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Keep up-to-date with relevant tax & accounting news there too.

Albasas In The Cloud. What Can It All Do For You?


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Poor management and a lack of financial information are 2 of the biggest threats to the well being of your business.

If you’re decision making is based on no numbers or numbers that are out of date then your business is in danger.

Entrepreneurs know that cash flow is king…you can be really profitable on paper but unless you get those invoices paid promptly..you’ll get into serious trouble

Accurate and correct external and internal financial controls and accounts give you the tools to manage your cash flow bottlenecks as they will also allow you to ask some probing questions like:

Do you have too much money tied up in stock?

How much are you losing through wastage of resources?

Who precisely is habitually owing you money ?

And how long are they taking to pay? And;

Having the means to cut out on all the uneconomical factors of your business; where are the known areas of growth and or profitability?

Robert Mitchell, the Principal here at technology accountants Albasas says: “number crunching js essential to the lifeblood and so the health of any business. Late payers and bad debts will just eventually cripple your businesses cash-flow and so blunt your ambitions. Keeping a tight rein on that money overdue, and a robust credit control policy will ensure that lifeblood of any enterprise, the cash-flow, does just that, and keeps flowing.

 We at Albasas know how important your book-keeping processes and systems that deliver such vital business statistics are.

 Financial information delivered and driven by digital technology creates the necessary synergy with real time information which will make all our jobs as professionals much easier, cheaper and profitable; delivering to us the critical numbers we need to make decisions.

 If you need a well thought out business plan Albasas can help there too.

 One of the first jobs you should consider delegating is book keeping, otherwise you may have no control over costs and no spare time to do anything about it. A vital but time consuming activity we can run the book-keeping for you, help you understand the books, and find a cost effective solution, or a book-keeper to help.

 We deal with many local businesses and have built up both a great contact data base of local suppliers and an envied reputation. So when you’re looking for local services, we can usually help here too by recommending or introducing you to someone who may assist..

 At Albasas you can rest easy knowing that all your UK regulatory paperwork is complied with too. Things like preparing and filing annual accounts, tax returns, and all other deadlines your business has like PAYE & VAT and so forth. Services offered are reliably taking care of to ensure that you pay only the tax that is due- and not a penny more. By taking time to get to know you and your business, and with due diligence, ,Albasas will identify all your legitimate expenses, and defend your position with the tax man, should some predictable situation arise at some future date.

So if you want to take your book keeping, accounts, tax, business planning or entrepreneurial knowledge up a level or two.Just pick up the phone now and call, Robert Mitchell at Albasas. The technology Accountants. You’ll be glad you asked!  Call 0141– 404- 6115 for an informal chat to discuss your needs. Now!  Or contact us via the website at http://www.albasas.org. We’re waiting for that request, now!

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Workplace Pensions – The Basics


To help you save for your retirement, you’ll be automatically enrolled into a workplace pension by your employer sometime between now and February 2018, if:

  • you’re not already in one;
  • you’re 22 or over;
  • you’re under State Pension age;
  • you earn more than £8,105 per year; and
  • you work in the UK.

You’ll pay in and your employer will pay in.

You’ll also get a contribution from the government in the form of tax relief.

You can opt out if you want to but you’ll be missing out on the contribution from your employer, and the tax relief.

REAL TIME INFORMATION (PAYE)


Under the new RTI payroll system employers will send information about the tax and national insurance that they deduct from employees’ wages to HMRC at the time when they are deducted – rather than at the end

of the tax year in April-May, as happens now. So instead of submitting this data once a year to HMRC, online submissions will be made weekly, fortnightly, four weekly or monthly, depending on the frequency at which their employees are paid. Employers will still calculate Tax & NIC (using their payroll software) in the normal way.

All accredited Payroll software is being updated with all of the relevant functions and features to allow you to send your RTI returns efficiently and on time. These features will be added as part of the normal updating process, so there will be no additional software costs in order for you to be able to operate RTI.

Presently the penalties are unknown for non-compliance.The new Universal Credit is due for introduction next year for Tax Credits / Welfare Payments/ Housing Benefits etc. This system is supposed to complement the implementation of the latter.The payroll department of all businesses will be rather busy places in 2013. More HMRC admin then…lets see how it all goes.

http://www.hmrc.gov.uk/rti/employerfaqs.htm

Basically HMRC are passing on all the compliance and admin issues to us employers. Which means they will have access to all the businesses payroll details to audit ‘in real time’ and then question immediately. Employers will certify the figures monthly rather than yearly as per Form P35. Big Brother? No get out for the self employed either if they are subject to the new Universal Credit. Income & expense claims for Tax Credits have to be in monthly too. That’s flagged up already! CIS which is part of PAYE will largely remain unchanged. But that’s a mess anyway!

Round sum allowances for the self-employed ?


HM Revenue & Customs (HMRC) issued a consultation document this summer that examined whether the self-employed might be offered an alternative accounting system for tax. The move followed a review by the Office of Tax Simplification on small business taxation. HMRC’s proposed system is designed to make accounting easier and features round sum allowances. Currently, the type of round sum allowances that the self-employed may claim are very restricted as HMRC requires taxpayers to retain evidence of each item of expenditure. However, HMRC does allow some leeway on this:

 
Use of home as office:  HMRC provides examples in its manuals of expense claims covering the costs of running a business at home, such as light and heat, council tax and repairs. While the size of any expense claim will vary depending on your business activity, HMRC indicates that it does not regard a round sum deduction as unreasonable when there is minor use of the home. The manual gives an example of £2 per week, however, this figure has not been updated for several years. HMRC allows employees a deduction of £4 per week from 6 April 2012, or £18 per month, and so we suggest that the self-employed can rely on these higher figures as being reasonable. The alternative is to claim the actual expense incurred.

 

Mileage allowances: self-employed drivers may claim 45p per mile for the first 10,000 miles travelled on business in a tax year and 25p per mile thereafter. There is no difference in rates between petrol and diesel, and whilst it is not necessary to keep receipts it is necessary to keep a mileage log.

 

A trap to watch out for concerns subsistence expenses: when a self-employed person is travelling on business the cost of subsistence is allowable as a business expense. Whilst HMRC agrees a table of fixed rate deductions that may be claimed if you are an employee, the self-employed do not get the same treatment: you may only make claims based on actual expenses.

Finance Act 2009 Penalties- The Reality


Finance Act 2009- Penalties

Forget the previous rules on disclosure and cooperation (size & gravity) after 1 April 2009.

Covers income, corporation and capital gains tax. All other taxes from 1 April 2010.

Documents delivered that contain careless or deliberate inaccuracies or would have been

relied upon by the Revenue. In each case a penalty will be levied. Therefore, each ‘inaccuracy’ attracts its

own penalty. Different penalties are defined as either:

‘Careless or deliberate’ unless YOU brought it to the attention to the Revenue before then, (amended the

return/innocent error no penalty).

4 types of ‘penalty’ Behaviour:

1. Reasonable Care ( Expect a 0% Potential Lost Revenue penalty)

(need ‘adequate records’ took a reasonable view of the law which turns out to be

wrong,intention not relevant you either did it or not, and basic systems in place to

demonstrate that there was no significant negligence);

2. Carelessness (Expect a max 30% PLR penalty)

(Failure to take care, bad internal controls, not taking proper advice, incomplete

records, misclassification, breach of duties, absence of skill- generally negligence);

3. Deliberate understatement (Expect a 20% min – max 70% PLR penalty)

(Not acting properly just omitting facts when you know its not the right thing to do,

deliberately misleading arguing and misinterpreting the law, i.e. not recording sales,

not declaring private use, inappropriate accounting treatment, basically deliberately

misinterpretation of the law. Border line prosecution case.)

4. Carelessness with concealment (Expect a 30% min – max 100% PLR penalty)

(False accounting, invoicing, destroying records, misleading agents or Revenue,

fictitious records, to conceal. Likely prosecution cases)

Prompted and unprompted Disclosure

Penalty ranges for unprompted and prompted disclosure

Type of error

Penalty range for prompted disclosure           Penalty range for unprompted disclosure

Careless                                                         0%-30%                                                        15%-30%

Deliberate but not concealed      20%-70%                                                       35%-70%

Deliberate and concealed           30%-100%                                                     50%-100%

Remember, if you took ‘reasonable care’ but still made a mistake, HMRC will not charge
a penalty.

What’s more, HMRC now have the power to levy some of these penalties on culpable company directors, or the specific director, in their personal legal capacity as an individual. A culpable director will have no limited liability when prompted or unprompted disclosure is proven against them, and so will be charged a suitable penalty just as if they were self employed. For example, circumstances, such as a company officer, perhaps having neglected their stewardship, or having been negligent as to their basic duty of reasonable care, as is required of them, in the day-to-day running of a company, under the Companies Act, will find that reasonable care is not a defence available to them against these new prompted and unprompted disclosure penalties. Of course, all other relevant facts need to be taken into consideration here before the directors culpability to a personal penalty is proven.

Contact me on 0141 404 6115 for any advice.

Robert Mitchell

Budget & Finance Bill 2012- Tax Changes Legislated For The 2012/13 Tax Year


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New tax changes announced in Budget 2012 for Finance Bill 2012 (or to otherwise be legislated for the 2012/13 tax year)

  • Corporation tax: – for the second year running the full rate will be reduced below the amount originally legislated. The main rate will be 24% for Financial Year 2012 instead of 25% as originally planned. The planned annual 1% reductions will be maintained leading to a low 22% rate in Financial Year 2014.
  • As a result of the change to the full rate of corporation tax the marginal relief fraction for Financial Year 2012 becomes 1/100 and the effective marginal rate will be 25%.
  • Fuel benefit: – the fuel benefit multiplier for company cars increases to £20,200 for 2012/13 but the van fuel benefit is frozen at £550.
  • Van benefit: – the van benefit rate for 2012/13 will be frozen at £3,000.
  • EMI options: – the limit on qualifying Enterprise Management Incentive (EMI) options will increase to £250,000 from a date to be determined following State Aid approval. Gains on shares acquired through the scheme on or after 6 April 2012 will be eligible for CGT Entrepreneurs’ Relief – this will be legislated in Finance Bill 2013.
  • esidential property: – Stamp Duty Land Tax (SDLT) on residential property increased to 7% for properties costing more than £2m from 22 March 2012. From 21 March 2012 residential properties purchased via a company will attract a 15% rate of SDLT.
  • VAT: – the registration threshold increases to £77,000 from 1 April 2012 and the deregistration threshold is set at £75,000. New fuel scale charges apply from 1 May 2012. From 1 October 2012 a number of loopholes and anomalies will be corrected covering the provision of self storage facilities, approved alterations to listed buildings, the sale of hot food, cold food consumed on the supplier’s premises, sports drinks, holiday caravans and the rental of hairdressers’ chairs

Previously announced tax measures for Finance Bill 2012 (or to otherwise be legislated for the 2012/13 tax year)

  • Corporation tax: – the small profits rate will be 20% for Financial Year 2012.
  • Patent Box: – provisions will be introduced to apply a 10% corporation tax rate on eligible income from patents and some other types of intellectual property. The reduced rate will be phased in over five years from April 2013.
  • R&D relief: – the rate of relief for SMEs will increase to 225% from 1 April 2012 and the rate of payable tax credit reduces to 11%. The £10,000 minimum expenditure requirement and restriction of the payable tax credit based on the PAYE/NIC liability are removed.
  • Controlled foreign companies (CFCs): – changes will be made to modernise the regime for taxing CFCs for accounting periods beginning on or after 1 January 2013.
  • EIS/VCT: – from April 2012 the annual investment limit for an individual will be increased to £1m and the minimum investment requirement of £500 will be scrapped. Companies will be able to raise up to £5m per annum through the schemes and the size of company that qualifies will be increased.
  • SEIS: – the Seed Enterprise Investment Scheme (SEIS) will make 50% income tax relief available for qualifying investments in new start up companies between 6 April 2012 and 5 April 2017. Any capital gain on disposal of the shares will be exempt. For 2012/13 only any gain reinvested in SEIS will be permanently exempted from CGT. The maximum that an individual can invest in SEIS each year is capped at £100,000.
  • Capital allowances: – from April 2012 capital allowances on fixtures embedded into a property will only be available to a purchaser of property if the fixtures have first been pooled by the vendor and the proportion of the property purchase price attributable to fixtures is agreed by the purchaser and vendor.
  • Personal allowances: – the personal allowance for 2012/13 will increase by £630 to £8,105.
  • Non-domiciles: – from 6 April 2012 the remittance basis charge will increase to £50,000 for non-domiciled individuals who have been resident for 12 of the last 14 years prior to the year of charge.
  • Income tax: – the main tax rates remain unchanged. The basic rate tax band is reduced to £34,370.
  • ISA limits: – the maximum amount that can be invested for 2012/13 is £11,280 with the cash element restricted to £5,640.
  • Child benefit:- will be withdrawn by means of an income tax charge tapered in for those with adjusted net income between £50,000 and £60,000. This will apply from 7 January 2013.
  • Inheritance tax: – for deaths on or after 6 April 2012 a 36% rate of tax will apply to estates that leave at least 10% of the chargeable estate to charity.

New tax changes announced in Budget 2012 but planned for Finance Bill 2013 or beyond


  • Capital allowances: – the thresholds that determine the rate of capital allowances for cars will be revised with effect from April 2013. The 100% first year allowance for low emission cars will be extended for two years from its intended expiry date of 31 March 2013 to 31 March 2015. However the threshold will be reduced from 110g/km to 95g/km and leased business cars will not qualify. The threshold for cars to be entered into the general pool will reduce from 160g/km to 130g/km, with all other cars attracting only the special pool rate of writing down allowance.
  • Car leasing: – in line with the capital allowance changes above the emissions limit above which the 15% lease rental restriction applies will reduce to 130g/km from April 2013.
  • IR35: – a package of measures will be introduced to improve anti-avoidance, make the rules easier to understand and possibly require office holders/controlling persons who are integral to the running of an organisation, to have PAYE and NICs deducted at source.
  • Creative sector: – Corporation tax reliefs will be introduced for the production of culturally British video games, television animation programmes and high end television productions from April 2013.
  • Personal Allowances: – for 2013/14 the basic personal allowance will increase by £1,100 to £9,205. Age allowances for 2013/14 and beyond will be frozen at 2012/13 rates and awarded based on taxpayer date of birth rather than age. From 2013/14 age allowances will only be available to those born before 6 April 1948 with the higher rate only being available to those born before 6 April 1938.
  • • Income tax rates: – the additional rate of tax will be reduced to 45% from 2013/14 and the additional rate for dividends will reduce 37.5%. The trust tax rate and trust dividend rate will also reduce to 45% and 37.5% respectively. The basic rate band will be reduced to £32,245.
  • Ordinary residence: – will be abolished from 6 April 2013.
  • Tax relief cap: – relief for all uncapped income tax reliefs will be limited to a maximum of £50,000 or 25% of income – whichever is higher.
  • Car benefits: – there will be further increases in the car benefit rates with a 1% increase for cars emitting more than 75g/km for 2014/15 and 2% increases in each of the years 2015/16 and 2016/17. The 0% and 5% rates for zero and low emission cars will end in 2014/15 and cars emitting less than 95g/km will attract a 13% charge for 2015/16 and a 15% charge for 2016/17. The 3% diesel supplement will cease from 2016/17.
  • NIC thresholds: – the Upper Earnings Limit and Upper Profits Limit will reduce to £41,450 to keep them in line with the threshold at which higher rate income tax becomes payable.
  • Residential property: – the Government will consult on the possibility of introducing an annual tax charge on residential properties costing over £2m held in companies. It will also look at introducing a CGT charge on residential properties owned by non-resident non-natural persons.
  • Cash accounting: – the Government will consult on the introduction of a voluntary cash basis of accounting for businesses with a turnover below the VAT registration threshold with a view to introducing legislation in Finance Bill 2013. It will also consult on a simplified expenses system for business use of cars, motorcyles and home.
  • Disincorporation relief: – the Government will consult on the introduction of a “disincorporation relief” to mirror the existing incorporation relief.
  • Integration of income tax and NIC: – the Government will consult on integration of the operation of these taxes as previously discussed.
  • Previously announced tax measures for planned for Finance Bill 2013 or beyond
  • R&D tax credits: – an ‘Above the Line’ tax credit will be introduced for large companies from April 2013 with a minimum rate of 9.1%. Loss-making companies will be able to claim a payable tax credit.
  • Statutory residence test: – this will be delayed for a year and implemented from 6 April 2013.Image