Problems With HMRC Basic PAYE Tools

Published on May 22, 2013 in Employee/Employer Issues. 0 Comments Tags: , , , , , , , , , , .

THE FREE SOFTWARE provided to small businesses by HM Revenue & Customs is failing to file real-time PAYE submissions.

The Basic PAYE Tools (BPT) software package is available to employers with nine or fewer employees, and is designed to work out tax and national insurance contributions for each payroll cycle, and report it to the taxman in real time.

However, a software issue has seen an error message appear when employers attempt to make PAYE submissions, while taxpayers calling the RTI helpline were met with a recorded message acknowledging the fault and assuring them the issue was being investigated.

An element of Windows, known as a registry key, has been removed in a Windows update. The key is needed to enable full functionality of the software. Without its presence, the software is unable to successfully submit the information.

HMRC has published guidance advising users that although information about restoring the key is available from various sources online, HMRC itself cannot provide instruction on how to, as it is unsure why the key was removed.

The taxman will, however, release a software update at the end of May negating the need for the key. In the meantime, taxpayers are advised to continue running the payroll system as normal and submit the information once the update has been installed.

A spokesman for HMRC said: “The roll out of RTI is progressing well. Since 6 April over one million PAYE schemes have successfully started to report PAYE in real time. This includes over 140,000 BPT users successfully submitting returns.

This article has been provided by Ashley Barrowclough, Partner at Balance Accountants.

Guide to Book Keeping – 4

Published on May 21, 2013 in Guides, Manual Cash Books and Spreadsheets and Uncategorized. 0 Comments Tags: , , , , , , .

This is a guide to bookkeeping for a business that

  • wants to record transactions on a cash basis (i.e. at the point that items are paid for, rather that the date invoices are raised)
  • wants to use a manual cash book, or use computer spreadsheets, such as Excel
  • is registered for VAT, and operates the Flat Rate VAT scheme on a Cash Accounting basis

If you have not done so already, it would be worth reading our Introduction to Book Keeping article, before progressing further.

It will also help to follow the instructions and explanations if you can print off the appendices referred to.

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Bank and Cash transactions can be recorded on the same page of a manual cash book or on the same spreadsheet.  The best way to split them is to show bank and cash receipts together, and bank and cash payments together.

INCOME

Appendix 10 shows a fairly typical layout for recording the income for a business.  It is usual for income to be split month by month, but not essential, however, it does lend itself more readily to helping you balance your bank and cash each month (more on this later).

Explanations of each column header are given below.  Obviously, each page needs to be titled with the month and year in question and with the fact that it is Income that is being listed.

Date
It helps to specify the date on which amounts are received.  It also helps to list them in date order.

Detail
Here list the person, business, or other entity that has paid you the money and/or a brief explanation of what the receipt is for, if considered necessary.

Reference
This example lists the invoice numbers of the invoices being paid by the amounts received.  For amounts received that do not relate to sales invoices, the reference has been left blank and a brief description used in the ‘Detail’ column instead.

Bank
Here list all amounts received that are paid into the bank.  This column should contain all of the deposits that show up on your bank statements.

Cash
Here list all amounts that are received in cash that you do not put into your bank account.
Once a receipt has been listed in either the Bank or Cash columns it then helps to show whether that income is sales receipts or other receipts.

Sales receipts
List receipts here if they relate to one of your sales invoices, or some other paid work that you have done.  The gross amount (net plus VAT) is the amount to record.

Other Income
List all other income here.  Your accountant will be able to analyse the items in this column over the year, and treat them accordingly in your accounts.

VAT

When you raise a sales invoice you have to charge VAT at the standard rate (currently 20%) regardless of which flat rate percentage you use under the Flate Rate Scheme.  So, for example you if you need to charge a customer £1,000 you will need to add VAT of £200 (20%) to the invoice and charge them £1,200 in total.

If you want to operate the Flat Rate Scheme you need to know which percentage rate you have to use for your business sector – a list of current rates can be found on http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#4

This example uses the flat rate percentage of 11%.  You have to declare output VAT at 11% of the gross amount collected.  So in this example, if you have collected £1,200 gross from a customer you have to declare £132 Output VAT.  This means you are better of by £68 in this example, but you need to be aware that this £68 will be added to you sales figure at the end of the year.  Thsi will increase profits.

The layout in Appendix 10 has a column for you to list the VAT at 11% of gross so that you can keep a total of the VAT to record on your VAT return.

It also has a column so that you can record the amount of standard VAT charged on your invoice – this isn’t obligatory but more on this later.

So, for each receipt you will need to

  • state the date it was received and provide some detail for it,
  • determine whether it should be shown as being paid into your bank account or held in your cash in hand,
  • show whether a receipt is sales or other income by listing it in the relevant column,
  • if a sales receipt, list the amount of flat rate VAT to declare on your VAT return.

At the end of each month you can add up the columns to get totals for the month.  The best check to see if you’ve got the basic arithmetic right is to understand that the totals of the ‘Bank’ and ‘Cash’ columns should equal the totals of the ‘Sales Receipts’ and ‘Other Income’ columns.

EXPENDITURE

Appendix 11 shows a fairly typical layout for recording the expenditure for a business.  Again, it is usual for expenditure to be split month by month, but not essential, however, it does lend itself more readily to helping you balance your bank and cash each month.

Explanations of each column header are given below.  Obviously, each page needs to be titled with the month and year in question and with the fact that it is Expenditure that is being listed.

Date
It helps to specify the date on which payments are made.  It also helps to list them in date order.

Detail
Here list the person, business, or other entity that you have paid the money to.

Reference
It is common for people to file their purchase invoices and receipts on a file, giving each one a reference, usually just in simple numerical order.  This example lists the given ‘number reference’ applied to each invoice/receipt.

For amounts that are paid by standing order and do not relate to a specific invoice, we suggest the abbreviation ‘SO’ be used.

Bank
Here list all amounts that are paid out of the bank.  This column should contain all of the withdrawals that show up on your bank statements.

Cash
Here list all amounts that are paid in cash and not from your bank.

Other Columns

Once a payment has been listed in either the Bank or Cash columns it then helps to split the expenditure into the various types of expenditure that you incur.  This is achieved by creating a series of columns with headings relevant to your business.  Appendix 11 shows common headings used.

You need to record the amount paid in one of the other columns.  Choose a column that best suits the expense you are ‘analysing out’ and list the amount there.

It will also be useful, especially to your accountant, if you could give additional information for some expenses in the column to the far right.  For example, it’s great seeing that this business paid £458 to Aviva and that it is analysed under ‘Insurance’, but in order to know that the transaction is accounted for properly in your year end accounts, your accountant will need to know what type of insurance it is and what period was covered by the insurance.

This additional info isn’t vital if you give all of your purchase invoices to your accountant at the year end as they will be able to find this detail on the relevant invoice.  However, if you send your accounts records to your accountant via email, and do not send in the original documentation, then this additional information will help no end.

Again, once the month has been completed the total of the columns needs to be calculated.  And again, the sum of the ‘Bank’ and ‘Cash’ columns should equal the sum of all the other columns.

VAT

If you operate the flat rate scheme then you cannot claim back any input VAT on any of your expenses and you are not obliged to keep any records of VAT, other than the ‘Flat Rate’ column as already explained on Appendix 10.  The point of the flat rate scheme is to cut down on the paperwork for small businesses.  However, you might consider that it is only worth operating the flat rate scheme for as long as you are paying over less, on the whole, to the VAT man than if you were on a standard scheme.  The choice is yours really.  If you want to keep a tab on whether you are financially better off using the flat rate scheme, then you also need to keep a total on how much you would have to pay over each quarter if you were using the cash accounting scheme.  The simplest way to do this is as follows:

Output VAT

Appendix 10 shows a greyed out column.  As already mentioned above, this is where we can keep a record of the VAT charged on each invoice. This keeps a tally on the output VAT you would need to declare if you were using the cash accounting scheme.

Appendix 11 also shows a greyed out column.  This is where you can record the amount of VAT that you have been charged on any of your expenses.  Again, this keeps a tally on the input VAT you would need to declare if you were using the cash accounting scheme.

As demonstrated on Appendix 10 you can easily calculate each month the amount of VAT you would have to pay over by deducting the Input VAT total from the Output VAT total.  If the amount you would have to pay over on the cash accounting scheme is usually more than the flat rate amount, then you are quids in.  If the amount often comes in lower than the flat rate scheme, it might be worthwhile coming off the flat rate scheme and using the cash accounting scheme

If you choose to keep these extra records then you will need to be mindful of the following to help you keep an accurate record of input VAT.  Remember that you can only claim back input VAT if you have a supporting VAT invoice or receipt from your supplier.  A VAT invoice or receipt must always have your supplier’s VAT registration number printed or written on it.

Most VAT invoices or receipts will have the amount that you have been charged for goods or services before VAT, the amount of VAT you have been charged, and the grand total.  The VAT charged is the amount to record in the VAT column.

If you have been given a receipt that just shows the amount you have charged, but does not separate out the VAT, then you need to work out how much VAT to claim back.  VAT is currently 20%, therefore, you will need to divide the full amount paid by 6.  For example, if you have paid £30 for petrol and need to work out what VAT is included, then divide £30 by 6.  This gives you £5, and this can be claimed back as input VAT.  You have been charged £25 before VAT for your petrol.  Also remember, that when there is a change in the rate of VAT, the calculation you need to apply to work out the VAT this way will change.

This Guide was compiled by Deborah Bradley, Client Manager at Balance Accountants.

Spring Has Sprung

Published on May 17, 2013 in Staff and Practice News. 0 Comments Tags: , , , , , , .

By the third week of April it was really beginning to feel like spring had finally arrived. The primroses and daffodils put on a great display and the colour of the flowering currant was electric. Even the snowdrops that had looked a little sorry for themselves after the snow had melted put on one last show before going to seed.

Primroses

Flowering Currant

The cold spell has probably delayed the seasonal growth in the garden by about 3 weeks, and although no major damage has been done to the shrubs and plants by the weather, the same cannot be said for the blue tits that had been visiting the garden every day. Since the snow fell we have had no sight of them and it is possible that they did not survive.

Things on the gardening front have been busy with plenty to catch up on as the soil starts to warm. The onion sets have finally been planted out, the leeks, spring onions and parsnip seeds have all been directly sown in the vegetable beds. Meanwhile, in the greenhouse , the peas and mangetout have been growing well and it has only been this last week that they have been planted out into their final positions, albeit with some protection from the weather and the birds. Climbing beans have also been sown into module cell trays in the green house and annual flower seeds of cosmos, rudbeckia and verbena bonariensis, as well as some celeriac have been sown in seed trays indoors. These are all now growing away quite well.

Erythronium

Over the May Day bank holiday we had a few days away and on our return we found that the shrubs and plants had really come on leaps and bounds. The garden was starting to fill out as the warm weather encouraged the plants to put on some growth, the garden was looking green and fresh. In our absence the cherry tree had started to blossom and the erythroniums, brunnera and clematis were all in full flower.

The tomatoes, peppers and courgettes are growing well and these are now gradually being acclimatised to the greenhouse conditions during the day. A dip in the temperatures over the next few days has been forecast so it may be another few days or so before they can remain in the greenhouse on a more permanent basis, and slightly longer still before the courgettes are planted into their final positions outdoors. That’s British weather for you, it can change at the drop of a hat, and as a gardener it keeps you on your toes.

This article was compiled by Karen Ashton, Client Manager at Balance Accountants.

Disclosure Agreements With Isle Of Man, Jersey And Guernsey

Published on May 16, 2013 in Food for Thought and Tax Planning. 0 Comments Tags: , , , , , , .

These new agreements involve a planned automatic exchange of information from 2015 on all accounts held in these offshore areas. So for any UK residents with savings accounts in these offshore areas, be aware that HMRC will know all about them from 2015.The new arrangements include a disclosure facility to allow UK resident investors with accounts to come forward and settle their past UK tax affairs before information on their accounts is automatically shared between the governments. Similar arrangements are expected to be announced for Luxembourg.

The disclosure facility operates from 6 April 2013 until September 2016. It will not be open to individuals already under investigation but will cover liabilities dating back to April 1999 at the earliest.

These types of arrangements are proving a real money spinner for HMRC. They were originally expected to bring in over £5billion over the next six years but they have upped that to £9billion based on what they have collected so far!

This article was compiled by Ashley Barrowclough, Partner at Balance Accountants.

Sleeping Partners and NI Contributions

Published on May 15, 2013 in National Insurance. 0 Comments Tags: , , , , , , .

In the past sleeping partners and inactive partners didn’t have to pay NI contributions on their partnership profits.  However, HMRC changed its view on this in April 2013 and it now considers that all partners are liable to pay NICs in respect of their taxable profits, whatever their level of activity within the business. The implications for inactive and sleeping partners are:

  • if not already registered as self-employed, the person must register with HMRC and arrange to pay class 2 NICs from 6 April 2013;
  • exemption from paying class 2 NICs can be claimed if the taxable profits are low, or the individual has another employment; and
  • class 4 NICs will be due on their profits from 2013/14 onwards and will collected through the normal self-assessment for 2013/14.

This article was compiled by Ashley Barrowclough, Partner at Balance Accountants.

National Minimum Wage to Rise from October 2013

Published on May 14, 2013 in Employee/Employer Issues. 0 Comments Tags: , , , .

The Government has announced that the main rate of the National Minimum Wage (NMW) will rise by 12p to £6.31 an hour from 1 October 2013.

Announcing the change, the Business Secretary Vince Cable also revealed that the hourly rate for those aged 18 – 20 will increase from £4.98 to £5.03, while the rate for 16 and 17 year-olds will go up by 4p to £3.72 an hour.

The Government accepted the recommendations put forward by the Low Pay Commission (LPC), although it rejected the LPC’s proposal to freeze the minimum rate for apprentices.

Instead, Mr Cable announced that the apprentice rate, which applies to apprentices under 19, or those 19 and over in the first year of their apprenticeship, will rise from £2.65 to £2.68.

The decision has provoked a mixed response, with some business leaders describing the move as ‘illogical’ and ‘unwelcome’.

Mike Cherry, national policy chairman of the Federation of Small Businesses, said: ‘The increase in the national minimum wage is unwelcome in today’s economic climate. We understand the Government must strike a balance between boosting consumer spending and economic growth, however they must ensure the UK’s small businesses stay competitive at a time when the economy remains fragile.

‘There will be businesses that operate on thin margins, who will struggle with any increase to the minimum wage.’

His thoughts were echoed by Dr Adam Marshall from the British Chambers of Commerce (BCC), who warned that the scale of the increase would add significantly to the cost pressures on businesses.

Yet the TUC said it would have liked to have seen the Government do more to help those on lower incomes.

‘Boosting the incomes of the low-paid goes straight into the economy and wage-led growth must be part of the recovery, so we would have liked to have seen minimum wage rates go up further today, even if the Government has rightly rejected calls for a freeze,’ commented TUC general secretary Frances O’Grady.

This article was compiled by Ashley Barrowclough, Partner at Balance Accountants.

Balance Accountants Take Silver at the National Design Awards

Published on May 7, 2013 in Our Rebranding Story and Staff and Practice News. 0 Comments Tags: , , , , , , , , .

It’s official—Balance Accountants are now an award winning firm!!!!!

At a glittering awards ceremony in London, Balance Accountants walked away with a silver award from the Design Business Association (DBA). The award was presented in the “Brand Identity” category and is in recognition of the remarkable transformation that we made from Rogers & Co to Balance Accountants.

On the night, in front of a large audience, we were pitted against industry giants like Cadbury, Carlsberg and Marks & Spencer. It was a little bit daunting but up there on the big screen our entry looked as good as any of the “Big Boys”.

In design circles, the DBA Design Effectiveness Awards are amongst the most prestigious and authoritative awards around so to receive any award is a great achievement but to get a silver is a tremendous accolade for the firm and it’s staff who put so much effort into the rebranding process and made it such a success.

The silver trophy comes in two halves so that one half can be kept by Balance and the other by our design Agency partners, Engine Room.

Ashley, back at the office, with the DBA silver trophy

This article was compiled by Ashley Barrowclough, Partner at Balance Accountants.

Penalties increasing for late filing of 2012 tax returns.

Published on May 1, 2013 in Paying Tax and Straight from the Boss. 0 Comments Tags: , , , , , , .

Individual taxpayers who are yet to submit their 2011/12 self-assessment tax return are reminded that they will be hit by increasing penalties from next month.

The online deadline for filing self-assessment returns for the 2011/12 tax year was 31 January. Individuals that missed this deadline will have already received an initial £100 late-filing penalty.

From 1 May, there will be an additional daily £10 penalty for each day the online return is late, up to a maximum of 90 days.

For paper returns, which were due by the 31 October deadline, daily penalties began on 1 February.

Further penalties of at least £300 – or five per cent of the tax due, whichever is the greater – will then be issued for returns that are six and 12 months late.

So if you have still to file your 2011/12 self assessment tax return then you need to take action as quickly as possible because in this instance time definitely means money!!!!!!

This article was compiled by Ashley Barrowclough, Partner at Balance Accountants.

P11Ds (Benefits-in-Kind) – an outline

Published on April 26, 2013 in Employee/Employer Issues. 0 Comments Tags: , , , , , , , , , .

The P11D season is upon us once again…

The P11D is a statutory form required by HMRC from UK based employers detailing the cash equivalents of benefits and expenses that they have provided during the tax year to their directors, and employees earning more than £8,500 per year (including benefits).

Cash equivalent means the cash value an employee will pay tax on according to the type of benefit they have been provided by their employer.

The basic cash equivalent formula is: –

Cost to the Employer of providing the benefit (inc VAT)
Less
Amount made good by the employee (Out of their net pay)
Equals
the Cash Equivalent

However there are some very complicated rules to calculate the cash equivalents for certain benefits such as company cars, beneficial loans, provision of living accommodation etc.

Here are some examples of what should be included on your P11D:

-        All expenses reimbursed to you by the company for business expenses incurred for you personally, whether or not you physically withdraw the cash or not.

-        All business expenses the company meets on your behalf. Common examples of the company paying for genuine business expenses for you personally would be entertaining, subsistence, etc.

-        All personal expenses the company meets on your behalf

-        Company car benefits must also go on your P11D, and these will attract a tax and Class1NIC liability. It is often better to keep your own car personally and charge the company mileage instead.

It is possible to apply for a P11D dispensation whereby you agree to adhere to certain rules, and, if accepted by HMRC, this precludes the need to do P11D’s from the date the dispensation is agreed. This is obviously a great time saver, and means that HMRC are made aware of the types of expenses you have in your business, and that these are for business only.

P11Ds (for the year to 5 April 2013) need to be completed and submitted to HMRC by 6 July 2013. Any Class 1A NICs due as a result of P11D benefits must be paid by 19 July (22 July if paid electronically).  By this date the employer must also provide current employees with details of the information contained on the P11D.

This article was compiled by Karen Ashton, Client Manager at Balance Accountants.

Sunflowers; What’s The Big Idea?

Published on April 24, 2013 in Staff and Practice News. 0 Comments Tags: , , , , , , , .

Not only are sunflowers the high achievers of the plant world they are one of the fastest growing plants and they follow the sun to maximise their potential.  But what we really love about them is their generosity……

One seed placed in the right environment, given the right amount of time and attention rewards you with 2000 more…..

Imagine what your business could achieve if nurtured in the same way.

At Balance we love to work alongside our clients throughout their financial year.  We believe that your business can only grow if given continuous care and attention, thereby ensuring that you are in control and benefiting from current thinking, trends and opportunities.

What will help your business stand out?

If you’ve visited us at our stand at the Buy Yorkshire 2013 Conference, then we may well have given you one of our lovely tins containing 2 sunflower seeds.  We love the idea that the West Yorkshire business community will be dashing home to grow their sunflowers, however, we appreciate that in the real world this may not happen.

However, the message that we would love visitors to our stand to take home with them is the analogy between tending to living, breathing sunflower throughout its growing season, and tending to their businesses throughout its various cycles.  If you would like to work with Accountants who want to meet with you regularly throughout your financial year then we could be the right for you.

Please contact us to find out more.

And if you fancy having a go at unlocking the full potential of your sunflower seeds, we have step-by-step instruction here, to help you along the way.

Compiled by Sharon Munt (Practice Manager) and Deborah Bradley (Client Manager) at Balance Accountants.