I hope you are keeping well.
27th January 2023 – Hillmans Weekly Update:Welcome to our round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!
I hope you have a good weekend.
Kind regards,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk
Remaining resilient in a shrinking economy
Despite a small growth in the economy in November of 0.1%, the UK has been struggling under the weight of high inflation and rising borrowing costs. Most economists are predicting a contraction in the economy in the next six months. Conditions are likely to remain challenging for businesses and individuals alike, so now is a good time to focus on resilience.
Resilience is the process of adapting well in the face of adversity, trauma, tragedy, threats, or significant sources of stress — such as business, workplace, and financial stressors. It means "bouncing back" from difficult experiences.
So what actions can you take now to remain resilient to any downturn in the economy?
Here are a few suggestions to help you think about your business:
- Review your Budgets and set realistic and achievable targets for 2023/24.
- Be careful with ‘can’t pay’ customers and get rid of ‘won’t pay’ customers.
- Review your debtors list and chase up overdue invoices (if appropriate).
- Offer existing debtors extended payment terms and/or discounts (if applicable).
- Make sure your terms of business contain explicit payment terms.
- Assign responsibility to one individual for invoicing and collections.
- Agree extended payment terms with all suppliers in advance (if applicable).
- If appropriate, review banking facilities and discuss future needs.
- Put extra effort into making sure your relationships with your better customers are solid.
- Review and flow-chart the main processes in your business (e.g. Sales processing, order fulfilment, shipping etc) and challenge the need for each step.
- Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
- Review your staffing needs over the next few months.
- Review your list of products and services and eliminate those that are unprofitable or not core products/services.
• Sales Leads generated,
• Orders supplied/fulfilled,
• Cash balance,
• Stock Turnover,
• Debtor Days,
• Gross Profit, and
• Net Profit.
The good news!
The important thing to remember is that the vast majority of people will not lose jobs, the majority of businesses won’t fail and, eventually, we’ll recover. (NatWest Bank, Key economic predictions for 2023).
Talk to us about your business; we have many clients who have changed the way they do things and some really innovative stories to share with you!
Submitting your tax return - Deadline 31st January 2023
If you’ve already sent us your tax return information and we have submitted your return to HMRC, thank you! You don’t need to do anything else other than pay any amount due.
If you have recently sent us your information we will ensure your return is submitted to meet the deadline. If you have not yet sent us your information, please forward this to us as soon as possible to enable us to complete your tax return and submit it to HMRC.
You will not receive a late filing penalty as long as your tax return is filed online by 31 January 2023.
Interest will be charged by HMRC from 1 February on any outstanding liabilities you have not paid.
If you can’t pay in full by 31 January because of financial difficulties, HMRC may be able to help by arranging a payment plan. If you owe less than £30,000, you may be able to do this online without speaking to them. Go to GOV.UK and search 'HMRC payment plan'.
Please contact us if you need assistance.
Statutory Pay Rates from April 2023
The UK Government has published the proposed statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay, parental bereavement pay, and sick pay from April 2023.
The rates normally increase each April in line with the consumer price index (CPI) and the increase normally occurs on the first Sunday in April, which in 2023 is 2 April.
See: Benefit and pension rates 2023 to 2024 - GOV.UK (www.gov.uk)
Research & Development (R&D) Tax Relief Reform Consultation Launched
The UK Government has launched a consultation to simplify the UK’s R&D tax relief system.
The 8-week consultation, which runs from 13 January to 13 March 2023, sets out proposals on how a single scheme could be designed and implemented. This would replace the two R&D tax relief schemes currently in place - the Research and Development Expenditure Credit (RDEC) and the small and medium enterprises (SME) R&D relief.
A scheme modelled on the current RDEC for SMEs would also give decision makers in smaller companies clearer information, which will help them set budgets for R&D. In contrast, for those claiming SME tax relief in the current setup, the exact amount of money their firm will receive can only be known with certainty at the end of accounting period.
This is part of the government’s ongoing R&D tax reliefs review, and follows changes announced at Autumn Statement 2022 where the generosities of the two R&D tax schemes were broadly aligned, with the Chancellor pledging to work with industry to understand how to provide further support for R&D-intensive SMEs.
Government spending on R&D is aimed at stimulating private sector investment which is why it is increasing investment to £20 billion a year by 2024-25.
See: R&D Tax Relief Reform Consultation Launched - GOV.UK (www.gov.uk)
From pensioners to teenagers, HMRC reveals who files a tax return
HMRC has revealed that more pensioners filed a tax return for the 2020 to 2021 tax year compared to young people.
Overall, those aged 65 and over accounted for 16% of individuals who submitted a tax return, whereas 16 to 24 year olds made up 2.7% of total filers.
The new data is part of analysis by HMRC into the demographic data of the Self-Assessment population. The findings also show:
