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July 2011 - E-NEWS
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
- Government launches business fund
- Big changes on parental leave
- Get ready for new agency worker regulations
- Europe set to streamline patent rules
- New challenge on red tape
- ‘E-traders’ included in new tax crackdown
- What do you think of HMRC?
- Ferrari – a company car?
Government launches business fund
Encouraging the growth and development of enterprising businesses is a key part of the Government’s plans for re-balancing the economy and spurring recovery.
To help improve business access to the sort of finance needed to get new products and services off the ground, the Government has launched its new Business Growth Fund (BGF). The fund has been set up to help SMEs with an annual turnover of between £10 million and £100 million. It has available funds of up to £2.5 billion, and is backed by a number of leading banks.
The BGF will invest approximately between £2 million and £10 million per business in return for a minimum 10 per cent equity stake and a seat on the board for a BGF director. It is designed to offer long-term equity investment for growing enterprises which are struggling to secure access to sources of capital.
Business Secretary, Vince Cable said: “The Business Growth Fund is ready to make substantial equity investments into ambitious mid-cap British companies who are set to create the business success stories of the coming years.”
More details on the BGF can be found at http://www.businessgrowthfund.co.uk
Has your business come up with a great new idea but is struggling to raise the funds to finance it? We just might be able to guide you towards sourcing the right kind of backing.
New Government plans will see an overhaul of the regulations governing parental leave following the birth of a baby.
At the moment, mothers are allowed six weeks of maternity leave at 90 per cent of their earnings. They can then take another 33 weeks off work at the statutory maternity leave pay of £128.73 a week. If they so choose, they can add another three months of unpaid leave. Fathers, on the other hand, can take two weeks of paid leave. Since April, men have been allowed to assume home care responsibilities for six months of any unused maternity leave should the mother opt to return to work after the baby is 20 weeks old. But that leave can only be taken as a single block.
The new plans mean that the mother will be entitled to 18 weeks of paid maternity leave following the birth of the baby. However, a subsequent 30 weeks’ leave, of which 17 weeks would be paid, can then be divided between the two parents and, if it is requested, the leave could be segmented into blocks of weeks and months. What’s more, both parents will be granted an extra four weeks of paid parental leave, taking the father’s automatic entitlement to six weeks in total.
Commenting on the planned changes, which are due to come into effect in 2015 but first go out to consultation, Vince Cable, the Business Secretary, emphasised that the Government has been mindful of minimising the costs and bureaucracy to business. As a result, employers will still be able to take into account their needs when agreeing how leave can be taken.
Business groups, though, expressed anxieties over the impact of the changes, particularly in the case of smaller employers. John Walker, national chairman of the Federation of Small Businesses, said: “For a small firm, organising cover and workloads for a member of staff that has decided to take chunks of parental leave from work – not a continuous period of time – will be extremely burdensome and difficult to administer.”
The consultation can be found at http://discuss.bis.gov.uk/modernworkplaces/
Get ready for new agency worker regulations
The Government has issued guidelines on how employers should approach the new rules governing the rights of temporary workers. The regulations, which implement the EU Agency Workers’ Directive of 2008, come into effect on 1 October 2011.
The rights were agreed between the last government, the CBI and the TUC but had been the subject of further scrutiny by the present administration because employers had expressed worries over the complexity of the regulations. However, the Government has decided that introducing any reforms would be too difficult.
The new rules will give agency workers the right to the same basic employment and working conditions as if they had been recruited directly by a company, if and when they complete a 12-week qualifying period in a job.
Edward Davey, the Employment Relations Minister, said: “We looked carefully at the possibility of amending the regulations to address employers’ concerns but were forced to conclude that we could not do so without putting the 12-week qualifying period at risk. This qualification period is something that is a key flexibility that we know is vital to business. Our focus therefore has been providing the best possible guidance to help everyone affected understand these regulations.”
The guidance can be viewed at: http://www.bis.gov.uk/assets/biscore/employment-matters/docs/a/11-905-agency-workers-regulations-guidance.pdf
Europe set to streamline patent rules
UK businesses are set to save millions of pounds a year as a single European patent came a step closer following agreements by ministers at a meeting of the Competitiveness Council in Luxembourg.
Ministers meeting on 27 June agreed on the languages regime for the patent – the number of translations which applicants need to file to get their patent – and on the technical details of the patent itself.
As a result it will be easier and cheaper to register patents, with far fewer translations required than at present. The availability of a single patent for the European market is set to act as an incentive for innovation and will enhance the competitiveness of European businesses.
UK Intellectual Property Minister Baroness Wilcox said: “The savings to UK business are likely to be around £20 million per year in translations costs alone.”
The measures will be adopted later in the year. A recent independent review of Intellectual Property and Growth by Professor Ian Hargreaves found that establishing a unitary patent would remove intellectual property barriers between EU countries and could increase UK national income by over £2 billion a year by 2020.
LINK: Press release on patent unification
Businesss owners, employees and the public are being urged to blow the whistle on inconsistent and over-zealous enforcement of rules and regulations.
The new initiative, launched on 24 June as part of the government’s Red Tape Challenge, asks businesses and the public:
- which aspects of enforcement do you find most difficult to deal with and how could things be done differently?
- what impact do these problems have on your business?
- do regulators recognise where you have made efforts to comply? What more do you think could be done to ensure regulators take your efforts into account?
- is it easy for you to appeal or complain about the way regulations are enforced?
- do you have any examples of good "common sense" enforcement where you feel that a regulator has really done its best to understand and work around the realities you face as a business?
- is enforcement flexible enough to keep pace with the way your business is developing?
Business Minister Mark Prisk said: “The Red Tape Challenge has already highlighted a number of ways in which compliance problems are getting in the way of businesses, but we weren’t getting enough information on the problems.
“So tell us about the good, the bad and the ugly side of how the regulations you deal with are enforced, and help us get the Government off your back.”
LINK: Red Tape Challenge
‘E-traders’ included in new tax crackdown
New campaigns targeting VAT defaulters, private tutors and e-marketplaces will be launched by HM Revenue & Customs (HMRC) over the next year.
HMRC said it would be using tools such as web robot software to search the internet and find targeted information about people and companies.
Using the software, the department can pinpoint more accurately people who have failed to pay the right tax. The web robot, used in conjunction with HMRC’s Connect computer system, also helps find people who are trading without telling HMRC.
Connect alerts HMRC to previously invisible tax evasion by matching HMRC and third party data. It is able to highlight previously hidden relationships, uncovering anomalies between elements including bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.
HMRC announced last month that a campaign targeting VAT rule-breakers trading above the £73,000 registration limit. Other campaigns that will be launched in 2011/12 will focus on:
- those who provide private tuition and coaching
- e-marketplaces, including people who use e-marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed
- trades, which will build on HMRC’s current plumbers’ campaign.
LINK: Reporting tax evasion
Probably unwise to ask you that, but do you recognise the following thoughts?
- HMRC sees the small business area as a source of tax leakage and as a result of its robust approach it is feared by many small businesses
- Small businesses and their advisers spend too much time sorting out HMRC errors
- HMRC needs to communicate better with taxpayers
- HMRC staff need to be well trained
- The tax legislation is over complicated
- What businesses want more than anything else is certainty in tax
Nothing of any surprise in those thoughts, but encouragingly they have been expressed by the Office of Tax Simplification which has to report to the Government on ways of reducing the administrative burden of the tax system on small businesses. If they continue to come out and tell the Government how it really is, like they have just done, there is hope for meaningful change in the near future. That will probably involve simplified tax measures for small businesses on a variety of issues and we will keep right up to date to use them for your benefit as and when available.
During an enquiry into the tax affairs of Huntington Antiques Ltd, HMRC became aware that that company owned two cars. They concluded that as the taxpayer was a director-employee of the company, the cars were made available to him by reason of his employment. They raised assessments, which included car benefit in respect of two cars, a BMW and a Ferrari.
The taxpayer appealed.
He explained that the Ferrari had been bought by the company for use on tracks or circuits only and could not lawfully be used on the public highway. Its sole use was as a marketing tool to entertain clients.
However, it was decided to sell the car in 2001, although no actual sale took place until 2005. HMRC argued that the Ferrari was available to the taxpayer by reason of his employment. After surveying the evidence, the First-tier Tribunal decided that the taxpayer had made no personal use of the Ferrari and that it was only used as a marketing tool. It would be artificial to regard the car, in those circumstances, as being ‘made available’ to the taxpayer.
The taxpayer’s appeal was allowed. (Michael Golding (TC1097)
The full decision can be read at: http://www.bailii.org/uk/cases/UKFTT/TC/2011/TC01097.html.
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For more information please contact Alan Rolfe, Tax Manager on 023 8046 1200. |
HWB
Chartered Accountants, Highland House, Mayflower Close, Chandlers Ford, Eastleigh,
Hampshire, SO53 4AR.
