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How did you get on with Self Assessment?
According to the Government…
This year, a record-breaking 8.48 million returns were filed online, representing 84.5% of all returns received. This meant that, of the 10.74 million tax returns due for the tax year 2012 to 2013, 93.4% met the SA deadlines for paper and online filing.
On 31 January we saw a final rush to file, with 569,847 online returns coming in on time – the highest percentage ever recorded. It shows that many of you and SA taxpayers now prefer to use our digital service, over paper.
How did you find self assessment, was it easy or nightmare?
steve@bicknells.net
CIMA MiPs have secured an exclusive partnership with Angels Den
With over 6,000 investors, Angels Den has already been successfully matching entrepreneurs and investors for the past six years. They have a great track record of successfully funding growing businesses through their unique SpeedFunding and Angel Club events and now offer entrepreneurs and business owners the opportunity to pitch online via their crowdfunding platform.
Angels Den only want to bring their investors the best deals so they spend quality time with each entrepreneur, pre-screening and giving feedback on their business. Those businesses that aren’t quite ready for funding will now be sent to a centralised booking line at CIMA Accountant. Tel 023 8064 3763.
CIMA Members in Practice will provide consultancy in order to assist businesses to present their funding and investment opportunities to Angels Den through its regional offices.
When CIMA Accountant feel they have a business that may be ready for funding, they can now pass these deals onto Piers Lawford at Angels Den.
How HMRC use IT systems to seek out tax evaders
There is no doubting the resolve of HMRC to track down and prosecute tax evaders.
The Government has committed to spend £917m to tackle tax evasion and raise an additional £7bn each year by 2014/15.
HMRC are using 2,500 staff to tackle avoidance, evasion and fraud, there is also a website to help those who want to declare income https://www.gov.uk/sortmytax
In the search for tax evaders, HMRC have a £45m computer system called Connect which in 2011 delivered £1.4bn in tax revenue and the system is getting bigger and better all the time. According to Accounting Web:
It uses a mathematical technique to search previously unrelated information and detect otherwise invisible ‘relationship’ networks. Using Connect, HMRC sifts through information on property transactions at the Land Registry, company ownerships, loans, bank accounts, employment history, voting and local authority rates registers and compares with self-assessment records to spot taxpayers who might be under-declaring or not declaring income.
Last year Connect made links between tax records and third party data from hospitals, pharmaceutical companies, insurers and even gas SAFE registrations. DVLA records and the shipping and Civil Aviation Authority registers help identify owners of cars and planes who declare income that the computer suggests cannot support such purchases.
In addition HMRC have also identified 200 accountants, lawyers and professionals who advise on tax avoidance structures and its currently unclear how HMRC will be dealing with them and their clients.
It is important to remember that most people pay the correct tax, in fact HMRC calculate that 93% of tax due is paid correctly, its only a small minority who try to evade tax.
steve@bicknells.net
5 ways to reduce the risk of a tax investigation
THE TAX YIELD derived from HM Revenue & Customs investigations into the affairs of small- and medium-sized companies rose by 31% over the last 12 months, according to UHY Hacker Young.
Compliance investigations into SMEs generated £565m for HMRC in 2012/13, up from £434m in 2011/12, with the year ending March 31. Accountancy Age
Some investigations are random and some as a result of HMRC task forces, but many are triggered by risk profiling.
What can you do to reduce your chances of being selected:
1. File your tax returns on time and pay what you owe – If you file late or at the last minute HMRC will think you are disorganised and as such there are more likely to be errors in the return
2. Declare all your income – HMRC get details of bank interest and other sources of income, sometimes they test them and match them to returns
3. Use an accountant – Unrepresented taxpayers are more likely to be looked at, mainly because many of them don’t know what they are doing
4. Trends – if your business doesn’t match the profile of similar business in the same sector or your results suddenly fluctuate it could raise concerns at HMRC, for example, if you suddenly request a VAT refund
5. Tax Avoidance Schemes – if you are using a tax avoidance scheme I am sure HMRC will be looking closely, if they can find a way to challenge the scheme then at some point they will
steve@bicknells.net
10 ways to get paid faster
Late payment kills businesses, it’s a fact.
Latest research shows that British SMEs are having to wait an average of 41 days longer than their original agreed payment terms before invoices are paid. (source: BACS)
So what can you do to get paid faster?
- Get payment upfront – It might sound obvious but do you ask for payment with order? or deposits? or to be paid on delivery?
- Get Stage Payments – on projects agree stages and collect payment before you do the next stage
- Raise the Invoice quickly – as soon as you can bill the client send out the invoice
- Agree Terms of Business and Payment Terms before you start any work
- Make sure you know who to bill and who to chase for payment
- Make your invoice stand out, use bright colours and send a copy by Post and E Mail
- Offer multiple payment methods – Credit Card, BACS, Cheques, PayPal – make it easy for your client to pay you
- Offer a discount for prompt payment
- Charge interest for late payment
- Deal with any disputes quickly
steve@bicknells.net
3 reasons why businesses are sold
When you think about it, there are really only 3 reasons why a business owner would want to sell their business:
Cashing In
Sometimes the the value of your business could be over inflated, remember the dot com bubble. Throughout history there have been times when the price that a buyer is prepared to pay is huge compared to normal business valuation models.
When: March 11, 2000 to October 9, 2002
Where: Silicon Valley (for the most part)
Percentage Lost From Peak to Bottom: The Nasdaq Composite lost 78% of its value as it fell from 5046.86 to 1114.11.
Imminent Threat
This can be caused by many things:
- New Legislation
- Loss of Resources
- Increased Competition
- Loss of Banking Facilities
Basically the seller will be aware that a problem is looming and they want to sell before the problem damages their business.
Life Changes
From a buyers perspective these are often the best businesses to buy, the key reason behind the sale being:
- Retirement
- Relocation
- Life Style
- Selling due to Illness
- New Business Opportunity
steve@bicknells.net
10 financial mistakes all new business should avoid
Starting a new business is always a challenge but there are some common financial mistakes that all start ups should avoid.
- Lack of Planning – Businesses normally start with a great idea but you need to have business model that works and to at least have a basic business plan and cash flow.
- Over Trading – this happens when a business expands too quickly for its working capital, when you start a new business its tempting to accept every order without considering whether you can have the resources and the cash to deliver.
- Wasted Marketing and Advertising – new businesses are an easy target for marketing companies but its important to stick to the essentials to start with, having a website, e mail and business cards are essential, magazine advertising and other things can be done as the business grows, in the early stages you are experimenting and finding your market so if you spend too much too soon you might promote the wrong things at the wrong price.
- Wrong Business Structure – Before you start your business get some advice from your accountant, its important to choose the right structure not just for tax reasons but also for investment and ownership.
- Wrong Staff – Choosing the right team is critical for business success, choose staff that have the right skills, the right attitude and are dedicated to the success of the business.
- Over Ambitious – All too often businesses plans are over ambitious with sales growing rapidly, often they prove to be unrealistic, when preparing a sales forecast start with your order book and be cautious in your assumptions.
- Overheads – Many businesses over spend on overheads for example renting premises too early, work from home, if you can, to minimise costs.
- Stock Problems – Buying the wrong stock, under or over stocking are also issues for start ups, try to adopt a ‘just in time’ stock policy.
- Getting Paid – A sale is only a sale if you get paid, any one can give things away, make sure you manage your clients and get paid on time.
- Competition – Keep an eye on your competitors, they will be watching you and responding to maintain their market share.
steve@bicknells.net
Are you eligible for Connection Vouchers for Broadband? £100m up for grabs
This was first announced in December 2013 and £100m of funding has been allocated.
Broadband Connection Vouchers will be available in 22 SuperConnected Cities across the UK. Click here to see where they are. If your city isn’t offering vouchers yet, use our Register your Interest form to let us know that you are.
- Connection Vouchers help your business connect to a better broadband service.
- You can apply if you are a small business and you are located in an eligible area. See more in our Can I apply? section and try the postcode checker.
- The Connection Voucher will pay towards the fixed cost of getting you connected -between £250 and £3,000 – you pay the ongoing line rental charge.
- Not sure if you need to upgrade your broadband? See why other businesses have made the decision to upgrade.
- You can choose from a list of registered suppliers. Take a look a the link on the right to the suppliers in your city.
- You can find out how to apply from your local city pages – use the links on the right of the page.
- Want to be a supplier? Read more and find out how to register.
steve@bicknells.net
Micro Entity Accounts – who can file them?
Micro-entity accounts are a new type of accounts that can be submitted to Companies House. They will provide the smallest companies with the opportunity to prepare and publish simplified financial statements (profit & loss account; and balance sheet) if they wish.
A micro-entity is defined as meeting two of the following criteria:
- Balance sheet total: £316,000
- Net turnover: £632,000
- Average number of employees during the financial year: 10 (or fewer)
Micro Entities are exempt from filing their profit and loss with Companies House.
Business Minister Jo Swinson said:
“Thriving micro-businesses are a vital ingredient for a stronger economy. However, because of their size they don’t always have dedicated finance teams behind them. We therefore need to make sure that they can focus on growing their business – rather than completing unnecessarily detailed paperwork.”
There are approximately 1.56 million micro-entities in the UK, as compared with a total number of companies on the UK register of approximately 2.8 million.
I don’t think this is going to help much? Micro Businesses still need to file corporation tax returns, deal with PAYE, RTI, VAT, minimum wage, Auto Enrolment Pensions, and a wide range of other requirements
steve@bicknells.net
HMRC demand payment from Landlords
HMRC launched the ‘Let Property Campaign‘ on the 10th December 2013.
If you’re a landlord who has undisclosed income you must tell HMRC about any unpaid tax now. You will then have 3 months to calculate and pay what you owe.
The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes. This includes:
- those that have multiple properties
- landlords with single rentals
- specialist landlords with student or workforce rentals
- holiday lettings
- anyone renting out a room in their main home for more than £4,250 per year, or £2,125 if the property was let jointly, but has not told HMRC about this income
- those who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK as you may still be liable to UK taxes
According to the Telegraph….
Fewer than 500,000 taxpayers are registered with HMRC as owning properties other than their home. And yet other sources put the number of Britain’s growing army of landlords at between 1.2million and 1.4million.
Why the discrepancy? No one can say for sure, but the taxman has his answer: not enough people are declaring – and paying tax on – their property incomes and gains.
HMRC will identify those who they believe should have made a disclosure by:
- comparing the information already in their possession with customers’ UK tax histories
- continuing to use their powers to obtain further detailed information about payments made to and from landlords
Where additional taxes are due HMRC will usually charge higher penalties than those available under the Let Property Campaign. The penalties could be up to 100% of the unpaid liabilities, or up to 200% for offshore related income.
If you owe tax, you must tell HMRC of your intention to make a disclosure. You need to do this as soon as you become aware that you owe tax on your letting income.
At this stage, you only need to tell HMRC that you will be making a disclosure.
You do not need to provide any details of the undisclosed income or the tax you believe you owe.
steve@bicknells.net
Business Accountant 