Businesses urged not to be complacement over accelerated payment notices

October 2, 2015 Posted by Wellden User

Businesses are being urged not to be complacent if they receive Accelerated Payment Notices (APNs), after new figures reveal that the government has collected more than £1 billion through their use.

HM Revenue & Customs (HMRC) recently announced that it has collected more than a billion pound using APNs, since it was granted the new powers in 2014/15.

Under the accelerated payment rules, HMRC is able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling.

Once an APN is received taxpayers have 90 days to pay the outstanding tax, whether they feel it is due or not or face additional penalties. If the taxpayer wins the case the money is reimbursed to them with interest.

During the first year HMRC issued more than 10,000 notices to businesses or individuals who had used a disclosable scheme under the Disclosure of Tax Avoidance Schemes (DOTAS) rules.

Andrew Brown, Associate Director said: “Receiving an APN should not be taken lightly, as it can have a serious effect on the liquidity and reputation of you and your business.

“The fact that HMRC have collected more than £1 billion, shows that they are serious when it comes to potential tax avoidance.”

Earlier this year, it was revealed in HMRC’s annual report on tax avoidance, that of the £596m received from APNs during 2014/15, some £28m was refunded after legal challenges.

“While many of those targeted by these new powers may have legitimately avoided paying tax, there will be some individuals and business who have been unfairly targeted and this is evident in the number of refunds already issued by HMRC,” added Andrew. “Seeking professional advice sooner rather than later is critical.”

If you’ve had an issue with HMRC or are currently facing a tax investigation, our tax investigation accountants are here to provide confidential help and expert advice. Contact us today to ensure you receive the right guidance and support.

UK’s smallest employees need to embrace auto-enrolment

September 24, 2015 Posted by Wellden User

A recent survey comissioned by the Chartered Institute of Payroll Professionals has found that more than a third of workers reaching the end of their working lives are not planning financially for their retirement.

At a time when auto-enrolment is very much at the forefront of SME owners’ minds, 36 per cent of individuals aged 51-60 admitted to having no pension provision. Meanwhile, two-thirds of 20-24 year-olds surveyed also confessed to having no pension plans, with 30 per cent of all survey respondents fearing that their final pension pot is unlikely to be enough to live on when they do come to retire.

Jane Watford, Payroll Manger said: “I would hope that most people are thinking about their future, but these results show that a great many towards the end of their working lives are not planning for their retirement.

“This should act as a wake-up call for SMEs to look at their automatic enrolment staging date and evaluate the role that payroll plays within their organisations. Auto-enrolment is here to stay and will not go away by ignoring it.

“Small employers should therefore be embracing auto-enrolment and promoting the virtues of it to their staff. After all, the survey revealed that 55 per cent of employees feel saving for the future through payroll is a good idea.”

If you’re confused about what the changes to The Pensions Regulator laws mean for your business, and you require assistance setting-up your automatic enrolment scheme, then please email our Payroll Manager, Jane Watford.

Should you require confidential advice on planning for your retirement, then we are also on-hand to help, so feel free to contact us today.

New EU court ruling could have significant impact on businesses

September 18, 2015 Posted by Wellden User

A new European court ruling has clarified that travelling time to and from work could itself be classed as work.

In a landmark ruling, the European Court of Justice has said that time spent to and from first and last appointments by workers without a fixed office should be regarded as working time and that wages should be paid in relation to this.

Within most businesses this time has not previously been considered as work and it means that firms operating without a fixed office may be in breach of EU working time regulations.

Failing to meet these regulations could see an employer brought before the Health and Safety Executive in the UK, which could lead to improvement notices being issued. Subsequent failure to comply can lead to unlimited fines and imprisonment.

Simon Odam, Director, said: “This new ruling represents a significant change to the current Working Time Regulations and could have a number of implications on a business, ranging from additional wage costs for travelling time to fines or even imprisonment for those who fail to meet its requirements.

“While some business owners may not be happy with this new measure it is important that they comply with it, or face the prospect of an investigation that could have a significant effect on them and their business.”

Simon went on to explain “this new ruling is most likely to affect care businesses, sales representatives and tradesmen who begin and end their working day at home.

Therefore, if you’re starting a new business, or you’re already a business owner, then speaking to a professional about your responsibilities as an employer in regards to the Working Time Regulations could save you a lot of problems further down the line.”

For further information on on your responsibilites as an employer contact us today.

Top Tips for Starting a Business: How to link your Personal goals with your Business Plan

September 16, 2015 Posted by Wellden User

It often amazes me how many Small and Medium Size Enterprises (SME’s) there are in the UK that do not have a Business Plan. According to even the most conservative of estimates, over one million MD/Business Owners don’t have a plan for their business. Are you one of them?

This raises numerous questions…

How can success be gauged accurately? How do you know what direction your business should be heading in without a plan? How can you plan for contingencies if you don’t have a plan in the first place? Let alone not being able to measure your businesses progress on a regular basis.

I think there is another reason that SME owners of small medium do not have clearly thought out business plan. It’s a lack of vision, or perhaps the loss of passion that was there when they started the business originally. Surely your business venture should be the vehicle by which you, the business owner, can achieve your personal goals, thus creating a better life for yourself and those dearest to you?

However too many of the classic business plan templates (usually handed out by banks) fail to link the aspirations of the person running the business, with the objectives of the enterprise concerned. How can the owner of a business be fully engaged with the targets of the business if there is not a direct link to the personal goals that are most important to the business owner? This disconnect is a fundamental flaw in the majority of SME Business Plans as there is often little emotional engagement with the cold hard business goals.

Here’s how to address this issue…

Whether you are starting a business, or planning ahead for your existing business, before putting ‘pen to paper’, ignore the goals of the business (for the moment at least). Your first points of reference for the business plan are your own personal goals and objectives. Time needs to be spent working out exactly what you wish to achieve in the most important areas of your life over a given time period.

These personal goals should be written down, stated in positive language and follow a model like S.M.A.R.T (Specific, Measurable, Agreed, Realistic and Timed) or something similar. There are more detailed goal setting tools, but this method is a start. Once your personal goals are clear, and written down, only then should the Business Plan be drafted.

The key is to ensure that each personal goal has a corresponding goal in the business plan. Personal and business financial goals are easy to link together and therefore easy to measure. For other personal goals you may find it more difficult to make a direct connection between these and business targets. However if you spend time giving these more thought, then a bridge can be built between what you which to achieve in your personal life with the goals you want your business to achieve.

Here’s an example…..

MD/Owners often work long hours, therefore not having enough time for their personal life. I have lost count of the number of business owners who simply don’t get the opportunity of spending more time with their loved ones. When they do manage to spend valuable time with the family it is often interrupted by business communications via the latest mobile device.

One of your personal goals could therefore be to spend five more hours per week with your family and friends, without interruptions from the business. To free up this time, certain business tasks may have to be delegated. The easiest way would be for you, the business owner, to write out simple easy to follows processes for tasks that only you carry out. The business goal in the business plan would therefore be to ensure that written processes are in place to enable you the business owner to delegate. This in turn frees up more time for you to work ‘on the business, not in it’ and to spend more of your time away from the business.

On other words Personal Goal = More time with the family = Business Goal – write down processes to enable me to delegate tasks

In summary, if you don’t have a business plan then write one, but only if it has a direct links to those goals you wish to achieve in your personal life.

For advice on how to manage your business more efficently and effectively, plesase contact us today.

The future of the Annual Investment Allowance

September 11, 2015 Posted by Wellden User

The Annual Investment Allowance (AIA) provides an immediate deduction to many business for the cost of most plant and machinery (not cars) purchased by a business up to an annual limit.

The maximum annual amount of the AIA was increased to £500,000 from 1 April 2014 for companies or 6 April 2014 for unincorporated businesses until 31 December 2015. George Osborne has now told us in the Summer Budget what the ‘permanent’ amount will be from 1 January 2016. It is £200,000.

What have also been confirmed are the transitional provisions to calculate the amount of AIA in an accounting period which straddles the date of change.

Two calculations need to be made:

1. A calculation which sets the maximum AIA available to a business in an accounting period which straddles 1 January 2016.
2. A further calculation which limits the maximum AIA relief that will be available for expenditure incurred from 1 January 2016 to the end of that accounting period.

It is the second figure that can catch a business out. For a company with a 31 March year end, under calculation 1 the company will be entitled to up to £425,000 of AIA (9/12 x £500,000 + 3/12 x £200,000).

However for expenditure incurred on or after 1 January to 31 March 2016 the maximum amount of relief will only be £50,000 (3/12 x £200,000).

So check with us what will be the tax efficient capital expenditure limits between 1 January 2016 and the end of the accounting period for your business.

We can also provide expert tax planning advice on capital gains tax, corporate tax, and VAT. Contact us today to make a confidential appointment to discuss your corporate finance needs.

Want to avoid the settlements trap?!

September 11, 2015 Posted by Wellden User

Owner-managed companies often seek to minimise the tax position of shareholder-directors by involving members of the same family and utilising personal tax planning strategies and lower rate tax bands of each person. Income is therefore diverted from the higher rate taxpayer. However, anti-avoidance rules need to be considered as to whether a diversion is effective. This is particularly relevant for spouse scenarios such as husband and wife.

Where it is considered that arrangements have been made by one spouse which contain a gift element, often referred to as ‘an element of bounty’ then the ‘settlements’ rules may apply. A key purpose of these rules is to ensure that income alone or a right to income is not diverted from one spouse to the other. Genuine outright gifts of capital or a capital asset from which income then wholly belongs to the other spouse are not caught by the rules because of a specific exemption from the settlement rules.

Family company shares and the dividend income derived therefrom have frequently been the subject of challenge from HMRC on this matter. An example of a structure which will be challenged is the issue of a separate class of shares with very restricted rights to a spouse, with the other spouse owning the voting ordinary shares. An area of potential risk is the recurrent use of dividend waivers particularly where the level of profits is insufficient to pay a dividend to one spouse without the other waiving dividends. In a recent tax tribunal case dividend waivers executed by two appellant husbands in favour of their spouses constituted a settlement for income tax purposes. The dividends therefore became taxable on the husbands.

The basic facts were that two directors of a company each owned 40% of the shares in the company. Their wives each owned 10% of the shares. However equal dividends were paid to each of the shareholders by the two directors waiving part of their entitlements to dividends and thus allowing larger dividends to be paid to the wives. This had been done for a number of years from 2001 to 2010.

The arguments…

HMRC argued that the taxpayers had waived entitlement to dividends as part of a plan which constituted an arrangement with an intention to avoid tax by seeking equalisation of their dividend income. The appellants’ arguments included the contention that the waivers had been executed to maintain the company’s reserves and cash balances in order to accumulate sufficient of each to fund the purchase of the company’s own freehold property.

The Tribunal preferred the submissions of HMRC that had this been the case the aim could have been achieved by other means, such as voting a lower dividend per share. The Tribunal determined that the waivers would not have been made if the other shareholders were a third party and therefore there was ‘an element of bounty’ sufficient to create a settlement.

While personal tax planning remains an important tool for mitigating tax liabilities, it is essential to navigate anti-avoidance rules carefully to avoid potential pitfalls. If you would like to review your current tax position and ensure compliance with HMRC regulations, please do not hesitate to contact us.

Growth top of the agenda for SMEs

September 8, 2015 Posted by Wellden User

According to research from Close Brothers Asset Finance, growing a business is top of the agenda for 34 per cent of SMEs.

The quarterly survey of UK SME owners and senior management from a range of sectors also revealed that more than half of firms have already experienced growth in the last 12 months, while a further 37 per cent expect their business to expand during the next year.

The results also highlighted that a significant number of firms are planning to recruit, with 43 per cent hoping to take on new staff within the next year.

Simon added: “Naturally, firms need to expand their team as they grow organically but the challenge often lies in how they manage this growth. It’s important that firms seek professional advice to help with obtaining funding.

“I would urge any business owners looking at expanding to ensure that they assess their plans and evaluate all of the financial options available to help them find an appropriate solution to fit their needs. At Wellden Turnbull my team and I can assist with a range of issues affecting SMEs and we can also handle the payroll. This allows SME owners to get back to doing what they do best; running their business and growing their enterprise.”

If you would like more information and advice about how to grow your business, please contact us today.

Growing opportunities for SMEs to secure public sector contracts

September 3, 2015 Posted by Wellden User

The Government has announced that it is aiming to increase its spending with small and medium-size enterprises (SMEs) to a third by 2020, and we are encouraging all our businesses clients to get involved.

The most recent public expenditure figures show that from 2013 to 2014, the government spent £11.4 billion of its budget with SMEs – equivalent to 26 per cent of its total spend during that period.

This taken into context with its new target of 33 per cent by 2020 would mean that an extra £3 billion per year will be spent with SMEs, either directly or through the supply chain.

Invoice financing for SMEs

August 24, 2015 Posted by Wellden User

There has been a lot of publicity recently on the availability of finance for small to medium sized enterprises (SMEs), particularly focusing on traditional bank loans or equity investments.

However, there are other forms of business funding which should also be considered as an alternative source of money for firms.

Invoice finance is a solution that is being increasingly used by companies to deal with late payments whilst also improving cashflow. This is where a finance provider pays an agreed proportion (usually 80-85 per cent) of approved invoices to the company on receipt of a copy of the invoice. The balance (minus a small charge) is paid upon client payment.

Andrew Brown, Associate Director said: “With the economy growing, there has been a surge in demand for working capital in the SME sector that has created lots of opportunities for more invoice financing. Despite this, its current use is relatively low compared to ‘traditional’ sources of lending. In fact, only around 43,000 SMEs out of a total of nearly five million in the UK are currently using invoice finance.

“Whilst invoice financing is available from the banks and independent providers, one of the major problems is that there is a general lack of awareness by SMEs of the advantages of utilising this source of funding.”

For more information on what finance options are available for your business, please contact us today.

Businesses need to prepare for changes to company law

August 21, 2015 Posted by Wellden User

New changes to company legislation have recently been announced, which will require businesses to register individuals with ‘significant control’ over the company.

Under proposals, laid down in the Small Business, Enterprise and Employment Act 2015, all businesses that are not subject to specified separate disclosure requirements must create and maintain a register containing details of any person with ‘significant control’.

A person with significant control is loosely defined as a person who directly or indirectly holds more than 25 per cent of the shares or voting rights in the company.

It also includes any person who directly or indirectly has the power to appoint or remove the majority of the board of directors of the company or otherwise has the right to exercise or actually exercises ‘significant influence’ or ‘control’ over the company.

Any person who has the right to exercise or actually exercises significant influence or control over a trust or firm (such as a partnership) that is not a legal entity, which in turn satisfies any of the first four conditions over the company, is also considered a person with significant control under the legislation.

The new Person with Significant Control (PSC) Register must be available for inspection and up to date information must also be provided to Companies House at least once per year.

For confidential advice on managing your business, please contact us today.

A growing number of SME’s to be affected by Auto-Enrolment

August 10, 2015 Posted by Wellden User

Recent data from The Pensions Regulator has revealed that approximately half a million more businesses will have to enrol than previously anticipated and will face higher employment bills as they set-up their pensions.

Apparently, around 1.8m small and micro employers will need to meet their pension duties over the next three years, compared to the previous estimate of 1.3m. Under the new regulations, employers must contribute at least one per cent of eligible employees’ qualifying earnings, rising to two per cent in October 2017 and then three per cent a year after that. However, these contributions are not subject to National Insurance (NI) and they can be offset against business profits for tax purposes.

In addition to the employer’s contribution employee’s will also be required to make contributions which many employee’s see as an extra deduction being made by their employer and it is essential that businesses communicate clearly and at an early stage with their employees to avoid any negative feelings.

But as well as the financial implications this will have for SMEs, businesses could be hit with further costs if they fail to comply with their duties as an employer. If a scheme has not been established by its staging date, the cost could escalate, with fixed penalty fines ranging from £50 to £2,500 a day.

Jane Watford, Payroll Manager said: “It is important to remember that the contributions must be paid into your scheme at each pay reference date. I would therefore advise SME owners to calculate how much they are likely to have to pay in contributions at each date, and set their budget accordingly.

“We can help by providing payroll services as well as sound financial advice for SMEs. Receiving help can reduce the cost of auto-enrolment for your business by ensuring that you’re compliant and avoid financial penalties,” concluded Jane.

Owners of personal service companies could face stricter tax rules

August 7, 2015 Posted by Wellden User

Individuals who run a personal service company (PSC) could face higher tax bills in the future as HM Revenues & Customs (HMRC) looks to re-evaluate its tax rules.

The HMRC have put forward a proposal to amend Intermediaries Legislation, which could have a serious effect on freelancers. The legislation – often referred to as IR35 – was introduced in 2000 and aims to tackle ‘disguised employment’.

It requires individuals working through an intermediary to pay broadly the same tax and National Insurance Contributions as any other employee, where they would have been providing the same services directly. This mainly refers to personal service companies, which are enterprises where people provide their services usually through their own company.

In HMRC’s latest discussion document they say there is a “growing body of evidence which suggests there is significant non-compliance with the current rules.”

They point to the fact that the number of those paying tax under IR35 has remained fairly static, while the number of PSCs has increased dramatically from 200,000 PSCs in 2011-12 to 265,000 in 2012/13 – a number that is expected to continue to grow.

HMRC officials estimate that during 2015, the cost of non-compliance regarding IR35 will total a staggering £430m.