Are HMRC right to target small businesses?

In 2011-12 HMRC raised £434m in taxes and fines from investigations into SME’s, that’s up 39% from £311m in the previous year.

HMRC initiatives such as task forces have played a key role

Small businesses are much more likely to make innocent errors than larger businesses.

Organisations such as the FSB now offer protection to their members and their website states:

HMRC can investigate a business at any time, even years after it has closed. On average, an investigation takes around 16 months.

If you thought HMRC only targeted big businesses, think again. In 2011, 33% of the HMRC enquiries handled for members related to business with a turnover of under £150,000 and 71% of these had a declared profit of under £25,000.

Membership of the FSB give you immediate professional support and essential protection for tax matters.

SME’s can also buy insurance from their brokers.

Should SME’s be given more help and guidance rather than insurance and penalties?


Would you invest in a Forest?

Did you know that there are considerable tax advantages

  • The income and profits from timber sales in woodlands managed commercially are free from both Income and Corporation Tax.
  • The gain in value of standing timber, whether from the physical growth of the trees or rises in timber prices, is entirely free from tax.
  • The entire value of commercial woodland, including both the land and the trees, attracts Business Property Relief, currently at 100%, once it has been owned for two years. Provided this condition is met, there is no Inheritance Tax liability.

Its ethical and sustainable. It even has good returns for example claim that they are suitable for SIPPs and claim to have a 22% IRR return.

In a Moneywise article they say returns have been around 19% but in the long term 5% is more realistic

Using Income Drawdown – how much pension will you be paid?

Basically when you want to retire you could buy an annuity

But personally I am not keen on annuities because when you die (or when you and your spouse die) the fund is lost

So if you have a SIPP or similar Pension, Income Drawdown might be better but unless you have a guaranteed income of £20,000 (in which case you can do Flexible Drawdown – meaning you have a lot more freedom over how much pension you can be paid) your pension is capped based on GAD tables.

I have found an online calculator that makes it easier

Reasons (Excuses) for filing your Self Assessment Return Late

Around half a million people who still have not filed tax returns for the 2010/11 tax year are about to receive fines of at least £1,200 as HM Revenue & Customs sends out its latest round of penalty letters.

So here some examples of reasonable excuses:

  • a failure in the HMRC computer system
  • your computer breaks down just before or during the preparation of your online return
  • a serious illness, disability or serious mental health condition has made you incapable of filing your tax return
  • you registered for HMRC Online Services but didn’t get your Activation Code in time

And some that aren’t acceptable:

  • found the online system too complicated to follow
  • left everything to your accountant to do and they let you down
  • forgot about the deadline
  • did not try to re-submit your return on time once a problem with the IT system was put right
  • registered for HMRC Online Services after the filing deadline (eg 31 January for Self Assessment)

If you need to appeal against a penalties here is a link to form SA370

Whats’ your excuse?


Are you a Business Owner with No Private Pension?

You’re not alone its estimated that 1.3 million business owner have no private pension that’s approx one in two UK Business Owners (according to Prudential).

Nearly one in three business owners (or 792,000 people) say they will be entirely reliant on the State Pension when they come to retire, compared with twice as many people across all employment types retiring this year in the UK.

Other self-employed workers will supplement their retirement incomes with money from a mix of alternative sources:

  • half will draw on other savings and investments
  • one in four will use equity from their properties or plan to use their partners’ pensions, and
  • one in five plan to use funds from the eventual sale of their businesses.

Most of us know we should be saving more for retirement and the government knows that we need to save more too. That’s why they give pensions tax breaks and employers are being forced to auto enrole staff into pension schemes and make payments.

But how many of us stand a chance of saving £400k into our pensions? it’s a huge amount of money and yet it only buys a modest pension. Work out your strategy now before its too late.


Press Release – Work-at-height specialist SCA scales up with auditor Smith & Williamson

The SCA Group,, has signed up the South Coast practice of accountancy and investment management group Smith & Williamson – – for an initial two years.

SCA, which employs 120 people and is headquartered near Ringwood in west Hampshire/near Bournemouth in east Dorset, excels in scaffolding, rope access and containment for the commercial and military sectors, onshore and offshore.

Earlier this year the group, established 13 years ago, launched its rope access service to meet demands for safety and quality work on inaccessible structures such as oil platforms, wind turbines and high-rise offices.

Another division, SCA Pro-Tect, is now at the forefront of the UK and European shrink-wrap market, covering structures such as banks, bridges, oil rigs and art galleries with protective material.

Clients include defence contractor BAE Systems (, ships repairer and vessel conversion group A&P ( and house builders Barratt Homes ( and McCarthy & Stone (

Steve Bicknell, SCA Group’s finance director, said: “A number of strategically shrewd partnering agreements have been achieved over time allowing for a prolonged period of continual growth and further expansion in to European and international markets.

“As such, SCA recognised Smith & Williamson as an ideal candidate for audit services, and the accountancy and investment management group was enlisted for this role.

“SCA has grown substantially with its client base, meeting exacting standards set by customers who rightly demand best-in-class safety performance and management for work-at-height projects.

“I have worked with Smith & Williamson previously and have always been impressed by the firm’s professionalism, intelligence and commercial awareness, so it made compelling sense to engage their services.”

Julie Mutton, a partner at the assurance and business services (ABS) arm of Smith & Williamson in Kings Park Road, Southampton, said: “The SCA Group is a leading player in southern England with its highly professional services to industry, and we look forward to providing advice and support.”

Steve added: “The SCA Group was established by the existing directors from fairly modest beginnings, and their drive and determination has brought about more than a degree of success.

“With unrivalled knowledge of the ship repair industry, SCA was soon at the forefront of this competitive and potentially perilous market.

“It’s skills, no-nonsense approach to health and safety and commitment to serving the client led to the award of long-term partnering agreements with prestigious ship repair companies such as BAE Systems and the A&P Group, fine recognition for the firm and the perfect grounding to expand operations.

“Safe in the knowledge that the marine scaffolding division was firmly established and recognised in this market, the SCA directors were not content with resting on their laurels and quickly addressed the further expansion of the business.

“Applying the same style of management to alternative sectors, and an irrepressible appetite for high standards and safe working practices, the SCA Group applied itself to the commercial markets and quickly achieved success through large, blue-chip firms such as Barratt David Wilson Homes and McCarthy & Stone.

“Contract scaffolding was clearly the ‘bread and butter’ for the SCA Group, but this is by no means the limit to our expertise.

“Through SCA Pro-Tect, the SCA Group offers a unique specialist containment system designed to provide weather protection or to contain harmful contaminants.

“The system has been in development for a number of years and served its infancy in the dock yards, but now with UK and Europe wide coverage, SCA ProTect can provide a superior level of protection, previously unobtainable, to a multitude of different projects and applications.

“SCA’s success in these fields has never allowed the directors to take their foot off the gas and there remains an unquenchable thirst for continued success and expansion into alternative markets.

“Earlier this year, SCA Rope Access was introduced as an alternative source of access to difficult-to-reach areas. The division uses the most advanced rope system available, as well as highly qualified technicians to carry out painting, paint inspections and non-destructive testing, to name but a few.”

Steve was previously the managing director and owner of Bournemouth-based Accounting 4 Business, one of CIMA’s largest practices, which became part of Bright Star Group two years ago.

He previously worked with a number of high-profile companies in Dorset, including luxury boats manufacturer Sunseeker.

SCA is headquartered at 7 Crane Way, Woolsbridge Industrial Park, Three Legged Cross, Wimborne, Dorset, BH21 6FA.

Will employees give away their rights in return for shares?

Its an interesting concept and tax advantages sound good too.

The Chancellor of the Exchequer, the Right Honourable George Osborne MP, has today announced plans for a new kind of employment contract called an owner-employee. New employee-owners will exchange some of their UK employment rights for rights of ownership in the form of shares in the business they work for, any gains on which will be exempt from capital gains tax.

Companies of any size will be able to use this new kind of contract, but it is principally intended for fast growing small and medium sized companies that want to create a flexible workforce.

Under the new type of contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8.

Employee-owner status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires. Companies recruiting employee-owners will continue to have the option of inserting more generous employment conditions into the employment contract if they want to.

Legislation to bring in the new employee-owner contract will come later this year so that companies can use the new type of contract from April 2013. The Government will consult on some details of the contract later this month.. Employee-owners receiving full capital gains tax relief on the shares awarded as part of their contract will still be eligible for existing employee share ownership schemes such as the Enterprise Management Incentive.

Where will you get Financial Advice from January 2013

From January 2013 advisers are preparing to dump their unprofitable clients, if you have investments worth less than £500k this could be you.

This story was covered in the Investors Chronicle this week.

Currently IFA’s and advisers are paid commission but from January they must charge fees, typically starting from £250 per hour.

The new regime is called the Retail Distribution Review (RDR).

Lloyds Bank have already said that they will stop their mass market advice from November, Barclays have already pulled out of face to face advice.

Where will you get your advice?

Employer v’s Employee Pension Payments (Net Relevant Earnings)

Currently the maximum pension payments allowed per year are £50,000 this for Employee and Employer payments, however, if your net relevant earnings (NRE) are below £50,000 your personla payments will be capped at the higher of your employment income or £3,600. (Carry Forward may be available)

NRE excludes Dividends and if your personal pension payments exceed the NRE then you will need to declare the over payment on your self assessment return and pay tax on it.

This can be a big issue for company directors-shareholders who often take a large part of their income in dividends.

The solution to this is for the company to make employer contributions. Employer contributions count towards the £50,000 limit but are ignored for the NRE cap.

The attached link is useful article on this subject

But there are further explanation on Accountingweb, Skandia, Indicator Tips & Advice Tax (4 October 2012)

How can £4m disappear in a black hole in the Accounts?

That’s exactly what happened at London Black Cab maker Manganese Bronze

The company blamed the accounting mistake on its new IT system, which meant losses, dating back several years, had been understated by £3.9m.

Coventry-based Manganese Bronze saw its shares fall 34% after saying it expected “substantially higher” losses for the first half of the year.

Manganese said a combination of “system and procedural errors” meant a number of transactions and balances were not transferred to the new IT system when it was introduced in August 2010.

Basically Invoices went missing during the transfer between systems.

If you are changing accounting system:

1. Choose your new software carefully and ask for references

2. Have a migration plan

3. Makesure your data is safe, secure and correct before you switch

4. Test the new system before your go live

5. If necessary parallel run the systems