Welcome to our monthly newswire...

Our aim is to keep you up to date with ideas and information that will help you gain the best possible advantages in working with us. This newswire will be sent regularly to help achieve this aim, and we hope you enjoy reading them.

We operate a responsible email policy at CW Fellowes, so if you do not wish to receive further copies of this newswire, click here to unsubscribe.

Key Dates

Plumbers & Heating Engineers Alert

Under the terms of the PTSP, initial notifications of an intention to make a disclosure need to be made by 31 May 2011. The full disclosure then has to be made by 31 August 2011. Such disclosures will qualify for a lower penalty rate, up to a maximum of 20%.

After 31 August 2011, HMRC has stated its intention to launch enquiries into those it believes should have made a disclosure and have failed to do so.

If you or anyone you know would like to speak to a Consultant, please call us on 02380 247070 or email advice@CWfellowes.com.

Round-Up of Budget Reaction

“Reductions in corporation tax of the magnitude planned for the next few years are likely to boost corporate activity in the UK.”
Institute for Fiscal Studies

Enterprise incentives: lifetime limit for Entrepreneurs’ Relief on capital gains tax doubled to £10 million; income tax relief on the Enterprise Investment Scheme (EIS) increased to 30%, both from April 2011; from April 2012, EIS extended to companies with fewer than 250 employees and no more than £15 million of gross assets pre-investment

“…will provide a much needed shot in the arm for entrepreneurship in the UK.”
Federation of Small Businesses

“Anyone who takes the risk of investing in a business should be able to reap the rewards...[these measures] will help bring more capital into promising companies.”
British Chambers of Commerce

“We are regularly told…the limits on the size of company that can raise money under the EIS make it too restrictive…[the raised thresholds] will make the scheme much more widely available.”
Chartered Institute of Taxation

Business rate holiday for small businesses extended to April 2012

“There is still much more to be done to bring predictability and affordability to the business rates regime for companies of all sizes.”
British Retail Consortium

“Extending the business rate relief holiday for another year will give many SMEs greater confidence and allow them to invest in growth rather than paying more to the Exchequer.”
British Chambers of Commerce

SME research and development tax relief raised to 200% in 2011 and 225% in 2012

“The uplift will provide a much needed cash flow boost to innovative manufacturers.”
EEF

“Ministers must now ensure that small businesses do not face complex bureaucracy when trying to apply for these credits or this policy will fail to help.”
British Chambers of Commerce

Three-year moratorium on new domestic regulations from 1 April 2011 for start-ups and firms employing fewer than ten people; certain regulations already planned scrapped

“This will give the smallest firms the confidence to employ more staff without having to worry about constant changes in employment law.”
Federation of Small Businesses

“If the regulations needn’t be applied to one group of businesses, are they really warranted at all?”
British Retail Consortium

“…modest steps in the right direction.”

“The government now needs to go further…to develop a plan to stem the flow of new measures from Europe.”
EEF

British Chambers of Commerce

Immediate 1p reduction in fuel duty; inflation increases planned this year and next delayed; abolition of fuel duty escalator, replacing it with fair fuel stabiliser increasing tax on North Sea oil production when oil prices are high

“If oil prices stay high but volatile, this policy will do little to stabilise pump prices.”
Institute for Fiscal Studies

“[We] await further details on how a stabiliser will work in practice so that businesses can plan with confidence.”
British Chambers of Commerce

“…much needed relief on fuel duty”
TUC

Creation of 21 new Enterprise Zones, with simplified planning rules, superfast broadband and tax breaks for businesses

“...will boost our regional economies.”
British Chambers of Commerce

“…can make a difference at the margins but must not disadvantage neighbouring areas.”
British Retail Consortium

“Past UK experience with Enterprise Zones suggests that their main effect may be to cause activity to relocate rather than create new activity.”
Institute for Fiscal Studies

And finally…consultation on integrating income tax and national insurance contributions (NICs)

“…would be a huge simplification for employers and save countless millions in administrative costs…[the government] must consult widely to ensure we get it right first time.”
British Chambers of Commerce

“The value of reform depends heavily on the details…even before the consultation begins, the government has already ruled out some of the most radical options.”
Institute for Fiscal Studies

“…cannot be a substitute for reducing the overall business tax burden as well”
British Chambers of Commerce

LINK: Budget overview and documents

Online Filing Plans under Fire

Online VAT filing and electronic payment are already compulsory for businesses with a VAT-exclusive turnover of £100,000 or more, and those newly registering for VAT, regardless of turnover.

The government is also to consult on mandating use of the new online Registration Wizard for corporation tax, income tax self-assessment, class 2 National Insurance contributions, PAYE and VAT.

Robin Williamson, technical director of the Low Incomes Tax Reform Group said: “We have seen people with disabilities that prevent them from using computers and very small businesses whose profit margins are so small that the cost of computers, broadband and training, or of appointing a professional agent, would have to be paid for by the proprietors in person.

“This they may not be able to afford, if (as is often the case) the proprietors themselves are on low incomes. Any move by the Government to compel online filing in such cases is disproportionate, and risks driving those people out of business altogether.”

He added that last November, Minister for the Cabinet Office Francis Maude had said that every government service must be available to everyone “no matter if they are online or not.”

LINK: HMRC online services

Cable Plans Shake-Up of Audit Rules

This would mean that certain small companies who still have to have independently audited accounts would no longer need to do so, helping 42,000 businesses.

For even smaller businesses, with less than ten employees, the government would press for exemptions in European rules to remove the requirement to produce specific accounts for Companies House as well as a set for tax purposes.

The government says those changes will allow small companies to produce just one simplified set of accounts and affect around two million of the smallest businesses in the country.

Currently medium sized businesses have to have their accounts independently audited but the government is to press the EU to release them from this requirement. This change could free over 32,000 businesses from audit obligations.

Mr Cable said:  “It’s important that we free small firms up so they can grow and drive the economy. The changes I have announced mean that small firms will be able to concentrate on growing and taking on more people instead of paperwork.”

Following Mr Cable’s announcement, Clive Lewis, head of SME issues for the Institute of Chartered Accountants in England and Wales, was reported as saying that businesses likely to be caught in any increase in the exemption limit were “significant businesses often with complex transactions and often with multiple shareholding, which will mean many of them will continue to opt for a voluntary audit.”

He said: “The government is seen to be doing its bit by reducing the apparent regulatory burden but it is a burden that many businesses will opt to have,” adding SMEs who chose to not have an audit would probably opt for another type of assurance.

LINK: Press release

HMRC Seeks Views on Website

HM Revenue & Customs (HMRC) has launched an online survey of its website, www.hmrc.gov.uk HMRC says it wants to know what its customers think of the website and that the answers provided by users will help it to identify what works well, where it can make improvements to meet customers’ needs and allow it to identify best practice by comparing responses to similar surveys across government departments.

Topics covered in the short survey include how easy it is to find what the customer is looking for and what they think of the website’s design.

The questionnaire can be found at http://www.hmrc.gov.uk/comment/coi-survey.htm

R&D Brings Tax Benefits

In 2008-09 alone, there were 8,540 claims – the highest annual figure since the R&D scheme began – receiving £980 million in tax credits. The total paid out in tax credits since 2000 was nearly £5 billion.

R&D tax credits are available, broadly speaking, when a research project seeks to achieve an advance in science or technology. Certain costs involved in the R&D may qualify for the tax credits, including expenditure on R&D staff, materials used in the R&D.

Companies spending at least £10,000 in their accounting year on qualifying R&D are entitled to claim a deduction when calculating their taxable profits of 150 per cent before, and 175 per cent on or after, 1 August 2008. For larger companies, the equivalent deductions are 125 per cent and 130 per cent.

Changes introduced in the 23 March Budget mean that the tax relief will become even more attractive to small companies, with the rates rising to 200 per cent in April 2011 and to 225 per cent from April 2012.

LINK: R&D tax credits explained

Businesses Offered Chance to Slash Red Tape

Businesses are being urged to get involved in government moves to reduce the burden of red tape. A range of measures, announced on 18 March, will include a public audit of almost 22,000 business regulations to weed out those that are no longer needed. Other measures include:

• repealing the regulations extending the right to request flexible working to parents of 17 year olds for all businesses, which was due start on 6 April 2011.
• continued exemption from the right to request time off to train for firms with less than 250 people.

The public audit will see legislation grouped into themes on a dedicated website, with businesses asked to tell the government what they think of those regulations and how to improve the system. The aim is that over-burdensome or unnecessary regulations will be removed unless government departments can make a strong case for keeping them.

Business Secretary Vince Cable said: “It’s not right that businesses should have to deal with years of government intervention by abiding by arcane rules. That’s why I am asking them to help us take a comprehensive look at the stock of regulation and tell us how rules and regulations affect them.

“This is the first time such a radical look at the statute book has been taken and we’re giving you the chance to play your part. I’d encourage all businesses, large and small to grab it with both hands.”

LINK: Business Minister unveils proposals

Employers Set To Say ‘You’re Hired’ To More Apprentices

The government will also support business consortia with grants to set up and main advanced and higher apprenticeship schemes, creating a further 10,000 apprenticeships.

Research has shown that 80 per cent of those who employ apprentices agree that they make the workplace more productive.

The Federation of Small Businesses said that with almost seven in ten existing apprenticeships currently taking place within small firms, the extra places were a “significant development for the small business community and young people alike” while the British Retail Consortium – representing a sector that employs a million under-25s – said that the government was “right to support apprenticeships”.

Currently, there are more than 85,000 employers offering apprenticeships in England in 130,000 locations and in 200 job roles.

LINK: National Apprenticeship Service

HMRC Told ‘Go Back To Drawing Board’ On Record-Keeping Drive

A proposal by HM Revenue and Customs (HMRC) to start making large-scale checks of business records before relevant tax returns are submitted is misguided, according to the Chartered Institute of Taxation (CIOT). HMRC is proposing to use powers in the Finance Act 2008 to check the business records of up to 50,000 SME businesses annually, beginning in the second half of 2011, and to impose penalties for poor record keeping.

Anthony Thomas, CIOT deputy president, said the CIOT supported efforts to improve business record-keeping.

But he added: “We do not believe this project will meet that objective. Its purpose seems to be more about raising money through penalties than about helping businesses improve their systems.

“HMRC are putting forward a blunt instrument designed to deliver punishment when what is needed is a collaborative process focused on providing education, guidance and support. We think they need to revert to the drawing board on this.

“We think that the legal basis for levying penalties as a result of such a check prior to submission of a return is questionable unless there is a failure to keep any records at all or there has been a failure to preserve them.

“A penalty should only be levied once it has been proved that the bookkeeping records have led to an incorrect return.”

HMRC says that although keeping adequate and accurate business records allows businesses to comply properly with their tax obligations, its random enquiry programme suggests that poor record keeping is a problem in around 40 per cent of around five million SME cases.

With research indicating that poor business record keeping generally leads to an underassessment of tax, HMRC estimates that it could be losing out on tax payments in up to two million SME cases each year.

LINK: Consultation on business record checks