Glover Stanbury & Co

Grants for green business

Small businesses with a green idea can take advantage of a new competition for grants of up to £10,000. The grant is part of the Leader 4 Torridge and North Devon programme funded by Defra and the European Union. The Green Business Exemplars competition was launched by Stewart Wallis, chief executive of the new economics foundation (nef), Rob Zarywacz, business writer for the North Devon Journal and Bruce Douglas from Defra. "To support the low carbon and environmental sustainability priorities of the programme, we are looking to fund at least five projects that can demonstrate excellence and good practice in ‘greening’ a business, product or service," said Leader 4 Chairman Viv Gale. "Projects receiving grant support could include the development of new sustainable products and services or those linked to the environment; reducing carbon impact through more efficient use of resources; improved waste, energy or water management systems; support for biodiversity or addressing climate change."

More details here http://www.leader4.org/ Hurry if you want to apply though - need to express an interest by 16 January 2012.

Late tax return penalties

We would remind individuals and businesses about new Self-Assessment penalties for late returns and late payments which came into effect this autumn.The changes affect Self -Assessment returns for 2010/11, and all future financial years.

The new penalties for late filing of Self- Assessment returns are:

-an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time

-after 3 months, additional daily penalties of £10 per day, up to a maximum of £900

-after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater

-after 12 months, another 5% or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100% of the tax due.

New penalties for paying tax late are 5% of the tax unpaid at:

-30 days;

-6 months; and

-12 months.

Interest will also be charged on top of these penalties.

The deadline for paying any tax due also remains the same at 31 January.

IT Developments

Our internal IT systems have all migrated to a "hosted" desktop so we can now access ALL our systems (securely) wherever we are as long as there is internet access. If there is no internet connection available we have devices that allow us to connect in any event (as long as their is telephone reception available). Many clients will already have seen us accessing data whilst on their premises, so that we can instantly source information such as tax calculations, resolve accounts queries etc.

We no longer have "servers" in the office, and there are many other benefits. YOU may well benefit too with your own systems. Come and talk to us......

 

VAT on Customer Deposits - especially relevant to hotels and guest houses

HM Revenue & Customs have recently made a change in the rules relating to the VAT treatment of non-refundable deposits received from customers.

The change applies where the customer forfeits a non-refundable deposit by either subsequently cancelling their booking or by being a “no show”, following a European Court case. HM Revenue & Customs have now stated that in such cases no VAT supply has taken place to the customer and the amount retained therefore becomes compensation - which is outside the scope of VAT. Under their previous guidance you would have accounted for VAT on the receipt of such deposits and as the previous guidance was incorrect you can now go back a maximum of 4 years and reclaim the VAT involved.

We therefore suggest that if you have declared VAT on any such deposits then you should review your bookings and business records for the last four years and reclaim the VAT element. If you require our assistance in making such a claim then please let us know.

Please note that this revised guidance also applies proportionately where a booking has been taken, and a deposit paid, but the guest then stays for less time than they booked for. However, HMRC do take the view that VAT is correctly accountable if the deposit relates to the reserving of a particular type of room such as “ground floor” or “sea view” as this is regarded as a guaranteed reservation granted for an optional payment.

The ruling only applies to forfeited deposits and does not change the position regarding deposits paid by customers who actually complete their stay. VAT will still apply on these deposits in the normal way.

For the future, VAT will still need to be declared on deposits at the time they are received. You should then reclaim the VAT element of any deposits withheld if the booking is subsequently not taken up, in the normal way on your VAT Returns.

To change the VAT rate in Sage Accounts

To change the VAT rate in Sage Accounts

 Summary Change T1 to 20% and T3 to 17.5%

STEP 1

1. Open the Settings menu, choose Configuration then click the Tax Codes tab. The tax code information appears.

2. Select T1 then click Edit. Note: If you use a different tax code for your standard rate of VAT, select the relevant tax code then click Edit. The Edit Tax Code window appears.

3. In the Rate box, enter 20 then click OK.

STEP 2

1. Select T3 then click Edit. Note: If you already use this tax code for something else, select a different tax code. The Edit Tax Code window appears.

2. In the Rate box, enter 17.5% then click OK. The Edit Tax Codes window closes.

3. To apply the change and return to the Sage Accounts desktop, click Apply then click Close. Tip: If you are prompted to save your changes, click No. Sage Accounts applies the new rate of VAT to any new transactions that use this tax code. All existing transactions remain unchanged at the old rate of VAT.

STEP 3

All recurring invoices will need to be recalculated. To do this, open each memorized invoice and reselect the tax code.

STEP 4

All recurring entries in the bank will need to be checked and VAT adjusted accordingly.

Writing up your books and records

Are your accounting records and bookkeeping stressing you out?
Spending too much time on the books and not enough time earning money?

We have two solutions which may be of interest to you – put them together and you can (nearly) forget about this side of the business!

Solution 1 - How about books and records that populate themselves …?

Just available - Automatically import your bank transactions straight from the bank* into your accounting records. The bank account in your accounting software is always up to date and always balances! The payments and receipts do need to be allocated to a customer, expense code or supplier –but half of the work has been done already, and if you use electronic payments these will be “remembered” for the future saving even more time.

Solution 2 – Our new bookkeeping service. Either in conjunction with the above or using various other systems, you can upload or post information to us and we will process it, reconcile banks, cash, supplier and customers accounts.

For more details about either of these services without any obligation give us a call.

*Not all bank feeds are available yet – but over 50 are!

2011 VAT Changes

VAT Change – What Happens Now?

 The standard rate of VAT will increase on 4 January 2011, from 17.5% to 20%. This will be the third adjustment in the standard VAT rate in the last two years. 

 This rate change presents a number of challenges to clients, particularly as it occurs part way through the month. Here are some of the key issues:

 VAT fraction

 The VAT fraction is used to calculate the VAT element of a price inclusive of VAT. For a 20% rate of tax, the relevant fraction is 1/6. So if you fill up your car with petrol costing £50, the amount of VAT you have paid after 3 January 2011 is £8.33, i.e. £50 x 1/6. The VAT fraction for the 17.5% rate is 7/47. 

 Price adjustments

 For clients who need to increase the price they charge for goods or services sold on a VAT-inclusive basis, the key fraction is 120/117.5 of the current selling price. So if an item sold before 4 January 2011 is priced at £11.75, the new price to ensure the VAT saving is fully passed on to customers is £11.75 x 120/117.5, i.e. £12.00.

 

It is important to remember that the price of zero-rated, reduced rate (5% VAT) or exempt items is unaffected by this VAT rise (e.g. food, books, newspapers). Only the price of standard rated items needs to be changed.

Deposits paid or invoices raised in advance

 If a business wants to help its customers avoid the VAT rise it can raise invoices or ask for payment from customers before 4 January 2011, for goods or services supplied on or after that date. VAT on those invoices and prepayments should be correctly accounted for at 17.5%.

 This is fine – but there are anti-avoidance rules to prevent clients using advance invoicing or prepayment where the customer cannot recover all the VAT charged, and any of the following apply:

• The supplier and the customer are connected parties (related individuals or companies under common control).
  • The supplier funds or arranges funds for the customer’s purchase.
  • Payment is due six months or more after the invoice date.
  • The pre-invoiced amount exceeds £100,000 excluding VAT, and this is not common practice.

 

Where the client is caught by this anti-avoidance rule, they will have to pay the additional 2.5% VAT on 4 January 2011.

 Goods delivered early

Another way to help customers avoid the VAT rise is for clients to arrange for goods to be delivered to customers before 4 January 2011. Even if the invoice is raised on or after 4 January, and the payment received after that date, the correct rate of VAT to charge is 17.5%.

 Work overlapping 4 January 2011

 There is good news for customers of clients providing services (e.g. a builder) where the work is started before 4 January and finished after this date. In such cases, the client has a choice. They can keep life simple and charge VAT at the new rate of 20% when an invoice is raised or payment received at the end of the job. Alternatively, the client can split the invoice to apportion the work done on a time basis between, for example, December and January work. The work performed before 4 January 2011 will attract VAT at 17.5%, and the rest of the work will have VAT applied at 20%.

 Credit notes raised on or after 4 January 2011

 In cases where an invoice was raised before 4 January 2011 (charging 17.5% VAT) then any credit note subsequently raised against the invoice (e.g. to correct a pricing error or if some of the goods are returned) will be based on the percentage of VAT charged on the original invoice. So the credit note will refund VAT based on 17.5% even though it is being raised on or after 4 January. This may cause some software problems for clients using computerised systems – a manual credit note may be the best option.

 Flat rate scheme

 Many businesses with annual taxable sales of £150,000 or less adopt the flat rate scheme, i.e. where VAT is paid by applying a specific flat rate percentage to the gross sales made by the business. It important to apply the new flat rate relevant for the business sector to sales made on and after 4 January 2011. The positive news is that although the flat rates have been increased from 4 January to reflect the higher rate of VAT, there are no big adjustments for particular business sectors.

 A full list of revised rates can be found on the HMRC website at www.hmrc.gov.uk/budget2010/bn45.pdf or by telephoning the VAT National Advice Service helpline on 0845-010-9000 (open Monday to Friday from 8am).

Road fuel scale charges

 Many businesses reclaim input tax on the road fuel they purchase for cars and account for output tax using scale charges published by HMRC to reflect private use. New scale charge rates apply from 4 January 2011 – details are available in Appendix C of the VAT technical guide on the HMRC website at www.hmrc.gov.uk/vat/forms-rates/rates/rate-rise-guidance.pdf or from the National Advice Service helpline.  

Fee bills and invoices

Many professional businesses will have raised ‘request for payment’ notes to clients in November or December 2010 in relation to work carried out on an ongoing basis. These documents are not tax invoices. For VAT purposes, this is known as a ‘continuous supply of services’ arrangement and VAT is payable according to the date when any tax invoice is raised or payment received from the customer, whichever happens first.

In the case of ‘request for payments’ notes raised in November or December 2010, these will have requested VAT to be paid at 17.5%. If these requests are paid on or after 4 January 2011, then VAT is actually due at 20%. To avoid this difficulty, the professional firm should raise a tax invoice before 4 January 2011 to fix the VAT charged on their services at 17.5%. Even if this invoice is paid later, the VAT is due at 17.5% not 20%, although the client should be aware of the anti-avoidance rules discussed above.

We would be pleased to provide help and advice on any issues your business is facing ahead of the VAT rate change. 

How are your accounting records?

Every business must keep records for tax purposes.

HMRC has published a helpful factsheet on the minimum requirements: www.hmrc.gov.uk/factsheet/record-keeping.pdf

Have a read and make sure your business complies - if it doesn't and HMRC claim you have inadequate records, this will make life difficult in the event of an enquiry.

Need help maintaining your records? Not enough hours in a day?  We can help......give us a call.

KNOW YOUR CUSTOMERS

It is impossible to build an effective marketing strategy without knowing your target audience. By finding out as much as you can about existing and potential customers you can work out how they make their buying decisions. You can then adapt your sales methods and techniques to fit your customers' needs.

That’s where market research comes in. Researching your market helps you to understand the buying habit and behaviour of customers. Since the customer behaviour and buying habits keep changing according to the trends in fashion and new innovations, your market research should be undertaken on a continuous basis.

There are many different ways to gather information about people. Whether you choose primary research methods (such as getting customers to fill in a feedback form or questionnaire) or secondary research methods (using existing resources such as data from the central statistics office) depends on what you need to know about your customers.

Once you have gathered your information you will need to process it into a format that you can use. Its often a good idea to try to categorize your target market into different segments.

Once you have done this you will be able to build a strategy which will target specific categories and enable you to reach your target audience. Now you have to ask yourself which groups of people you want to sell your product or service to.

No matter what size your company is, you can’t develop an effective “catch-all” marketing plan. Every business has limited resources.

Some firms have more money but they may not have resources such as time or manpower. Therefore every business no matter how big must choose specific target categories to market the product or service to.

BACK UP YOUR DATA

It seems that the only time backing up your data becomes a topic of conversation is when a computer has failed and work has been lost. Backing up is one of the most important, but also one of the most neglected areas of computing.

Loss of data can happen in many ways, the most common of which is failure of the media the data is stored on. Hard drive failures are common and if it has never happened to you, it is probably only a matter of time until it does. Power failure or power surges can also result in data loss or even failure of your entire computer.

As such, backing up your data is of huge importance to any business. Now that we have established that you need to back up, it is important to establish how best to do it. Cd’s and dvd’s are a definite no. Your options range from an external hard drive which can work well for a single PC to a dedicated back up system using tapes or mirrored drives on the network. This is best for large office set ups.

However, there is a fairly significant hardware cost associated with backing up on your own network. Recent developments in cloud computing and new service offerings now allow businesses to back up online.

Microsoft, for example, can back your data up on their data centres in the UK, Ireland and mainland Europe. There is no need for extra hardware, tapes or hard drives. Instead your entire office can be set up to back up using your office broadband connection at night. This type of backup system is extremely cost effective, secure, reliable and efficient. Perhaps online back up Is the way forward for the modern business?

 Disaster recovery is also a big issue - we have recently put in place a disaster recovery system where a full image of our servers is held off site and incremental backs are done on a regular basis - and remotely monitored - so that in the event of a disaster we can be up and running again very quickly. Please contact us if you would like more information on this......