Help for SME’s – National Loan Guarantee Scheme 2

On the 5th April 2012 the new National Loan Guarantee Scheme will be launched. So what is it and how does it work?

The Government will guarantee £20Bn of banks debt, enabling the banks to access cheaper funding in the money market.
RBS/NWB anticipates £6Bn allocation.Santander has signed up, HSBC have declined.
This has been made possible by  Government reducing the Asset Purchase Facility from £40Bn to £10Bn.
This is a contingent liability for the Government.
There is a two year window, and the banks will pay a fee for the guarantee.

The purpose is that the bank passes on the saving to eligible customers.
The savings are up to 1% off the APC (asset price calculator).

Banks will retain full credit risk of the client facilities.

Eligiblity: SME’s with turnover up to £50m
New loans, hire purchase and leasing including refinance of Over Draft’s and refinance loans. Purchase of owner occupier property is eligible.

Ineligible: loans to property investors, property developers and those that have restrictions in state aid set out in specific European Commission State Aid rules (e.g. agriculture, transport and export).

OD’s, Revolving loans and Invoice Discounting are not eligible.

The borrower must be advised if banks use the scheme on their facility.

Loans up £25k to £250k must be repayable on 3, 5 or 10 year terms.

steve@bicknells.net

Payroll Year End – how to stay in control 3

Tax week 51 starts n Monday 19th March, so there are only 2 weeks till tax year end. For many Payroll Year End brings on feelings of dread and fear, the panic of closing off, printing P60’s, clearing payroll history, re-setting tax codes, tax rates, NI rates, but with a bit of planning and preparation it doesn’t need to be scary.

Here is a quick summary and timetable:

  1. Register online with HMRC https://online.hmrc.gov.uk/registration/organisation
  2. Order your P60’s (including some spares, just in case), you can get them free from HMRC http://www.hmrc.gov.uk/paye/forms-publications/onlineorder.htm
  3. Run your year end payslips as normal and print the P32, check what you have paid against P32 amounts
  4. Print the P11 Workings for PAYE and NI, makesure they are complete, no missed weeks, run some test calculations to double check the answers
  5. Print your P60’s and check them against the Payslips (these have to be issued to current employees by 31st May, but why wait till then? also employees that have left before year end get P45’s they don’t get a P60)
  6. Produce your P35 Employers Return and P14’s (these have the same details at the P60) – due by 19th May but you might as well prepare these when you run the final payslips
  7. Take back ups, print file copies
  8. Whether you use HMRC Basic PAYE Tools or commercial software like Sage, you will have been sent an update for the new tax year, basically, this will help you reset the Tax and NI Bands and change the basic tax code, starting the new tax year should also mean that the history is cleared
  9. HMRC will also have sent you new coding notices to start in the new tax year
  10. When you process your first period in the new tax year carryout your own test calculations on several employees to make sure the answers are correct, it better to deal with problems in the first period than have to roll back or start again later
  11. By the 6th July you will need to do you P11D’s for Benefits in Kind, but there is plenty of time for that

HMRC have a checklist and timetable available at http://www.hmrc.gov.uk/paye/payroll/year-end/checklist.htm

steve@bicknells.net

Fraud and Scams – be on your guard 1

I hadn’t realised just how many types of scam were out there until I was discussing it with our Nat West Relationship Director Mike Harrison, take a look at these links

http://www.natwest.com/commercial/planning/g2/security-advice-centre/common-scams.ashx

http://www.actionfraud.org.uk/a-z_of_fraud

It is an absolutely incredible list.

So what should you do?

As a business you should have a Fraud Policy that covers:

  • allocation of responsibilities for the overall management of fraud
  • the formal procedures which staff should follow if a fraud is discovered
  • any staff training necessary for the prevention and detection of fraud
  • creation of an awareness amongst staff that response plans have been devised, to deal with and minimise the damage caused by any fraudulent attack.

Alongside such fraud policy statements staff should be given clear guidance on the acceptance of gifts and hospitality and should also be clear on how to handle conflicts of interests.

An organisation’s Fraud Awareness Policy should be a short, precise document that can be understood and acted on by the appropriate personnel within the organisation. In broad terms, and in addition to the points noted above, the plan may also cover the following:

  • a general review of robustness of existing systems, procedures and controls in preventing fraud
  • a means for regular testing of such controls
  • the identification of assets (including corporate information and plans) most at risk
  • an appraisal of the threat of fraud on those assets and how it might manifest itself
  • the means of damage limitation and recovery of funds if fraud occurs
  • an unequivocal statement that all fraud offenders will be prosecuted
  • the steps to be taken in the event a fraud occurs and who is responsible for taking action including:
    • assigning responsibility for an instant response to the occurrence
    • recovering funds
    • dealing with the media
    • preserving evidence and reporting to the police

http://www.fraud-stoppers.info/policies/index.html

steve@bicknells.net

 

Practical Uses for Hive Up and Hive Down 3

Many Groups consist of trading and non trading businesses and often assets will get left behind in non trading businesses or businesses that only exist to cross charge their services, this is inefficient, to make a Group work efficiently assets need to centralised. But how can you do that?

Hive Ups and Hive Downs refer to the transfer of a business or assets within a group company.

What is a Hive Up?

A Hive Up is where a business or assets are transferred (or hived up) to the parent company.

What is a Hive Down?

A Hive Down is effectively a reorganisation of a company whereby a business or businesses are transferred (or hived down) to a subsidiary.

What could you Hive?

  • Assets
  • Clients
  • Trade

How do you Hive?

You need to sell the assets at their market value between the companies and to be a subsidiary a company must be 75% owned by its parent.

HMRC have rules to prevent loss buying ie buy a business with losses and use the losses to cut you tax bill, the rules are set out in CTM06300 http://www.hmrc.gov.uk/manuals/ctmanual/CTM06300.htm

It isn’t possible to get HMRC Clearance prior to a Hive Up or Hive Down but provided everything is fully disclosed and there are good commerical reasons for Hiving its likely HMRC will be supportive.

As always, if in doubt, seek advice.

steve@bicknells.net

Plan out the Key Dates for your Business Reply

There are so many things to remember when you have a company, accounting dates, vat dates, paye dates, corporation tax, self assessment dates, the list seems endless. The only way to keep on top of the dates is to put them in your diary.

I found this link http://www.businesslink.gov.uk/bdotg/action/keydates

Business Link can generate all your key dates, the results look like this

July 2012

05/07/12 Ensure agreement is reached with HM Revenue & Customs re Class 1B voluntary settlement.
Find out more: National Insurance: an introduction
PAYE and NICs
06/07/12 Ensure copies of P9D/P11D are with employees. PAYE and NICs
Submit P11D(b), P9D and P11D forms to HM Revenue & Customs.  
Report shares/securities information to HM Revenue & Customs.
Form 42 is provided by HM Revenue & Customs for this purpose.
Find out more: Share schemes – Opens in a new window
 
22/07/12 Pay PAYE, NICs, student loan deductions and deductions for payments to subcontractors for the month up to the 5th of this month electronically.
Find out more: PAYE for employers: the basics
PAYE and NICs
Pay Class 1A NICs shown to be due by your form P11D(b), electronically.  
31/07/12 If you need to make a Self Assessment payment on account, this is the date for your second payment.
You won’t have to make payments on account if your tax bill for the previous year was less than £1000, or if more than 80 per cent of your income tax for the previous year was deducted at source.
Find out more: Tax return deadlines and penalties
Self assessment

You can then print the list and pin on the wall or fridge and pop the dates in your diary.

Brilliant!

It could save you a fortune in late filing penalties

steve@bicknells.net

 

Choosing the right VAT Scheme could massively improve your cash flow Reply

For SME’s there are lots of options, here is a quick summary:

Standard VAT Scheme – on this scheme the VAT is based on tax points from invoices

Flat Rate VAT Scheme – If your turnover is below £150k you could join the Flat Rate Scheme, this scheme applies a % to your sales to work out your VAT Liability, it can make VAT returns easier to complete and in can sometimes work in your favour as the Flat Rates may mean you pay less VAT, if you join in your first year of VAT registration you get an extra 1% off the rate for the first year.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=HMCE_CL_000345#P31_2162

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#4

VAT Cash Accounting Scheme – if your turnover is below £1.35m you can account for VAT on a Cash basis, this is particularly helpful if your customers pay you on slower terms than you pay your suppliers

http://www.hmrc.gov.uk/vat/start/schemes/cash.htm

Annual Accounting Scheme for VAT – if your turnover is below £1.35m you could join the Annual Scheme and complete one return for the year but you make either 9 interim payments or 3 quarterly interim payments

http://www.hmrc.gov.uk/vat/start/schemes/annual.htm#1

Retail VAT Schemes – These are specific schemes aimed at mainly at shops and help to overcome the issues of mixed vat rate goods

http://www.hmrc.gov.uk/vat/start/schemes/retail.htm#2

VAT Margin Scheme – The margin scheme relates to second hand goods and accounts for VAT on the margin, for example on the sale of cars

http://www.hmrc.gov.uk/vat/start/schemes/margin.htm

The cash flow impact of the different schemes can be considerable, to get an idea of impact consider your cash cycle https://stevejbicknell.wordpress.com/2012/03/07/the-cash-cycle-what-is-it-what-is-your-cycle-how-can-you-improve-it/

To identify which schemes are availble to you take this test

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1074419970&r.s=sl

steve@bicknells.net

You could face a £1000 penalty for non compliant Letterheads 3

We have all been aware of this for sometime now, but Indicator have highlighted that Companies House are now taking a harder line and giving out £1000 penalties, so what are the rules:

The Companies (Trading Disclosures) Regulations 2008

(1) Every company shall disclose its registered name on—

(a)its business letters, notices and other official publications;
(b)its bills of exchange, promissory notes, endorsements and order forms;
(c)cheques purporting to be signed by or on behalf of the company;
(d)orders for money, goods or services purporting to be signed by or on behalf of the company;
(e)its bills of parcels, invoices and other demands for payment, receipts and letters of credit;
(f)its applications for licences to carry on a trade or activity; and
(g)all other forms of its business correspondence and documentation.

(2) Every company shall disclose its registered name on its websites.

http://www.legislation.gov.uk/uksi/2008/495/regulation/6/made

Letterheads: Company letterheads must show:

  1. The name of the company. This must end in “Limited” or “Ltd” or their Welsh equivalents. If the name you trade under is different in any way from the name of your company as shown on your certificate of incorporation, then the full name, including “Limited” etc must be shown on the heading, usually at the foot.
  2. The registered office. It must be identified as the registered office. If there is only one address shown on the letterhead, the words “Registered Office” can appear in small type just above or below, or you can mention it at, say, the foot of the heading by saying “Registered at the above address”, or something similar. The important point is that your registered office must be clearly identified. If this were an address other than your trading address then it would be appropriate to print the address, clearly identified as such, in small type at the foot of the letterhead and the trading address elsewhere in larger type.
  3. The registered number.
  4. Whether registered in England (or ‘England & Wales’) or Scotland.
  5. A Welsh company which has chosen “Cynfngedig” instead of “Limited” as the last word of its name must also state (in English) that it is a limited company.

http://link4business.info/2008/08/business-disclosure-requirements-information-which-must-appear-on-your-letterheads-invoices-websites-and-email-messages/

Make sure you comply, no one wants a penalty.

steve@bicknells.net

 

 

 

 

The Cash Cycle – What is it? what is your Cycle? How can you improve it? 9

As the saying goes, Sales are Vanity, Profit is Sanity and Cash is King. The Cash Cycle also known as the Working Capital Cycle helps you to quickly understand how much cash you need to run your business.

Here is a great example from Steve Grice for an average business

Average time to collect payment from customers           60 days            plus..

Average days sales held in stock                                   25 days            less..

Average days taken to pay suppliers                             35 days            equals…

Cash cycle                                                50 days

This means that you need enough cash in your business to finance 50 days worth of sales. If your sales are £1,000,000, you will need cash of £136,900. In practice, your business will probably need more cash available than this to pay for rent, rates, wages etc. You may also get cash spikes at the quarter end if you pay VAT.

http://stevegrice.wordpress.com/2012/02/06/working-capital-cycle/

Here is a brilliant Cash Flow Improvement Tool from NAB http://oms.nab.com.au/media/10/power_of_one/CF.html

This model quickly and easily calculates your cash cycle but also shows the effect of making improvements.

Having discovered what the cashflow cycle is, what can you do to improve it? well that depends, assuming you have agreed the best possible terms with your suppliers, you need to find ways to speed up cash received from Customers, if your business Sells to other businesses the first thing to look at is Credit Management.

CIMA have produce a comprehensive guide http://www.cimaglobal.com/Documents/ImportedDocuments/cid_improving_cashflow_using_credit_mgm_Apr09.pdf.pdf

But Credit Management may not be enough on its own, perhaps Invoice Finance might help?

Invoice discounting is an excellent, cost-effective way for certain businesses to improve their cashflow position.

  • Invoice discounting is most suitable for businesses with good financial controls in place and a strong financial background.
  • Invoice Discounting is ideal if you have an annual turnover above £500,000
  • Invoice discounting is suitable for business with an established credit control department.
  • Invoice Discounting is suitable for a wide range of businesses including manufacturers, wholesalers, transport firms, employment agencies and providers of some business services.
  • Suitable businesses for invoice discounting are growing businesses because the level of funding grows in line with increasing sales.

For more details look at http://www.rbsif.co.uk/invoice-financing/invoice-discounting

If your business sells to end customers you might consider Card Processing Advances http://www.credit-card-processing-loans.co.uk/

You must be masterful. Managing cash flow is a skill and only a firm grip on the cash conversion process will yield
results.

steve@bicknells.net

HMRC Results from Business Record Checks so far – will they start again in April? 1

BRC are short, face-to-face, real time interventions which aim to encourage greater voluntary compliance in record keeping among small and medium business enterprises (SMEs). They aim to put the customer on the right record-keeping footing and so save costs the business might incur as a result of inadequate record keeping.

http://www.hmrc.gov.uk/businessrecordscheck/review.pdf

HMRC were carrying out Business Record Checks under their existing powers in Schedule 36, FA 2008. They had set a target to make 50,000 visits, this then dropped to 20,000 visits and after just 2,437 record checks, on the 3rd February HMRC announced that it was to postpone making any new business record check appointments until a revamped approach is launched early in the 2012/13 financial year.

So how did the checks go:

Total number of visits 2,437

61% (1,495) of businesses received a “green” rating – which in HMRC terms means they were satisfactory or better

28% (681) got an “amber” rating – meaning there were some issues

11% (261) got “red” – meaning they get follow up and if they don’t improve face fines of up to £3,000

Number of follow up visits 61 percentage improved to Green assessment 80 per cent
percentage improved to Amber assessment16 per cent percentage with no improvement 3 per cent

A key problem has been agreeing what constitutes poor record keeping

steve@bicknells.net

 

£50 to £500 in Cash if you can get enough votes….. Reply

I was looking at PayPal becuase I had to up date some details and spotted they were promoting Fund 101 from Enterprise Nation its backed by Intuit and PayPal.

Every month they give £5000 to new businesses and they invite businesses to ask for amounts from £50 to £500, details as follows:

http://www.enterprisenation.com/fund101/?mpch=ads&mplx=3484-133899-12439-45

If you have an idea for a business and need a bit of cash to get started or you’re running a small business and need up to £500 to buy equipment, promotion flyers, hardware etc, you can apply.

Apply for between £50 and £500 and once you receive the money, the only thing we ask is you agree to be profiled on the site so we can see how you’re getting on. The money doesn’t have to be paid back; it’s for you to use on your idea or business.

Apply online and outline how much money you need and for what purpose. Make a good case for your idea and then encourage as many people as possible to vote for you. The number of votes required is equal to the amount of funding you’re looking for so to obtain £500 you’ll need to secure 500 virtual votes.

Remember, the Enterprise Nation community will help you spend the dosh! Want to use it to buy a camera to take good pictures of your products? Ask peers about the best deal on the market. Want to spend the money on a Google Adwords campaign but not sure where to start? Watch our video clips that will show you how!

Sounds like an interesting idea and if all you need is votes, how hard can it be?

steve@bicknells.net