Tuesday, 24 March 2009

1st Addition Sign Up For Utility Warehouse Distributorship

As part of our drive to assist clients with the minimisation of their operating costs and, therefore, the maximisation of their profits, 1st Addition Accountancy have signed up for a distributorship with Utility Warehouse.

Utility Warehouse have won a whole range of awards in recent months, for both their prices and levels of customer support.

For example, The April edition of Which? magazine features a follow-up to the survey of energy suppliers they conducted last year.

The new survey has found that; "customer satisfaction with suppliers has got worse."

With one exception - the Utility Warehouse!

Utility Warehouse's customer satisfaction rating has actually increased - to an amazing 83%! The closest any of the 'Big 6' come to that is SSE - with just 53%, placing Utility Warehouse miles ahead of the oposition!
Utility Warehouse received:
  • billing accuracy: 5 stars!
  • clarity of bill: 5 stars!
  • customer service: 5 stars!
  • telephone support: 5 stars!
  • value for money: 5 stars!

This is a further improvement on the ratings achieved in the previous survey.

With Utility Warehouse, customers value taking the 'total package', not just their energy, but their phone and broadband too.

Once more, Which? spells it out: for service, value and all-round customer satisfaction, the Utility Warehouse is number one.

To find out more, and see how much you could save, why not give us a call, for free, on 0800 061 2441.

Tuesday, 17 March 2009

Time For Some Last Minute Tax Planning?

For many, particularly the self employed, 31 March / 5 April is not only the tax year end, but also the financial year for their accounts. For those of you in that position, there are only a couple of weeks left to get in any last minute items of tax planning.

Most of us have heard of capital allowances. They are, effectively, a ‘wear and tear’ allowance give by HMRC to help us claim the cost of our major purchases of capital equipment, vehicles etc over a number of years.

What many do not realise, though, is that, in April last year, the Finance Bill 2008 introduced ‘Annual Investment Allowance’ for the first time.

Under the provisions of this allowance, any business (sole trader, partnership or limited company) can, from April 2008, claim 100% of the cost of their new equipment in the year in which it is incurred, up to a maximum of £50,000 of capital expenditure.

For those of us with a year end coming up, it’s definitely worth a look. Whilst I would never advocate buying equipment unnecessarily, just to save tax, if you do have any imminent capital expenditure on the horizon, I would give some serious consideration to getting it in before your accounting year end.

By way of clarification, if the company profits for the year are £15,000, and you purchase a new piece of equipment, costing £10,000, on the last day of the year, you will be able to reduce your taxable profit down to just £5,000 (in spite of the fact that you have not had the equipment for the whole year)!

Food for thought I think.
Further guidance on this is available in HMRC Guidance Booklet BN12:

Sunday, 1 March 2009

National Minimum Wage For Directors

On 2 September 2008, we posted details of the new National Minimum Wage for employees.

One question we often get asked is; "How does this affect us as directors"?

Many are aware of recent speculation and debate as to the legality of paying ourselves, as directors, less than the NMW. This is relevant for many small business people who pay themselves a small salary only, with the balance being topped up by dividends.

This is perfectly legal, as long as the director concerned does not have a contract of cmployment. As soon as a contract of employment is signed, then the NMW must be applied.

Sounds simple, except that the decision to sign a contract will also have an impact on the director's eligibility for Working Tax Credit (WTC).
  • If you are a director with no contract of employment, you will not qualify for WTC, unless your partner works the required number of hours each week.

  • If you do have a contract of employment, and pay yourself at least NMW, for the hours you do work, then you should qualify for WTC.

HMRC To Change The Way It Carries Out Compliance Checks

The way HM Revenue & Customs (HMRC) carries out compliance checks (also known as enquiries, visits and inspections) will change from 1 April 2009. These changes will affect how we manage compliance checks for:
  • Income Tax
  • Capital Gains Tax
  • VAT
  • PAYE
  • The Construction Industry Scheme
  • Corporation Tax

The new compliance checks legislation is designed to make the tax system simpler and more consistent.

From 1 April 2009, HMRC will have one set of powers covering PAYE, VAT, Income Tax, Capital Gains Tax, Corporation Tax and Construction Industry Scheme to:

  • visit businesses to inspect premises, assets and records
  • ask taxpayers and third parties for more Information and documents

These powers are provided by Schedule 36 of the Finance Act 2008.

The new legislation will also provide:

  • greater flexibility in setting record-keeping requirements after 1 April 2009
  • new time limits for assessment and claims which will not be fully in force until April 2010 - but there will be some transitional arrangements from 1 April 2009
  • important safeguards for customers
    These measures are provided by Schedule 37 and Schedule 39 of the Finance Act 2008.

Legislative changes at a glance:

The new legislation provides HMRC with:

  • one set of powers to inspect business records, assets and premises
  • the ability to see statutory business records without a right of appeal
  • the ability to look at records for PAYE, Income Tax, the Construction Industry Scheme,
  • Capital Gains Tax and Corporation Tax during the tax year before a return has been submitted
  • a new power to correct obvious errors in a tax return based on information held by HMRC
  • a single approach across all taxes to asking taxpayers and third parties for supplementary information, based on formal information notices with a right of appeal

The legislation also makes some changes to the way HMRC must carry out compliance checks, including:

  • a new four-year time limit for assessments and claims - a reduction from six years for Income Tax, Capital Gains Tax and Corporation Tax and an increase from three years for VAT
  • reductions in extended assessment time limits
  • a streamlined process for closing Corporation Tax assessments
  • a new statutory ban on inspecting purely private dwellings without consent
  • a statutory requirement for HMRC to give at least seven days prior notice of a visit, unless either an unannounced visit is necessary, or a shorter period is agreed
  • a new requirement that unannounced visits must be approved beforehand by a specially trained HMRC officer
  • a statutory requirement on HMRC to act reasonably.

Soooo. That's the official line out of the way, but how will affect the average Tax Payer?

Well, for once, HMRC appear to be genuinely trying to streamline the system, and, not only that, there is a wealth of information around to help us understand the new regime, including the HMRC web site, a podcast and online learning tool (see the links below).

There has been much concern amongst smaller, home based, businesses that these new powers will, effectively, give HMRC carte blanche to visit their home premises whenever they wish. The reality is, this would only happen in instances of suspected fraud, or if there were a strong reason to do so (such as significant levels of equipment and / or stock being stored there or employees working from a home office). HMRC have also confirmed that they would be happy to conduct any such visits with the client's accountant in attendance, to minimise the 'fear factor' involved.

In conclusion then, although the penalties can be severe for non compliance, if we stay within the legislation, we have nothing to fear. This is being made easier to achieve, by standardising the procedures and penalties across all key areas of tax.

As usual, only time will tell.

The HMRC web site, http://www.hmrc.gov.uk/about/new-compliance-checks.htm, outlines the basics.

It also has a link to the online e learning module, http://www.hmrc.gov.uk/e-learning/compliance-checks/Externalmodule/HTML/Externalmodule_menu.html.

There's even a podcast available, at: http://podcasts.hmrc.gov.uk/audio/18_HMRC_Compliance_Checks.MP3. It's only 8 minutes long, so why not check it out?

Recession Hits Government Coffers Too!

We're all feeling the effects of the recession, but many might be surprised to hear jst how much it is now taking its toll on public finances, addording to recently released official figures.

The UK's public sector finances recorded a surplus of £8.4bn in January, well down on the £15.3bn surplus in the same month last year.

Government borrowing for the first 10 months of the financial year now stands at £67.2bn. The chancellor has forecast borrowing for the full year of £77bn.

The year-on-year drop in January's surplus was largely due a slump in tax receipts, which fell by £7bn.

Government borrowing now stands at 47.8% of the UK's economic output. Last January, it stood at 42.2%.

"It's clear that public sector finances are deteriorating quite rapidly," said Amit Kara at UBS.

"The tax take is being hammered by the recession," commented Howard Archer, economist, Global Insight

January is traditionally a good month for the public finances as they are boosted by annual tax receipts, however, these have been hit by falls in income tax caused by rising unemployment and the curbing of bankers' bonuses in the City, and by falls in corporation tax as businesses' profits suffer during the recession.

The temporary cut in VAT from 17.5% to 15% has also affected tax revenues.

The Office of National Statistics, which releases the public finance figures, also said that it plans to incorporate the finances of the Royal Bank of Scotland (RBS) and Lloyds Banking Group into the public finance balance sheet. It said this could add between £1 trillion and £1.5tn to public sector.