On the 3rd April, to coincide with the 15th anniversary of the introduction of National Minimum Wage, HMRC issued a list of the worst and most elborate excuses given to their officers in the last 12 months.
- An employer said a woman on the premises was not entitled to NMW as she was his wife. When asked what his wife’s name was the employer said “err.. her name, err what’s your name love?..”
- An employer told HMRC: “I don’t think my workers know anything about the NMW because they don’t speak English.”
- Another employer told HMRC: “When the NMW goes up I do increase the amount I pay a little, even if the total pay is still below the NMW. I don’t think its right to ignore the rises in NMW.”
- A number of employers were paying rates below NMW, suggesting that accommodation they provided workers made up for their shortfall in wages.
- Upon inspection an employer told HMRC: “I know I am paying them too little, but they are happy to work for this amount because they are getting experience.”
- An employee claimed to be just working for a few days with a view to buying the business. When HMRC checked food safety records, the employee’s name was found on historic food temperature records.
- An employer claimed they realised they were not paying employees NMW and had just this week increased their wages… to an hourly rate which was still below the minimum wage.
- An employer told HMRC: “It wasn’t a conscious decision to say ‘I’m not going to pay this’, but I’ve never really considered doing it because I’ve not had people come to me and say, ‘I’m not getting paid enough’ or ‘Is this the minimum wage?’”
- An employee ran out of the premises when HMRC officers arrived to check for NMW infringements. The same employee then returned – minus the work pinafore – pretending to be a customer.
- Another employee claimed to be a friend of the owner and only in the restaurant as they were in the area. HMRC officers returned another day to find the person in the kitchen preparing food.
Jennie Granger, Director General of Enforcement and Compliance, HMRC, said:
Most employers are honest and pay their staff the correct rate. But this research shows that some still view the National Minimum Wage as a choice and will even try these crazy excuses to avoid paying workers what they are due.
Last year, HMRC’s investigations resulted in over 26,000 people getting a share of £4 million in back pay. HMRC investigate all complaints of employers failing to pay minimum wage. We will take action to recover back pay for employees and fine employers who are not playing by the rules.
HMRC officers work hard across the UK to ensure that everyone is paid at least the National Minimum Wage, and anyone who isn’t should call us.
Many employers who submit mainly nil returns (ie small owner managed businesses) for RTI are likely to get a letter from HMRC with Specified Charges on them, this is because under RTI if you don’t pay any employees in a pay period you need to submit a return to HMRC, if you forget or mis a period, which with HMRC RTI Basic PAYE Tools is easily done, HMRC will create a charge.
HMRC define a Specified Charge as
These are amounts we have estimated to be due when we have not received the necessary RTI PAYE submissions. We base these on you previous filing and payment history. We do this under Regulation 75A Income Tax (Pay As You Earn) Regulations 2003.
But as its an estimate is unlikely to be correct and on top of that HMRC will probably charge interest based on their Specified Charge.
If you get a Specified Charge check your RTI Submissions to makesure that you haven’t missed any, if you have missed one, post it now
Land Remediation Relief is a relief from corporation tax only. It provides a deduction of 100%, plus an additional deduction of 50%, for qualifying expenditure incurred by companies in cleaning up land acquired from a third party in a contaminated state.
The tax releif is available on both commercial and residential developments.
Qualifying Land Remediation Expenditure can be claimed for tackling pollution, natural issues, such as radon, arsenic or Japanese Knotweed or remediating long term derelict land.
Asbestos is a common issue and qualifies for Land Remediation Relief….
Legislation in The Control of Asbestos Regulations 2006 and The Control of Asbestos Regulations (Northern Ireland) 2007 governs the way that asbestos is removed.
As a result additional costs may be incurred in containing the asbestos and dust during removal.
For example, a licensed contractor must be employed to remove high risk material, such as pipe insulation or asbestos insulating panels.
The additional costs incurred in order to comply with the regulations are part of the cost of removing the asbestos and so may qualify for Land Remediation Relief.
So you don’t have to be Indiana Jones to discover value in your land…
Last weeks ONS figures show more people are becoming self employed than ever before.
Budding female entrepreneurs are set to benefit from superfast broadband with a new £1m challenge fund, enabling them to work effectively, access new markets and grow their business online.
The fund will be part of the Government’s Superfast Broadband rollout and will help women take full advantage of all the opportunities superfast broadband can bring to business. There are 40 local broadband projects in England, already delivering the programme and they will be invited to submit bids to the £1m challenge fund in May 2014.
This forms part of help the Government is already providing to female entrepreneurs, which includes:
- £1.6 million to support women’s enterprise in rural areas;
- access to over 15,000 free business mentors; and
- from next year, the introduction of Tax Free Childcare will mean that, for the first time, many self-employed parents will have access to support with childcare costs.
Are we doing enough to help women in business?
To maintain public confidence in the work of charities, charity law requires most charities (income over £10,000) to have an external scrutiny of their accounts. Provided a charity is not required by law or its governing document to have an audit then trustees may choose a simpler and less expensive form of external scrutiny called an independent examination.
Trustees may opt for an independent examination instead of an audit provided their charity’s gross income is not more than £500,000, or where gross income exceeds £250,000 its gross asset are not more than £3.26 million
Details in Charity notice CC31
Its estimated that approximately 90,000 UK charities require independent examination and that there are approximately 20,000 independent examiners.
The Charity Commission has a Framework in Notice CC32 to explain what the examiner needs to do
Common problems found by the charity commission include:
- The examiners report being signed by an organisation when in fact the must be signed by an individual
- Failing to address all the directives in the framework
- Insufficient scrutiny of the records
If you are self employed, you probably use your car for your business and that means you will incurr costs to keep the car running.
So what is a car….
A car for tax purposes is any motor vehicle of a kind normally used on public roads which has three or more wheels and either:
- is constructed or adapted mainly for carrying passengers or
- has to the rear of driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows
If you had a commercial vehicle instead of a car its likely that all the costs would be business costs because there would only be minimal incidental private use.
HMRC have just released a video to explain how you can claim motor expenses….
Bascially you can claim either a % of the total running costs (Actual Cost Method) or a mileage allowance payment.
The mileage allowance is 45p for the first 10,000 miles and then 25p per mile after that.
Using the Actual Cost Method you can claim a % (relating to business use) of :
- Capital Allowances (these help you recover tax on the purchase price of the vehicle)
- Road Tax
You may have other costs which are ‘wholly and exclusively’ for business such as:
- A Sat Nav to find customers and make deliveries
- Signage on the vehicle
Basically if a cost is ‘wholly and exclusively’ for business then you can claim 100% against tax.
In August 2013, the UK Government became a Buyer of invoices on the MarketInvoice Platform, investing directly in UK SMEs looking to access working capital and grow their businesses.
Why is the Government investing funds through MarketInvoice?
The UK Government, via the Department of Business Innovation and Skills (‘BIS’) and as part of the ‘Business Finance Partnership’, has committed to using alternative finance providers to channel much needed growth funding to UK SMEs. The scheme is investing £1.2 billion into increasing lending to small and medium sized businesses from sources other than banks.
How does it work?
Any company can use MarketInvoice provided its sells goods or services to other large businesses.
Its a ‘pay as you go’ service and you can see the estimated costs by using their calculator
Companies are vetted and the invoice must be to a large corporate not to other SME’s.
Its confidential so your customer will not know you have used MarketInvoice, if the customer doesn’t pay you will have to refund the investor.
So far £163m of invoices have been funded by MarketInvoice.
Of course it would be better if customers always paid quickly!
If you are an employer you can’t afford to mess up Auto Enrolment, the penalties are harsh!
Even a small employer will need 6 months to prepare and larger employers could take up to 18 months.
So what do you need to do before you stage?
- Find out your staging date, this the date when your obligation under Auto Enrolment will start, the Pension Regulator calculator is a good place to start
- Nominate a person to be the Pension Regulators key contact and register their name with the Regulator
- Draw up a Project Plan and consider whether you need help (60% of companies currently staging have decided they do need help! and most businesses use a service like www.business-accountant.com to help with project management)
- Choose a Pension Provider – Nest, Now Pensions and The Peoples Pension are the 3 largest
- Makesure your Payroll can provide the analysis needed
In addition you will need to work on elements of the Project Plan such as Assessing the Workforce, Letters to Employees, Considering Postponement etc
There is a lot to do and its complicated!
Often business premises are owned by the business, this could be for many reasons for example the business has multiple owners or it helps to increase the business net worth.
But in many cases it would be better for the premises to be owned by the business owners pension fund because:
- The object of the business is not to own its own property, the objective should be for the business to make profits from trading
- The business could use cash tied up in the premises to invest in trading activities
- Pensions are a very tax efficient method of ownership – no capital gains, no tax on rental profits
- Company Pension Contributions are Tax Deductible and Individual contributions get income tax refunds
- You may be able to use 3 year Carry Forward to get funds into your pension scheme
In summary to move your business premises from your business to a SIPP or SSAS pension you would do the following:
- Find a lender prepared to lend a third of the property value to your pension scheme (which will be half the value of the fund ie if the property was valued at £300k, your pension could borrow £100k which is 50% of the £200k which will need to be funded by your pension scheme)
- Have the premises independently valued and rent assessed and appoint solicitors
- Create a SSAS or SIPP pension (you can include other people in your SSAS or SIPP investments)
- Transfer into your SSAS or SIPP any funds you have in other pension schemes
- As you are the business owner and its your pension scheme your business could make a payment into your pension scheme, the maximum for the last 3 years would be £140k (£50k + £50k + £40k) see details of NRE
- The pension contribution from your company could be an In Specie payment (meaning its in kind not cash)
- You could make a personal payment to your pension and if you are a higher rate tax payer your will get a tax refund via your self assessment return
- Then your pension scheme buys the premises from your business and rents it back to the business
From May 2014 getting a mortgage will be a little bit harder.
The changes, brought in by the Financial Conduct Authority (FCA), mean lenders must ensure borrowers only get a mortgage they can afford.
The changes are:
- You will be asked to set out your financial commitments in more detail
- The application process will take up to 4 times longer (according to Money Saving Expert)
- New Borrowers will be stress tested for affordability
- Remortgages will become harder to obtain because of the stress tests
You can get further details from the FCA
Money Saving Expert have a useful Mortgage Calculator
Will this slow down the housing market?