Taxing Times – February 2017

By the time you read this, the personal tax filing deadline will have been and gone and we – as well as all our personal tax clients – will be breathing a sigh of relief and taking a quick breather before gearing up to face the rest of the year! 

To provide a much needed bit of down time, sit back and relax with this month’s Taxing Times, which includes:

  • VAT Flat Rate Scheme update
  • Doddie angelsTax Opps
  • Bad to the bone – how to help limit desk related bad back and strain injuries
  • Don’t be an ostrich – managing your tax debt
  • Get financially fit in 2017
  • Payroll update
  • What’s new in the world of tax

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VAT Flat Rate Scheme update

Do you use the VAT Flat Rate Scheme?

If so new rules effective from April 2017 could leave you out of pocket.

If you are what HMRC describe as a “limited cost trader” you will be forced to use a flat rate scheme percentage of 16.5%, regardless of what type of business you run.  A limited cost trader is a business which has expenditure on goods that is either:

  • Less than 2% of flat rate turnover, or
  • More than 2% of turnover, but less than £1,000 a year.

When we look at expenditure under these rules, only expenditure on goods can be included, and even then spending on capital items (assets), food or drink that will be consumed by your business or employees, and vehicles, vehicle parts and fuel for all businesses other than transport providers has to be excluded. To discuss how these rules could affect you contact Faye Armstrong on 01228 530913.

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Could you do with some Doddie Angel help?

DA serviceDoddie Angels are back by popular demand! They can help get your office in to shape by helping with bookkeeping, organising your files, answering the phone, taking messages, word processing, chasing debts and a number of other things around the office.

We have had great feedback on the service year after year from happy clients who have found it to be a really cost effective way to help them get back on track and have a good spring clean of the paperwork in time for the year ahead. For further information contact Claire Phillips on 01228 530913 or Stu Bell on 01768 864466. The cost of your Doddie Angel, who will be a trainee from our specialist program, starts at £75 + VAT and expenses per day. Limited period only, local businesses, first come, first served.

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Bad to the bone – a proactive approach to warding off back and strain injuries for the deskbound among you

The Chartered InstituOffice worker bored 16334410_mte of Personnel and Development (CIPD) undertook a survey into employee absence last year and found that more than a third of those who took part listed back pain in the top 5 causes of both long term and short term absence.  And with the working population having to stay in work for longer these days, the figures for the desk bound among us may well be on the rise (and as I write this no less than 2 colleagues on my desk of 4 are popping the pills to combat back pain made worse by sitting at a desk!). Therefore, taking a proactive approach to managing employee’s “musculoskeletal disorders” (the fancy catch all word for back pain, neck strain, wrist strain etc – call it MSD) makes a lot of sense.  After all, prevention is better (and cheaper and less painful!) than dealing with MSD after it has arisen.

So what can you do to tackle the root cause of such issues as back pain?

  • Exercise – exercise can be done on the spot at work with very little space.  Bounce on the balls of your feet or squeeze your shoulder blades together while waiting for the kettle to boil is a good example. There are also exercises you can do at your desk.  It may look a little odd but you’ll be the one laughing when your colleagues are complaining about a sore shoulder or neck!
  • Breaks – regular breaks are important.  Get up, walk around, make a cup of tea, print something to the furthest printer from your desk so you have to get up and move.  You may want to jump on the FitBit bandwagon (other brands are available) and get a bangle that buzzes at you when you have been sitting down too long.  Or download one of the many step-counting apps that exist and get into a competition with your colleagues about how many steps you can take in a working day!
  • Initiatives – if you are an employer, you could offer on site visits from a masseuse or physio, or tie employee rewards (e.g. for a suggestion scheme, best safety record, or employee of the month etc) into a reward linked to health such as vouchers to spend at a gym or exercise classes.

 It may sound a bit New Age but it makes good commercial sense – employers that take a proactive approach to preventing MSD at work not only reduce absence but also increase productivity (after all, an employee with back pain is never going to be able to concentrate fully on their work!)  And if you are an employee, do yourself a favour – if you don’t look after yourself, who will?

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Don’t be an ostrich – managing your tax debt 

tax-stickmanMany businesses and individuals will come a little unstuck when it comes to paying their bills at some point in their lives – it happens.  They key thing is to manage it and NOT act like the proverbial ostrich in burying your head in the sand (which incidentally is a myth anyway!)  This is especially true when it comes to dealing with HMRC debt, whether it is VAT, income tax, corporation tax, or PAYE.  The most important thing NOT to do is to ignore HMRC debt recovery letters in the hope they will go away.  They won’t.  It may take them a little while to catch up with you but in the meantime there is interest, penalties (potentially lots of penalties), and getting on HMRC’s radar as a “bad” taxpayer, not to mention worry and stress for you.  So..tackle it.  The earlier the better.  A time to pay arrangement may be possible.  Some sort of refinancing of the business may be possible. A solution is far easier found when you talk about it rather than hiding it or ignoring it.  So please do ask your accountants (ideally us!) for advice. Hopefully we can help you to nip it in the bud.

And if things have gotten really bad, we have a fantastic Dodd Rescue Team who can look at the serious stuff with you.

Just give us a call and we will do what we can to help. At least you will be seen to be doing “something” in the eyes of HMRC, and this can really help with negotiations for an appropriate way forward!

Lets get physically, physically, FINANCIALLY fit!

It is much catchier when King Julian sings it! But really, it is so important not to neglect your financial fitness in 2017.

Here are a couple of important steps you can take to get you onto the right path:

  • Review your savings and investments

Getting a good rate of interest on savings these days is like finding hen’s teeth. Internet or postal accounts usually have better rates than the high street.  Or you could look at longer term savings which lock you in for a period and give a better rate in return.  You should talk to your financial adviser to make sure you know what your full range of options are, and to discuss your objectives (your risk profile, whether you are happy to lock your money away for a period etc).

You should also talk to your financial adviser about your investment portfolio to make sure it is still the right mix to meet your attitude to risk and what you are trying to achieve financially. It is easy to let these things slip but it is your money and very important to your plans for the future!  So a little housekeeping would be a very good idea.

  • Review your pension arrangements

Pensions are very flexible these days and they come in more shapes and sizes than ever before. So it is important to think about whether yours is still a good fit for your lifestMoney 18419289_xlyle, plans, aims and objectives.  Maybe it is quite old and therefore isn’t particularly flexible or has high charges.  Might a different scheme suit you better now? Can you reduce the costs on your scheme? Perhaps you need to consider putting more aside to achieve the pension income you are hoping for.  Before making any changes you need to be fully aware of your options and the impact of making any changes.  Pensions are an area where an IFA can really help to give you focus and clarity and a plan tailored to fit.

If you need any assistance getting financially fit in 2017 please contact Nathan Glaister from our Dodd Wealthcare team.

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Payroll update

Companies’ minimum wage excuses revealed!!!

The government has revealed some of the excuses companies have given for not paying their staff the minimum wage.  They include claims that:

  • The employee wasn’t a good worker so I didn’t think they deserved to be paid the NMW.
  • It’s part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first.
  • I thought it was OK to pay foreign workers below the NMW as they aren’t British and therefore don’t have the right to be paid it.
  • She doesn’t deserve the NMW because she only makes the teas and sweeps the floors.
  • I’ve got an agreement with my workers that I won’t pay them the NMW; they understand and they even signed a contract to this effect.
  • My workers like to think of themselves as being self-employed and the NMW doesn’t apply to people who work for themselves.
  • My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone.
  • My employee is still learning so they aren’t entitled to the NMW.

Needless to say, these companies were informed of their correct responsibilities but clearly they are not employers of choice!!

Meanwhile…..

The Low Pay Commission has recommended that the government review the current obligations on employers regarding provision of payslips and to consider introducing a requirement that payslips of hourly paid staff clearly state the hours they are being paid for.  They argue for clearer pay statements, so that workers can see they have been paid at least the National Minimum Wage or the National Living Wage.  As well as providing a key piece of information for the worker to help reconcile hours and pay, this step would also help in cases where HM Revenue & Customs is seeking to enforce the minimum wage regulations.

The government is still considering this recommendation.

And….

Employers are facing a second increase in minimum wage rates come 1 April 2017 (and the rate will then change every April following this).

Payroll April 2017 Changes

The year ahead

2017 promises to be a very busy year for the roll out of automatic enrolment.  Up to 700,000 employers are due to stage in 2017 – the highest number since AE began in October 2012.  This year we will see over twice the number of our clients staging each month, compared with 2016.

This will include new employers that first employed a worker between April 2012 and September 2017 who will reach their staging date between May 2017 and February 2018.

In addition:

  • Medium size employers, those with 50 to 500 staff in 2012, are expected to reach their re-enrolment date in the new financial year (2017/2018).
  • New employers from 1 October 2017 onwards will have immediate AE duties, starting on the contract start date of their first worker.

Recent figures also show that employers are leaving it later and later to get their workplace pension set up on time and are therefore risking a hefty fine.

Figures show that during the last quarter of 2016, 14% of businesses applying for a workplace pension made their application after their staging date had passed and more than a third of businesses left their application to the last minute.

The Apprenticeship Levy

From 6 April 2017, the way the government funds apprenticeships is changing, with the introduction of the apprenticeship levy.

Employers with annual pay bills greater than £3 million, and some connected companies and charities with pay bills less than this amount, will be required to pay into the apprenticeship levy.  The apprenticeship levy is charged at a rate of 0.5% of your annual pay bill.  All employers (subject to the rules on connection) will have an annual levy allowance of £15,000 to offset against their levy liability.  The allowance will be calculated on a pro rata monthly basis offset against the monthly levy liability which will be calculated through the Sage payroll software when the first P32 report is run in the 2017/18 tax year.

There will be a new digital apprenticeship service from January, where employers can access their funds and manage and pay for their apprenticeships in one place.  H M Revenue & Customs will calculate how much each employer will have to use through the English system using data that it already holds about the home address of their employees.  Non-levy employers will continue to pay providers directly for apprenticeships, but can still use the digital apprenticeship service to find and plan their apprenticeship training.  Scotland, Northern Ireland and Wales will have their own mechanisms for spending levy funds.

687 companies fined for wage failures

Fines totalling nearly £1.4m have been imposed on companies paying staff less than the minimum wage. These are on top of back wages that must be paid to staff.  Offenders include Blackpool football club and the Wimbledon restaurant San Lorenzo.

“15 – Love” to the tax man

 And finally……

A teenager has been jailed after going on a spending spree when his employer made a decimal point error in his salary, meaning he was paid €19,639 instead of €196.36.

19 year old Irishman Karl Smith, had “an incredible temptation presented to him” when the money was mistakenly paid into his bank account.  He withdrew most of the cash over three transactions before spending the balance through use of a bank card.  Failing to report the error, he spent the money on drugs, socialising and items such as a new bed and a PlayStation.

He was jailed for four years at Dublin Criminal Court.

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What’s new in the world of tax?

Theft in Paradise – Accountant to the stars jailed

45454143 - prisoner businessman. vector flat illustration

An accountant has been jailed after stealing more than £150,000 from a string of celebrity clients over three years. Edward Lewis’s victims included the actor Kris Marshall of Death in Paradise fame. Mr Lewis was jailed for 32 months after admitting seven charges of fraud by abuse of position at Ipswich Crown Court.

HMRC wins big by targeting SMEs

HMRC netted an extra £468m in tax last year by focussing on Small and Medium Enterprises.  This may be because larger companies are better positioned to employ specialists who can close down or limit HMRC investigations, whereas SMEs may have a lack of financial experience and be adversely affected by time and budgetary constraints.

All men are created equal are they?  Some more equal than others perhaps….  The moral of the story is to get a professional adviser on board ASAP and please don’t just ignore any enquiries!

Nine out of 10 accountants think HMRC is not improving

A poll by the Institute of Chartered Accountants in England and Wales has found that nine out of 10 members believe it has not become any easier to file a tax return and half said they did not trust HMRC to “get it right first time”.

There is a saying – discretion is the better part of valour. So no comment!

Victoria Beckham’s fashion faux pas

Victoria Beckham’s fashion label has been warned it faces closure unless it files its tax accounts. Victoria Beckham Ltd has missed the deadline for the last three years and was issued with an official notice by Companies House.

Hidden cost of being an employee

Stickman money - 9676815_lOffice workers will spend around £40,000 over their lifetime on teas and coffees, socialising, work clothing and contributing to ‘whip-rounds’ for colleagues having birthdays/children/leaving/fundraising for charity.

No wonder there has been a rise in the number of people turning self employed!

That’s rich!

HMRC has published a list of some ludicrous expense claims submitted by taxpayers. “Pet food for a Shih Tzu guard dog” (yes they can be a bit snappy). Or how about “Armani jeans as protective clothing for painter and decorator” and “International flights for dental treatment ahead of business meetings”?  Other claims that were rather more optimistic than they were relevant included “Holiday flights to the Caribbean” – nice if you can get it!!

Party people – 34% decline in submission of tax returns on New Year’s Eve

Taxpayers remained in the party spirit in 2016 with 8,390 (34%) less people choosing to submit their self-assessment tax return online on New Year’s Eve, compared to a whopping 24,546 on NYE 2015.

HMRC’s fraud team prosecutions rise

HMRC targeted 679 tax evaders for prosecutions last year, including company directors, accountants and gangsters. The 10 biggest cases alone involved unpaid amounts totalling £260m. Simon York, director of the HMRC’s Fraud Investigation Service, said: “Tax evasion isn’t a victimless crime. It’s stealing money from vital public services. It undermines honest traders. No one is beyond our reach.” 

And finally, some more interesting tax facts from HMRC (yes, really!)

HMRC has revealed men are (just) more likely than women to complete their tax return on time. In 2014-15, for every 10,000 tax returns submitted by men, 232 were late. For women, the there were 235 late tax returns for every 10,000 submitted. Unsurprisingly, older people are also more likely than younger people to get their returns in on time, with only 104 per 10,000 tax returns filed by over-65s being late, compared with 833 for every 10,000 sent in by 18 to 20-year-olds.   When it comes to tax returns, taxpayers in Northern Ireland are the most organised, and Scotland and England jointly take worst position.  Accountants and lawyers need to get a bit more organised – they aren’t too bad at all at doing their own returns but they aren’t as good as those working in agriculture, fishing and forestry!

 

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