Toni Hunter's SuperBlog » George Hay

can you afford to miss the self-assessment deadline?

Toni — Wed, 28 Dec 2011 21:43:01 +0000

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

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.

Stop 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.

12 tips for staying in control of your business finances

Toni — Mon, 01 Aug 2011 21:00:15 +0000

With 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:

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.
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?
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?
Revisit 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?
If cutting costs, make sure you know which of your costs are fixed and which are variable.
What can you delegate/outsource so that you can devote more of your time to looking after key clients and driving the busimess?
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.
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.
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.
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?
Get 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.
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.

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new target for HMRC investigations

Toni — Thu, 28 Jul 2011 20:25:39 +0000

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 amnesty 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.

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.

Thinking of buying your dream car?

Toni — Fri, 15 Jul 2011 22:12:43 +0000

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

The 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

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.

NIC inequality

Toni — Mon, 06 Jun 2011 07:22:48 +0000

New businesses excluded from a Government scheme to encourage more start-ups should still ensure they plan ahead to minimise their tax liabilities.

The National Insurance Contributions (NIC) holiday scheme

The scheme was launched on September 6th 2010 and means employers do not have to pay the first £5,000 in NICs for each of the first 10 workers during the first 52 weeks of their employment, provided that year falls within the three-year period up to September 5th 2013.

However, while new firms across the UK are set to benefit from potential tax savings of up to £50,000, those in the East, South East and London regions are being excluded from the scheme.

Another postcode lottery?

Barry Jefferd, Tax Partner at George Hay, said: “This is incredibly unfair on new businesses in the region who will be at a disadvantage compared to their counterparts in other areas.

“However, employers should still give serious thought to tax planning in order to minimise their liabilities and take advantage of any opportunities that might not be available at a later stage.

“While businesses in the East may not be able to enjoy the same tax breaks as others around the country, we can still help them make valuable tax savings, ensuring more of their hard-earned money goes back into those companies rather than the taxman’s pocket.

“Equally, if any new businesses in the area are unsure of their NIC obligations, then we can advise them accordingly.”

Further reading: NI holiday scheme slammed by Labour, Accountancy Age 04.01.12 – Administration costs more than savings.

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.

changes at the top

Toni — Tue, 17 May 2011 20:52:36 +0000

Chartered accountancy firm George Hay, which has offices in Biggleswade, Huntingdon and Letchworth, has announced of the appointment of a new senior partner.

Current senior partner Eddie Fuller stepped down from the position on March 31^st, and partner Nick Willis has taken over at the helm.

Eddie will still continue at the practice where he has worked for over 45 years and has been a partner since 1985. He provides accountancy services to a number of clients particularly specialising in agricultural businesses.

Nick joined George Hay in 1977, and was appointed as a partner in 1987. He has built up a strong reputation specialising in small and medium-sized businesses.

Nick is a Chartered Accountant and member of the Institutes Audit and Assurance Faculty he serves as a member of the executive committee of the UK200 Group and chairs their membership service committee. The UK 200 Group is a national association of accountants and lawyers of which the practice is a member.

Commenting on his new role, Nick said: “I am delighted to have been appointed senior partner and look forward to continuing to take the firm forward and helping it grow”.

For further information on George Hay, please visit www.georgehay.co.uk.

HMRC amnesty for plumbers

Toni — Fri, 06 May 2011 21:11:42 +0000

If you are a plumber or heating engineer and have undeclared earnings then now is the time to tell the taxman.

New amnesty launched

HM Revenue and Customs (HMRC) has launched a ‘tax amnesty’ known as the Plumbers Tax Safe Plan (PTSP).

The PTSP is the fifth tax amnesty to be offered to UK residents. Those targeted in previous schemes have included doctors, dentists and offshore account holders.

The amnesty provides an opportunity for plumbers who have not yet done so to make a full disclosure about their income without receiving excessive penalties and is only open until May 31^st. Those who register with the scheme before this date will then have until August 31^st to pay any back taxes as well as interest and penalties.

Potential Penalties

In most cases, HMRC will impose a penalty of 10%, although this could vary between zero and 20%, depending on your individual circumstances.

Those with undeclared earnings who fail to take advantage of this opportunity will face a crackdown by HMRC, which will be using information from the CORGI and Gas Safe registers to identify individuals it wants to question.

You can be sure that the penalties will be a lot higher if the taxman catches you out – and he is unlikely to be too sympathetic if you did not use the disclosure opportunity available.

While there are still costs involved, including the reduced penalty, the bill for making a full disclosure will still be a great deal cheaper than it would be when the taxman comes knocking.

Barry Jefferd, Tax Partner at George Hay, can advise on a wide range of taxation matters, including making a disclosure to HMRC. This opportunity is unlikely to be repeated, making it all the more important to act sooner rather than later.

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.

changes to pension contribution levels

Toni — Thu, 10 Feb 2011 21:49:51 +0000

If you have a pension, then you are about to see a significant reduction in the amount of money you can put into it without paying tax.

From next April

The Government will slash the annual tax relief limit on pensions from £255,000 to £50,000. There will also be a reduction in the lifetime allowance on money that can be saved in a pension fund from £1.8 million to £1.5 million, which will come into effect from April 2012.

The Government hopes the changes will save it more than £4 billion a year, which it will use to tackle the budget deficit.

Warning

Experts have already warned that some people with long service in final salary pension schemes could suddenly face higher bills, particularly as the increase in accrued pension will now be multiplied by a factor of 16 instead of the current factor of 10.

However, the Government says that the changes would affect 100,000 pension savers a year, 80% of whom earned more than £100,000 a year, meaning that very few people earning less than that amount would actually have to pay any pension tax.

Utilising your allowance

Anyone with unused annual allowance from the last three tax years will be able to carry them forward if they are a member of a pension scheme during that period, meaning that if a pension contribution is more than £50,000 then they may not have to pay the annual allowance charge.

At George Hay, we can advise you on all aspects of pensions, including how the above changes might affect you.

For further information on whether you are getting the best from your pension, please contact us.

Increase in HMRC inspections for Higher Earners

Toni — Sun, 12 Dec 2010 21:11:11 +0000

If you were among those hit by the new 50p top tax rate back in April, then you could now be more likely to receive a rather unwelcome knock on the door from the taxman.

Proposal

Under plans unveiled by the Liberal Democrats at their recent conference in Liverpool, half of the UK’s 300,000 higher earners affected by the top tax rate face having their tax affairs checked over by HM Revenue and Customs (HMRC).

This means that the number of tax investigations will rise from the current figure of 5,000 to 150,000 a year – an increase of 3,000%.

Why?

The £900 million drive is designed to crack down on tax avoidance, the legal practice of using existing provisions within the current tax regime to minimise your tax liabilities. This should not be confused with tax evasion, where tax liabilities are avoided by illegal means, amounting to tax fraud.

Those who ‘hide’ money in offshore accounts will also come under scrutiny as part of the increased investigations.

As a result of the scheme, the number of criminal prosecutions relating to tax matters is expected to increase five-fold, while the Treasury has announced that it expects the initiative to bring in £7 billion a year by 2015.

While tax avoidance is certainly not illegal, the announcement highlights the importance of seeking professional advice on all tax matters to ensure you do not fall foul of any investigation.

Impact on small business

Even if you have nothing to hide, tax investigations can be both costly and time-consuming, particularly for smaller businesses which have neither the time nor the money to spare.

Need support?

Friendly, approachable, reliable professionals

At George Hay, we can advise clients on all aspects of taxation and can help you ensure that all your tax affairs are in order. We can help you ensure you do not pay too much or too little tax and, should you find yourself the subject of an investigation, can offer as much assistance as you need.

We are also able to offer tax investigation protection. As with any insurance, everyone hopes they will never need to use it, but taking out cover now could save you thousands of pounds in investigation fees should the taxman come calling – money that could be put to better use in your business.

For more information on any area of taxation, including tax investigations, or to find out more about tax investigation protection, please contact us.

Employer Pension Contributions to become compulsory

Toni — Sun, 28 Nov 2010 20:02:55 +0000

If you do not currently offer your employees a company pension scheme then you need to take heed of a new scheme announced by the coalition Government.

All employers

From October 2012, all employers, no matter how small, will have to enrol staff in the National Employment Savings Trust (NEST), unless they already offer a comparable pension scheme to their employees.

NEST

NEST is a scheme designed to give people more access to good quality pension savings, especially for those on low to middle incomes. The Government hopes that this will prompt people to start saving for their retirement, particularly with people now living longer with little or no savings.

Phased implementation

Each employer will be given a date from when the changes must be in place. The reform will be phased in over a four-year period to 2016, starting with larger firms and then working down through medium and then small and micro-employers. The size of an employer will be based on PAYE data.

A minimum contribution level will also be phased in gradually, with employers eventually contributing at least 3% of qualifying earnings by October 2017.

Eligibility

To be eligible for enrolment, staff must work in the UK, be at least 22 and under state pension age and not already be in a suitable pension scheme. They will have to earn at least £7,475 a year, which will be the threshold for paying income tax from April 2011.

Transferable and may be used by multiple-employers

Friendly, approachable, reliable professionals

The advantage of NEST is that it can travel with a person from job to job, with more than one employer being able to contribute to a member’s retirement savings pot at the same time.

If you are an employer or considering employing someone, then George Hay can advise on a wide range of pension and tax issues to help ensure you are fully prepared for the changes.