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This week's round up of accountancy and business news – Budget Special

The Chancellor, George Osborne, outlined his budget as one which “encourages enterprise” and “supports exports, manufacturing and investment” with the aim of “reforming the nation’s economy, so that we have enduring growth and jobs in the future”. 

 

The changes introduced in the budget will affect individuals and businesses according to their particular circumstances and as with any budget it is worth reviewing these changes with your accountant.  Aside from changes in rates such as personal allowances the key measures within the budget are set out below.

 

Individuals

• Mileage allowances for employees  - to be increased from 40p per mile to 45p per mile
• Fuel – duty falling immediately by 1p with the rise due in April being postponed for 1 year
• Non-domiciled tax – Charge to be raised for those living in the country more than 12 years.  Tax removed when monies are remitted to the UK for investing within a UK company
• Inheritance tax – those leaving 10% or more to charity will have 10% taken off the inheritance tax rate

 

Businesses

• Corporation tax – The rate of corporation tax was due to fall by 1% in April.  A reduction of 2% will now apply with further annual reductions of 1% for the following 3 years
• Business Rates – the small business rate relief scheme is to be extended to October 2012
• Business start ups and those employing less than 10 people – will be exempt from new domestic regulations for 3 years
• Enterprise Investment Scheme – business tax relief to increase from 20% to 30% with entrepreneurs’ relief increasing to £10million.
• Small company research & development tax credit – rises to 200% in April and to 225% in 2012
• Short Life assets – Time limit on capital allowances being doubled to 8 years
• Enterprise Zones – Among 21 new zones across the country, one is to be created in London bringing business rate discounts, superfast broadband and simpler planning.
• VAT – threshold increased to £73,000

 

Tax Simplification

• Tax & NI – a review is to take place with a view to combining these regimes at some stage in the future
• IR35  - to be retained
• Tax reliefs – 43 tax reliefs to be abolished

 

This week's round up of accountancy and business news

What might the Budget have in store?

With the Budget next Wednesday here is one set of predictions on how individuals and business may be affected.

http://www.citywire.co.uk/money/budget-2011-what-to-expect/a478981

 

Meanwhile George Osborne rules out further tax increases or spending cuts

George Osborne has signalled that the Budget will be looking to move on towards economic recovery.

http://www.telegraph.co.uk/news/politics/8394109/George-Osborne-rules-out-cuts-and-tax-rises-in-the-budget.html

 

 Fraudulent expense claims cost UK over £1.3bn

A report by GlobalExpense has revealed that fraudulent expense claims cost UK companies over £1.3bn in 2010.  With employees making an average of 33 claims each the largest total for a single employee amounted to £333,000.

http://www.contractoraccountants.com/2011/03/17/fiddled-expenses-cost-the-uk-more-than-1-3bn-in-2010/

 

EU ruling on hot takeaway food may have implications for UK

An EU ruling on whether food sold for immediate consumption is classes as catering services or supply of service may have an implication for pubs and other venues which sell take away food.  HMRC has indicated not but some experts are suggesting food outlets review their VAT position.

http://www.morningadvertiser.co.uk/news.ma/article/90070

 

HMRC guidance for SME record keeping

This article summarises the importance of record keeping alongside some handy links to further guidance on the HMRC and Business Link sites.

http://www.taxationweb.co.uk/tax-articles/business-tax/small-business-keeping-proper-records.html

 

HMRC FAS bank account changes

HMRC opened a new bank account for its Flexible Accounting System payments in March 2009.  The old one is due to be closed at the end of this month and HMRC warns those using FAS to ensure they are making payments to the new account.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_PROD1_031139

 

HMRC admits customer service may remain poor for next 2 years

The head of HMRC has admitted to the Treasury Select committee that customer service has suffered and may continue to do so until a backlog of cases is complete.

http://www.accountancyage.com/aa/news/2034763/revenue-2013-chair

This week's round up of accountancy and business news

Office of Tax Simplification (OTS) outlines proposals

The Office of Tax Simplification has outlined its initial proposals including a merging of tax and NI systems, a review of IR35 and simplified procedures for small business.

http://www.tax-news.com/news/UK_Tax_Panel_For_Radical_Small_Business_Reforms____48203.html 

 

Missing petrol receipts leads to un-reclaimed VAT

A survey by Global Expense revealed that with 41% of mileage claims missing a valid VAT receipt, businesses were unable to reclaim more than £124m in VAT last year.

http://www.accountancyage.com/aa/news/2033426/businesses-fail-recover-gbp100m-vat

 

New tax year brings 45 tax and benefit changes

Over 29 million workers will be affected by the changes in tax and benefit coming in on 6 April with an average loss to families of £200 per year.

http://www.bbc.co.uk/news/business-12714407 

 

Millions face poverty in retirement

According to a Chatham House think tank millions of Britons face a severe drop in standard of living when they retire.

http://www.totallymoney.com/news/index.php/2011/03/squeezed-middle-face-retiring-in-poverty/ 

Drivers of large company cars face tax increase

From April the maximum list price for company cars, currently £80,000 will be abolished.  This will lead to a tax increase for those driving company supercars.

http://www.contractoraccountants.com/2011/03/14/drivers-of-supercars-set-to-pay-more-income-tax/ 

 

Base rate held at 0.5%

The Bank of England’s Monetary Policy Committee voted to hold base rate at 0.5%.  However, the majority experts are still predicting a rise shortly with May being the favourite.

http://www.moneysavingexpert.com/news/banking/2011/03/interest-rates-march-2011

 

The importance of good bookkeeping in business

The announcement in January by HMRC that they intended to crack down on poor record keeping by SMEs was a wake up call to all businesses.  The original proposal, which went out to consultation, involved the proposed investigation of up to 50,000 SMEs each year. 

 

The consultation period finished on 23 February and we are still waiting for the final scheme details.  However, many industry bodies have condemned the proposals.  The Institute of Chartered Accountants of Scotland has calculated that the cost to an SME of a half day review will be in the region of £560, far more than the £54 envisaged by HMRC. In addition, whilst a sample check by HMRC revealed poor record keeping in around 40% of cases, experts disagree with the revenue assumption that in many cases the poor record keeping was either deliberate or would lead to underpayment of tax.

 

With potential fines of £3,000 for poor record keeping, businesses are urged to tighten up on record keeping as a way of pre-empting the Revenue.  The best way of doing this is to employ the services of a good bookkeeper or at the very least a good bookkeeping programme. 

 

When deciding what sort of bookkeeping system to set up, the first port of call should be your accountant.  It is in their interest to help you to set up a system that is right for your business, particularly as this will help them to prepare your end of year accounts speedily and without error.  You may well find that your accountant includes bookkeeping or offers free bookkeeping software as part of their standard package.  Alternatively, they might offer a part time bookkeeping service or be able to recommend a bookkeeper for you.

 

Bookkeeping is not just about avoiding potential HMRC fines.  Keeping up to date with receipts and payments will help you to stay on top of your businesses finances.  VAT returns will be more accurate and by using appropriate accounting software can often be produced automatically at the touch of a button.  In addition, by keeping on top of finances you will be able to quickly spot outstanding invoices and chase slow payers before they get away.

 

Improving record keeping also means keeping track of paperwork.  Your accountant will be able to work with you to help to set up systems for dealing with paperwork and information.  You may well find that by reviewing your procedures you can not only improve record filing but also simplify processes and save costs.  Companies such as keebo.com and receipt-bank.com  offer service that will take away the meticulous job of processing and keeping track of receipts and invoices by scanning, sorting and making it available electronically.

 

Whilst the crackdown on poor paperwork by HMRC is driven by their desire to collect all taxes owed they may in the long run be doing SMEs a great favour.  With better record keeping leading to greater business efficiency businesses will be more on top of their finances.  This in turn can lead to a reduced need for reliance on borrowing as well as a reduction in charges from accountants at the end of the financial year.  Leaner and fitter businesses which are on top of their records and finances will be the winners and well set for taking every advantage of the upturn in the economy.

This week's round up of accountancy and business news

Electronic P60s now allowed

Changes to the PAYE regulations meant that employers can now offer e-mailed or on line access to P60s rather than having to issue them in paper form.

http://www.accountingweb.co.uk/topic/tax/electronic-p60s-arrive/482955

 

Business Secretary pledges to remove audit requirements from 42,000 businesses

Vince Cable has pledged to remove the audit requirement from some businesses as well as review the requirements for companies house postings.

http://www.accountancyage.com/aa/news/2031499/firms-auditors-cable

 

Taxman changing stance on debtors

Evidence is emerging that HMRC are changing their stance on debtors in a bid to collect more back taxes.  This includes a stricter approach to company voluntary arrangements and time to pay agreements.

http://www.businesszone.co.uk/topic/finances/taxman-getting-tougher-debtors-experts-warn/33575

 

European ruling on gender based insurance

The ruling by the European court of Justice that gender cannot be taken into account when calculating premiums will mean a change in rates particularly for motor insurance and annuities.

http://www.citywire.co.uk/money/european-gender-ruling-what-it-means-to-you/a475117?

 

HMRC offer plumbers an amnesty

HMRC have given plumbers until the 31 May to sign up for the plumbers’ tax safe plan.  This allows plumbers to notify the revenue of previously undeclared income and make a fresh start.

http://www.hmrc.gov.uk/trades-disclosure/index.htm

 

Pensions’ minister admits millions don’t understand pension rules

With multiple changes affecting pensions this year the Pensions’ minister admits that many people don’t understand how pensions work or what they should save for their pensions.

http://www.moneysavingexpert.com/news/banking/2011/03/minister-admits-millions-dont-have-a-clue-about-pensions

 

Prime Minister attacks own officials for loading costs on to business

As part of the pre-Budget teaser speeches, David Cameron has vowed to make the forthcoming budget pro-growth and to cut down on red tape which is stifling SMEs.

http://www.thisismoney.co.uk/news/article.html?in_article_id=524702&in_page_id=2

The Advertising Standards Authority starts monitoring Twitter -- how NOT to get caught out

It seems everyone has jumped into the social media bandwagon, including accountants. Be aware the big brother has started watching. Ian Hendry from wecando.biz has got some tips how not to break the rules of advertising.

 

Posted by Ian Hendry in WeCanDo.Biz Blog

Back in September 2010 we wrote about how the UK's ASA remit would include ensuring fair advertising, promotion and marketing on social networks.  That day is upon us...

As of 1 March, all advertising and marketing material posted by businesses on social networks like Facebook and Twitter is now regulated by the UK's Advertising Standards Authority.  The aim is to ensure that simple, often informal Tweets and status updates are now as honest and accurate as messages companies use in printed advertising.

We reported on this back in September 2010, when we questioned how easy it would be to actually control the content of Tweets.  Well, it seems the ASA hasn't been put off by the practicalities and will be monitoring social networks closely.  Any companies breaching its rules could face having their Facebook or Twitter accounts suspended or their content being removed from search engines.

Here's some guidelines to stop you falling foul of the ASA's Code of Non-Broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code)... Continue reading...

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