Posts tagged ‘Gov Uk’

What’s happening?

The laws governing pensions provided to staff by employers are changing so that all employees will be enrolled in the pension scheme unless employees specifically opt out of it, compared to the current situation where all employees are offered the pension scheme but must apply to join it. This new regime is called “auto enrolment”.

What effect will it have on my organisation?

If a significant majority of your staff are already members of the staff pension scheme, then the change will make very little change other than to change the induction process for new employees. However for many organisations where staff have traditionally not joined the pension scheme, especially if this is through apathy rather than through a clear decision not to join, then this change could increase your staff costs in line with the employer contribution to the scheme – which for employers operating a final salary scheme could be as much as 20%.

When does it happen?

j0434804For the country’s largest employers the change has already taken place. The change is being rolled out, starting with the largest employers, over the next five years.

Your staging date will depend upon the number of employees registered for PAYE purposes and the PAYE reference code you use for paying over tax and national Insurance. For employers with fewer than 50 employees the roll-out starts in two years’ time.

What do I need to do?

First, you need to make sure that your staff pension scheme qualifies for registration for auto-enrolment. Most schemes that are open to all members will, and there is a tool available on the Pensions Regulator’s website, www.thepensionsregulator.gov.uk, which will help you.

Secondly, you need to look at what it would cost if everyone that is entitled were a member of the pension scheme, and then compare that with what you are paying now. This will give you a view of the potential extra cost the organisation will have to take on after auto-enrolment. Consider this in the context of your business. You may decide that it’s not a significant increase, in which case all you have to do is change your process for induction of new staff, and start talking to your existing staff about the change.

The next thing you need to think about is how many of your staff are likely to opt out of the scheme. Remember that you are not permitted by law to encourage employees to opt out in any way, so people have to make an effort to opt out – they need to make an application. However some employees may choose to opt out. Finding out by consulting your staff may be difficult without giving the impression of encouraging staff to opt out, so be careful.

However you may feel that this is an unacceptable increase in costs. In which case you need to plan very carefully what you do next, and you will probably need some specialist advice. See the next section for more details.

The next thing you need to do is to work out when you will need to make the change. This is called the staging date. There is guidance on this on the Pensions Regulator website.

Once you know what your staging date is, you can then start to plan the implementation. You will need to

  • Decide whether you want to continue with your existing pension, or change to a new one with revised terms;
  • Plan how you are going to tell your staff about the change. You will need to allow at least three months for consultation, especially if you plan to change your scheme;
  • Prepare changes to your induction process for new employees, so that they are told about the pension arrangements when they join, and contributions are deducted from their pay and paid to your pension provider from the start of their employment;
  • Set a process for those who wish to opt out of the pension scheme (it is good practice for this to be administered by the pension provider, so that there is no grounds for claiming that the employer encouraged staff to opt out);
  • Appoint a point of contact which must be notified to the Pensions regulator;
  • Start automatically enrolling staff into the scheme from the staging date and paying contributions over to the pension provider;
  • Register the pension scheme with the Pensions Regulator.

Changing your pension scheme

You may decide that your current pension scheme is not suitable for auto-enrolment. This might be because

  • Employer contributions are too high and you as an employer cannot afford to pay contributions for all staff;
  • Employee contributions are too high and few staff will be able to afford it; or
  • The scheme does not qualify for auto-enrolment.

When you have decided this you will need to take advice from an expert pensions adviser. You will need to aim for a pension scheme which will

  • Be affordable to you as an employer;
  • Be affordable to your staff; and
  • Meet the pensions Regulator’s conditions for auto-enrolment.

So it’s probably a good idea if you have a clear view of what you would consider to be affordable to both employer and employee before you talk to the experts. Remember that in order to be acceptable to the Regulator there will need to be minimum employer contributions of 3%, and minimum total contributions of 8%.

Next, you will need to think about what you want to offer to those already in the existing scheme. You will need to think about the impact both on existing staff, on those not currently in the pension scheme, and on new staff. Options would include:

  • Closing the scheme to all further contributions, and auto-enrolling members into the new scheme;
  • Closing the existing scheme to new members, allowing those already in the scheme to continue to contribute in the scheme, and auto-enrolling all other existing staff into the new scheme.

Either way, you’ll need to consult your staff and take their views into consideration when you make your decision. You need to allow at least three months for this process.

Conclusion

The arrangements around auto-enrolment are complicated. It’s important to make sure you understand the implications for your business, cost out the options, and leave yourself enough time to make alternative arrangements if necessary. This could involve extensive consultations with your employees or their representatives. So it’s worth starting your planning now to allow enough time to make a well-considered choice.

Need help?

Clover 1062The author of this post is an experienced Finance Director and Consultant and can help you to

  • Identify your Staging Date
  • Establish whether your current pension arrangements will meet the criteria of the Pensions Regulator after your staging date
  • Project the annual cost
  • Cost out some alternatives
  • Explain pensions to your staff

Melanie Digney at Tailored HR Limited is an HR professional who can help you

  • Explain and communicate the pension scheme’s details to all your staff
  • Consult with your employees about pension arrangements or arrange individual staff meetings with the scheme provider at your office to set up the scheme.
  • Put arrangements in place for employees who wish to opt out
  • Change your induction processes to reflect auto-enrolment
  • Provide advice on Employment Law

Antony Moyes of Moyes Financial Planning Limited is an Independent Financial Adviser authorised by the FCA to advise on pensions. He can

  • Help you select a pension plan
  • Advise your employees on investment options within the plan
  • Establish whether your current pension arrangements will meet the criteria of the Pensions Regulator after your staging date
  • Explain pensions to your staff
  • Register your pension scheme with the Pensions Regulator

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.

During his first budget speech in the Summer the current chancellor announced that the standard rate of VAT would be increased from 17.5% to 20% on 4th January 2011, the third rate change in two years. 

If you are using the flat rate scheme, this change will affect you too.  Be sure to check your new rate on the HMRC website.

Administrative Burden

For business that supply goods and services to other VAT registered businesses, the burden will be one of administration.

  • The default rates in bookkeeping systems such as SAGE need to be altered – ask for help
  • Business owners and bookeepers need to be clear about the tax point being used – the time of supply is important.
  • If you are using the Cash Accounting Scheme it is imperative that you can identify payments received on or after 4th January 2011 that relate to supplies made prior to that date, to be able to account for them at 17.5%
  • Make sure your book keeping is as up to date as possible, confusion surrounding work/supplies that span the VAT change are likely to be exacerbated if you are behind with your paperwork.
  • If you display prices inclusive of VAT you will need to be prepared to change literature/brochures/websites etc.

Financial Burden

But for business such as tradesmen and retailers that supply goods and services to non-VAT registered consumers, there are additional considerations as the change may have a significant financial impact.


  • How price sensitive are your customers?  Will they find a cheaper alternative or simply stop purchasing your offerings if you add another 2.5% to your prices?
  • If you don’t increase your prices, can your business afford the reduced margins?  If you don’t increase them now, when?
  • Speak to your customers, they may be willing to pay a deposit in advance of receiving your goods and services to take advantage of the current VAT rate. (For full details on whether this ruling can apply to your business click here )
  • Ensure you have procedure in place that will allow you to measure the amount of work carried out up to the date of the VAT rate change, such as detailed timesheets, as you are entitled to split your invoice.  i.e. work performed in 2010 charged at 17.5% plus work carried out in 2011 at 20%.

Effect on Economy

The Chartered Institute of Personnel and Development has predicted that the VAT rate increase will result in the loss of an estimated 200,000 UK jobs.

The effect on an already under pressure retail sector is going to be huge, I don’t think anyone dare to hazard a guess at how huge.


We have been fortunate enough to benefit from one of the lowest rates of VAT in Europe for many, many years, but will this increase really have a significant effect on our huge deficits?  I am not convinced.


For guidance on how to implement the change and minimise the impact on your business, please get in touch.

Another easy to read article about the VAT increase and price sensitivity : What’s a small business to do?  

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.

How good are your I.T. skills?

If you have not yet completed your Tax Return for the year ended 5 April 2010 they may need to be fairly good as HM Revenue and Customs  are encouraging taxpayers to file online.  If you continue to use paper Returns, the usual 31 January timeline is substantially reduced to 31 October 2010.

Not filed your Tax Return online before?


If you have not filed Tax Returns online in previous years, you will need to register with HM Revenue and Customs beforehand.  As this will take at least a week to process immediate action is required to meet the fast approaching deadline.

You will need to visit the website of HM Revenue and Customs on www.hmrc.gov.uk and select ‘Self assessment’ from ‘Do it online’. This will guide you through the process of creating a user name and password.

You will also need to have some personal details, including your Unique Tax Reference and National Insurance number or Post Code to hand.

Once you have done this you will be sent a personal activation Pin through the post, from the Government Gateway. With this you should be able to complete the registration process and to be able to file the Return online.

Need assistance?

Most people find the filing process relatively straightforward and there is help available on the website itself. There is also an online demonstrator showing how the service works and provides various specific examples. To see this go to www.hmrc.gov.uk/demo

Watch out: Not everyone is able to file online…

It must be pointed out that there are a few people who will not be able to use the online service due to some of the supplementary pages not being available on the internet site and, of course, if you do not have access to the internet you also have the problem of what you should do. The only answer is to contact ourselves as soon as possible and we will do our best to submit your Return in time.

Time

As emphasised above, for everyone who still has a Tax Return outstanding, the problem is time.  Can you do everything in time and stay focused on your business?

Why not contact George Hay Chartered Accountants for peace of mind?


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 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.

In the past few days, with the complete mayhem caused by HMRC’s PAYE coding fiasco , clients of ours have received some very strange calls apparently from HMRC asking for payroll references and other data that we know they already have on their records, so please be wary of all unsolicited emails and phonecalls purporting to be from the Tax Office.

Too good to be true

Of course, no one wants to pay more tax than they should, so being told you are due a refund will come as good news.

In some cases, it may seem too good to be true – and that’s because it is.

If you receive a telephone call or an email from someone at HM Revenue & Customs  (HMRC) informing you of a tax refund then the person on the other end of the line is not the taxman but a criminal “phishing” for your bank account details.

HMRC has reported an alarming increase in the number of people being targeted in this way, with a record 83,000 phishing attempts reported in one month alone.

Written Correspondence

In some cases, letters are sent out purporting to be from external companies acting on behalf of HMRC and beginning with a sentence such as “we have reviewed your tax return and our calculations of your last year’s accounts show a tax refund of XXXX is due”. The letter will give a specific figure which the victim is supposedly due.

Phishing  and identity fraud

The thieves ask for bank details in order to pay in the non-existent refund. However, they then use this information to try to take money from the victim’s account.

Victims not only risk having their accounts emptied, but their details could also be sold on to other criminal gangs who may target them further.

Tax office communication policy

HMRC does not contact customers who are due a tax refund by telephone or email. It always writes to them directly, without using any external companies.

Advice

Anyone who receives a telephone call from someone offering them a tax refund should not give out any information to the caller but report it to the police immediately. Likewise, they should not reply to emails but forward them on to HMRC at phishing@hmrc.gsi.gov.uk.

If you have already responded to a telephone call, email or letter and think you may have been the victim of a scam then you should contact your bank or card issuer as soon as possible.

HMRC Update – September 2010

An email from “HMRC Online Services – test@test.com’ is being issued, stating the recipient has one new alert message and should log in to their Online Account to read it.  The link in the email directs you to a fraudulent website where personal data is requested.  If you receive this notification, please forward it to phishing@hmrc.gsi.gov.uk.

Friendly, approachable, reliable professionals

At George Hay, we are experienced in all areas of taxation and can advise you on whether a genuine tax refund is due. If you are in any doubt about any communications you have received regarding a refund, please speak to us.

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 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.

This is a very short post just to let you know that the easy-to-read guidance offered by H M Revenue & Customs on the Gift Aid scheme has been updated.

If you are, or are thinking of running a gift aid scheme for your deserving cause, I highly recommend you read this http://www.hmrc.gov.uk/charities/gift_aid/basics.htm

I would particularly like to highlight the fact that the time limit for making a claim has reduced to 4 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.

When working with charities, the question I get asked the most is “is our TAR detailed enough?” as they naturally do not want to expose all, yet they appreciate that this is a key document that is clearly defined by the SORP 2005 and is crucial in demonstrating compliance with the public benefit tests (see previous blog post ‘Public benefit – your best defence…’)

To answer the question directly the report should:

  • be about 4-6 pages of A4 print, font 11 for a small to medium sized organisation
  • clearly explain how the organisation fulfils it’s objects and adheres to it’s governing document
  • use plain English and refer to the accounts to which it is attached, but not regurgitate the accounting information
  • use the prescribed format set out in the SORP.  i.e. use the 7 key headings.

For those who are not familiar with the SORP 2005, these prescribed headings are:

  1. References and administrative details of the Charity, its Trustees and advisers
  2. Structure, Governance and Management
  3. Objectives and Activities
  4. Achievements and Performance
  5. Financial Review
  6. Plans for future periods
  7. Funds held as a Custodian Trustee (if appropriate)

Model reports are available on the Charity Commission Website  http://www.charity-commission.gov.uk/

Some key points that are often missed

  • In paragraph 2 explain how trustees are recruited and outline the policies for induction/training of trustees.  Mapping the skills of the board and recruiting to fill skills gaps is a sign of great governance.  If your organisation has carried out this exercise, brag!
  • When explaining to the reader your objectives, paragraph 3, focus on the positive impact significant activities have had and explain how they have contributed to the achievement of the stated objectives.  If the organisation is grant making, ensure the policies are explained and if volunteers are utilised, readers need to understand their role and contribution.  If possible, quantify this in terms of hours, locations etcetera
  • bs00876aPerformance, paragraph 4, should identify milestones and KPI’s so that achievements can be benchmarked against objectives.  The public are keen to know the percentage of resources allocated to overheads, they need to understand the ROI i.e. impact per pound of funds raised.  This is obviously difficult to quantify as many of the aims are emotional, not financial, but trustees should not shy away from trying.  I have often seen larger, national charities measure their impact in terms of taxpayers money saved.
  • The financial review needs to look at each fund and state the principle financial policies adopted.  Take time to clearly explain the reserves policy in particular as the Charity Commission will be monitoring this.  Make comment on how the current years performance and the current activities effect reserves.  Also, outline any financial commitments such as borrowing or obligatory grants.

This list is not exhaustive, but I hope I have set out the key points, please call me if you would like to discuss your TAR or would like me to review your draft.  Please note however, that an auditor can not write this report for you so please don’t ask!

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.

The Charity Commissioners have been quite public about their detailed and sometime rigorous reviews of registered charities’ compliance with their public benefit tests.

The two key principles of this imperative test being:

support tree1. There must be an identifiable benefit (or benefits)

It must be clear what the benefits are, how they relate to the aims of the organisation and they bust be balanced against any detriment or harm.

2. The benefit must be to the public (or section of the public) 

The beneficiaries must be appropriate to the aims.  If a section of the public is the target, the opportunity to benefit must not be unreasonably restricted by geography or ability to afford fees etc.  People in poverty specifically must not be precluded from the opportunity to benefit and any non-public benefit should be incidental.


The implications of losing charitable status are huge.  Not only would the loss affect public confidence and therefore the ability to raise funds, but H M Revenue & Customs have the right to ‘unwind’ tax exemptions claimed in the past six years which could create liabilities that would simply end the organisation’s ability to continue.

If you would like to see some of the Commission’s “Emerging Findings” reports, take a look at their website.  http://www.charity-commission.gov.uk/publicbenefit  You will notice that they seem to be targeting fee charging schools as they are suggesting that offering a few bursaries to good students that can not afford to attend, does not constitute ‘public’ and is not going far enough to remove restrictions, but all charities are susceptible to this review.

Any charity with annual income above £25,000 (effective for accounting periods commencing 1st April 2009) must attach a Trustees’ Report to their financial statements and file these with the Commission with in 10 months of the accounting year end.  For incorporated charities this is in addition to the required Directors report.

This report is in my view, the best defence against a review as it gives the Trustees the chance to explain the activities of the organisation in both financial and non-financial terms as well as stating the aims, objectives and policies of those charged with governance.  It should tell the ‘story’ of the charity for the year giving those who are not trained in business the ability to understand how the charity is performing and the impact it is having on the public.

Much of my time spent working with trustees of charities revolves around this key report, guiding and advising them on structure, essential disclosures and helping them to explain the accounts and performance of their organisation.

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.