September 2009

Points to Ponder!

Welcome to our fifty fifth newsletter issued in September 2009, 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 or you can find them on our website. To save paper, we shall no longer be carrying forward general items from month to month.

It’s here – our website is live and you are visiting!

Now everything is running, we would like to offer all our clients some reciprocal advertising. We would like to add your business to our associates page with a link to your Website and in return would ask that you link us to yours. If you don’t have a website but would like to be on our associates page, perhaps we could give you some of our cards or leaflets to pass on to your clients?

The New HM Revenue and Customs Penalty Regime.
We recently “hosted” a VAT inspection visit for one of our clients, as we maintain all his company’s records at our office. These visits can be extremely useful as we can ask the visiting officer all the questions we like, whether they are relative to the business being visited or any other aspects of VAT. But now, before anything else happens, the officer has to issue a warning, almost like a Police caution, stating the new penalty regime for errors. I would say that the officer concerned was not fully in favour of the extremely strict lines laid down for the VAT office now. Previously they had more power to mitigate penalties, based on their conclusions as to the honesty of the trader and if the error was a genuine mistake or incorrect returns based on information given to the trader by a VAT officer and misinterpreted by the trader. Now the VAT office has no choice and all mistakes, accidental or deliberate, will be liable for penalties. These penalties can be for up to 70% of the tax error, with a minimum of 30%. Interest will be charged on the tax amount too. However, if the error is in the taxpayer’s favour, interest will not be paid on the tax refunded. More bad news? These penalties cover all taxes collected by HM Revenue & Customs – including National Insurance. We have covered this penalty regime in earlier newsletters, but we must remind you that it came in to force on 1st April 2009.

We Mean Business – Federation of Small Businesses Event
Are you looking to develop and expand your business? Maybe you are thinking of starting a new venture, or perhaps you have the beginnings of a business idea and need help to get things off the ground. This event is specifically for new and existing businesses and can offer all manner of support and ideas to help you manage and expand your business. The event takes place on Thursday 1st October at the Fairfield Halls in Croydon and the doors open at 10.00 and close at 4.00. As we shall be taking a stand, we are issuing a challenge – “Are your reactions fast enough to cope with today’s market?” We have a speedway bike, fitted with an electronic reaction tester to see if you would be first out from the tapes. If you’d like to take up this challenge, the exhibition is free and open to all – hope to see some of you there.

VAT payments by credit or debit card – on line only.
Please be aware that credit card payments will carry a 1.25% transaction fee. However, you can still contact the Debt Management line and make interest-free arrangements to pay off your liability. If you need more than six months to clear your tax debts, you will be asked to supply cash flow projections.

Construction Industry – Worker Status.
We were expecting a consultative document to be published by the Government, prior to any specific actions being taken, but the consultation seems to be how to actually implement what they intend to do. The worker must now meet at least one of three tests to claim self-employed status. These are:

If none of these criteria can be met, the Revenue will deem the worker as employed, not self-employed and charge tax and National Insurance on everything paid to them. So far they have tried three cases against quite large concerns and failed in all three as the firms concerned were able to prove at least one of the above tests had been carried out and confirmed. HMRC now states that, as the Construction Industry is hardest hit during this recession, action will be delayed except in the most blatant breaches.

Offshore bank accounts
Another amnesty has been announced as an additional 300 institutions are releasing details of account holders to HMRC. The first penalty was set at 10% of the tax lost – this time it is 30%.

Child Trust Funds
The majority of new parents have not taken advantage of this scheme – have you?

Get your records in and save on VAT
Please remember that VAT is due to go up at the end of December – if you are not VAT-registered it is even more important for you to get your records in to us as soon as possible so that we can complete them and invoice you at 15% VAT.

No excuses, but we are repeating the following items as they are so important!

Registration for Money Laundering - a repeated warning.
Under the regulations, anyone who supplies accountancy services, book-keeping or tax advice must register with HMRC, if they are not registered with their own governing body. Some of you use part-time self employed book-keepers to look after your records – please check they have the correct registration or you too may be in breach of these rules.

Can we e-mail your paperwork to you?
As we didn’t get much response to this when we first asked, we are asking again. Along with the rest of the country, we are trying to cut down on our overheads and want to use e-mails much more. This will save time, postage and stationery, especially in respect of payrolls, draft accounts and invoices. Please may I give you more details? Payrolls and CIS returns – we can e-mail all your reports, including payslips and you can print only those you wish to or need to pass them on to staff. Sam will run the payroll as normal, scan the reports and payslips then e-mail them to you. We shall keep the originals on your file in our office. If your subcontractors agree and can provide an e-mail address, their deduction certificates can be e-mailed direct to them, saving your stationery too. Draft accounts – as you know, these run in to many pages but if you agree, we can e-mail a draft to you to check through on screen, with no need for either of us to print it out. When you do agree the accounts, we can print and send formal copies. Invoices – we can print a copy on our headed paper and e-mail it to you. The original will go straight in to your accounts papers so you wont need to print it off.