Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

Successful business leaders have all the information they need to make good decisions…Do You?

Tuesday, May 24, 2011

Will you catch a cold with HMRC penalties?

Several weeks ago on Radio 4’s Money Box program there was a report on the heavy handed tactics of HMRC who had made final demands for immediate payment of tax liabilities for what seems like very small sums of money.
The Governments austerity measures are hitting hard and HMRC is taking a hard line with regard to late payments.  In May 2010, in an attempt to encourage companies to pay the correct PAYE and related liabilities on time, they introduced a penalty charge calculated as a proportion of the amount that is paid late – the percentage of which gets bigger depending on how often payments are late (our news article refers).

One of the subtleties of the system companies may have failed to pick up on is that the penalty would be applied on a risk assessed basis for 2010/2011, not throughout the year. So if you have not had a penalty yet, it does not mean you won’t get one!  For example paying a small amount for the first 11 months followed by a large amount in the last month to top up the years payments would be considered an abuse of the system but HMRC would have to inspect the records to discover the exact amounts. These discrepancies may only be identified several years later and the total penalty (which could be very substantial) demanded in one lump sum.

April 2011 also sees the introduction of online filing for P45’s & P46’s (Leavers and Joiners) in addition to the  end of year returns (P14’s and P35’s). Penalties from £100 to £3000 have been introduced for non-filing.

Late penalties remain at £100 per 50 employees per month.  From 2012 the £100 initial penalty will be followed by a daily penalty if filed more than 3 months late.

PAYE and NIC inaccuracies also come under the standardised penalty regime for inaccuracies.

Don’t expose your business to fines and scrutiny from HMRC due to poor financial management and record keeping.

Minimise the risk to your business with good, accurate, reliable and honest accounts from Insight Associates. With more and more fines being incurred due to bad record keeping and poor accounting information it’s even more important to use the services of professionals like ourselves.

Monday, May 09, 2011

Cheque Gaurantee Scheme to close

The UK’s cheque guarantee card scheme is closing on 30th June 2011 following a decline in the use of guaranteed cheques.
  
Cheques can still be used after this date but they will no longer be covered by the guarantee even if the card is still valid and carries the cheque guarantee hologram.  Guarantee cards will gradually be phased out. 

Any cheques you accept may be returned ‘unpaid’ by your bank if your customer does not have enough money in their account to cover them.   

If you rely heavily on accepting or issuing cheques now is the time to look at alternative payment options such as Debit/Credit or Charge Cards, On-line banking, telephone banking or cash.

For further help or advice on this please get in touch and we can help you assess your options.

Thursday, May 05, 2011

Is Time to Pay getting more difficult?

It seems that there has genuinely been a change at the Business Payment Support Service of HMRC.  

I have been on record over recent months in saying that much of the press about HMRC getting tough was ill founded when it came to Time to Pay (TTP) deals.  It certainly was the case that HMRC were getting very tough on defaulters but we were not experiencing any real issues with putting in place new deals on behalf of clients if the circumstances were sensible.

However recent experience and new statistics are now showing that there has been a change. Not only has the number of actual requests for deals dropped quite dramatically but also the proportion of those requests being refused has risen. In the first quarter of 2009 the number of requests was 82,000, in 2010 this had dropped to 57,800, but for 2011 it was right down to 32,900 … only 40% of two years earlier. At the same time the percentage of those refused has increased from 3% to over 10%!

There is increasing evidence that it is getting harder to get repeat deals, and indeed we have had experience of this first hand, and also longer term deals. Shorter periods now being more palatable to HMRC it seems. In recent case I am aware of a Company Director was told he should pay a Corporation Tax demand on his personal credit card as he had been taken dividends and salary out of his business previously!!

HMRC are quoted as saying there has not been a policy change, and their criteria for arrangements have not changed. However, that is perhaps missing a statement tucked away in the small print of the Budget in March which said that TTP would continue to be available to “viable businesses experiencing temporary financial difficulty”. That is a long way from Alastair Darlings statement in November 2008 when he launched the scheme to “enable firms facing difficulties to spread their tax on a timetable they can afford”. How HMRC can establish if a business is viable and their difficulties are temporary is beyond me …but if that is not a policy change I am not sure what is!

The concern is that if this is evidence of a change then is it likely to have an impact on the continuing viability of what is undoubtedly a lot of very fragile smaller businesses in the UK.

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