October 2016 Newsletter from Accountants in Dartford

The Government’s landmark 'Making Tax Digital' initiative, which aims to create a 'transparent and accessible tax system fit for the digital age', may be delayed until 2019 for many businesses. This follows concerns over the 'short' timetable for the implementation of the initiative. The Government has now released six consultation documents, which focus on key issues relating to the new digital drive.

Meanwhile, the Small Business Minister, Margot James, has confirmed new measures designed to support the Prompt Payment Code and help tackle the problem of late payment, including the Government's ambition of payments being made within 30 days.

Finally, with Autumn now upon us, Chancellor Philip Hammond recently announced that he will deliver his first Autumn Statement on Wednesday 23 November. Following the Brexit vote, many expect the Chancellor's 'mini-Budget' to unveil a raft of announcements designed to support the UK economy. As always, we will keep you updated on all of the major announcements, following the Chancellor's speech.

Making Tax Digital 'delayed until 2019' for many businesses

The introduction of HMRC's new Making Tax Digital (MTD) drive may be delayed until 2019 for most businesses, the Financial Secretary to the Treasury, Jane Ellison, has stated.

The announcement came in response to critics' concerns over HMRC's 'short' timetable for implementing the new scheme.

Delaying the initiative will give larger businesses more time to prepare and adjust, the Secretary announced in a speech at the HMRC Annual Conference.

Some business owners have raised particular concerns over the plans relating to digital record-keeping and quarterly updating.

The Government has also confirmed that the exemption from quarterly returns applying to individuals with secondary incomes of less than £10,000 a year (from self-employment or property) will now be extended to all unincorporated businesses and landlords with annual incomes below £10,000.

Ms Ellison stated that the Government aims to provide businesses and individuals with the 'kind of digital services they expect in the 21st century'.

HMRC has released six consultation documents outlining the plans for MTD, and how businesses and individuals will transition to the online filing system.

These consultations focus on a number of key areas, including how digital recording and quarterly updating will operate, extending cash basis accounting to landlords, and proposals to simplify the penalty system for late filing.      

The consultations run until 7 November.

New measures to support prompt payment

New measures to support the voluntary Prompt Payment Code (PPC) and combat the problem of late payment have been confirmed by the Small Business Minister, Margot James.

A letter to PPC signatories from Ms James and Philip King, Chief Executive of the Chartered Institute of Credit Management (CICM), outlined that firms should aim to pay suppliers within 30 days, and that this should eventually become the norm.

However, payment within 30 days is not compulsory: the letter states that the Code Compliance Board will not be enforcing payment within this time frame.

Currently, over 1,800 firms are signed up to the PPC, which sets out measures to ensure the fair and equal treatment of suppliers. These firms agree to maximum payment terms of 60 days. If payment terms extend beyond 60 days, companies are required to demonstrate that exceptional circumstances apply. The Code Compliance Board will consider each case individually.

Additionally, from 6 April 2017, large businesses will be required to report on their payment practices under the Small Business, Enterprise and Employment Act 2015.

The letter also confirmed the future appointment of a Small Business Commissioner, who will provide advice and support on payment issues and queries.  

Minimising the late payment risk

Small and medium-sized enterprises are particularly vulnerable to the effects of late payment. Consider the following to help you avoid falling foul of today's 'late payment culture'.

• Carry out a credit check on clients - Failure to accurately assess the credit history of new or potential customers could leave your business at significant risk of late payment or, potentially, non-payment.
• Ensure terms and conditions can easily be found - Include your payment terms and conditions on all relevant documentation sent to new and potential customers. These should clearly detail the payment period for any invoice.
• Promote early payments - Consider offering small discounts to those who pay their bills early.
• Invoice on time - Ensure that invoices are distributed on time. Unnecessary delays can be prevented by ensuring that your contact lists are kept up to date.
• Know your rights - It is advisable to keep up to date with the latest legislative changes, to avoid becoming a victim of late payment.

We can help you to improve your business's cash flow - please contact us for further advice.  

ESSENTIAL TAX DATES FOR OCTOBER

1 October
Due date for payment of Corporation Tax for period ended 31 December 2015.

5 October
Individuals/trustees must notify HMRC of new sources of income/chargeability in 2015/16 if a Tax Return has not been received.

14 October
Due date for income tax for the CT61 quarter to 30 September 2016.

19/20 October
Quarter 2 2016/17 PAYE remittance due.

31 October
Last day to file 2016 paper Tax Return without incurring penalties. 

QUOTE OF THE MONTH

'We expect polymer notes to last at least two-and-a-half times longer than the current generation of fivers, and therefore reduce future costs of production.'

The Governor of the Bank of England, Mark Carney, commenting on the launch of the new polymer £5 note.

For more information about Accountants in Dartford contact us.

Accountants in Dartford

Regus

Victory Way

Dartford

Kent

DA2 6QD  

01322303162

September 2016 Newsletter from Accountants in Dartford

Following the dramatic events of the last few weeks, which saw the appointment of both a new Prime Minister and a new Chancellor in the wake of the EU referendum result, many of our clients will be wondering what the changes will mean for UK tax and economic policy. This month we explore some of the possible consequences of Britain's vote to leave the EU.

Meanwhile, new research suggests that many employers have chosen to increase prices rather than cut jobs in response to the National Living Wage (NLW). However, the Federation of Small Businesses has called on the Low Pay Commission to take small businesses' concerns into careful consideration when recommending the NLW rate for 2017.

Brexit - what are the likely implications for business?

The new Secretary of State for Exiting the European Union, David Davis, has recently indicated that formal Brexit negotiations could begin by the start of 2017 - so what could this mean for UK businesses?

It is important to note that in the short to medium term (until 2018 at least), there will not be any changes to tax and employment laws as a result of the vote.

VAT

However, once Britain's withdrawal is complete, VAT (which is operated in line with EU law) could be subject to some significant reforms. If the UK is no longer obliged to comply with the EU VAT Directive, the UK Government could choose to amend the legislation to apply different rates to goods and services without constraint.

If VAT were to be applied to items that were previously exempt, or if there are changes to the rates of VAT, the financial implications for business could be sizable.

Importing and exporting

The potential restrictions on the free movement of goods between the UK and its EU neighbours could also trigger significant changes to how businesses import and export.

For example, currently when a UK firm buys goods from an EU business it makes an 'acquisition'. The transaction does not result in any VAT being payable - a book entry in a VAT return being the only consequence, unless the UK business makes exempt supplies. However, following Brexit the transaction is likely to be treated as an 'import' and import VAT would be paid to HMRC at the time of importation. Although this would be reclaimed by the business on the next VAT return (unless the business makes exempt supplies), the changes could have implications for the firm's cash flow.

Business reliefs

Once Britain leaves the EU, the UK Government could have greater control over business reliefs such as R&D tax credits for SMEs, which currently have constraints placed upon them due to EU State Aid rules.

Other regulations

With much employment legislation derived from Brussels, concerns have been raised over whether this is another area that could be open to reform. Meanwhile, David Davis has suggested that the 'flood of unnecessary market and product regulation' will be halted, which could be good news for business owners.

A new Chancellor, a new economic policy

With a new Prime Minister and Chancellor at the helm, there could be significant changes to Britain's economic and fiscal policies in the months and years ahead. The Government has already axed its plans to achieve a budget surplus by 2020, although we will have to wait until the Autumn Statement for further details on the Government's latest economic strategy.

The dust may be settling on the EU referendum result, but there is still much that remains unknown about the future of UK tax and employment law. Whatever happens, we will be happy to advise you on any issues that may arise.

Employers favoring price hikes over staff cuts in response to National Living Wage

 

Many employers have raised prices or reduced profits rather than deciding to cut jobs in response to the introduction of the National Living Wage (NLW), research from the Resolution Foundation suggests.

The think tank's report on the issue is based on a survey of 500 businesses, carried out before the EU referendum. The research reveals how employers responded to the introduction and implementation of the NLW.

Of those affected by the NLW, 36% said they had raised prices, while 29% are reported to have reduced their profit margins in order to compensate for the new wage.

The data also revealed that 14% of firms have decided to reduce labour, either by cutting recruitment levels or by offering fewer hours to employees.

However, concerns have been raised over just how durable the NLW pay rate is in the aftermath of the UK's vote to leave the EU. Mike Cherry, National Chairman of the Federation of Small Businesses warned that the Low Pay Commission (LPC) must be 'extra vigilant' when recommending the NLW figure for 2017.

Mr Cherry stated that the LPC should take 'extra care to ensure small businesses can sustainably support higher wages at this challenging time'.  

Introduced in April, the NLW requires employers to pay employees aged 25 and over at least £7.20 an hour.

Employees aged under 25 continue to receive the National Minimum Wage at the appropriate rate.

We can advise on a wide range of business issues, including budgeting and cash flow forecasting - please contact us for more information.

For more information about Accountants in Dartford contact us.

Accountants in Dartford

Regus

Victory Way

Dartford

Kent

DA2 6QD  

01322303162