Small businesses should be aware that HMRC is taking a much more proactive stance at recovering unpaid VAT. HMRC is also less prepared than it was a year ago to allow businesses to defer tax payments under its "Time to Pay" scheme, so businesses really do need to get their payments in order or they could face the real risk of having their assets repossessed.
HMRC had previously reserved its use of distraint proceedings to recover unpaid payroll tax. However, since the recession it has been far more active in recovering other types of unpaid tax, most notably value-added tax.
Wednesday, 16 May 2012
IR35 Business Entity Tests
HMRC has started the process of overhauling its operation of the IR35 regime for personal services companies with new guidance issued in May 2012 that sets out basic risk factors which they say will potentially increase a contractor's chance of being investigated.
This overhaul is clearly designed to facilitate an increase in IR35 investigations. As expected following leaks last month, the 12 business entity tests set out in HMRC's 47-page intermediaries legislation guidance notes are illustrated by six example scenarios. HMRC said the tests are designed to build up a picture of how a contractor's business works and how they provide their services. The tests include the following:
The business entity tests are something against which you should be able to self-assess to see how you scored by their internal rating. But HMRC aren't revealing what the detailed risk criteria are because of the fear people might arrange their affairs accordingly.
In any event the business entity tests are just a diagnostic tool. The actual application of IR35 will always come down to employment status factors that must be tested against case law going back over 40 years and will always take into account contractual terms.
HMRC is apparently seeking to appoint specialist IR35 teams at offices in 3 areas of the UK to pilot the new diagnostics.
Anyone with concerns about the tests and the risk of investigation can contact us.
This overhaul is clearly designed to facilitate an increase in IR35 investigations. As expected following leaks last month, the 12 business entity tests set out in HMRC's 47-page intermediaries legislation guidance notes are illustrated by six example scenarios. HMRC said the tests are designed to build up a picture of how a contractor's business works and how they provide their services. The tests include the following:
- Business premises test - Does the business utilise business premises separately from the contractor's home or end client's premises.
- PII test - Does the contractor need professional indemnity insurance
- Efficiency test - Has the business had the opportunity in the past two years to increase its revenue by working more efficiently?
- Assistance test - Does the business employ any workers who bring in at least 25% of annual turnover?
- Advertising test - Has the business spent over £1,200 on advertising in the past year; entertainment does not count as advertising?
- Previous PAYE test - Has the end client engaged the Director during the previous 12 months with no obvious changes in the working arrangements?
- Business plan test - Does the company have a business plan with a regularly updated cash flow forecast, and does it have a separate bank account?
- Repair at own expense test - Does the business have to bear the cost of rectifying any mistakes?
- Client risk test - During the past two years, has the business been unable to recover payment amounting to more than 10% of yearly turnover.
- Billing test - Does the business invoice for work carried out before being paid and negotiate its payment terms?
- Right of substitution test - Does the business have the right to send a substitute?
- Actual substitution test - Has the business hired anyone in the previous two years to do the work it has taken on?
The business entity tests are something against which you should be able to self-assess to see how you scored by their internal rating. But HMRC aren't revealing what the detailed risk criteria are because of the fear people might arrange their affairs accordingly.
In any event the business entity tests are just a diagnostic tool. The actual application of IR35 will always come down to employment status factors that must be tested against case law going back over 40 years and will always take into account contractual terms.
HMRC is apparently seeking to appoint specialist IR35 teams at offices in 3 areas of the UK to pilot the new diagnostics.
Anyone with concerns about the tests and the risk of investigation can contact us.
Thursday, 10 May 2012
Queen's Speech
The Queen's Speech sets out to address legislation in the next twelve months.
The only Bill which reflects upon business is seemingly -
A wide ranging Enterprise and Regulatory Reform Bill covering competition, employment disputes, director's pay and regulatory reform. Competition enforcement will be strengthened by merging the Competition Commission and parts of the Office of Fair Trading. A Green Investment Bank will be established to promote private sector investment in a greener economy. Reforms in the employment tribunal system will be achieved by providing more options for the early resolution of disputes through Acas. On Director's pay, shareholders will be allowed a binding vote on the remuneration of directors.
This Bill applies to the whole of the UK, but with some parts relevant to England, Wales or Scotland only.
The only Bill which reflects upon business is seemingly -
A wide ranging Enterprise and Regulatory Reform Bill covering competition, employment disputes, director's pay and regulatory reform. Competition enforcement will be strengthened by merging the Competition Commission and parts of the Office of Fair Trading. A Green Investment Bank will be established to promote private sector investment in a greener economy. Reforms in the employment tribunal system will be achieved by providing more options for the early resolution of disputes through Acas. On Director's pay, shareholders will be allowed a binding vote on the remuneration of directors.
This Bill applies to the whole of the UK, but with some parts relevant to England, Wales or Scotland only.
Thursday, 3 May 2012
Walker Thompson Newsletter 55
We are delighted to welcome a new member of staff to Walker Thompson. Sharan Bansal has joined our bookkeeping and payroll department working alongside Tamar Smith. The recruitment is helping us to meet the needs of our expanding portfolio of clients and is part of our ongoing strategy. We feel she is going to make a great addition to our staff.
P11D DEADLINE LOOMING
P11D DEADLINE LOOMING
The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2012, are due for submission to HMRC by 6 July 2012.
According to the latest statistics issued by the Office of National Statistics:
‘The unemployment rate was 8.3% of the economically active population, down 0.1 on the quarter. There were 2.65 million unemployed people, down 35,000 on the quarter. This is the first quarterly fall in unemployment since the three months to May 2011.’
HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time.
HMRC are urging anyone who has still not completed their 2010/11 self assessment tax return to send it online before the end of April, or be charged daily penalties from 1 May.
HMRC have updated their guidance on Real Time Information (RTI). This new system of monthly PAYE returns is to be piloted from April 2012 and is expected to be compulsory for all employers from October 2013.
HMRC are consulting on changing the rules on hot takeaway food to ensure that all food (with the exception of freshly baked bread) that is above ambient air temperature when provided to the customer is standard rated.
The government is proposing to restrict tax reliefs available to individuals such as charitable giving.
Thursday, 19 April 2012
Setting up a business with a partner
Going into business with a partner? Forming a limited company and each having 50% of the shares would seem reasonable. It sounds fair but could lead to a deadlock if you ever disagree over something serious.
Common causes of disputes include:
The solution: Get a well drafted shareholders' agreement in place, and before you fall out.
Common causes of disputes include:
- disagreements over strategy
- power struggles and poor personal relationships
- conflicts of interest, and dealings between the company and a private business owned by one of the directors
- concern as to whether the board is meeting its legal responsibilities
- concern over financial issues and potential insolvency
- service contracts and remuneration
- a change in personal circumstances of one of the key parties
The solution: Get a well drafted shareholders' agreement in place, and before you fall out.
Monday, 16 April 2012
Walker Thompson Newsletter 54
Have you visited our new website yet? If not, please have a look and let us know what you think: http://www.walkerthompson.co.uk/
We are now keeping clients up to date with regular articles on Facebook, Twitter and Linkedin.
Please follow any of the links below for more information on each topic.
BUDGET 2012
George Osborne presented his third Budget on Wednesday 21 March 2012.
INCREASED PERSONAL ALLOWANCE FOR 2012/13
For those aged under 65 the personal allowance will be increased by £630 to £8,105. This increase is greater than the minimum required and is part of the plan of the government to ultimately raise the allowance to £10,000.
AGE ALLOWANCES
It was announced in the Budget that from 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted.
CHILD BENEFIT
Legislation will be introduced to impose a new charge on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner are in receipt of Child Benefit for the year.
CORPORATION TAX RATES
A further reduction in the main rate of corporation tax has been announced.
STAMP DUTY LAND TAX (SDLT)
A new rate of 7% will be introduced where the chargeable consideration for a residential property is more than £2 million.
EMPLOYER END OF YEAR FORMS
HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time.
REIMBURSING ADDITIONAL HOUSEHOLD EXPENSES
From 6 April 2012 HMRC are increasing the guideline rate which employers can use to reimburse employees for additional household expenses incurred because they have to work from home to £4 per week (currently £3 a week).
ADVISORY FUEL RATES FOR COMPANY CARS
New company car advisory fuel rates have been published to take effect from 1 March 2012.
UPDATED GUIDANCE ON GIFT AID AND NEW DECLARATIONS
HMRC have updated their guidance on Gift Aid declarations and provided new model declarations.
NATIONAL MINIMUM WAGE RATES
The government has accepted the Low Pay Commission’s recommendations for National Minimum Wage rates from 1 October 2012.
NATIONAL LOAN GUARANTEE SCHEME
The Chancellor George Osborne has launched the National Loan Guarantee Scheme (NLGS), which is designed to help ‘smaller businesses’ across the UK access cheaper finance.
We are now keeping clients up to date with regular articles on Facebook, Twitter and Linkedin.
Please follow any of the links below for more information on each topic.
BUDGET 2012
George Osborne presented his third Budget on Wednesday 21 March 2012.
INCREASED PERSONAL ALLOWANCE FOR 2012/13
For those aged under 65 the personal allowance will be increased by £630 to £8,105. This increase is greater than the minimum required and is part of the plan of the government to ultimately raise the allowance to £10,000.
AGE ALLOWANCES
It was announced in the Budget that from 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted.
CHILD BENEFIT
Legislation will be introduced to impose a new charge on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner are in receipt of Child Benefit for the year.
CORPORATION TAX RATES
A further reduction in the main rate of corporation tax has been announced.
STAMP DUTY LAND TAX (SDLT)
A new rate of 7% will be introduced where the chargeable consideration for a residential property is more than £2 million.
EMPLOYER END OF YEAR FORMS
HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time.
REIMBURSING ADDITIONAL HOUSEHOLD EXPENSES
From 6 April 2012 HMRC are increasing the guideline rate which employers can use to reimburse employees for additional household expenses incurred because they have to work from home to £4 per week (currently £3 a week).
ADVISORY FUEL RATES FOR COMPANY CARS
New company car advisory fuel rates have been published to take effect from 1 March 2012.
UPDATED GUIDANCE ON GIFT AID AND NEW DECLARATIONS
HMRC have updated their guidance on Gift Aid declarations and provided new model declarations.
NATIONAL MINIMUM WAGE RATES
The government has accepted the Low Pay Commission’s recommendations for National Minimum Wage rates from 1 October 2012.
NATIONAL LOAN GUARANTEE SCHEME
The Chancellor George Osborne has launched the National Loan Guarantee Scheme (NLGS), which is designed to help ‘smaller businesses’ across the UK access cheaper finance.
Friday, 13 April 2012
Fact or Fiction
Without facts at your fingertips it is difficult to take the right business decisions. Don't expect brilliant insights if you haven't collected the right information in a useable format.
Do you actually know which of your products, services or markets generate the largest revenues?
In an uncertain world, the more information directors have, the more confident they should be about their decisions.
Businesses are often swamped with data but those that can quickly decide what is important will strengthen their performance.
Make sensible decisions about which information you need to collect and how to categorise it.
Collect the right information in an easy to use format.
Do you actually know which of your products, services or markets generate the largest revenues?
In an uncertain world, the more information directors have, the more confident they should be about their decisions.
Businesses are often swamped with data but those that can quickly decide what is important will strengthen their performance.
Make sensible decisions about which information you need to collect and how to categorise it.
Collect the right information in an easy to use format.
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