December 2008

Points to Ponder

Welcome to our forty sixth newsletter issued in December 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.

Pre Budget Report

There are still points coming out from this and we prepared a special newsletter concerning VAT, as this is the most urgent change. Most other proposals won’t come in to effect until after the next election – make of that what you will.

Trouble with the banks

Has your bank withdrawn your overdraft, or lowered its limit? Have you had problems obtaining finance? Has your rate of interest gone up while the base rate has gone down? The Chancellor’s shoring up of the banking system was intended to encourage the banks to help small businesses, but the reverse seems to apply. Small businesses employ 13 million people and turn over £1,440 billion.

Phishing is on the increase

This is the practise of sending scam e-mails, most purporting to come from banks, and asking for confirmation of account details. The latest says it’s from HM Revenue & Customs, asking for card or account details in order to pay a refund. Don’t open these e-mails but if you do receive the Revenue one, forward it to This email address is being protected from spambots. You need JavaScript enabled to view it.

Face the recession challenge

Now is the time to review your business. The most important area is cash flow. Check the effect of rising prises and falling sales. Should you diversify? If you are relying on a few customers, you are at risk if they fail. Can you offer your product to a wider customer base? Do you need to drop unprofitable customers? Look in to more creative marketing. Review stock levels. Keep an eye on the competition and make sure you can offer something better than they can.

Energy and cost savings.

Did you know that a photocopier left on unnecessarily could cost an extra £194 a year to run? Switch off what doesn’t need to be left on – fans, computers, monitors etc.

Northern Rock

It is now over a year since this crisis – seems like yesterday!

Previous topics revisited

Set off of liabilities.

Since the Revenue departments combined, they have shown a great lack of co-operation. They are finally getting at least part of their act together. All tax revenues are the “property” of the Exchequer, but VAT, PAYE, Corporation Tax, Personal Tax and National Insurance contributions have always been collected separately. From April 2009, each Revenue department will be able to recoup tax owed to it from refunds due from other tax areas. So, if you normally expect to collect a refund on your VAT and you are behind with your PAYE or any other tax, your refund may be withheld to offset your debt.

Performing Rights

Do you play music in your workplace, either for the public or just for you and your staff? I must admit I don’t like a radio on when I’m working, but many businesses do, especially retail outlets and professions such as hairdressers. If you do play music, you need a licence, issued by the Performing Rights Society. This licence is issued under the Copyright, Designs and Patents Act 1988. The money collected pays royalties to musicians and composers. The areas and types of music are wide-ranging, extending to “music on hold” on a telephone system, staff parties and even Radio 2 through your computer! Yet another good reason not to listen to Russell Brand or Jonathan Ross!

New Penalties To Come

HMRC is shaking up its penalties and saying that it will be using a “reasonable approach” to how they are assessed after 1^st April 2009. (Does this constitute an acknowledgement that they are currently unreasonable?) The new regime is likely to lead to a great deal of confusion, so the answer is to make sure all records are correct in the first place. As soon as the details of the changes become clearer, we’ll pass on more information.

Late paid invoices

Like many other businesses, we suffer cash flow problems and like all too many other small businesses, we don’t impose the legal right to charge statutory interest on late paid accounts which was introduced in the Late Payment of Commercial Debts (Interest) Act 1998. We have now decided that we shall start doing this on all overdue accounts – we have noted on our invoices that interest may be charged, but from now, it WILL be charged. However, if we have made an arrangement with you to pay your account by standing order, there will not be any interest charges. We would be happy to discuss this facility with you.

PAYE Time Bomb

HMRC has just issued a series of new leaflets relating to worker status, so it looks as if the investigations are about to start. Have you reviewed your workforce properly? Last month we reported HMRC and the Construction Industry.

Business Use of Home

HMRC is reviewing its policy on this claim at the moment. Up until now, we have used a “round sum” approach but it is now likely that we should review this. The initial guidelines suggest that costs should be apportioned in respect of mortgage interest, light and heat, insurance etc. It is all based on “exclusivity of use”.

Government U-turn costs Taxpayers millions

The Chancellor’s U-turn over the abolition of the 10% tax band has cost all taxpayers millions – not just from the Treasury’s reduced tax income, but in the costs involved in telling everyone!

Offshore account.

HMRC has announced that it collected over £400million via the voluntary disclosure and expects to rise even more from those who didn’t own up!

HMRC On-line filing.

A recent survey of accountants has proved that the HMRC service has been worse this year than in previous years. There are also rumours that the current free access may become chargeable. So, by law returns must be filed on line but you will have to pay for the privilege!

ACAS Services

If you have queries about employment regulations, your first line of enquiry should be a call to ACAS, as they are there to advise both employees and employers. Their Helpline number is 08457 47 47 47 or their website is www.acas.org.uk.

CIS Certificate withdrawals

The Revenue has started its review of gross certificates for sub-contractors and is withdrawing them when tax payments and returns have not been kept up to date.

Income Shifting Regulations

Now is the time to review “family” arrangements in respect of business shares.

Lower VAT Rate on renovations (Speak to Sue)

From 1^st January 2008, renovations and alterations to residential properties that have been empty for at least 2 years will be eligible for the reduced VAT rate of 5%.