Why do we recommend Xero?

We at Premier Tax Solutions recommend the cloud accounting software Xero, but what is cloud accounting? Cloud accounting allows you to keep your business books online, which includes records of income and expenses, as well as assets and liabilities. All your information is encrypted so only people with the login can view the data. All you need to do is subscribe and move all your books to the cloud. From then on you can access your accounts from any web browser, or from an app on your phone.

Running your business accounts online with Xero has many advantages:

  • Data about your income and expenses can flow straight from your bank to your Xero account meaning you do not need to spend hours typing transactions out
  • You can see your current financial position at any time provided your book keeping is up to date
  • Multi-user access makes it easier for you to collaborate online with your team and accountant
  • Because it’s online there is no installing or updating, and all your data is backed up automatically
  • You can set up a dashboard to show important financial information e.g. who owes you money, what bills are due, and how your cash flow is looking

If you are thinking of moving to Xero or are a new start up looking to get straight onto Xero get in touch on 01782 479699

What If I Cannot Afford To Pay My Self Assessment Tax Bill?

If it is you are struggling to make a tax payment you should always seek help earlier instead of burying your head as it will not just go away. For those of you struggling to pay the tax due this week a time to pay arrangement may be an option.

HMRC offer a time to pay arrangement which is based on your specific financial circumstances and can cover all outstanding amounts overdue including penalties and interest. They make sure to look at what you can afford and then use that to work out how much time you will need to pay off your tax bill.

HMRC usually expects you to pay no more than 50% of your disposable income but can be higher if you have a very high disposable income. There is no upper limit on how much time you will have to pay.

It is designed to be flexible and is not a fixed, formal contract. It can be altered overtime, so it can be shortened if your earnings rise or you receive a windfall. More importantly it can also be lengthened should your essential expenses increase, or income decrease.

For Self-Assessment, you may be able to set up a payment plan online. This would allow you to pay your Self-Assessment tax bill in instalments without contacting HMRC.

You can set up a payment plan to spread the cost of your Self-Assessment bill if:

  • You owe £30,000 or less
  • You do not have any other payment plans or debts with HMRC
  • Your tax returns are up to date
  • It’s less than 60 days before the payment deadline

For any extra information on time to pay arrangements or to set up a time to play arrangement online visit the gov.uk guidance here.

What Support Is Available For The National Lockdown 5 November 2020?

Following on from the government announcements we thought we would reach out about what support is available so far, as we go into the national lockdown on Thursday:

Coronavirus Job Retention Scheme

  • CJRS (furlough) scheme extended to December paying 80% of employees wages up to £2,500.
  • Employers will be required to cover national insurance and pension contributions.
  • Full time and flexible furlough will continue to be available.
  • Neither the employer nor the employee needs to have previously accessed the Furlough scheme.
  • All employees on the employer’s PAYE payroll by 23:59 30 October 2020 will be eligible.

Mortgage payment holidays extended

Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

Business grants available

Businesses required to close in England due to local or national restrictions will be eligible for the following through their local authority:

– For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;

– For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;

– For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.

 

Self Employed Income Support Scheme

  • Claims window being brought forward from 14 December to 30 November which will cover the period November to January
  • For November it is worth 80% of average trading profits and for December it is worth 40% of average trading profits meaning the total level of the third grant is 55 per cent of trading profits. The maximum grant will increase to £5,160.
  • Claims must be done by individuals, accountants cannot do these

To be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either:
  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus

 

Bounceback Loans & CBILS

 

Self Assessment Tax Deferrals

The July 2020 payment on account that was deferred to 31 January 2021 and amounts due by 31 January 2021 can be payable over a further 12 month period under a time to pay arrangement. This can be set up online by individuals here: https://www.gov.uk/difficulties-paying-hmrc

 

VAT Deferrals

Businesses that deferred their VAT during the period 20 March to 30 June 2020 to 31 March 2021 can now make smaller payments interest free up to 31 March 2022. You have to opt into this, you will find more info here: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

 

We hope that you find this round up useful. Things are changing daily so please always check the up to date guidance.

How to create the perfect business plan in 10 steps

Follow these ten steps to create a clear plan you can share with your Accountant.

Every business needs a plan, and creating the right one can sometimes feel like a challenge. But the benefits are definitely worth it.

A business plan helps you get your ducks in a row and also lets us know how we can best advise you.

So, how do you create a good business plan?

These ten steps will help you get started:

1. Create an executive summary

2. Define your customers

3. Evaluate the target audience

4. Identify your opportunities

5. Understand the competition

6. Build a simple financial plan

7. Include an outline marketing plan

8. Plan your operations

9. Get the right people, advice from your Accountant and maybe getting a mentor would be great

10. Keep it simple, it doesn’t need to be over complicated

Remember, clarifying your ideas by writing them down gives them substance and structure. Feedback from others is also crucial in business planning, and advice from the right people is the key to success.

Read more on Xero’s ten steps to a perfect business plan and start planning your business around your strengths.

HMRC Insolvency Powers from April 2020

From 6th April 2020 new measures regarding insolvency will be introduced by the 2019-20 Finance Bill meaning HMRC will have increased powers.

It is proposed that Finance Bill 2019-20 will contain measures to ensure that from 6 April 2020 where a company becomes insolvent with unpaid tax liabilities which it holds in trust to pay to HMRC, these liabilities will take priority over other unsecured or floating charge creditors.  

Taxes that a company holds in trust for HMRC include VAT, PAYE Income Tax, Employee’s National Insurance Contributions and Construction Industry Scheme deductions.  Other company tax liabilities such as Corporation Tax and Employer’s National Insurance Contributions will not be affected by the measure.  HMRC will remain below preferential creditors.

Diane Dunion, Partner from Begbies Traynor Stoke has helped to expand on what exactly this means for businesses:

“The draft legislation proposes to amend The Insolvency Act 1986, giving HMRC priority in the recovery of VAT and certain other debts owed to HMRC in insolvency proceedings; by creating a new category of creditor for the purpose of the distribution of assets. 

When a business enters formal insolvency proceedings, the order in which assets are distributed is prescribed by law.  Currently, HMRC ranks as an unsecured creditor.  The introduction of the legislation will allow HMRC to rank as a “secondary preferential” creditor, which places them in a better position on the creditor hierarchy.

However, HMRC will remain an unsecured creditor, for taxes levied on businesses such as Corporation Tax and Employer NIC.

The Explanatory Note to the Legislation notes that “the Government does not believe it is fair that taxes paid by employees and customers should be diverted to other creditors, when these are only held temporarily by businesses whose role is to transfer these payments to the Government. The Government view is that this is a fair approach that balances the interests of creditors and the Exchequer, which relies on these taxes to fund public services.”  

Monies collected in respect of those taxes paid by employees and customers, are essentially held on trust for HMRC.  On that basis and in the event of formal insolvency proceedings, these funds will be paid over to HMRC – to “benefit the wider population by being utilised for their original purpose” (i.e. to fund public services).”

The new finance bill will also allow HMRC from 6 April 2020 to make directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency. It is designed to prevent individuals benefitting from avoidance or evasion through the insolvency of their business when unable to pay its debts to HMRC.

The conditions for a joint liability notice are:

  • Insolvency is underway for the company or there is serious threat of insolvency
  • A company has entered into tax avoidance arrangements, or engaged in tax evasive conduct.
  • The person either was responsible for the company/LLP (perhaps as a director or shadow director), enabled the avoidance or evasion or benefited from it
  • A tax liability is expected to arise from the avoidance or evasion and there is a serious possibility that some or all of that tax will not be paid

The new rules will also allow HMRC to issue a joint liability notice to individuals whose companies have been involved with repeated insolvency or non-payment of tax with limited liability

There is a common misconception that directors/members will not be personally liable for anything, because their business has limited liability (either Limited Company or Limited Liability Partnership).  This is not always the case and more people may find themselves held accountable for their actions as a result of the changes.

Importance of cash flow

Keeping on top of your cash flow is extremely important.

 

A software programme which works directly with Xero to pull out accurate cash flow data is – Fluidly. #Fluidly provides intuitive cash flow forecasting and management powered by AI. Fluidly is for modern businesses that want to know exactly what their financial future holds and how to optimise it.

 

Whether it’s hiring a new team member, investing in new equipment or simply paying a bill, Fluidly gives a clear picture of your cash position so you always know where you stand.

 

For further information on how Fluidly can help you – get in touch http://bit.ly/33ozuWq #Fluidly #CashFlow #Xero Cash flow is King!

The benefits of cloud accounting

If you want your business to work smarter and faster, cloud accounting software is a wise investment. Working in the cloud can give you a better overview of your finances and improve collaboration with your team.

With Xero, you can access the cloud anywhere. Online accounting means small business owners stay connected to their data and their accountants. The software can integrate with a whole ecosystem of add-ons. It’s scalable, cost-effective and easy to use.

Thinking of making the switch? Let us help you get set up.

I have a limited company, what accountancy services would I need?

We offer the following services for limited companies:

  • Statutory accounts preparation
  • Company secretarial services
  • Corporation tax return preparation
  • Payroll
  • PIID
  • CIS contractor returns
  • VAT return preparation
  • Help with HMRC enquiries
  • Tax investigations insurance
  • Research & development claims
  • Capital allowances claims on commercial building
  • Tax efficiency reviews
  • Business restructuring
  • IR35 contractor reviews

For more information, please click here to contact us.

Time to fight the late payment culture which harms UK business

New research has revealed 37% of small businesses owners have considered closing their company because of cash flow issues caused by late payments.

The findings highlight the scale of the late payments challenge facing British small businesses, who are owed an average of £23,360 in overdue invoices on any one day and have to wait on average 14 days after the due date to be paid.

The research, by accounting software Xero, showed that the amount owed to small businesses in late payments on any given day in February 2019, was up 17% from the year before, demonstrating the startling growth in tardy payment practices.

At Premier Tax Solutions, we are a Xero Gold partner and are fully behind the campaign to highlight slow payment for smaller businesses, said Director Vanessa Fuller.

“The impact of late payments has a damaging effect across the whole UK economy as, on average in any given month, 48% of invoices issued by small businesses are paid late, and as a result a quarter of small business owners struggle to pay their own suppliers on time.

“Clearly, this has a direct impact on a company’s viability and cash flow, but late payments also negatively impact small business owners’ lives outside work. The research shows that over the last 12 months, over half have used personal savings or borrowed from friends and family to keep their business alive, while a quarter said they would enjoy better physical health if late payments were no longer an issue.”

“Over two fifths said that late payments caused them sleepless nights and affected their mental health.”

Vanessa also welcomed a recent initiative in which  Xero has teamed up with PayPal to help make it easier for customers to pay invoices. By adding PayPal as a payment option to an invoice, customers can get paid up to 21 days faster using their PayPal account or credit card.

If you’d like help with getting paid faster we can help you to set up payment systems that link with Xero that can take payments for you and can even build credit control into the process. For more information call us on 01782 479699.

What is subsistence?

Subsistence is the accounting term used to describe food & drink and other incidental costs of travel such as accommodation. It is an allowable deduction when incurred by an employee or office holder in conjunction with a qualifying business journey such as business travel & overnight stays.

All claims must be backed up by receipts, unless you have agreed a scale rate system with HMRC.

From April 2019 there are some changes due in the area of subsistence for employees which we will take a look at along with some of the questions we most frequently get asked. Please note that the rule for employees are different than the self employed and so people can fall foul of this.

What is changing on 6th April 2019:

  • The employer will have to have a system in place to check the employee has undertaken a qualifying journey.
  • Employers will no longer need to check receipts where HMRC scale rates are used both in terms of UK and overseas scale rates

The Finance Act 2019 will put all of HMRC’s benchmark scale rates on a statutory footing.

Can I reimburse my employee for their lunch?

When they are travelling on business, entertaining customers, or when lunch is provided at a conference or meeting to ensure continuity of work it is ok to do so. For example if you have a training day and order pizza in for the staff then that would be deductible as it will ensure continuity of work.

How much can I reimburse for subsistence?

There is no upper limit however an employer can only reimburse expenses if there are actual expenses incurred. It can reimburse round sum amounts using scale rate payments

Can I claim VAT back on subsistence?

Yes provided the employee gives you a VAT receipt

If you are unsure about subsistence payments and would like more advice please call us on 01782 479699.