• The rag trade
• The motor trade
• Indoor and outdoor markets

Tasksforces bring together various HM Revenue & Customs compliance and enforcement teams for intensive bursts of activity targeted at specific sectors and locations where HM Revenue & Customs believes there is evidence of a high risk of tax evasion. HM Revenue & Customs has confirmed that it views the ‘rag trade’ as those concerned with the import, wholesale, marketing and sale of clothing.

In addition to the 2012/13 plans, the Revenue has today also announced the last of its taskforces for the current financial year, which involves the targeting of landlords in scotland.

HM Revenue and Customs already expects to collect over £50million of additional tax as a result of the twelve taskforces launched  in 2011/12, however, this figure is set to rise in the coming months. In addition. thirteen criminal investigations are already underway – a clear sign that HM Revenue and Customs will continue to aggressively pursue individuals with the full force of its powers.

Good Communication. The goverment continues to promote its online services, but until now HM Revenue & Customs has fought off pressure to use e-mail as a means of communication. Part of its reticence is almost certainly the fear that it wouldn’t be able to cope with the number of e-mails simply asking “Where’s my tax refund”. It’s probably right, but the excuse it’s used until now is that there was a security problem.

Addressee only. When HM Revenue & Customs sends a letter it often contains personal or confidential information but as the envelope is addressed to the business owner or individual concerned it can reasonably expect that it will be the addressee who opens it. Similarly, when you phone HM Revenue & Customs it carries out a security check before discussing your tax affairs. By contrast, e-mail addresses are often shared or can, at least, be accessed by others and so HM Revenue & Customs has had to find a way to work around this.

Security. First HM Revenue & Customs has restricted e-mail enquiries to VAT, as these are less likely to contain personal information. Plus, rather than publish a general e-mail address it has a secure online e-mail service which anyone can access via its website. Where you use this service you aren’t guaranteed a response in the same format. The VATman says that where his reply contains confidential information he will write instead.

Advantages. One advantage over a letter is that you’ll have immediate confirmation your communication has been received. Plus, we found the stencil e-mails that VATman provides will help you to construct your question by prompting you for information about your enquiry. However, one drawback is you’re limited to 2,000 characters and there’s no simple way to keep an electronic copy. Tip. Our advice is to use a PDF printer to do this; you can easily find and download one for free from the web.

Source: Indicator Ltd

• Home Improvement Trades – This will build on campaigns aimed at plumbers and electricians. Hundreds of thousands of tradepeople in construction and building such as roofing, window fitting, bricklaying, carpentry and joinery will be affected.
• Missing Returns – This campaign will initially focus on those who fail to complete tax returns and who are liable to pay tax at the highest rates. Overall this will contribute to wider HM Revenue & Customs activity tackling failure to complete tax returns.
• Direct Selling – This will target customers who ought to be paying tax on income they earn from buying and selling goods to others, or from the commission on these sales.

Following the success of previous campaigns which utilised HM Revenue & Customs ‘Connect’ system to analyse and identify potential links and targets. HM Revenue & Customs has advised that it will use new technology to trawl the internet and information about specific, targeted people and businesses. This will also include cross-referencing returns received with other information held to ‘build a picture’ of where they can identify taxpayers with missing returns.

As seen in the Plumbers Tax Safe Plan, HM Revenue & Customs will target those that do not come forward with the full force of its powers including higher penalties and criminal prosecution. The Plumbers Tax Safe Plan has so far raised nearly £4million and seen 10 plumbers arrested with HM Revenue & Customs planning more arrests in the future.

The pilot programme conducted 2,437 Business Records Checks up to 4th January 2012 and found that 28% of businesses had some issue with their record keeping and that an additional 11% had issues serious enough to warrant a follow-up visit.

Any new Business Records Checks appointments will be postponed until the revamped approach is launched early in the 2012/13 financial year. However, HM Revenue & Customs will continue to undertake visits booked (including follow up visits) to those already identified as having seriously inadequate statutory records.

HM Revenue & Customs will confirm the new start date of the program in due course. However, when the program does restart, HM Revenue & Customs will initially contact those businesses it considers to be a higher risk of keeping inadequate records by phone or letter to ask about their record keeping. This information will then be used to determine whether a full Business Record Check is required.

Fines

HM Revenue & Customs is introducing a much tougher system of fines this year. The £100 penalty will apply whether or not there is tax owed. Penalties can mount up if a taxpayer neglects to send in a form, to £1,300 after six months and £1,600 after a year.

Even so, 600,000 of the nine million people who have to fill in the return were expected to put off submitting them until 31 January.

HM Revenue & Custom’s Stephen Banyard acting-director of general personal tax stated “We have always been very clear that we want the returns – not the penalties. For that reason, we do not want anyone who cannot get through for help and advice on 31 January to be disadvantaged in any way”

Appeals

Anyone who files after 2 February will be fined £100, although the normal appeals procedures is in place. This requires taxpayers with a “reasonable excuse” to write to their tax office quaoting their unique taxpayer reference. They should not wait for the penalty notice.

Source: BBC News

Insuring against interruptions

Business interruption insurance (sometimes referred to as business income insurance) is designed to protect a company’s financial position, i.e. it’s gross profits, in the event of a disaster, such as a fire or flood. But how do you calculate the level of cover that the company requires?

Setting the sum insured

There are two things that must be taken into account. The first is the actural “sum insured” in respect of the company’s gross profits. For insurance purposes it’s important to note that the definition of “gross profit” significantly differs to the standard one accountants use. If the directors rely solely on the latter when making a calculation the company could be underinsured, or uninsured, as a result.

Calculating gross profits

To calculate a company’s gross profits, the insurance industry will start by adding up the total value of its:

• Turnover.
• Closing stock.
• Work in progress.

Final part. They then deduct the combioned value of its opening stock and uninsured working expoenses.

What’s your indemnity period?

Once the directors have this figure, the second consideration is the actural “indemnity period”. It should represent the maximum time it would take your company to recover from a major incident. This won’t just include the physical reinstatement of any building(S) but the recovery of trading to a pre-loss position. Various factors need to be taken into account here, for example:

• demolition and site clearance
• time needed to abtain planning permission, tenders for work and rebuilding premises
• lead times on ordering machinery and restocking materials, products etc.
• winning back customers, e.g. is there a loyal following or will new ones need to be found?

Tip 1.Indeminty periods are commonly expressed in months, e….g. 24 or 36. It’s easy to underestimate this period and twelve months is rarely sufficient.

Tip 2. Premiums are based largely on the sum insured. Setting it too low is a false economy. In this situation “average” will be applied to any claim and it will be reduced in line with the level of underinsurance. So if in doubt, take advise.

Tip 3. If you opt for a longer indeminty period, say, 24 months, your premium won’t double – insurers charge a lower than pro rata rate for longer indemnity periods on this type of insurance.

Source: Indicator Ltd

Radical changes afoot - It seems that no government can resist the temptation to tinker with pensions, and the next big thing is “auto enrolment”, which starts in less than a year. Unlike previous attempts to gently encourage people to pay a pension, this will be far more wide-ranging. Apart from certain employees who won’t be eligible, all others will be automatically included in a pension scheme unless they opt out. What’s more, as their employer, you’ll be required to arrange this scheme and make contributions in to it.

What does auto enrolment entail? – Under auto enrolment all companies with one or more employees will be obliged to:

• choose a pension scheme for their workers, including directors. This can be operated by an insurance company or the new government scheme currently being set up specifically for this purpose; these are called National Employment Savings Trust.
• enrol workers into a scheme
• pay a pension contribution equal to no less than 3% of your employees’ wages, salary etc. between the “earning trigger” and the upper limit (currently just over £38,000) per year. Or where the scheme is based on the length of employment with your company, it must be approved by the Pensions Regulator as meeting certain conditions.

Note. Companies which have only one employee who is also the only director of the company are exempt from auto enrolment.

Can every employee join? – Essentially, employees aged between 22 and the state pension age (currently 65) whose employment income is more than the “earning trigger” (currently £7,475) will be eligible for auto enrolment. This can include temporary and agency workers. You’ll need to monitor your workforce to ensure that new employees are offered a chance to join your pension . Every three years you’ll also have to offer those employees who choose to opt out of your scheme another chance to sign up.

Trap. You won’t have to pay the 3% contribution for employees who don’t sign up to your scheme. But there will be stiff penalties for companies which try to persuade their employees to opt out.

What steps should I now take - The good news is that enrolment won’t apply to all companies at once. The timetable is for it to take four years starting in October 2012. The fewer employees you have, the longer it will be before you’ll be obliged to operate auto enrolment. If you have fewer than 50 employees, auto enrolment won’t apply until March 2014. But our advice is to start preparing now.

Tip. Check with your insurance company or pensions advisor whether your existing scheme meets the new requirements. If not, check when auto enrolment will apply and give yourself several months to get a suitable scheme set up.

Source: Indicator Ltd

StartUp Britain – You may have read about StartUp Britain in the papers recently. It was launched a couple of months ago at Microsoft UK headquarters in London. Although backed by the government, it is very much a scheme led by the private sector. Indeed. there are no goverment grants or funding to be found on the site – we’ve looked. So what’s it about?

The Website – The website, http://startupbritain.org, is all about inspiring Britains entrepreneurs and small businesses. In spite of its name, it’s not just for those starting up either – half of the website is dedicated to “growing a business”. There’s a great deal of information linked on there already – everything from the best magazines to read, to how better to market your business and set up a social responsibility strategy. However, this is all through third party websites – you clickk on a link which takes you to a website you have to search deeper for the information you want. So in respect, it’s far from perfect.

The offers – As well as the resources, the thing that caught our eye was the offers. When you click on the “growing a business link” you’ll be guided to a split screen – down one side are the resources on the other is a smorgasbord of company logos. If you hover the cursor over the logo, it will give you brief details of the discounts that the company offers. There are 33 companies on there at the moment, but this will only increase over time.

Note. Many of these offers can be found on the relevant company’s own website, but it’s worth spending ten minutes taking a look as this is so easy to use – plus, all the deals are in one place, which is handy.

Tip 1. Some of these offers are running out already, so you’ll need to be quick.

Tip 2. It’s worth signing up to the news feed – as the website grows it will have more resources and content of it’s own.

What you’ll save – currently the deals include:

• 100 free sales contacts
• 10% discount on HP website
• free copies of books related to growing and starting up businesses
• one month’s free rentall with O2
• free words on a Goole ad
• 60 days of free web conferencing
• half price on business suits
• 50 free business cards
• free foreign exchange money transfers for one year
• free access to sourcing interns
• 10% of business insurance
• £270 off website design
• free 30 day cloud computing trail worth £3,000
• 10% off cloud computing service for one year, saving £2,500
• free mentoring
• free IT training to 5,000 companies on how to use technology to manage and improve their business

Source: Indicator Ltd

Rise of social media – Facebook isn’t just a tool to find out what your friends had for breakfast; many businesses are now seeing it as an essential marketing tool. Just think about the number of ads that now say something like “find us on Facebook”.

Top targeting – Facebook may be used by millions, so almost every niche market you can imagine has people on Facebook that are interested in it. This can make it easier for you to locate those who are keen on your products and services. Everyone from Rentokil to Royal Mail can now target potential customers more effectively.

Tip. You can hire through Facebook, saving you hefty recruitment costs. People out of work may well be at home and online!

Note. You can advertise on Facebook, but this will cost you. Yeel.com, for instance, has a service which helps target people on Facebook effectively; for example, by presenting wedding-related ads to those who change status to “engaged”.

Fans of Facebook - According to a survey by publishing group Daryl Willcox, more than a third of UK SMEs use social media as a marketing method every day. It found that 35% of the firms surveyed post daily updates on services like Twitter, Facebook and LinkedIn. What’s more, 60% of users said that social media has had a positive impact on their business. Of these, 46% reported an increase in brand awareness. There are a few golden rules which might help you get ahead of your competitors:

1. Facebook isn’t all about selling, but building relationships with your audience.
2. If you’re using Facebook to promote your business, create a “fan page” not a “profile”. This is better suited to marketing.
3. Facebook is also a great way to keep in contact with your customers and find out what they’re saying about you. You can use this information to adapt your products and services to their needs and respond quickly to any feedback.
4. the rules covering marketing online have changed, so it’s worth the Advertising Standards Authority website (http://www.asa.org.uk).
5. Don’t expect to get it right first time. For every successful Facebook campaign there’s a failure.
6. Start small – friends, customers, etc. Provide links on your homepage to click through to your Facebook page, offer discounts and other benefits exclusive to Facebook members.

Tip 1. Your employees are likely to be on Facebook and know their way around the site. It could be an interesting project for someone who might not have the workload they did twelve months ago.

Tip 2. You may be able to spend less on printing brochures and flyers because social media is more targeted and can be updated quickly.

Source: Indicator Ltd

Alternative overdraft - With the economy in trouble, cash is a little tight for many at the moment. To make matters worse Christmas is on the horizon and your youngsters have a wish list as long as your arm. You could increase your overdraft, but this often comes with a hefty arrangement fee and interest. Alternatively you could borrow a little from your company to tide you over. But this route isn’t necessarily trouble-free.

Directors loan - As you know the Taxman counts a loan from your company as a benefit-in-kind. he also applies a temporary tax charge where it’s a director/shareholder who borrows the cash, but this won’t apply for most short-term loans. Where you owe £5,000 or more at any time during a tax year your company must work out the benefits-in-kind and report this on an annual benefits return Form P11D. This will trigger a tax bill for you.

Trap. Once borrowing exceeds £5,000 the whole of the loan is subject to the benefits-in-kind tax charge, not just the excess. So for a tax free loan keep it below £5,000.

How much Tax? – The benefits-in-kind is worked out as 4% of the average balance of the loan over the tax year or, if shorter, the period of the loan. So, for example, if you were to borrow £9,000, and over the year the average balance was £8,000 after repaying some, the benefits-in-kind would be £320 (£8,000 x 4%). If you pay tax at 40% you would owe the Taxman £128. Your company will also have to pay NI at 13.8%, i.e. £44 (£320 x 13.8%). But compared to the interest on an overdraft of the same amount, not to mention the arrangement fee, it’s not a bad deal! But could you do better?

No Benefit-in-kind - A friend says he wipes out the tax bill on his company loan by paying interest on it. Using the same figures as in our example above, if you paid £320 interest this would cancel the tax and NI charges. At first sight paying £320 to avoid a combined tax and NI bill of £172 might seem mad. But your friend points out that you aren’t really losing the £320 because you’re paying it straight back to your own company. It seems like a brilliant wheeze but your friend has overlooked something. Trap. You’ll have to pay tax and possibly NI on the £320 to extract the money either as salary or a dividend. This will cancel out any saving. However, the difference in tax between paying the interest or taking the hit on a benefit-in-kind is minimal. You might therefore decide to pay the interest because at least that way you won’t have to declare the benefit-in-kind or include it on Form P11D.

Conclusion. Unless you’re borrowing very large sums from your company, the difference in cost between paying tax on a benefit-in-kind or paying interest to your company is very small, making it more a case or personal choice. But is you decide to go for paying interest, we have one final piece of advice.

Tip. You don’t have to find the money to pay the 4% interest, you can simply add it to the amount you owe the company. This counts as payment for tax purposes and will cancel the benefit-in-kind charge.

Source: Indicator Ltd