Grow Online, Expand Worldwide – initiative to help SME’s
The government wants to make the UK the best place to start and grow a business. In the autumn it will launch a public campaign to celebrate GREAT British business success stories. The government wants to inspire other small businesses and point them towards the support that can help them grow. It will also launch a new strategy for how the whole of government will back them. This will set out a range of measures to continue helping budding entrepreneurs and existing businesses succeed.
If you are a business interested in the ‘Grow Online, Expand Worldwide’ campaign, please call 02070344848 and speak to a member of the Click:Connect:Sell team.
Just 33% of small to medium-sized companies have a digital presence and only 14% sell their products online. But research suggests that if UK SMEs fully adopted online technologies, they could increase annual turnover by £18.8 billion. Here in the UK we’re twice as likely as the OECD average to buy goods online.
UKTI’s ‘Grow Online, Expand Worldwide’ campaign includes local support for:
- 4,000 aspiring web exporters through awareness raising sessions, a webinar campaign and international web workshops.
- 1,200 web export ready businesses through e-commerce masterclasses.
- 1,500 web exporters with bespoke one-to-one advice from experts, tailored website reviews and action planning to access web exporter vouchers – up to £3,000 matched funding.
- 600 companies from the UK retail sector to sell online by helping them to list their products on the world’s leading online sales sites including Alibaba in China and Tejuri in the Gulf.
steve@bicknells.net
Pension Liberation – Don’t do it
If you have a pension fund you could be targeted by companies offering you ways to access your pension fund before you are 55, this is known as ‘Pension Liberation’.
How pension liberation arrangements work
Typically, pension liberation arrangements involve transferring your pension savings from your existing pension scheme to another pension scheme to allow you to access funds early. The schemes are offered through companies, who make money by charging you a fee to do this or by taking money direct from your savings. Company representatives or advisers may be pushy and may say they can offer you a loan or advance or cashback from your pension. They may even offer to share their commission for doing this.
Sometimes representatives suggest that because of the excellent returns their new scheme supposedly offers, you’ll get an upfront reward or dividend. Whatever way it’s presented, if you end up getting cash you’re likely to be involved in pension liberation.
Converting a pension pot into cash can sound very attractive to people who urgently need money. However, don’t be tempted, as there are big tax consequences of accessing your pension early. If something sounds too good to be true, it usually is.
Very often the advisers say there is a legal loophole to get round the rules to give you money by transferring your pension pot to a different scheme. There is no legal loophole. Very few people can take money out of their pensions before they’re 55. If you can, it’s usually because you’re retiring on ill-health grounds such as a terminal illness and you must meet strict rules to do this.
If you liberate your Pension you personally will have to pay tax at a special fixed rate of 55% on the funds liberated. The 55% rate isn’t reduced if you are a lower rate tax payer or pay no tax at all.
In addition to the tax the Pension Advisory Service say that on average you will be asked to pay a fee of at least 20% by the company liberating your pension.
steve@bicknells.net
10 ways to maximise sales revenue
Before you can sell you need to master the sales process, the following is a link to a 9 step process to help improve your sales process – WikiHow
Or you might prefer the 1941 Chevrolet approach
Once you are selling, how can you maximise your sales revenue…….
- Understand your clients needs and wants, sell products that they want, or make them want what you have to sell
- Keep your promises and earn your clients trust
- Look for opportunities to sell additional services and products
- Offer good value and service
- Get testimonials, recommendations and referrals
- Use your contacts and social media and tell them your success stories
- Credit Check your clients, a clients isn’t a client if they don’t pay and you aren’t running a charity
- Bad Debt Insurance could help reduce your risk but its not appropriate for all businesses
- Set up a customer rewards program and offer incentives
- Follow up leads within 24 hours
steve@bicknells.net
What are the implications of being a Service Company? Q1 Page TR4 SA100
Here is the question:
If you provided your services through a service company (a company which provides your personal services to third
parties), enter the total of the dividends (including the tax credit) and salary (before tax was taken off) you withdrew
from the company in the tax year – read page TRG 21 of the guide
£ • 0 0
This is what the guide says:
Service companies
Box 1 If you provided your services through a service company
Complete this box if you provided your services through a service company.
You provided your services through a service company if:
• you performed services (intellectual, manual or a mixture of both) for a client (or clients), and
• the services were provided under a contract between the client(s) and a company of which you were, at any time during the tax year, a shareholder, and
• the company’s income was, at any time during the tax year, derived wholly or mainly (that is, more than half of it) from services performed by the shareholders personally.
Do not complete this box if all the income you derived from the company
was employment income.
http://www.hmrc.gov.uk/worksheets/sa150.pdf
The majority of limited company contractors are, by definition, ‘personal service companies’ and therefore this box is of relevance.
The question however has no statutory backing and you cannot be penalised for failing or refusing to answer it but if contractors ignore the question when HMRC know full well that their company is a ‘service company’ then they may be drawing unnecessary attention to themselves.
The information to be entered is the total of the gross salary and dividends taken from the contractor’s company in the year ended 5th April 2012.
http://shop.qdosconsulting.com/freelancer/news/2013/01/18/psc-question-on-sa-return
The point is not the whether you answer the question or not, its whether your company falls under IR35 that matters most.
IR35 came into existance in 1999, it was created to prevent workers previously employed from creating a limited company and then benefiting from lower taxes and national insurance through the use of dividends and expenses.
So you think you are self employed, does HMRC agree?
http://stevejbicknell.com/2012/01/28/so-you-think-you-are-self-employed-does-hmrc-agree/
Can your business pass the HMRC IR35 Business Entity Tests
http://stevejbicknell.com/2012/05/14/can-your-business-pass-the-hmrc-ir35-business-entity-tests/
Consultants beware of IR35
http://stevejbicknell.com/2011/09/10/consultants-beware-of-ir35-use-the-qdos-model-contract-free/
steve@bicknells.net
Save for Children but save tax where you can
Many parents, grandparents and other family members like to save for children but are you paying tax on the interest?
The £100 Rule
HMRC Form R85 is used to claim interest tax free but what you might not realise is that despite your child having a personal tax allowance from birth there is a maximum of £100 per year which can earned tax free in interest and dividends earned on parental/family gifts.
So for 2 parents that’s £200 plus grandparents have the same exemption, but if the interest exceeds the limit even by a small amount, the exemption is lost and whole amount of interest becomes taxable.
Junior ISA
Children can have an ISA in their name, the maximum annual contribution limit is £3,720 (2013/14) in cash or shares but the money will be locked in until the child is 18. The £100 rule doesn’t apply to ISA’s.
Pension
Yes, crazy as it might sound your baby can start a pension plan.
You can receive 20% tax relief even if you don’t pay tax. The maximum you can contribute is £3,600 gross – a payment of £2,880 to which the taxman adds £720. This is the case even for people who don’t pay tax, such as children and non-earning spouses.
steve@bicknells.net
A time to pay!
Recently I have come across several service providers who are finding it difficult to get paid. This got me thinking about the psychology of payment.
There are clearly two sides to this particular coin – us and the client. We can be as much, or more, to blame as our customers for not getting paid, because of the way we think and act.
Firstly, as Brits we are sometimes embarrassed to talk to clients about fees and payment. Some business owners hide behind hourly rates, which means there is no upfront agreement about exactly what the client will be expected to pay. This means it is highly likely there will be disagreement and therefore delay in payment. Not only that, but disagreement about fees can leave a bad taste in everyones mouth.
Secondly, many service providers are slow to invoice, which means clients receive bills quite a long time after they have had the service. This sends a message to the client that the supplier is probably pretty well off and so doesn’t need the cash quickly (or the invoice would have been sent more promptly). Consequently it is more likely that payment will need to be chased.
Other suppliers do not make it clear what their payment terms are. Now, it is in clients interests to delay payment as long as they can (especially at the moment when many businesses are finding cash flow difficult) so if you are not clear on payment terms you cannot be surprised when payments don’t come through. Make sure your letter of engagement clearly states what your payment terms are and re-iterate these terms on your invoice.
Further to payment terms ask yourself the question ‘Am I a bank?’ If the answer is no (as I expect it is for anyone reading this blog) only give credit if it is absolutely necessary – and then ensure there is some allowance for interest in the price you are quoting! Otherwise, make your payment terms ‘payment on receipt of invoice’. You probably won’t get paid immediately but at least you can chase earlier.
I know business owners who don’t like chasing for payment, even if they have agreed a fixed price, invoiced promptly and have clear payment terms, because they think their good clients will think badly of them. This, in my opinion, is the worst ‘sin’ of all. Firstly, GOOD clients pay as agreed in the contract – a good client is not one who bitches about the agreed price and then fails to pay promptly. Secondly, we are business people who should expect to be paid for a good job done, so there is nothing to be coy about when it comes to asking for what you are legally and morally entitled to!
So, to recap:
1. Agree clearly with your client the exact terms of the engagement both in terms of job to be done and fee to be paid.
2. Bill as soon as the job is complete.
3. Be clear on your payment terms and give as little credit as possible.
4. Be professional! If money is owed to you do not be coy about chasing for it.
Fiona 🙂
Key Points from the Autumn Statement 2013
The Chancellor George Osborne presented the Autumn Statement to the House of Commons on 5th December 2013 and things are getting better, economic growth forecasts for this year have more than doubled from 0.6% to 1.4% but the austerity plan is set to continue.
Here is a summary of the key announcements:
Business Rates
Business rate increases in England will be capped at 2% in 2014/15 (they were set to increase by 3.2%) and businesses will be able to pay over 12 months rather than 10.
The Retail Sector will also get a £1,000 discount in 2014/15 and 2015/16, this applies to pubs, cafes, restaurants and charity shops with a rateable value below £50,000.
A reoccupation relief of 50% is being introduced for up to 18 months on premises that have been empty for a year or more and it will apply from 1st April 2014 to 31st March 2016.
Small Business Rate Relief has been extended to April 2015 under the scheme small businesses with a rateable value of £6,000 or less can get 100% relief, the relief is scaled down to zero on rateable values of £12,000 and there is a lower multiplier on rates between £12,001 and £17,999.
Income Tax
As previously announced the personal allowance will be £10,000 for the tax year 2014/15.
From April 2015, a spouse or civil partner who is not liable to income tax will be able to transfer £1,000 of their allowance to a basic rate tax paying spouse and as a result save £200 in tax.
State Pension Age
By 2020 it will be 66, by 2028 it will be 67 and by mid 2030′s 68, then in 2040′s 69.
Capital Gains Tax
The annual exempt amount will be £11,000 for individuals for 2014/15.
But there was an exemption for principle private residence letting for 36 months and from 6th April 2014 it will be reduced to 18 months.
Consultation will start in April on non-residents paying capital gains on property disposals.
Individual Savings Account (ISA)
The limit will rise to £11,880 for 2014/15 and of this £5,940 can be invested in cash ISA’s
Mortgage Guarantee Scheme
The scheme started in October will run for 3 years and end in January 2017.
Buyers will only need a 5% deposit and the government and the funder will guarantee 15% of the loan in return for a fee.
IR35
Legislation will be tightened from April 2014.
Anti-avoidance
A range of measures were discussed in addition to IR35 and these included:
- Partnership Tax
- Controlled foreign companies
- Charities
- High risk tax avoidance schemes
- Dual contracts
Other headline measures
- Employers NI for under 21′s to be scrapped in 2015
- Rolling back green levies to allow an average saving of £50 on energy bills
- Free school meals for infants
- Scrapping of 1% above inflation rail fare increases
- Electronic tax discs
- Abolition of next years 2p per litre fuel duty rise
steve@bicknells.net
New case clarifies the meaning of insolvency
When a company becomes insolvent there can be serious consequences:
- An increased risk of personal claims and Directors disqualification
- Winding up petitions
- Disposal of assets will be void once a winding up petition has been made
- Banks and Lenders will enforce their security
- Termination of contracts with customers and suppliers
- Transactions entered into within the previous 2 years can be reviewed and reversed
There are two tests for corporate insolvency:
- the cash-flow test: is the company currently, or will it in the future, be unable to pay its debts as and when they fall due for payment?
- the balance sheet test: is the value of the company’s assets less than the amount of its liabilities, taking into account as-yet uncertain and future liabilities?
If the evidence proves that the answer to either of these questions is yes on balance of probabilities, then the company is deemed insolvent under English law.http://www.out-law.com/en/topics/financial-services/restructuring/corporate-insolvency-the-basics/
On the 9th May 2013 the Supreme Court ruled in the case of:
BNY Corporate Trustee Services Ltd & Ors v Eurosail-UK 2007- 3BL plc & 2 other cases [2013] UKSC 28
Lord Walker acknowledged the uncertainty that is inherent in the (Balance Sheet) test, commenting that: “it is still very far from an exact test, and the burden of proof must be on the party which asserts balance-sheet insolvency.” It will, therefore, not simply be a matter of looking at a company’s statutory balance sheet at a given moment in time as there may be relevant assets and liabilities not contained in that document. However, nor will it involve a rather more complex assessment of whether the debtor has reached the point of no return.
Further comments on the case:
It is of course true that a snapshot of a company’s balance sheet is not conclusive as to its commercial and economic viability, and to make every company in this position vulnerable to a winding-up or administration order would be unfair and uncommercial.
The Supreme Court’s decision should therefore be welcomed for clarifying that the two tests are mutually exclusive and both represent different ways of analysing whether a company is insolvent. The judgment does leave some issues unresolved, for example the correct methodology for discounting future liabilities and the timing of the accrual of future and contingent liabilities.
steve@bicknells.net
Will Temp Agencies avoid Auto Enrolment by using Postponement?
- Large employers (with 250 or more workers), have started automatically enrolling their workers and will continue to February 2014 (some employers may choose to start earlier)
- Medium employers (50 – 249 workers) will have to start automatically enrolling their workersfrom April 2014 to April 2015
- Small employers (49 workers or less) will have to start automatically enrolling their workers from June 2015 to April 2017
- New employers (established after April 2012) will have to start automatically enrolling their workers from May 2017 to February 2018
- Employers who chose to use Defined Benefit or Hybrid Schemes can delay their staging date until 30 September 2017
You can postpone the start of Auto Enrolment for up to 3 months and then re-test for eligibility using this method could mean that Temporary Staff Agencies could avoid Auto Enrolment for their temps. This also means that many agencies will use NEST because other pension schemes will not want to sign them up as they many not actually receive any contributions.
Pinsent Masons blogged:
Agency workers are different from other workers and so present particular challenges. Many are seeking work for only a short period. Many will register with a number of different agencies and will, in fact, only be ’employed’ by a particular agency for a short period. The auto-enrolment obligation applies to all workers who meet the age and earnings thresholds, but there are options which may assist those employing high churn groups of workers.
Employers can make workers wait up to three calendar months before enrolling them into a pension scheme. If the worker has left by the end of that three-month period, then there is no need to provide that worker with a pension.
If you do postpone, make sure you follow the rules otherwise there could be harsh penalties under the Pension Act 2008 Section 45
Offences of failing to comply(1)An offence is committed by an employer who wilfully fails to comply with—
(a)the duty under section 3(2) (automatic enrolment),
(b)the duty under section 5(2) (automatic re-enrolment), or
(c)the duty under section 7(3) (jobholder’s right to opt in).
(2)A person guilty of an offence under this section is liable—
(a)on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or both;
(b)on summary conviction to a fine not exceeding the statutory maximum.
steve@bicknells.net
VAT Simplified Invoices
HMRC have released an update this month to their notice on Keeping VAT records. One of these changes relates to VAT simplified invoices which were introduced earlier this year as part of the simplification and harmonisation of VAT rules in the EU. Previously only retailers were exempt from providing full VAT invoices to unregistered businesses.
However the changes mean that any business issuing VAT invoices for £250 or less (including VAT) can issue simplified invoices.
What to include in a simplified invoice:
Your name, address and VAT registration number
The time of supply (date)
A description which identifies the goods or services supplied
The each VAT rate charged, the amount of VAT charged.
How does a simplified invoice differ from a full VAT invoice:
In addition, a full VAT invoice must include:
A sequential number based on one or more series which uniquely identify the document
The date of issue (if different from the time of supply)
The name and address of the person to whom the goods or services are supplied
For each description, the quantity of the goods or the extent of the services, and the rate of VAT and the amount payable, excluding VAT, expressed in any currency
The gross total amount payable, excluding VAT, expressed in any currency
The rate of any cash discount offered
The total amount of VAT chargeable, expressed in sterling
The unit price
The reason for any zero rate of exemption.
VAT invoices over £250
If issuing VAT invoices over £250, a full invoice must still be issued or a modified VAT invoice showing VAT inclusive rather VAT exclusive values.
Rebecca Taylor ACMA
Business Accountant 