360 Blog

We’ve mentioned previously of HMRC’s intention to target on-line traders who are not declaring their income to the tax man and their amnesty (which ends on June 14) that offers reduced penalties for those coming forward voluntarily.

Over the weekend we learned that HMRC has now ordered popular websites such as Amazon and eBay to hand over records of traders’ names and e-mail addresses to help them identify individuals who have undeclared income.

This does not apply to individuals who sell a few personal items to raise some cash and if you are unsure of whether you should be declaring on-line income then please contact 360.

Smartphones and apps are quickly overtaking computers and websites as the tools we use to explore the internet. There are some amazing apps available to download and here, we recommend our favourite 5, all of which are completely FREE!

5. Twitter – it seems all modern businesses now have Twitter pages and the app allows you to run multiple accounts (e.g. a business page and your personal account), tweet, re-tweet and follow new people. It’s very quick, easy to use and has been designed really well. A must for all mobile Tweeters.

4. Natwest Business – This is a great app for Natwest customers. You’re able to view bank statements (and drill down into the transactions to obtain more information) for multiple accounts, move money and there is also a facility that shows you where the nearest branch / cash machine is!

3. iRank – this app tracks your website’s performance on the various search engines for up to 10 key word searches (if you want additional key words or websites you have to pay for an upgrade). It produces graphs that show whether your site has moved up or down the rankings in the last 90 days and is so much quicker than doing the searches yourself. Anyone interested in monitoring their SEO needs this app (or something similar).

2. Xero Touch – anyone using Xero to run their business’ accounts and finances will benefit enormously from this app. It shows you overdue invoices, bank balances (real time if using automatic bank feeds) and outstanding expense claims. It also allows you to raise and send sales invoices and take photos of receipts – this facility is great for busy employees who have a tendency to lose invoices!

1. 360 Accountants – of course we’re slightly biased but we think this app is the best financial tool out there. There are loads of tax calculators, tax tables and tax saving ideas and you can call, e-mail or interact with us at the touch of a button!

Keep an eye on our blog – we’ll be reviewing the best paid for apps soon.

- Help for technology, science, gaming, TV and drug industries.

- Funding for ultra fast broadband and WIFI in 10 major cities (but not Hull!).

- Proposals for businesses with turnover below £77K to pay tax on cash basis (rather than accruals)

- Corporation Tax for large companies to fall to 24% next month (not 25%) – falling to 22% in 2014.

- No change in fuel or alcohol duties, tobacco increasing at 18.00.

- Stamp duty on properties over £2m increasing to 7% at midnight (15% if transferred into a company!).

- 50% tax rate being reduced to 45% in April 2013.

- Child benefit only to be lost if someone earns over £60K, tapered reduction for >£50K earners.

- Largest increase in personal allowances ever, increasing to £9205 in April 2013, goal is £10K.

As ever the devil will be in the detail – if you’re registered to receive our free e-newsletters you’ll receive a comprehensive guide overnight – if not go to the on-line resources section of this website.

George Osborne delivers his third budget at 12.30pm on Wednesday 21 March and we’ll be posting all the news here, as it happens.

Companies House are taking a much harder line on companies whose stationery does not meet the legal requirements. Directors face criminal prosecution and a fine of £1000 if their company’s letterheads and e-mails don’t show the necessary detail. Companies can be fined £100 per day if not corrected to the satisfaction of Companies House.

Companies House regulations state they must include:

1. The company’s full registered name (as per the certificate of incorporation) – be careful to only abbreviate limited to ltd if this is what is shown on the certificate. Trading names and logos can be shown provided the actual name is clear and legible also.

2. The registered office address – not only must this be shown but it must state that it is your registered office. If you trade from a different address you may choose to show both addresses but make it clear which is the official registered office.

3. The company registration number.

4. Whether the company is registered in England, England & Wales or Scotland (again this information can be found on your certificate of incorporation).

5. If you choose to show the names of the company’s directors you must show ALL directors, you cannot pick and choose.

Invoices, order forms and compliment slips don’t need all of this information, the company’s full registered name will suffice but be aware that if you add a note to a compliment slip this converts it into a letter and all of the above needs to be included!

It’s also good practice to ensure you hold all of the above information for your customers – it is not uncommon for businesses who are pursuing payment for goods or services supplied on credit to not actually know who they’ve been doing business with – clearly this is extremely dangerous.

For a free audit of whether your business stationery is compliant, please contact 360.

The Humber Local Enterprise Partnership Forum held its first meeting at the Willerby Manor Hotel today. Several hundred local business owners and other interested parties attended the event with Lord Haskins (chair of the LEP) and Danny Alexander MP who were the key note speakers.

Lord Haskins explained the role of the forum (which any local interested party can join) is to provide a link between business and the LEP and also to scrutinise the work of the organisation.

In an upbeat presentation, Lord Haskins was hopeful that the new Enterprise Zones and the anticipated influx of renewable energy investment could reverse 50 years of decline in the region and that if the LEP performed well, its limited budget may be increased by central government in the future. Other comments included:

The Humber Estuary is currently a hugely unexploited national asset.

The forthcoming reduction in Humber Bridge tolls will help to unify the economies of the north and south banks.

There is huge potential for growth in trade with the Baltics as the former communist states develop over the next 30 years.

Current proposals to adapt the region’s political boundaries means Westminster is extremely interested in the region currently – he hopes to exploit this!

One of the group’s aims is to convince the 4 local authorities that 1+1+1+1 can make 5 or 6.

At the start of a 1 day visit to the region, Danny Alexander revealed that the government wants the UK to become the world leader in renewable energy, with the Humber as the hub to this.

The government is committed to green energy, increasing our production of it and driving down the cost of its production.

In a surprise announcement, he also revealed the Paull Enterprise Zone will be one of only 6 in the UK that qualifies for enhanced Capital Allowances – this was extremely well received by businesses in that area. He also confirmed that rate reductions in the EZs could be worth upto £55K per annum per business.

If you would like to discuss any of these matters or would like information on joining the forum then please contact 360.

Businesses have until 13 June to bid for a share of round 3 of the Regional Growth Fund. £7.5bn has already been distributed to 170 organisations and it is estimated 330,000 jobs have been created or saved.

The minimum amount of grant that can be applied for is £1m and is available to public and private partnerships too.

For further information go to http://www.bis.gov.uk/rgf or contact 360.

Dear Client

Welcome to our monthly tax newsletter designed to keep you informed of the latest tax issues.

We hope you enjoy reading the newsletter and remember we are here to help you, so please contact us if you need further information on any of the topics covered.

Best wishes

360

GETTING ROUND THE NEW RESTRICTIONS TO 100% TAX RELIEF ON BUYING EQUIPMENT

As we mentioned in the February edition of Tax E-News, the £100,000 annual investment allowance reduces dramatically to £25,000 from 1 April 2012.

If that is a problem, and your company needs to spend, say, £40,000 in the year on equipment, one solution is to pay the extra £15,000 yourself in your capacity as an employee of the company. You then have your own £25,000 expenditure limit and you can claim full tax write-off against the income you receive from your company. This is because your employment is a qualifying activity for the purposes of capital allowances, provided we are NOT talking about cars, motorcycles or cycles.

You need to show that purchasing the equipment is a necessity for you to use in the performance of the duties of your employment, and that should not be a problem. Care is needed in getting the paperwork right.

CAUGHT BY THE PERSONAL ALLOWANCE TRAP?

Do you know if you are one of the 700,000+ people paying a marginal income tax rate of 60%? This is an increasingly unfair trap which exists if your income is just over £100,000. That means you are a 40% taxpayer, but some of your income will (amazingly) be taxed at 60%. You may not even realise this as it is not absolutely clear from the tax computation we produce for you each tax year.

How can this happen? It’s all down to the withdrawal of the personal tax allowance by £1 for every £2 that your income exceeds the magic figure of £100,000. And with the large increase in the personal allowance (the plan is to get that up to £10,000 eventually) it is a tax trap that will affect more and more people each year. Here is what it means in figures for 2011/12:

Taxable income                 Marginal rate
£100,000 to £114,950          60%
£114,951 to £149,999          40%
£150,000 +                           50%

And for the next tax year 2012/13 it is even worse in terms of the number of people affected:

Taxable income                 Marginal rate
£100,000 to £116,210          60%
£116,210 to £149,999          40%
£150,000 +                           50%

As if the above was not bad enough, add in your national insurance contributions at 2% if employed or self-employed and you suffer a marginal rate of 62%!

There are several techniques available to avoid this unacceptable tax rate. Please contact us for help.

ELECTRICIANS TO LOSE THEIR SPARK

HMRC have just launched their Electricians’ Tax Safe Plan, to encourage electricians to declare any income they have kept quiet about so far. If you know of any electricians in that category, please point them towards us and we will get the best tax deal for them under this plan.

The special deal involves lower penalties than are normally charged on previously undeclared income and represent a convenient way of coming clean and getting the tax position in order.

Notification for taking part has to be made by 15 May 2012 and the tax arrears have to be paid by 14 August 2012.

Similar campaigns will start soon and we are ready to help anybody within the following categories:

• Not completed tax returns but are liable to tax at the 40% or 50% rates.
• Those in the construction and building work industry who are not paying the correct amount of tax. This includes roofers, window fitters, bricklayers, carpenters and joiners.
• Direct selling from buying and selling goods direct to others, or receiving commission on such sales.
• Those using e-marketplaces to buy and sell goods as a trade or business (the odd deal should not be a problem).

BUSINESS RECORDS CHECKS – REVIEW, SUSPENSION AND RELAUNCH

The pilot programme of BRCs began in April 2011 and involved checks by HMRC on the standard of small and medium-sized enterprises’ (SME’s) statutory business records. Up to 4 January 2012, 2,437 BRC’s had been carried out. These found that 28% of SMEs had some issue with their record-keeping, and an additional 11% had issues serious enough to warrant a follow-up visit.

HMRC undertook a strategic review of the project in consultation with the professional and representative bodies. The purpose of the review was to consider the overall aims of BRCs, examine whether the current approach is the best way of achieving the policy objectives and identify what changes are needed to ensure that the objectives are achieved.

As a result of the review, the scheme has been suspended! However, don’t celebrate too much as it will be relaunched early in the 2012/13 tax year with a fresh approach. This will partly involve:

• Collecting far less revenue than originally forecast
• More focus on businesses considered to be at a higher risk of keeping poor records
• No penalties charged unless poor records lead to an incorrect tax return.

This is all good news and at last HMRC are being sensible about how to operate BRCs.

Then now is the time to be sitting down with your accountant, ascertaining what your profit levels and tax liabilities are likely to be and looking at ways of reducing your tax burden.

The timing of capital expenditure is crucial given recent changes to Capital Allowance rules and you may also wish to accelerate repairs to plant, investment in ICT or marketing.

Contributions into director or staff company pension schemes is another popular method of reducing profits.

Finally, perform a full review of potential bad debts and instruct lawyers before your year end in case you need to prove to HMRC you were aware the debt was bad at this point.

As ever, you do need to consider the cash flow impact of the above strategies and we at 360 can of course assist you in this decision making process.