Friday 29 July 2022

Paper £20 and £50 banknotes cease to be legal tender after 30 September 2022

The Bank of England will be withdrawing legal tender status of the paper £20 and £50 notes after 30 September 2022 and are encouraging anyone who has these to spend or deposit them at their bank or Post Office.

As they are returned to the Bank of England, these are being replaced with the new polymer £20 notes featuring J.M.W. Turner, and polymer £50 notes featuring Alan Turing. After 30 September 2022, the new polymer notes will be the only ones with legal tender status.

After 30 September 2022 people with a UK bank account will still be able to deposit withdrawn notes into their account. Some Post Offices may also accept withdrawn notes as payment for goods and services or as a deposit to an account accessed via them.

The Bank of England will continue to exchange all withdrawn notes.


Thursday 28 July 2022

Recovery Loan Scheme extended

An important support scheme offering Government-backed loans to small businesses will be extended for a further two years, Business Secretary Kwasi Kwarteng announced last week. 

The Recovery Loan Scheme, originally launched in April 2021 to help businesses recovering from the Covid-19 pandemic, has supported almost 19,000 businesses with an average of £202,000 in support.

The Recovery Loan Scheme (RLS) is a government scheme aimed at supporting access to finance for UK businesses. It gives lenders a government-backed guarantee against the outstanding balance of the facility.


Wednesday 27 July 2022

Seafarers to receive National Minimum Wage

New legislation will ensure seafarers get paid at least equivalent to the UK National Minimum Wage.

The UK government has introduced new legislation to make sure seafarers get paid at least equivalent to the UK National Minimum Wage.

The changes mean that thousands of seafarers regularly entering the UK will receive fairer pay.

The Seafarers’ Wages Bill – introduced in the House of Lords – enables port authorities to deny access to services calling regularly at UK ports who do not pay their workers equivalent rate to the UK National Minimum Wage (NMWe) for time spent in UK waters. 


Tuesday 26 July 2022

Community Ownership Fund 2022

People across the UK will have the chance to become owners of at-risk local pubs, theatres, post offices, sports grounds and corner shops with the launch of the UK Government’s Community Ownership Fund.

Voluntary and community organisations can bid for match funding.

The Community Ownership Fund is open for Expressions of Interest applications.

Once you have passed the EOI stage you will be sent a link to submit a full application to the Fund. Please note you can only submit a full application if you have received confirmation that your project is eligible at the EOI stage.

Your full applications must be submitted before 12pm on 19 August 2022 if you are applying in the first bidding window.


Monday 25 July 2022

Helping your business become more sustainable

After some of the hottest temperatures seen on record last week we are reminded about global warming and how small businesses can help our country drive towards net zero. A sustainable business, or a “green business”, is an enterprise that has minimal negative impact or potentially a positive effect on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line.
Going green can boost your competitiveness, lower costs, and improve your business’s reputation with your customers and staff. Most importantly, consumer trends reveal that consumers are increasingly assessing a company's environmental credentials, while business supply chains are under scrutiny to minimise environmental, ethical, and social impacts. 

There are also lots of incentives for environmentally switched-on businesses and climate change awareness is also likely to see legislation designed to support environmental pledges and limit global warming to 1.5 degrees.

With a renewed focus on climate change and the environment, sustainability should be increasingly at the heart of business operations. Even small changes can help move UK businesses towards a greener future. 

The British business bank lists eight ideas on sustainability:
Don’t use single use plastic;
Use sustainable suppliers and service providers;
Implement a greener commute scheme;
Switch to low energy lightbulbs;
Install smart power strips;
Reduce water usage;
Make workspaces more heat efficient; and
Install built in recycling units.  

For the full details see:  8 sustainable business ideas - British Business Bank (british-business-bank.co.uk)
The British Business Bank has a wealth of information and guides on how to create a sustainable business and prepare for green growth. Take action with their green business guides, jargon busters and helpful explainers.

Find out what Net Zero actually means with their Green Decoder. The online guide has been co-created with Nottingham Business School, Nottingham Trent University to help smaller businesses decipher the terminology surrounding decarbonisation.

You can also commit to the UK Business Climate Hub and take steps to be greener, saving your business money and saving the planet too.

For further information visit Sustainability - British Business Bank (british-business-bank.co.uk)




Friday 22 July 2022

Tax credits claimants have until 31 July to renew their claims.

Thousands of claimants are yet to renew their tax credits ahead of the deadline, with HMRC reminding them to do so by 31 July or their payments will stop.

Tax credits help working families with targeted financial support, so claimants must renew before the deadline to ensure they don’t miss out on the money they are entitled to.

Renewing online is the best option, and you can log into GOV.UK to check the status of your renewal.

See: Manage your tax credits - GOV.UK (www.gov.uk)

 

Thursday 21 July 2022

Take control of your business!

We were finally getting over the financial crisis when Covid struck. Then, in the trough of the worst economic downturn in 300 years, we discovered that recovery was driving the Financial Times Stock Exchange (FTSE) to new heights and the job market into a frenzy. In the wake of that, it became clear that the recovery was overheating and that we were facing a period of rising inflation and industrial action. 

Russia’s war in Ukraine made things worse. It has not only meant human suffering, but it has also affected the entire global economy, driving up the cost of food and energy. It adds to the hardship for those on a low income and means serious food security risks in the world’s poorest economies.

The economy has always had its ups and downs, but its resemblance to a roller coaster is currently more marked than ever with the news of Prime Minister Boris Johnson’s resignation and the race for his successor.   

Businesses of every size face challenges that are now suppressing growth. A business might have a great product or service, but without a strategic plan to help it define, articulate and communicate where it is going, it will be at the mercy of outside events. We encourage our clients to take some time to think long-term about their business and to establish goals or targets that you can control.    

A plan starts with identifying and accessing opportunities within your market and should address how your business is going to evolve to meet the challenges of today and the future. The plan gives your business purpose and it answers questions about your long-term goals.

The first step is to look at five important areas:

  1. Think long term – invest time in understanding where the market is going and what this means for your customers. Short-term decisions do not help grow a business.
  2. Having a good value proposition is essential – this states the relevance of your product or service, what it does and why customers need it. What is yours? 
  3. Expand your reach – what is your target customer and what do you need to do to let them know you exist and that your product or service is relevant to them?
  4. Growth means new people, systems and (maybe) different ways of doing things. Grow at a pace you can manage.
  5. How will your marketing get your value proposition to relevant customers?

Once you have taken some time to write out your plan and where you want your business to be in (say) 2 years, the next step is to work out a marketing programme with actions to make it happen.

A marketing plan is a business document outlining your marketing strategy and tactics. It is often focused on a specific period (i.e. over the next 12 months) and covers a variety of marketing-related details, such as costs, goals and action steps. But like your business plan, a marketing plan is not a static document. The plan should outline:

1.    How you are going to keep existing customers happy and returning to buy more often.

2.    What the goals are for getting new customers.

3.    The marketing methods you are going to use to achieve points 1 and 2.

We specialise in helping our clients manage their businesses. We do this by preparing and updating detailed forecasts, using the latest and most powerful software. 

Please talk to us about strategic planning. We can provide a template so you can do this yourself or work together with you to produce estimates for a variety of scenarios and help you take control of your business!


Wednesday 20 July 2022

Innovate UK Smart Grants

Innovate UK, part of UK Research and Innovation, is investing up to £25 million in game-changing, and world-leading ideas, designed for swift, successful commercialisation. Ideas need to be genuinely new and novel, not just disruptive within their sector. The competition closes on 27 July 2022.

Your proposal must be business focused, with deliverable, realistic and adequately resourced plans to achieve a return on investment, growth and market share following project completion.

Applications can come from any area of technology and be applied to any part of the economy such as, but not exclusively:

        Net zero

        The arts

        Design

        Media

Your project must:

        Start by 1 January 2023.

        End by 31 December 2025.

        Include at least one micro, small or medium-sized enterprise (SME) as the lead or a collaborative grant claiming partner.

        Carry out all its project work in the UK.

        Intend to exploit the results from or in the UK.

See: Competition overview - Innovate UK Smart Grants: April 2022 - Innovation Funding Service (apply-for-innovation-funding.service.gov.uk)

Tuesday 19 July 2022

Charging the correct rate of VAT

The VAT rules are becoming increasingly complex and businesses need to ensure that the correct rate is applied to the goods and services they supply.

HMRC have recently updated their guidance on VAT rates. It provides a list of goods and services which you can check to determine which rates of VAT apply and which items are exempt or outside the scope of VAT: VAT rates on different goods and services - GOV.UK (www.gov.uk)

The guide is not a comprehensive list, and you may need to check the appropriate VAT Notices that deal with certain supplies in more detail. We can of course assist you if you are unclear on the correct rate to apply.

Monday 18 July 2022

Attracting and retaining key staff with share incentives

In the increasingly competitive job market, it is important for employers to attract and retain talented people to help them grow their business. More and more key staff would like the opportunity to participate in the equity of the organisation that they work for and employers that do not offer such opportunities will be at a disadvantage when looking to retain and recruit.

In the case of companies, there are currently four HMRC ‘tax-advantaged’ schemes that provide employees and employers with income tax and National Insurance (NIC) advantages. These used to be referred to as “HMRC approved” schemes but HMRC, although helpful, no longer provide an approval service. The onus is now on the company or its professional advisers to ensure that the scheme complies with the specific legislation, which can be complex. The four tax-advantaged schemes are currently:

Share Incentive Plan (SIP) and Save As You Earn (SAYE or Sharesave) schemes, which generally need to be made available to all employees after a qualifying period.

Schemes more appropriate for SMEs are the Company Share Option Plan (CSOP) and the Enterprise Management Incentives (EMI) share option scheme, as these are discretionary schemes which allow management to award options to selected employees and directors that the organisation is looking to incentivise.

Shares acquired under these four schemes are generally free from income tax and NICs. Depending on the scheme used, the employer may also qualify for a corporation tax deduction for the difference between the price paid by the employee for their shares and the market value.

The scheme of first choice, provided the company qualifies, is currently the EMI share option scheme as it allows the employee or director to hold options up to £250,000 of the employing company’s shares based on the market value when the option was granted. The shares, once acquired, potentially qualify for CGT business asset disposal relief when sold, and thus the first £1 million of gains would be taxed at just 10%.

The acquisition of shares and securities in connection with employment, other than through one of the four schemes outlined above, are commonly referred to as ‘unapproved’ or ‘taxed’ schemes. This means that neither the employee nor the employer benefit from any income tax or NIC advantages. This could result in a significant income tax and NIC charge.

Please contact us if you would like to discuss introducing a share incentive scheme to help you attract and retain talented staff.

Friday 15 July 2022

MTD for income tax – Quarterly information to be reported by businesses

Making Tax Digital (MTD) for Income Tax will apply to sole traders, property landlords and certain other businesses with gross turnover and/or property income over £10,000 a year and will commence in April 2024. The system will then be extended to partners from April 2025 and LLPs and partnerships with corporate members from April 2026.

The Income Tax (Digital Requirements) Regulations 2021, set out the requirements that relevant persons must comply with under MTD for Income Tax. These include the use of MTD-compatible software to keep and preserve their business records (income and expenses) digitally, send quarterly updates of their records to HMRC and submit an end-of-period statement to HMRC.

HMRC has now published draft notices of the detailed provisions for consultation. The consultation invites views on these which provide additional information on the key requirements of MTD as they relate to:

        The use of functional compatible software.

        The information required when submitting quarterly updates and end-of-period statements.

        Retail sales election.

The draft notices specify the proposed dataset requirement. Later in the year, HMRC will publish guidance to explain how customers can reflect any accounting and tax adjustments that may be required to reconcile the quarterly submissions to the final taxable profits for the year (The End of Period Statement). The consultation sets out the adjustments that are likely to be required, such as accruals, prepayments, private use adjustments, stock and capital allowances.

As expected, the breakdown of income and expenses broadly follows the headings on the self-employment and property income pages on the Self-Assessment Tax Return.

The consultation document states that where the annual turnover is below the VAT registration threshold, the individual may choose to provide the total of all income and the total of all expenses, instead of a detailed breakdown of expenses. This is also consistent with the self-employment pages in the Self-Assessment Tax Return.

Retail sales businesses may enter a single digital record of the daily gross takings for any retail sales made.

Please talk to us about making sure your business complies with MTD. We are here to help!

For details, see: Tertiary legislation for Making Tax Digital for Income Tax - GOV.UK (www.gov.uk)

Thursday 14 July 2022

New importers must register on a new single customs platform

The Customs Handling Import and Export Freight (CHIEF) will be closing for all import declarations on 30 September 2022. The system has now stopped accepting new registration requests from importers. Instead, they will need to register with the Customs Declaration Service to make their import declarations.

The UK Government states that the Customs Declaration Service represents a significant upgrade by providing businesses with a more user-friendly, streamlined system that offers greater functionality.

This marks the first step toward the government’s vision of a Single Trade Window, which will have considerable benefits for businesses through reduced form-filling, better data use across government and a smoother experience for users.

See: New importers to register on new single customs platform - GOV.UK (www.gov.uk)

Wednesday 13 July 2022

The Young Innovators Awards 2022/23

Ground-breaking ideas can come from anyone and everyone. Innovate UK are on the hunt for innovators who could benefit from a business-boosting support package,   including £5,000 and advice designed to evolve your idea into a great business.

The Young Innovators Awards 2022/23 will be open until 27th July 2022. Up to 100 winning young entrepreneurs will be supported for 12 months. It’s all part of Innovate UK’s commitment to changing the world by investing in young people with big environmental, societal, and economic ambitions. The award is open to everyone from 18 to 30, with any kind of idea from anywhere in the UK.

See: Calling for Young Innovators 22/23 - Innovate UK KTN (ktn-uk.org)

 

Tuesday 12 July 2022

ICO ransomware guide and checklist for businesses

The Information Commissioner's Office (ICO) recommends that businesses and organisations establish incident response, disaster recovery and business continuity plans to address the heightened risk of ransomware attacks.

The recommendation accompanies ICO's new guidance and a checklist of actions businesses should review to assess their preparedness against potential ransomware attacks on their organisation.

Ransomware is an increasingly prevalent form of cyber-attack. Personal data breaches from the ICO's caseload during 2020/2021 have seen a steady increase in the number and severity of cases caused by ransomware. This guidance presents eight scenarios about the most common ransomware compliance issues the ICO has seen:

        Scenario 1: Attacker sophistication

        Scenario 2: Personal data breach

        Scenario 3: Breach notification

        Scenario 4: Law enforcement

        Scenario 5: Attacker tactics, techniques and procedures

        Scenario 6: Disaster recovery

        Scenario 7: Ransomware payment

        Scenario 8: Testing and assessing security controls

Ransomware payment and data protection compliance

In its guidance, the ICO supports the position of law enforcement in not encouraging, endorsing or condoning the payment of ransom demands to criminals by businesses who have lost access to their systems and data. The ICO also does not consider the payment of a ransom as an 'appropriate measure' to restore personal data in the event of a disaster.

Businesses that choose to pay the ransom to avoid the data being published should still presume that the data is compromised. They should take actions accordingly to mitigate the risks to individuals even though the ransom fee has been paid, and – where necessary – inform the ICO of the breach.

See: Ransomware and data protection compliance | ICO

Monday 11 July 2022

Working capital – Overview for businesses

Working capital finance solutions offer businesses the opportunity to improve cash flow. The world of commercial finance and asset-based lending (ABL) is complex and expansive with products, terminology and contractual interpretation varying from lender to lender.

The benefits of arranging working capital are:

       Up to 90% of outstanding invoice value can be advanced within 24 hours;

       Flexible lending – funding increases in line with your growth (UK and Export);

       Confidentiality – lenders can offer a completely confidential service – your customers need not know you have a facility in place;

       Lenders allow you to manage your funding at all times;

       Sector-specific finance is often available;

       Structured asset-based lending (ABL) – funding for management buy-outs/management buy-ins; and

       Trade Finance & Supply Chain Finance Solutions.

Specialists in this area can advise on:

       Invoice finance - an effective way of quickly accessing a proportion of the value (up to 90%) of your invoices. A business ‘sells’ its invoices to the lender in return for accessing cash at the point products and services are sold. Specific sector-based offerings are available, as is the ability to arrange finance for selected invoices only.

       Structured ABL - generate a higher level of funding by unlocking the maximum value tied up in the combined assets within your business, including debtors, inventory, plant & machinery and property. Additional forms of funding can be structured in addition to this, such as top-up loans to drive growth.

       Trade finance - supply chain finance with various options, enabling the purchase of goods from overseas where you are otherwise unable to obtain credit from suppliers.

Typically, you will need to ensure that your management accounts are up to date, you make available current detailed lists of debtors and creditors, and you might need up-to-date projections before an expert will consider your application. Please talk to us about finance – our working capital finance experts have many years of knowledge and success in advising businesses across a wide range of sectors in obtaining working capital finance solutions.

Friday 8 July 2022

R&D Tax Credit Repayments Delayed

The Research & Development (R&D) tax credit scheme for small and medium sized enterprise companies is particularly generous as there is currently 230% relief for qualifying expenditure and, where the company is loss making, this results in a 14.5% repayable credit. This means that the company receives a £33,350 refund for every £100,000 spent on R&D.

This generous tax break has reportedly resulted in abuse of the system. HMRC have recently paused some repayments while they investigate an increase in irregular claims. Unfortunately, even for legitimate claims, this is going to increase processing times.

For the vast majority of claims, HMRC aims to either pay the payable tax credit or contact the claimant regarding the claim within 40 days instead of the previous 28 day response.


Thursday 7 July 2022

MTD For VAT - New Guidance on Penalties For Non-Compliance

HMRC have also issued new guidance on the penalties that they impose for non- compliance with the Making Tax Digital (MTD) for VAT rues. In particular, there is a penalty of up to £400 for every VAT return a business files without using ‘functional compatible software’.

Functional compatible software means a software program, or set of software programs, products or applications that can:

record and store digital records
provide HMRC with information and VAT returns from the data held in those digital records
receive information from HMRC

There are additional penalties if the business does not keep their records digitally.

HMRC may charge the business a penalty of between £5 to £15 for every day on which the digital record keeping requirement is not met.

To meet the digital record keeping requirement, the business’ functional compatible software must contain:

the business name, address and VAT registration number
any adjustments from calculations made outside the functional compatible software for any VAT accounting schemes used
the VAT on goods and services supplied, meaning everything the business sold, leased, rented or hired (supplies made)
the VAT on goods and services received, meaning everything the business bought, leased, rented or hired (supplies received)
any adjustments made to a return
the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything bought and sold
the rate of VAT charged on goods and services
details of any ‘reverse charge transactions’, where the business needs to record the VAT on the sale price and the purchase price of the goods and services bought
copies of documents that cover multiple transactions made on behalf of the business like those made by volunteers for charity fundraising, a third-party business or employees for expenses in petty cash

All transactions must be contained in the functional compatible software there is not a requirement to scan or upload supporting documents like invoices and receipts.


Wednesday 6 July 2022

Reporting SEISS Grants on 2021/22 Tax Returns

Where applicable, the fourth and fifth SEISS grants that a trader was entitled to need to be reported on the trader’s 2021/22 self-assessment tax return, with any overclaimed amounts separately disclosed. The fifth grant claim was particularly complicated as it was dependant on the reduction in business turnover.

If you have any concerns, we can check that the amounts reported are correct and minimise any potential penalties.


Tuesday 5 July 2022

Penalties For Overclaimed SEISS Grants

HMRC are reminding sole traders and partners who have received Self-Employed Income Support Scheme (SEISS) grants that there are potentially penalties of up to 100% of amounts overclaimed in certain circumstances.

HMRC may apply the penalty where they believe that the trader knew that they were not entitled to the grant and did not tell HMRC within a 90-day notification period. The law treats the failure as ‘deliberate and concealed’. This means HMRC may charge a penalty of up to 100% of the amount of the SEISS grant that the trader was not entitled to receive or keep.

Traders are required to notify HMRC if there is an amendment to any of their tax returns on or after 3 March 2021 which either:

lowers the amount of the fourth or fifth grant they are eligible for

causes the trader to no longer be eligible for the fourth or fifth grant

If the tax return was amended before claiming the fourth or fifth grant, traders had to tell HMRC within 90 days of receiving the grant. If the tax return has been amended after receiving the fourth or fifth grant, traders must tell HMRC within 90 days of the amendment.


Monday 4 July 2022

Childcare Accounts Can Subsidise Camp Costs

If you have children under 12 who attend a nursery, after school club, play scheme, childminder or you are considering sending them to a summer camp, you should think about setting up a tax-free childcare account. The government adds 25% to the amounts that you save in the account, contributing up to £2,000 for each child each year (a higher amount applies for disabled children). For example, if you save £8,000, this is topped up to £10,000.

The account is then used to pay approved childcare providers. It is worth noting that it doesn’t need to be the child’s parents paying into the account. Uncles, aunts, grandparents and others can also make payments, The government have noticed that many families who are eligible for this scheme are yet to set up their accounts.

Various factors affect eligibility but those with annual net income in excess of £100,000 are notably excluded.

The tax-free childcare account scheme will gradually replace childcare vouchers which many employers continue to provide to employees.

Childcare vouchers are free from tax and national insurance (within specified limits) and can be used to pay for childcare until the child is 16. Childcare voucher schemes can no longer be set up but employees already eligible can continue to benefit.


Friday 1 July 2022

What are the characteristics of innovative businesses?

Innovation has generally been recognised as essential for value creation, both for individual companies and for the UK economy as a whole. The development of new ideas, processes and technologies and their flow across different sectors is a significant driver of economic growth and productivity. Recently, innovation has also been identified as crucial to the transition of the economy away from fossil fuels and carbon-intensive business activities.

There are many factors that affect whether and how businesses innovate, for example, the availability of skills and capital, and government policy measures such as tax incentives.

However, none are more important than the company’s own culture, capabilities and internal systems – all of which are aspects of its governance. Unless companies are governed in a way that is conducive to innovation, they are unlikely to be in a position to take advantage of new opportunities.

Our most innovative clients share some key characteristics:

       They invest in activities with uncertain outcomes, of which the likely commercial return is difficult to quantify and the risk of failure is higher than normal;

       They benefit from the availability of company-specific skills, which may be highly specialised;

       They have a culture which encourages flexibility, experimentation and a high level of individual decision-making; and

       They require a longer-term time investment horizon than many other kinds of business activity.

Research and development (R&D) is the process of taking an idea and transforming it into a fully-fledged product or procedure. R&D tax credits are a government incentive designed to encourage innovation across multiple industries. This is an opportunity for you to reduce your corporation tax bill or receive a refund from HMRC based on the number of working hours and relevant costs your business dedicates to research and development. Under the scheme, SMEs can claim back up to 33% of the costs associated with R&D.

If you are looking for long-term finance to support innovation, you will need to ensure your management accounts are up to date and provide detailed lists of debtors and creditors. You may also need to provide up-to-date projections before an expert will consider your application.

Please talk to us about R&D tax credits and long-term finance. Our independent experts have many years of experience and success in advising businesses across a wide range of sectors.