Archive for the ‘Accountancy and finance’ Category

As we start a new financial year, myself and my team here at George Hay, Huntingdon are celebrating achieving a record 35% increase in turnover over the last three years.

growth chartManaging Partner Barry Jefferd said

‘It is a testament to the commitment and determination of the whole team here in Huntingdon that we have managed to increase our turnover at such a rate, especially in this time of recession. We celebrated the 20th anniversary of the opening of our Huntingdon office in 2014 and we are delighted to have built and maintained such good relationships with local people and businesses during that time.

We are now looking forward to continuing to provide the town with our excellent accountancy services for the next twenty years and beyond!’

 

I celebratory leapam very proud to have been a significant part of this growth period and I am looking forward to the challenges of taking on more offices at St. George’s House to accommodate new team members, including an apprentice in the Autumn.

I would also like to thank the many clients, networking colleagues and professional contacts that have supported us during these incredible years.

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

In today’s digital age, information is accessible to many via the web, but the validity of the data published online is always difficult to establish.  With search engines offering entries from Wikipedia and blogs set up freely and authored by anyone who is inclined to share their opinions as if they were facts, the internet really is a minefield for those searching for clear, coherent and up to date advice.

laptop frustrationHowever, it is reasonable to assume that major websites of core government organisations are up to date and free from misleading information, isn’t it?

Take the website of H M Revenue & Customs for example.  Full of guidance, help sheets and forms to download it is a useful source of information that goes some way to replace the much depleted staff numbers manning the ‘phone lines and tax offices.  But can it be relied upon?

In the next two weeks, we have the Self-assessment Tax Return filing deadline. If you were in any doubt as to whether this regime applies to you, it would be reasonable to visit www.hmrc.gov.uk and find the following as part of a list of circumstances in which a Return is necessary.

Quote “If you are an employee or a pensioner and already pay tax through a PAYE code, you can sometimes ask for tax that you owe on income, such as savings and property, to be collected through your code number. You’ll need to complete a tax return instead if the income you receive is:

  • £10,000 or more from taxed savings and investments
  • £2,500 or more from untaxed savings and investments
  • £10,000 or more from property (before deducting allowable expenses)
  • £2,500 or more from property (after deducting allowable expenses)”

Tax Return and CalculatorThe words “you’ll need to” are certainly not ambiguous, however if receiving £10,000 or more of dividends does not create a charge to tax, perhaps because your employment earnings are minimal, this fact alone is not enough to require a Tax Return from you.

It is important to note that the list published by HMRC is intended as guidance, the need to file a return will depend on each taxpayer’s circumstances.  As it the taxpayer’s responsibility to notify HMRC of the need to file a Return, I am sure an “it depends” answer isn’t really what you were looking for.

Whilst the internet serves many needs, it must be used with caution when seeking advice regarding even the simplest taxation and accounting queries.  For the foreseeable future, there really is no replacement for trustworthy, personal advice from a team of trusted professionals!

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

To many small business owners, administration and bookkeeping are a necessary evil of being self-employed.  Often managed simply to keep HMRC away from their door, the bank manager happy and accountancy fees at a palatable level, bookkeeping can be a time consuming and often monotonous chore, that steals time away from servicing client’s needs and therefore earning profit.

Have you considered using the results of your bookkeeping efforts to drive your business forward?

There are many ways that management information can help you to manage your business as well as complete your VAT return and keep an eye on cash flow.

  • It can assist the business owner in making good quality decisions
  • It can monitor performance indicators such as turnover against budget or prior year
  • It can help ensure you get paid for the work you do and manage financial commitments
  • It can highlight more profitable areas of the business, or potential to cut costs

Let me illustrate with an example.

A well maintained sales ledger, in a well constructed spread sheet or using software such as Kashflow or Sage, can improve cash flow, increase profitability and grow your business.

How?

  • By reporting customers in order of money spent, you can focus on providing your best customers with the best customer service, reducing the chance of them looking for alternatives or being as price sensitive.  This will also encourage advocates of your business, which will provide the best quality advertising at no cost.
  • Analysing debt by age can highlight poor paying customers who may indicate the need to improve the way you do business or highlight the need for more robust credit control.
  • You may decide that poor value customers or late payers are costing you too much in time and cash flow, so refuse to accept
    their future business or at least renegotiate terms.
  • Incorporating a little CRM (customer relationship management) data such as the source of the customer (e.g. advert, referral etc) can help you calculate the cost of acquiring new business and give you clues regarding your marketing spend.
  • Looking at accounts that have not been active for some time could highlight missed opportunities.
  • By improving the amount of cash flowing in to your business you can reduce the cost of finance and perhaps have more
    negotiating power when purchasing.

Not for you?

If the thought of devoting more management time generating information turns you cold, then outsourcing is probably your best option.  Many small business owners feel the need to control every element of their business and often consider cost to be a barrier, but in most cases outsourcing bookkeeping will pay for itself; by freeing up time to focus on the performance of the business or indeed to do more business.

To find out more about getting a return from your investment in bookkeeping, give me a call on 01480 426500 or Skype chat with tonimhunter.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

May 1960 Pay SlipNew powers to tackle PAYE debtors

HM Revenue and Customs (HMRC) will have new powers to tackle companies which fail to pay their employees’ income tax and national insurance contributions.

Upfront demands

From April, HMRC will be able to demand an upfront security from firms it deems to pose a serious risk of not paying.  In particular, HMRC will be targeting companies which deduct money from their employees’ pay packets but have no intention of paying it to the tax office.

The new measures are an extension of existing powers which HMRC has in respect of VAT, insurance premium tax and  environmental taxes.

It is hard to believe that this a “new” power as without it compliant taxpayers are not being treated fairly.

PenaltyPossible penalties

Businesses failing to provide a security will face a fine of up to £5,000 which will be enforceable by the courts.

HMRC have said that employers facing genuine payment difficulties will not be affected by the change.

Source: Total Investor website.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

 

HMRC reveals that 7.65 million Self Assessment Tax Returns were filed online in time this year, with an overall  total of 9.45 million returns  submitted in time.

Record Numbers

90.4% of  taxpayers met the deadline – an increase of 4% on last year – the highest on-time filing result since HMRC was created.

The busiest day for online returns was 31 January, when HMRC  received nearly 445,000. The SA rush hour occurred between  4pm and  5pm on 31st January, when 37,460 returns – more than one every 6  seconds – were received by HMRC.

Penalties delayed

Although the 31st January deadline was unchanged, HMRC announced that no penalties would be issued for online returns received by midnight on 2nd February, due to industrial action at HMRC contact  centres.

David Gauke, Exchequer Secretary to the Treasury, said:

“I am pleased that the extension to the filing deadline prevented people from being unfairly penalised if they were unable to speak to HMRC on the 31st.”   This statement is inaccurate as the deadline was not extended, simply HMRC promised not to fine anyone on 1st and 2nd February.  By filing late, the period known as the “enquiry window” is affected in favour of HMRC.

He also said “I’m delighted so many people filed their tax returns online this year. The record number proves that it’s quick, easy and secure to do.”  I wonder if he has ever used the HMRC portal?

Baubles *Merry Christmas*Festive filing

Many took advantage of the Christmas holidays to wrap up their  returns this year, with 1,100 people filing online on Christmas Day;  3,512 on Boxing Day; 11,648 on New Year’s Eve; and 8,935 on New  Year’s Day.

Perhaps this is an indication of multi-cultural Briton?

 

Missed the fun?

The filing deadline has now passed and  anyone who hasn’t yet  filed their 2010/11 tax return must send it to HMRC as soon as  possible, as well as pay any outstanding tax due for the 2010/11 tax  year.

professional, approachable, timely advice

A new penalty regime is in force, so if you need help getting your tax affairs up to date call our Tax Managers, Heather Irvine or Jenna Gaylor as soon as possible to set up a free, no obligation meeting to discuss how we can assist you.

 

data source : HMRC press release

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

 

HM Revenue and Customs (HMRC) has always taken a dim view of the late filing of self-assessment tax returns, but it has now introduced significant new penalties for those who fail to meet the deadlines.

The deadline

If you are registered for self-assessment and have not already filed your paper return then you will need to do so online by 31 January 2012. This may still seem a long way off, but it makes sense to start preparing now rather than leaving your return until the last minute, when it will be more difficult to deal with any issues which may arise.

The penalty

Back of the net!Under HMRC’s new regime, late returns will incur an initial fixed penalty of £100.

This will apply even if there is no tax to pay or any tax due for the year has already been paid on time.

If your tax return has still not been filed after three months, then HMRC will impose additional daily penalties of £10, up to a maximum of £900.

After six months, the penalty increases to either £300 or five per cent of the tax, depending on which is greater.  The penalty could increase to 100 per cent of the tax due if returns have still not been filed after 12 months.

Late tax

Any overdue tax must also be paid by 31 January.  If this deadline is missed then HMRC will impose a penalty of five per cent of the amount due after 30 days, six months and 12 months respectively. It is also worth noting that HMRC will charge interest on top of these penalties.

The Art of ProcrastinatingStop procrastinating

As with any tax matter, it is always better to act sooner rather than later.

The longer you leave it, the bigger the penalty will be.

 

 

At George Hay, we can assist with a wide range of tax matters, including ensuring your self-assessment tax return is filed on time.

Friendly, approachable, reliable professionals

Disclaimer: This article is for general guidance only. All taxation planning should only be undertaken after appropriate professional advice. George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

The Dilnot Report offers little help

It was thought that the Dilnot Report might help to reduce the cost that individuals have to contribute to Residential Long Term Care, but very little seems to have changed since the last report on this subject.

It looks as if a lot of people will still have their homes sold for Residential Long Term Care unless they plan effectively for such an eventuality.

 

The Report in Summary

The Dilnot Report is some 86 pages long with a substantial amount of supporting documents, but in short, the commission is saying:

  • Personal Care Costs should be capped between £25,000 and £50,000 with Dilnot’s preference being £35,000
  • An individual requiring care should be expected to pay between £7,000 and £10,000 per annum for “hotel/living” costs
  • Means Test threshold, currently at £23,250 or more should be switched to a sliding scale from £14,250 to £100,000
  • Estate cost approximately £2 billion each year on current care costs.

Some responses to the report have been:the man in the street

  • Too expensive
  • Cannot be taken seriously
  • Dead on Arrival
  • Lukewarm response from The Treasury
  • Pensioners face 2 billion granny tax
  • George Osborne wants to “strangle the proposals”

What it really means

The present proposals would not make much difference, for example, to an elderly lady who goes into a residential care home for four years, before she dies, and has a property worth £200,000 which is sold for the Care Home Fees.

Calculating average Care Home Fees, Personal Care, Hotel Costs, under the new scheme (capping at £35,000 and hotel costs not exceeding £10,000, the family would get £125,000 after all bills are paid.  Under present rules they would also have had to pay the council’s costs, so would receive £92,000.

 

The problem is getting bigger as we get older

Many who have to consider Residential Care Home fees have worked hard all their lives, were brought up believing they should save and buy their own home.  The expectation being that the “state” would care for them in their old age, and they would be able
to provide for their children and grandchildren.  Over 20,000 homes were sold last year to meet Care Home Fees costs, and this is only going to increase with an ever-growing elderly population.

Protect your home with professional planning

With proper planning these costs can be reduced, provided you have a professionally drafted will which includes the appropriate trust.  Or alternatively by setting up a Life Time Property Protective Trust (LPPT) you would be able to protect your house
from being sold and ring-fence your assets if you so desire.

The purpose for establishing a LPPT are manfold, and some are:

  • No Probate fees on the value of the property/assets in the Trust
  • No claim against the Trust can be made upon your death
  • Protecting the family assets from potential bankruptcy of beneficiaries
  • Financial protection from relationship failure

A side effect of a LPPT is that your property/assets are protected from being taken to pay for your care.  The LPPT offers effective protection from care fees provided that at the time the assets were protected it was not reasonably foreseeable that you would need to go into care.

Guest Author: Eric S Britt. Will Writer and Estate Planning Practitioner. Affiliated Member of The Society of Will Writers  Call 01480 270114 or Email: eric.britt@collectivelegalsolutions.co.uk for a confidential, no obligation review of your circumstances.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

 

Drowning under a mountain of paperWith 2011 more that half way through, how is your business performing?

 

Here are twelve tips to act an aid-memoire when trying to stay in control of your business:

  1. If you are not producing regular management accounts, consider what financial information can be easily extracted from your accounting system to help you monitor the business. You can only extract meaningful information if your records are up to date and accurate.
  2. If you are selling a product, make sure you know your break even sales volume – this could be higher than you realise, particularly with pressure on prices.  What level of waste are you experiencing?  Are you carrying too much stock?
  3. If selling a service, check how many hours of time you are invoicing out a month – how much of it is resulting in billable income?   Are you charging at the right levels?  Are you competitive without being cheap?
  4. Project Management PlanRevisit your business forecasts and cash flow projections for the coming 12 months on a regular basis – are they still realistic in the current climate?  What costs can be trimmed back?
  5. If cutting costs, make sure you know which of your costs are fixed and which are variable.
  6. What can you delegate/outsource so that you can devote more of your time to looking after key clients and driving the busimess?
  7. A big, bad debt can be disastrous for business, so make sure you monitor your debtors carefully.  Keep in regular contact, resolve disputes quickly and discuss options at an early stage if they are having difficulties.  A debtor making round sum payments on account is often a warning sign.  Consider credit checking businesses that do not have any history with you.
  8. Look after your purchase ledger with as much care as your sales ledger.  Good suppliers are key to you being able to deliver to your customers, keeping prices down and an essential source of credit when managing cash flow.
  9. Make sure you have up to date information to hand when requesting a renewal or increase in your banking facilities and keep your bank manager informed of changes to the business and its performance.
  10. Check that the financial structure of your business is correct.  If you are relying on short term finance for long term projects then you need to get the balance right.  What assets do you have to secure more cost effective commercial finance?
  11. Income taxGet your tax affairs up to date and make sure you have provided for payments due in January and July as well as Corporation Tax due nine months after the accounting period if trading through a Company.  This is just as important if profitability has declined as you may be able to reduce any payments on account that fall due.
  12. Check you are using the most effective VAT scheme.  If you have a large sales ledger, cash accounting may be more appropriate.  Have you calculated whether the flat rate scheme results in less VAT being paid over to HMRC?

 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

 

If you are a tutor, a fitness instructor or make your money by selling through the internet, then the taxman may soon be taking a particular interest in your financial affairs.

More targeted investigations

HM Revenue and Customs (HMRC) is stepping up its tax investigations of specific sectors where it believes tax is being underpaid.

A date for the investigations to launch has yet to be announced and there have been no guarantees of an amnarrow found the targetesty for those who forward to get their affairs in order wish to confess, although those who settle up any unpaid tax early are far more likely to get much better terms than those who are caught out.

Among those targeted will be private tutors and coaches who earn main or secondary income from private lessons, whether they are qualified or not, and ranging from national curriculum tutors to fitness or lifestyle coaches.

HMRC is also interested in individuals who use online marketplaces such as eBay to buy and sell goods as a trader or business without paying the resulting tax. This will, of course, not affect those who buy or sell in low volumes on eBay, such as private individuals selling unwanted items. HMRC is only interested in those who consistently use the online marketplace to make a profit.

Non-VAT registered businesses

Other traders who will come under the spotlight will be those whose turnover exceeds the £73,000 threshold but who have not registered for VAT. Don’t forget that now that the Inland Revenue and Customs and Excise work together as HM Revenue & Customs, they share your business data.

Act early to mitigate penalties

As with any tax matter, it is always better to act now than to wait for the taxman to come calling.

If you fall under any of these sectors then George Hay can help you register with HMRC and get your affairs in order.

Disclaimer: This article is for general guidance only. All taxation planning should only be undertaken after appropriate professional advice. George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

For more business news updates like this, please subscribe to my monthly business support newsletters using the “join my lists”  widget in the top right of your screen.  Thank you.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

Clients often ask us “what is the best way to buy a vehicle?”  If they plan to use it in their business, should they own it personally? Should they buy it through the business? Should they lease it? The list of questions is endless and many of the answers will depend upon your particular situation and requirements but beware getting it wrong could prove costly in terms of time and money.

Your options

Martin Bessell from Midland Autolease Contracts says “The type and terms of your finance will be dictated by your circumstances, if you require a mid range car for business use this often lends itself to Lease purchase or Hire purchase.  An executive car which is mainly used for private use will often be better bought outside the business, so a personal contract purchase should be considered. If you simply need a reliable car for a short period leasing may be the answer, but talk to your accountant about each type they may have a better solution”

Taxation

1959 Porsche 356A Carrera GS CabrioletThe tax position regarding the purchase of your vehicle can be quite complex.

Firstly you will need to consider the VAT position. Generally you can not claim VAT on the purchase price but may be able to claim a proportion of the VAT on lease costs, this is providing it is a car you are purchasing. If the vehicle is a van different rules apply, and the debate as to what is a car and what is a van is not something I wish to discuss here!

You will also need to consider the costs that you can deduct in arriving at your taxable business profit. The rules on both Capital Allowances and Lease rental deductions changed significantly in the last budget and many clients are now taking a more serious look at leasing.

Finally don’t forget if a vehicle is provided as a company car there will be PAYE and National Insurance arising from the benefit.

Get advice

The important aspect is to seek advice when buying a vehicle don’t just be blinded by that shiny new car.  Make the right commercial decision for you and your business, search the market and then present the facts to your accountant who will crunch the numbers and tell you what the tax consequence will be.  HAPPY SHOPPING :-D

 

Disclaimer: This article is for general guidance only.  All taxation planning should only be undertaken after appropriate professional advice.  George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

For more business news updates like this, please subscribe to my monthly business support newsletters using the “join my lists”  widget in the top right of your screen.  Thank you.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.