The Income Tax Administrator may insist that you provide certified accounts and for this you will need to employ an accountant. The decision of the Administrator can be influenced by the nature of the business. Cash-based businesses may find that they have to provide the Administrator with more detailed figures than those whose affairs do not involve cash changing hands on a regular basis.

If the administrator does not object you can prepare your own accounts. Again, that depends upon the simplicity or complexity of operations. If there are no major expense issues, annual allowances, work in progress or capital allowance matters involved, a simple income and expenditure statement could fit the bill.

If you are operating as a limited company you need to remember that Guernsey Law requires an annual audit. This is where the accountant earns his or her fees.

Remember, it is the not the job of the Income Tax Office to prepare accounts for you. You will need to keep proper records and all invoices and receipts in support of your business records. The Income Tax Office may need to see the invoices and receipts at some time so they are vitally important.

If your business consists of the buying and selling of goods it will be necessary to take stock at the end of your financial year and adjust purchases accordingly. Once you start having to deal with this and valuing work in progress you may well feel the need for the assistance of an accountant.

If you are going to employ people then you will have to contact the ETI Department at the Income Tax Office and they will provide the necessary documents that explain how to calculate and deduct tax when paying wages. The tax you deduct has to be sent to the Tax Office on a quarterly basis.

You also have to pay your own tax and this is payable half-yearly on 30 June and 31 December. You can arrange to make regular payments by standing order throughout the year. A surcharge will be imposed for late payment of your tax.

With effect from 1 January 2008, Guernsey’s new taxation regime for limited companies (“Zero/10”) was introduced.   Whereas previously the standard rate of income tax for companies was 20% this has now been reduced to 0%.   Only specific corporate activities will be taxed e.g. banking at 10%, Guernsey property income and development profits 20% and utility companies also 20%.  

Guernsey resident individuals will pay tax at 20% on a proportion of the accumulated untaxed profits of a company in which they have a beneficial interest.   

Another aspect of the Zero/10 regime entails the introduction of a tax cap of £250,000 payable by an individual on foreign source income.

Also with effect from 1 January 2008, interest paid on loans is restricted but business interest relief continues.  

(For further information on the Zero/10 regime refer to the Income Tax Website).

Taxation might seem to be a rocky area through which to navigate but Guernsey’s accountants are well equipped to provide the support you need and the Income Tax Office has a range of publications and pamphlets that can help as well.

In addition be aware that if you if sell goods or services to any customer outside Guernsey you may be liable to Income Taxes and VAT and other taxes and duties may also be involved. So if this is the case consult a suitably qualified and experienced accountant.