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London to Paris Cycle September 2009

Many thanks for sponsoring for my 19th consecutive year of sporting charitable fundraising. I have raised over £4,000 for The Rose Road Association in Southampton for their Change My Life Appeal (see the website at www.roseroad.org.uk).

This charity provides wonderful support for children with multiple and profound disabilities. My four fellow cyclists who also cycled to Paris enabled us to raise over £10,000 in total, which was very pleasing in the current economic climate. I think they have also all now got the ‘bug’ and will no doubt be either joining me on my next challenge or trying a different challenge.

I am pleased to report that the ‘bionic hips’ have settled down well as the anniversary of my operation approaches and I am currently dreaming up a ‘different cycle challenge’ for 2010 to celebrate 20 years….....

Thank you again.

With best wishes

Bruce Elkins

VAT Holiday Over As Rates Expected To Return To 17.5%

• VAT should be calculated at 17.5% from 1st January, using the VAT fraction 7/47ths. Those who reduced their prices last December (2.13 % was the calculated reduction) should increase them by that same figure. If the customer has an account and he takes the goods away prior to the change, then you account for VAT at 15%.
• Businesses issuing VAT invoices after 1st January should calculate their VAT at 17.5%, unless the goods/services were supplied before the rate change, in which case you can choose to charge at 15%.
  For supplies of services that span the change, you can charge 15% for services provided before the change, 17.5% afterwards or charge all at 17.5%
  Suppliers issuing invoices prior to the rate change, but where delivery will take place after the 1st January, may charge VAT 17.5%
• When issuing quotes and estimates for work to commence after 1st January you should quote the 17.5% rate. Customers willing to pay before that date can be charged at 15%, (subject to the anti-forestalling legislation – see below).
• Refunds or credit notes should be dealt with at the same rate originally declared or invoiced.
• Invoices issued for 12 months in advance, with monthly payments plus VAT, must show VAT at 15% up to 31st December 2009.  Payments after that date must be at 17.5%
• With ticket sales, the tax point is the receipt of payment. So if a ticket is purchased before 1st January 2010 the VAT rate will be 15%, even if the event takes place after the rate change in 2010. 

Flat Rate Scheme

The increase in VAT will lead to changes to the Flat Rate Scheme percentages and to the Fuel Scale Charges - all effective from 1st January 2010.  Those people whose VAT returns span the change will have to carry out two separate calculations.

Anti-forestalling legislation

With certain businesses, where the goods or services are supplied on or after 1st January 2010, anti avoidance rules have been put into place. These will apply if:

• You receive pre-payments from persons connected to you for future supplies
• You issue advance VAT invoices to persons connected to you for future supplies
• You provide or arrange funding to your customers to enable them to pay in advance for goods or services to be supplied by you
• You issue VAT invoices that do not have to be paid for at least six months
• You receive pre-payments or issue advance VAT invoices in excess of £100,000, and this is not your normal commercial practice
• You supply rights or options to receive goods and services from you free of charge or at a discount i.e. receive payment prior to the rate change for a supply to take place after.

These rules will not affect many businesses and they are only invoked if your customer cannot recover the VAT charged in full.  More information is available here:

http://www.hmrc.gov.uk/budget2009/bn72.htm

To coincide with the changes HMRC have produced a guide, available on their website – http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-changes.htm. However, HMRC have not yet published the rates for the Flat Rate Scheme. We will update you once these have been published.

Directors’ Service Addresses

Changes introduced on 1 October mean that every director must provide Companies House with both their usual residential address, and a ‘service address’ for each directorship they hold. A director may choose any service address, including the company’s registered office or their own home address, but PO boxes or DX numbers are not permitted.

The service address will be publicly-available, but the residential address will be protected information, and even if the director chooses his home address as the service address, that would not be apparent from the public record. This is designed to answer previous concerns from directors, particularly those operating in sensitive sectors, about their home addresses being available alongside their company accounts.

Residential addresses will only be made available to prescribed regulatory authorities such as the police and HM Revenue and Customs (HMRC), and it may also be made available to credit reference agencies.

Existing directors’ residential addresses have remained on the register and automatically became the service address from 1 October. However, anyone whose home address was placed on the register on or after 1 January 2003 can now apply for that address to be removed.

Tips Don’t Count Towards The NMW

The service address will be publicly-available, but the residential address will be protected information, and even if the director chooses his home address as the service address, that would not be apparent from the public record. This is designed to answer previous concerns from directors, particularly those operating in sensitive sectors, about their home addresses being available alongside their company accounts.

Residential addresses will only be made available to prescribed regulatory authorities such as the police and HM Revenue and Customs (HMRC), and it may also be made available to credit reference agencies.

Existing directors’ residential addresses have remained on the register and automatically became the service address from 1 October. However, anyone whose home address was placed on the register on or after 1 January 2003 can now apply for that address to be removed.

Tax Relief On Nursery Vouchers To Be Withdrawn

As you may be aware the National Minimum Wage (NMW) rates increased from 1 October 2009 to: an adult rate of £5.80 an hour. This is payable to those age 22 and over. a development rate of £4.83 for those aged 18 – 21 and for 17 year olds a rate of £3.57 an hour.

A change was made from the same date, to the elements of pay which can count towards the payment of the NMW rate. Tips, gratuities, cover charges and service charges do not count from 1 October 2009 towards NMW in any circumstances. This is a change to the previous rules which allowed such payments to count towards the NMW rate in certain circumstances.

As detailed on the Business Link website:

“…before 1 October 2009, tips, gratuities, service charges and cover charges did count towards the NMW as long as you paid them to your workers through your payroll. They no longer count towards the NMW, regardless of whether they are paid through your payroll or are given direct to workers by customers or a tronc master.”

If you have any queries on the NMW, or how this change impacts on your employees, please do get in touch.

Internet links: Business Link Website and Employer Bulletin

Scrappage Scheme

An extra 100,000 (£100 million) has been added to the number of scrappage deals that the government will fund, taking it to 400,000 in total. In a change to the qualifying conditions, the age of the vehicle has also been adjusted to first registered on or before 29 February 2000 for cars or 28 February 2002 for vans.

For general information on the £2,000 scrappage discounts and other conditions visit the BIS website link below. For HMRC’s views on the business tax and VAT implications of the car and van scrappage scheme use the HMRC link below.

If you have any queries on the tax implications of the scheme please do get in touch.

Internet links: Scrappage website, BIS website and HMRC Brief

Paying PAYE On Time

HMRC are warning employers that from May 2010 they may have to pay a penalty if they do not pay their PAYE on time.  These are generally due each month, on time and in full. HMRC will implement late payment penalties for payments due from May 2010. From then on, employers may have to pay penalties if they make more than one PAYE payment late in a tax year. The new penalties will apply to all employers, including large employers (those with more than 250 employees) who currently are subject to a Mandatory Electronic Payment surcharge.

HMRC are advising employers to let them know if they are likely to have difficulty making a payment on time, so that arrangements can be made and penalties can be avoided. Their guidance states that where employers enter into ‘time to pay’ arrangements, before the liability becomes due, no penalty will be charged. Penalties for late payment start at 1% increasing to 4% depending on the number of late payments in the year. Extra penalties will be added where liabilities our outstanding for a further six and then 12 months.
 
Internet link: Employer Bulletin

Online Payroll Starter And Leaver Forms

Penalties

HMRC advise that they will shortly begin issuing warning letters to those employers with 50 or more employees who are still not filing their starter and leaver forms online. These warning letters will refer to paper submissions made up until 5 January 2010 and will only refer to one paper submission.

From the start of the fourth quarter of 2009/10 (6 January 2010) HMRC will begin charging penalties to those employers with 50 or more employees who send HMRC starter and leaver notifications on paper. Penalties will range from £100 to a maximum of £3,000 depending on the number of paper forms sent in paper format.

The first penalty notices will be sent in April 2010. Although this is some time away it is important to check that employers are sending starter and leaver notifications online.

Internet link: Employer Bulletin