Taxman targets auction websites in new clamp down

HMRC have asked online auction sites to provide detailed information about their members .The auction sites involved have been told they have a legal obligation to comply; failure to do so will result in an initial penalty of £300 plus up to £60 per day for any continuing failure.

The tax man has requested the name, address and post code of each member, the date on which the member first registered and the member’s username.

The e-marketplace campaign is aimed at those people who buy and sell goods online as a trade or business, but who have failed to make a full disclosure of their income. This campaign is part of HMRC’s strategy to close the tax deficit and collect an additional £4 billion for the Treasury before April 2013.

8:10 am May 22, 2012

£5m growth fund available for small businesses

Investments of between £10,000 and £100,000 are available to small businesses for expansion and growth opportunities in the West Midlands that will directly create jobs and help create the skills necessary for the future.

The Birmingham Post Business Growth Fund is financed by the Department for Business Innovation & skills and will be accompanied by a £750,000 awareness campaign.

A series of application windows will be available over the next 2 years. Full details of the scheme and how to apply can be found at http://goo.gl/HXEZX

7:19 am May 21, 2012

Bank Of England summary of UK business conditions

A report released this week by the Bank of England gives an outlook for business as unsettled as the April weather.

The ‘Agents summary of business conditions’, based on information collated during March reveals the following:

Increase in consumer demand remains modest with some signs of improvement;

Tightening of credit conditions, but most firms have access to credit if needed;

Moderate increase in domestic manufacturing output;

Employment will be broadly flat over the next six months however labour costs rose at a moderate pace;

Consumer price inflation continues to edge down, but remains elevated;

If you’d like to discuss how the BoE outlook may affect your small business, why not get in touch? Alternatively, you view the full report by using the following link http://goo.gl/GEH13.

10:46 am April 23, 2012

Wealthy Brits think about leaving the country

Up to half a million Britons with savings and investments of more than £250,000 are thinking about upping sticks and moving abroad in the next two years according to recent reports.

Their main concerns appear to be the UK’s high cost of living, crumbling infrastructure, crime and of course, high taxes (which have not been out of the headlines since the Chancellor’s budget in March). Cutting red tape for business and improving public services were all quoted as ways of making the UK more attractive to such individuals.

Although a mass exodus of the wealthy and rich is not on the cards, it is evident that the Government is facing a tough fight to preserve its image as a safe haven for the rich whilst increasing taxes and slashing public spending to reduce the national debt.

7:52 am April 17, 2012

Budget 2012

After a lot of press leaks, comment and second guessing the Chancellor finally delivered his Budget last week. The Cog Blog is here to cut through all the smoke and mirrors and give you the low down on what it means for small businesses and their owners.

The top rate of income tax is cut from 50p to 45p for those paying themselves a salary of £150,000 or more from April 2013. There are other more tax efficient ways of paying yourself – why not get in touch to find out how?;

Personal allowance to be increased to £9,205 and the basic rate band set to £32,245 for 2013/14, meaning higher rate tax will start to be paid when income reaches £41,451;

Personal allowances for individuals born on or after 6 April 1948 will be capped at the standard £9,205; age related allowances will not be applied – leading to a so called ‘Granny Tax’;

No changes to the amount of the Annual Investment Allowance (£25,000) nor to the rates of writing down allowances (18%/8%);

R&D tax credits for SMEs increased to 225% of qualifying expenditure. The minimum spend requirement of £10,000pa has also been removed – great news for the smaller business;

Increase in company car tax rate by 1% for all cars with CO2 emissions between 95g and 220g from April 2013. The car fuel benefit charge multiplier increases to £20,200 from April 2012;

For individuals seeking to claim more than £50,000 in tax relief (through whichever means), a cap will be set at 25% of their total income;

The annual exemption for Capital Gains Tax remains unaltered, although this will increase by CPI from 2013/14;

Similarly the Inheritance Tax nil rate band is frozen at £325,000 until April 2015 when it too will be adjusted in line with CPI; and

SDLT increased to 7% for residential properties over £2m and to 15% for those purchased through a company.

In addition, the Chancellor has teed up a swing at what he calls the ‘morally repugnant’ practice of tax avoidance by signalling his intention to introduce a General Anti Avoidance Regime (GAAR) intended to clamp down on such schemes. We at Cog Blog Towers feel that it is morally wrong for individuals and businesses to pay more tax than they are legally required to and that the GAAR goes against this. Only time will tell whether his shot ends up out of bounds or sitting pretty on the fairway.

9:23 am March 28, 2012

Business Record Checks On Hold

Back in February 2011, the Cog Blog reported that the Taxman would be visiting up to 50,000 small businesses at random to check the quality of their record keeping. Well, the good news is that after making less than 2,500 visits, the scheme has been scrapped.

Although approximately 61% of those small businesses graced with received a “green” rating, accountants were vociferous in claiming that the visits were nothing more than a ‘fishing trip’ by Inspectors looking for easy prey and that HMRC’s view on what constituted poor record keeping was not commensurate with the accounting profession’s.

As a result, the Taxman has gone back to the drawing board with his tail between his legs. But don’t go thinking that Business Record Checks have gone for good. The Cog Blog fully expects a revised and more acceptable system to be up and running at some point in 2013, so beware the wounded animal!

8:06 am March 21, 2012

Holiday, anyone?

Recent statistics released by the Government have shown there are a large number of new businesses missing out on its National Insurance holiday scheme.

If you have started a new business since 22 June 2010 and are based outside of the South East of England, then its highly likely you qualify. The scheme offers new businesses up to £50,000 of savings by exempting them from employers’ NI contributions for each of the first ten workers they employ (and lasts for 12 months after the employee has started work).

And there’s more good news! Company office holders, such as directors and company secretaries also count as qualifying workers for the NI holiday.

To register your new business, visit http://www.hmrc.gov.uk/paye/intro/nics-holiday/how-to-apply.htm.

12:37 pm March 16, 2012

Act now to maximise your AIA

The Annual Investment Allowance (AIA) enables businesses to write off 100% of the cost of plant and machinery in the year of acquisition. However, the window of opportunity to maximise this allowance will soon be slamming shut.

If your business has a March 31 year end, the allowance for the year to 31 March 2012 is a whopping £100,000. However, after this date, the amount falls to a mere £25,000.

If you are thinking of buying some new plant or machinery (not cars – they do not qualify) it makes sense to do it before 31 March 2012, as long as you haven’t already used up this year’s allowance. If you have a year end other than 31 March, the allowance will be pro rated.

9:13 am March 12, 2012

Pre-pack administrations targeted by Tax Man

From 6 April, HMRC will have extra powers to demand a ‘bond’ from companies whom it considers a serious risk in avoiding paying their PAYE or NI contributions.

The crackdown is aimed at unscrupulous Directors and business owners who deduct tax and NI from their employees’ pay, but then fail to pay it over to the HMRC coffers. There has been a steep rise in the number of so called ‘pre-pack administrations’ whereby a new, debt-free company is established, leaving it free to continue trading whilst the defunct company is left with all the debts and no way of paying of them.

HMRC have stated that failure to pay the security, which could be by way of a cash deposit or bankers’ draft, will be punishable by a fine of up to £5,000. The size of the bond will be determined by the amount of tax at risk, together with the company’s ‘previous tax behaviour’.

The move to require a ‘bond’ follows the decision by HMRC to abandon their overhaul of ‘pre-pack administrations’ with measures to protect unsecured creditors from the ability of firms to be collapsed, restructured and sold to new owners (often the existing  owners and/or management) without their consultation.

9:31 am February 21, 2012

Student Loans chief in “tax avoidance” scandal

Here at Cog Blog towers, we note that its been widely reported this week that Ed Lester, CEO of the Student Loans Company, has been ‘avoiding tax’ by having his £182,000 remuneration paid to a private company (owned by Mr Lester) rather than going on the Government payroll and paying PAYE and NI.

Whilst many observers have been crying foul and shouting that Mr Lester has saved as much as £40,000 per annum in tax (a figure that is hard to believe hasn’t been sexed up), we here at the Cog Blog think that one crucial point has been overlooked in this whole saga.

By receiving payments directly into his own personal service company, Mr Lester is caught under the Government’s own IR35 legislation and would be subject to PAYE and NI regardless! What will be interesting, however, is to see whether this fact has been divulged on his tax returns for the period over which such payments have been received.

As ever, we will keep you up to speed with events right here on the Cog Blog.

8:12 am February 6, 2012

The 12th Annual Cognitor/Acorns Childrens Hospice Golf Day

Following on from the runaway success of our 2011 Golf Day which raised over £5,800 for Acorns Children’s Hospice, we are pleased to announce that our 2012 event will again be held at the idyllic parkland course at Moseley Golf Club.

Acorns depends heavily on fundraising for its survival so help this very worthy cause and have some fun at the same time.

The date for your diary is Wednesday 13 June. Entry costs £350 per team of four and includes soup and sandwiches prior to tee off, followed by a 3 course dinner with wine and prize giving once corporate bragging rights have been decided out on the course.

Places are strictly limited and are filling up fast, so to reserve your team’s place at this unique event, call Kim on 01527 836 836.

1:16 pm February 1, 2012

Our predictions for 2012

A very happy and healthy new year to all our regular and new readers of the Cog Blog!

As part of our New Year resolutions here at Cog Blog towers, we thought we’d put our neck on the line and make some bold predictions for the year ahead. Some may not make happy reading, but they are all relevant to every single small business:

1) One or two countries will be forced to leave the Euro and in a worst case scenario, France and Germany will be the last two standing using the single currency.

2) There will be a modest and temporary recession in the UK. Economic data is already indicating we are heading for ‘double dip’ recession but we think it will be far shorter and less painful than the first one.

3) UK household incomes will be effectively frozen as businesses look to ride out the latest storm.

4) On the other hand, we expect inflation to fall back to a much more sensible level of around 1% (from its current 5%).

5) Following on from #1, at least one major French or German bank will need to be bailed out by the Eurozone.

6) England will win Euro 2012 (well, 5 out of 6 isn’t bad!).

The Cog Blog will be reporting back on the success (or otherwise!) of its predictions in December, so watch this space. In the meantime, we would suggest everyone’s new year’s resolution is to keep reading the Cog Blog!

10:14 am January 6, 2012

Season’s Greetings

All of us at Cog Blog HQ would like to wish our loyal band of readers a very Merry Christmas and a happy and prosperous new year.

We’ve already made our new year’s resolution and that’s to keep continuing to provide incisive, relevant and clear analysis and dissection of the news and events that matter to the smaller business.

So to keep up to date with the best ways to grow your business or save a festive-sized sack of tax, keep watching this space. We’ll see you on the other side of the turkey and trimmings, presents, chocolates, mince pies and mulled wine in 2012.

3:30 pm December 19, 2011

Autumn Statement 2011

Following the Chancellor’s Autumn Statement last Tuesday, the Cog Blog dissects and presents the key points and pitfalls:

• A £20bn credit easing initiative to make funds easier access for small and medium sized entities. A good plan, in theory, but there was no mention of how long it will be before its available and what hoops businesses will have to jump through to get it!
• The burden of complying with employment law is a heavy one for small businesses to bear. The changes announced (essentially making it easier for such businesses to hire and fire staff) will both help tackle the nervousness of hiring new staff and making the red tape around employment easier to comply with and understand. Let’s hope the Chancellor himself isn’t effectively fired come the next election then!
• Existing business rate holidays will be extended for an additional six months. To be particuarly warmly welcomed by the small retailer.
• Whilst no one wants to see accidents at work, the Cog Bog welcomes the initiative announced to simplify health and safety regulation which has previoulsy created a burden on small businesses. The reduction and simplification of red tape and form-filling coupled with high compliance costs which are not proportionate to the real risks is something to be welcomed by all small businesses.

In addition, whilst there were no announcements on any changes to key rates of direct taxation (other than those previously announced in the Budget in March), it is worth reiterating that planning for the timing of purchases of significant items of plant becomes very important over the next year (and particularly any purchases before April 5th) to ensure that the maximum available Annual Investment Allowance (AIA) can be secured.

If you would like to discuss any of the content of this Cog Blog and how it may affect your business, give Graham a call on 01527 836836.

9:13 am December 5, 2011

How to maximise your commercial property tax allowances

Legislation expected to come into force on 6 April 2012 will force all capital allowance claims for plant & machinery and fixtures inherent in buildings to be made within one year of when they are spent.

If claims are not made in this time, capital allowances will not be available to either the original owner, nor any subsequent purchaser. HMRC will also require a ‘record of agreement’ for purchases to demonstrate how much of the original cost relates specifically to inherent capital allowances.

Of course, assessing what constitutes plant & machinery is a specialised subject. Cognitor therefore strongly recommend that commercial property owners who have recently acquired or refurbished premises to review what they have and have not claimed allowances on, before it’s too late.

8:10 am October 25, 2011

2,250 Tax inspectors to be hired in HMRC crackdown

The Chief Secretary to the Treasury has announced the recruitment drive to ‘crack down on the wealthiest people in the UK’ and ensure that the nation’s 350,000 top earners ‘pay their fair share’ of tax. Over one thousand of these posts are currently being advertised.

The targets are individuals whom HMRC believe should be paying the controversial 50p tax rate but don’t because of taking advantage of advanced tax planning strategies or manipulating loopholes and grey areas in tax legislation.

What HMRC fail to recognise (yet again) is that these individuals are very often the entrepreneurs and risk takers who are trying to stimulate the economy which in turn would raise a significant amount more in tax for the nation’s coffers. And this is very often after their companies have already been taxed to the hilt in other, indirect ways (VAT, corporation tax, dividends) before the money hits their own pockets.

Whilst the promise to “find you and your money and make you pay your fair share” may grab the headlines, maybe HMRC shouldn’t be cutting off its nose to spite its face.

12:50 pm September 23, 2011

HMRC to verify mortgage applications

Potential homeowners who apply for a mortgage could face a tax investigation as part of a new fraud prevention scheme. The Mortgage Verification Scheme (which came into force on 1 September) means lenders can pass on applicants’ details to HMRC for further checking.

If what’s on their application form doesn’t match up with their tax return, then they can expect a tap on the shoulder from the Tax Man very soon. The scheme is designed to help HMRC to risk assess whether information it has been given on applicants’ tax affairs is correct and ultimately reduce mortgage fraud.

Of course, the scheme can work both ways – the Council of Mortgage Lenders (which set up the scheme) reckons that there will be a considerable number of applications that will be approved because of the checks, which give lenders more confidence in the credence of the applicant.

With all this talk of bricks and mortar, let’s hope that HMRC can get its own house in order!

9:55 am September 5, 2011

Time to Pay disappearing quick for SMEs

Following our Cog Blog post of 27 June, it appears that Time To Pay schemes may indeed be a thing of the past for small businesses. HMRC agreed to just over 4,000 arrangements in June compared with over 15,000 in January, a startling and worrying decrease.

A spokesman for the Tax Man stated that this was down to an increase in the number of repeat applications, together with HMRC believing that some companies making the applications just simply weren’t viable, so called “zombie businesses”.

So what does the future hold for small businesses unable to pay their HMRC bills? Well, we don’t actually know. Yet. The nature of the scheme will certainly change, but as to whether in favour of small businesses or not, the Cog Blog will keep you posted.

7:03 am August 9, 2011

HMRC scraps for spare paper!

It’s our very first “you couldn’t make it up” blog. And who better to star in this unique post than Her Majesty’s finest at Revenue & Customs.

It appears that in the melee to send out the millions of reminder letters to those who should have been making their self assessment second payments on account by 31 July, someone forgot to order enough letterheads to actually send them out on. Definitely a case of “pulp fiction” then!

HMRC have apologised for the faux pas and stated that any tax payer who didn’t receive a reminder would be given an extra 30 days to pay and would not incur any interest charges.

We can only hope that HMRC have actually solved the problem and aren’t just papering over the cracks.

1:18 pm July 29, 2011

HMRC refuses payment plans to dividend paying companies

Further to our post of June 27, the Cog Blog has learnt that HMRC are increasingly refusing to agree to Time To Pay schemes for those companies that use dividends to reward key personnel.

Time To Pay allows companies to defer monies owed to HMRC by paying in a fixed number of instalments. Although HMRC have previously agreed to around 95% of applications and only on very rare occasions (normally when the moon is blue and Shergar is romping home in the Grand National) turning down first time applicants.

But, it seems the Tax Man is getting tough and refusing to be being used to fund other creditors. A fair point, maybe but it is not always that clear cut; for example paying a bonus as a dividend is much more tax efficient than through PAYE. Not to mention those companies who use dividends as part of a sensible tax planning approach. The Cog Blog feels that the Tax Man has got out his big tar brush and made a very sweeping generalisation.

11:34 am July 8, 2011