What do you resolve?
It’s that time of year when we come up with fantastic ideas and resolutions for the year ahead. Unfortunately, these ideas and resolutions, which seemed so fantastic in 2013, will have been forgotten very early on in 2014. The reason for this is that we tend to come up with woolly, general thoughts rather than a real plan for change.
How about making this year different? If you really want to change your business, your work/life balance, your effectiveness or any other aspect of your life, you have to think through what you want to achieve. What are your timescales? What are your specific goals? How will you measure change? What resources will you need? Who do you need to help you?
Once you have thought through all the aspects of your idea write them down so you have a point of reference – and then DO IT!
By taking the time to plan you will find it much more likely that you will keep your resolutions and move forward.
Don’t wish upon a star – reach for it!
How long does it take to register for VAT?
It currently takes around a month for HM Revenue & Customs (HMRC) to process applications for VAT registration, although it can take longer if they need to carry out additional checks.
GOV.UK say it could take as little as 14 working days.
HMRC aims to process 70 per cent of applications within 10 working days and most are processed within a month.
But there are cases where it can take a lot longer, possibly even 6 months.
Between applying for VAT registration and receiving your VAT registration number, you must still account for and pay any VAT due. You become liable for VAT from the date you must be registered or asked for your voluntary registration to start, not the date that you actually apply for registration or the date you receive your VAT registration number.
You may also reclaim any VAT you pay on your purchases from the date you must be registered, so you must also keep records of any invoices where your suppliers have charged you VAT.
Until you receive your VAT registration number you must not charge VAT, or show VAT on your invoices. To make sure that you do not lose income in the period after you applied for VAT registration but before you receive your VAT registration number, you should increase your prices by an amount equivalent to the VAT rate relevant for your goods or services, and explain to your customers why you are doing so.
Once you receive your VAT registration number you can then reissue those invoices, amended to show your VAT registration number and the VAT charged. This will make sure that your VAT-registered customers may reclaim the VAT that they have paid.
From a business perspective this is messy, you have to ask you customers to pay 20% extra on the promise that you will later give them a credit and a vat invoice so that they can reclaim the VAT!
I think HMRC should give this some thought, perhaps VAT registration could be fast tracked or done instantly by phone or online?
steve@bicknells.net
Whistleblowing & tip offs – fight against occupational fraud
Tip-off is by far the most effective way of uncovering a fraud & this goes hand in glove with establishing a clear fraud policy & stating this in the staff handbook. But how is the employee protected & what about non employees?
Whistleblowers are protected by the Public Interest Disclosure Act 1998 (PIDA) if they make a disclosure which is in the public interest, which includes reporting:
- Where someone’s health & safety is in danger.
- There is damage to the environment.
- A criminal offence has been committed.
- The company isn’t obeying the law.
- The company is covering up a wrongdoing.
Employees should tell their HR department or manager, if they can. Otherwise they should report the incident to a prescribed person – such as governing body. A list is available from www.gov.uk.
Employees & workers are protected if they make a qualifying disclosure (see above) which they believe is in the public interest. Employees rights are covered by claiming constructive dismissal. However, workers who are not employees are also protected & can claim “detrimental treatment”.
Encouraging tip offs is important in combatting occupational fraud & all businesses should be open to the fact that fraud doesn’t just happen to others. In many businesses it is a significant yet invisible overhead.
5 Pitfalls to avoid with Entrepreneurs Tax Relief
If you sell or close your business, you may be able to claim Entrepreneurs’ Relief – this means that you only pay 10% Capital Gains Tax on any qualifying profits.
There’s no limit to how many times you can claim Entrepreneurs’ Relief, and you can claim up to £10 million of relief in total during your lifetime.
Companies
To claim Entrepreneurs’ Relief you must:
- own at least 5% of the shares in the business for a year
- be a director, partner or employee of the business
Sole traders
To claim Entrepreneurs’ Relief you must have been trading for at least a year.
Full details are on the HMRC Helpsheet HS275
But here are some pitfalls to avoid…….
- Entrepreneurs Tax Relief is not available to companies, so if your company sold the part of its business then that won’t qualify, it’s common for a buyer to want to buy the assets into a New Co but ask that the old company remains alive in case of future claim.
- Significant Non Trading Activity could be a problem too, some business contain investments and if these were more than 20% in terms of turnover, net assets, time spent by directors or profit it could mean that your business is not counted as a trading business
- Less than 5% share ownership this can be an issue where share options are granted and exercised before a sale
- Voting rights of classes of shares or when at an AGM votes are based on a show of hands
- Shares transferred to a non working spouse prior to sale to save tax – to qualify you have to be an employee/officer and hold the shares for a year
steve@bicknells.net
Why start ups need a CIMA Non Exec
Before you have even started trading, getting advice from an CIMA accountant can be critical here are some key areas where advice can really help:
- Creating the Business Model and Business Plan
- Obtaining Loans, Finance and Investment
- Business Structure, Shares and Shareholder Agreements
- Choosing Accounting and Business Software and Systems
- Creating a Cash Flow Forecast
- Understanding your legal duties
Then when you start trading……
- Tax Compliance – PAYE, NI, VAT, Corporation Tax
- Pensions – Auto Enrolment
- Managing relationships with Banks and Investors
- Budgeting and Forecasting
- Product Pricing and Tendering
Once the business has become established……
- Growth Strategies
- Funding Growth
- Research and Development
- Decisions on whether to buy or rent new equipments and premises
- Managing the Cash Cycle
CIMA Accountants have worked in business, they understand from the inside what running a business is really like and how to make a business successful.
You can also get some useful tips from HMRC http://www.hmrc.gov.uk/startingup/
steve@bicknells.net
Financial Reporting – Strategic Report – Part I
In the excitement of an economic outlook rising like the incoming tide during the last quarter of 2013, together with the ‘silly season’ most of us would probably have missed Statutory Instrument No. 1970 – The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013, and off course you would be forgiven for it. This particular statutory instrument made the duty to provide a Strategic Report a part of UK financial reporting legislation.
To most us the update to the Companies Act 2006, Part 15 – Accounts and Reports, will not have any impact, if our our daily task is that of preparing annual statutory financial accounts for approval by the board of directors of a UK incorporated company. This is because under section 414B of the Act, an exemption applies as follows:
* Quotes and references (sections) to the Companies Act 2006 available from Companies House
Are your workers ‘Fit for Work’? or would use of a tax free fitness option help?
Now Christmas is over and we may have eaten more than we should, many of us will be thinking of getting back into shape.
Did you know the NHS daily recommendation for steps per day is 10,000 steps and a recent article in Workplace Savings and Benefits pointed out that according to an American study:
- Secretaries take 4,300 steps per day
- Lawyers take 5,000 steps per day
- Construction and Factory 9,000 steps per day
Sickness absence in the UK costs £17bn per year.
You could reduce sickness by promoting an active lifestyle and it could be tax efficient too!
HMRC allow tax free treatment provided sporting or recreational facilities (or vouchers that are exchangeable for their use) that meet all of the following conditions:
- The facilities are available for use by all of your employees.
- The facilities aren’t available to the general public.
- The facilities are used mainly by employees or former employees or members of employees’ families and households. (The facilities don’t have to be used mainly by your employees – this condition also covers use of the facilities by employees of other employers if you’ve grouped together with them to provide the facilities.
The tax and NICs exemption doesn’t apply if you provide any of the following:
- facilities based at premises used wholly or mainly as a private dwelling
- holiday or other overnight accommodation (including any associated sporting facilities)
- use of a mechanically propelled vehicle (including road vehicles, boats and aircraft)
So that seems to rule out most Gyms, so what can you do?
Personal Trainers could be your ‘sports facility’ provided they are made available to all employees as part of a benefits package
Join a club run by other employers, many large businesses have their own sports and social club perhaps your company could use their facilities
Get together with other employers and hire a local Gym or Health Club at specific times for example set evenings and exclude members of the public on those evenings
If these options don’t work for you, you could still get your employer to pay for Gym Membership as part of your package, the benefit in kind tax will be less than if you pay direct out of net pay.
steve@bicknells.net
Partially-exempt Businesses
If your business supplies some goods or services which carry VAT, and other items which are exempt from VAT (such as charitable events and financing), the business is likely to be partly-exempt for VAT purposes. Being partly-exempt means you may not be able to reclaim all of the VAT on your purchases (input VAT).
Where the input VAT that relates to your exempt sales is no more than £625 per month, and it is also less than half of your total input VAT, you can reclaim all of the input VAT. In other cases you can only reclaim the input VAT which relates to the supplies that carry VAT. There are various methods to apportion input-VAT which can be agreed individually with HMRC, or you can use the standard method.
Whichever method you use to allocate input VAT, this should be reviewed at least once a year, to see if it still gives the best outcome for your business. We can help you with this.
If you pay VAT on road fuel used for private journeys, based on the road fuel scale charges published by HMRC, you need to be aware that the concession for partly-exempt businesses is withdrawn from 1 January 2014. Under this concession the business is permitted to reduce the output VAT due on the road fuel scale charges in line with its partial-exempt position. If you have been using this concession we definitely need to review the methods you use to apportion input VAT from 1 January 2014.
Self Assessment Payment – Shipley or Cumbernauld
For all those struggling to work our whether to make a bank transfer to HMRC Shipley or Cumbernauld
Your payslip tells you which HMRC account to use. If you’re not sure, use HMRC Cumbernauld. You must use your UTR as the payment reference.
| Sort code | Account number | Account name |
|---|---|---|
| 083210 | 12001039 | HMRC Cumbernauld |
| 083210 | 12001020 | HMRC Shipley |
If you make a Faster Payment this will clear the same day if the amount is within your bank’s limits.
https://www.gov.uk/pay-self-assessment-tax-bill
steve@bicknells.net
Do you wish your accountant had an App?
According to a report by Distimo, an app market data and analytics company, there are now over 700,000 different applications available across both the Apple and Google platforms, and with the total market estimated to be worth around $22 billion we can safely assume that it’s a pretty huge market. It appears to be growing pretty quickly too, with the increasing adoption of tablets over traditional PCs, more and more users are getting their applications from app stores rather than traditional retailers.
http://www.androidauthority.com/apple-app-store-vs-google-play-distimo-141851/
SME’s everywhere are seeing the advantages……
But as with websites you need to give your clients a reason to keep coming back and using the App.
There are some pretty good Apps out there to help you with your record keeping and we blogged about them https://cimaaccountant.wordpress.com/2013/09/06/expenses-theres-an-app-for-that/
So does your accountant have an App?
Less than 2% of Accountants have one!!!!!
In a recent AccountingWEB survey on average survey respondents said more than 80% of their customers use a smartphones or a tablet and almost
all expect this number to increase over the next 12 months.
What does your accountants App do? is it just tax tables and contact details?
Should they have an App which contains services, directions, calculators, dates which you can download to your diary….
Are Apps a waste of time?
steve@bicknells.net
Business Accountant 