Why Your Business Needs An Accountant

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Accountants in the Past

Accountants have  undoubtedly been employed in some form or another since as far back as we can remember.  In the Middle Ages, someone had to calculate how many eggs the chickens could lay  and estimate how much grain to store for the winter, as well as counselling the King on the cost of war and how to replenish the state coffers.

The dawn of the Renaissance in the 12th century fuelled  an explosion in trade, with merchants becoming busier and wealthier. New ways  of maintaining  detailed records of transactions were established,  as well as the notion of creating financial statements to evaluate  success  and plan for the future.

The later  agricultural and industrial revolutions further altered the financial structure of life and the role of the “counting man” evolved into something more significant.  In  post-war 20th Century, with the rise of commercial enterprise, the production of sound  financial information became an essential ingredient in  promoting market confidence, securing investment, and a necessity for good public relations.  The  importance of engaging the services of a proficient accountant became a priority in the world of business.

Accountants Today

Today’s accountant can offer a variety of services to both the small business and the larger enterprise, using a wealth of experience, knowledge and expertise as well as a promise of confidentiality and a pledge to  look after your best interests.

It is preferable to choose an accountant who is a member of one of the recognised bodies  – e.g. Institute of Chartered Accountants in England and Wales (ICAEW) or Association of Chartered Certified Accountants (ACCA)  – as he is governed by strict guidelines on professional behaviour. He is  obliged to keep up to date with legal requirements and accounting practice, is covered by professional indemnity insurance,  and has  the benefit of being able to draw on the support and knowledge of other  members when needed.

Aside from producing financial reports on the success (or otherwise) of your business activities, your accountant will also offer you support and advice with book-keeping, funding options, capital investment, employing staff and can undertake company secretarial duties on behalf of corporate entities.

Planning is  important for your personal and financial future and your accountant can help you deal with the complexities of issues such as the timing of capital expenditure, minimising inheritance tax and capital gains. He will advise you on ways to streamline or expand your business, depending on how profitable it is.

Most significantly for the majority of people who engage an accountant, he can handle all of your tax affairs.  The British tax system is complex, sometimes ambiguous and a little intimidating to the lay man. There are often special rules affecting different areas of trade, such as Farming and the Construction Industry, and there are accountants who specialise in these fields.

A good professional accountant will have an established relationship with HMRC and a working knowledge of the taxation system  so that he can act as an effective intermediary between you and the tax man.  He will know what reliefs  to claim and when to claim them, what the tax inspector will accept and what he will question,  and how best to utilize any allowances – all of which will help you to avoid  paying unnecessary tax – both now and in the future.

What About The Cost?

Obviously, your accountant will charge you for the service he provides, but it is more than likely that you will recoup the cost of his fee in the amount of tax he saves you.  On average Green and Co have saved their clients almost £2,000 in tax per £1,000 of fees charged, and the saving for farming clients is even higher at around £4,000!

Fees are usually time-based, but Green and Co now offer clients a Fixed Price Agreement before beginning work each year.  The agreement offers  a fixed fee which covers you for all work you expect us to undertake on your behalf, regardless of the time involved.  This means you can call on us at any time without worrying about incurring extra charges.  The fee is graded according to the level of service you require, and is payable in monthly instalments to ease your cash flow and make budgeting simpler.   The agreement can also offer free  insurance cover if exceptional extra work is needed in the event of a tax enquiry by HMRC.

Engaging the services of an accountant is undoubtedly a worthwhile investment and, as a bonus,  it will also free up some of your time – often your most valuable asset.  This  allows you  to focus on working at your trade or business, rather than worrying about deadlines , completing returns or pacifying your bank manager.

For more information about the services we can offer you and our fixed price agreements please visit our website, or call us on  01633 871122.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Severn Bridge Toll – Should It Be Scrapped?

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This week’s South Wales Argus ‘The Big Question’ features our director, Ed Gooderham answering this question:

“The Lib Dems have announced this week that if they get into power in next year’s General Election they will scrap the tolls on the two Severn crossings into Wales. So this week we are asking – should the tolls be scrapped and what would be the impact on the Gwent area if they were?”

This is a big issue as many businesses decide to relocate to the England side of the bridge because of the toll fees. If the tolls were removed this would make the Gwent area more appealing and reduce one tax on the Welsh economy.

Read the online original here: The Big Question.

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The Battle Rages On…

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The ever present, ever contentious issue of capital expenditure versus revenue expenditure has made another appearance in a recent tax tribunal. The case of Hopegear Properties Ltd v HMRC follows on from the Cairnsmill Caravan Park Case in that we see another victory for the tax payer surrounding the issue of allowable repair expenditure.

HMRC challenged works expensed by Hopegear which involved the repairing and widening of the main entrance road to an industrial estate. The expenditure included the repairs and widening of the main entrance road itself, repairs to footpaths and re-laying of fibre optic cables, related landscaping costs, changes to an existing car park, and the construction of a temporary access road for the duration of the repairs.

It was accepted by the Tribunal that the widening work on the road and other expenditure directly relating to that widening was capital expenditure, however the work on the car park and footpath were deemed to be repairs.

It was ruled that only part of the site was repaired and therefore it was irrelevant that the road wasn’t patch repaired (HMRC argued that the absence of patch repair work implied enhancement of a capital nature). The temporary diversions were deemed incidental to expenditure on the main entrance road and the cabling only affected part of the cabling system on the site. It was therefore accepted that this work was revenue expenditure.

In addition, the tribunal considered whether the works carried out led to a  reconstruction, significant improvement, replacement or renewal of the asset and concluded that it had not, thus reinforcing the judgement.

It is important to be aware that the deductibility of repair expenditure is a very complex area and very little can be taken for granted. It is always advisable to seek advice before carrying out such works, in order to avoid unexpected tax bills.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Blogging Our Way To Success

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We are extremely pleased to discover that we have been featured in a list of must-read business blogs! The blog, entitled ‘25 UK Small Business Blogs You Should Be Reading‘ lists top blogs that focus on marketing, finance, sales, management and entrepreneurship.

Below is an excerpt from the blog, but please follow this link to read it in full:

“There are many entrepreneurs, business owners and bloggers who share valuable business advice via their blogs. But with over 900,000 blog posts made every 24 hours, it’s difficult to cut through the noise and figure out which blogs are worth reading.

Luckily for you, we’ve done all the hard work to produce a list of 25 top UK small business blogs you should be reading…”

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Executors and Power of Attorneys: What Do They Do?

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Many people who are appointed Executors of Wills are not aware of their legal duties.

Executors are appointed to carry out the wishes of those who appoint them. An Attorney is appointed to make decisions in certain circumstances on behalf of a living person. Both roles carry what is known as fiduciary obligations and are, ultimately, responsible to the Court for their actions. A fiduciary duty is an obligation to act, with no conflict of interest, in the best interests of another person or group of people.

If you are appointed to these roles you are personally liable for breaches of duty of care. Such obligations are not to be taken lightly, and responsibility cannot be handed to another person.

Executors have a duty to administer an estate on the death of the person in whose will they are appointed. Their role is to execute the terms of the will, administer the estate including payment of any outstanding debts, apply for probate and distribute the assets in accordance with the terms of the will. There can be up to four people nominated to this role. You can, if you wish, choose not to act or to take a step back, but reserve your power while allowing the other executor(s) to act. However, once you have started to act as executor you have to see the process through.

An attorney can be appointed to be a Power of Attorney  in the case of property and financial matters and/or health and welfare. The person appointed (the attorney) will make decisions during the lifetime of the person appointing them in the event that  the person (donor) becomes unable to make those decisions. The executor only commences duties on the death of the person appointing them.

Power of Attorney allows an individual to state his wishes and give both the attorney and the care provider comfort in setting out who can or cannot act for him. It is sensible to have a health and welfare LPA drawn up so that should you lose mental capacity then your attorney has clear authority over such things as choice of care home and medical treatment.

Due consideration should be given to whom you appoint as executors or power of attorney. It can be useful to appoint a trusted family friend or a more remote family member than a spouse or children or even to act alongside them. A professional could also be appointed such as a Solicitor or Accountant.

Should you require any help with making a Will or putting a Power of Attorney in place please do not hesitate to contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

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Autumn 2014 Newsletter

Summer will soon be coming to a close, and here is our next newsletter to usher in Autumn: Green & Co Autumn 2014 Newsletter

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This newsletter focuses on:

  • Tax advantages for innovative companies
  • Dealing with workplace disputes
  • Tax planning following changes to the treatment of trusts
  • Pensions – is now the time to make contributions?
  • Tougher lending rules for mortgage borrowers
  • Tax relief on your travel expenses

If you would like advice on any of these areas, please contact us today.

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Is A Will Really Necessary?

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The simple answer is yes.

Unless all your assets are held in joint names and/or you are happy to rely on the arrangements for your family that the intestacy laws will provide, then it is imperative you make a Will. Without a Will an Estate with a value of more than £250,000 will not all pass to the spouse and may mean that the full Inheritance Tax Exemption may not be due.

A Lasting Power of Attorney should also be considered alongside the Will. The Power allows the person appointed (the attorney) to make decisions during the lifetime of the person appointing them, in the event that that person (the donor) becomes unable to make those decisions. There are two separate Powers, one to cover property and financial matters and another which covers health and welfare issues.

It is worth bearing in mind that unless your accounts and assets are in joint names, a bank will not generally consent to a person dealing with a spouse’s own accounts without a property and financial affairs LPA.

Professional advice should be sought in most cases when preparing a Will to ensure that it not only reflects your wishes but is also prepared in a tax efficient matter.

Should you require any further information please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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