay someone in the open market place to do this work.
3. Make sure you comply with PAYE paperwork as you would do with any employee.

Do those things and yes, you can save yourself over £4000 in tax every year if you are a higher rate tax payer! It's worth noting that if you pay the wage in the magical area of between £84 and £97 per week, there is no tax or national insurance payable but you still get credit for national insurance purposes as long as you complete the end of year PAYE documentation.

Q. We have applied to join the VAT cash accounting scheme to help our cash flow but since sending in the application we have received a large order and know that we are now going to go over the £660,000 turnover limit you need to be under to join the scheme. The large order is going to put even more strain on our cash flow. Is there anything we can do?

A. The rules actually say that when you make the application "you expect the value of your taxable supplies (excluding VAT) during the next year (beginning at the start of a tax period) will be £660,000 or less". Now if that was the case when you made the application, then you are entitled to join the scheme, even if subsequently you no longer expect this to be the case. It of course helps if you can demonstrate this with no evidence of the order being on the cards before then. You can get written confirmation of this from HMRC if you wish.

Once in the scheme, you can normally continue to use it until the annual value of your taxable supplies including the disposal of stock and capital assets, but excluding VAT, reaches £825,000.

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