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So far Sadia Ajaz has created 39 blog entries.

Labour’s crackdown on tax avoidance

Labour’s crackdown on tax avoidance
The Labour party have pledged to crack down on tax avoidance to raise an ambitious £7.5bn annually, according to their manifesto.

Ed Balls, the Shadow Chancellor stated should the Labour party be elected by the public, it will crack down on tax avoidance immediately by closing tax loopholes and increasing fines for tax avoidance.

In the first week under Labour rule, a draft Finance Bill will be set out, to deliver Labour’s ten point plan.

The proposals set out by Labour would include HMRC and the Chancellor being summoned before parliament every year to discuss the target set of bringing in £7.5bn annually, which Mr Balls stated should be achieved half way through the government’s term.

Labour also intends to review the systems for collecting tax and assess HMRC’s current powers.

The Shadow Chancellor stated:

“We will close loopholes the Tories won’t act on, increase transparency, toughen penalties and abolish the non-dom rules. And our first budget will make sure that following an immediate review of HMRC, it has the powers and resources it needs to come down hard on tax avoidance and evasion”.

The ambitious amount of £7bn has attracted staunch criticism, with critics stating there are no details on how this will be achieved.
Labour’s Ten point plan
Labour’s ten-point tax plan includes:

abolishing the non-dom rules;
re-writing the carry interest rules;
closing stamp duty loopholes relating to hedge funds;
mandating the UK’s Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership;
increasing penalties for tax avoidance including new penalties for those who are caught by the General Anti-Abuse Rule (GAAR).
scrapping the Shares for Rights scheme;
tackling disguised self-employment by introducing strict deeming criteria;
tackling the use of dormant companies to avoid tax by requiring them to report more frequently;
close Eurobonds […]

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Small Business Tax Rate Summaries

Individual and Small Business Tax Rate Summaries
The 2015/2016 tax year commenced on 6 April 2015.

We have set out below a few points on the impact of a new tax year for individuals, sole traders & partnerships, employers and small businesses.
Individuals

Personal Allowances have increased to £10,600. This is the amount an individual earning less than £100,000 can earn tax free.
Individuals earning over £100,000 also have this personal allowance available to them, however it is reduced by £1 for every £2 they earn over £100,000. Therefore anyone earning £121,200 in 2015/16 will have no personal allowances (assuming they were born after 4th April 1948).
Personal allowances for individuals born before 6 April 1938 have gone up an extra £60 to £10,660.

 Sole traders and partnerships

Many businesses align their accounting year end with the tax year end. If you haven’t already, it is a good opportunity to review margins, reduce costs and increase prices.
Although the government proposed to abolish Class 2 National Insurance Contributions, they haven’t set a date yet. The rate has increased by 5p to £2.80 per week.
Where profits are below the Small Profits Threshold of £5,965,  individual may elect to apply for the Class 2 Exemption. It may affect your entitlement to state benefits therefore careful thought is required on whether it would be appropriate to apply for this exemption.

 Employers

Ensure End of Year 2014/15 PAYE reporting requirements have been completed and successfully submitted to HMRC.
Employee tax codes have to be updated.
Review business to consider whether Employment Allowance is applicable. If business is eligible it gets a £2,000 allowance to set off against Employer’s National Insurance Contributions.
Employee National Insurance threshold has increased to £155 a week. Therefore an employee can earn up to £155 before they need to pay National […]

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Small Business – impact of Auto Enrolment

Small Business – impact of Auto Enrolment
Whilst Auto Enrolment has already been embraced by majority of the companies with more than 50 employees, there are more than 17,000 companies that are on the edge of staging.
Survey of small business
A survey undertaken  showed 43% of these companies who are on the cusp of staging are worried that they will not be able to offer their staff with pay increases in the future.

Employees feel similar thoughts, with 72% of employees working in companies who have a staff of less than 50 are fearful that they may not see increases in their pay, due to the work place pension regulations.

Some 21% of companies who have less than 5 employees feel that they may be put of business due to auto enrolment.

Many businesses who have 1 – 5 employees are of the opinion that their product/service costs would have to increase to absorb the Auto Enrolment implementation and running costs.
Comments by Matthew Mitten
Mathew Mitten, director of Enrolsme, stated

“These are worrying trends, given small businesses are the lifeblood of the economy. Employment in this sector may be affected with a third claiming they won’t be able to recruit more staff; and almost one fifth telling us they will have to reduce their investment plans.”

“However, even more concerning is the portion of small companies that believe automatic enrolment could see them going out of business all together. This was certainly not the goal of the legislation. These are tricky times for small business in the UK and more should be done to help support them.”
Other findings of the survey
The survey undertaken also stated that despite the media hype publicising the legislation, a third or employers are not sure what Auto Enrolment means.

In contrast, […]

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HMRC wins tax avoidance cases

HMRC wins tax avoidance cases
HMRC has won three wins against tax avoidance schemes, upholding earlier judgments in HMRC’s favour at the First- Tier Tribunal.

These wins has resulted in HMRC protecting over £260 million in tax.
The cases
The three cases were:

Steve Price, John Myers and James Lucas v HMRC
Malcolm Healey v HMRC
Philip Savva, Andrew Savva, Mario Savva, Savva Savva and Kalliopi Pericleous v HMRC

An appeal to the Upper Tribunal was dismissed by users of a tax avoidance scheme which was promoted by NT Advisors. The scheme created artificial losses by a combining employment income and capital gains on share options. There were 420 users of this scheme.

The judges dismissed the appeal without hearing the main arguments from HMRC. This is the ninth win for HMRC against schemes promoted by NT Advisors.

The Upper Tribunal also dismissed two other cases. These schemes were designed by banks to provide the users with a much higher tax-free return on their cash deposits than they could have obtained by placing funds in a normal deposit account. Both of these berspoke schemes were marketed and sold by banks some years ago for substantial fees. The court joined these two separate cases because of similarities between the schemes.
Financial Secretary’s comments
The Financial Secretary to the Treasury David Gauke stated:

“The overwhelming majority of people pay the taxes they owe. These latest cases show that HMRC will effectively tackle those who try to get around their legal responsibilities. Users of avoidance schemes should think twice before trying to abuse tax reliefs to avoid paying their fair share of tax.”

For information on how to increase you businesses tax efficiencies, contact us on  0118 907 9224.

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Small business, Enterprise and Employment Act

Small Business, Enterprise and Employment Act receives Royal Assent
A wide ranging Act designed to make UK the best place to start and grow a business have become reality by being granted Royal Assent.

The Small Business, Enterprise and Employment Act paves the way for businesses to improve access to finance, put an end to zero hour contracts and creates fairer provisions for tied pub tenants.

The Act will provide a path for small businesses to expand, creating jobs, assist with innovation and help bolster the economy. .
Business Secretary’s comments
Business Secretary Vince Cable has stated:

“Small businesses provide jobs for millions of people across the country and are driving the economic recovery. The Small Business Act will create the right environment for small businesses to continue to thrive by giving them greater access to finance to help them innovate and grow, and make it easier for them to export goods and services made in Britain.

“The Bill’s measures also mean there is nowhere to hide for firms who do not play by the rules, whether by abusing zero hours contracts or not paying the minimum wage.”
Business Minister Matthew Hancock’s comments
Business Minister Matthew Hancock has stated:

“The government has backed small businesses like never before to build a Britain where entrepreneurs can break the mould and take on the world.

“Coming from a small business background myself, I know first-hand how cumbersome bureaucracy can stifle your ambitions to grow.

“The Small Business Act is the first set of laws specifically to help level the playing field for small business. There really has never been a better time to start and grow a business in the UK.”
How the Act will assist small businesses
The Act is designed to assist small businesses through the following measures:

•increase availability […]

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Small businesses lack basic digital skills

Small businesses lack basic digital skills
The latest UK Business Digital Index has polled that 23% of small and medium sized enterprises (SME’s) lack basic digital skills.
Digital Trends
The Index tracks and measures levels of digital ability amongst SMEs and charities. It suggests that there is a trend towards SMEs embracing digital skills. However there are still a million SMEs that don’t have basic digital skills.

In the charity sector, 58% of charities don’t have digital skills.
Digital skills
Digital skills can include having a website and updating it regularly with blogs, having social media presence such as Twitter and Facebook and using e-commerce.
Challenges and perceived benefits for small businesses
There are challenges around the benefits many SME perceive from embracing digital skills. 25% of SMEs see this as irrelevant and 27% believe they have embraced as much digital skills as they possibly could.

The report found that firms which embrace digital skills are twice as more likely to increase turnover.
Comments from Lloyds
Miguel-Ángel Rodríguez-Sola,the group director for digital at Lloyds Banking Group stated:

“In just one year it is pleasing to see that over 100,000 more small businesses in the UK now have basic digital skills.”

“But what is also clear is that real challenges remain – over a million small businesses and charities still lack basic digital skills and the perceived benefits of being digital remain. For example 25 per cent of all organisations surveyed believe digital is ‘irrelevant’ to them. We cannot emphasis enough the benefits that digital adoption can offer – such as saving time, increasing revenue or funding or reaching wider audiences. Digital is the key to unlock these benefits.”

To find out how Avery Clifton can assist small businesses with their digital marketing please contact us on 0118 907 […]

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Budget 2015

ACCA’s View on Budget 2015
The Association of Chartered Certified Accountants (ACCA) has voiced its thoughts on the Budget 2015 Report. It has stated with a Budget so close to the General Elections, the Budget was always going to be a political one with tax payer pleasing measures.

The head of taxation at ACCA, Chas Roy-Chowdhury has stated:

“As you’d expect so close to the General Election, this was a political Budget from a political Chancellor.”

“It contained a number of welcome measures that will go down well with voters from a range of economic backgrounds such as a further increase in the personal tax free allowance to £11,000, a new fully-flexible ISA and the new first-time buyer bonus.”
SME Business Rates
On the news of the Government launching a review into SME business rates, Chas Roy-Chowdhury commented that the review is welcomed, as business rates can often be punitive costs, especially for businesses in the retail sector.
Lifetime Pension Allowance
The reduction in the lifetime allowance for pensions from £1.25 million to £1 million has not gone down well. Chas Roy-Chowdhury commented that this wasn’t the right way to deal with long term investments. He stated:

“The Chancellor should exercise caution when meddling with the pension pots of those who have been contributing to them for 30 to 40 years in many cases. They are heavily relied upon by those looking to retire and care should be taken not to jeopardise their future.”

“What the Chancellor didn’t make crystal clear was the tax implications of withdrawing a lump sum. There is the potential for a large number of people to get quite a shock when they find out they will have tax to pay on their money should they wish to get their hands on […]

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Budget Summary 2015

Budget Summary 2015
The Chancellor George Osborne delivered his Budget Report on 18 March 2015.
Avery Clifton have produced a summary of the report below. The Chancellor’s Report was fairly exhaustive so we have kept the summary brief . Highlights to the Budget include reduction to savings tax, revolutionising the personal tax return, abolishing Class 2 National Insurance Contributions  and reduction in the Annual Investment Allowance for businesses.
Click this link for Budget 2015 Rates and Allowances
Personal Tax
Personal Allowances for 2015/16
From 6 April 2015 the personal allowance will be £10,600.
Income Tax Rate Bands for 2015/16
The thresholds for the rates of income tax are as follows from 6 April 2015:

Income Band                          Income tax rate           Dividend rate
£0 – £31,785                                  20%                               10%
£31,786 – £150,000                     40%                               32.5%
£150,000 +                                   45%                                37.5%

The threshold at which higher rate tax is paid is £42,385.
Married Couples and Civil Partners Transferable Tax Allowance
From April 2015, a transferable tax allowance will be introduced which would allow spouses or civil partners to transfer a maximum of £1,060 of any surplus income tax allowance to their partners. Conditions for making or receiving the transfer are that neither party must be liable to income tax at the higher or additional rate. From 6 April 2016 the transferable amount will be 10% of the personal allowance for those born after 5 April 1938
Tax Simplification – Tax Returns
The government intends to transform the tax system over the next 5 years by introducing digital accounts to remove the need for small businesses and individuals to complete annual tax returns. Further details of these changes will be announced later in 2015.
A new Personal Savings Allowance
A new allowance is being introduced from 6 April 2016 to remove tax on up to £1,000 of savings income for basic […]

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Small business cash flow tips

Small business cash flow tips
Managing late payments are a significant issue to small businesses, with £46.1 billion currently being owed to businesses. In 2008 the amount owed was £18.6 billion, less than half of what is currently owed. With the situation worsening, businesses need to take real action to ensure they have a healthy cash flow by managing their credit control effectively.

Government has stated that small businesses spend on average 130 hours a week chasing late payments, which equates to a cost of £1,500 per business. As small businesses are reliant on a healthy cash flow, late payments can have a huge impact on the liquidity of a business and can lead to insolvency. 34% of businesses have used external finance in the form of loans and overdrafts from banks to bridge the gap caused by late payments, resulting in interest charges of £180 million. With tightening profit margins, businesses should be looking at ways of getting their invoices settled quicker to avoid unnecessary costs.

Small businesses should therefore implement the following tips as a minimum to manage their cash flow effectively:

Ensure business has a clear and easy to implement credit control strategy. Setting out an approach which sets out the strategy on a day to day basis will assist in getting paid on time. For example business policy should state when reminders are sent, whether emails or telephone calls are appropriate, templates for reminder and when court action is required.
The key task before undertaking business with a prospect is “knowing your client/customer”. Credit should only be provided once a credit check has been done on a client. With financial circumstances changing all the time, it makes sense to ensure credit checks are an ongoing process.
Payment terms should be incorporated in […]

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HMRC report on IR35 cost

HMRC has published their report on the IR35 cost to the government.

In summary the report states that continuing with the IR35 regime is more cost efficient than trying to get it abolished. The administrative cost to the public in continuing with this practice is £16 million, whilst abolishing it would cost the Exchequer £550 million per year.

The legislation which has been the source of various controversies is designed to prevent people from lowering their tax bill by not being directly employed.

Jason Piper who is the ACCA’s tax technical manager and sits on the HMRC’s IR35 Forum responded to the figures on the report:

“Figures cover the cost to taxpayers of assessing whether or not the complex and often controversial measure affects them directly but what it can’t address is the wider costs to other businesses in the chain of the IR35 compliance process. Agencies and end users will often face an administrative burden of replying to the taxpayer’s requests, while the contractor themselves will often be in limbo until that information is forthcoming.”

“The wider costs of IR35 are beyond what HMRC has the remit or resources to reasonably investigate but it’s clear that the policy making process needs to address that wider drag on the economy. Government has clearly identified a risk that it wants to address, but it’s important to make sure that the mechanisms used are the best that we can craft. That may mean devoting more time and resource to the underlying design, but that initial spend will be more than repaid in efficiencies further down the line.”

Piper stated the interaction issues regarding the IR35 cost and how it is interlinked to the society we live in.

“We […]

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