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Read our latest article in Business Accountant Magazine
contact us to discuss the article
FRS102 which is now the UK’s main reporting standard has some really odd rules and in my view the rules for interest free loans are complete madness!
Take a simple example of a £5,000 interest-free loan repayable in three years’ time:
if the market rate for such a loan was, say, 7% then the present value of the loan would be £4,081 (£5,000 x 1/(1.07)3).
Unfortunately, FRS 102 does not contain any requirements about how the above financing shortfall of £919 should be accounted for on initial recognition. It is therefore necessary to consider the particular facts in order to determine the accounting treatment.In simple terms, the financing shortfall of £919 is either interest income or an interest expense when the loan is made. That then reverses as interest receivable or payable as the discounting unwinds.
FRED 67 proposes a number of amendments to FRS 102, in response to calls from stakeholders, intended to simplify it and make it more cost-effective. This includes permitting small entities to initially measure a loan from a director who is a natural person and a shareholder in the small entity (or a close member of the family of that person) at transaction price. FRS 102 currently requires such loans to be initially measured at present value, with the discount rate being a market rate of interest for a similar debt instrument.
Once the election is over, Making Tax Digital will be pushed forward again, ready for its launch in April 2018.
If you aren’t using any software or apps to prepare your accounts, now is the time to start. Under MTDfB – Making Tax Digital for Business – Sole Trader, Partnerships, Landlords and ultimately Companies will need to file returns every quarter and submit a final year end return.
This what you will need to report
The categories of information listed below are being reviewed and have not yet been finalised. They have been included mainly for indicative purposes.
Income – furnished holiday lettings:
Expenses – furnished holiday lettings:
Income – property:
Expenses – property:
Interest and alternative finance receipts without UK tax deducted:
Interest and alternative finance receipts with UK tax deducted:
Other income received without UK tax deducted:
Other income received with UK tax deducted:
Disposal of capital assets – partnerships:
Tax adjustments and elections:
Capital allowances – claims and balancing charges:
Cashback sites are a simple idea. Instead of going directly to a shop, you access a retailer’s online store through a link from a cashback website.
You still receive your item directly from the retailer, but you also get some money from the cashback website.
It is often a percentage of the total price you paid.
The sites have links to retailers of everything from groceries and toiletries, to insurance policies and broadband deals.
Nobrainers explain the process
Signup to a Cashback Website, the most popular ones are Topcashback and Quidco but there are many other smaller ones too. If you sign up through us, you’ll get additional signup bonuses! (do it now!)
Search and compare products to buy online just as you normally would, for example, you might do a Google product search, or look on Kelkoo, for a CD, book, Furniture, anything.
Choose the merchant you would like to purchase this item from, for example, you’ve done a search for Widgets and deciced to but then from WidgetsRus
Now the clever bit, instead of going direct to widgetsRus, visit your cashback site first, eg. Topcashback, and search the site of several thousand Merchants for ‘widgetsRus’
If you’re in luck, you’ll find the amount they will give you (usually a percentage) cashback on whatever you spend at widgetsRus. Click on their link, and it takes you direct to widgetsRus, where you complete your purchase.
Once the purchase is complete (usually within 24 hours), you will get an email from the cashback website saying they successfully tracked my purchase.
Usually within 1-3 months the money arrives in your cashback account which you can able to withdraw at any time. simple as that!
Indicator recently reported that you could get £75 to £80 back on business insurance or save around 12% on booking via Expedia.
I was watching the BBC news this morning and in the Reality Check report they were talking about Debt.
Obviously the biggest amount of debt is mortgages and compared to other countries we are close to the average for Debt.
But its not just an issue for families its an issue for businesses too. We often work with landlords and typically their net cash flow out of the rent received is 2% or less.
That’s the Rental Income less mortgage interest, expenses and tax.
Landlords tend to be asset rich and cash poor, liquidity is vital to cover even minor problems such as repairs and void periods. It is of course easier to have liquidity with a bigger portfolio.
Landlords are facing many problems at the moment not least the Section 24 Interest Restrictions which start this year. This will mean large numbers of landlords with high Loan to Value ratios will have negative cash flow and if the sell they face 18% to 28% capital gains tax (as buy to let get an 8% penalty).
I wonder how many landlords have the resources to handle negative cash flow, how long could they cope what are their contingency plans?
The Lenders and Bank of England have anticipated this problem and for sometime now have tightened the lending rules coverage is now 145% for personal borrowers, but its still 125% for companies as they are aren’t affected by Section 24.
Now is the time to work on your strategy!
Most people don’t like doing accounts and actors, singers, musicians, dancers and performers are no exception.
Making Tax Digital will mean they will need to be on top of their expenses in order to do quarterly returns from April 2018.
Here is quick summary of claimable expenses.
Section 352 Limited deduction for agency fees paid by entertainers
(1) A deduction is allowed from earnings from an employment as an entertainer for agency fees (and any value added tax on them) if the fees are calculated as a percentage of the whole or part of the earnings from the employment.
This is subject to the limit in subsection (2).
(2) Amounts may be deducted under this section in calculating the net taxable earnings from an employment in a tax year only to the extent that, in aggregate, they do not exceed 17.5% of the taxable earnings from the employment in the tax year.
(3) Subsections (4) and (5) apply for the purposes of this section.
(4) “Entertainer” means an actor, dancer, musician, singer or theatrical artist.
(5) “Agency fees”, in relation to an employment, means—
(a) fees paid under a contract between the employee and another person, to whom the fees are paid, who—
(i) agrees under the contract to act as an agent of the employee in connection with the employment, and
(ii) at the time the fees are paid is carrying on an employment agency with a view to profit, and
(b) fees paid under an arrangement under which a co-operative society or the members of such a society agree to act as the employee’s agent in connection with the employment.
(6) For the purposes of subsection (5)—
“co-operative society” does not include a society which carries on or intends to carry on business with the object of making profits mainly for the payment of interest, dividends or bonuses on money invested or deposited with or lent to the society or any other person, and
“employment agency” has the meaning given by section 13(2) of the Employment Agencies Act 1973 (c. 35).
Trade and Magazine Subscriptions
You can claim for:
Travel & Subsistence
The normal rules apply https://stevejbicknell.com/2017/03/27/what-are-the-rules-on-subsistance-and-travel/
Travel to auditions, rehearsals and performance related activities should all be claimable.
Car Mileage can also be claimed at 45p for the first 10,000 miles then 25p per mile
Clothing and Costume Cleaning
If the clothing is for a performance then it should be fine but if used for personal use it has duality of purpose and can’t be claimed.
Generally rehearsal clothes can’t be claimed.
If the clothing counts as for a performance then the cleaning costs can be claimed
Tickets to events, shows, movies and museums may be claimable if they are for research purposes.
Props and equipment, even Ipads and computers could also be business expenses.
Websites, marketing, photography can all be business expenses.
Working form Home can also be claimed https://stevejbicknell.com/2015/02/02/simplified-expenses-working-from-home/
Also Mobile phones, stationery, insurance, accountancy and many more
Basically there are 2 procedures to correct errors at companies house.
Amending Published Accounts
You must send amended accounts to Companies House on paper.
Amended or corrected accounts must be for the same period as the original accounts.
You must clearly say in your new accounts that they:
You must write “amended” on the front – the accounts may be rejected as duplicates if you don’t.
Your original accounts will remain on file at Companies House.
If you only want to amend one part of your accounts, you need to send a note saying what’s been changed. The note must be signed by a director and filed with a copy of the original accounts.
Depending on the changes made you might also need to change the corporation tax returns!
Second Filing of Documents (RP04)
RP04 should be used to notify Companies House of a second filing of a previously properly delivered document that contains inaccuracies showing on the register.
This form only applies to the following documents:
Forms need to be printed at full size on white A4 sized paper.
We all love happy clients and there is nothing better than a client referring you to their business contacts.
We love referrals too, so don’t forget to tell your friends how Bournemouth Chamber of Trade and Commerce help businesses and charities in Bournemouth.
3 great referral tips
What goes around, comes around. If you refer people and try…
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It’s often said that ‘your network is your net worth’ in otherwords the more business connections you have the more value you can add to your business and increase your chances of success.
There are many business networks in Bournemouth, you could probably network every day – Breakfast, Lunch and Evening.
Bournemouth Chamber of Trade & Commerce is different!
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The Finance Bill 2017 was to be the largest at 762 pages but in order to rush it though it was cut to 148 pages!
That’s an 80% reduction dropping 72 out of the 135 clauses and 18 out of 29 schedules.
One of the items dropped was Making Tax Digital (MTD).
But its widely expected that following the general election there will be another bill to bring in all the items that were dropped.
Our tax system is already far too complex:
Its a shame they couldn’t cut all the tax rules by 80%!