News Archive - August 2012
Half of small business owners rely on their spouse - 22.8.2012
More than half of small trade businesses rely on their partners to help run the business, research by Direct Line for Business (DL4B) has found.
Focusing on small tradespeople, it found that spouses and partners are called in to help on average for two days a week, with nearly a third (31 per cent) of these being unpaid. As many as one in four are called in to work three or more days a week.
Direct Line said that many smaller businesses were turning to voluntary support from their partners to avoid high legal, secretarial or IT support fees.
Of the 51 per cent of owners or key decision makers surveyed who rely on help from their partners, the majority called on them to support their business paperwork.
A further one in five (19 per cent) employ their partner as a receptionist, one in seven use them to help with legal and accounting services, while a further eight per cent look to their partners to carry out sales and marketing functions and generate opportunities.
According to the research, small businesses owners and their partners have increasingly aided each other over the past four and a half years - since the beginning of the first UK recession. This comes despite two in three (65 per cent) of those supporting their trading partner having other employment elsewhere.
One in four (26 per cent) were found to be working full time and two in five (39 per cent) were working part time at another business.
The results came from a survey of tradesmen and small businesses employing fewer than five people with an annual turnover of around £124,000.
Jazz Gakhal, Head of Direct Line for Business said: "Small businesses are crucial in re-energising the UK economy. It is therefore, heartening to see partners working together to help sustain these small companies despite not being fully financially compensated and in many cases not paid at all."
He also warned that businesses should ensure they have suitable back-up in place if their partners were unable to continue to help.
We can help with your marriage .................. just kidding !!!
We can help with small business support services, we offer book-keeping tailored to suit, payroll, monthly sales ledger and credit control to name just a few of the services we can offer to aid in the running of your business and free up more of your time.
Focusing on small tradespeople, it found that spouses and partners are called in to help on average for two days a week, with nearly a third (31 per cent) of these being unpaid. As many as one in four are called in to work three or more days a week.
Direct Line said that many smaller businesses were turning to voluntary support from their partners to avoid high legal, secretarial or IT support fees.
Of the 51 per cent of owners or key decision makers surveyed who rely on help from their partners, the majority called on them to support their business paperwork.
A further one in five (19 per cent) employ their partner as a receptionist, one in seven use them to help with legal and accounting services, while a further eight per cent look to their partners to carry out sales and marketing functions and generate opportunities.
According to the research, small businesses owners and their partners have increasingly aided each other over the past four and a half years - since the beginning of the first UK recession. This comes despite two in three (65 per cent) of those supporting their trading partner having other employment elsewhere.
One in four (26 per cent) were found to be working full time and two in five (39 per cent) were working part time at another business.
The results came from a survey of tradesmen and small businesses employing fewer than five people with an annual turnover of around £124,000.
Jazz Gakhal, Head of Direct Line for Business said: "Small businesses are crucial in re-energising the UK economy. It is therefore, heartening to see partners working together to help sustain these small companies despite not being fully financially compensated and in many cases not paid at all."
He also warned that businesses should ensure they have suitable back-up in place if their partners were unable to continue to help.
We can help with your marriage .................. just kidding !!!
We can help with small business support services, we offer book-keeping tailored to suit, payroll, monthly sales ledger and credit control to name just a few of the services we can offer to aid in the running of your business and free up more of your time.
Half a million late self-assessment returns in line for penalties - 15.8.2012
Half a million people who have yet to file their 2010/11 tax returns will begin to receive additional penalty letters from next week, HMRC has announced.
Many may face fines of up to £1,200, made up of a maximum £900 in daily penalties for non-filing and an additional late filing penalty of £300, or 5 per cent of the tax due, whichever is the greater.
HMRC said the number of outstanding returns halved in 2012, down to 5.9 per cent compared to 10.7 per cent the previous year, resulting in 518,000 fewer penalties.
However, those who missed the 2 February deadline will face new and higher penalties introduced in April this year, in an attempt to boost the incentive to file tax returns on time and reduce the cost to taxpayers when HMRC chases up missing forms.
Those who failed to submit their return on time would have faced a £100 penalty notified to them in the spring, even if there was no tax to pay.
HMRC's director general for personal tax, Stephen Banyard, said they wanted the 'returns, not penalties.'
"This year, half a million more people have filed their return - which means we are issuing 44 per cent fewer penalties.
"But, despite several reminders, nearly six per cent of people have not sent their 2010/11 tax returns to us and they'll be getting a penalty."
HMRC removed 273,000 people out of self-assessment this year, likely to occur when people move from self-employment into a permanent or temporary role with one employer. Those who believe they do not need to be considered for self-assessment can apply online to be taken off HMRC's register and, if approved, mistaken returns and penalties will be cancelled.
In some cases there may be legitimate reasons for failing to submit tax returns - bereavement or family illness for example - and those are able to appeal against HMRC's decision.
The new penalties for self-assessment are:
We can help to file your self-assessment returns on time. Please talk to us to find out more.
Many may face fines of up to £1,200, made up of a maximum £900 in daily penalties for non-filing and an additional late filing penalty of £300, or 5 per cent of the tax due, whichever is the greater.
HMRC said the number of outstanding returns halved in 2012, down to 5.9 per cent compared to 10.7 per cent the previous year, resulting in 518,000 fewer penalties.
However, those who missed the 2 February deadline will face new and higher penalties introduced in April this year, in an attempt to boost the incentive to file tax returns on time and reduce the cost to taxpayers when HMRC chases up missing forms.
Those who failed to submit their return on time would have faced a £100 penalty notified to them in the spring, even if there was no tax to pay.
HMRC's director general for personal tax, Stephen Banyard, said they wanted the 'returns, not penalties.'
"This year, half a million more people have filed their return - which means we are issuing 44 per cent fewer penalties.
"But, despite several reminders, nearly six per cent of people have not sent their 2010/11 tax returns to us and they'll be getting a penalty."
HMRC removed 273,000 people out of self-assessment this year, likely to occur when people move from self-employment into a permanent or temporary role with one employer. Those who believe they do not need to be considered for self-assessment can apply online to be taken off HMRC's register and, if approved, mistaken returns and penalties will be cancelled.
In some cases there may be legitimate reasons for failing to submit tax returns - bereavement or family illness for example - and those are able to appeal against HMRC's decision.
The new penalties for self-assessment are:
- An initial penalty of £100 for failure to submit a tax return , regardless of whether there is no tax to pay, or if the tax due is paid on time.
- Additional daily penalties of £10 after three months, up to a maximum of £900.
- After six months, a further penalty of £300, or five per cent of the tax owed, whichever is the greater.
- A further £300 or five per cent charge after 12 months.
We can help to file your self-assessment returns on time. Please talk to us to find out more.
Firms urged to update business records or risk penalties - 9.8.2012
Business owners are being reminded to keep their business records up to date, following a report that HMRC issued large fines to a company who failed to notify the authority of a change of name.
The Forum of Private Business (FPB) is urging businesses to immediately update their business records if there have been any alternations, no matter how small, to their business's operations.
The FPB has been aiding one unnamed firm who had originally been hit with a £30,000 fine after it changed from a partnership to a limited company (ltd) and changed its name without informing HMRC.
The penalty was later reduced to £10,000, despite the firm's exemplary record of submitting tax returns and VAT payments on time. The change in business structure did not alter the firm's VAT number and no tax payments to HMRC were lost.
The unnamed company was fined under the VAT notification liabilities as set in the Finance Act 1985 and the VAT Act 1994. A House of Commons debate in July 1986 resulted in the inclusion of a legal clause to protect small traders making 'innocent mistakes' in the original legislation.
However, the FPB's tax adviser Andrew Needham, who helped to reduce the original penalty and wants it reduced further, voiced concerns in HMRC's shift in policy which led to them imposing the penalty.
Needham said the shift could see firms hit with hefty penalties when ' in reality, they have done very little wrong.'
"It is important that all small businesses are aware they could face steep fines unless HMRC is kept fully updated - but this heavy-handed approach is the very opposite of the support that is desperately needed at this difficult time."
"HMRC risks further alienating firms hit by its disproportionate, targeted business records checks regime and widely-reported poor levels of service."
The FPB is critical of HMRC's 'disproportionate' treatment of small firms, particularly its business records checks regime, while it said 'large companies routinely get away with widespread tax avoidance.'
We can help with keeping your business records up to date. Please contact us if there are any changes to your circumstances.
The Forum of Private Business (FPB) is urging businesses to immediately update their business records if there have been any alternations, no matter how small, to their business's operations.
The FPB has been aiding one unnamed firm who had originally been hit with a £30,000 fine after it changed from a partnership to a limited company (ltd) and changed its name without informing HMRC.
The penalty was later reduced to £10,000, despite the firm's exemplary record of submitting tax returns and VAT payments on time. The change in business structure did not alter the firm's VAT number and no tax payments to HMRC were lost.
The unnamed company was fined under the VAT notification liabilities as set in the Finance Act 1985 and the VAT Act 1994. A House of Commons debate in July 1986 resulted in the inclusion of a legal clause to protect small traders making 'innocent mistakes' in the original legislation.
However, the FPB's tax adviser Andrew Needham, who helped to reduce the original penalty and wants it reduced further, voiced concerns in HMRC's shift in policy which led to them imposing the penalty.
Needham said the shift could see firms hit with hefty penalties when ' in reality, they have done very little wrong.'
"It is important that all small businesses are aware they could face steep fines unless HMRC is kept fully updated - but this heavy-handed approach is the very opposite of the support that is desperately needed at this difficult time."
"HMRC risks further alienating firms hit by its disproportionate, targeted business records checks regime and widely-reported poor levels of service."
The FPB is critical of HMRC's 'disproportionate' treatment of small firms, particularly its business records checks regime, while it said 'large companies routinely get away with widespread tax avoidance.'
We can help with keeping your business records up to date. Please contact us if there are any changes to your circumstances.
SMEs diversifying in tough trading conditions - 2.8.2012
SMEs are turning to new business tactics and slashing prices in a bid to capitalise on this summer's events, research from Aviva has found.
With small business owners keen to increase turnover, many are diversifying into new areas and introducing sale strategies through reduces prices, sales and discounts.
The most popular opportunity was cutting prices, with around 28 per cent of firms saying they had cut the price of stock this summer compared with 23 per cent during the winter.
The biggest change in tactic over the last six months came from firms diversifying into new products and services, with 26 per cent doing so this summer compared to 17 in the previous six months. A further 20 per cent of firms also increased their sales and discounts this summer.
According to the research, the Queen's Diamond Jubilee delivered a boost in revenues for 27 per cent of SMEs. One in four remain optimistic that the Olympics will bring a similar boost to trade, with a fifth of firms altering their business operations to maximise opportunities.
Business conditions, however, remain tough for SMEs. Only 6 per cent of firms are finding trading conditions 'easier than expected', down from 22 per cent six months ago. Meanwhile, over a fifth of firms believe that the positive knock-on effects of the Olympics will be short lived, with fears it could lead to a dip in revenues during the third and fourth quarters of the year.
Recent figures from the Office for National Statistics (ONS) indicate that the UK recession had deepened and are thought to have added to concern. With an increasing number of small firms cutting permanent or temporary staff, many said they were also reducing staff pay, hours and benefits to cut costs.
David Bruce, commercial product manager at Aviva, said SMEs owners were 'hanging on in there.'
"Trading conditions clearly remain tough, while it seems many owners are perhaps being more pragmatic than optimistic in their forecasting of future revenues."
"Diversification in particular is an excellent way to protect and grow the bottom line, while efforts to capitalise on the Jubilee and summer sporting boost are other examples of this. For some SMEs, the investment has paid off, with revenues increasing markedly already this summer."
Bruce advised SMEs to revise their business plans in preparation of 'expected bumps'.
Is it time to review your business plans? Please talk to us to see how we can help.
With small business owners keen to increase turnover, many are diversifying into new areas and introducing sale strategies through reduces prices, sales and discounts.
The most popular opportunity was cutting prices, with around 28 per cent of firms saying they had cut the price of stock this summer compared with 23 per cent during the winter.
The biggest change in tactic over the last six months came from firms diversifying into new products and services, with 26 per cent doing so this summer compared to 17 in the previous six months. A further 20 per cent of firms also increased their sales and discounts this summer.
According to the research, the Queen's Diamond Jubilee delivered a boost in revenues for 27 per cent of SMEs. One in four remain optimistic that the Olympics will bring a similar boost to trade, with a fifth of firms altering their business operations to maximise opportunities.
Business conditions, however, remain tough for SMEs. Only 6 per cent of firms are finding trading conditions 'easier than expected', down from 22 per cent six months ago. Meanwhile, over a fifth of firms believe that the positive knock-on effects of the Olympics will be short lived, with fears it could lead to a dip in revenues during the third and fourth quarters of the year.
Recent figures from the Office for National Statistics (ONS) indicate that the UK recession had deepened and are thought to have added to concern. With an increasing number of small firms cutting permanent or temporary staff, many said they were also reducing staff pay, hours and benefits to cut costs.
David Bruce, commercial product manager at Aviva, said SMEs owners were 'hanging on in there.'
"Trading conditions clearly remain tough, while it seems many owners are perhaps being more pragmatic than optimistic in their forecasting of future revenues."
"Diversification in particular is an excellent way to protect and grow the bottom line, while efforts to capitalise on the Jubilee and summer sporting boost are other examples of this. For some SMEs, the investment has paid off, with revenues increasing markedly already this summer."
Bruce advised SMEs to revise their business plans in preparation of 'expected bumps'.
Is it time to review your business plans? Please talk to us to see how we can help.
SMEs warned about contractor tax obligations - 1.8.2012
Small and medium sized businesses (SMEs) hiring self-employed contractors are being warned about the risk of avoiding their tax obligations.
A report from unbiased.co.uk said that business owners need to be clear on HMRC rules regarding contractors to avoid falling foul of tax rules and potential penalties.
It said that SMEs could save a total £2 billion in tax by utilising self-employed contractors but that many who are 'disguising' full time employees as contractors are doing so unlawfully.
Businesses have increasingly turned to contractors or sub-contractors following the economic downturn to carry out short-term work or to supply specialist skills on specific projects. Outsourcing staff this way is often more cost effective for businesses than hiring permanent staff.
HMRC regards employees and those working self-employed on a contract basis differently for taxation purposes. For instance, businesses do not normally pay tax or national insurance contributions for contractors.
According to the research, if 15 per cent of higher rate taxpayers transferred to self-employed or contractor status, SMEs could benefit from national insurance savings of around £2 billion every year.
However, it highlights that tax rules in this area are complex, saying: "SME owners have to ensure they are clear on the rules - to avoid utilising ‘disguised employees' and being accused of tax avoidance."
Such 'disguised' employees are considered as those leaving a company to become self-employed, while effectively remaining employed on a full-time basis by a company for the sole purpose of reducing the company's tax liabilities.
Karen Barrett, chief executive of unbiased.co.uk said: "Tax is a vast and complex subject and it can be hard for business owners to find the time to understand how to optimise their tax status whilst also running their business day to day."
"By utilising self-employed workers better, SMEs could be saving tax payments but it also highlights that tax can be a bit of a minefield."
Its 2012 Tax Action report also revealed that SME owners are also failing to take advantage of tax breaks and efficient ways to run their business amounting to £7.1 billion a year. Elsewhere, it found that individual Britons will also pay £12.6 billion in unnecessary tax to the tax man in 2012.
We can help with tax compliance. Please talk to us for more information.
A report from unbiased.co.uk said that business owners need to be clear on HMRC rules regarding contractors to avoid falling foul of tax rules and potential penalties.
It said that SMEs could save a total £2 billion in tax by utilising self-employed contractors but that many who are 'disguising' full time employees as contractors are doing so unlawfully.
Businesses have increasingly turned to contractors or sub-contractors following the economic downturn to carry out short-term work or to supply specialist skills on specific projects. Outsourcing staff this way is often more cost effective for businesses than hiring permanent staff.
HMRC regards employees and those working self-employed on a contract basis differently for taxation purposes. For instance, businesses do not normally pay tax or national insurance contributions for contractors.
According to the research, if 15 per cent of higher rate taxpayers transferred to self-employed or contractor status, SMEs could benefit from national insurance savings of around £2 billion every year.
However, it highlights that tax rules in this area are complex, saying: "SME owners have to ensure they are clear on the rules - to avoid utilising ‘disguised employees' and being accused of tax avoidance."
Such 'disguised' employees are considered as those leaving a company to become self-employed, while effectively remaining employed on a full-time basis by a company for the sole purpose of reducing the company's tax liabilities.
Karen Barrett, chief executive of unbiased.co.uk said: "Tax is a vast and complex subject and it can be hard for business owners to find the time to understand how to optimise their tax status whilst also running their business day to day."
"By utilising self-employed workers better, SMEs could be saving tax payments but it also highlights that tax can be a bit of a minefield."
Its 2012 Tax Action report also revealed that SME owners are also failing to take advantage of tax breaks and efficient ways to run their business amounting to £7.1 billion a year. Elsewhere, it found that individual Britons will also pay £12.6 billion in unnecessary tax to the tax man in 2012.
We can help with tax compliance. Please talk to us for more information.