Points to Ponder!

Welcome to our 75^th. newsletter issued in June 2011, 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.

After a battle with the telephone company, the main phone number from 220 has now been transferred to Gilders Road, so we are fully contactable again. We hope this problem has not caused too much upset to anyone. If you still have records to be collected from us, please can you drop in and get them? We are so short of space, it is becoming very difficult. Many thanks.

HMRC are actively reviewing businesses that have exceeded the VAT registration limited but have not registered for VAT. The VAT threshold is based on a ‘rolling 12 month’ i.e. any 12 month period NOT your accounting year. If we only see your books once a year we are unable to keep a check on this and you could be liable for fines and penalties. If you thinks your turnover is going to exceed £73,000 and you have not registered for VAT then please contact us as soon as possible so that we can do some calculations for you.

If you think that your income has increased significantly over the last 12 months or is likely to in the next 12 months then please contact us before your year end so that we can have a look and see if we can do any tax planning. If we only see your books once a year we are not able to suggest ways to help reduce any tax once the accounting period has closed. For those with a year ending 31^st March then February would be the best time to contact us. Currently we would be looking at clients with a year ending July or August. Remember that Profit and Cash Flow are two completely different things and just because you do not have money in the bank does not mean you have not made a profit.

The Department of Work and Pensions has just released the above document – 17 pages of it. The Pensions Act 2008 set this scheme up but this is the first basic document that has been released, setting the scheme out in words of one syllable. This is going to happen and it is going to cost every employer an increasing percentage of their staff’s salary over the years plus additional time and admin.

Sue attended a meeting in London with the Minister of State for Pensions along with some rather more influential concerned parties, such as the directors of the BA scheme, Orange, B & Q and Tesco’s. Heads of major brokers were also there plus one FSB employee. The vested interests wanted to know what amendments would be required for their existing arrangements but the FSB is worried about the impact on very small businesses, employment and the Black Economy. The Government is keen to promote NEST – the National Employment Savings Trust Corporation which will be a “pension provider” available to everyone, but our enquires show that no company has yet been formally appointed as most are not interested in taking it on as the profits they can take are minimal. It appears that the Swedish company that runs the state scheme and the Indian car manufacturer, Tata, are interested.

Sue tried to get across that insufficient information has been supplied for small businesses and the Minister and brokers agreed that education is key. When the Construction Industry Scheme underwent radical changes, it was left to the accountancy profession to educate their clients but with this new pension law, we are not licensed to do this and most IFA’s wouldn’t be interested as they will not earn sufficient returns on the time it will take to set up dozens of small schemes. She has followed up the meeting with a letter to the Minister and we hope we get a positive reply.

At the moment, we are talking to various people to try and source schemes that we would be happy with as we shall have to set up a scheme, but as yet the Government hasn’t said which existing arrangements will fit their criteria. We shall arrange a seminar for anyone who is interested as soon as we get some firm information but please be aware this concerns all employers, including directors / owners with only themselves on the payroll. On the plus side, it is tax-deductible but it will cost employers and staff.

These arrangements will be phased in with the large companies expected to comply next year with smaller businesses being phased in up to 2016 by when every employer will have to comply. Some very small businesses will have to enrol by March 2014, depending on their PAYE reference number – we shall have to check out who this will affect although the document does state that The Pension Regulator will inform all employers 12 months before their compliance date. Let’s see what happens.

Following HMRC’s decision to target specific trades and professions, the latest target is to be London Restaurants. The excuse is to ensure the tourists expected to come for the 2012 Olympics shouldn’t be ripped off and the proceeds hidden in cash.

Regulations have been approved to increase from 6 April 2011, the rate of approved mileage allowance payments for cars and vans from 40 pence to 45 pence for the first 10,000 miles of business travel in a tax year. HMRC guidance will also be updated to give an allowance for passenger payments currently in place for employees at a rate of 5 pence per passenger per mile to be extended to volunteers. About time too! There was no mention of a change of rate for motorcycles, currently 24p per mile, or changing the 15p per mile allowed for push bikes.

If you play background music in the workplace, you need to have a Performing Rights Society license. There is a concessionary fee of £44 plus VAT (50% of the full license) for a year if you have 4 or less employees. Even if you only put the radio on once or twice, you should have a license.

If you search the above, you should be directed to the HMRC page for making on-line payments for your tax. If you use this facility, please make sure you have the correct reference number to hand. HMRC does not operate the “Faster Payment Service” offered by some banks, so you must still allow three working days at least for your payment to clear. The only immediate service is to pay your VAT by direct debit. Please let us know if you would like us to set this up for you.