OTS summer budget news for the UK SME

The government announced in its Summer Budget that the Office of Tax Simplification is due to review the closer alliance of National Insurance and income tax.

On the government agenda this autumn will be consultation on reforming Class 4 NICs, abolishing Class 2 NICs and simplifying NICs for the self-employed.

Taxation of SMEs will also be reviewed, with a focus on deformations between personal and business tax systems and the complexities that are faced by many small businesses in the UK.

The OTS has been in place since 2010 and will now remain on as a permanent office of HM Treasury.

It is there to advise the government on how to develop and deliver a simpler tax system, including compliance issues and provide independent advice on tax complexity issues.

Financial secretary to the Treasury, David Gauke, outlined the plan in a letter to the leaders of the OTS:

“The first is a closer review of alignment of income tax and national Insurance contributions. This is an area often cited as an area of complexity for taxpayers.

“I would like the OTS to look at what the impacts, costs and benefits of closer alignment would be and to set out what the necessary steps would be to achieve closer alignment. This is a new type of review for the OTS, focusing on the issues and impacts rather than on making specific recommendations.

“The second is a review of the taxation of small companies, focusing on the distortions between the personal and business tax systems. This builds on your previous review of small business tax which focused on unincorporated small businesses.”

OTS summer budget news for the UK SME

What do you think about the OTS – will they really simply business for the UK SME? Join in the conversation on twitter @OmnitasTax or like us on Facebook!

Self-employment tips – part one

One of the main benefits of becoming self-employed is the ease with which you can start up and run your new business.

In part one of our special feature, we take a look at some of the important things that you may wish to consider before taking the plunge.

You can even become a sole trader (another term for self-employed) whilst working as an employee for someone else, so you can test the water and see if you’re suited to working for yourself.

Here are first top tips for when you decide to go self-employed:

How to register as self-employed with HMRC

Once you set up as a sole trader (or work as a partner in a partnership if there’s more than one of you), you will be responsible for paying your own income tax and National Insurance (NICs).

You must register as self-employed with HMRC within three months of starting trading, even if you already pay tax via the self-assessment process each year. You can register online or call HMRC on 0845 915 4515 if you’d prefer to speak to someone.

If you are unsure whether or not you need to register with HMRC, here is some help to establish whether you are employed or self-employed.

Once you start operating as self-employed, you will need to pay your own National Insurance contributions (NICs).

Do you need to register for VAT?

As of April 2015, if your business has an annual turnover of £82,000 or more, you must register for VAT.

At any stage of the business cycle, if you look like you’re going to hit this annual VAT threshold over the coming 12 months, you must also register. The threshold usually rises by a few thousand each year. Make sure you let HMRC know within 30 days, or risk paying a fine.

In many cases, you might decide to register for VAT even if you don’t need to. You may gain more credibility by having a VAT number, and you’ll be able to claim the VAT back on eligible purchases you make.

You might also consider the flat rate VAT scheme, which makes accounting for VAT much simpler. Your accountant will be able to advise you if you’d be better off on the Flat Rate or standard VAT scheme.

Need advice?

If you need advice about becoming self-employed, we are here to help – request a free of charge call back from our website or click here and we will contact you to discuss your situation.

Payroll price challenge

Take the Omni Accountancy payroll price challenge

Do you outsource your payroll? What are you paying? What service are you receiving? And is it fit for purpose?

Do you do it yourself but your time could be better utilised to the benefit of your business. At Omni we offer many services and payroll is just one.

We are competitive, flexible and we can save you money. Why not take the Omni Accountancy Price Challenge today to see just how much…

At Omni you will get a very personal and bespoke offering – quality at an affordable price.

Referrals

Do you know anyone who needs payroll, tax or accountancy help right now? Refer us and make sure they mention your name too.

For more information about Omni Chartered Accountants, call 01902 837 408, or request a free of charge call back from our website – www.taxandaccuntancysolutions.co.uk.

We are always happy to help.

Top five business forecast tips

Cash, as they say, is King.

And cash flow is one of the main reasons that small businesses find themselves throwing the towel in, especially during early days of trading.

With this in mind, it is imperative that business owners forecast their cash flow regularly and as accurately as possible, no matter how big or small the company may be.

Here are our top five business forecast tips (in no particular order):

Predict sales based on your invoice date

When you are working out your sales figures for the month, don’t forget to add them up by the actual amount of work that you have invoiced out – not the amount that you think you will actually get paid. This is a different matter and will feature in your cash flow forecast.

Remember to include outgoings

It is important to include as many costs as possible when forecasting your pennies – include daily running costs no matter how trivial they may seem as they can soon mount up!

In addition, remember to count costs like depreciation of assets; just because they don’t actually leave your bank account, it doesn’t mean they aren’t there!

Factor in the VAT

Ensure that, if your business is VAT registered, that your sales forecast, and profit and loss forecast exclude any VAT that you will be invoicing out and reclaiming.

If you can’t reclaim VAT on certain items i.e. business entertaining, or if you are registered on the VAT flat rate scheme, you should include the VAT as part of your running costs in when you are calculating your profit and loss forecast.

When it comes to cash flow forecast, include the VAT in your turnover figures.

Cash flow forecast dates

Cash flow forecasts are different from sales and profit forecasts, as cash flow is when you actually receive monies and pay monies out.

Make sure that you make your calculations allowing reasonable time for payments, remembering clients who may pay better – or worse! – than others.

Set monies aside

Remember to set monies aside for important payments that must be paid i.e. VAT.

We hope that you have found our top five business forecast tips helpful – for any taxation, accountancy or business information or advice, request a free of charge call back from our website or call 01902 837 408 today!

Have your say direct to the Bank of England

As you may or may not know, one of the partners at Omni Chartered Accountants sits on the Bank of England review panel.

Topics that are of specific interest to the monetary policy committee at present and that are for inclusion in the next meeting are:

Key issues for next Bank of England meeting:

1. International issues

Have there been any effects from the increase in sterling since May on export prospects?

Has there been any noticeable change in impact as a result of the appreciation against the euro since May?

More generally, is there any sign of fallout from uncertainty about Grexit, directly or indirectly, relevant to financial stability or to the central macroeconomic outlook?

What impact is the rise in sterling having on the price of imports?

Are there different stories for different types of imports? And what is the speed of pass through to consumer price inflation?

2. Activity

What are the prospects for the housing market and housebuilding, given the recent pickup in new buyer enquiries and mortgage approvals?

What explains the recent pickup in housing market activity?

What are the implications for house prices?

How is buy-to-let activity evolving?

3. Employment and wage inflation

Are there any signs of changes (or expectations of changes) in trends in the composition of employment that might affect growth in average weekly earnings (or total paybill per head)?

4. Demand for credit

How are the proceeds from corporate borrowing currently being used?

Are firms refinancing existing debt whilst rates are low, building cash reserves for future acquisitions or borrowing to invest in capital?

Have your say – this is your chance to get your voice heard! Contact us on Twitter@OmnitasTax, or Facebook!

Top 5 bookkeeping tips

We are often contacted by businesses that are in need of assistance with a bookkeeping clean up. 

If you have found yourself in the middle of a bookkeeping nightmare take these four simple steps to clean up your mess. 

1.  Get serious about it

The first step is to identify that you have a business bookkeeping mess and that you are willing to do whatever it takes to get things cleaned up and caught up. 

Nothing is more frustrating than working with someone that clearly is not serious about getting the job done.

2.   Get help from a professional

It is important to work with a bookkeeper or bookkeeping service that actually knows what they are doing. 

It is always a good idea to check your business network to see who your colleagues use for their bookkeeping needs. 

3. Bookkeeping software

If you are using recognised software you might consider contacting a specialist in that particular product, although most professionals will be familiar and used to working with the main products on the market.

4.  Follow Your Bookkeeper's instructions

When you bookkeeper asks for something you should provide it or ask for help so you understand where it is or why it is needed. 

Having your statements available online is probably the best thing you can do.  Make sure you have access to ALL your statements including bank accounts, credit cards, credit/debit balance and payroll reports. 

5.  Stay on top of your bookkeeping

Once you have found an individual or business bookkeeping service to clean up the mess it is important to stay on top of your bookkeeping. 

You don't want to spend all your efforts on cleaning up your bookkeeping system if you don't intend to maintain your bookkeeping on an ongoing basis. 

If you would like help from the professionals with your bookkeeping, Omni Chartered Accountants are here to help – we can offer free advice and guidance and competitive rates to deal with your needs!

Call us on 01902 837 408 or you can request a free of charge call-back from our website www.taxandaccountancysolutions.co.uk – alternatively, click here to view our pricing structure.

How likely is it that your business will win a HMRC tax appeal?

How likely is it that your business will win a HMRC tax appeal?

Not very, according to accountancy firm Wolters Kluwer.

Apparently, there is actually only around a 25% chance that a business tax appeal will be successful; 75% are unsuccessful, based on Government figures.

HMRC the Revenue received 7,081 appeals in the tax year 2013-2014; 6,626 were settled. Out of the outstanding 455 appeals, only 113 were granted.

VAT expert for Wolter Kluwer UK, Glyn Edwards, said that accountants should warn clients of the difficulties appealing a HMRC decision;

“If you have a client that disagrees with an HMRC decision you need to make them aware of how difficult it is to win a case at tribunal.

“As the statistics show, only a few hundred appeals get to tribunal and those that do are more likely to be won by HMRC than the taxpayer.”

He went on to explain that accountants should always advise clients by helping with thorough research on relevant legislation, helping them with preparation for hearings and making sure that all of HMRC’s documentation is in place well in advance of any hearing.

In addition, it was recommended that clients should consider using HMRC’s alternative dispute resolution service in a bid to negotiate settlement.

Edwards went on to say;

“Clients shouldn’t be spending more time and money than the tax in dispute reserves, as they can’t claim costs even if they win in the first-tier tribunal.

“However, if an accountant feels the client has a strong case then it is certainly worth making an appeal, but only if the client has expert help, as those who represent themselves are more likely to lose.”

Of course, the above should be common sense, but can you be sure that your accountant would help you in this capacity if you found your business in this situation?

At Omni Chartered Accountants, we strongly believe that remaining in contact with our clients and guiding them along their business journey is the key to not getting into tax disputes with HMRC in the first place.

However, our bespoke, one-to-one service means that we are there whenever our clients need us and are proud of our first class service and competitive fee structure.

For more information about Omni Chartered Accountants, call 01902 837 408, or request a free of charge call back from our website www.taxandaccountancysolutions.co.uk – we are always happy to help.