Jolliffe's Accounting

2011-10-20T13:33:00.000-07:00

The Bribery Act: What your business needs to know

Effective from 1 July 2011, the Bribery Act 2010 means that businessesneed to ensure that they have adequate procedures in place to prevent acts ofbribery and, should the worst happen, protect themselves in a legal dispute.

While the Act will affect some firms more than others, all organisationsshould review their existing policies and take action if required - failure todo so could result in a substantial fine or even imprisonment.

What is the Bribery Act?

Introduced towards the end of the last Parliament, the Bribery Act 2010replaces the existing anti-corruption statute and common law. It covers briberywhich takes place in the UK and overseas, by employees and third parties employedby the organisation.

The Act outlines four offences of bribery and introduces a new corporateoffence of bribery. It also makes it easier to prosecute offenders. In summary,it provides:

a general offence of active bribery, which prohibits giving someone a financial or other advantage to induce them to perform their duty improperly
a general offence of passive bribery, which prohibits requesting, receiving or accepting a bribe
an offence of bribing a foreign public official in order to win business, keep business or gain a business advantage for the organisation
an offence relating to failure by a business to prevent a person associated with it from committing the above offences on its behalf in order to win business, keep business or gain a business advantage for the organisation

According to the Act, a person is guilty of bribery 'if he offers or gives afinancial or other incentive to someone with the intention of getting thatperson or a third party to perform a function or activity improperly or as areward for an improper act'. He or she is also guilty if they know or believethat the offer or payment itself constitutes an improper performance of arelevant function or activity.

This factsheet provides a general overview. If you would like more detail,the Ministry of Justice (MoJ) has released comprehensive guidance on the Act,including advice for businesses on the new offence of corporate bribery. Copiescan be found in the 'Guidance' section on the MoJ website: www.justice.gov.uk.

Some key terms

Relevant commercial organisation - The MoJ guidance defines a'relevant commercial organisation' as a body or partnership incorporated orformed in the UK irrespective of where it carries on a business. It may also bean incorporated body or partnership which carries on a business or part of abusiness in the UK irrespective of the place of incorporation or formation.
Persons associated - The Act provides a partial definition ofan 'associated person' which includes an employee, agent or subsidiary but thedefinition would also extend to a joint venture partner.
Improper performance - 'Improper performance' covers any actor omission that breaches an expectation that a person will act in good faithor impartially, or is in a position of trust and fails to do so. It isdetermined through an objective test based on what a 'reasonable person' in theUK would expect in relation to the relevant activity.

The penalties

Those found guilty of an offence face significant penalties. From 1 July themaximum penalty for bribery rises from seven to 10 years imprisonment and/ oran unlimited fine. Disqualification from acting as a director for a substantialperiod of time may also arise in some cases.

Corporate hospitality

One of the areas of concern highlighted by businesses relates to theprovision and receipt of corporate hospitality, promotional and other suchbusiness expenditure. Under the strict rules of the Act, it would appear thatthese activities may constitute bribery offences.
The MoJ has attempted to clarify this issue, stating that it is not theintention of the Act to criminalise bona fide, proportionate and reasonablehospitality and promotional expenditure 'which seeks to improve the image of acommercial organisation, better to present products and services, or establishcordial relations'. For example, it will still be acceptable to take a clientfor a meal at a nearby restaurant, but disproportionately lavish gifts may beconsidered an offence under the new Act.

Facilitation payments

A 'facilitation payment' refers to the practice of paying a small sum ofmoney to a public official (or other person) for performing routine functionswhich they were obligated to perform in any case.
Despite many objections, these payments areclassified as bribes under the Act and are therefore illegal.

Defending your business

Adequate procedures and proportionate risk
An organisation will have a full defence against the corporate offence if itcan show that it had 'adequate procedures' in place to prevent an act ofbribery. The Act does not define the meaning of 'adequate procedures' and it istherefore open to interpretation. It is here that businesses will need toconsult the MoJ guidance on the matter.
The guidance requires procedures to be proportionate to the organisation'sbribery risks. What counts as 'adequate' will therefore depend on the briberyrisks faced by a business and its nature, size and complexity. The risk islikely to be increased if you operate overseas. For instance, a largeorganisation employing 500 people with a number of overseas outlets will needto make more provisions than a self-employed plumber.
However, the MoJ guidance does recognise that the Act is not there to imposethe 'full force' of criminal law upon well run businesses for an isolatedincident of bribery. It also states that 'a small or medium-sized businesswhich faces minimal bribery risks will require relatively minimal procedures tomitigate those risks'.

What do you need to do?

The MoJ guidance identifies the following six guiding principles forbusinesses wishing to prevent bribery from being committed on their behalf:

Proportionate procedures
Top-level commitment to ensuring the company is unified in preventing bribery
Undertaking occasional risk assessments
Applying due diligence procedures
Communication and training
Monitoring and review.

With these principles in mind, you will find a number of tips below designedto help your business prepare for the new bribery regulations.

1. Assess the risk

As a first step, you should review the current activities of your businessand identify any particular areas where there is a risk of bribery beingcommitted on behalf of your business. Some of the factors that you may want toconsider include:

Is yours a small, medium or large-sized business? Are you part of a group?
Does the firm have complex operations?
What sector does the business operate in and does this heighten the risk?
Does the business operate outside of the UK? If so, which countries and are bribery and corruption known to be commonplace in any of these countries?
Do you make use of agents?
Could the type and levels of corporate gifts, hospitality or promotional expenditure be considered to be disproportionate to the size of the business, its market and its needs?

2. Review the strength of your existing anti-bribery procedures

Assess the strength of your existing bribery measures and, where an elementof risk has been identified, determine whether further action needs to betaken. Even where you consider that your business is low risk, it is advisableto put in place some minimum procedures. As best practice, assign a seniormember of the team to take responsibility for any action required.

3. Update key policies

Update the business's key policies to demonstrate to staff and the keypeople who do business with you that you do not tolerate bribery within yourbusiness. This may involve reviewing the company's handbook and ethics/conductcodes, as well as updating whistleblowing, disciplinary and grievance policies.
Ensure that new recruits are briefed on the company's anti-briberyprocedures and remember to update polices on an on-going basis. You may need toadapt your procedures as the business develops in the future.

4. Do you need to undertake any due diligence procedures?

How much do you know about the people who represent you in business i.e.overseas agents, employees and subordinates? Are they genuine? You might wantto carry out additional checks on such persons to ensure that they are honestand can be trusted to work for you without bribing on your behalf.

5. Don't forget training and communication

Training should initially address key staff such as senior employees andthose working in sales - it is vital that such persons are made aware of thecorporate responsibility to prevent bribery. As a minimum, training shouldcover: what constitutes bribery; the areas of risk for the business; thepotential corporate and individual liability; and the relevant policies andprocedures.
You should also consider how you will brief staff and associated thirdparties (i.e. consultants, agency staff and contractors) on the firm'santi-bribery policies and procedures.
Please note, the information contained in this factsheet is intendedas a summary only. For more detailed advice you should consult the guidanceissued by the Ministry of Justice - available at www.justice.gov.uk.

Changes to PAYE procedures

2011-10-17T03:13:00.000-07:00

From 6 April 2011 significant changes were made to the operation of PAYE onpayments made to employees following the termination of their employment and onthe engagement of new employees who fail to provide a P45 and do not complete aform P46. In both cases, employers are now required to deduct tax using code 0T(zero T) on a non-cumulative basis. This will ensure that tax is deducted atthe basic, higher and additional tax rates where necessary (without takingpersonal allowances into account).

Previously, employers were only required to deduct tax at the basic rate(using code BR).
Further information and advice can be found at www.hmrc.gov.uk.

If you would like more information on any of thematters raised here, please give us a ring on
0845 258 1445. We have a wealth of experience in dealing with the tax authorities andcan advise clients on strategies for mitigating tax whilst ensuring that theycomply with HMRC regulations.

Corporation tax filing

2011-10-15T02:52:00.000-07:00

From 1 April 2011, company tax returns and accounts for accounting periodsending after 31 March 2010 must be filed online using the inline ExtensibleBusiness Reporting Language (iXBRL) format, the new standard designed forbusiness financial reporting. Updated guidance on iXBRL tagging is available onthe HMRC website.

If you need further information, please don't hesitate to contact us on: 0845 258 1445

2011-10-10T05:23:00.000-07:00

Changes to payment dates - Class 2 national insurance contributions

From April 2011, HMRC will issue just two payment requests in the year inOctober and April, showing payments due by 31 January and 31 July,respectively.

This means that the due dates for payment of2011/12 Class 2 national insurance contributions (NICs) will be 31 January 2012and 31 July 2012.

If you have any further questions, please don't hesitate to give us a ring: 0845 258 1445

Security for PAYE and NICs

2011-10-05T09:02:00.000-07:00

HMRC estimates that the Exchequer lost between £600 million and £800 millionper year between 2005/06 and 2008/09 in PAYE and NICs debts that had been builtup by employers who then became insolvent.

To help prevent this, legislation in the Finance Bill 2011 introduces apower to allow HMRC to make regulations enabling them to require a securityfrom employers for PAYE that is seriously at risk. The measure will alsointroduce a criminal offence for non-payment of a security.

Once the new power is in place, HMRC will use existing powers to makeequivalent provision in respect of NICs.

Harsher penalties for offshore tax evasion

2011-10-03T09:01:00.001-07:00

On 6 April 2011 new penalties came into force for offshore non-compliancerelating to income tax and capital gains tax (CGT). Under the new rules,penalties are linked to the tax transparency of the territory in which theincome or gain arises. Where it is harder for HMRC to get information fromanother country, the penalties for failing to declare income or gains arisingin that country will be higher.

All offshore jurisdictions are divided into three categories and theclassification determines the level of the penalty that is applied, as shown inthe table below. Details of which territories are in 'category 1' and 'category3' can be found at www.hmrc.gov.uk/news/territories-category.htm.All other territories (except the UK) are in 'category 2'.

Category	Transparency of territory	Penalty (from 6 April 2011)
1	UK and territories with automatic exchange of information on savings with the UK	The penalty remains the same - up to 100%
2	Territories which exchange information on request with the UK. Least developed countries without information-sharing agreements with the UK	The penalty is now 1.5 times that due under the previous rules - up to 150%
3	Territories which do not exchange information with the UK	The penalty is double that due under the previous rules - up to 200%

If a person can demonstrate that they have taken reasonable care to gettheir tax right, they may escape a penalty. Similarly, HMRC may not apply apenalty where an individual has a reasonable excuse for a failure to notifytaxable income. Where penalties are due, HMRC can reduce them depending on howhelpful the individual is in assisting it to establish the correct amount oftax due.

The first Self Assessment returns affected will be for the 2011/12 tax year,with paper returns due to be filed by 31 October 2012, and electronic returnsby 31 January 2013.

Managing Deliberate Defaulters

2011-09-29T06:31:00.000-07:00

After conducting a series of campaigns to encourage the disclosure ofundeclared income or gains abroad, HMRC has introduced new measures to clampdown on tax evasion. Changes include increased levels of scrutiny and harsherpenalties for those who deliberately evade tax.

Under the Managing Deliberate Defaulters (MDD) programme, individuals whodeliberately evade tax will now be subject to detailed inspection for up tofive years. The level and term of monitoring will depend on the seriousness ofthe offence, but HMRC does not envisage that anyone will be released from thescheme within two years.

There are a variety of ways that HMRC can now monitor a deliberatedefaulter's tax affairs. These may include:

making announced or unannounced inspection visits to carry out pre-return checks of their books and records
asking for certain records and additional information to be sent in with the individual's tax return
conducting in-depth compliance checks into all or any part of the person's tax affairs
observing and recording the person's business activities and cross-checking details in their accounts
requiring more frequent VAT returns or withdrawing certain favourable VAT schemes such as cash accounting, annual accounting, the flat-rate scheme and retail schemes.

If HMRC finds that a person has continued todeliberately evade tax, it may instigate criminal proceedings against thatperson. From April 2010 where someone has deliberately evaded tax of more than£25,000 HMRC can also publish the person's name and other details.

If you need further advice regarding this article, then please don't hesitate to contact us: 0845 258 1445

Record checks - HMRC

2011-09-27T03:47:00.000-07:00

Following a period of consultation, HMRC is proceeding with its plans tocarry out spot checks on small businesses. The visits were not due to startuntil July 2011 but HMRC decided to introduce what it describes as a 'test andlearn' trial.

However, following protests from some professional organisations, HMRCsubsequently released a Briefing Paper explaining the status and extent of theBusiness Records Checks (BRC), which are already being undertaken in some partsof the country.

It confirms that HMRC is testing BRC in a limited way between 4 April and 15July 2011, involving 30 HMRC staff in eight locations (Edinburgh, Irvine,Manchester, Liverpool, Stockport, Sunderland, Sheffield and Portsmouth). Itestimates that around 1,200 businesses will be targeted during this initialphase of the programme.

HMRC said it has 'no intention' of charging penalties for record-keepingfailures during this testing period, adding that it will continue to review itslong-term planning around the introduction of such charges in the future.

Don't get caught out by the taxman! A round-up of new HMRC penalties and powers

2011-09-22T04:50:00.000-07:00

HM Revenue and Customs (HMRC) recently unveiled a plethora of changesto its penalties and regulations, as well as proposed increases in its powersand capabilities. This factsheet provides a round-up of some of the mostsignificant changes affecting businesses and individuals, including the newpenalties for late filing.

Increased penalties for late filing

A new penalty regime for late filing and late payment of Income Tax throughSelf Assessment has now come into effect.
Under the new framework, which first applies to 2010/11 tax returns, thepenalties for submitting tax returns late have risen significantly. It meansthat a return filed six months after the deadline could attract a fine of atleast £1,300.
Previously, filing the returns after the annual 31 January deadline wouldlead to a £100 fine. However, HMRC claims that this failed to act as adeterrent. It hopes the new harsher penalty system will therefore encouragepeople to 'submit returns as soon as possible'.
Another big change to the penalty regime is that the fines will no longer becancelled if the taxpayer owes no money to HMRC, because there was no extra taxto pay or because it had been paid. The new penalties for fi ling tax returnslate are as follows:

Day one - Individuals will be charged an initial penalty of £100, even if they have no tax to pay or have already paid all the tax owed
Over three months late - Individuals will be charged an automatic daily penalty of £10 per day, up to a maximum of £900
Over six months late - Individuals will be charged further penalties, which are the greater of 5% of the tax due or £300
Over 12 months late - Individuals will be charged yet more penalties, which are the greater of 5% of the tax due or £300. In serious cases people face a higher penalty of up to 100% of the tax due.

Meanwhile, the penalties for paying tax late are:

30 days late - Individuals will be charged an initial late payment penalty of 5% of the tax unpaid at that date
Six months late - Individuals will be charged a further late payment penalty of 5% of the tax that is still unpaid
12 months late - Individuals will be charged a further late payment penalty of 5% of the tax that is still unpaid. The above penalties are levied on top of the interest that HMRC will charge on all outstanding amounts, including unpaid penalties, until payment is received.

Don't forget, if you need help or further advice about any of the above, why not give us a call

on 0845 258 1445

HMRC proposes to move more VAT filing online

2011-09-19T06:49:00.000-07:00

HM Revenue and Customs has launched a consultation on the next steps formoving VAT online.

It proposes that from 1 April 2012, it will be compulsory for VAT registeredbusinesses with a turnover below £100,000 to file VAT returns online and makeelectronic payment of any VAT due.

There are also plans to make online the default (though not compulsory)channel for all businesses for VAT registration, deregistration and changes toregistered details.

Since 2010, larger businesses and all new VAT registrations have had to fileVAT returns online and pay their VAT electronically. Others can still filepaper returns and pay by cheque.

Although HMRC claims that moving to online filing has so far been'considerably faster' than predicted, with 'few practical problems', for someolder businesses and some in rural locations where broadband is limited,compulsory online filing could be a burden.

The move is part of a wider general Government drive to move transactionsfrom paper to online. There are plans to introduce a new online VATregistration service from October 2012, with the aim of making registeringquicker and easier, and there are also consultations to move direct taxes online.

The consultation on the VAT proposal closes on 31 October 2011.

Cameron pledges to support business as latest enterprise zones revealed

2011-09-14T01:34:00.000-07:00

The Government has announced the locations of 11 new enterprise zones inEngland in a bid to boost local economies.

It is hoped the new sites, which will benefit from cheaper business rates,superfast broadband and lower levels of planning control, will create 30,000new jobs by 2015.

Plans to create 21 new enterprise zones nationwide were first unveiled inthe Chancellor’s Budget in March.
The enterprise zones previously announced were: Leeds, Sheffield,Birmingham, Bristol, Liverpool, London, Manchester, Derby, Nottingham, theBlack Country, the Tees Valley, the West of England and the North East.
Now Warrington, Cornwall, Gosport, Norfolk, Hereford, Kent and Oxfordshire,Essex, Suffolk,

Northampton, Leicestershire, Cambridgeshire and Humber Estuarywill also become targeted zones for enrichment.

The Prime Minister David Cameron said: 'We are determined to do everythingwe can to make Britain the best place in the world to start and grow abusiness.

'Enterprise zones are a major step towards delivering this - cuttingbusiness taxes, easing planning restrictions and giving business the tools theyneed to invest and expand.

'These new enterprise zones will be trailblazers for growth, jobs andprosperity throughout the country.'

Household finances 'worse than in the recession'

2011-09-12T06:08:00.001-07:00

Household finances are declining at their fastest pace since the height ofthe recession in February 2009, new research suggests.

According to a survey by the financial information company Markit, almost40% of those quizzed reported a fall in their finances between July and August,while just 6% said their financial situation had improved.

The drop in household savings and available cash was the fastest fall fortwo and a half years and has been attributed to high inflation, soaring debtlevels, high unemployment and decreasing take-home pay.

The research found that all income groups, age ranges and regions monitoredare suffering in the current economic climate, although those in the north ofEngland are under more financial pressure than those in the south of thecountry.

Commenting Tim Moore, senior economist at Markit, said: 'Recent events havemade a week seem a long time in economics, and August's survey is the firstsign that the slew of downbeat headlines has knocked consumer sentiment.

'With consumer spending accounting for around two-thirds of UK grossdomestic product, this does not bode well for the second half of the year. Itis likely that the UK economy will be increasingly dependent on externaldemand.'

More shops left empty as consumer numbers fall

2011-09-07T02:45:00.000-07:00

More than 10% of shops in towns and cities across the UK were vacant at theend of May, latest figures have revealed.

According to new data from the British Retail Consortium (BRC), the nationaltown centre vacancy rate (high streets and shopping centres) was 11.2% in May2011.

Northern Ireland had the highest vacancy rate, where 17.1% of shops werereported empty, followed by Wales with 13.4% and northern England with 13.1%.

The study also found that the number of people visiting shops has fallen,with overall footfall between May and July down by 1% when compared with thesame period last year.

Greater London (1.6%), the South West (0.4%) and Scotland (0.2%) were theonly locations that saw an increase in shopper numbers.

Commenting on the study, Stephen Robertson, BRC director general, said:'This is the first time we've been able to publish footfall and vacancy figuresin this level of detail and it shows stark differences in retail health betweensome of the UK's nations and regions.

'Generally, the parts of the UK where the public sector is a biggerproportion of the economy are the ones where customer spending is most likelyto be hit by worries about job prospects and cuts, meaning people are shoppingless and more retail businesses are failing'.

UK businesses 'turning to eBay'

2011-09-05T05:48:00.001-07:00

The online marketplace eBay has reported a 'surge' in the number ofbusinesses using its services since the start of the recession.

While many high street retailers have been struggling over recent months,eBay said the volume of online SMEs was growing rapidly.

Its latest figures also suggest that the number of million-pound businessestrading on the site is likely to increase by a quarter this year.

The company said it expected the number of eBay millionaires to rise to 159,with the majority of these boosting their sales through exports to countriessuch as the United States, Australia, Germany, Ireland and France.

Retailers in the fashion, automotive, home and garden and electronicssectors are thought to the behind the recent drive in growth.

Angus McCarey, retail director for eBay UK, said: 'Whilst the UK economy isoften compared unfavourably to Germany, our figures show good reason to beoptimistic.

'Online SMEs (small and medium-sized enterprises) are growing faster oneBay, with millionaire businesses developing at three times the rate comparedwith Germany.

'Exports are helping to drive this success as UK SMEs benefit from theinternational audience that selling online gives them.'

Skills shortage 'hampering micro firms' ability to grow

2011-09-01T07:49:00.000-07:00

Micro businesses are struggling to fulfil their ambition to grow becausethey are unable to find the right staff, a new report has claimed.

Research published by the British Chambers of Commerce (BCC) suggests thatmore than half of micro businesses (those with fewer than 10 employees) areunable to expand their business due to an apparent 'lack of skilledcandidates'.

Some 47% of respondents to the survey said they would not be confident thatschool leavers with A-levels or equivalent qualifications would have thenecessary skills for their business, while 22% said they were very or fairlyconfident.

Although many companies are finding it difficult to source the rightcandidates, 55% of firms said they intend to increase their staff intake before2015. Just 2.5% of those surveyed said they would be decreasing staff levelsduring this period.

Commenting on the findings, Dr. Adam Marshall, Director of Policy at theBCC, said: 'Micro-firms make up an important part of our economy, and the factthat over half want to increase staff numbers is good news. However, for thosewanting to take on more staff, finding the right person for the job can provedifficult.

'Despite high levels of unemployment, many micro-firms are frustrated by thequality of applicants for vacant roles. There is a real mismatch betweenbusiness needs and local skills supply, with many businesses unable to findschool leavers, or even graduates, with the right mix of skills.

He added: 'At a time when we need to fight hard for every new private sectorjob, Britain needs a skills system that delivers what businesses require. Acourageous government must recognise this and put more control in the hands ofemployers when it comes to training the nation.'

Government reaffirms intention to reform business rates system

2011-08-26T02:59:00.000-07:00

Following a six-month review into council finance, Communities Secretary Eric Pickles has reaffirmed the Government’s intention to overhaul the way councils are allocated income from business rates.

Under current arrangements, which have been in place since 1988, business rates charged on most non-domestic premises, including shops, offices, pubs and factories, are calculated and collected by local authorities and put into a central pool before being redistributed through a complex formula to all councils, where they are used to pay for services like the police and fire brigade.

However, the Government is now proposing an overhaul of this 'formula grant' system, to allow local councils to keep the business rates they raise. The intention of 'localising' business rates is to give councils more incentive to invest resources as they see fit to boost business and create jobs in their areas. In addition, councils will be able to fund major projects by borrowing money against future revenue from business rates.

Mr Pickles told MPs: "No more will proud cities or historic counties be forced to come to the national government with a begging bowl. Councils will have a greater control over the cash, helping them plan for the longer term."

Labour shadow Caroline Flint attacked the proposals on the grounds, saying: : "Cutting funding to areas of the highest need doesn't free councils from central control or empower them, it stops them from doing the things their communities need of them. Yes, we want a funding system that supports jobs and encourages enterprise - but not every area has the same ability to attract investment and new business, not everywhere can be Westminster or the City of London."

Currently, the amount raised via business rates varies widely from £1.8bn in Westminster to just £8.5m in West Somerset. However, Mr Pickles suggested that councils which raised the most could expect to subsidise those which raised the least, through a new system of tariffs and top-ups.

The Local Government Association has broadly welcomed the plans.

Bank of England unlikely to raise interest rates in near future

2011-08-23T07:29:00.000-07:00

Earlier this month the Bank of England's Monetary Policy Committee decided to keep interest rates on hold at 0.5%, and minutes released from the meeting suggest that a rise is unlikely in the near term.

The MPC said that business surveys suggested "continued modest underlying economic growth in the second quarter", but some softening in the outlook for the third quarter for both manufacturing and services.

The minutes state that there is a "substantial" risk posed by an escalation of the eurozone debt crisis, and that "the funding costs faced by the major UK banks remained elevated… and were likely to continue to affect the price and availability of credit to many households and businesses adversely."

On 7 July the nine-man committee voted seven to two in favour of holding rates at 0.5%. Spencer Dale and Martin Weale voted to raise them to 0.75%. Both men had voted to raise rates in each meeting from February to May, along with Andrew Sentance.

However, Sentance, the most aggressive member, who voted to raise rates to 1%, has since been replaced on the MPC by Ben Broadbent, a former Goldman Sachs economist. Broadbent voted to hold rates in June and July.

The British Chambers of Commerce has encouraged the MPC to hold interest rates. David Kern, chief economist at the BCC, said: "With wage pressures remaining modest, and with businesses and consumers facing acute pressures, it is right to wait before raising rates.

"At present, only one member of the committee [Adam Posen] has voted for increasing the quantitative easing programme, but if the economy continues to shows sign of weakness in the next few months, the MPC should consider this option more seriously to avoid a setback."

Low interest rates 'deter young savers', study suggests

2011-08-17T06:52:00.000-07:00

Low interest rates on children's savings accounts are deterring many parents from investing in their future, a new study suggests.

According to a survey by consumer group Which?, the average instant access account for children provides a 1.1% return on money invested, while some even offer rates as low as 0.05%.

Those offering some of the lowest interest rates include child savings accounts affiliated with major football clubs.

Which? also said it expects interest rates on child trust fund accounts to fall sharply when the new junior ISA is introduced later this year.

'It's really important that children are encouraged to save, but it's a real disincentive when there are such poor rates on offer,' commented James Daley, Editor of Which? Money.

'We think the situation may get worse unless the Government allows transfers from child trust funds [CTFs] to junior ISAs as we foresee that rates for CTFs will decline as providers concentrate their efforts on the new market for junior ISAs.'

The findings have prompted calls for banks and building societies to review their rates and do more to incentivise saving.

However, the Financial Secretary to the Treasury, Mark Hoban MP, said the introduction of junior ISAs shows the Government is dedicated to improving the UK's savings culture.

'Junior ISAs will be a great example of a simple, clear and tax-free account that allows families to save and invest for their children's future,' he said.

Capital allowances 'too complicated' for small businesses

2011-08-15T04:03:00.000-07:00

Tax breaks designed to encourage businesses to invest in new equipment are overly complex and fail to boost spending, a new study suggests.

Research for the Open University has found that just 8% of firms understand the rules regarding capital allowances, while 19% rated them 'acceptable'.

A further 31% of those surveyed said the system was 'too complicated' and 42% didn’t know what they were and/or left it to their advisers.

The study was conducted by the Finance & Leasing Association (FLA) as part of the Open University’s Quarterly Survey of Small Business in Britain.

Under the capital allowances system companies can write off some of their purchase of equipment against their taxable profits.

Currently, the first £100,000 of the year's investment in plant and machinery, except for cars, is allowed at 100%. However, the maximum annual investment allowance is set to fall to £25,000 with effect from April 2012.

Following the findings, Julian Rose, head of asset finance at the FLA, called on the Government to simplify the current system of capital allowances.

'If small firms are to drive the economic recovery, they need tax investment incentives that are simple to claim,' he said. 'The capital allowances system is over-complicated and falls short of providing the support that UK businesses need to encourage them to invest.'

If you need any advise regarding capital allowances, why not give us a ring today. 0845 258 1445

Delay in tax statements as HMRC fails to order enough paper

2011-08-12T01:03:00.000-07:00

Statements about self assessment balancing payments will be delayed this year for some 500,000 people after HMRC failed to order enough special paper.

Those in the self assessment system who pay taxes 'on account' - mainly sole traders, the self-employed, and partners in businesses or LLPs - make payments in January and July 2011 based on the tax they paid for the tax year 2009-10. A balancing payment, or refund, will paid in January 2012 to rectify any differences between the estimate and the actual amount.

However, this year HMRC underestimated the number of forms - similar to credit card statements - required by taxpayers and failed to order enough of the necessary paper for printing them.

The late statements will now go out in August and, so long as payments are made within 30 days, no interest will be charged. It will also still be possible for taxpayers to check their statements online and pay via the internet or by telephone.

A spokesman for the Revenue said: "The volumes on this occasion have risen out of all proportion to previous patterns. HMRC will now ensure that they understand the reasons for this and will be fully prepared for any future rises…This in no way prevents the accurate payment of tax and no one will be out of pocket as a result."

Cost of red tape compliance on the rise

2011-08-10T04:47:00.000-07:00

Businesses are spending more time and money on complying with regulations than ever before, latest research has shown.

According to a new survey by the Forum of Private Business (FPB), small firms spent a total of £16.8 billion on legal compliance last year, equating to an average of £14,200 per firm.

Of the 4,800 business owners polled, more than eight in 10 (84%) said they were spending more time on legislation than in 2009, while 67% revealed that they were spending more money on contracting external consultants to help minimise the burden.

The FPB argues that Government measures aimed at reducing the regulatory burden, such as the scrapping of £350 million of business regulations and a three-year moratorium on new regulations for firms with fewer than 10 staff, have yet to have an impact.

'Despite several government initiatives – some more effective than others – it is clear that we are heading in the wrong direction as far as reducing regulation for small business owners is concerned,' said the Forum's Head of Campaigns Jane Bennett.

'We simply want these measures to work properly and for the voices of the UK's business owners to be clearly heard.'

Review to examine small business tax administration

2011-08-08T04:34:00.000-07:00

The Office of Tax Simplification (OTS) is to carry out a review of how bureaucracy in the tax system is hindering small businesses.

In a letter to the OTS, the Exchequer Secretary to the Treasury, David Gauke, has asked the organisation to examine small firms' experience of tax administration and 'their contact with HMRC at key stages of their annual cycle.'

'The first OTS reports have provided the basis for some genuine moves towards a simpler tax system,' wrote Gauke. 'To build on this excellent start, the Chancellor and I would like the OTS to look at ways to improve the tax administration for small business.'

The review will also consider the issues involved in starting and growing a new business.
'It's clear that many small businesses are struggling under the administrative burdens imposed by the UK tax system,' said John Whiting, interim tax director at the OTS.

'We plan to set up surveys and more road shows to really home in on what steps cause the most difficulties - and how the system can be improved, making it easier for businesses to get things right with the minimum of fuss.'

The OTS was set up last year to analyse tax reliefs, allowances and exemptions, and to conduct a review of business taxation with a view to reducing complexity.

Publishing its findings ahead of this year's Budget, the OTS identified 47 reliefs which it said should be abolished and 17 which need to be simplified, including Entrepreneurs’ Relief and the Enterprise Investment Scheme.

The OTS will report its latest findings on small business tax administration ahead of the 2012 Budget.

Small loan interest rates reach 10-year high

2011-08-02T03:28:00.000-07:00

Despite record low interest rates, the rates charged on small loans have reached their highest level for more than a decade, according to financial information group Moneyfacts.co.uk.

The group found that banks and other providers are charging average interest of 12.7% on a £5,000 loan, up from 8.6% before the credit crunch and the highest level since May 2000.

The Bank of England's own findings, released earlier this month, suggested that interest rates on £5,000 loans had hit a record high of 15.58% during April - the 3.2% rise during the month being the biggest monthly change recorded since it first began collecting the data in 2005.

Moneyfacts has attributed the rise to the increased risk of people defaulting on small loans in the difficult economic climate.

Previously, lenders had offset the cost of low loan rates by selling payment protection insurance alongside them, but the industry now faces a £7bn to £9bn compensation bill for mis-selling the cover.

However, average interest rates on loans of more than £10,000 actually fell for the fourth consecutive month during April to 9.01%, according to the Bank of England.

UK's 'ostrich generation' is failing to plan for retirement

2011-07-28T03:49:00.000-07:00

A new report suggests that only 39% of Britons have a financial plan to save for their retirement, even though a majority expect work pensions to become less generous.

The HSBC survey, which quizzed 17,000 people in 17 countries, found that virtually half of those asked in the UK thought they would be worse off in their old age than their parents (compared to just 27% who thought they would be better off). 68% of respondents are worried about coping financially and 48% fear they are not saving enough for their retirement, rising to 57% among women in their 30s and 40s.

Despite this, nearly one in five UK respondents said they didn’t know what their main source of retirement income would be, with a further 21% saying they will rely on the state pension.

The National Association of Pension Funds said: "We must begin to think differently about the way we approach financial planning for retirement. The report suggests that Britons currently have a culture of dependency on the state, which is a false economy. People have to take greater personal responsibility for their retirement and rely less on the state, by planning more effectively and saving more for themselves."

The 39% of Britons who claimed they did have a financial plan for retirement compares with 84% of people in Malaysia.

"The emergence of this ostrich generation is a real concern. Britons know that they need to plan and save more for their retirement, yet they are not turning this knowledge into action," said David Wells, head of investments, pensions and savings at HSBC.

If you would like to discuss this further, give us a ring 0845 258 1445

Reducing payments on account

2011-07-22T04:27:00.000-07:00

Payments on account are normally equal to 50% of the previous year’s net liability. A claim can be made to reduce your payments on account, if appropriate, although interest will be charged if your actual liability is more than the reduced amount paid on account.

Do not wait until it’s too late – please keep us informed of any factors which might affect your tax liability.

We can only suggest business solutions if you tell us in good time about any issues facing your business.

Payments on account will not be required where the net liability does not exceed £1,000, or where the self assessment tax/NIC is less than 20% of the previous year’s total income tax/Class 4 NIC liability (instead, the full liability is due on 31 January after the tax year).

Case Study 3

Isabelle is self-employed. Her accounts are made up to 31 August each year. When we prepare the 2010 Return we will be including her profit for the year ended 31 August 2009, and that is the profit which will be taxed for 2009/10.

Isabelle’s payments on account for 2010/11 will automatically be based on the 2009/10 liability.

If we know that Isabelle’s profits for the year to 31 August 2010 are significantly less than the previous year, we can discuss the figures, perhaps even prepare the annual accounts, and make a claim to reduce Isabelle’s 2010/11 payments on account, easing her cash flow by reducing the tax payments due in January and July 2011.

If you need help with your accounts, give us a ring today 0845 258 1445.

Don't Forget......

2011-07-19T03:56:00.000-07:00

That the following is due for payment.

19 July             PAYE/NIC and CIS deductions due for the month to 5th July 2011
19 July             PAYE/NIC due for quarter ending 5th July 2011
19 July             Class 1A NICs for 2010/11 due

Having problems with PAYE/NIC or if your new to all the above, why don't you give us a ring today. We could help! 0845 258 1445

Tax payment dates

2011-07-15T07:18:00.000-07:00

The timetable of tax payments is relatively straightforward for the self-employed.

31 January in the tax year, first payment on account
31 July after the tax year, second payment on account
31 January after the tax year, balancing payment

There is also a system of interest and surcharges to encourage prompt payment.

For example, if you do not make your full 2009/10 balancing payment by 28 February 2011, HMRC will add a 5% surcharge as well as the interest that will be charged from 1 February 2011. Delay until after 31 July 2011, and a further 5% surcharge in addition to the interest will be added. In addition interest is charged on outstanding surcharges, as well as on unpaid tax and NICs.

If you have incorporated your business the company will be paying corporation tax. Corporation tax is normally payable nine months and one day after the end of the accounting period.

If cash flow is tight, HMRC could be persuaded to accept a spreading of your next business tax payment – you will have to pay interest at the HMRC rate, but keep to the agreed schedule and surcharges will be waived. Arrangements need to be put in place before the due date for paying the tax, so talk to us in good time if you need or wish to apply.

Planning ahead of the year end

2011-07-13T08:32:00.000-07:00

Tax and financial planning should not be left until the end of the tax or financial year, but in advance of the end of YOUR business year. Issues to consider include:

The impact on your tax position and financial results of accelerating expenditure into the current financial year, or deferring it into the next
Additional pension contributions or reviewing your pension arrangements
How you might take profits from your business at the smallest tax cost, and how the timing of payment of dividends and bonuses can reduce or defer tax
Avoiding overvaluing stock and work in progress
Improvements to your billing systems and record keeping, or a general systems review to improve profitability and cash flow

National insurance efficiency and employee remuneration packages with potential cost savings for both you and your employees.

Remember if you need help or advice, give us a try.

Owner-directors: increasing net income

2011-07-11T01:24:00.000-07:00

As an example, consider how much you might save if, as an owner-director, you wanted to extract the £10,000 profit (pre-tax) your company makes in 2010/11 by way of a dividend rather than a bonus.

Case Study 2

As you can see in this case study, the net income is increased by more than 13% by opting to declare a dividend. Be sure to discuss this with us, as this is a complex area of tax law.

	Bonus £	Dividend £
Profit to extract	10,000	10,000
Employers’ NIC	- 1,135
Gross bonus	8,865
Corporation tax		-2,100
Dividend		7,900
Employees’ NIC	- 89
Income tax @ 40%	- 3,546
Additional tax		- 1,975
Net amount extracted	£5,230	£5,925

Please note that in Case Study 2 we assume that you are paying higher rate tax at 40%, and that your earnings exceed the so-called ‘upper limit’ for NICs. There are many matters to be considered when deciding whether directors should be paid by dividend or salary/bonus. In practice, a combination of each is often an appropriate course.

Remember that dividends are usually payable to all shareholders. Although it is possible to waive dividends, this can result in tax complications, so a better option may be to have different classes of share. Finally, you need to consider with us the effect of regular dividend payments on the valuation of shares in your company.

Remember you can always give us a call!

National insurance: your liability

2011-07-06T04:35:00.000-07:00

Although leaving profits in the company can be tax-efficient, you need money to live on, so you should consider the best ways to extract profits.

A salary will meet most of your needs, but do not overlook the use of benefits, which may save income tax and could also result in a lower national insurance liability.
Six ways to save NICs:

Increasing the amount the employer contracts to contribute to company pension schemes (subject to allowance not being exceeded)
Share incentive plans (shares bought out of pre-tax and pre-NIC income)
For companies, disincorporation and instead operating as a sole trader or partnership
Instead of more salary, paying a bonus to reduce employee (not director) contributions
Paying dividends instead of bonuses to owner-directors
Provision of childcare and other tax-free benefits.

Any questions? give us a ring today on 0845 258 1445

Forming a limited company

2011-07-04T03:45:00.000-07:00

You could form a limited company if the limitation of liability is an important consideration – but do bear in mind that banks and other creditors often require personal guarantees from directors for company borrowings.

Trading through a limited company can be an effective way of sheltering profits. Profits paid out in the form of salaries, bonuses, or dividends may be liable to top tax rates, whereas profits retained in the company will be taxed at rates from as low as 21% (20% from April 2011).

Retained funds can be used to buy equipment or to provide for pensions – both of which are eligible for tax relief. They could be used to fund dividends when profits are scarce (spreading income into years when you might be liable to a lower rate of income tax?) or capitalised and taxed at 10% or 18%/28% on a liquidation or sale. Forming a partnership with your own limited company or introducing limited partners into your partnership or limited liability partnership (LLP) can create tax-saving opportunities.

An increasing number of businesses have incorporated, or introduced limited partners, but there are important implications which we would be happy to discuss with you, before you decide whether or not to incorporate your business.

July dates for your attention

2011-06-30T04:22:00.001-07:00

6 July               Deadline to file PAYE end of year returns P11D, P11D(b) and P9D for 2010/11
6 July               Deadline to give employees P11D forms (year end summaries) for 2010/11
19 July             PAYE/NIC and CIS deductions due for the month to 5th July 2011
19 July             PAYE/NIC due for quarter ending 5th July 2011
19 July             Class 1A NICs for 2010/11 due
31 July             Self Assessment second payment on account due for tax year 2011/2012
31 July             Second penalty (£100) applied to 2009/10 Self Assessment tax returns not yet submitted
31 July             Automatic 5% penalty surcharge on 2009/10 outstanding tax still unpaid on 31st January 2011

Unpaid invoices and unbilled work

2011-06-27T07:11:00.000-07:00

It is a feature of the tax system that businesses must include in their turnover for the year the value of incomplete work, of unpaid bills (debtors) and of work completed but not yet billed, all as at the end of the year. This was not always the case, and thus HMRC has been ‘catching up’.

We will need to discuss with you exactly what needs to be identified and the basis of valuation. And whether you are starting a new business or running a more mature business, keeping an eye on debtors and unbilled work is crucial to your cash flow. Call us today 0845 258 1445

Determining your employment status

2011-06-24T01:36:00.000-07:00

There is no statutory definition of ‘employment’ or ‘self-employment’. Rather, there is a series of ‘tests’ which HMRC will apply to ascertain whether someone is classified correctly.

Because large amounts of both tax and NICs can be at stake, HMRC can take quite an aggressive line and mistakes can cost you dearly, so advice specific to your situation is essential.

‘IR35’ rules require businesses to consider each and every contract they enter into for the provision of services. The test is whether or not the contract is one which, had it been between the owner or partner and the customer, would have required the customer to treat the owner or partner as an employee and therefore be subject to PAYE.

The contract ‘passes’ if the owner/partner would have been classified as self-employed; it fails if the owner/partner would have been classified as an employee.

If the contract ‘fails’, the business is required to account for PAYE and NICs on the ‘deemed’ employment income from the contract at the end of the tax year.

This is done using specific rules. We would welcome the opportunity to advise you about these.

Call us today on 0845 258 1445

Unincorporated businesses

2011-06-22T05:38:00.001-07:00

Business profits are charged to income tax and Class 4 NICs on the current year basis. This means that the profits ‘taxed’ for each tax year (ending 5 April) are those earned in the accounting period ending in the tax year.

Case Study 1

Mary, a sole trader, draws up her accounts to 31 July each year. Her profits for the year ended 31 July 2010 will normally be taxed in 2010/11.
There are special rules for the early and final years of a business, and for partnership joiners and leavers. There is a growing number of ‘fines’ for those not complying with the rules and regulations of Government departments. We have already mentioned income tax and Class 2 NICs, but other ‘traps’ to avoid are:

Late VAT registration
Late filing penalties
Late payment surcharges and interest
Penalties for errors in returns
Penalties for failing to operate a PAYE or sub-contractors scheme

If we are to help you to steer clear of these traps, you must let us have all the details for your accounts and Tax Returns in good time, and inform us of any changes in your business, financial and personal circumstances.

Give us a ring today 0845258 1445

Employing family members

2011-06-20T04:28:00.000-07:00

You can employ family members in your business, provided the package is commercially justifiable. You can remunerate family members with a salary, and perhaps also with benefits such as a company car or perhaps medical insurance – and you can make payments into a registered pension scheme.

An alternative to a company car is to provide a van: the maximum annual tax bill on the use of a company van with unlimited private use is only £1,500 or £1,775 including free fuel.

You can also take family members into partnership, thereby gaining more flexibility in profit allocation. In fact, taking your non-minor children into partnership and gradually reducing your own involvement can be a very tax-efficient way of passing on the family business. Be aware that taking family members into your business may put the family wealth at risk if, for example, the business were to fail.

HMRC may challenge excessive remuneration packages or profit shares for family members, so seek our advice first. If you operate your business through a trading limited company, under current tax law you can pass shares on to other family members and thus gradually transfer the business with no immediate tax liability in most cases. However, a tax saving for the donor usually impacts on the donee, and you need to steer clear of the ‘settlements legislation’, so again, seek our advice first.

Need further assistance? Give us a ring today on 0845 258 1445

Research and Development relief

2011-06-16T02:16:00.000-07:00

Tax relief is available on research and development (R&D) revenue expenditure at varying rates. Maximum rates of relief for 2010/11 are as follows:

For small and medium-sized companies paying tax at 21%, the maximum rate of tax relief is 36.75% (that is a tax credit on 175% of the expenditure)
For small and medium-sized companies not yet in profit, the relief can be converted into a tax credit payment worth 24.5%
For larger companies paying tax at 28%, the maximum rate of relief is 36.4% (that is a tax credit on 130% of the expenditure).

This is subject to a minimum annual spend of £10,000. SME relief is capped at 7.5 million euros per project and subject to the most recent accounts having been prepared on a going concern basis.
SMEs barred from claiming SME R&D tax credit by virtue of receiving some other form of state aid (usually a grant) for the same project will be able to claim the large company R&D tax credit. This means that they will qualify for relief on 130% of their R&D expenditure.

Your business and capital allowances

2011-06-13T03:29:00.001-07:00

‘Capital allowances’ is the term used to describe the deduction we are able to claim on your behalf for expenditure on business equipment, in lieu of depreciation.

Annual Investment Allowance (AIA): The first £100,000 of the year's investment in plant and machinery, except for cars, is allowed at 100%. This applies to any size of business and most business structures, but there are provisions to prevent multiple claiming. Businesses are able to allocate their AIA in any way they wish; so it is quite acceptable for them to set their allowance against expenditure qualifying for a lower rate of allowances (such as long-life assets or integral features) – see below.
The maximum AIA increased with effect from 1 April 2010 (corporates) or 6 April 2010 (others). If an accounting period straddles the “operative date”, the maximum AIA for the transitional chargeable period is the sum of:

the AIA entitlement, based on the previous £50,000 annual cap for the portion of a year falling before the relevant operative date; and
the AIA entitlement, based on the new £100,000 cap for the portion of a year falling on or after the relevant operative date.

Thus a company with a calendar year chargeable period from 1 January 2010 to 31 December 2010 would calculate its maximum AIA entitlement based on:
(a) the proportion of a year from 1 January 2010 to 31 March 2010, that is, 3/12 x £50,000 = £12,500; and
(b) the proportion of a year from 1 April 2010 to 31 December 2010, that is 9/12 x £100,000 = £75,000.
The company’s maximum AIA for this transitional chargeable period would therefore be the total of (a) + (b) = £12,500 + £75,000 = £87,500.
Once established, the maximum entitlement can be spent at any point in the 12 month period, with one restriction, that only expenditure up to £50,000 will qualify before 1 April 2010.
Note that the maximum AIA reduces to £25,000 with effect from April 2012.
Special rules which may disallow property loss relief against general income to the extent that the loss is attributable to the AIA are now in force. This provision will only apply where there are relevant tax avoidance arrangements. Contact us for more details.
Enhanced Capital Allowances (ECA): In addition to AIA, a 100% first year allowance is available on energy saving or environmentally beneficial equipment. Where companies (only) have losses arising from ECAs, they may choose how much they wish to carry forward and how much they wish to surrender for a cash payment (tax credit payable at 19%).
There is a separate ECA scheme for electric and low CO2 emission (up to 110 g/km) cars, zero-emissions goods vehicles (the last proposed, for five years from 1 April 2010 (corporates) or 6 April 2010 (others)) and natural gas/hydrogen refueling equipment. They still qualify for the 100% first year allowance, but do not qualify for the payable ECA regime.
Writing Down Allowance (WDA): Any additional expenditure not covered by the AIA (or enhanced capital allowances (ECA)) level enters either the main 20% pool or a special 10% pool, attracting WDA at the appropriate rate. These rates are set to reduce to 18% and 8% with effect from April 2012. The special rate 10% pool applies to long life assets, the addition of thermal insulation to existing commercial buildings, and integral features of buildings, specifically:

Electrical systems (including lighting systems)
Cold water systems
Space or water heating systems, powered systems of ventilation, air cooling or purification and any floor or ceiling comprised in such systems
Lifts, escalators and moving walkways
External solar shading
Active facades (climate-responsive features).

The 20% pool applies to most other plant and equipment, including some cars (see below).
Businesses may claim a WDA of up to £1,000 where the unrelieved expenditure in the main pool or the special rate pool is £1,000 or less.
Cars: A rate of 20% applies to cars with CO2 emissions exceeding 110 g/km. However, cars with CO2 emissions above 160 g/km will be restricted to 10% WDA. Expenditure incurred before April 2009 on “expensive” cars continues under the old regime (£3,000 per year cap on capital allowances). For non-corporates, cars with a non-business use element continue to be dealt with in single asset pools, so the correct private use adjustments can be made but the rate of WDA will be determined by the car’s CO2 emissions.
Buildings: The phased withdrawal of industrial and agricultural buildings allowances ends during 2010/11 with essentially a further reduction in the WDA by 50%. The restricted allowance is now 1%, subject to transitional rules.
A maximum 100% initial allowance is available for conversion of parts of business premises into flats, business premises renovation allowance and Enterprise Zone Allowance. WDA of 25% (on a straight line basis) applies to expenditure on which an initial allowance is not claimed.

Claiming deductible expenses

2011-06-08T04:35:00.000-07:00

Our role is to work with you to minimise your taxes, and it is important to take advantage of all the opportunities available.

You will pay tax on your taxable profits, so it is essential to claim all deductible expenses, many of which will be included in your accounting records. If you are self-employed and carry on your business from home you can claim tax relief on part of your household expenses, including insurance repairs and utilities.

You can also claim for the cost of travel and accommodation when you are working away from your main place of business. You must keep adequate business records – including a log of business journeys – because in addition to ensuring your accounts are accurate, these records may be requested by HMRC.

Have you considered using an appropriate computer package for record keeping?

Or better still, give us a call today.

Starting a business action plan checklist................

2011-06-06T03:12:00.000-07:00

Prepare a robust business plan

Ensure that you have access to suitable funding

Check your right to use your chosen trading name

Choose the right business structure

Trade and professional registrations

Choose your year end

Develop your branding

Involve the family

Plan to avoid fines and penalties

Plan to reduce your tax liability

Prepare a robust business plan

Ensure that you have access to suitable funding

Check your right to use your chosen trading name

We can help with all of the above. Telephone 0845 258 1445

Regional employer NICs holiday for new businesses

2011-06-01T07:18:00.001-07:00

This is a scheme intended to assist new businesses in targeted areas of the UK. within a three year qualifying period, employers eligible for the scheme will not have to pay the first £5,000 of Class 1 Employer NICs due in the first 12 months of employment. This will apply for each of the first 10 employees hired in the first year of business.

The targeted countries and regions are: Scotland, Wales, N. Ireland, the North East, Yorkshire and the Humber, the North West, The East and West Midland and the South West.

Speak to us today to see how we can help on 0845 2581445

Effective business planning

2011-05-30T03:41:00.001-07:00

Starting a new business

Starting a new business venture is a risky proposition, whatever the economic climate. There are a number of factors to consider, including: the nature of the business; your target market and competitors; the potential for profit; how you will extract those profits; how fast the business will grow; how the business will impact on your life; the potential risks involved; and how you plan to exit the business.

Business plan: A comprehensive business plan is essential. This should include: your sources of funding; tax-efficient borrowings; whether the business needs a PAYE scheme or to be VAT registered; and, not least, the business structure that will best meet your needs (sole owner, partnership, limited liability partnership or limited company). We can help you through the decision-making process – and to make the appropriate registrations. A good cash flow forecast can help you spot potential times when cash will be short, and regular updates will help you to see how your business is performing.

Business structure: There are both advantages and disadvantages for each trading structure and each has implications for control, perception, support, and costs. For example, careful consideration is needed regarding whether or not to retain personal ownership of any freehold property on an incorporation of business.

Choosing a year end: It is also important to choose the right year end for your business. Is there a time of year when it will be more convenient to close off your accounting records, ready for us? What would be the best time of year for stock-taking? To what extent is your business seasonal? From a tax viewpoint, the choice of a year end early in the tax year for an unincorporated business usually means that an increase in profits is more slowly reflected in an increased tax bill and over time the delay between earning profits and paying the tax can create a source of working capital for the business. Conversely, a reduction in profits will more slowly result in a lower tax bill.

HMRC registration: Advising HMRC when you become self-employed, and probably liable to Class 2 national insurance contributions (NICs), may not be very high on your list of priorities in the first weeks and months of a new business – but failure to notify will attract a penalty if tax or NICs are unpaid as a result. You should register as soon as possible to begin paying NICs and notify HMRC of your new self-employed status.

Entrepreneurs advised to explore alternative funding options

2011-05-26T03:45:00.000-07:00

Smaller entrepreneurs are being advised to explore the alternative funding options when setting up or growing a business.

With some entrepreneurs still struggling to access traditional forms of finance, John De Groot, chairman at Success Strategy, suggests that business owners consider turning to family and friends to help fund their venture.
He explained that securing a traditional loan is highly dependent on a number of factors, including: the basic viability of the idea; the amount of money required and of course how much the entrepreneur can contribute; the naivety or experience of the entrepreneur - including their peer group; the credit rating of the individual; and the ability of the entrepreneur to motivate the case.

'There is still money from specialised sources for the big ideas or the technology ideas. But, for smaller entrepreneurs, self-funding or money from friends and family are routes that should be sought,' he said.
However, if you are able to secure loans from personal sources such as friends and family, you should ensure that any arrangements are formally agreed and legally binding. You might want to consider the impact on familial relations as well.

Latest figures from the Bank of England suggest that lending to small and medium-sized firms fell to - 2% in February, despite the banks being told to make more money available.

We can help with a range of business planning and financial issues - please contact us for assistance on:
Tel: 0845 25814458 1445

Figures reveal strongest ISA season in nine years

2011-05-23T01:49:00.000-07:00

The 2010/11 ISA season was the strongest in nine years, with net sales of almost £1 billion, latest figures reveal.

Investments in stocks and shares ISAs were particularly high as people rushed to use up their tax-free annual ISA allowance before the end of the tax year.

According to the Investment Management Association (IMA), a total of £956 million was paid into UK-based unit trusts and Oeics (open-ended investment companies) between 1 March and 5 April - a period known as the ISA season.

Despite the last-minute rush, total ISA sales for 2010/2011 were slightly down on the previous year at £3.68 billion, compared with £3.99 billion.

Commenting, Jane Lowe, director of markets at the IMA, said: 'The last two tax years have together seen a big jump in ISA inflows to more than £7.5 billion.

'This coincides with two increases to the annual allowance in October 2009 and April 2010 and compares starkly to Isa outflows of over £5 billion over the preceding five years.'

On 6 April 2011 the annual ISA subscription limit for 2011/12 increased from £10,200 to £10,680, up to £5,340 of which can be invested in a cash-only ISA.

Annual Return Deadline

2011-05-18T02:52:00.000-07:00

Employers reminded of annual return deadline

Employers are being urged to file their annual return (P35 and P14s) by the 19 May deadline or risk incurring a penalty.
HMRC has issued an urgent reminder ahead of the impending deadline warning that, unlike previous years, there will be no period of grace for late filers.
Last year no penalty was charged for employers with five or fewer employees, but these transitional arrangements have now ended.
From this year, employers will also be liable to a penalty if they file their annual return on paper (except in some very limited cases).
Under HMRC's penalty regime, employers who file their return after the 19 May deadline will be charged a penalty of £100 per 50 employees for each month or part month that the return is outstanding.
If the return remains outstanding for more than four months, individuals will receive a penalty notice shortly after 19 September and again the following January and May, if necessary.
Further help is available from HMRC via its Employers Helpline on 08457 143 143 or online at www.hmrc.gov.uk/paye.

For further information and assistance please contact us at Jolliffe's on 08452581445 or via our website: www.jolliffes-accounting.co.uk

Payroll dates for your attention

2011-05-09T07:27:00.000-07:00

May 2011

2               Deadline to submit P46(car) notifying changes to car / fuel benefits during quarter ending 5 April 11

19             PAYE / NIC and CIS deductions due for the month 5 May 2011

19             Deadline to file PAYE end of year returns P35 and P14 for 2010 / 11

31             Deadline to give employees P60 forms (year end summaries) for 2010 / 11

Who Are We?

2011-05-03T08:40:00.000-07:00

I've often asked myself the same question.

Basically, we are a passionate team of Accountants and book-keepers, who no matter what size and budget your business has to spend, we can accommodate your needs in some way.