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December 2010 - E-NEWS
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
- All change on VAT again
- “We’re backing small businesses,” says Coalition
- Warning against VAT complacency for flat rate scheme users
- Concern as time to pay arrangements fall
- Smaller charities win online filing concession
- Making your accountant your registered office ... and more
- Active business factsheets
There is now barely a month remaining before the standard rate of VAT climbs from 17.5 per cent to 20 per cent. The increase means that any sales of standard-rated goods or services made on or after 4 January 2011 must carry a VAT charge of 20 per cent. The increase only covers standard-rated goods and services. Zero-rated (0 per cent) and reduced-rated sales (5 per cent) will see no change, nor will exempt goods.
There will, inevitably, be concerns among firms about the rules that apply to sales made before 4 January but payments made after that date.
If you are not sure about charging the correct amount of VAT please contact Alan Rolfe, Tax Manager, on 023 8046 1200.
“We’re backing small businesses,” says Coalition
After all the cuts, now comes the Government’s drive to help stimulate business growth. There are going to be a minimum of 500,000 job losses in the public sector, so the Government is banking on private firms to pick up the slack.
It has duly published a document, entitled Backing Small Business, which details its plans for encouraging entrepreneurship. These include improving access to finance and making it easier to do business with the public sector.
Among other measures, the Enterprise Finance Guarantee (EFG) is to continue for the next four years, making around £2 billion available to viable small companies without a credit history or collateral. A further £200 million is to be made available to Enterprise Capital Funds supporting equity investments in the highest growth potential businesses. That is on top of the £1.5 billion Business Growth Fund which is being run by the banks.
When it comes to tendering for public sector contracts (a pot of business worth some £236 billion), the Government has pledged itself to a target of awarding a quarter of all government projects to SMEs.
Hopefully, these actions will make a difference, but, even so, it is likely to remain tough for smaller firms that are looking for growth capital.
If you would like any expert assistance in putting together a funding request, be it from your bank or an alternative source of investment, we would be more than willing to lend our help. Please contact us on 023 8046 1200.
Warning against VAT complacency for flat rate scheme users
Flat Rate Scheme (FRS) users need to be alert to new rates after 4 January 2011. Under new HMRC penalty regime “without reasonable care”, errors will be hit.
Companies within the FRS are being picked up by HMRC over transitional rate errors. They were being targeted for compliance visits because they offered easy pickings as part of HMRC’s “dash for cash”.
The FRS was introduced to simplify VAT returns for small businesses, but the specific industry rates that are applied are just one of the obscure pitfalls that can trip up the unwary. The fact that they have to account for the flat rate on income not subject to VAT is another.
Concern as time to pay arrangements fall
New figures show that fewer businesses are deferring tax payments through the HM Revenue & Customs’ (HMRC) Time to Pay scheme, designed to help businesses during the economic downturn.
Figures highlighted by UK independent finance provider Syscap show that the value of Time to Pay arrangements granted by HMRC fell by 45 per cent over the last year from £830 million in Q3 2009 to just £460 million in Q3 2010. In the last quarter alone, arrangements fell 16 per cent from £550 million in Q2 2010.
R3, the Association of Business Recovery Professionals, said that the decline in the number and value of Time to Pay arrangements during 2010 reflected more favourable conditions for businesses post-recession and that the scheme had worked well in preventing the spike in corporate insolvency numbers that typically follows the end of a recession.
But it said that R3 research looking at the challenges facing businesses in 2011 found that almost a third (29 per cent) of insolvency experts thought that a squeeze on Time to Pay would be the most harmful potential development. The impact of public sector cutbacks and a modest rise in interest rates were joint second, with 23 percent each.
R3 President Steven Law said: “Our members have seen how invaluable the Time to Pay scheme has been to businesses. We believe that it is important that it remains available as a breathing space for viable businesses, but that it is not used as an alternative credit facility for ‘zombie companies’.”
R3 describes “zombie companies” as those that are able to service debt but not fund expansion.
LINK: Time to Pay (Business Payment Support Service)
LINK: R3 press release
Smaller charities win online filing concession
From 1 April 2011 onwards, all companies and organisations will have to file company tax returns online for any accounting period ending after 31 March 2010.
From the same date, they will have to pay any corporation tax and related payments due electronically, for example by direct debit.
Under the changes, all corporation tax returns and supporting documents, including accounts and supporting documents, will have to be filed online using the iXBRL format.
However, HM Revenue & Customs (HMRC) has made a concession to smaller charities on the new arrangements, on the basis that the way they prepare accounts means that the accounts template included in the free software provided by HMRC may not be suitable for them.
It says that until it provides free software suitable for smaller charities, HMRC will continue to accept accounts from smaller charities in PDF format. However, computations must be filed in iXBRL, for which the free HMRC software should be suitable.
A smaller charity for the purposes of this arrangement is one where, together with any wholly owned subsidiaries (companies owned by the charity), the combined income does not exceed £6.5 million for the accounting period.
LINK: HMRC guidance to charities
LINK: Switching from paper to online returns guidance
Making your accountant your registered office ... and more
It has become standard practice for many companies to use our office address as the registered office for the company. In addition to this we also provide a service to some companies whereby we collect and open mail and raise invoices. This can be a cost effective solution to office accommodation and administration issues, leaving you time to operate and develop your business.
For more information about our company secretarial services please contact Arthur Bell, Director on 023 8046 1200.
Available now on our website are our Active Business factsheets for your information on a wide range of topics. Please click the links below if you would like more information:
HWB
Chartered Accountants, Highland House, Mayflower Close, Chandlers Ford, Eastleigh,
Hampshire, SO53 4AR.
