A survey by AutoenrolSME found that 6 out 10 businesses can’t cope and hired additional staff to manage the process!
A Poll in April 2014 of 200 businesses with 62 to 249 employees found:
63% of the employers didn’t know when their staging date was.
58% had not set up an auto-enrolment pension scheme.
90.5% of employers without an auto-enrolment pension scheme hadn’t even started researching one.
If you think you can ignore Auto Enrolment, think again, The Pensions Regulator will make you comply……..
We can issue guidance and instruction by telephone, email, letter and in person. Or we can send a warning letter confirming a set time frame for compliance with the duties.
Statutory notices can direct you to comply with your duties and / or pay any contributions you have missed or are late in paying. We have further discretionary powers which allow us to estimate and charge interest on unpaid contributions and direct you to calculate and / or pay unpaid contributions.
We can issue penalty notices to punish persistent and deliberate non-compliance.
A fixed penalty notice will be issued if you don’t comply with statutory notices, or if there’s sufficient evidence of a breach of the law. This is fixed at £400 and payable within a specific period.
We can also issue an escalating penalty notice for failure to comply with a statutory notice. This penalty has a prescribed daily rate of £50 to £10,000 depending on the number of staff you have.
We can issue a civil penalty for cases where you fail to pay contributions due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.
Where employers fail to comply with a compliance notice or there is evidence of a breach, we can issue a prohibited recruitment conduct penalty notice. This is currently set at a maximum fixed daily rate of £5,000 for organisations with over 250 staff. We aim to fully recover all the penalties that we issue.
We can take civil action through the court to recover penalties.
Employers who deliberately and wilfully fail to comply with their duties may be prosecuted.
We can also confiscate goods where there is a criminal conviction and restrain assets during criminal investigations.
The first case was Dunelm http://www.thepensionsregulator.gov.uk/docs/section-89-dunelm.pdf
Research shows that Accountants are most likely to be asked to help SME’s and Business Accountant (a service provided by CIMA Members in Practice) have created a booking service to assist SME’s in getting help http://business-accountant.com/auto-enrolment/
So don’t be scared by Auto Enrolment, don’t delay drawing up a project plan, take action now to avoid problems with the Pension Regulator later!
Let’s look at the options….
Exemption for Canteen Meals
Employees can be provided with free or subsidised meals provided generally to employees served on the business premises where the following 3 conditions are met:
- The meals are provided on a reasonable scale
- That all employees or all those at a specific location may obtain free or subsidised meals
- If the meals are provided in a restaurant or hotel at a time when meals are being served to guests/clients part of the dining area is designated for employees
Not everyone needs to use the facility they just need the option to use it and its is possible for senior management to have superior meals.
This exemption is not available where only select employees are able to get a free lunch.
HMRC are happy to accept Tea and Coffee as trivial benefits that can be ignored.
Since April 2009 employers have been able to pay their employees HMRC approved flat rate allowances referred to as Benchmark Subsistance, the rates are:
- £5 if you buy a breakfast and start your business journey before 6am
- £5 if you’re out of the office on business for more than 5 hours, and buy one meal
- £10 if you’re out of the office on business for more than 10 hours, and buy 2 meals
- £15 if your business trip keeps you beyond 8pm, and you buy an evening meal
So £15 is the maximum
You can only claim if:
- travel is required as part of your dutues or you are working at a temporary work place
- you are away from your work place or home for more than 5 hours
- you are expected to pay for food and drink after starting your journey
Vouchers can be issued tax free but only up to the value of 15p per working day and the voucher must be non-transferable and used for meal only.
I have separate blog on this topic https://stevejbicknell.com/2013/02/13/what-travel-expenses-will-the-taxman-allow/
You might think you can charge related companies whatever you want, but is that true?
First a quick lesson in Transfer/Internal Pricing ….
SME’s do have tax exemptions….
There’s an exemption that will apply for most small and medium sized enterprises. The conditions attached to this exemption can be found in HMRC’s International Manual.
A business is a ‘small’ enterprise if it has no more than 50 staff and either an annual turnover or balance sheet total of less than €10 million.
A business is a ‘medium sized’ enterprise if it has no more than 250 staff and either an annual turnover of less than €50 million or a balance sheet total of less than €43 million.
There are some exceptions:
- Transactions with Parties in Non Qualifying territories
- Where HMRC have issued a notice to Medium Sized enterprise
- Election to remain subject to transfer pricing rules
- Patent Box
On the 9th April 2014 HMRC launched the Second Income Campaign….
A second income could come from:
- consultancy fees, eg for providing training
- organising parties and events
- providing services like taxi driving, hairdressing or fitness training
- making and selling craft items
- buying and selling goods, eg at market stalls or car boot sales
You need to tell HM Revenue and Customs (HMRC) if your additional income hasn’t been taxed through either:
- your main job
- another Pay As You Earn (PAYE) scheme
- Self Assessment
This is called a ‘voluntary disclosure’. To get the best possible terms you need to tell HMRC that you want to take part in the campaign.
You’ll have 4 months to calculate and pay what you owe.
You can find out about the campaign and how to make a disclosure here
The criteria used to assess if an activity is a hobby or a business are:
- The size and commerciality of the activity.
- The frequency of the activity and transactions
- The application of business principles.
- Whether there is a genuine profit motive.
- The amount of time devoted to the activities.
- The existence of arm’s-length customers (as opposed to just selling your wares to family and friends).
If you have a Second Income its better to disclose it now rather than wait till HMRC find you.
A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.
A business plan helps you to:
- clarify your business idea
- spot potential problems
- set out your goals
- measure your progress
Approximately a third of all SME’s in the UK don’t have a Business Plan, that’s about 1.5m businesses, so if you don’t have one, here are some reasons why you should prepare one….
- Research by Exact Software shows that SME’s with Business Plans make 20% more profit
- Having a business plan doubles your chances of increasing profits, increasing revenue, attracting new clients
- A well-researched business plan which includes the right figures and realistic forecasts will reassure potential investors you are a sensible investment opportunity
- A Business Plan will help you set out and achieve your goals
- It will help you set goals for your managers and staff
- The Business Plan will help you plan your cash flow and forecast Capital Expenditure
- A Business Plan will help you secure Business Finance and Loans
- You can plan your succession strategy or prepare the business for sale
- A Business Plan tests the feasibility of your business idea
- It will help you plan for the recruitment of Staff
From 1st July 2014, individual savings accounts (ISAs) will be reformed into New ISAs (NISAs) with an annual limit of £15,000.
You can invest your NISA in Cash, Stocks and Shares or in any combination.
The limits for Junior ISAs and Child Trust Funds have already been increased from £3,700 to £4,000.
From July, restrictions on corporate bonds and gilts will have the 5 year rule removed allowing you to invest in short dated securities such as Retail Bonds.
There are plans to enable Peer-to-Peer loans to be held in NISA’s but that’s still in the consultation stage.
Between now and July the most you can invest in an Cash ISA is £5,940.
So are you waiting for a New ISA?
A new way to pay is coming this month, its called PAYM and it will be available from the 29th April.
Customers of the following banks can now register to link their mobile number with their bank account: Bank of Scotland, Barclays, Cumberland Building Society, Halifax, HSBC, Lloyds, Santander and TSB.
Other banks – including NatWest, RBS and First Direct – will join the scheme later in the year.
People who wish just to receive money – as opposed to paying it – will still be able to use the system, even if their phone is not a smartphone, or they do not use mobile banking.
To send money, a user will have to log into their bank’s mobile banking app, using a pass code as normal.
They will then have to select the recipient of the payment, using their existing contacts or by typing in that person’s mobile phone number.
After confirming the name of the recipient, they will have to check the amount being paid, type in a reference for it (such as “dinner”), and then press send.
A confirmation message will then be sent to them.
BBC News 2nd April 2014.
You can find out more details on these links:
So are you going to PAYM?
A company meets the qualifying conditions for a micro-entity if it meets at least two out of three of the following thresholds:
- Turnover: Not more than £632,000
- Balance sheet total: Not more than £316,000
- Average number of employees: Not more than 10
There are approximately 1.56 million micro-entities in the UK, as compared with a total number of companies on the UK register of approximately 2.8 million.
Most property businesses will have less than 10 employees and less than £632,000 turnover.
If you are a property investor filing Abbreviated or Full Accounts you have to report property values at their fair value, which means you tell everyone what you think the property is worth. You may not want to do that, especially if you are planning to sell as it tells the potential buyer what you think its worth and that might be an issue in negotiations.
Under the Micro Entity regime you aren’t allowed to use fair value and have to use Historical Cost. Which most Property Investors will prefer.
No notes are required with Micro Entity Accounts and any advances or financial commitments are shown at the foot of the Balance Sheet, often this is simply the value of the Mortgage outstanding.
Crowdfunding is a way in which people and businesses (including start-ups) can try to raise money from the public, to support a business, project, campaign or individual.
The term ‘crowdfunding’ applies to several internet-based business models, only some of which we regulate.
The Financial Conduct Authority don’t regulate:
- Donation-based crowdfunding: people give money to enterprises or organisations whose activities they want to support.
- Pre-payment or rewards-based crowdfunding: people give money in return for a reward, service or product (such as concert tickets, an innovative product, or a computer game).
The FCA do regulate:
- Loan-based crowdfunding: also known as ‘peer-to-peer lending’, this is where consumers lend money in return for interest payments and a repayment of capital over time.
- Investment-based crowdfunding: consumers invest directly or indirectly in new or established businesses by buying investments such as shares or debentures.
Further details on their website
The Financial Conduct Authority is proposing that starting from this year inexperienced investors in equity schemes will have to certify that they will not invest more than 10% of their portfolio in unlisted businesses.
Firms that run the website platforms say the rules are too tight and will put off potential investors.
Barry James, founder of The Crowdfunding Centre, says: “Make no mistake, the infamous 10% rule – however it’s dressed up – does just that: it takes the crowd out of equity crowdfunding.”
Despite the crackdown, investors who lend to small companies will not be covered by the Financial Services Compensation Scheme which protects investors if they are mis-sold an investment or if the company they invest in goes into liquidation.
The FCA believe there is high risk that consumers could suffer losses from peer-to-peer lending.
Is the risk too high? would you invest?
If your Group passes 2 out of 3 of the following tests then you are Medium.
In the first year you become Medium you are exempt from preparing Group Accounts but if you are Medium 2 years in a row you will need to prepare Group Accounts.