Archive for the ‘Uncategorised’ Category

Brexit, the outlook for business

Friday, November 23rd, 2018

The political upheavals of the last week have done little to resolve the Brexit issue, the underlying political manoeuvrings or settle a growing list of issues for small businesses across the UK.

Leaving aside the political considerations we now seem to be at a point where there will be a no-deal, a compromise deal (the so-called Chequers’ plan) or a no-Brexit outcome; all are possible.

Those of us working hard to build a business in the UK will be hard put to take much more of this indecisiveness.

There is, however, something we can all do while these political issues are being resolved. The main question we need to ask is:

What is the worst outcome for my business?

The consensus from most economic think-tanks and informed opinion is that a no-deal outcome would be the least helpful outcome. In which case, if you fit any of the criteria set out below, you may want to create a detailed impact assessment for your business: what are downside risks and how can they be countered.

  • Companies that export to the EU.
  • Companies that import goods from the EU, and
  • Companies that have key customers or suppliers that are dependent on trade with the EU.

With less than 120 days until the 29th March 2019 deadline, we need to consider our options. As we have said before on this blog, we need to get business fit for the Brexit race.

Apart from an impact assessment if you fit any of the above categories, all businesses need to be prepared for a possible downturn in economic activity, especially if no arrangements can be agreed with the EU before 29 March.

We need to take a hard look at our business assets and figure out how we can speed up the conversion of leads into cash in the bank. We need to work smarter.

There are no downsides to this suggested course of action. Even if Brexit produces an amicable outcome for all sides being business-fit will allow you to hit the ground running and outpace competitors who less able to respond.

We can help. Please call if you would like to discuss your options. In some respects, “the clock is ticking” is a worn out cliché, and yet so appropriate at this time.

Are you looking for export opportunities?

Thursday, November 22nd, 2018

In a recent press release, the Department for International Trade promoted its enhanced Export Opportunities service for UK companies.

In a nut-shell, this lists overseas governments and companies that are looking to buy UK goods and services.

On the face of it, if you are looking for a source of leads for your export marketing activities, it’s probably worth taking a look.

Extracts from the press release and the link to find out more are copied in below:

The UK is one of the first countries in the world provide this online service, following the launch of the Export Strategy and an ambitious drive to boost British exports.

Examples on the service include:

  • the Government of Ghana wants UK companies to help build infrastructure and supply vehicles
  • a Dutch education body that wants to buy touch-screen computers from the UK
  • a Hong Kong distributor who wants British cheeses for hotels, airlines and supermarkets
  • a Mumbai distributor who wants British chocolate to sell through its network of suppliers across India
  • a Costa Rican distributor wants to sell Scotch Whisky across the Caribbean
  • the pan-American games organisers in Lima want to buy sports equipment from the UK

 

Discover thousands of export opportunities online today.

 

The Export Strategy sets out how the government will support businesses of all sizes to make the most of the opportunities presented by markets around the world.

A government-led collaboration with business, developed after extensive engagement with a range of UK firms – the Strategy sets a new ambition from the government to increase exports as a proportion of UK GDP to 35%.

It presents a streamlined and targeted offer for businesses of all sizes, set to raise productivity, boost wages and protect employment across the UK.

Research shows that companies that export have increased growth potential, are more productive and have better paid jobs.

Making Tax Digital timeline

Wednesday, November 14th, 2018

As many readers of our newsletter will be aware, HMRC is moving forwards with their digitisation of taxpayer VAT and Income Tax reporting requirements under their much publicised Making Tax Digital (MTD) initiative. We have reproduced below recent announcements made by HMRC on this issue.

Mandatory filing of VAT returns using MTD compliant software will commence for all returns submitted after 1 April 2019. This will apply to VAT registered traders with turnover in excess of the present VAT registration limit of £85,000.

Traders in the following list can apply for a six month deferral, to October 2019 from this requirement. Those eligible for the deferral are:

  • trusts,
  • ‘not for profit’ organisations that are not set up as a company,
  • VAT divisions,
  • VAT groups,
  • those public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts),
  • local authorities,
  • public corporations,
  • traders based overseas,
  • those required to make payments on account and
  • annual accounting scheme users.

Finally, a reminder that the MTD process will not be rolled-out to other taxes (Income Tax and Corporation Tax for example) until April 2020 at the earliest.

Reporting tips for building contractors

Wednesday, November 14th, 2018

HMRC recently published a list of helpful reminders regarding the submission of monthly returns to HMRC. This article lists some of the points highlighted.

Each month contractors must send HMRC a complete return of all payments made to subcontractors within the scheme in the preceding tax month. This is regardless of whether the subcontractors were paid:

  • net of the standard deduction of 20%
  • net of the higher deduction of 30% or
  • gross (you still need to include gross payment status subcontractors on your monthly submission if you pay them in the month even though no deductions have been made from their payments).

This monthly return must reach HMRC within 14 days of the end of the tax month it is for.

You can make your monthly returns using either:

  • the free HMRC CIS online service or
  • commercial CIS software

Contractors who know they won’t be paying any subcontractors for several months should let HMRC know. You can do this by selecting the ‘Inactivity Request’ box under the declarations section of the return. HMRC will make your CIS record ‘inactive’ for 6 months which means you will not need to send any monthly returns (including nil returns) during this period of inactivity. If, however the situation changes during that time and you start to pay subcontractors again, you must tell HMRC.

If you stop using subcontractors within the Construction Industry Scheme permanently or stop using subcontractors but continue to have employees liable to PAYE deductions, you need to tell HMRC and they will update your records to show you are no longer a contractor. Once all the required contractor monthly returns have been received up to the requested date of cessation then no further monthly returns (including nil returns) should be submitted. If, however you start making payments to subcontractors under the Construction Industry Scheme again you will need to advise HMRC.

Childcare scheme update

Wednesday, November 14th, 2018

The childcare voucher and directly contracted childcare schemes closed 4 October 2018. In time, these schemes will be replaced by the roll-out of the new Tax-Free Childcare: this offers parents £2,000 per year per child towards approved childcare costs. (This is extended to £4,000 for disabled children.)

In a recent article HMRC confirmed the following instructions for employers:

  • Employees who joined a scheme and had the necessary changes made to their salary on or before 4 October, will see no change. Both you and your employees will continue to benefit from any Income Tax exemption or National Insurance contributions (NICs) disregard.
  • Applying to the scheme before the deadline is not sufficient and a new applicant needs to have had the necessary changes made to their salary by the deadline (4 October 2018) in order to benefit from the Income Tax exemption and NICs disregard.
  • If you continue to offer a scheme for new entrants after 4 October, you’ll need to deduct Income Tax and NICs on any vouchers given and pay employer NICs after this date.
  • Your employees need to tell you in writing (for example, by email) within 90 days if they start getting Tax-Free Childcare, so you can stop giving them vouchers and directly contracted childcare with Income Tax and NICs reliefs. If this means stopping or changing their salary sacrifice arrangement, you’ll need to update their contract and your payroll software. Employees won’t be able to return to your scheme once they’ve left.

Parents reading this post can check out what is available to their family under the new arrangements for child care support at https://www.childcarechoices.gov.uk/

Fifty pound note gets new lease of life

Wednesday, November 14th, 2018

The Treasury has confirmed that the £50 note will continue to be part of the UK’s currency, and further, that the Bank of England will reissue it as a new modern polymer note. According to Treasury sources this will help clamp down on crime.

The announcement follows a public consultation and the government has confirmed that the current mix of coins and notes will remain. The move will apparently give us more flexibility over how we spend and manage our money while making it harder for criminals to counterfeit the new note.

Originally introduced in 1981, there are currently 330 million £50 notes in circulation – with a combined value of £16.5 billion. According to the Bank of England, demand for the note is continuing to rise.

The Bank of England has also confirmed that the new £50 polymer note will be printed in the UK to accompany the existing £5, £10 and upcoming £20 notes. This will ensure that the UK’s currency continues to be secure.

Tax Diary November/December 2018

Wednesday, November 14th, 2018

1 November 2018 – Due date for Corporation Tax due for the year ended 31 January 2018.

19 November 2018 – PAYE and NIC deductions due for month ended 5 November 2018. (If you pay your tax electronically the due date is 22 November 2018.)

19 November 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2018.

19 November 2018 – CIS tax deducted for the month ended 5 November 2018 is payable by today.

1 December 2018 – Due date for Corporation Tax due for the year ended 29 February 2018.

19 December 2018 – PAYE and NIC deductions due for month ended 5 December 2018. (If you pay your tax electronically the due date is 22 December 2018)

19 December 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2018.

19 December 2018 – CIS tax deducted for the month ended 5 December 2018 is payable by today.

30 December 2018 – Deadline for filing 2017-18 self assessment tax returns online to include a claim for under payments to be collected via tax code in 2019-20.

Saving the High Street

Wednesday, November 14th, 2018

In his Autumn Budget delivered 29 October 2018, Philip Hammond made a number of promises including measures to improve the lack-lustre retail sector in our High Streets.

There is no doubt that the major online retailers have caused a major shift in the way we shop. As faster broadband has become more commonplace, and the use of computers a regular feature at home, the drift away from viewing and buying goods on the shelf to viewing pictures and click and buy on the internet, will likely continue.

At present, online retailers have a competitive advantage over their High Street competitors. They don’t have to pay:

  • business rates or rent for shop front property or
  • salaries to sales staff.

And in the case of the mega online retailers, who can afford to exploit the use of tax havens to shelter their trading profits, they do not pay comparable tax on their trading profits.

The recent Budget offered a one-third reduction in business rates for retailers with smaller shop premises: those with a rateable value below £51,000. Although this reduction is for a limited period, two years from April 2019.

He has committed what seems to be a modest sum, £675m, to rejuvenating city centre areas. This will support the cost of:

  • improving traffic flows to shopping areas,
  • the renovation of empty retail premises to provide residential accommodation, and
  • the repurposing of older or historical property.

City centre shops depend on foot-fall, if shoppers don’t pass by, then it’s unlikely they will become customers. In this respect, the above investment should encourage people to live and shop in city centre areas.

Mr Hammond also committed to start the process of increasing the UK tax take from online retailers, social media outlets and search engines, who sell goods and services to UK users. A new digital services tax will commence April 2020 and will levy a charge of 2% on the revenues generated by these concerns to customers in the UK.

Increase in the Annual Investment Allowance

Wednesday, November 14th, 2018

The Annual Investment Allowance (AIA) is being increased from 1 January 2019 to £1m from the present base level set some years ago of £200,000. The increase is due to be available for two years, until 31 December 2020. At this later date, the AIA will presumably return to the £200,000 limit.

The AIA is a 100% write down of qualifying asset purchases against business profits. For profitable companies, partnerships (excluding partnerships where one of the partners is a company or another partnership) and sole traders this is a generous tax break.

The AIA is available for most plant and equipment purchases, for example:

  • items that you keep using in your business, including commercial vehicles and cars if they are working assets, for example taxi cabs or driving school, dual control vehicles;
  • costs of demolishing plant and machinery;
  • parts of a building considered integral, known as ‘integral features’;
  • some fixtures e.g. fitted kitchens or bathroom suites;
  • alterations to a building to install other plant and machinery – this doesn’t include repairs.

The AIA is not available for purchase of:

  • cars that are not working assets;
  • items you owned for another reason before you started using them in your business; and
  • items given to you or your business.

Please call if you would like more information about this generous tax allowance.

Are you about to buy a second-hand commercial vehicle?

Tuesday, November 13th, 2018

When you buy a new commercial vehicle, you will pay 20% VAT on the purchase price and in most cases this VAT can be reclaimed. This assumes of course, that the motor trader selling you the vehicle is VAT registered.

If you purchase a second-hand commercial vehicle there are three VAT options:

  1. The second-hand dealer is not registered for VAT and therefore, you will not be charged VAT.
  2. The second-hand dealer is registered for VAT and only charges you VAT on the profit he is making on the sale under the VAT margin scheme, in which case you will not be provided with a VAT invoice and you cannot reclaim the VAT charged.
  3. The second-hand dealer is registered for VAT and charges you VAT at 20% on the sale price. In this case you will get a VAT invoice and can reclaim the VAT charged.

Let’s say that Jerry is looking at a second-hand van at his local dealers that has a sales price of £20,000. Primed by his accountant, he asks if the VAT included is calculated under the margin scheme.

After a hasty conversation with their accounts department, the rather flustered sales person says “yes, it is,” and after more enquiries Jerry is advised that the VAT element is £700. Jerry switches on his phone accesses the calculator, taps in £700 divides by 20 and multiplies by 100. The number £3,500 emerges.

Jerry knows that he cannot recover this £700 and he also knows that the dealer will have to pay the £700 out of his profit margin. Armed with this information, Jerry asks if he can pay outside the margin scheme, and more importantly, could he and dealer split the £700 saved by dropping the sales price to £19,650 plus VAT at 20%.

In this way, the dealer will collect and pay the VAT added of £3,930 and will receive £19,650 for the van instead of £19,300 (£20,000 less the £700 margin scheme VAT).

Jerry will have to pay out £23,580 initially but will be able to claim back the full £3,950 of VAT and will have acquired the van for £19,650 instead of £20,000.

The dealer accepts. A classic win-win outcome.