2011 July | McBrides

delay in tax statements as hmrc fails to order enough paper
July 27, 2011 by Shirley1
Statements about self assessment balancing payments will be delayed this year for some 500,000 people after HMRC failed to order enough special paper.

Those in the self assessment system who pay taxes ‘on account’ – mainly sole traders, the self-employed, and partners in businesses or LLPs – make payments in January and July 2011 based on the tax they paid for the tax year 2009-10. A balancing payment, or refund, will paid in January 2012 to rectify any differences between the estimate and the actual amount.

However, this year HMRC underestimated the number of forms – similar to credit card statements – required by taxpayers and failed to order enough of the necessary paper for printing them.

The late statements will now go out in August and, so long as payments are made within 30 days, no interest will be charged. It will also still be possible for taxpayers to check their statements online and pay via the internet or by telephone.

A spokesman for the Revenue said: “The volumes on this occasion have risen out of all proportion to previous patterns. HMRC will now ensure that they understand the reasons for this and will be fully prepared for any future rises…This in no way prevents the accurate payment of tax and no one will be out of pocket as a result.”

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low interest rates ‘deter young savers’, study suggests
by Shirley1
Low interest rates on children’s savings accounts are deterring many parents from investing in their future, a new study suggests.

According to a survey by consumer group Which?, the average instant access account for children provides a 1.1% return on money invested, while some even offer rates as low as 0.05%.

Those offering some of the lowest interest rates include child savings accounts affiliated with major football clubs.

Which? also said it expects interest rates on child trust fund accounts to fall sharply when the new junior ISA is introduced later this year.

‘It’s really important that children are encouraged to save, but it’s a real disincentive when there are such poor rates on offer,’ commented James Daley, Editor of Which? Money.

‘We think the situation may get worse unless the Government allows transfers from child trust funds [CTFs] to junior ISAs as we foresee that rates for CTFs will decline as providers concentrate their efforts on the new market for junior ISAs.’

The findings have prompted calls for banks and building societies to review their rates and do more to incentivise saving.

However, the Financial Secretary to the Treasury, Mark Hoban MP, said the introduction of junior ISAs shows the Government is dedicated to improving the UK’s savings culture.

‘Junior ISAs will be a great example of a simple, clear and tax-free account that allows families to save and invest for their children’s future,’ he said.

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cost of red tape compliance on the rise
by Shirley1
Businesses are spending more time and money on complying with regulations than ever before, latest research has shown.

According to a new survey by the Forum of Private Business (FPB), small firms spent a total of £16.8 billion on legal compliance last year, equating to an average of £14,200 per firm.

Of the 4,800 business owners polled, more than eight in 10 (84%) said they were spending more time on legislation than in 2009, while 67% revealed that they were spending more money on contracting external consultants to help minimise the burden.

The FPB argues that Government measures aimed at reducing the regulatory burden, such as the scrapping of £350 million of business regulations and a three-year moratorium on new regulations for firms with fewer than 10 staff, have yet to have an impact.

‘Despite several government initiatives – some more effective than others – it is clear that we are heading in the wrong direction as far as reducing regulation for small business owners is concerned,’ said the Forum’s Head of Campaigns Jane Bennett.

‘We simply want these measures to work properly and for the voices of the UK’s business owners to be clearly heard.’

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government reaffirms intention to reform business rates system
July 20, 2011 by Shirley1
Following a six-month review into council finance, Communities Secretary Eric Pickles has reaffirmed the Government’s intention to overhaul the way councils are allocated income from business rates.

Under current arrangements, which have been in place since 1988, business rates charged on most non-domestic premises, including shops, offices, pubs and factories, are calculated and collected by local authorities and put into a central pool before being redistributed through a complex formula to all councils, where they are used to pay for services like the police and fire brigade.

However, the Government is now proposing an overhaul of this ‘formula grant’ system, to allow local councils to keep the business rates they raise. The intention of ‘localising’ business rates is to give councils more incentive to invest resources as they see fit to boost business and create jobs in their areas. In addition, councils will be able to fund major projects by borrowing money against future revenue from business rates.

Mr Pickles told MPs: “No more will proud cities or historic counties be forced to come to the national government with a begging bowl. Councils will have a greater control over the cash, helping them plan for the longer term.”

Labour shadow Caroline Flint attacked the proposals on the grounds, saying: : “Cutting funding to areas of the highest need doesn’t free councils from central control or empower them, it stops them from doing the things their communities need of them. Yes, we want a funding system that supports jobs and encourages enterprise – but not every area has the same ability to attract investment and new business, not everywhere can be Westminster or the City of London.”

Currently, the amount raised via business rates varies widely from £1.8bn in Westminster to just £8.5m in West Somerset. However, Mr Pickles suggested that councils which raised the most could expect to subsidise those which raised the least, through a new system of tariffs and top-ups.

The Local Government Association has broadly welcomed the plans.

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call for fast-track planning applications for small firms
by Shirley1
The Government is being urged to fast-track small business planning applications to help firms cut through bureaucracy and drive economic growth.

The call came from the Federation of Small Businesses (FSB) ahead of a consultation by the National Planning Policy Framework (NPPF).

According to a new study by the FSB, many enterprises find the current system protracted, overly complicated and far too expensive.

Of the 1,700 firms polled, 53% that had applied for planning permission over the past two years said the rules and process were ‘overly complex,’ while 38% said the process had higher costs than they had anticipated.

With the majority of business owners submitting applications for minor changes, the FSB is campaigning for a fast-track application process to enable small firms to grow and expand.

FSB National Chairman, John Walker, said: ‘It is small businesses that have the potential to drive the economy, but only if their environment is conducive to growth.

‘Providing a fast track for small business planning applications, that make it cheaper and easier, would provide the incentives they need to grow their businesses. The Government is going through huge changes with planning at the moment, so it is vital the small business voice is heard’.

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business voices concerns over pace of economic growth
by Shirley1
The Government is being urged to take action on the economy amid fears that the pace of economic growth is faltering.

The British Chambers of Commerce (BCC) said it expects the UK economy to grow by 0.3% in the second quarter of 2011.

Official figures showed that the UK economy grew by 0.5% in the first quarter of 2011, after a 0.5% decline in the final quarter of 2010.

Furthermore, new research suggests that the number of profit warnings from quoted retailers has more than doubled during the first half of 2011 when compared to the number for the whole of 2010.

The BCC is now calling for ‘radical reforms’ to support business, arguing that the Government has failed to create a ‘credible plan’ to boost economic growth.

BCC director-general, David Frost, said: ‘Britain’s economic recovery is continuing but the pace of growth is too slow, and our economy is out of balance. Wealth-creating businesses must be given the right conditions to create growth or there is a real chance that the economic recovery could be thrown off course.

‘We accept the need to persevere with painful measures to cut the deficit. But the Government must move beyond the rhetoric of growth, and introduce radical reforms to help businesses export, invest and create more jobs,’ he added.

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vat rule-breakers given final chance to come forward
July 14, 2011 by Shirley1
HMRC has launched a new campaign to tackle businesses trading above the VAT threshold who have not registered for VAT.

Individuals and businesses have until 30 September to tell HMRC that they want to take part in the campaign. Those that make a full disclosure may face a reduced penalty rate of 10% on VAT that has been paid late.

More than 40,000 letters are being sent out over the next few weeks to inform businesses how to register to pay what they owe.

Businesses must register for VAT if their taxable turnover for the previous 12 months is more than £73,000 or they believe it will exceed this threshold in the next 30 days.

Commenting, Mike Wells, HMRC’s director of risk and intelligence, said: ‘The aim is to make it easy for individuals and businesses to contact us, make a full disclosure of their income and face a reduced penalty on any tax owed.

‘I urge people who have not registered their businesses for VAT to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.’

The clampdown is the latest in a series of HMRC campaigns to recoup unpaid tax.

Last month the Revenue published details of a campaign to target traders who use e-marketplace sites to buy and sell goods as a trade or business.

It also intends to scrutinise the tax affairs of private tutors and coaches who are able to earn either a main or secondary income from their expertise.

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inflation shows surprise dip in June
by Shirley1
New data from the Office of National Statistics (ONS) reveals an unexpected drop in the rate of inflation in June.

The Consumer Price Index (CPI) dropped from 4.5% to 4.2%, and the Retail Price Index (RPI) was down slightly as well from 5.2% to 5%. Both rates had been expected to remain unchanged.

There was also a sharp fall in core inflation, which dropped to 2.8%, the lowest figure since November 2010.

This comes as good news for the Bank of England, which has insisted that there is little sign of an inflationary spiral and has resisted pressure to raise interest rates in order to control rising prices. However, despite the fall, it is the 19th month in a row that inflation has exceeded the Bank of England’s target of 2%.

The ONS has said a sharp fall in prices of games, computer consoles, and electrical products outweighed a rise in food and alcohol prices, which were 0.9% higher over the month.

The Bank of England forecasts inflation to peak at 5% by the end of the year.

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rise in sme loan approvals but ‘small firms still struggling’
by Shirley1
A significant number of SMEs have successfully secured bank credit in the last 12 months, according to an independent survey conducted by the British Bankers’ Association (BBA) Taskforce.

Some 72% of SMEs that applied for an overdraft had their request approved, while 59% of loan applicants were successful.

However, business groups have argued that the very smallest firms are still struggling to gain access to affordable finance, with many firms choosing not to apply. Of the 5,000 SMEs surveyed, just 15% had actually applied for new credit.

The BBA Taskforce, which is made up of the major banks, business organisations and trade bodies, found that businesses with up to nine members of staff are most likely to be initially refused finance.

John Walker, national chairman of the Federation of Small Businesses (FSB), said: ‘These figures tell us what we already knew: the very smallest businesses are the ones bearing the brunt of a contraction in bank lending.

‘Small firms have been telling us for the past few years that they are fearful of approaching the banks for new finance, or to extend an overdraft, because they know they are likely to be turned down, or be offered a deal on terms that just aren’t favourable for them.’

Yet the British Bankers’ Association was more optimistic.

‘The results from the SME finance monitor are encouraging and show that most business are able to get the credit they need and that customers with a good track record and sound credit history find the process straightforward,’ it said.

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‘fab’ benefits for members from new business breakfast club
July 13, 2011 by Shirley1
Bankers, lawyers and CFOs turned out from three counties for the ‘FaB’ launch of an exciting new business club serving finance professionals.

More than 30 visitors, including guests from Middlesex and East Sussex, converged on the Kent offices of accountancy firm McBrides for the inaugural meeting of FaB – Finance and Business.

Offering top tips on current tax issues, as well as strategic business advice, the FaB club is aimed at financial and managing directors and professional advisers.

Visitors to the launch included representatives of Kent’s leading law firms, banks and other financial intermediaries as well as Chief Financial Officers from leading SMEs located in the South East.

Following an introduction from McBrides Corporate Finance Director Nigel Kimber and a bacon “butty” or two, McBrides’ Tax Partner Terry Baldwin outlined the Inland Revenue’s latest tactics in countering tax avoidance schemes. He also revealed new ways in which firms will be able to escape being caught by the associated company rules.

Paul Chapman, from London-based Azure Partners, specialists in creating strategies for business growth, then detailed tools and processes with which SMEs could develop and implement growth – and exit – strategies.

Guests were also provided with a quarterly tax update briefing and a voucher entitling them to a free Exit Readiness Review.

McBrides’ Terry Baldwin said: “We were delighted with the response to our first meeting and FaB is now well and truly up and running. The aim is to provide CFOs and like-minded professionals with the latest news and advice from the financial sector which they will find relevant and useful in their day to day working lives.”

Membership of FaB is free – but places are filling up fast. The next meeting will take place on Wednesday October 6 2011 from 8 – 9.30am.

For further information or to register, email shirley.caddock@mcbridesllp.com.

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