You may have used the same accountant for a number of years, and you may well be happy with them – we hope you are! But it’s always a very useful exercise to review your accountant from time-to-time just to check that you’re getting the most appropriate service for your business.

When you do your review, it encourages you to think about the service you’re getting and assess whether or not you’re getting what you need from your accountant. Here are the questions we think you need to ask yourself in order to make an informed assessment.

Are they technically strong?

Are you getting a high enough technical service, particularly on the tax side of things? As your needs get more complex, do you feel that they are on top of what they need to be doing?

Are you happy with the way they communicate?

Does your current accountant communicate clearly with you so you understand the information clearly? How much jargon do they use? How approachable are they? Do you feel you can contact them when you have a question? A good accountant isn’t just an expert at what they do, it’s all about getting a good service, and dealing with you on a personal level is a very important part of this service.

How proactive are they?

Do you ever have to chase your accountant to get things done? Are they always dealing with things late and scrambling to meet deadlines or do they get things done in a timely manner? A good accountant will plan ahead and make sure everything’s properly scheduled. As issues are about to come up, they will tell you they are dealing with them, rather than waiting for you to have to prompt them when you receive a notification after the deadline has gone.

Do they give you practical solutions to problems?

The relationship between you and your accountant works both ways – if you’re getting a good quality service, they will be proactive and suggest practical solutions to any problems you might encounter. A good accountant will be happy to work through things with you to make sure that everything is on the right path.

Are they at the right level?

Do you feel that your accountant is experienced enough to handle your accounts? It may well be that you started working with them when your business was small, but your company has seen great growth. You need to ask yourself if your accountant has grown at the same rate because, with the best will in the world, their skills might not be enough for your needs as a larger company any more.

If you’re happy with the answers to all these questions, then you’ve got the right accountant for your needs, along with the peace of mind this brings. If not, then contact them to discuss your concerns, after which, if you’re still not sure, it may be time to look for a new accountancy service. Contact us for more information or to see how we could help you turn those unsure questions into informed decisions.

Until recently, an HMRC investigation usually meant one of two things. Either someone, possibly disgruntled business partner or spurned spouse, had tipped off the taxman or you were unlucky enough to have had your tax return picked at random.

All that changed with the advent of HMRC Connect, an £80m software system designed to join billions of dots to create a picture of who may not be entirely honest when it comes to assessing their tax liabilities. 

HMRC Connect obtains data from different sources including other government databases such as the Land Registry, DVLA and private sector financial information from credit card issuers and companies such as eBay, PayPal and Airbnb.

Years ago, inspectors and their assistants would take loads and loads of time manually cross-checking all of that information and then comparing it to the returns that came in from taxpayers to determine whether or not there was a risk those taxpayers were not paying the full amount of tax.

Nowadays that cross-checking takes practically no time at all, the preliminary work is done in seconds. What that does is to see if there are anomalies in the information that they’ve got from different places that flag up there is a risk on the taxpayer. The risk department then identifies those with highest risk and then investigates those people.

It quickly establishes links that enable experts to identify suspicious businesses, individuals and transactions for further investigation. It allows HMRC to see more information in one place for a single taxpayer and has the capacity to find anomalies between information such as bank interest, property income and other lifestyle indicators and compare it to what a customer is paying us in tax. Manually interrogating such data would take weeks or even months.

Whilst being extremely happy with Connect’s impressive successes date, HMRC is keen to develop the system further, particularly when it comes to reducing the burden on its staff. ‘Connect is not the sole deciding factor in beginning or deciding the direction of a tax investigation, it is simply a powerful tool that enable lots of different data sources to be brought together that will inform an overall picture. Other factors are brought in, including human insight to make the final judgement’ HMRC says.

Another opportunity for Connect is to use its capabilities for pre-fill tax returns based on data already known about the individual. By confronting taxpayers with information that they are merely asked to check and confirm, HMRC hopes to significantly reduce fraud and increase the tax take, and no doubt the rollout of mandatory Making Tax Digital will be a trigger for even more compliance activity as digital data pours in.

Doing the payroll is more than just having the bank account details of the people you employ and making sure they’re paid what they’re owed on a regular basis.

Meeting legal requirements is a huge part of the payroll process and the recent introduction of GDPR has made things more complex for most companies when it comes to record keeping, requiring them to protect their data securely and prevent unauthorised access, especially when it comes to transferring sensitive personal information.

Confidentiality

Some companies are a bit nervous about keeping employees’ personal data onsite. In which case, outsourcing payroll to an accountancy firm is a good solution which means records will be completely inaccessible to your own staff.

Digital security

Outsourcing your payroll will also have advantages in that your accountancy company should already have robust security practices in place in order to properly encrypt your data. If this is the case, then GDPR will not have made much impact on their cybersecurity provision as it was already good enough. The difference that GDPR will make to your payroll system is that, as the new standard of security practices to protect us all as individuals, you can rest assured everyone’s data is in safe hands.

Other advantages

Apart from security, there are a number of other advantages of outsourcing your payroll to a specialist accountant. You will be benefiting from their training and expertise in their specialist subject, meaning they’re less likely to make errors in their calculations at the same time as ensuring you and your staff get all the tax breaks they are entitled to. The lack of errors may also save you money – if you do your own payroll and get it wrong, you may lose money or have to spend it in order to put things right.

You will also be able to spend more of your own time on running your company. Most entrepreneurs just want to follow their passion which, let’s face it, rarely involves anything to do with taxes! The accounts and payroll are therefore a drain on their time, and the pressure to do them right is a drain on their mental energy. Yet there are plenty of accountancy experts out there whose passion is accounting, so why not let them do what they do best while you concentrate on what you do best and concentrate your efforts on running the business.

Contact us for more information on how we can help you or call us on 01992 444466.

Car Tax

If an employee is provided with a car by their employer, tax is payable on the cash equivalent of the of car provided.
The cash equivalent of the company car provided is calculated by taking the list price of the car, multiplied by a certain percentage, this percentage depends on the amount of carbon dioxide emitted by the car.
The list price of the car is calculated using the following formula:
£
List price when new A
Add Accessories (over £100) B
Less: Employee contribution (max £5,000) (C)
Revised List Price D

This revised list price is then multiplied by the appropriate percentage as per the table below:

37% is currently the maximum percentage that can be applied to the list price of the company car to calculate the cash equivalent of the benefit.
From 2018/19 if diesel cars are RDE2 standard then no additional percentage will be added to percentage figure.
As you can see from the table above HMRC are increasing the relevant percentages up to 2019/20.
From 2020/21 the rules will be reformed, and percentages will be reduced for ultra-low emission cars, we will provide an update regarding these rules closer to the time of their introduction.
We have identified below the tax an employee provided with a company car throughout a full tax year could expect to pay on four different models of vehicles in the 2017/18, 2018/19 and 2019/20 tax years:
BMW i3:
– Fuel Type: Zero Emission
– Approximate market value: £34,075
– CO2 Emission Figure: Zero

Audi A4 Saloon (1.4 TFSI)
– Fuel Type: Petrol
– Approximate market value: £29,180
– CO2 Emission Figure: 122g/km

 Land Rover Discovery Sport (Pure 2.0 eD4 150hp (5 seat) 5d)
– Fuel Type: Diesel
– Approximate market value: £28,195
– CO2 Emission Figure: 123 g/km

Volkswagen Passat (S TSI 1.4 125 PS 6 speed man)

• Fuel Type: Petrol
• Approximate market value: £22,025
• CO2 Emission Figure: 123 g/km

Vans
There is an income tax charge for an employee or a director who is provided by their employer or company with a company van that is made available for private use.
There is no tax charge for employee or employer where private use is insignificant, or the van is only used privately for commuting in and out of work.
The tax charge is the employee’s marginal rate of tax (i.e. 20%, 40% or 45%) times the benefit for the year in question, as outlined in the table below:

There are special rules for zero emissions vans, however these are beginning to be tapered down, the current cash benefit for low emission van’s is as below:

By the 2022/23 tax year the van benefit charge for zero emission vans will be identical to regular vans.

What can be considered a ‘van’ for tax purposes?
These are the criteria that HMRC uses to classify a vehicle as a goods van:
– A vehicle primarily constructed for the conveyance of goods or burden;
– A gross vehicle weight, fully laden, not exceeding three and a half tonnes
The key term in this definition is “constructed.” In short, it is not the actual use of the vehicle, but the purpose for which it was constructed and sold that matters.
For a vehicle to class as a van there are certain structural criteria that should be met:
– The vehicle should have a significant load bay to carry goods such that the carrying of passengers can no longer be the main purpose;
– The load bay of the vehicle must not have windows
Double Cab pickups will qualify as a van if its cargo capacity/payload is over 1 tonne. A payload means the vehicle’s gross vehicle weight less its unoccupied kerb weight.
We have listed some of the Double Cab pickups that may qualify as a van within the above definition below:

– Volkswagen Amarok
– Nissan Navara
– Ford Ranger
– Isuzu D-Max
– Mitsubishi L200

Provision of Fuel for Employees
Employees will be taxed on fuel provided by their employers for private use. The employee will be taxed on the cash equivalent of the benefit each tax year. The fuel benefit is fixed each year, according to the table below.

The fuel benefit charge is calculated by taking the appropriate percentage, as worked out for car benefit purposes and multiplying by the fixed figure. The tax amount is then calculated by applying the individuals marginal rate of tax to the fuel benefit charge amount.
For example, if an employee was provided with fuel for private use for a Volkswagen Passat (as above) company car the tax would be as follows:

In the Autumn Budget 2017, the Chancellor announced that from 6 April 2018 no benefit in kind will arise where fuel is provided for an electric car.
Where an employee is provided with fuel for a van for private use the benefit charge is a flat rate each tax year as below:

If you would like any assistance or have any questions regarding any of the topics discussed above please do not hesitate to contact Amy Armitage (amy@hbaccountants.co.uk) or any other member of the HB Accountants team on 01992 444466.
(please note figures have been rounded to the nearest pound)

The Criminal Finances Act came into force on 30 September 2017. Part of the Act means that companies and partnerships can be criminally liable where they fail to prevent those who act for, or on behalf of, the business from criminally facilitating tax evasion.

There is, however, a potential defence against this offence by the business putting into place a system of reasonable prevention measures. The penalties for the offence include unlimited financial penalties and ancillary orders such as confiscation orders. The Act doesn’t change what tax fraud is, just who may be liable.

An overview
There are three stages that apply to both the domestic and foreign tax evasion facilitation offences. There are additional requirements for the foreign offence but we only cover the UK tax evasion offence here.

• Stage one: the criminal tax (including NIC) evasion by a taxpayer (either an individual or a legal entity) under existing law.
• Stage two: the criminal facilitation of the tax evasion by an ‘associated person’ of the ‘relevant body’ who is acting in that capacity.
• Stage three: the ‘relevant body’ failed to prevent its representative from committing the criminal facilitation act.

Stage one and two do not create any new offences. These are already criminal offences. Only a ‘relevant body’ can commit the new stage three offence, so it applies to incorporated bodies (typically companies) and partnerships, not individuals. The new offence is a strict liability offence which means that if stages one and two are committed, the relevant body will have committed the new offence (subject to claiming a defence).

So what is the offence?
The new offence created by the new rules is the failure to prevent facilitation of UK tax evasion offences. A relevant body (B) is guilty of an offence if a person commits a UK tax evasion facilitation offence when acting in the capacity of a person associated with B.

Meaning of relevant body
A ‘relevant body’ is subject to the new rules and this means a body corporate or partnership (wherever incorporated or formed).

And who acts in the capacity of an associated person? A person (P) acts in the capacity of a person associated with a relevant body if P is:

• an employee of a relevant body who is acting in the capacity of an employee;
• an agent of a relevant body who is acting in the capacity of an agent (i.e. someone that has authority to act for someone else); or
• any other person who performs services for or on behalf of a relevant body who is acting in the capacity of a person performing such services (e.g. a subcontractor).

Is there any defence against such a charge?
It is a defence for a relevant body to prove that, when the UK tax evasion facilitation offence was committed, it had such prevention procedures in place as it was reasonable in all the circumstances to expect it to have in place or it was not reasonable in all the circumstances to expect it to have any prevention procedures in place.

‘Prevention procedures’ means procedures designed to prevent persons acting in the capacity of a person associated with a relevant body from committing UK tax evasion facilitation offences.

Sanctions under the Act
A relevant body guilty of an offence under these rules is liable a financial penalty, possibly unlimited.

So what does this really mean for my business?
What the law takes a long time to say is that there is a penalty for a company or partnership which fails to prevent facilitation of UK tax evasion offences by employees, agents or persons acting on the business’s behalf.

To quote HMRC: ‘The legislation aims to tackle crimes committed by those who act for or on behalf of a relevant body. The legislation does not hold relevant bodies to account for the crimes of their customers, nor does it require them to prevent their customers from committing tax evasion. Nor is the legislation designed to capture the misuse of legitimate products and services that are provided to customers in good faith, where the individual advisor and relevant body did not know that its products were intended to be used for tax evasion purposes.’

What procedures do businesses need to implement?
Part of the new rules requires The Chancellor of the Exchequer to publish guidance about procedures that relevant bodies can put in place to prevent persons acting in the capacity of an associated person from committing UK tax evasion facilitation offences or foreign tax evasion facilitation offences.

This has now been published by HMRC at goo.gl/8GmyFY

This guidance explains the policy behind the new offences and is designed to help relevant bodies understand the types of processes and procedures that they can put in place to prevent associated persons from criminally facilitating tax evasion.

Six guiding principles
As can be seen, it is, therefore, important to follow the spirit of the law and apply the guidance properly. The guidance is designed to be of general application and is formulated around the following guiding principles:

• Risk assessment
• Proportionality of risk-based prevention procedures
• Top level commitment
• Due diligence
• Communication (including training)
• Monitoring and review

HMRC make an interesting point that:

‘The prevention procedures that are considered reasonable will change as time passes. What is reasonable on the day that the new offences come into force will not be the same as what is reasonable when the offence has been in effect for a number of years. The Government accepts that some procedures (such as training programmes and new IT systems) will take time to roll out, especially for large multi-national organisations. HMRC will, therefore, take into consideration the prevention procedures that were in place and planned at the time that the facilitation of tax evasion was committed.

At the same time, the Government expects there to be rapid implementation, focusing on the major risks and priorities, with a clear timeframe and implementation plan on entry into force. In addition, HMRC expects reasonable procedures to be kept under regular review and to evolve as a relevant body discovers more about the risks that it faces and lessons are learnt.’

Doing nothing is clearly not an option.

So where does this leave us?
The rules are already operational, so whilst business owners needn’t be having too many sleepless nights, policies and procedures need to be established sooner rather than later. The guidance gives some helpful pointers towards what is required, so there is no excuse for not grabbing the bull by the horns and getting the systems in place.

You’ve made the decision to set up your own business. It’s an exciting time and you’re keen to get going, but you need more startup cash than you have savings, so you’ll have to find an external source of finance to help you with your startup funding. Going to visit your bank manager is probably the first place you think of for a business loan, but it’s a good idea to look at other options available before you apply for any kind of business investment.

Family and friends

Whilst your family and friends are more likely to be enthusiastic about your new company and are the least likely to charge big interest rates on a loan, going down this route could be fraught with difficulties. Not least of which is your relationship with them. If you accept a loan from family and friends, the advice is to formalise the process, drawing up an agreement which details exactly what each party can expect, what their obligations are, and how the loan will be repaid. By treating it in the same way as you’d treat a loan from a bank or institution, you should be able to avoid the pitfalls informal loans often fall into.

Grants

Business grants are generally made for a specific purpose and do not have to be repaid, making them extremely attractive, especially to startup companies. Click here for a list of organisations that offer financial support for companies.

In Hertfordshire, Wenta offers a Startup Programme which includes practical advice and eligibility for a grant. You’ll get 12 hours of free business support and mentoring.

Once you have been trading for a year, you’ll be eligible to apply for smallbusiness.co.uk’s monthly Small Business Grant competition of £5,000.

Government loan

The Government offers a specialist unsecured loan for startups of up to £25,000 at 6% interest, repayable over five years.

Angels

Business angels are private investors who are willing to invest money and sometimes also their own expertise in startups and startup funding. Angels are generally looking to invest smaller amounts of money than the banks or venture capitalists, but expect lower return rates. There are a number of companies that help investors and startups find each other, but the trade association UK Business Angels Association specialises in early-stage investment.

Venture capitalists

If you are looking for an investor to get more involved in the running of your business, you need a venture capitalist. They will invest money and time in return for equity or shares and take a hands-on approach. If you’d rather not be seen being grilled on Dragon’s Den, visit the British Private Equity & Venture Capital Association for more information.

Crowdfunding

Most people think of crowdfunding as a way of asking people to donate to good causes, but there are also crowdfunding sites, like Crowdcube, that specialise in raising startup funding for small businesses. Crowdfunding has enabled smaller investors to put money into small businesses and startups, with the consequent benefit of allowing businesses to raise finances from a wider range of investors in return for shares.

If you would like advice about the best way of funding your new startup business, contact us to book an appointment.

A study undertaken by the Centre for Economics and Business Research study found that SMEs, on average, spend around a million pounds a year on their business operations. Those with more than 50 staff spend an average of £3m every year on goods and services; micro businesses, i.e. those with fewer than nine employees, spend an average of £225,379.

The study was able to drill down into the figures, discovering that the average SME spends 24% of its budget on hiring new staff, 20% paying suppliers, and 19% on technology. The good news is that older businesses tend to spend less on expenditure. However, overall, it shows the importance of managing cash flow at all levels of business.

Here’s our breakdown of these, and other expenditures that make up the majority of an SME’s costs:

Staffing

Don’t forget that staff expenditure doesn’t end with how much you pay them. You will also take into account any benefits, bonuses and commission, tax, insurance, as well as the HR costs involved, including pension contributions, the cost of recruiting and training new staff, training courses etc. You also need to factor in the cost of any consultants whose expert advice will help you do a better job of running your company, e.g. trainers, HR specialists, management consultants etc.

You also need to take into account the fact that there will be times when your staff are faced with productivity problems, which could be anything from being delayed in meetings, stuck in traffic, sickness, power cuts or breaks in broadband to disasters such as fire or flooding for which a rigorous disaster recovery plan needs to be in place.  

Suppliers

If you are a retailer or manufacturer, you will have the cost of buying in stock and raw materials which also have costs associated with delivery and storage.

Overheads and operating expenses

Having the right technology is vital for the smooth running of your business and provision must be made for upgrading it on a regular basis. Your computer systems may appear to be working, but older ones will probably be slower (wasting valuable staff productivity time) and less secure. In 2017, the average cost of a security breach to a medium-sized organisation was over £3k, so it is well worth the investment to keep your cybersecurity up to date.

All businesses incur the expense of running the organisation – office rental, utilities, office equipment, and any company vehicles.

Late payments and long payment times

SMEs can really struggle and sometimes go out of business altogether because of late payments, whether it’s because of long payment conditions – sometimes 90 days or more – or the inefficiency or poor ethics of your debtors. Late payments cost SMEs a whopping £2bn a year in terms of chasing them and paying interest on overdrafts and loans to keep the company going in the interim.

If you run a small or medium business and need help managing your company’s expenses, financial planning and business advice, please talk to us! Call us on 01992 444466 or click here to contact us to find out more.

The Ambition conferences are a hugely important business and community initiative for two reasons. Firstly, it’s an incredible resource designed to help Hertfordshire entrepreneurs and small businesses develop their sales and marketing skills in order grow their businesses. Secondly, 100% of our ticket sales go to two amazing local charities.

I have been involved in all four Ambition conferences and am a huge advocate. The conference is organised on a voluntary basis by local SMEs who believe that if we work together and support each other, we can all benefit from the business opportunities in Hertfordshire, with a consequently positive knock-on effect on the local economy. 

On a personal and professional level, I’ve always got tremendous value from working as a team with the committee, and think it is an inspirational example of local businesses working together to help boost the local economy at the same time as benefiting the community.

That’s why I’m involved and why I agreed to become Chairman. But how will Ambition help your business? Here are the top reasons why you should attend:

It’s great for your business

First and foremost, Ambition 2018 is there to help local companies that are, as yet, too small to outsource their sales and marketing, but understand these skills are vital for their growth. Our professional speakers are all experts in their fields and will pass on tips and the benefit of their experiences in order to help you get to grips with this important aspect of running a business.

It ticks your business and Corporate Social Responsibility boxes

All the expenses involved in the organisation of Ambition are covered by our sponsors. This enables us to keep the cost of tickets down so they are low enough for even the most modest start-up to be able to afford – only £95 (Early Bird rates are even lower). But most importantly, all the proceeds raise thousands of pounds for our nominated charities. You don’t have to be an accountant to work out that the more delegates attend the conference, the more money we raise for good causes.

It attracts great speakers

Speakers really appreciate the ethos behind the conference and, because it is a non-profit-making event that benefits charities, it attracts higher quality speakers than we could otherwise bring on board – in fact, all our speakers are kind enough to donate their time and expertise so more money goes to the charities.

It’s inspirational

Having attended all the Ambition conferences, I know how inspirational they can be for entrepreneurs and people who run small businesses. They are exceptional value for money in terms of teaching entrepreneurs and managers more about sales and marketing, networking opportunities and having plenty of sales and marketing professionals to bounce ideas off. I really want to encourage more business professionals to take part and make 2018’s conference the best yet!

What happens at Ambition

The format is that we sit together on tables during sessions, listening to the speakers. We then have a chance to discuss the session on our tables before the next speaker so the key takeaways are more likely to be remembered. Delegates can network with each other during the breaks and over lunch. In previous years, people have not only got a lot out of them, but have also had a good time too!

Click here to find out more about this year’s speakers. Other speakers will be announced as soon as they are confirmed and we will shortly post more information about the sessions.

Booking will open soon – watch out for the Early Bird offers to get an even greater ROI!