UK accounts and tax

Monthly management accounts are essential to small businesses. The argument that monthly management accounts for sole traders (approximately 70% of all businesses), especially whose income is falling, is superfluous makes no sense. What it means is that monthly management accounts for sole traders should be relatively simple. Regardless of whether business income is rising or falling, it is vital that at least once-a-month business owners review their financial position based on accurate data, whatever the size of their business. Most businesses rely on accounting software, which is governed by GIGO (garbage in, garbage out – or – Good In and Good Out). The key to accurate time management information is a  professional bookkeeper , registered with the  Institute of Certified Bookkeepers . Employing a bookkeeper will save money in the long run, and short term: Accounting errors are very much more expensive to sort out, as opposed to “getting it right first time”. Professional...

FOR THOSE OF US  that can forgive and forget Germany's 4-1 trouncing of England in last year's World Cup, doing business with our German EU partner may spell good news in 2011. Data from the Federal Statistical Office just released in the last couple of days show that Germany is the place to trade nowadays. Domestic investment in machinery last year was up nearly 10%, fuelling better than expected GDP growth figures. Domestic as well as healthy export growth led to the Germans posting a 3.6% rise in GDP in 2010 - far better than many of its western European neighbours. Not only that, but trading with Germany is getting far less risky too. Federal insolvency statistics released this week for the period January to October 2010 showed business insolvencies numbering 26,966 - a year on year fall of 2.2%, but the decline in numbers is gathering pace; in October for instance, corporate insolvencies were down 12.8% on the previous October. Gute Nachrichten!

THE RECENT NEWS  that Companies House will move to electronic filing of statutory annual returns and accounts in 2013 could spell good news for its users. Receiving accounts information in xbrl digitised format instead of paper will provide an opportunity for the house to do some validation checking before it offers it up for public consumption. Visitors to the Companies House website will see a disclaimer there saying that at the present time, information received by its staff is done so in good faith, and that no checking of the data is undertaken. There are two big reasons why not; one is that the paper format gives very little opportunity to run checks on the content, and two, Companies House does not have it in its remit to do validation checks to ensure the information is "kosher". Potential fraudsters know this....that's why many fictitious sets of accounts are being filed on recently acquired shelf companies for the purpose of tricking trade suppliers into providi...

Companies across the UK are being reminded of important changes to Corporation Tax (CT) filing and payment, which come into effect next month. From April 2011, all Corporation Tax payments will have to be made electronically, and all company tax returns must be filed online for accounting periods ending after 31 March 2010. The returns will also have to be filed using a specified data format, known as Inline XBRL or iXBRL. As well as limited companies, the changes will affect other organisations that pay corporation tax, including clubs, societies, associations, co-operatives, charities and other unincorporated bodies. There are a number of options for electronic payment, including: Direct Debit; debit or credit card via the BillPay service; your own bank or building society’s internet or telephone banking service; a BACS or CHAPS transfer; by Bank Giro or at participating Post Offices. Companies will be able to file online either through commercially available software or by using ...

Tax cheats will face up to five years’ detailed scrutiny from the taxman Letters will start to land on the doorsteps of 900 tax cheats, telling known evaders that they are now under increased levels of personal scrutiny as part of the new Managing Deliberate Defaulters (MDD) programme. MDD will closely monitor the tax affairs of individuals and businesses who have deliberately evaded tax to ensure that they are complying with their tax obligations and have demonstrated a permanent change in their behaviour. David Gauke, Exchequer Secretary to the Treasury, said: “Managing Deliberate Defaulters will deter people from evading tax in the future and reassure honest taxpayers that tax evaders will be dealt with. This government has made it clear that we will not tolerate people who refuse to pay their fair share and HM Revenue & Customs (HMRC) will pursue those who bend or break the rules.” HMRC’s Steve Hickman, said: “Tax cheat check-ups will involve continued and clo...

Plumbers, gas fitters and heating engineers are being targeted by the tax authorities in a clampdown on tradespeople failing to declare their earnings and pay tax. Under the tax plan, plumbers, gas fitters, heating engineers and members of associated trades who have tax to pay which they have not yet told HM Revenue & Customs (HMRC) about can come forward by 31 May to tell the department of their intention to disclose what they owe. If they make a full disclosure, most face a low penalty rate of 10 per cent, with a maximum of 20 per cent. They have until August 31 to make their disclosure and arrange for payment to be made. After that date, using information pulled together from various sources, HMRC will carry out targeted investigations aimed at those who have failed to come forward and make a full declaration. Substantial penalties or even criminal prosecution could follow. The plumbers’ tax safe plan (PTSP) is the first initiative in a campaign focused on trade...

TAX BODIES HAVE criticised the Treasury's decision yesterday to ignore pleas for a delay in the implementation of new technology for making tax returns. Treasury minister David Gauke yesterday revealed he would not postpone the mandatory use of the computer language iXBRL beyond 1 April. A coalition of tax bodies had written a joint letter asking for a delay. Companies are due to use iXBRL to make their corporate tax returns from 1 April. HM Revenue & Customs had already signalled its intention to push ahead with the deadline. Companies have been aware of the iXBRL deadline for five years. Anthony Thomas, deputy president of the Chartered Institute of Taxation , said: "This decision will come as a blow to some businesses and members of the professional bodies who are struggling with implementation due to the insufficiency of time between software arriving, and the legislation commencing on 1 April 2011." Concerns were raised after it was revealed by A...

THE TAXMAN'S plans for managing PAYE has been slammed as "unwise and ill-conceived". Proposals have been made by HM Revenu & Customs to gather real time information for tax and universal credit purposes through the BACS system but experts have dismissed the idea. Donald Drysdale, assistant director of tax at ICAS, said: "Given that HMRC have failed to cope with the task of reconciling PAYE and National Insurance Contributions annually, there is no reason to believe that they would be any more successful in clearing the much greater number of reconciliations potentially arising on a monthly or weekly basis under real time information (RTI)." ICAS cites the recent troubles that have hit PAYE systems as proof that a switch to RTI will fail to work. The taxman intends to notify software developers of RTI information by the end of March. Tests with a limited number of employers will then staged before a full scale roll-out.  By Gavin Hinks

Q- Company with two shareholders having 1 share each wants to increase share capital to 200 (100 shares each) to enable them to take different dividends payments. How would they go about this. What paperwork is necessary and can it be done online with Companies House or not? Would the Memorandum and Articles need altering or is it just a form filling excercise? Answer- Was this company formed before the relevant provisions of CA 2006 came into force? If so, it will have an authorised (maximum) share capital set out in the Memorandum, which is now deemed to be incorporated into the Articles. If that is less than £200, you will need to amend the Articles by special resolution and send an copy of the amended Articles to Companies House for filing. If the company was formed after the CA 2006 came into force, the concept of a maximum authorised share capital no longer exists and the directors are probably empowered simply to issue more shares at their discretion, as they...

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/2/676c7f86-2006-11e0-a6fb-00144feab49a.html#ixzz1F656edXM Thousands of higher-rate taxpayers who have been excused from filing tax returns could be paying hundreds of pounds of unnecessary tax following the steep fall in interest rates in recent years. Experts warn that people who have received letters from HM Revenue & Customs (HMRC) telling them they no longer need to fill in returns should still consider whether they could make a reclaim for overpaid tax. HMRC says it routinely writes to higher-rate taxpayers with “straightforward” finances – typically employees with some savings and investment income – telling them that unpaid tax will be collected by reducing their pay-as-you-earn (PAY...

There are a number of government-backed schemes designed to help small and medium-sized enterprises (SMEs) access finance, be it loans or grants. In addition to the main two UK-wide initiatives - the Enterprise Finance Guarantee (EFG) scheme and Enterprise Capital Funds (ECFs) - there are separate programmes in England, Wales, Scotland and Northern Ireland. ENTERPRISE FINANCE GUARANTEE SCHEME EFG was set up by the former Labour government to encourage more bank lending to SMEs. Under the scheme, the government guarantees 75% of an SME's bank loan, with the lenders covering the remaining 25%. It is open to companies with an annual turnover of up to £25m, and loans from £1,000 to £1m are available, repayable over 10 years. Firms can seek to use EFG to access new loans, refinance existing loans, convert overdrafts into loans, gain a new overdraft or extend a current one, and cover cash flow shortages. It is available for all...

Smart small business operators realize that they do not need a full-time in-house bookkeeper, so all you need do is to approach such businesses in your area and offer to do their book keeping. MYOB, Quick books, Sage are all available so you don't need to purchase any software and just pay very reasonable amount for your bookkeeping. Sourcing new clients is actually very simple – if you need some help, then Contact us (ayaz786amd@gmail.com) for more details about how we can help you to handle your bookkeeping.

Smart small business operators realize that they do not need a full-time in-house bookkeeper, so all you need do is to approach such businesses in your area and offer to do their book keeping. MYOB, Quick books, Sage are all available so you don't need to purchase any software and just pay very reasonable amount for your bookkeeping. Sourcing new clients is actually very simple – if you need some help, then Contact us (ayaz786amd@gmail.com) for more details about how we can help you to handle your bookkeeping.

If you let out all or part of a property (including your home), how you're taxed on the rent depends on the type of letting. If you let property abroad, you may have to pay UK tax on the rental income if you're resident in the UK for tax. Tax on residential lettings Letting residential investment property is treated as running a business - even if you only let out one property. And if you let out more than one property in the UK, they'll all be treated as a single business. Whether you let one or several properties, you're taxed on the overall 'net profit'. You work this out by: adding together all your rental income adding together all your allowable expenses taking the allowable expenses away from the income Working out your net profit like this means that you can offset a loss from one property against the profit from others. Your net profit counts as part of your overall taxable income. ...

http://www.hmrc.gov.uk/vat/managing/reclaiming/motoring.htm#6 Make sure that the employees get VAT receipts for all their petrol purchases and hand them over when they do their expense claims (or you won't be able to claim). Obviously not all of the fuel on those receipts will be for business use, but you need to be able to show documentation that more than covers the business element.

HM Revenue and Customs (HMRC) has issued new guidelines on the recent changes to the tax relief available on pensions. As part of the changes, the annual allowance for tax relief on pensions has been cut from £255,000 to £50,000 for 2011/12. The announcement was confirmed last October. The annual allowance covers how much can be paid into a pension pot while attracting tax breaks. Now HMRC has published its latest, updated guidance on what the new limit means for pension savers. In some circumstances, HMRC said, savings added to a pension fund between 14 October and 5 April may come under the remit of the new rules.

With insolvency experts predicting an increase in company failures, evidence is emerging that HMRC is adopting a harder line on outstanding debts and voluntary agreements. Baker Tilly insolvency practitioner David Hudson warned an Institute of Credit Management conference in London this week that with the indicators pointing towards more businesses at risk, the number of firms seeking company voluntary arrangements would increase in the coming months. CVAs are based on legal agreements with creditors that allow the company to keep trading while paying off its debts. While many creditors continue to see advantages in allowing struggling companies to try and trade their way out of trouble, Hudson and other insolvency practitioners at the event offered evidence of a harder line emerging from HMRC, the country’s most influential trade creditor. “A CVA is like a legal ‘time to pay’ arrangement to give the company a breathing space,” said Hudson. “Banks tend to like them becau...

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LONG-TERM career progression has returned to the forefront of accountants' minds, according to recruiters Badenoch & Clark, taking over from a main concern during the crisis with holding on to jobs and pay. The views are contained in the latest market report from the recruiter. Heidi Waddington, associate director in professional services at the recruitment company, said: "As confidence returns in the market, candidates are focusing on career progression and longer term prospects. This is a move away from the situation during the recession when just having a role and remuneration was their main focus." Employers are still hiring too. Badenoch & Clark said demand was good for analysts and, as companies grew, employers were making more short-term posts available. Waddington said: "Vacancies for both fixed term contractors and temporary candidates have increased as companies find innovative ways of ensuring steady growth." She added: ...

Small business owners in the UK could be encouraged by the news that small business rate relief is set to increase later this year. With VAT set to increase in the early stages of 2011 and a number of businesses being exempt from the government's new tax scheme because of where they are based, there has been little to lift the spirits of many small businesses owners of late. However, one measure announced in the most recent Budget could serve to benefit a number of the UK's smaller firms. As announced by the previous administration, the government is to increase small business rate relief later this year. Business Link, the government's enterprise information platform, explained: "Between October 1st 2010 and September 30th 2011 eligible ratepayers will receive small business rate relief at 100 per cent on properties up to £6,000 rather than 50 per cent and a tapering relief from 100 per cent to 0 per cent for properties up to £12,000 in rateable va...