VAT – Are You Registered?

People who attempt to avoid VAT rules have until 30 September to register to pay what they owe under a new HMRC campaign. This focuses on individuals and businesses trading above the VAT registration threshold – a turnover of £73,000 – but who have not yet registered. Specific sectors to be targeted by the taxman include construction, business services, hair and beauty, hotels and catering, retail distribution, recreational services, motor vehicle distribution and repair, sanitary and domestic services, agriculture and horticulture, property and road haulage.

Under the terms of the VAT Initiative, those who have not registered to pay VAT can come forward at any point up until 30th September to tell HMRC that they want to take part. If they make a full disclosure, most will face a low penalty rate of 10% on VAT that has been paid late. After this date, however, HMRC will begin investigating those who have failed to come forward, and substantial penalties and even criminal prosecution could follow.

Sasha Wickham, Tax Manager at Stewart Fletcher & Barrett, advises: “While most people do register for, and pay, the correct amount of VAT, there are still a large number of individuals and businesses who have not yet addressed this issue – and they could soon find themselves falling foul of the law. Those coming forward are invited to also disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100 per cent charged to those who fall outside the opportunity. However, the Revenue appear to be using scare tactics – forcing people to rush into making decisions. We urge anyone who thinks this may be relevant to them to pick up the phone and give us a call before they act.”

Providing Exceptional Solutions

Stewart Fletcher & Barrett is proud to announce that it has adopted a new strapline to take the firm forward with renewed purpose and vision. After a period of deliberation and consultation, staff have chosen to sum up the company ethos with the slogan ‘Providing exceptional solutions.’

Senior partner Paul Carvell explains: “We felt that we had evolved beyond our old strapline, and wanted to encapsulate the spirit of the Stewart Fletcher & Barrett Group in the 21st Century. So I asked the whole team to think about what it is that we do that makes us special, that sets us apart – and, after all the votes were counted, we found a clear winner.

“Providing exceptional solutions is exactly what we strive to do for every single one of our clients – we pride ourselves on going the extra mile in order to achieve outstanding results. We aim to exceed expectations by delivering personally tailored, proactive solutions, and by selecting this new strapline we hope to make this ethos clear to everybody who engages with the SF&B brand. It was decided by all of our employees, so we know that they will live and breathe it – it will show that we do what it says on the tin!”

REPORT FINDS ‘CONSIDERABLE DISSATISFACTION’ WITH HMRC

A recent report by the Treasury Committee into the administration and effectiveness of Her Majesty’s Revenue & Customs has found that there is ‘considerable dissatisfaction’ among the public and tax professionals alike with the service provided by the Department – to the extent that concerns have been raised that, if the situation continues, it will severely undermine respect for the whole tax system.

The report identified three particular areas of dissatisfaction: access to advice over the telephone; responses to post; and offline alternatives to internet-based filing and guidance. It concluded that ‘there is a serious risk that if communicating with HMRC becomes too time-consuming, difficult and expensive, respect for the tax system, and with it voluntary compliance, may be undermined.’ The report also dismissed claims by the Department that these problems are primarily the result of reconciling of multiple PAYE tax years at once, as the current state of affairs has ‘been building for some years now.’

Stewart Fletcher & Barrett’s senior partner Paul Carvell commented: “While it is clear that HMRC is operating under significant pressures due to government cuts and the implementation of new legislation, at the same time businesses all over the land are struggling to deal with these issues too. There are certain levels of accuracy, efficiency and professionalism that one expects from an official government body, and unfortunately it is apparent that HMRC is letting these standards slip more frequently than in the past – as has been illustrated by the growing number of embarrassing incidents appearing in the press recently.

“As communication problems have emerged as the key factor in this report, now more than ever, anyone who has dealings with HMRC could benefit greatly from using a qualified tax agent who has the breadth of knowledge and experience required to achieve the best results when it comes to communicating with the taxman.”

To speak to a tax professional about how Stewart Fletcher & Barrett could help you in your dealings with HMRC, call us now on 02476 384171.

HMRC In Gobsmacking New Blunder

In a development straight out of a Seventies sitcom, H M Revenue & Customs has failed to send out around half a million tax reminders – because it ran out of paper.

The farcical development may amuse many, but it means those people may have forgotten to pay their final demands by last Sunday’s deadline. In mitigation, though, the taxman has stated that taxpayers who have not received a reminder have 30 days to pay from the date it is finally delivered.

Four times more people than last year owe money on bills that should have been paid in January. They were expected to pay the money owed by July 31, but HMRC did not order enough paper for reminder letters.

An insider has been quoted as saying: “It is a shambles. They have literally run out of paper to send out the reminder letters.” Red-faced revenue bosses admitted the gaffe at the end of last week, and there has been speculation that staff cuts are to blame.

A spokesman for Revenue and Customs said: “We very much regret any inconvenience.” The statements will now be sent out “as soon as possible,” so anyone who is worried that they have not yet received one can rest assured that it IS the taxman’s fault, and they will still have time to pay.

Thank goodness for that – if anyone else’s business was run like this it wouldn’t last two days…

Entrepreneurs vs. Accountants

As an entrepreneur, you probably have an entirely different mindset to most accountants. You have to consider all aspects of the broader picture, while your accountant is most likely to be concerned with highly specific details. Your business is your baby, but often it can feel like you are just another set of accounts to them. How can they possibly understand where you are coming from when your concerns are so different from theirs?

When you start to work with a particular accountancy firm, you are beginning a relationship that will – hopefully – be mutually beneficial. If it is to work, then there must be sufficient understanding and empathy between the two parties, and trust must be established over time. In order to achieve this, communication is the key. In other words, your accountant should be someone you feel you can talk to.

While many accountants consider the human element of their service offering to be less important, a good one will realise that building a successful relationship with a client requires effective two-way communication. On their part, they will happily take the time to explain anything you don’t understand, rather than jealously guarding their specialist knowledge as if it were so much gold dust.

At Stewart Fletcher & Barrett, we understand that business is about more than just the money – it’s about people, and product, and passion too. You and your business have your own unique and specific needs, and we make it our business to understand them. To get the ball rolling, call us for an initial chat on 02476 384171.

PAYE Tolerance Level Slashed

People who have underpaid due to PAYE errors will soon find themselves being chased up for smaller sums, as H M Revenue & Customs is to slash the current £300 ‘tolerance’ level to £50.

When it was introduced last year, the National Insurance & PAYE System (NPS) led to a huge number of errors for 2008-09 and 2009-10, which have affected an estimated 15 million people. As a consequence, HMRC agreed to write off the debts of taxpayers who owed less than £300. Now, however, this is set to change, as the taxman has announced that this sum will be reduced to £50 for the estimated 1.2 million people who underpaid tax in 2010-11.

An HMRC spokesman said: “We’ve used a tolerance since PAYE was introduced to achieve a balance between the costs of sending out tax calculations for relatively small amounts of tax with the cost of that work to the taxpayer. The six-fold increase to £300 was always intended as a temporary measure while we reconciled two years at one time. That work is now complete so it’s only right that we return the threshold to its normal level.”

Because of this, taxpayers are likely to see more and more P800 tax calculations being issued, which could be problematic for employers operating weekly or multi week payrolls who have processed a week 53, 54 or 56, as the Revenue’s new computer system does not recognise these additional weeks – and can therefore make no additional allowance for the underpayment of tax.

The announcement is also likely to hit vulnerable groups hard. For example, some pensioners on low incomes, who may have had their payments written off in the previous two years, will find they will have to pay the accrued limit. However, HMRC insists that there are schemes in place to help those who may encounter difficulties in paying – despite its decreasing leniency in such situations.

If you would like more information about how this could affect you, call one of our experts now on 02476 384171.

No More Time To Pay?

Business who are struggling to pay the taxman have been dealt a severe blow by the news that there has been a huge increase in the number of ‘Time to Pay’ (TTP) arrangements being rejected by HM Revenue & Customs.

According to recent figures released by HMRC, 3,390 TTP requests were refused in the first three months of 2011, compared to 2,440 in the same period in 2009 and 2,360 in 2010.

Only 32,900 requests were agreed in the first quarter of this year, compared with 82,000 in 2009 and 57,800 in 2010.

HMRC said that the scheme “continues to be available to help companies address short-term cash flow difficulties that result in an inability to pay their tax in full and on time”. It also claimed that the criteria determining whether arrangements were agreed or rejected had not changed in any way.

However, many professionals (including ourselves) see this as yet another sign of HMRC’s tough new approach towards individuals and businesses who are already struggling in a harsh economic climate. Even requests with secure guarantees are being turned down, and deals are being restricted to payments within three months. Those who have not previously had a TTP arrangement in place are far more likely to have a request accepted than companies that have already been subject to one.

If you are worried about any difficulties with tax payments, it is a good idea to have a plan in place. Talk to one of our experts to find out how we can help you with this. http://www.sfb.uk.com/

Online, Offline – What’s Going On?

After imposing new rules requiring tax returns to be iXBRL-tagged and filed online, HMRC is in the embarrassing position of being forced to admit that its systems cannot accept the electronic files. In fact, it will not actually be ready to accept post-31 March 2011 returns until its online portal is updated in October.

In the face of much mockery and disbelief, HMRC has stated that because of the lowering of the Corporation Tax rate to 26% (20% for small profits rate) on 6 April, its software needs to be updated. Unfortunately, it has no plans to do so until October.

The official notice from HMRC explains that “the rate changes only affect returns with accounting periods that end on or after 1 April 2011 with filing dates of 1 April 2012 or later. These changes will take effect on the date that Finance Bill 2011 receives Royal Assent (expected in July 2011). Corporation Tax Online will then be updated in October 2011 with the new rates. In the meantime Corporation Tax online will use the old rates.”

Before the new rules came into force in April, people were allowed to file paper returns early. With this option being withdrawn, many who have taken the time and effort required to properly undertake iXBRL tagging and e-filing are extremely displeased to be told now that they will be unable to file returns till October.

Stewart Fletcher & Barrett partner Peter White comments: “It does seem to many people that HMRC should really ensure it is able to deal with the consequences of any new policies it decides to push through before it requires everybody else to comply with them. Unfortunately, as with all of these things, there will inevitably be additional costs for clients, but this is something that the Revenue completely dismisses. While the taxman demands that ordinary people abide by the rules, it would appear that he is under no such obligation himself!”

HMRC ‘Determined To Increase Number of Prosecutions’

Following on from its recent tax amnesties, HM Revenue & Customs is coming down hard on tax evaders by launching its first 16 criminal investigations as part of its commitment to deliver a five-fold increase in prosecutions. Its enquiries, which have been aimed at specific categories of taxpayer, have raised nearly £500m so far – but this figure is set to soar as further industry sectors are targeted, with doctors now in the firing line.

Last month HMRC revealed that it had set its sights on restaurant owners in London as part of a new, industry-specific team approach which ushers in a “new era for tax compliance.” Now the medical profession is under the same scrutiny, with HMRC expected to soon publish details of members that have deliberately evaded paying tax.

Chris Harrison, HMRC Criminal Investigations deputy director, said: “We are confident that these and more cases will be taken forward in the future. This is proof of HMRC’s determination to increase the number of prosecutions we take forward in all areas – we are committed to ensuring everyone pays what they owe so that the maximum is available to spend on public services used by everyone.“

Another area being subjected to intense scrutiny is financial records. With HMRC taking a hard line on tax evasion and non-compliance, it is more important than ever to ensure that your tax affairs are in order. Call us on 02476 384171 to arrange a chat, or visit our website www.sfb.uk.com to access our free online checkers, including your own personalised records report.

Challenging Time For UK Businesses

Being a UK business owner in the 21st Century presents myriad challenges, and it’s likely that, although you may be equipped to deal with some of these, you will not necessarily have the breadth of expertise needed to handle all of them.

Businesses are seeing their profit margins being squeezed due to a combination of factors. Companies are suffering from rising costs and greater regulatory burdens – and these pressures are set against a backdrop of wider financial gloom, with 90% of Britons* currently of the opinion that the economy is in a bad way. The same proportion also believes that it is unlikely to strengthen over the next 6 months.

When it comes to tax issues, there are direct and indirect taxes (e.g. VAT and excise duties), and other areas such as environmental and property taxes to worry about. Additionally, increasing compliance, risk and corporate social responsibilities can present new tax challenges. That’s a lot for any business to manage – let alone small or start-up companies, whose first priority will be establishing and growing their core business.

Efficient tax planning can play a crucial role in making the most of your financial resources, allowing you to minimise liabilities and maximise tax breaks. A good accountant will be able to help you to comply with legislation and save money in both the short and long term.

For more on how Stewart Fletcher & Barrett can help your business with tax planning, click here or call us on 02476 384171.

*Survey conducted by Ipsos MORI