MTD – nothing to be scared of!

Making Tax Digital (MTD) is nothing to be scared of – and digital accounting could actually save you and your business time and money.

That was the message of our free interactive workshop for small business owners which we held with The Business Clinic in Preston earlier this month.

The aim of the presentation given by myself and WNJ colleague Donna Helm was to de-mystify the subject and take away some of “the panic” around the subject.

Donna supervises our accountancy software programmes and helps clients with training, and integration to make sure they get the most out of the software they choose.

We touched on some of the concerns people have, including increased compliance burdens, short timescales and additional costs.

Our aim was to give you the truth about digital accounting. We also looked at the whole concept of cloud accounting and its potential benefits.

Donna told the audience: “It can be of huge benefit to your business, in efficiencies and cost savings.”

She also stressed the importance of proper training to ensure businesses get the best out of the software and technology that is available.

The countdown to MTD is now well and truly on. As part of MTD, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software.

This will start from their first VAT period starting on or after April 1 next year.

Businesses with a taxable turnover below the VAT threshold will not have to operate MTD, but can still choose to do so voluntarily.

VAT Notice 700/22: Making Tax Digital for VAT provides information to customers and adds to amendments to the VAT Regulations made earlier this year.

WNJ also has also set up a dedicated team which we have put together to address MTD issues and to help our clients chose, install and train how to best use the different software on offer.

The workshop was our latest collaboration with The Business Clinic – a growing Preston-based community interest company set up to support companies across Lancashire.

The Business Clinic delivers independent and thought-provoking strategy, skills and support to ensure healthier profits.

To discuss any issues regarding the HMRC’s MTD plans please contact me on 01772 430 000.

Putting together your ‘boardroom’

Running your own business can be a lonely task. While leaders of larger organisations have a wealth of boardroom experience to support them, SME owners can feel isolated.

The ideal boardroom is made up of an effective mix of skills and experience. This means that different angles of production, finance, marketing, human resources and IT are covered.

Experienced non-exec directors can also be worth their weight in gold in questioning; challenging and helping businesses develop and grow.

However, SMEs and owner-managers that can’t afford these resources can still find the right support they need – by building up their ‘virtual’ board of advisers that can give them the benefit of their experience and knowledge on the road to growth.

That’s where a good accountant can be a vital ingredient, there to act as a sounding board, giving advice where applicable and pointing the SME in the right direction where they can find other areas of expertise that they need.

I often find that small businesses that have not got the benefit of a board of directors use their accountant as a ‘sounding board’ for a whole range of matters, or as someone they can discuss issues with in a confidential environment.

Your accountant should know your business almost as well as you do – and may even know more when it comes to its finances.

That helps give an informed opinion. We’re also able to step away from any emotions surrounding a business – again like a good non-exec director – so we can give an objective view.

And sometimes we can identify and spot potential problems before they arise – another invaluable role of the strong non-exec.

When I’m asked to about the right way to recruit in the boardroom my best piece of advice is, ‘If you can find an individual who buys into the values of the organisation, what it does and what it is aiming to do in the future and has the appropriate skill set and experience, you will be on the right path to find the right person’.

The same goes for any ‘virtual’ board. Business is also all about relationships. SME owners can bounce ideas off each other so finding the right peer group is also important.

Then there are business support organisations like The Business Clinic. It’s acclaimed, confidential ‘peerworking’ sessions can also act like a ‘virtual’ board of directors.

They give SMEs and owner-managers access to a range of professionally qualified people and experienced business owners – without expensive executive charge out rates.

To discuss any issues regarding your business’ development and plans please contact me on 01772 430 000.

R&D support on the rise

R&D tax relief claims are rising but new figures show that manufacturing companies are falling behind other sectors when it comes to applying for the valuable business support scheme.

The total amount of R&D support claimed by UK businesses has increased by 25 per cent, bringing the total for 2016-17 to £3.7bn.

The figures have also revealed that 75 per cent of these claims were for under £50,000, with the current average being valued at £53,000 – no small sum.

These latest figures from HMRC show that over the period there were 39,960 tax credit claims, with just over 34,000 in the SME R&D scheme.

More than 240,000 claims have been made in total and £21.4bn given since the scheme was launched back in 2000/01.

According to HMRC’s report, more ICT firms made claims in 2016-17 than manufacturers.

R&D tax credits are a form of corporation tax relief. They provide qualifying companies with very generous cash repayments.

So who is eligible for R&D tax relief? HMRC has set out some clear rules and guidelines.
It says your company can only claim for R&D tax relief if a “project seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty” – and not simply an “advance in its own state of knowledge or capability”.

The project must relate to your company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D.

And if your company or organisation is claiming tax relief under the SME scheme it must own any intellectual property that might arise from the project.

It is not enough to say that a product is commercially innovative. You can’t claim in respect of projects to develop innovative business products or services if they don’t incorporate any advance in science or technology.

You can’t claim R&D tax relief under the SME Scheme if you’ve been subcontracted to do the work on behalf of somebody else.

It’s also worth pointing out that your project doesn’t have to be a success in order to qualify for the relief. The fact that it failed can be used to show that its work was genuinely pioneering.

However, if your company receives a subsidy or grant for an R&D project, it may affect how much tax relief you can claim.

Gaining this support can be an important part of a business’ decision whether to make an investment that can see very real benefits for its future.

The requirements of the scheme are broad. It can include creating new products, processes or services or changing or modifying existing ones.

To discuss the possibility of claiming R&D tax relief please contact me on 01772 430000

On course for MTD

There will be no further delay to the government’s ‘Making Tax Digital’ (MTD) drive – despite the fears of small business leaders.

That was the strong message from Business Minister Kelly Tolhurst, quoted in an article in The Timesnewspaper earlier this month.

A number of organisations have been warning that businesses are not ready to move tax compliance online as they wrestle with the uncertainties around Brexit.

Research by The Institute of Chartered Accountants In England and Wales (ICAEW) published last month revealed that over 40 per cent of businesses about to be affected by MTD for VAT are not yet aware of it.

This is despite the changes being mandatory for most VAT registered businesses from April next year.

The survey also shows that although there has been a significant increase in the number of businesses now using accounting software, a quarter of all businesses are still using a paper based accounting system – unchanged from two years ago. Paper based records will not be permissible for MTD for VAT.

However the Minister told the newspaper: “We’re making sure the communication is there so small businesses know exactly what they’ve got to do. Digitalisation is the way to go.

“It’s all about making it easier for business, but it’s rightly down to us to sell it to businesses and make sure they understand what the benefits are.”

And on that subject, WNJ is hosting a workshop with The Business Clinic on that very subject next month.

Our free ‘How to Make Digital Accounting Work for Your Business’ session will take place at the business support organisation’s offices at 1 Lockside Business Park, Lockside Rd, Preston, on Wednesday November 21 from 6-8pm.

The aim is to ensure your company’s smooth and successful transition to the world of digital accounting.

I’ll be giving the presentation alongside my WNJ colleague Donna Helm, who supervises our accountancy software programmes and helps clients with training, and integration to make sure they get the most out of the software they choose.

We’ll touch on some of the concerns people have, including increased compliance burdens, short timescales and additional costs.

Our aim is to give you the truth about how much time and money digital accounting could actually save you and your business.

WNJ also has a dedicated team which we have put together to address MTD issues and to help our clients chose, install and train how to best use the different software on offer.

The workshop is our latest collaboration with The Business Clinic – a growing Preston-based community interest company set up to support companies across Lancashire.

The Business Clinic delivers independent and thought-provoking strategy, skills and support to ensure healthier profits.

For more information on the workshop and to book a place please visit www.thebusinessclinic.org

To discuss any issues regarding the HMRC’s MTD plans please contact me on 01772 430 000.

Is your software supplier set for the digital tax revolution?

HMRC has announced it is working with more than 150 software suppliers who have said they’ll provide software for Making Tax Digital (MTD) for VAT in time for April next year.

More than 40 of them have said they will have software ready for the first phase of the pilot project.

That’s when the taxman will test the service with small numbers of invited businesses and agents.

HMRC says that other software suppliers will follow. The pilot will be opened up to allow more businesses and agents to join later.

The countdown is now well and truly on. As part of MTD, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software.

This will start from their first VAT period starting on or after April 1 next year.

Businesses with a taxable turnover below the VAT threshold will not have to operate MTD, but can still choose to do so voluntarily.

VAT Notice 700/22: Making Tax Digital for VAT provides information to customers and adds to amendments to the VAT Regulations made earlier this year.

HMRC is now advising businesses to check their existing software supplier to find out if they’ll be supplying suitable software before or after the pilot, or contact one of the following:

And it is also putting together a list of those taking part in the tests, which we’ve reproduced below.

WNJ also has a dedicated team which we have put together to address MTD issues and to help our clients chose, install and train how to best use the different software on offer.

The aim of the team is to help clients use the software that is most appropriate for them; not just to comply with MTD requirements and VAT Return filing.

We are also working with The Business Clinic organisation in Preston to present a seminar on cloud accounting and MTD which is planned for November 21. More details will be given in next month’s newsletter.

In the meantime to discuss how we can help on any aspect of MTD and how it will impact on you please contact me on 01772 430000.

The HMRC list:

• Abratax
• Absolute Accounting Software Ltd
• Access Group
• Acorah Software Products Ltd (TaxCalc)
• Accu-Man
• Advanced Computer Software Group Limited
• Ajaccts
• Anagram Systems
• Arkk Solutions
• Avalara
• BTCSoftware
• Bx
• Capium Limited
• Cirrostratus – Exedra
• Clear Books plc
• COINS
• DC Software
• Deloitte LLP
• DTracks Limited
• Easy Books
• eFileReady
• Essentia Global Services
• Exel Computer Systems plc
• EY
• Farmplan
• Forbes Computer Systems
• FreeAgent
• GoSimple Software
• Grant Thornton UK LLP
• Ibcos Computers Limited
• Intuit – QuickBooks
• IRIS
• KAI Consulting
• KPMG
• Landmark Systems Ltd
• Liquid Accounts
• MAM Software Limited
• Motor Trade Technologies Limited
• My Digital Accounts
• Neilson James Technology
• Omni
• PwC
• Quickfile Accounting Software
• Road Tech Computer Systems Ltd
• Ryan Tax Services UK Limited
• Sage (UK) Limited
• SAP
• SDA Logic Limited
• Simplifi-HQ Limited
• Taxate
• Tax Automation Limited
• Tax Optimiser
• Tax Systems plc – AlphaVAT
• Thomson Reuters – ONESOURCE
• Thomson Reuters – Onvio
• Tyresoft Ltd
• Wolters Kluwer
• Xero
• Zoho Books

Focus on workplace pensions

An increasing number of workplace pension schemes will come under greater scrutiny from The Pensions Regulator (TPR) from next month. It is all part of what the regulator describes as “a significant shift” in its approach to protect savers.

TPR says it will be working proactively with more pension schemes through a new range of interventions to address risks sooner, clearly set out its expectations and take action where necessary.

The changes result from a review of the way it carries out regulation. Key to the new approach is the introduction of a supervision regime to monitor schemes more closely, which will include higher and lower intensity interventions depending on the risks identified.

Announcing the new approach TRP chief executive Lesley Titcomb stressed the organisations pledge to be “clearer, quicker and tougher”.
Schemes across all sectors, whatever their size, can expect the volume and frequency of their interactions to increase. TRP says the aim is for potential risks to pension savers to be identified early and put right before it becomes necessary for it to use the full force of its enforcement powers.

Hundreds of schemes are expected to experience higher volume supervisory approaches over time to tackle “different risks” across the pensions landscape. Meanwhile, the vast majority of staff across the UK are now saving for their retirement thanks to the success of automatic enrolment. A TPR report his month has shown workplace saving continues to rise with 84 per cent of employees now saving into a workplace pension, an increase from 77 per cent last year.

The report also shows compliance with the law remains high among employers. TPR’s director of automatic enrolment, Darren Ryder, said: “Employers nationwide have successfully complied with the law to give their staff the opportunity to start saving for their retirement, often for the first time.

“Our role now is to ensure current and new employers continue to meet their duties, including re-enrolment and next year’s further increase to minimum contributions, so that the culture of saving remains strong. We will continue to act if employers fail to comply.”

To discuss any aspect of workplace pension provision and enrolment please contact me on 01772 430000.

Are you preparing for Brexit?

Only one in seven small businesses have starting planning for a no deal Brexit, according to new research from the Federation of Small Businesses (FSB).

Despite more than 40 per cent believe quitting the EU without a deal will impact their business, it seems many are not yet starting to plan for the possibility.

The research from the Blackpool-based organisation also revealed the actions small firms that will be impacted by Brexit intend to take between now and the time the UK leaves.

Again that makes for troubling reading, with 35 per cent saying they would postpone major decisions or innovations, with around one in five saying staff or expenditure would be cut.

FSB national chairman Mike Cherry says the research highlights that the country’s small firms are simply not prepared or ready for a no deal outcome.

He said: “If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.”

He is urging government to work with the small business community to ensure that they are adequately prepared and supported if a no deal Brexit becomes a more likely outcome in the coming weeks.

His message is that small firms need some Brexit clarity – and they need it sooner rather than later as the clock runs down.

Those businesses that haven’t yet done it should really take the time to undergo a Brexit ‘health check’ and see how a hard Brexit is likely to affect their operation and what they need to do to mitigate the impact.

That means working to understand not just the direct impacts of a no-deal Brexit but any indirect consequences that might arise as a result.

Time to declare your offshore assets

HMRC is urging taxpayers to come forward and declare any foreign income or profits on offshore assets before September 30 to avoid higher tax penalties.
New legislation called ‘Requirement to Correct’ requires people to notify the taxman about any offshore liabilities relating to income tax, capital gains or inheritance tax.
HMRC says that some taxpayers may not realise they are required to declare their overseas financial interests.

So what are the rules? Renting out a property abroad, transferring income and assets from one country to another, or even renting out a property here in the UK when living overseas could mean you face a tax bill. Examples of offshore assets include art and antiques, bank and other savings accounts, boats, vehicles and cash as well as debts owed to you. They also include gold and silver, jewellery, government securities, land and buildings including holiday timeshares and life assurance policies and pensions.

Also on the list are other accounts, such as stockbroker’s or solicitors’, other bond deposits and loans including personal portfolio bond, rights or intellectual property including image rights, stocks and shares and trusts, including employee benefit and self-employed persons trusts.
Financial Secretary to the Treasury Mel Stride says the crackdown on offshore tax evaders will continue warning: “We will continue to relentlessly crack down on those not playing by the rules.


“This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now.”

From the beginning of October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the Common Reporting Standard (CRS).
This will significantly enhance HMRC’s ability to detect offshore non-compliance.

The taxman says that some 17,000 people have already contacted HMRC to notify it about tax due from sources of foreign income, such as their holiday homes and overseas properties.

People can correct their tax liabilities by using HMRC’s digital disclosure service as part of the ‘Worldwide Disclosure Facility’ or any other service provided by HMRC as a means of correcting tax non-compliance.

Once they have notified HMRC by September 30 of their intention to make a declaration, they will then have 90 days to make the full disclosure and pay any tax owed.
If you would like to discuss any aspect of this article or have any tax queries or concerns please contact me on 01772 430000.

SMEs under the microscope

It’s a startling statistic. One in ten of the UK’s small businesses is under investigation by the taxman – equivalent to more than half a million at any one time, according to official figures.

Parliament’s Treasury select committee heard from HMRC about its sharp focus on SMEs earlier this year. According to its figures small businesses are responsible for 46 per cent of the UK’s £33bn tax gap.

Against this backdrop there’s little wonder that some small business owners and managers believes the sector is being singled out unfairly.

Recent research has also revealed that more than half of the country’s SMEs think that HMRC’s tax investigations are too intensive.

And 56 per cent of those quizzed did not think the taxman attempted to minimise the cost, time and effort involved in dealing with those inquiries, according to the study by specialist insurer PfP.

HMRC has dismisses the criticism. It says it treats all businesses fairly and consistently. And it adds that it doesn’t fine anyone if reasonable care has been taken in completing a tax return.

But there is no doubt that tax investigations can be massively disruptive for small businesses.

They may have fewer resources to cope with the exercise. There is the time that needs to be spent managing an inquiry and co-operating with the inspectors, not to mention the potential cost in terms of professional fees.

WNJ has offered its clients a Tax Enquiry Fee Protection Insurance scheme for some time now.

Professional fees for defending clients in tax enquiries can be claimed under this insurance policy.

Clients in the scheme are also able to obtain helpful advice about the complex areas of Health and Safety and Employment Law.

The WNJ scheme, and similar ones that are available, can give people piece of mind and help protect them.

If you would like to discuss any aspect of this article or the Tax Enquiry Fee Protection Insurance scheme please contact me on 01772 430000

Digital drive continues

The British Chambers of Commerce (BCC) has called for a delay in the introduction of Making Tax Digital (MTD) until the start of the 2020-21 financial year – but that looks highly unlikely to happen.
The taxman is pushing ahead with the programme, this month publishing further information to support businesses and agents in the run up to the start of the mandatory MTD VAT service from April 2019.
The BCC revealed that 24 per cent of firms have never heard of the initiative. And on top of that 66 per cent of those quizzed knew the project only by name.
According to the BCC that demonstrates a “widespread lack of awareness among business communities about the switch to a digitised tax system”.
Of those who were aware of BCC, a quarter admitted they had made no preparations ahead of the implementation date of April 2019.
According to Accountancy Age, BCC is calling for “breathing space” so HMRC can engage with businesses, ensure that the necessary software is in place, and raise levels of awareness about the impending changes”.

HMRC’s new raft of information includes a new VAT Notice and a page on the GOV.UK website providing a list of software developers it is currently working with during the MTD VAT pilot.
It says those developers have already demonstrated a prototype of their product ready to start testing with businesses and/or agents.
There is also communications pack which the taxman says will provide information to support businesses and agents to prepare for MTD.
A spokesman said: “Together, these provide additional clarity that businesses and their representatives have been asking for.
“HMRC has been working closely with software providers to help them to bring a wide range of MTD products to market, and has published a list on GOV.UK of those that are already at the stage of having demonstrated a prototype product ready to start testing with businesses and/or agents.”
As part of MTD, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software.
This will start from their first VAT period starting on or after April 1 next year.
Businesses with a taxable turnover below the VAT threshold will not have to operate MTD, but can still choose to do so voluntarily.
VAT Notice 700/22: Making Tax Digital for VAT provides information to customers and adds to amendments to the VAT Regulations made earlier this year.
At WNJ we have developed a team of cloud accounting specialists who can advise on a number of software options including Sage, Xero, Quickbooks and others.
The aim of the team is to help clients get the most out of whichever software is appropriate for them; not just to comply with MTD requirements and VAT Return filing.
To discuss how we can help on any aspect of MTD and how it will impact on you please contact me on 01772 430000.