News Archive - March 2012
Online VAT filing : Are you ready ? - 26.3.2012
HMRC has issued a reminder that all VAT registered businesses in the UK will now have to submit their VAT returns online, and also pay any VAT owed electronically, from 1 April.
Since April 2010 only newly-registered businesses and those with an annual turnover of more than £100,000 had to submit their VAT online. Previously, HMRC accepted paper returns from smaller firms, but as of 1 April 2012, all remaining VAT registered businesses will also have to submit their VAT returns online.
1.9 million VAT registered firms will now use the online system for accounting periods beginning on or after 1 April 2012.
Few businesses will be exempt from the switch, such as those subject to insolvency procedures and businesses managed by individuals whose religious beliefs prevent them from using a computer.
Businesses submitting their VAT returns online will need to register and enrol for the HMRC service and will benefit from automated responses that their returns have been received and alerts to when their next return is due.
Individuals are legally responsible for paying any tax due and ensuring that HMRC receive all relevant information on time. A penalty ranging between £100 and £400 will be charged if a paper return is submitted, it is late, or if it is submitted with an error.
We can assist with VAT returns. Please contact us to find out more.
Below are downloadable files in pdf format covering the main points of the budget :
Loan scheme for small businesses launched - 20.3.2012
A new Government backed loan scheme worth £20 billion aimed at boosting lending to small and medium-sized enterprises (SMEs) has been launched by the Chancellor.
Businesses with an annual turnover of less than £50 million are eligible for the National Loan Guarantee Scheme (NLGS) and will be able to access capital at a reduced rate of 1 per cent compared to other loans available
outside the scheme.
Backed by the Treasury, the scheme will provide discounted unsecured borrowing to banks, which in turn can pass on a reduced lending rate to SMEs through lower interest rates. It is hoped that the additional capital will boost business growth and create more jobs.
Barclays, Santander, Lloyds, Aldermore and the Royal Bank of Scotland (RBS) have confirmed they will take part in the scheme.
£5 billion is to be made available in the first tranche of funding, with a minimum allocation of £100 million to each
individual bank. The remaining £15 billion will be released at intervals over the next two years.
Announcing the scheme, Chancellor George Osborne said: "The government promised to help small businesses get access to lower interest rates. Today, we deliver on that promise with a nationwide scheme. It's only because we've earned credibility with our deficit reduction plan that we have low interest rates, and it's only because of this scheme that we can pass . the benefits of those low rates on to businesses."
Talking to the BBC, national chairman of the Federation of Small Businesses, John Walker, welcomed the scheme, saying: "Recent FSB research indicated that around 60% of small firms believed that credit is unaffordable and so this scheme should help reduce that burden. "What we now need to see is clear communication to small firms
and bank branch staff so that everyone is aware of it, and how it will work, so that businesses can benefit from it."
Commenting on the scheme, director general of the British Chambers of Commerce, John Longworth, warned that the move was 'not a panacea' and that it was more than likely business will continue to face problems accessing finance in the future.
Workers sick on holiday to be granted additional leave - 16.3.2012
Employees will have a legal right to claim back annual leave if they become ill whilst on holiday, the European Court of Justice (ECJ) has decided.
Under the regulation changes to the working time directive - expected to come into effect in October - workers will be entitled to time off in addition to the standard four weeks annual leave, as long as a sick note is provided. The ECJ ruling will also apply to those who fall ill while on maternity or paternity leave.
The move, which in some cases could see employee holiday carried over into the next year, is estimated to cost UK
businesses more than £100 million a year, according to The Daily Telegraph.
Businesses and employment lawyers have voiced concern that the changes are likely to be abused by false claims, proving costly for businesses.
Michael Slade, managing director of Bibby Consulting and Support, said that many companies would be 'frustrated' and 'disappointed' with the ruling given the Government's continuing pledge to reduce red tape for firms.
"It remains to be seen how much impact these changes will have on the number of employees claiming sickness during their holidays," he said. "SMEs will see this change as yet another burden that they can well do without, and
one which appears to fly in the face of the Government's pledge to help business leaders."
Talking to The Daily Telegraph, Guy Bailey, head of employment and employee relations at The Confederation of British Industry (CBI) said: "While active discussions are ongoing in Brussels on the future of the working time directive, it may make sense for the UK Government to pause before implementing the latest European Court of Justice rulings. Introducing a set of changes in October that immediately have to be reviewed and replaced would not be a good outcome."
Pressure on Chancellor for a 'Budget for business' - 14.3.2012
Chancellor George Osborne must take a business minded approach to next week's Budget to encourage company growth, investment and create new jobs, the British Chambers of Commerce (BCC) has said.
The comment comes ahead of the BCC's annual conference in which it will argue that the Chancellor should
utilise the Government spending surplus and implement changes in order to 'starve off stagnation' and 'weak growth'.
According to calculations from the BCC, the Government could comfortably implement new and specific initiatives to
support businesses, costing the Exchequer a maximum of £4.2 billion. Such initiatives include scrapping the upcoming business rate rise to 5.6 per cent, the restoral of the Empty Property Rate Relief (EPRR) to £18,000, the
introduction of a time-limited capital allowance for medium sized companies, and an incentive for employers to take on young workers. The BCC also suggested credit easing measures including the creation of a bank solely dedicated to SME financing and a speeding-up of the National Infrastructure plan. Commenting on the upcoming Budget, the BCC's director general John Longworth, said that 'George Osborne faces one of the most challenging Budgets in recent years.'
"He can either take bold steps to create growth in the economy by introducing measures to support business, or shy away and face the spectre of economic stagnation. He has to pull out all the stops to boost British business
by providing them with a Budget for growth. Firms need an environment in which they can thrive, create jobs, and export our goods and services abroad. "Without a strong and prosperous private sector, we will be unable to
provide the public services we all want or need. The Chancellor must stick to Plan A, but use the wiggle room he has to scrap the 5.6% business rate rise that will cripple many businesses."Without concerted action in these areas, the
potential for businesses to grow will be limited, and so will the economic recovery."
Pressure was also piled on by opposition leader Ed Miliband who speaking at a pre-Budget press conference, emphasised the need for a Budget which will .encourage short term growth in the economy and boost young
We will be covering Budget 2012 live as it happens on Wednesday 21 March.
Bank holds interest rate at 0.5% for 3 years - 12.3.2012
The Bank of England's Monetary Policy Committee (MPC) has voted to keep interest rates at 0.5 per cent for another
month, marking three years since the rate first plummeted to its record low. The base rate, the measure in which UK banks set their interest rates, has languished at its historic 0.5 per cent low since 5 March 2009. The Committee has also agreed to continue with its quantitative easing (QE) programme which now totals £325 billion after a further £50 billion was injected into the economy last month. The combination of low rates and high levels of
QE has been particularly painful for savers and those approaching retirement as record low interest rates have wiped £76 billion off savings in the past three years, according to The Daily Mail.
Economic consultants Capital Economics have speculated that interest rates could remain at this level for a further
three years. Capital Economics' chief economist, Vicky Redwood, said that weak bank lending and a slower than expected economic recovery could lead to rates remaining low and another round of QE beginning later this year.
Responding to Bank's announcement, The Confederation of British Industry's (CBI's) chief economic adviser Ian McCafferty, said: "Since the MPC has been signalling that the current policy stance is broadly appropriate, it appears that the economic climate would have to deteriorate to prompt a further extension of QE.
"Nevertheless, with economic conditions fragile and the level of uncertainty high, monetary policy decisions are still likely to be finely-balanced."
The scale of the Bank's QE programme will be kept under review as the committee expects its current round of asset purchases to take another two months to complete.
Business groups push for new SME voice in Government - 7.3.2012
The Federation of Small Businesses (FSB) has argued for the formation of a new separate Government body to
represent the UK's 4.5 million small businesses. As part of its submission to the Chancellor ahead of the forthcoming Budget, the FSB has proposed a new Small Business Administration - modelled on an existing US department which represents small businesses in the Cabinet - to be implemented in Whitehall to add volume to the voices of small firms.
Although various Government departments already deal with policy affecting small companies, an overarching department that 'thinks small first' should be set up to challenge competing Government priorities, says the FSB.
Voicing frustration for the small business community, it accused the Government of breaking promises with 'temporary eye catching' measures and emphasised the importance of small businesses to drive the UK's economic recovery.
Modelled on the US counterpart, the FSB believes a UK Small Business Administration could facilitate small business finance and credit easing to bolster export, improve business opportunities and also provide greater support for uncontrollable circumstances such as last year's riots.
The Government recently came under fire from ministers for failing to meet targets set in 2010 to award 25 per cent of contracts to SMEs. The FSB also challenged existing departments to re-examine policies that damage small
business interests and improve their communication with SMEs. John Walker, FSB national chairman, said: "The Chancellor has made clear that there will be no big tax giveaways in this year's Budget and that it is up to the private sector to drive economic recovery by creating jobs and growth.
"A Small Business Administration would allow the Government to quickly implement policies aimed at helping small businesses - such as credit easing - which firms have been waiting for since the Autumn Statement. It would give the Government a channel through which it can advertise procurement opportunities, give expert help and advice on exporting as well improve communications with small firms. All of this would in turn help to achieve growth."
Simplify tax system for small businesses, says OTS - 2.3.2012
The UK's tax system should be simplified to ease pressure on small businesses, the Office of Tax Simplification (OTS) has said.
In a publication put forward to Chancellor George Osborne, the OTS, which was launched in July 2010 to provide
the Government with independent advice on simplifying the UK tax system, recommended that both technical and administrative reforms should be made that could aid around two million small and medium sized enterprises in the UK with their tax obligations.
Gathering evidence from 4,000 businesses, tax advisers and representative bodies around the UK, the OTS examined the common tax problems faced by SMEs. According to the review, a streamlined taxation system for small businesses - those with a turnover under £30,000 - should acknowledge the use of cash handling and make the process of claiming for business expenses easier. It also identified that many small companies wishing
to 'discorporate' faced expensive tax charges.
The OTS also reviewed HMRC's tax administration procedures and concluded it should improve relationships
between itself and small businesses, including recommendations for better email and telephone communication.
John Whiting, Tax Director for the Office of Tax Simplification, said: "We have spent a lot of time gathering the views of businesses and their advisers about the tax system from the sharp end. That has led us to recommend a range of practical changes to the way the system runs that will help businesses with their everyday tax affairs - and will help HMRC as well. "We have also looked for ways of changing the tax system and that has led us to recommend introducing a disincorporation relief and a wider range of flat rate allowances. There's a strong case for a form of cash accounting and indeed we think that going further into a radically different way of calculating tax for the smallest businesses needs study. Overall, we think that the recommendations put forward today represent a common sense approach that would help to ease the burdens of thousands of the smallest businesses throughout the UK."
All contents Copyright Abbotstones 2012.