Digital Tax Reporting – The Story So Far

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In 2015 the Government announced its commitment to bringing our tax system into the 21st century by introducing digital technology and dispensing with the annual tax return.  The new system would involve digital quarterly reporting with a view to making tax simpler and easier to manage for the taxpayer.  The Financial Secretary to the Treasury, Jane Ellison MP, has said that the new tax system will help businesses put “people and profit, not paperwork, first.”

Over the past 18 months  consultations have been taking place to establish exactly how HMRC are going to implement the changes and what effect it will have both on the Treasury and taxpayer. The Federation of Small Businesses (FSB) says that, following what it calls “real dialogue with the business community”, HMRC have listened to their representations and have announced the following considerations:

  • Landlords and businesses with a turnover of less than £10,000 to be exempt from digital reporting and quarterly returns.
  • The introduction of quarterly digital updates for other small businesses to be deferred.
  • Reporting to be based on a cash accounting scheme, whereby tax is paid on the money a business actually receives, rather than on invoices raised.
  • Help, both practical and financial, to be made available to ease the transition to digital accounting, but where a business cannot make the move, for whatever reason, it will not be forced to do so.

The FSB has welcomed the announcement and estimates that around half of Britain’s 5.4million small businesses could now be outside the scope of the initial moves into digital accounting.  The consultations are on-going, but it is hoped that the new digital tax system will be in place by 2020.

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

HMRC – Under Cover or On-The -Spot

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Flushed with success following the introduction of their Connect scheme (an information sharing program), HMRC have once again been focussing on cash-based businesses.

As a part of their investigations, officers from HMRC often pose as customers in restaurants, fast food outlets, bars and even hairdressing  salons , with a view to obtaining more information about businesses whose income is cash-based.  By masquerading as a normal customer, an experienced HMRC officer can gauge how well a business is doing by observing orders, counting customers and seeing how many staff are working.  He can then make an assessment of the scale of trade and ascertain whether that is in line with the income being declared.  The assessment may be carried out over a number of visits at different times and perhaps by different officers.

It’s important to remember, however, that if a representative of HMRC attempts to carry out an on-the-spot compliance test, you have the right to refuse in certain circumstances.  If you are busy working, the visit is outside normal hours, or the paperwork required is not at the premises – or indeed, if you consider the request to be unreasonable – you can politely ask him to leave and make an appointment to return at a more convenient time.  The only time HMRC (much like anyone else) can enter your premises uninvited, is if they have a warrant.

Always contact your accountant or tax advisor if HMRC have told you they wish to look at your books and records, even if you are certain everything is in order.  They can arrange to be present at the visit, if you so wish, and in some cases, can request the inspection be held at their own offices. They will also be much more adept at dealing with any issues which may arise and can ensure that you are treated fairly by the inspecting officer.

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

Job Vacancy: Semi-Senior Accounts Technician

www.greenandco.com

Green & Co are a forward thinking and proactive, Chartered Certified Accountancy Practice, with a diverse range of successful clients and an excellent team environment. We have recently been awarded an Investors In People Gold Award and we are now seeking an accountant to join our team.

This is an excellent opportunity for anyone wanting a career in accountancy, as the business has an excellent reputation for training and development of all their staff, in a friendly and warm environment.

Working within a “hands on” busy team, alongside the Accounts Manager and 8 other trainee and qualified accounts staff, it is essential for the individual to be an enthusiastic and motivated professional with the ability to work well under pressure.

Duties:

This position offers a great deal of variety but key duties will include:

  • Bank reconciliations from books of prime entry
  • Working on the Purchase & Sales Ledger
  • Supplier Statement reconciliations
  • Using Sage and other accounts packages
  • Using Excel on a daily basis to update spread sheets and databases
  • Answering queries from clients, verbally and written, on a daily basis

The successful candidate will ideally be able to demonstrate:

  • Having achieved an A level standard of education
  • Having achieved AAT / ACCA accreditation or be qualified by experience
  • A committed attitude to a career in accountancy
  • Willingness to learn new skills and systems
  • Excellent communication skills
  • Flexible attitude to your work
  • Be proficient with Sage and MS Office packages

Click here to apply.

Accountant vacancy!

www.greenandco.com

Green and Co are a forward thinking and proactive, Chartered Certified Accountancy Practice, with a diverse range of successful clients and an excellent team environment. We have recently been awarded an Investors In People Gold Award and we won Best Independent Firm in Wales in the 2014 British Accountancy Awards.

Due to an increase in our Client base we are seeking an Accounts Senior to join our team. We work 35 hours per week on a flexi-time basis.

Duties:

This position offers a great deal of variety but key duties will include:

  • Reconciling bank accounts from books of prime entry.
  • Preparation of year-end accounts and tax computations.
  • Preparation of management accounts, mainly using Iris Accounting software.
  • Liaising with clients in a friendly but professional manner when appropriate.

The successful person will:

  • Have considerable recent experience in practice with a competent understanding of accounting practices.
  • Be able to work on their own initiative but also able to take direction from senior staff.
  • Have the ability to adopt a logical and flexible approach to reviewing and processing clients’ books, particularly where there are incomplete or manual records.

Click here to apply.

Don’t Put Off Until January What You Can Do In July…

Files.

It’s February again, and many an accountant and tax advisor is heaving a sigh of relief that another self-assessment deadline has passed. The month of January often puts extra pressure on accounting professionals as they endeavour to submit eleventh-hour returns before the end of the month to help their clients avoid penalties and interest on tax paid late.

Of course, you don’t have to wait until the end of January to complete your accounts or file your self assessment return.  It can be done any time after the start of the new tax year and your accountant would undoubtedly prefer to receive your books sooner rather than later.

Most businesses should be in a position to provide the information to prepare accounts after 3-4 months following their year-end, and there are advantages to completing your accounts and self-assessment return early in the tax year:

  1. You can keep a closer eye on how your business is doing and take steps to rectify any issues which crop up. This could include chasing aged debtors, resolving disputes or even deciding when to purchase fixed assets to maximise tax allowances.
  2. If there are any queries on your books, you will have a better chance of answering them if transactions for that year are still fairly fresh in your mind.
  3. You will know how much your tax liability will be that much earlier. so that you can budget better for payment. If your profits are less than in the previous year, you can also make a claim to reduce your payments on account to a level which is more in line with your liability.
  4. HMRC have a time window during which they can question anything on your return. This window is twelve months following the date of submission – so the earlier you get your return filed the sooner the window is closed.

Don’t worry – submitting your return earlier in the year doesn’t mean you also have to pay your tax earlier.  You still don’t have to settle your liability until 31st January following the end of the tax year.

So why not make a New Tax-Year resolution to get your bookwork done, your accounts prepared and your return filed as early as possible.  You will make your accountant so happy!

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

New Business? Start On The Right Foot!

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So you have just started up your own business. Things are going well. Do you really need an accountant, you ask? You may believe that the business isn’t established enough to need one. But unless you are an expert in tax and accounts, you may soon find a steep learning curve awaits.

Appointing an accountant can provide you with some essential business advice and ongoing support that will steer your new venture through that tough first year and into the future.

How? A good accountant will help you set up a bookkeeping system to keep track of your expenses and income. This could involve advising which software package suits your needs. They can help you register for VAT and PAYE should the need arise. They can also help with plenty of advice, as, let’s face it, whatever the situation they probably have a client who has been in exactly the same position as you!

An accountant can help with advising on your business structure, be it sole trader, partnership or Limited company. They can make you aware of the benefits and tax implications of each, while also seeing what is right for your personal circumstances.

Appointing an accountant may sometimes feel a little premature.  However, during the fledgling months, you may find the advice and help you get from one invaluable.

If you have just started your own business or would like to know more, please get in touch with the team at Green & Co.

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

Image courtesy of Ambro at FreeDigitalPhotos.net

Automate Your Accountant!

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A new report by the Association of Chartered Certified Accountants (ACCA) has questioned whether the next inevitable step of business is the introduction of robots in the workplace.

Fear not, Hollywood fans! In this case we don’t mean walking, talking robots sent back in time to enslave us, rather software tools that are designed to run in a data centre working through a user interface. The technology has been around for a while, but is mainly limited to communication widgets to ease workflow and e-invoicing.

But what role can robots play in a field like accountancy? After wrestling with that very question, the ACCA has released this paper to try and decipher whether it is a reality or just a ‘clever marketing tool.’

From an accountant’s point of view, my key question is: what are the chances of a robot being clever enough to take over my job? But the report also considers whether there are jobs which can be improved, replaced or even eliminated with the use of robotics.

One of the co-authors, Jamie Lyon, says that ‘there needs to be far more clarity beyond just the headcount reduction’. While the numbers may seem ‘appealing’ and many may be attracted to the shedding of expensive labour, the reality may be entirely different.

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

Image courtesy of ratch0013 at FreeDigitalPhotos.net

Friend or Foe?

www.greenandco.comWell actually, neither.

As most business people can appreciate maintaining a professional relationship between service provider and client is important. This relationship is emphasised in the world of accounting where professionalism and integrity form a large part of the services provided as a result of legislation across the profession.

However, it is not uncommon for such relationships to become soured as a result of high expectations of your accountant and potentially a limited understanding of exactly how they can benefit you and your company.

It should be considered that planning is the key element to keeping both parties of the professional relationship satisfied. Providing that your accountant is furnished wholly with the information they require, then the planning phase can begin. As a result your own and your company’s affairs can be set in order without the added pressures of deadlines for Self-Assessment returns or limited company accounts filing. This planning can be beneficial in a multitude of ways including the following:-

  • Tax minimisation
  • Business growth and development

Obtaining the required information is key to providing the best service possible.

Here at Green and Co we strive to obtain the required information well in advance of any statutory deadlines, so we can provide the best service possible. Please remember to help us so we can help you!

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

Photo credit: freedigitalphotos.net

 

 

Why Your Business Needs An Accountant

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.

Will your records pass the test?

HMRC restarted their business records checks in November 2012 on the expectation that such checks will increase the tax yield significantly. During a pilot of the scheme HMRC state that 10% of the 2,437 businesses they visited had inadequate records and a further 26% had records that gave rise to concerns.

The business records check(BRC) will comprise a four stage process:

  • HMRC’s identification of a risk of inadequate records.
  • An initial phone call by HMRC to the taxpayer to ascertain whether a business records visit is necessary.
  • The business records check itself
  • Follow-up action and a second visit.

HMRC will contact the taxpayer as opposed to the Accountant so it is important that the Accountant is informed of any such contact immediately,

If HMRC consider that the records are inadequate a record keeping penalty may be imposed (usually £500). That may not be the end of the problem as when your tax return is submitted,

HMRC are more likely to open an enquiry into the reported profits.

It is important that you review the records you maintain and discuss any concerns with your Accountant now.

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