Business Records Check

HMRC have relaunched their business records check programme. The purpose of this is for HMRC to check the adequacy of the business records being kept by small and medium sized enterprises (SMEs).

It is now HMRC’s intention to write to selected SME's to conduct an interview style call to assess whether they feel a face-to-face visit is required. The call will take approximately 10-15 minutes to enable the officer to assess the SMEs record keeping. If the officer making the call deems the records to be adequate, he will confirm his decision in writing and no further action will be taken.

If, however, he feels the records can be improved he will arrange for a colleague to call and make arrangements to visit the premises.

If on visiting the records do appear to fall short of what is required, recommendations will be given for improvements. If these recommendations are not adopted and have not improved at the time when a follow up visit is made, a first offence penalty of £500 will be considered (this will be reduced to £250 if it is in the first year of trading).

If on visiting the SME the officer finds the records to have been deliberately destroyed, a penalty of up to £3,000 may be charged.

It is important that you advise us immediately if any such telephone call is received. Please contact Ray Callingham for further advice on this matter.

Employer's National Insurance Holiday

New employers can still benefit from the Employer's National Insurance holiday introduced in 2010. This exemption applies to Employer's National Insurance chargeable for the first twelve months of the business or up to 5 September 2013, whichever comes first. At up to £5,000 National Insurance for the first ten employees, this relief is worth looking at closely for those who qualify. In order to qualify, there needs to be a new business starting and paying a wage before 5 September 2013. This does not have to be a new company or individual starting in business, it applies equally to an existing business provided that it is performing wholly or mainly new activities. The key point is whether these business activities were carried on in the proceeding six months.  HMRC give the example of a traditional being closed down by a new owner, refurbished and reopened as a gastro pub as one that would qualify. A business that has simply changed ownership may well not qualify, therefore the incorporation of a sole trader or partnership into a limited company will not receive the exemption unless the business activities wholly or mainly change.

The business must have its principal place of business in one of the following regions:-

·                    Northern Ireland

·                    Scotland

·                    Wales

·                    East Midlands

·                    North East

·                    North West

·                    South West

·                    West Midlands

·                    Yorkshire and Humber

Certain sectors such as road freight and agriculture have restrictions based on EU state aid rules. Managed service companies do not qualify.

If a business has paid National Insurance when it feels that it should have qualified for this relief, an application form can be submitted to claim a repayment. The business must have commenced after 22 June 2010 and contributions after 6 September 2019 may qualify.

G M Beeley

Child Benefit Changes

From 7 January 2012, high income recipients of Child Benefit face the prospect of repaying all or part of the benefit in additional tax.

The charge, known as the high income child benefit charge, applies where there is one high earner in a couple. A high earner is defined as an individual earning more than £50,000. The tax charge claws back Child Benefit at the rate of 1% of the benefit for every £100 of additional income, hence the full benefit is clawed back at £60,000. It creates yet another unwelcome layer of complexity in the tax system and a further income range where an increase in income comes at a particularly high rate of tax. For example, an employed high earner with two children will face a tax rate of 59.5%.

HMRC are allowing individuals to opt out of the Child Benefit system to escape the administrative burden of the charge however for those with incomes between £50,000 and £60,000, opting out will mean losing out on some Child Benefit. Some commentators view the Child Benefit as an interest free loan from the government for between 10 and 22 months and recommend not opting out. Our view is that this very much depends upon the couple concerned. Whilst financially it would be better to invest the money on deposit until HMRC claw it back, albeit marginally given the paltry interest rates that we are experiencing, we are finding many people simply want the certainty these days. If there is the risk that the Child Benefit would be spent as it always has done – will a tax charge really be appreciated? In any event, with income between £50,000 and £60,000 the clawback can hardly be certain and it would be unwise to opt out provided that proper budgeting is performed for the eventual payment.

The charge is clawed back through the self assessment system. All individuals have a legal requirement to notify HMRC of an additional source of income before the 5 October after the end of the tax year. If subject to this high income tax charge, then HMRC will need to be notified. Our understanding is that HMRC will be asking for a self assessment tax return from all involved. Given the number of tax code errors we continue to see, this also allows an annual check up of the tax position.

The good news is that, in certain situations, finances can be rearranged to lower the clawback. There are certain situations however where it will pay dividends to talk in detail about financial plans, for example cashing in investment bonds at a gain. Whilst these are “top-sliced” so that higher rate tax payable is spread over the time the bond has been owned, any gain is treated as income in that year to determine the amount of child benefit to be clawed back.

Payroll RTI Reporting

Payroll Reporting is Changing – Are You Ready?

HMRC is introducing a new way of reporting PAYE - called Real Time Information, or RTI.  From April 2013, employers will be legally required to report PAYE in real time. This means that information about all wages and PAYE payments needs to be submitted to HMRC online each time a payment is made as part of the payroll process, rather than at the end of the year as they are now.

How will this affect you?

If you calculate your payroll manually your options are to purchase RTI enabled software, use HMRC’s free basic PAYE Tools (if you have 9 or fewer employees), or use a payroll bureau, such as ourselves to process your payroll for you.

If you currently use payroll software you need to ensure with your supplier that it is RTI compliant.  If you use HMRC’s basic PAYE Tools, this will be updated for RTI in February 2013.

Every employer will need to check they have up to date, correct details for each and every one of their employees, including full name, address, date of birth and National Insurance number.  Abbreviations such as ‘Stephen’ to ‘Steve’ will not be permitted and must be changed.  This information is needed for anyone you pay, even casual part time staff earning below the National Insurance Lower Earnings Limit.

How can we help?

At Beeley Hawley & Co we already use software which has been RTI enabled.  Our service to existing payroll clients should be seamless throughout this change, subject to information checks.  If you believe your own software can cope with the change but think you may need a helping hand please feel free to call us.  If you have never operated payroll software we will happily talk you through the options or alternatively discuss the possibility of using our bureau service.

A useful list of frequently asked questions has been provided by HMRC and can be accessed via the following link -

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

If you have any question please speak to Richard Shaw for more information.

Audit Exemption

Audit Exemption

For financial years ended on or after 1 October 2012 the audit exemption threshold criteria has changed allowing more companies to avoid the need for audit.

If a company's staff headcount is no more than 50 employees and if either your annual turnover is less than £6.5 million or the value of your gross assets (fixed assets plus current assets) is no more than £3.26million it will be eligible for small company audit exemption. These thresholds also apply to LLPs. An audit may still be required under the constitution or by a third party such as a lender. It may also be seen as desirable to ensure that the business has a robust external financial interrogation annually.

Further relaxations have occurred for subsidiary companies. Simplistically speaking if a parent company is prepared to guarantee the subsidiary's debts then audit exemption may also apply.

Contact Ray Callingham to discuss further.

Beeley Hawley Launches New Website

Beeley Hawley are proud to unveil our newly branded website designed by Sheffield design agency fwd:motion limited. This new website is designed to be useful and direct users to relevant up to date information, and also serves to give an insight into Beeley Hawley as a company.

As well as launching our new website which we hope will be informative to all of our clients, we are also embarking on a new strategy to engage with our valued clients via social media, by posting blogs throughout the year on financial matters that will affect you directly and give opinions and information about these topics for you to digest. So watch out for these posts which will appear on our home page feed as well as communicated via electronic mail to you if you are already on our mailing list. If you aren't currently on our electronic mailing list please contact us so we can keep you informed of these exciting blogs throughout the year!