Monthly Archives: January 2016

0 VAT and Pre-Trading Expenses

Are you aware of the view change ?

OK – so this is not the most exciting topic ever, but one to know about.

Your business must be registered for VAT when your rolling 12 month turnover reaches £82,000 although you should register if you believe your rolling 12 month turnover will go over that threshold.

When you first register your business for VAT purposes, you can claim back the VAT on goods acquired within the previous four years as long as the items were used in the business and you still have them as working assets (or stock) in the business. The same rule applies to service but in the previous six months if the services were still ongoing at the time of VAT registration and the service was not fully consumed at the date of registration.  The VAT cost could then be reclaimed on the first VAT return (standard and flat rate scheme). Depending on the business, this would make a nice cash flow injection. This is all in VAT Regulations SI 1995/2518, reg 111 if you want to check it out.

But, the VAT man has now changed his view on how much VAT can be reclaimed – OK so they changed their view in 2011, but it’s not really been publicised. For assets, the value of the asset would need to be written down in relation to its usage, and then claim the proportional VAT on that VAT

Let’s say you purchased £10,200 (includes £1700 of VAT) of printing equipment back in October 2013 and you’d expect a 7 year life from those assets. You registered for VAT in October 2015 so you have had 2 years use out of 7 of the assets. In the old days you would have claimed all the £1700 of VAT, but now, you would only be able to claim 5/7ths of it so a reclaim of £1214 can be made on the first VAT return.

It is only a change of view and not written down in VAT notices, indeed the government website still talks about reclaiming all the VAT cost. I guess it depends on your VAT inspector. But forewarned is forearmed, so just be aware of this for when you may register for VAT.

 

If you find this blog interesting / useful, please share with others and if you think this is going to affect you, then contact us for help. 01344 669084

 

 

 

 

 

 

 

 

0 Mixing & blending to get the right consistency

Getting the Processes Together

Over the Christmas period, I was playing “catch up” on the previous four weeks of Masterchef Australia as I love the format they have there, and the banter that comes with the judges. One of the challenges was trying to blend some obscure flavours together that came from historic Australian ingredients. One of them was black sugar ants !

Watching them mix and match (and many used the ants) reminded me of my corporate days when I was working in part of the airline & airport industry. Two companies had joined forces as they provided ancillary services in the bowels at London Heathrow, and the only thing they had in common was that they were people driven and serviced the end passengers through the airlines. Part of my role was to get the two businesses working together using the same systems & processes with shared resources and the same backing systems.

It all started with looking at what worked well within both companies, where there were holes in working practices and how they would like to work in the ideal world. Part of it involved a change of culture especially as a couple of other players came into the market to compete with their services. Their services had to be carried out on time and with the satisfaction of the customer – with flexibility for when flights come in late or early or when there was a stacking of planes when schedules change.

Documentation of working processes was the major task to be tackled. One of the companies had the bare bones of a manual that they kind of followed, but the other was built on a haphazard approach to business.  By getting people round the table to discuss how things currently work & how they should work, documenting it all in detail, and then obtaining agreement from all parties, it helped to ensure process were followed the same way across the business, irrespective of which terminal they were in or which line manager was on duty. The process manual became the guide for training new members of staff so they could hit the ground running. The result was a workforce that could happily cross over between the merged companies and be placed to carry out the service that was required of them.

The haphazard mentality also carried through to the financial systems and processes with everything having to be started from scratch. With solid operational foundations, financial systems & processes could be built to guide people through their numbers and know effects of missed calls, additional work load from aircrafts and hence the disparate ingredients all blended together as one complete dish. I won’t say perfect dish as everything need refining and tweaking initially – but knowing when to stop is another skill to make sure your dish does not get burnt.

 

Performance Process

Making processes work for you

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0 January Tax Blues – 01344 834 260

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It’s that time of year when the tax adverts are shown more often on the TV exclaiming that “tax does not have to be taxing”. For most people though, it is, especially if you have not been organised during the year and are now racking your brains trying to remember what you did 18 months ago, and digging round the back of the sofa searching for receipts. You look in the expanding file where you promised to put all your receipts and it is decidedly empty. Last years resolution went to pot quite quickly!

There are many reasons why you may need to complete a self-assessment tax return, but the main groups of people are*:

• the self employed;  
• people that earn money from property;
• a director of a company – unless no income or benefits were received;
• those that claim child benefit and they (or their partner) earn more than £50K;
• people that earn over £100K.

Notices would have been sent by HMRC April 2015 for you to complete a tax return, although if you didn’t inform them of any new income, then they won’t have known to issue you a return – catch 22 situation.

The paper return should have been in to HMRC by the 31st October, but the online version has a deadline of 31st January. The good thing about the online version is that it automatically calculates the amount of money you owe, or indeed are owed. There are help markers and worksheets for any questions, plus HMRC are rolling out an online chat service if you hoover on the page long enough. If you miss the 31st January deadline, then late penalties kick in on the 1st February, and delay too long and you could face penalties of up to £1,600.

Of course you need to be registered with HMRC in order to deliver an online tax return. If you have not done so, then you can find out how to do it  >>> here  <<< . Beware, this is the first stage of the process, as HMRC send you an activation code in the post which you need to allow 10 working days to receive it.

Already Registered?

Should you already be registered for taxes and have a unique tax reference number (UTR), then it’s just a case of pulling all the data together and completing the form. Often this is where the fear kicks in that you may “do something wrong”. However, help is at hand and it’s not too late to ask for help.

We’ve managed to add some more capacity for January, so if you have your UTR and your bookkeeping records and need to get your return submitted on time, then contact us before the 18th January and we can probably do it for you. Should you need your bookkeeping done as well, then we need it all before the 14th January.

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A word of warning: You need to ensure you have given yourself and your accountant enough time to gather all the information required for your tax return and complete the return appropriately, plus the review and submission. We do as much as we can electronically and have checklists in place to help gather information so scream if you need them when coming on board.

 

 

 

*this is not a complete list but just an example