December 2007

Points to Ponder

Welcome to our thirty fourth newsletter – produced during December 2007 and issued in January 2008, to keep you up to date with some of the changes in Income tax, National Insurance and VAT along with compliance regulations for businesses, plus other oddments that have caught our eye. If you would like a copy of any past newsletters, please call and we can either send or e-mail them to you.

This month’s news is brief as we are, as usual, fighting the Self Assessment deadlines –

Offshore account disclosures. (Speak to Sue)

HMRC has given notice that a further 175 banks have been targeted but may extend their disclosure scheme with reduced penalties but only to account holders who haven’t received a letter from their bank. If you have an offshore account, please make sure we know about it.

Protecting tax revenues. (Speak to Sue or Angela)

Following losing the case in Arctic Systems, the Government is trying to stop the gap. Basically, they will be reviewing all arrangements where family are shareholders or income is passed to a non-fee generating person. This is why we do not recommend an equal shareholding or shares held by children.

Capital Gains Tax changes (Speak to Angela)

The Government has put the proposed changes on hold but a complete U-turn appears unlikely. There has been no specific announcements made yet. It seems the Revenue was horrified by the Budget announcement as it is a complete re-write of the current law.

Red Tape

It seems that all small businesses lose up to 7 hours per week – what could you do with an additional 7 hours?

Previous items covered – contact us if you want to know more.

CIS Changes and fines (Speak to Sue, Nimmi or Dave)

The new regulations came in to force in April 2007. As we stated in an earlier newsletter, fines have been imposed from 19^th October, and they cover all late returns outstanding as of that date – including nil returns.

No more paper Self Assessment returns

From next April, HMRC will no longer accept substitute paper Self Assessment returns, like those we generate on our computer system. Returns must be made on line or completed by hand on the forms supplied by HMRC.

HMRC promise “Openness and early dialogue in enquiries”. (Speak to Bernadette or Lorraine)

HMRC has published a notice that it intends to be more open and direct when initiating enquiries, including full information on what and why it is making enquiries, how long it estimates they will take to complete. This may be the time to consider your Professional Fee Protection Insurance; especially if we said your records were not really up to scratch!

Introduction of the new Money Laundering Regulations.

This is one of the biggest changes in practise admin that I have seen since I started work, and that’s a longer time than I care to admit! With the increase in terrorism and drug smuggling, we can understand the need to monitor movements of money but the controls we have to introduce are very heavy-handed and will be time-consuming, all adding to overhead costs. As we are likely to be regulated in this area directly by HM Revenue and Customs, we have to get things right. An officer may make a control visit at very short notice and we only have until early December to start to get the records in place. These records are designed to cover you as well as us as insufficient information may lead to other lines of enquiry.

Basically we need to be able to prove that we have checked our clients’ identities and have such proof on file. For those who have been with us for some years, we should hopefully have sufficient documents already to satisfy the requirements, but for the majority of you we shall still need to copy your passport or some other identification that carries your photograph. We shall also need utility bills to prove your home address. It would really help us if we can make the necessary copies next time you call in to the office.

I feel that this identity checking is intrusive to say the least, especially as we have known so many of you for so long, but if we are to maintain the practise, we must ensure we have the required information on file – and Oh yes – it will be securely stored to comply with the Data Protection Act too!

Changes to VAT invoices now in force.

Have you amended your invoices to cover the new VAT regulations? In addition to the normal regulations (sequential numbering, supplier and customer names and addresses, VAT registration number and rate of VAT charged) traders using special schemes must declare them.

Directors’ Duties & Responsibilities – changes in the Companies Act

From 1^st October 2007, directors have additional obligations by law.

Watch where you WEEE

From 1^st July 2007, the Waste Electrical & Electronic Equipment (WEEE) Directive (from the EU – of course) requires all electronic and electrical equipment to be recycled, reused or recovered, rather than sent to a landfill site.

Increase your pension – play up your ailments!

Did you know that the rate paid out on your annuity pension could be increased if you declare all your ailments? It seems that companies will pay more each year if they believe you have fewer years in which to collect! Independent Financial Advisers recommend a bit more shopping around.

Rent deposits

Shorthold tenancies with deposits registered under the tenancy deposit scheme came to an end on 31^st October. Landlords are now required to register the deposit with one of three Government approved schemes. Now deposits are either held by a third party or covered by insurance.

The Pre-Budget Bulletin.

The waters are still very muddy. These measures are not yet law, but it will need a full defeat of the annual Finance Act to save us from these measures. Once these changes have been clarified, we can start to help with some tax planning – please do arrange to speak to or meet up with Angela at some time.

Health and safety regulations and training

Any business with 5 or more workers, including sub-contractors, owners and part-timers, must have a written Health and Safety Policy and have carried out risk assessments as well as nominating and training a first aider and a fire marshal.

Offshore disclosure

The repercussions from this will go on for a long time.

Spam e-mails

Just don’t open these, or they will multiply. If you’re not sure of a message’s content, delete it unread.

Rent-a-room

Don’t forget this useful tax-free source of income.

Increase in the right to paid holidays.

With effect from 1^st October 2007, the entitlement is going to increase to 4.8 weeks or 24 days for a full-timer and then on 1^st April 2009, increases again to 5.6 weeks or 28 days for a full-timer. These days include bank holidays and will be pro-rata’d for part-timers.

National Minimum Wage

These have all increased – please check with Dave.