Steve J Bicknell Tel 01202 025252
Helpful Comments on Tax and Finance – Bicknell Business Advisers Limited www.bicknells.net
On 2nd February 2015 HMRC launched HMRC Penalties: a Discussion Document
Closing date 11th May 2015.
HMRC state…
We don’t use penalties as a way of raising revenue, or to offset our running costs. In essence, we want compliance, not penalties.
Do you think HMRC penalties are fair? do they work? how could the system work better?
Why not use the discussion document to help HMRC to change the system and improve the way penalties are applied.
steve@bicknells.net
HMRC use the Analogy of a shop window….
The cost of a web site is analogous to that of a shop window. The cost of constructing the window is capital; the cost of changing the display from time to time is revenue. (BIM35870)
UITF Abstract 29
Set out 4 key areas of cost:
HMRC also have some useful information on software in CA23410
CAA01/S71
Computer software qualifies for PMAs if it is not already plant.
Computer software is not defined in the capital allowance legislation. You should treat computer programs of any type and data of any kind as computer software. Computer programs range from operating systems like Windows to games like Solitaire. There may be no physical asset because software is sometimes transferred by electronic means, for example it may be downloaded over the Internet. Software acquired that way is also plant.
A person may acquire a right to use or otherwise deal with computer software. If so, the right and the software to which it relates are plant. Treat the person as owning the plant while the person is entitled to the right.
Capital Allowances and the Annual Investment Allowance can be claimed against Plant including software.
steve@bicknells.net
HMRC have been doing lots of research on SME businesses, the most interesting areas of research are:
Understanding Small and Medium Enterprise (SME) business life events – SME Customer Journey Mapping
Research was carried out to understand:
The Transparent Benchmarking Team Statement (November 2014)
HMRC is conducting a number of pilots, focussed on SME customers, designed to explore the effectiveness of publishing benchmarks on aiding greater voluntary compliance.
Following the first pilot (benchmark net profit ratios for Painters and Decorators, and Driving Instructors) in March 2014, HMRC will run two more in the autumn. One of these will focus on self-employed taxi drivers and pharmacists, where HMRC will be writing to around 2,500 agents that have a number of clients in the target sectors. The idea is to test whether publishing benchmarks through an agent is more effective than writing to a customer directly. Letters will also be sent to a sample of represented and unrepresented customers within the selected sectors to form control groups for evaluation purposes. All represented individuals and businesses written to directly will be informed that their agent has not received a copy of the letter.
The benchmark for both sectors is the net profit ratio. Because this is a controlled pilot exercise, not all agents or businesses within the relevant sectors will be receiving a letter. (source CIOT)
The Benchmarks we know so far are:
So the range of profits are big!
We await the ranges for Taxi Drivers and Pharmacists.
If your profit doesn’t fit then you need to know why.
Do not ignore the letter because HMRC are likely to follow it up and assume you are deliberately trying to avoid tax!
You may have some valid reasons for not fitting the benchmark and you must explain those reasons to HMRC.
A deliberate error will results in a higher penalty (up 100% of the tax) but can also open the door to HMRC going back over up to 20 years of your accounts!
The letters refer to common mistakes in:
You may find these blogs helpful
HMRC also have some useful toolkits/checklists…..
Private and Personal Expenditure Toolkit
steve@bicknells.net
SCA have recently completed the acquisition of Access Scaffolding IW, and have formed a single division for our Isle of Wight operations that will become the largest provider of contract scaffolding on the island. Access Scaffolding IOW will exist as a wholly owned subsidiary of the SCA Group, with the existing owner, Ashley Palmer, excited to commit his future to the new venture.
Ashley Palmer’s scaffolding business, Access Scaffolding, has been a presence on the Isle of Wight for many years, and the business has undergone substantial growth under Ashley’s stewardship, forging some great partnerships and working relationships along the way. SCA recognises the potential in Ashley’s business, and the hard work that has gone in to creating such a fantastic company, and coupled with our resources, reputation and enhanced service provisions, we believe that we can further improve the offering to the Isle of Wight, and build upon some well laid foundations.
SCA also has vast experience of working on the Isle of Wight with local people and local businesses, and we can further establish the reputation of ‘SCA Access IOW’ through our accreditations and memberships, not to mention our network of contacts and customers. As full members of the National Access & Scaffolding Confederation, or the NASC (as one such example), we can demonstrate our dedication to high standards of workmanship, attention to detail, and ability to work to the highest levels of health and safety, something that can only bring additional benefits to the service we can provide.
Ashley’s focus in the past has been on delivering a high quality, access scaffolding service to his clients, which has served the market well. With SCA’s influence, we can expand on these capabilities, and offer a wider package including Rope Access and Industrial Painting as well, and we look forward to exploring these possibilities with Ashley on board.
With the formation of a single division now complete, it is essential to us that ongoing activities remain uninterrupted, and with this at the forefront of our minds, all existing customer contracts of Access Scaffolding will be fulfilled as scheduled as we look to not only maintain existing relationships, but build and strengthen them as well.
Should you have any queries or concerns or future requirements for the new division, please note all the relevant contact details below:
Mr Ashley Palmer
Contracts Manager
Mobile: 07917 132390
Mr Barry Westbrook
Divisional Director
Mobile: 07736 691184
Head Office: 01202 820820
Its time to review your subscription to company information databases!
Companies House is to make all of its digital data available free of charge. This will make the UK the first country to establish a truly open register of business information.
As a result, it will be easier for businesses and members of the public to research and scrutinise the activities and ownership of companies and connected individuals. Last year (2013/14), customers searching the Companies House website spent £8.7 million accessing company information on the register.
Until it becomes free in 2015, you will still have to pay
| Companies House WebCHeck | Charges |
|---|---|
| Company accounts | £1 |
| Annual return | £1 |
| Company record report | £1 |
| Current appointments report | FREE |
| Monitor Service (per company, per year) | FREE |
This change will come into effect from the second quarter of 2015 (April – June).
steve@bicknells.net
Back in June 2013 the EU passed a directive 2013/34/EU which changed the thresholds for small companies.
| Present | Proposed | |
| Turnover | £6,500,000 | £10,200,000 |
| Total assets | £3,260,000 | £5,100,000 |
| Average no. of employees | 50 | 50 |
As before its a 2 out of 3 test. The Audit thresholds are unchanged.
The UK was required to transpose this into UK Law no later than 20th July 2015.
The Dept for Business Innovation and Skills (BIS) have just concluded their consultation (24th October 2014) and the plan is currently to implement the change for financial years starting on or after 1st January 2016.
As pointed out by SWAT
This could mean that a company with a turnover between £6.5m and £10.2m will be required to prepare its accounts for year ended 31 December as follows:
2014 as a medium sized company under present UK GAAP;
2015 as a medium sized company under FRS 102;
2016 as a small company under the applicable accounting regime for small companies.
This might depend on whether the company could early adopt the new regulations for its 2015 accounts. The possibility of early adoption is one of the questions asked by BIS.
Surely BIS can see that not allowing early adoption will place an unnecessary reporting burden on Small Companies?
steve@bicknells.net
Its the UK Trade and Investment’s 6th annual Export Week (10 to 14 November).
Previous Export Weeks have seen over 17,000 companies in the UK attend exporting focussed events. This week we will again have over 70 events across the UK; there will be at least one event per day in every part of the UK.
According to a recent survey by Barclays Corporate Banking, in new emerging markets 64% of consumers are more likely to buy a product which displays the Union Jack.
A survey by Exact back in June 2014 showed…
The survey of 453 SME leaders found that 54% of SMEs now sell products or services abroad. It found that exporting is the biggest growth area for 19% of the UK’s SMEs, and 68% of those who currently export saw export sales increase in 2013 over the previous year. For 18%, exports now account for over half their sales.
HMRC have a helpsheet TH/FS15 which has some helpful advice on importing and exporting.
So will your business be exporting this week?
steve@bicknells.net
Often as part of an exit strategy or succession planning companies will buy back shares.
Setting aside the mechanics, nicely explained in the ACCA Technical Factsheet 177 and the need for S1044 CTA 2010 clearance, the Buy Back has to be in the benefit of the trade not just the shareholder.
For example….
If the purpose is to ensure that an unwilling shareholder who wishes to end his association with the company does not sell his shares to someone who might not be acceptable to the other shareholders, the purchase will normally be regarded as benefiting the company’s trade.
Examples of unwilling shareholders are:
Assuming that the shares aren’t being bought back at Par Value, basic rate taxpayers will probably prefer dividends for any surplus where as higher rate taxpayer will want capital treatment.
Share Buy Back is complex, make sure you seek professional advice.
steve@bicknells.net
Almost a third of British workers run some kind of creative business outside their main job contributing an estimated £15bn to the UK economy, according to new research from Moo.com. Profitability among this group of enterprises has increased by 32% in the past year. One in ten part-time creative entrepreneurs plans to leave their job to focus on their business full-time within the next year. However, 60% said it was their passion for the business, and not making money, that motivated them. The most popular part-time creative ventures are in food and cooking, gardening, photography and knitting. (According to Law Donut)
So why are micro businesses taking off:
Here are my top 20 home based business ideas:
https://stevejbicknell.com/wp-content/uploads/2014/05/home-worker.jpg
steve@bicknells.net
The UK has seen the fastest growth in self-employment in Western Europe over the past year, according to the Institute for Public Policy Research (IPPR).
The number of self-employed workers rose by 8%, faster than any other Western European economy, and outpaced by only a handful of countries in Southern and Eastern Europe.
The IPPR’s analysis shows that the UK – which had low levels of self-employment for many years – has caught up with the EU average. If current growth continues, it says, the UK will look more like Southern and Eastern European countries which tend to have much larger shares of self-employed workers.
According to Tax Research UK…
Something like 80% of all the new jobs created since 2010 are, in fact, self-employments, and there are a number of things that very significantly differentiate self-employments from jobs.
The first is security: there is none.
The second is durability: vast numbers of new small businesses fail, which is one reason why I doubt the official statistics. I am sure they record the supposed start-ups correctly but seriously doubt if they have properly counted the failures.
Then there is the issue of pay. The evidence is overwhelming that in recent years earnings from self-employment have, on average, declined significantly.
A worker’s employment status, that is whether they are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement.
Many workers want to be self-employed because they will pay less tax, this calculator gives you a quick comparison between being employed, self employed or taking dividends in a limited company.
HMRC have a an employment status tool to help you determine whether a worker can be self-employed or should be an employee http://www.hmrc.gov.uk/calcs/esi.htm
In summary, why is it attractive to use Self Employed Freelancers?
So do you think self employment is good for the UK?
