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Key Dates

Showbox Appeal

Concern As Time To Pay Arrangements Fall

R3, the Association of Business Recovery Professionals, said that the decline in the number and value of Time to Pay arrangements during 2010 reflected more favourable conditions for businesses post-recession and that the scheme had worked well in preventing the spike in corporate insolvency numbers that typically follows the end of a recession.

But it said that R3 research looking at the challenges facing businesses in 2011 found that almost a third (29 per cent) of insolvency experts thought that a squeeze on Time to Pay would be the most harmful potential development. The impact of public sector cutbacks and a modest rise in interest rates were joint second, with 23 percent each.

R3 President Steven Law said: “Our members have seen how invaluable the Time to Pay scheme has been to businesses. We believe that it is important that it remains available as a breathing space for viable businesses, but that it is not used as an alternative credit facility for ‘zombie companies’.”

R3 describes “zombie companies” as those that are able to service debt but not fund expansion.

LINK: Time to Pay (Business Payment Support Service)

LINK: R3 press release

HMRC Reports On R&D Support

It concludes that because most businesses involved in R&D see it as a “vital, often intrinsic part of their work” they already carry out as much as they can afford and are keen to do more.

Although it says that government support is viewed as “enabling rather than motivational” it adds that: “Grants allow companies to conduct R&D project which they would otherwise have been very unlikely to pursue (and)…tax credits do appear to increase the overall budget available for R&D within the company”.

However, it also found that many companies consider the procedure around grant applications to be time-consuming and onerous while most of the respondents involved in its research “know little about the process and progress of tax credit claims”, with, typically, little communication between finance and R&D functions when the claim is submitted or afterwards.

But it adds: “However, once the routine of claiming is established, the company tends to gain confidence in the likely availability of this funding stream and begins to rely on it as part of the budget for reinvestment in future R&D work.”

The report suggests that support for R&D is likely to continue, concluding: “Alongside the monetary value of the government support, the message sent by the system of R&D tax credits and grants is important to companies engaged in R&D. Any attempt to reduce their availability would be interpreted as a statement that government no longer values the contribution of R&D in this country.”

LINK: The HMRC report

VAT Rules On Entertaining Overseas Customers Changed

In 1988, UK law was amended to extend the block to include business entertainment provided to overseas customers.

Now, following the European Courts of Justice (ECJ) judgment in the joined case of Danfoss and AstraZeneca, HMRC has decided that the UK block on the recovery of input tax on the business entertainment of overseas clients is inconsistent with EU law.

HMRC says the government intends to amend UK law shortly and in the meantime it will consider claims for previously restricted VAT in respect of the entertainment of overseas customers, subject to the normal four year cap.

The block on recovering input tax on entertainment provided to anyone other than an overseas customer, for example, non-UK business contacts who are not customers, remains in place.

LINK: HMRC guidance

Change On Unfair Dismissal Claims On Cards

Lord Young, the government’s new Enterprise Adviser, has told the BBC that he may recommend an increase in the length of time employees have to work before being allowed to bring unfair dismissal claims. Lord Young told BBC Radio 4 on 1 November that he might recommend limiting eligibility for making such claims until workers had been employed for two years.

He said that he would have to consult with small businesses before making any recommendations but confirmed earlier leaks that extending the length of time that employees had to work before being able to claim unfair dismissal was "one of the lines" he would investigate.

He told the BBC:  "I want to find out what small business people themselves think about this and then we'll think about it."

The government has appointed Lord Young to the post as part of its drive to help make it easier for people to start, run and grow businesses.His first assignment is to prepare a report examining how government departments interact with and affect small businesses.

LINK: Lord Young appointment

Smaller Charities Win Online Filing Concession

However, HM Revenue & Customs (HMRC) has made a concession to smaller charities on the new arrangements, on the basis that the way they prepare accounts means that the accounts template included in the free software provided by HMRC may not be suitable for them.

It says that until it provides free software suitable for smaller charities, HMRC will continue to accept accounts from smaller charities in PDF format. However, computations must be filed in iXBRL, for which the free HMRC software should be suitable.

A smaller charity for the purposes of this arrangement is one where, together with any wholly owned subsidiaries (companies owned by the charity), the combined income does not exceed £6.5 million for the accounting period.

LINK: HMRC guidance to charities  

LINK: Switching from paper to online returns guidance  

Reminder On Filing Online

HM Revenue & Customs (HMRC) has reminded anyone missing the 31 October deadline for filing paper self assessment tax return for 2009-2010 that they have until the end of January to file online. Anyone filing on paper, rather than online, now that the deadline for paper returns has passed could face a £100 penalty.

Taxpayers filing online for the first time will first need to register for online filing at www.hmrc.gov.uk/online

They will be given a user ID and an activation code that will be posted to them within seven working days. Once these have been received, the taxpayer can file online.

HMRC is also reminding people who have filed online to make sure that they have their user ID and password to hand in case they leave filing until very close to the deadline and then can’t find them. It can take seven working days to get replacements.

The deadline for online self assessment returns is Monday, 31 January.

LINK: Self assessment guidance

Alert To Employers On CD-Rom

It says that the latest update includes changes for employers who use the P11 calculator and have received a P6 from HMRC showing previous pay and tax details or have employees with national insurance category letter X who are at, or reach pension age during 2010-11.

Installing the latest update will ensure that the 2010 CD-ROM is compatible with the new PAYE tools when they become available next year.

LINK: HMRC guidance

Businesses Urged To Prepare For Pensions Shake-Up

The government has set out plans for automatic enrolment into workplace pensions. The announcement followed publication of Making Automatic Enrolment Work, an independent review for the Department of Work and Pensions, at the end of October. The measures are due to start taking effect from April 2012 and all employers will be required to automatically enroll eligible jobholders into a qualifying pension scheme.

There will be a phased introduction, with the smallest employers – those with 50 or fewer employees –coming on board between summer 2014 and early 2016.

Employers will receive reminders of their new responsibilities12 months and three months before they are due to be affected.

Where the employer chooses to provide a money purchase arrangement, the minimum contribution requirements will be phased in to help both employers and individuals adjust to the additional costs gradually.

A new workplace pension scheme called NEST (National Employment Savings Trust). NEST will be one of the qualifying schemes and will be open to any employer who wants to use it to meet their duties.

The move to include all employers has attracted some criticism for placing an additional burden on smaller firms. The Federation of Small Businesses says that average small firm – those with four employees earning an average salary of £25,000 – will pay at least an extra £2,550 per year in administration and pension costs.

LINK: Workplace pension reforms

LINK: NEST website