As you may know, Claire is our ''Cloud Champion'' (or is it “Queen of Cloud’’), which means she gets very excited about doing accounts in Xero etc. So I gave her an article from the technical press and she’s reorganised it as follows: If that raises any questions, ask the Queen : Cloud Countdown - dragging accounts production into the 21st century With Making Tax Digital (MTD) on the horizon, cloud accounting systems are becoming more popular and one hell of a lot smarter than their desktop counterparts. There are several cloud accounting providers, the biggest being Xero, Quickbooks, Sage One and Clearbooks. All have their strong points, it really depends on what you want out of the software. The last time accounting made a digital leap was in 2011. This was the year that HMRC introduced compulsory online filing of Corporation Tax returns and computations to HMRC and accounts to Companies House. So, innovation was driven by government rather than the market. Many specialist software developers were left financially and metaphorically bruised and this may explain the lack of further innovation since then. Although in their defence they have spent the last few years worrying about UK GAPP compliance and jumping through regulatory hoops. Now, just six years later, we are being dragged into MTD, which means that in April 2019 all businesses that are compulsory VAT registered will have to submit their VAT to HMRC via online software, or bridging software. Furthermore, HMRC will make it compulsory for all businesses that are VAT registered to comply with the new rules at some point in the future. All this is being done with a view to making quarterly tax submissions via cloud software, potentially as early as 2020. With accounts production being an annual compliance task, it’s not difficult to see why cloud systems have been slow to enter the market. Mostly people struggle along with desktop packages and receive a journal list to post once the accounts have been finalised. Traditionally, all that we as accountants have needed from client’s software, is to be able to extract closing ledger balances and use the Trial balance to prepare financial statements which comply with reporting standards and allow us to create statutory accounts for clients as economically as possible. Cloud accounting will change the way we do this. Adjustments like stock, accruals and prepayments will be made by us within the online software package. This new way of life allows us to login and view your data in real time, meaning that we can help with queries immediately and with much greater visibility, resulting in (hopefully!) fewer adjustments at the year-end and relieving frustration on both sides. Whilst most accountants now use accounts production software to create the statutory accounts like Digita and Iris, some still prefer manual systems and spreadsheets. The data is brought into the production software and manual changes are kept to a minimum, but some firms still export every set of accounts to a word processor and fiddle around with them to make them look a little bit prettier, wasting thousands of hours a year. With time at a premium, accounts production in cloud software will be the way forward. Indeed, accounts will eventually be prepared within the cloud software itself. So far Sage is the only traditional provider of accounts software to make this leap. Though recently at Xerocon (Xero roadshow) they demonstrated their new reports with final accounts layout, meaning people may not need to use software such as Digita in the future. Cloud accounting is working to change the way accounts production should look like, and how it will work in the future. Who knows where accounting will be in another six years from now. Original article by Lesley Meall
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Data Website Privacy Policy
This privacy notice provides you with details of how we collect and process your personal data through your use of our site, www.chrisduckett.co.uk and when you engage our services or sign up to our newsletter. We need to collect and use certain types of personal information about the people we deal with, such as current, past and prospective clients, suppliers, affiliates, employees, professional contacts and others with whom we communicate. In addition, we may occasionally be required, by law or via our professional body to collect, use and share certain types of personal information to comply with the requirements of government departments, agencies and regulators. Under the Data Protection Legislation, all organisations which handle personal information must comply with a number of important principles regarding the privacy and disclosure of this information. We believe that the lawful and correct treatment of personal information is critical to our successful operation. We recognise that to maintain our professional reputation and integrity, we must be fully compliant with this legislation. By providing us with your data, you warrant to us that you are over 13 years of age. Data Protection Legislation In the United Kingdom and the European Economic Area (EEA), “Data Protection Legislation” means all applicable data protection and privacy legislation or regulations including The Privacy and Electronic Communications (EC Directive) Regulations 2003 (also known as PECR) and any guidance or codes of practice issued by the European Data Protection Board or the Information Commissioner, together with:
Additionally, we will ensure that:
The types of personal data we collect and use Personal data means any information capable of identifying an individual. It does not include anonymised data. We may process certain types of personal data about you as follows:
Sensitive Data
Using your personal data: the legal basis and purpose We will process your personal data:
Change of purpose
Disclosures of your personal data Subject to applicable data protection law we may share your personal data with:
We require all third parties to whom we transfer your data to respect the security of your personal data and to treat it in accordance with the law. We only allow such third parties to process your personal data for specified purposes and in accordance with our instructions. Data security We have put in place appropriate security measures to prevent your personal data from being accidentally lost, used or accessed in an unauthorised way, altered or disclosed. In addition, we limit access to your personal data to those employees, agents, contractors and other third parties who have a business need to know such data. They will only process your personal data on our instructions and they are subject to a duty of confidentiality. We have put in place procedures to deal with any suspected personal data breach and will notify you and any applicable regulator of a breach where we are legally required to do so. Data retention periods
Your rights under applicable data protection law Under certain circumstances, you have rights under data protection laws in relation to your personal data. These include the right to:
You can see more about these rights at: https://ico.org.uk/for-organisations/guide-to-the-general-data-protection-regulation-gdpr/individual-rights/ If you wish to exercise any of the rights set out above, please contact Martyn Wright, Data Controller at Chris Duckett Limited, Network House, Thorn Office Centre, Rotherwas, Hereford, HR2 6JT. You will not have to pay a fee to access your personal data (or to exercise any of the other rights). However, we may charge a reasonable fee if your request is clearly unfounded, repetitive or excessive. Alternatively, we may refuse to comply with your request in these circumstances. We may need to request specific information from you to help us confirm your identity and ensure your right to access your personal data (or to exercise any of your other rights). This is a security measure to ensure that personal data is not disclosed to any person who has no right to receive it. We may also contact you to ask you for further information in relation to your request to speed up our response. We try to respond to all legitimate requests within one month. Occasionally it may take us longer than a month if your request is particularly complex or you have made a number of requests. In this case, we will notify you and keep you updated. Third party links This website may include links to third-party websites, plug-ins and applications. Clicking on those links or enabling those connections may allow third parties to collect or share data about you. We do not control these third-party websites and are not responsible for their privacy statements. When you leave our website, we encourage you to read the privacy notice of every website you visit. Unless you’ve been living in a cave for the last couple of years, you must be aware that HMRC are introducing compulsory computerisation of business records. The goalposts have been moved over time, but now we are looking at a start date of April 2019 for most businesses.
To be clear, only VAT registered businesses who are required to be registered will have to use the new system initially. Voluntarily registered business with turnover below the threshold (currently £85,000) can continue as they are for now. Currently most businesses submit their VAT returns by logging into the HMRC site and manually inputting their VAT figures onto the screen. Under the new rules they will have to have software which transmits the figures to HMRC automatically. The ability to log in to the HMRC VAT return will still be available for the businesses which are voluntarily registered but probably only until MTD comes in for the other taxes (currently 1.4.20) So, the affected businesses will need to have the appropriate software in place by the start of their first VAT quarter on or after 1 April 2019. This will be 1 April or 1 May or 1 June 2019 and then submit their quarterly information by the end of one month after that quarter ends ie quarter 1.4.19 to 30.6.19, submit by 31.7.19. Then it will be quarterly thereafter. NB the 7 day grace period will not apply to returns or payment but will remain for online payment. At the moment, the Revenue’s plan is that income tax and corporation tax will be handled this way from 1.4.20. Arguably, the figures will already be submitted for VAT, but there will be a ‘tidy up’ submission at the 10 month after the year end point. This will cover adjustments for stock, debtors, allowances for kit etc. We anticipate that businesses who already use computerised software will be able to buy a bolt on programme or their existing software will be enabled in some way. I realise that this is vague. Even though we’ve got less than year to go, there is still a lot of uncertainty. Businesses who use manual records will need to move, at the very least, to using spreadsheets. HMRC have confirmed that spreadsheets are digital records but they will only be acceptable if combined with bridging software that can ‘speak’ to HMRC direct. It is not clear at this stage which companies, if any, are working on providing this type of software. HMRC will not be providing any free software, but the software companies have to provide some free basic software which would work for very small businesses probably where there is no VAT nor payroll. That means that nearly all businesses will need to buy software of some kind and ideally before the last minute so they have time to get used to it. If everyone leaves it until the 11th hour and then cries for help in that 3 month initial period, they will be frustrated if we cannot provide our usual level of service. Any businesses with VAT periods that do not coincide with their accounting periods would be advised to get this changed so that they are co-terminus otherwise they are looking at even more submissions. Our favoured software is Xero. They provide some basic cash book only models. The VAT enabled version costs £9 + VAT per month. The all singing version which connects to your bank is £22 + VAT per month. * Alternatively, we will be able to handle these quarterly submissions for you if you prefer. If you decide this is the way to go, there are administrative hoops to be negotiated so please tell us sooner rather than later. It won’t be cheap. There will be a transitional period where the new system overlaps with the existing tax return system. Everyone currently in self assessment will have to make returns for 2019/20 by 31st January 2021 as usual while reporting under MTD for 20/21. Businesses with an accounting period which starts after 1.4.2019 eg those businesses with year ends of 30 April and later will still be making self assessment tax returns for 20/21 by 31st January 2022. Thereafter everyone who needs to be will be in the new system. When we get to that point, every month will be a deadline for somebody so the January panic will only apply where businesses have a year end of 31st March. It will be a February panic for 30 April year ends and so on. We understand that the tax payments dates will stay the same. HMRC will be inviting ‘customers’ to make voluntary payments when they submit their quarterly figures, but this is unlikely to be attractive particularly in the transitional period where clients will be paying under the old rules already. Landlords with turnover of £10k + will have to make quarterly digital returns from April 2020. As they’re not VAT registered, the Xero software for £5+ VAT per month * option may be a possibility. HMRC are prepared to allow certain businesses to opt out of MTD. Businesses with turnover under £10k are not covered by the MTD rules. They will simply submit their figures 10 months after their year end. Other than that, a business will have to apply for digital exclusion due to impracticality. We do not expect any of our clients to qualify for this. Everyone has a personal digital tax account and I recommend that you access it. In there is a mine of useful information that we, as your agents, cannot see. You can see your National Insurance contributions. My record goes back to 1980/81. Your P60 information is held there, PAYE codes and ultimately your tax bills will operate from there. If HMRC have got the wrong information about your income it will be apparent there. NB going forward they will be assessing your tax bills based partly on third party information (salaries, interest, pensions possibly dividends) and you need to be able to see what they think you’ve had. In a nutshell, it’s all change. You need to start getting ready. If you want us to help or do it for you, please tell us sooner rather than later. *Prices correct at May 2018 “Last one before GDPR” Special. If you don’t know what GDPR is by now, it’s probably too late to worry. The knock-on effect is that Newsletters may be even more erratic than usual as we try to figure out whether we’ve broken the rules (again). Forthcoming events Wednesday 27th June- the summer event Visit to the Hillside Brewery (on the top of May Hill) for a tour + barbeque. We really like Paul, the guy in charge, so we’re going regardless (even though it’s further than usual from Hereford). You’re welcome to join us. Details/invites to follow in due course. Cost probably £20 per person. Friday 7th September – the Golf Day I’m really excited: I might not have to go. Next season I’m also working on getting my lad (Jack) to give a presentation on how to handle Millennials, as usual sometime in late September/early October. Might need to get him to change his surname as a precaution. I’m considering turning this into a panel event, which will make it much more exciting. Book of the month “Why We Sleep: The New Science of Sleep and Dreams” by Matthew Walker The gist of it is that absolutely everything (mind and body) falls apart if you don’t get 8 hours a night as a matter of routine. Even relatively modest shortfalls cause significant under-performance. In pre-industrial times, people tended to sleep from 9pm till 4am (particularly in the summer) and then have another hour between 1pm and 2pm. This obviously suits the BD team who seem to sleep for most of the afternoon, at least judging by their output. The book is full of stats and stories to back up the importance of sleep. The one I liked best was the Greek island of Ilkaria. Up until the last 30 years or so, folk on the island still had a siesta and routinely lived into their late 80s, with heart disease and dementia almost unknown. Commercial pressures forced the islanders to move into an always open culture and the full gamut of 21st Century health issues subsequently developed. As a responsible employer, what can you do? Bonuses for people who get enough sleep, based on evidence from wearable tech? It’s all a bit Big Brotherish. Pinko wealth tax I picked up an article in the press about the possibility of an incoming Labour Govt inventing a windfall wealth tax to pay for popular services, rather like they have in France & Norway. A wonderful idea if you don’t have to pay it. I was so astonished by the concept that I put a longer article on the blog. Snowflake bashing There’s a lovely video on the web of a tech boss interviewing a Millennial and getting nowhere: https://www.youtube.com/watch?v=Uo0KjdDJr1c Arguably, this is more of an instructional feature than a joke and I’m certainly going to use the line “I’m not feeling a good fit here” whenever I want to fire somebody. It’s a bit softer than my current “I think you need a more structured environment”, but it gets to the same place. On a similar point, there’s an excellent podcast with Mike Pegg on http://storiesofsuccess.libsyn.com/stories-of-success-with-mike-pegg-the-positive-encourager It’s quite a long podcast, but really gets to grips with (amongst lots of other concepts) the sweet spot where brutal reality meets positivity. As the Sage would say, “Take the best and leave the rest”. Brexit progress & MTD The major achievement of the Brexit shambles is that Govt has been so busy fighting with this that it’s found very little time and energy to tinker with the tax system. But, don’t be fooled: the professional terminators in the Treasury/HMRC are still pushing the MTD agenda. MTD for VAT starts this time next year and the full MTD (for corporate and personal tax) rolls out over the following 2 years. Allegedly, HMRC are rubbing their hands with glee at the prospect of all that data heading in their direction, but I still can’t see what they are actually going to do with it in the short run. But we’re all going to be very busy indeed making sure they get what they want. And we’ve tried our best with Brexit by copying somebody else’s planning checklist. It will eventually appear on the website, but I can send you one if you ask. Carillion NEDs Becoming a Non-Executive Director of a larger business is seen as a good way of extending a career into retirement without working very hard/long, but still getting well paid. A DIY pension, as it were. With the collapse of Carillion, the hunt for scapegoats appears to have focussed on NEDs (rather than the real culprits?) and various quangos have decided to review their corporate governance rules. Defence & Security Expo Our very own version of the Chuckle Brothers, Martyn & Phil, have taken a stand at Harrison Clark’s Defence & Security Expo at the Three Counties Showground on 31st May. [Whilst neither of them was in the military, Phil was in the Boy Scouts. Phil claims to be highly decorated, but rumour has it that the pinnacle of his scouting career was integrating the Girl Guides into the Scouts. {I wanted to say something considerably earthier, but we’ve had an attack of political correctness and I’ve been censored.} Anyway, he’s more of a Lover then a Fighter? Whereas, I was good with knots.] The purpose of the Expo is to promote Herefordshire's Golden Triangle. Allegedly, 90% of defence and security innovation has its home in the Three Counties. Is this our most successful export? Look out for our guys if you go: they may be in camouflage. Or cloaking devices. website link? www.3CDSE.co.uk The Abracadabra Effect For those who missed it, the last BD event was really quite useful. The speaker was Nicola Whiting who turns out to be a senior figure in cyber security and indeed runs a very successful tech business from the wilds of Worcestershire. She actually talked about the Chimp Paradox and its relevance to pricing and website design. Follow up reading:
New website?? Like the Boyscout’s video, its late and over budget. As a precautionary measure, we’ve thrown stuff onto the blog:
Big news I saved it till last: Rachael has had her baby – it’s a boy. Less than 12 months to wait till she’s back. Disclaimer Anything you want is on the other side of fear. Is that a Brexit strategy? A summary of the issues we think are relevant now and going forward. It’s not a riveting read but there’s quite a lot going on. Please read it and I can provide more detail where required, unless HMRC haven’t made up their mind yet. Personal tax The tax free allowance goes up to £11.85k from April. Individuals with income over £100k lose this on a sliding scale of £1 for every £2 until they get to £123.7k. So income between £100k and £123.7k actually gets taxed at 60%. To be avoided. The point at which the 40% tax rate applies, is £46.35k, ignoring the things that increase that level, such as pension contributions and charitable donations. The additional rate sticks at 45% on income exceeding £150k. Going forward, the government have promised to increase the tax-free allowance to £12,500 and the 20% tax band to £50k by 20/21. Savings rate Interest on savings up to the £1,000 is tax free. For HR taxpayers they get the first £500 tax free and additional rate taxpayers don’t get any allowance. This tax-free savings allowance can be as much as £5k where the individual has a lot of interest on savings and does not use up all of their tax-free allowance. Dividends The nil rate band goes down from £5k to £2k from 6.4.18 so it will make more of an impact next year when we’re doing tax returns for 2018/19. The rates over this are 7.5%, 32.5% and 38.1%. Transfer of allowances between couples Married couples where one person has unused tax relief can transfer up to £1,185 to the other and save a maximum of £237. This only works where neither of you is a higher rate taxpayer. Capital Allowances No change: 100% relievable spend is, apparently, now fixed at £200k per annum.18% thereafter, or maybe 8%. CT rates Down to 19% for accounting periods starting 1st April 2017. Due to go down to 17% and perhaps even lower. CT Losses Generally, there’s been a relaxation of the rules whereby there is more scope to use them BUT HMRC have restricted the amount that can be claimed for larger businesses. This is unlikely to affect you. Child benefit Still repayable where one of the household has income over £50k Tax free childcare In the process of being phased in. For every £8 paid into a childcare account the government will pay in £2 up to a maximum of £500 for 3 months. It is available to parents working over 16 hours per week. You will not qualify if you expect to earn more than £100k in the year. The childcare voucher system involving employers will continue but no new schemes can start after 5.4.18. Buy to Lets- restriction of interest relief The effect of this will start to bite from now on. The next phase of tax returns will exclude 25% of the interest paid from the rental calculation and include it as a tax reducer. This will not make a big difference to basic rate payers on the whole but it could push an individual into the 40% tax bracket when more of the interest is restricted over the coming years. Mortgage applications – income verification NB HMRC have access to these to check that their record of your income ties in with what you’re telling the B Soc. Aside from that, lenders should now accept our version of the SA302 for income verification along with the HMRC tax year overview all of which I should be able to provide instantly. HMRC will no longer provide forms SA302. IR35 in the private sector HMRC have already imposed PAYE on government departments who use contractors. It is looking increasingly likely that this will be introduced for the private sector. This will affect businesses who pay contractors via their personal service companies. The effect is punitive and means that end user will play safe and deduct PAYE even if it is not actually due. Car benefits These have never been popular with HMRC. Diesel cars are a particular ‘bete noire’ and have also resulted in a higher tax bill. HMRC have increased the diesel supplement from 3 to 4% from 6.4.18 as well as increasing the car benefit percentage by 2%. Company cars can sometimes be better funded via an increase in pay and run privately, but it does make sense to check because low business mileage users may remain better off with a company car. PAYE Employer allowance: £3k per annum, but single employee companies can’t have it. National living wage: applies from April to employee age 25 and above. £7.83 per hour from 1 April 2018. Payments under salary sacrifice change from 1st April. Pensions and childcare are fine. Most other arrangements are not: gym memberships will be taxable. Existing arrangements other than the exceptions are taxable from 6.4.18. Sage payroll There will be an update for the end of the (tax) year. Please download it in plenty of time. If you don’t, you may not be able to do the payroll end of year process and you’ll panic. Inheritance tax relief re homes Started in April 2017. The existing relief of £325k each will be supplemented by a further £125k each from April 2018 increasing incrementally to £175K over 3 years in respect of homes passed to children/grandchildren. Downsizing relief will be available in respect of houses sold on or after 8.7.15. The extra relief is withdrawn incrementally for estates over £2m. Making Tax Digital The latest on this is that all VAT registered businesses with turnover over the threshold will have to make quarterly reports under MTD from 1.4.19. This will require different software, so those businesses who submit their VAT returns via the HMRC log in will no longer be able to do so from that point. You will be able to calculate your VAT on a spreadsheet if you prefer that, but you will need to acquire (API enabled) software that can connect to HMRC and file your returns direct. You will have the option to handle this yourselves or use an agent (us/your bookkeeper) to do it for you. There is no change to the due dates etc From April 2020 other taxes will be brought into MTD. Common reporting standards It sounds harmless but it is an unassuming name for an aggressive plan by HMRC to tackle overseas tax avoidance. Overseas financial institutions will report overseas assets held by UK individuals to HMRC. HMRC have promised to follow all of these leads to ensure that any relevant income has been reported. A client has already been targeted and has parted with an eye-watering payment. In the meantime, HMRC have announced an amnesty to run until 30 September 2018. It’s not particularly benign, but it’s significantly kinder than the regime that will operate if HMRC discover wrong doing from then on. GDPR From 25.5.18 the new rules on Data Protection come into force. Businesses must protect the privacy of any individual about whom they hold information. They must follow the rules on notifying the affected individuals and obtain their consent to hold the information. You will need to prove that you are complying with the rules by putting in place training and protocols. Individuals have a right to access any stored information and businesses will have to be able to produce this on demand. Any request that the information be deleted must be completed. Penalties for noncompliance could be between 2% and 4% of global turnover depending on the severity of the failure. Bitcoin/crypto currencies Any gains or losses on buying/selling these will treated the same as any other currency ie taxable. Any trade of goods/ services using crypto currencies is still taxable. And Finally An Analogy If HMRC ran a café, it would drag in passers-by, force them to cook their own meal then fine them for overcooking it. A little later it would publish a ‘spotlight’ on how to cook said meal and double the fine. (I pinched this from the lighter side of Accountancy and Tax) At Ducketts, we believe that What If? is a very important question. So much so, that we have What If? Planning tools, which we use when clients are looking at significant growth, a one-off project, changing terms of trade etc., as well as planning the following years budgets.
This allows us to see what the potential effect of the growth or project might have across a number of areas, but in particular, the cash position of the business. This in turn allows us to look at alternatives, but also put together a coherent plan and set of forecasts/budgets to present to the client’s bank, to support any increase in bank funding. It is much better to understand the implications/effects of an opportunity, before you are committed to it, particularly if 3rd party support is also required. If you would like some help in answering what if? please call Martyn Wright on 01432 370572 or 07598 890019 or e-mail [email protected]. The (right wing) press has been having some fun speculating what a Labour Govt, under proforma Chancellor John MacDonald, might do under its tax and spent vision spelt out in the 2017 manifesto. Basically, they are talking about a 45% tax rate for those earning over 80k and 50% from 123k up. Corporation tax up to 26% from its current low of 19%. More Sweden than Venezuela. But what if some more radical ideas come through in order to fund (massive) spending on education and the NHS? The current favourite is a “wealth tax” which is well established in countries such as France and Norway. Tax wonks favour this as income is relatively easy to fudge (well, defer anyway) and real inequalities exist in wealth. The real shocker is the suggestion that all savings and investments in excess of 200k should be subject to a one-off 20% wealth raid. That amounts to an unprecedented assault on property rights, the very concept that helped to create wealth in the first place. Who said tax was boring? Sales Training Courses For Sales People, Customer Service Staff, Sales Managers & Business Owners27/10/2017 If so, Ducketts can help. Our workshop based sales courses are the most effective way of training individual salespeople in your organisation. All of our sales courses are delivered in a fun and interactive way. Your salespeople will get to engage and share best practice advice with other sales professionals from different industries and sectors across the region. All of our sales training courses are formally endorsed and taken by Phil Brace AISM who has years of sales experience in the service sector working with local, national and international organisations. Phil’s experience is straight from the coal face of up to date methods currently being used by national corporate organisations. Phil makes this practice relevant to both local and national markets and everything is evidence based. Our courses are one day workshops held in our training suite on the Rotherwas industrial estate, Hereford. Course notes, lunch and coffee are included. Friday 24th November 2017 £200pp (+VAT) Sales Training Workshops and Sales Courses Why wait to polish those selling skills that will help you earn more revenue and improve sales performance? Sign up today for one of our sales training workshops to learn the secrets behind successful selling - the Customer First Way. With our proven sales process, you’ll be well on your way to increased sales. Sales Training Workshops and Sales Programmes We offer sales training workshops to organisations of all sizes and industries. Our sales methodology has proven successful for many of our clients across a range of sectors, our approach is always evidence based and work on the basis that all sales people are not the same. We focus on best practice and on what the customer experience and needs are. Our sales training courses have proven to help business owners gain a deeper understanding of the sales process, sales managers become better sales people and better leaders. Furthermore, field sales staff increase their sales and enjoyment of the job and customer service staff get a better understanding of what really matters. Significantly improve sales performance Improve customer retention Improve the customer experience Increase forecasting accuracy Boost sales and revenue year over year Improve prospect and pipeline qualification Lead with value not product, putting the customer’s goals/needs first Shorten the sales cycle Stop losing to “no decisions” Reduce cost of sale Improve staff enjoyment and motivation Take a moment to consider the benefits of a locally managed Sales workshop and call today to book your place. I've been on another tax course and as usual have returned feeling totally demoralised. The Criminal Finance Act of 2017 takes effect from 30 September 2017. This allows the prosecution of any business including partnerships regardless of size if a person associated with it (employee contractor or agent) facilitates a tax evasion in the UK or overseas An example where this would bite is where work is carried out for an individual (who cannot claim back VAT) but the invoice is made out to his business where VAT is reclaimed. A prosecution under this, could mean unlimited fines, public record of the conviction and reputational damage. The offence can stick to the business even if the evasion was carried out by an employee and the principal was completely unaware. There is no requirement for there to be intention. The only get out is having documented procedures in place to prevent/minimise the risk: 1. Risk assessment 2. Proportionality 3. Top level commitment 4. Due diligence 5. Communication and training 6. Monitoring and reviewing This needs to be considered seriously When someone has invented a TARDIS everything will be fineWhat it means for advisors and their clients
I watched with interest the Channel 4 documentary on Monday night to see what areas it would cover with HMRC’s work into catching ‘tax dodgers’. The case that I looked at with most interest was a ‘PR Guru’ who instructed his accountant not to submit a VAT Return, for which HMRC successfully prosecuted him. This is the type of scenario we, as accountants and tax advisers, are more commonly likely to encounter, rather than a £45m foreign wine duty issue. The case resonated with me as I have seen similar cases with HMRC whereby, what used to be considered a relatively minor offence of not being compliant with your tax obligations, would now result in a Criminal Investigation being launched. I am currently presiding over two CI cases involving non-submission of VAT and PAYE returns. In each case, neither of the amounts due are particularly high for those of us who deal with tax enquiries on a regular basis; however, HMRC’s stance is to make a statement to demonstrate that perceived tax evasion will not be tolerated. This is in addition to several others that I have had contact with who were being investigated for VAT offences, mainly a failure to register because HMRC suspect they have breached the turnover threshold. A meeting I had with the lead officer on one of these cases confirmed that HMRC are taking a tougher stance on such offences in order to ‘shock’ local business communities to bring any outstanding issues up to date, or realise that HMRC will deal with them far harsher than in the past. A lot of cases will centre around VAT, due to the way the VAT legislation differs from direct tax legislation, any non-compliance is potentially a criminal offence which gives HMRC far more scope to obtain a successful prosecution. It is therefore expected that we see a rise in the number of these cases as HMRC pour more resources into an area that they find easy to make cases of. So, what does it mean for the adviser? In the case of the PR Guru, the adviser did the correct thing in submitting a money laundering report – although I was surprised that this was mentioned as my belief was these would be anonymous and a client would be unaware that a report had been filed against them. I will be checking this again with our own ML officer. I have seen a case whereby HMRC quizzed the adviser into his role in a potential CI case, trying to establish whether the accountant had knowledge of his clients non-compliance, presumably seeking to establish whether the accountant had followed the correct ML procedures had he been aware of the issue. In December 2016 an adviser was reprimanded for not submitting an ML report despite having reasonable grounds to believe an offence had been committed – the case being an over claim of mileage expenses. This now puts pressure on the adviser to consider submitting an ML report for any suspected case of non-compliance, no matter how minor it is considered to be. As far as the individual with the offshore tax issue, in which HMRC took a hard line with him in not offering the benefits of the LDF to him for being late with his submission, again shows HMRS to be taking a hard line against those who have not used the appropriate disclosures facilities in a timely basis. With the upcoming requirement to correct legislation coming into force September 2018, there is greater emphasis for taxpayers to use the Worldwide Disclosure Facility to bring any matters up to date. Overall, I was pleasantly surprised that the programme gave a fairly accurate portrayal of where HMRC are currently going with their investigations, though it was clearly set out to be a warning to individuals and businesses to get their acts together, resulting in some good PR for HMRC. If you have any concerns about an on going tax investigation or a client who needs to make a disclosure because of overseas income or previous non-compliance in the UK, then please call me on 01803 320100 or email me at [email protected]
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The EditorA man who has to wade through treacle on a daily basis to find silver linings and missing commas. Archives
June 2018
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