Have you got undeclared Credit Card sales?
The Credit Card Sales Campaign is an opportunity to bring your tax affairs up to date if you’re an individual or business that accepts credit or debit card payments.
Who can do this
This opportunity is for you if:
- you accept card payments for goods or service
- you haven’t declared all your UK tax liabilities
Get the best terms
You need to tell HM Revenue and Customs (HMRC) if you either:
- haven’t registered with them
- have failed to declare all your income
This is called a ‘voluntary disclosure’.
What happens if you should disclose but don’t
HMRC has details of all credit and debit card payments to UK businesses. This information is used to identify individuals and businesses that might not have paid what they owe.
Credit Card Sales Campaign Helpline
Telephone: 0300 123 9272
From outside the UK: +44 300 123 9272
Monday to Friday, 9am to 5pm
steve@bicknells.net
The tax incentive to lend to Social Enterprises?
Social Investment Tax Relief (SITR) came in on 6th April 2014.
Individuals making an eligible investment at any time from 6 April 2014 can deduct 30% of the cost of their investment from their income tax liability for 2014/15 (or the relevant later year in which the investment is made). The minimum period of investment is 3 years.
The income tax and capital gain tax reliefs provide a substantial incentive for investors. To make sure new investment is directed to the organisations which need it most and to meet EU regulations, the investment and the organisation receiving it must meet certain criteria.
Organisations must have a defined and regulated social purpose. Charities, community interest companies or community benefit societies carrying out a qualifying trade, with fewer than 500 employees and gross assets of no more than £15 million may be eligible.
The tax relief is available on unsecured loans as well as shares.
So basically, if you are a basic rate tax payer using SITR will be better than Gift Aid.
Not only do you get the tax relief but if you give a loan it will be repaid (after 3 years).
steve@bicknells.net
Have you got a Will?
Currently 47% of UK adults die intestate, in other words without a will.
- Where there are no children, the entire estate will pass to the surviving partner (this shuts out blood relatives such as parents, brothers, sisters or their children)
- Where someone dies leaving a spouse and direct descendants the first £250k will pass to the surviving spouse/partner plus 50 per cent of the remaining balance as a capital sum (previously they had a life interest in 50 per cent of the remaining balance)
- Unmarried couples continue to recieve nothing if their spouse dies intestate
If you are tempted to try a ‘do it yourself’ Will, think again, they might be cheap but the consequences of getting it wrong could be extremely costly for your family.
If you own a business you also need to consider carefully what your succession plan will be.
My advice is to see a solicitor carryout estate planning and prepare a will.
steve@bicknells.net
How to get paid – Part 2
This post is a follow on from ‘How to get paid – part 1’ so if you haven’t read that you might like to do so before reading this one!
Once you have decided on your payment terms, ensured that both you and your client understand what is to be delivered, and paid for your services, there is still the possibility that a client will let you down and not pay.
The most likely scenario is that the client is strapped for cash and you are not seen as the first payment priority for them. This is a difficult position to be placed in for any service provider. My advice is that you must stand firm and by doing so you may well move yourself up the payment list – especially if the client is looking for further work from you.
Just as an aside, I generally provide an ongoing service to clients and so agree with them a fixed price service, so they can set up monthly standing orders. This has proved to be a win/win strategy. Clients like it because payments are broken down into monthly bite sized payments and I like it because I don’t have to do monthly invoices and then chase for payment.
However, what I did not appreciate until a client pointed it out to me was that, for them, my payments had moved up into the ‘unavoidable’ category – along with rent, rates, electricity etc. Unlike other professional service bills which are paid as and when money is available, my payment is made as one of the first.
Now, many service providers get lulled into doing more work for a client who is not paying, because they believe that they will not be given further work if they insist on being paid. As in my previous blog I would most strongly urge you not to get into this way of thinking. Firstly, the surest way of getting paid for work done is to stop working until payment is made. Secondly, if the client is bad at paying why would you want further work from them – rather than using your limited time to work for a client who will pay!
If a client is unlikely to use your services again, you are in a psychologically stronger position. You may well not be so reticent in sending tough letters demanding payment. Or, in fact, starting legal proceedings. If you want to go down this route it is very important that you understand what your rights are and how best to proceed. My advice would be to use a payment collection service such as that provided by companies like Credebt. They take the hassle away and enable you to concentrate on more positive areas in your business.
Finally, as I said in my earlier blog, don’t be coy about collecting money owed to you. As long as you have done the job required, and to the standard agreed, you are entitled to be paid!
Fiona 🙂
Have you had your annual tax statement?
Back in 2010 the Government promised every taxpayer an annual statement of their tax position – not just the income tax and National Insurance paid, but also where the money was spent.
During October these statement started to be sent out, see the example above.
If you’re registered for online self-assessment you’ll be able to access your statement digitally by logging on to the HMRC website in the usual format, selecting the tax summary option.
Initially the statements will only cover your tax position for 2012/2013 and at first only selected taxpayers will receive one.
Is this a positive step forward or a waste of time?
steve@bicknells.net
Are you one of the third of workers with a part time business?
Almost a third of British workers run some kind of creative business outside their main job contributing an estimated £15bn to the UK economy, according to new research from Moo.com. Profitability among this group of enterprises has increased by 32% in the past year. One in ten part-time creative entrepreneurs plans to leave their job to focus on their business full-time within the next year. However, 60% said it was their passion for the business, and not making money, that motivated them. The most popular part-time creative ventures are in food and cooking, gardening, photography and knitting. (According to Law Donut)
So why are micro businesses taking off:
- You can start off working at home
- Your start up costs are low
- You can do it part time when it suits you
- With wages frozen and costs rising it can provide a useful additional income
- Its easy to be price competitive with low overheads
- The Internet makes it easy to sell your goods and services
- Your social capital can be used to generate sales ie use your contacts and connections
- There could tax advantages – employees generally pay more tax than sole traders
- Some clients prefer the personal touch
- It could be start of something big
Here are my top 20 home based business ideas:
- Get a lodger – Under rent-a-room a taxpayer can be exempt from Income Tax on profits from furnished accommodation in their only or main home if the gross receipts they get (that is, before expenses) are £4,250 or less
- Ironing and Laundry Services – Always popular and you can start with friends and family
- E Bay Trading – as E Bay say… The first task is to sort through those bulging drawers and messy cupboards, finding stuff to flog. Get a big eBay box to stash your wares in, and systematically clear out wardrobes, DVD and CD piles, the loft and garage. Use the easy 12-month rule of thumb to help you decide what to offload: Haven’t used it for a year? Flog it.
- Blogging – Blogging has taken off and many businesses are looking for people to write blogs for them
- Candle Making – You can sell the candles on line and its easy to buy the wax and things you need to make the candles
- Car Boot Sale – As with E Bay but without going on line
- Cake Making – Make sure everything is labelled correctly and you comply with Health & Safety issues
- Data Entry – The internet makes it easy to enter data from where ever you are
- Social Media – Similar to blogging, businesses need help to manage Twitter, Facebook and Linked In
- Website Design – If you have the expertise, go for it
- Sales Parties – Cosmetics to Ann Summers, there is a long list of opportunities
- Sewing and Clothes Alterations – Perfect before and after Christmas
- Jewellery – Making and selling jewellery is always popular and great for Christmas presents
- Car Repairs – Assuming you have the skills needed and comply with legal requirements
- Pet Care – Walking dogs or grooming is popular
- Virtual Assistant – Also personal organiser or personal shopper
- Wedding Planner – You could start by creating a blog about your expertise
- Direct Sales – For example http://www.netmums.com/back-to-work/working-for-yourself/direct-selling-opportunities
- Computer Repair – Great provided you have the skills
- Marketing – Telesales to leaflet design and freelance writing
steve@bicknells.net
Business Premises Renovation Allowance
The Business Premises Renovation Allowance (BPRA) finishes in 2017 and is a great relief! Changes have been made to the relief to target it more effectively. Additionally the period for balancing adjustments has been reduced from seven to five years.
BPRA is aimed at the renovation of empty business premises, which have been empty for at least 12 months and which are located in an assisted area. See Assisted Areas Map below from the Gov.uk website:
Capital Expensiture must meet conditions A and B, and must be incurred before the expiry date. Also certain exclusions aply.
Condition A
The expenditure must be incurred on:
The conversion of a qualifying building into qualifying business premises.
The renovation of a qualifying building, provided it is or will become qualifying business premises.
Repairs to a qualifying building, or part of a qualifying building, provided those repiars are incidental in nature to that incurred…
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TOGC issues on Business Acquisitions
Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate. A transfer of a business as a going concern for VAT purposes (TOGC) however is the sale of a business including assets which must be treated as a matter of law, as ‘neither a supply of goods nor a supply of services’ by virtue of meeting certain conditions. Where the sale meets the conditions then the supply is outside the scope of VAT and therefore VAT is not chargeable.
It is important to be aware that the TOGC rules are mandatory and not optional. So it is important to establish from the outset whether the sale is or is not a TOGC.
The main conditions are:
- the assets must be sold as part of the transfer of a ‘business’ as a ‘going concern’
- the assets are to be used by the purchaser with the intention of carrying on the same kind of ‘business’ as the seller (but not necessarily identical)
- where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer
- in respect of land which would be standard rated if it were supplied, the purchaser must notify HMRC that he has opted to tax the land by the relevant date, and must notify the seller that their option has not been disapplied by the same date
- where only part of the ‘business’ is sold it must be capable of operating separately
- there must not be a series of immediately consecutive transfers of ‘business’
The TOGC rules are compulsory. You cannot choose to ‘opt out’. So, it is very important that you establish from the outset whether the business is being sold as a TOGC. Incorrect treatment could result in corrective action by HMRC which may attract a penalty and or interest.
Problem areas:
- Gap in trading – for TOGC to apply there must be no significant gap in trading between the sale and purchase
- VAT registration – If the vendor is VAT registered, there can only be a VAT-free TOGC if the purchaser is registered at or before the transfer
- Buying part of a business – the part being bought must be capable of separate operation
- A series of sales – it may not be possible for one of the parties to carry on the trade
- Staged Sales – As long as the overall result is that of business transfer these should qualify for TOGC
steve@bicknells.net
How can you avoid charging VAT on Inter-Company Charges?
There are situations where one company is VAT registered and other related companies are either partially exempt or not registered for VAT, so in these circumstances not charging VAT is an advantage.
The following are not Taxable supplies for VAT:
Common Directors – Notice 700/34 (May 2012)
An individual may act as a director of a number of companies. For convenience one company may pay all the director’s fees and then recover appropriate proportions from the others.
The individual’s services, such as attending meetings or approving expenditure, are supplied by the individual to the companies of which they are a director. The services are supplied directly to the relevant businesses by the individual and not from one company to another. Therefore there is no supply between the companies and so no VAT is due on the share of money recovered from each company.
Joint Employment – Notice 700/34 (May 2012)
Where staff are jointly employed there is no supply for VAT purposes between the joint employers. Staff are jointly employed if their contracts of employment or letters of appointment make it clear that they have more than one employer. The contract must expressly specify who the employers are for example ‘Company A, Company B and Company C’, or ‘Company A and its subsidiaries’.
Paying a Bill on behalf of an associated business
This is basically an inter company loan which will be repayable in full, its not a taxable supply.
Insurance
If insurance is being recharged and both businesses names are on the policy it can be treated as a disbursement of an exempt insurance so that its not vatable.
steve@bicknells.net
Government help to get new businesses started
The New Enterprise Allowance can provide money and support to help people start their own business if they get certain benefits and have a business idea that could work.
The scheme has resulted in:
- around 460 new businesses being set up each week – around 53,000 in total
- 12,360 businesses being started by people aged 50 or over
- 10,040 disabled people becoming their own boss
- 3,920 started by young people
People who don’t qualify for the scheme may be able to get other help with setting up a business.
Business Mentors have a key role to play
The New Enterprise Allowance is available to:
- people over 18 who are claiming Jobseeker’s Allowance
- lone parents on Income Support
- people on Employment and Support Allowance in the work-related activity group
People on the scheme get expert help and advice from a business mentor who will help them to develop their business idea and write a business plan. If the business plan is approved, they are eligible for financial support payable through a weekly allowance over 26 weeks up to a total of £1,274.
There are also Start Up Loans…
A government funded scheme to provide advice, business loans and mentoring to startup businesses
steve@bicknells.net
Business Accountant 