Archive for the 'Food for Thought' Category

Disclosure Agreements With Isle Of Man, Jersey And Guernsey

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.

Tips for a better business – from Balance Accountants

3. Don’t try to compete on price

There are very few cases where low prices can be sustainable in the long term.  If you make a sale or gain a contract based purely upon price this year then next year it is quite possible that another competitor will come along and undercut and take the business away from you.  So what do you do then? Well a natural reaction is to reduce your prices further in order to regain the business.  But, as you can see, the end result is a downward spiral in prices until it is no longer viable to provide the product /service.

The alternative is to provide a product/service that is differentiated from your competitors by being better.  By providing better value for money.  That way you won’t necessarily be competing with the cheap and cheerful product/service of your competitors.  You will become known for being the best and customers who are looking for quality will gravitate towards you.

Balance Accountants specialise in helping business owners to have better, more profitable and more enjoyable businesses. If your business is not performing as well as you want it to then you should contact us now.

Review of The Way of the Dog by Geoff Burch – by Phil Auckland

As part of the staff mentoring process that we undertake at Balance, Ashley has recently asked me to read a book called The Way of the Dog by Geoff Burch.  The reason behind this was to try to help me to develop management skills and thinking, rather than just being a number cruncher!

When I started to read the book I was in for a bit of a shock…there were no technical management terms (as I would have expected), in fact the book was written as a story.

The story was about a double glazing salesman called Derek who wasn’t very good at his job.  One day, Derek was magically transformed into a sheepdog!  Derek almost instantly fell into a bad crowd of sheepdogs (in this new world it was every sheepdog for himself)!

The sheepdogs and the farmer treat Derek badly, they bullied Derek and were aggressive towards him.  Derek did not like this, and as a result he didn’t perform his sheepdog duties very well.  The farmer had had enough of Derek’s poor performance and so he tried to shoot Derek.

Derek ran away from the farmer and found a new farmer and a new group of sheepdogs to join.  Derek’s new farmer and sheepdogs treat him well, they were polite and kind to him.  Most importantly, they worked with Derek and encouraged him to learn and improve his sheepdog skills by showing him where he was going wrong and explaining to him how to improve his performance (rather than just shouting at him for doing it wrong).

Sheepdogs - helpful support works wonders

Under the guidance of the new farmer and sheepdogs, Derek soon learnt new skills and became a successful sheepdog, before he magically transformed back into a person, and became a successful double glazing salesman!

This may sound like a bit of a children’s story, but it does help to highlight the following important message:

  • By looking after your people, working and co-operating with your people, and helping and encouraging them to learn and improve, you build better relationships with these people.  This means that everyone is happier, and as a result of this people want to work with one another and help each other – both individual and collective performance improves as a result of this!

Why not take a few minutes now just to think of the practical ways in which you could apply this to your business?

For example, you could:

  • re-analyse the performance of employees, and mentor them to understand what training they want and need to improve – this also helps you to understand what their goals and ambitions are, and you can then set a plan to help them achieve this
  • hold regular team meetings so that employees feel valued and part of the team
  • hold social events or team-building days

Phil Auckland - future management material

Please leave your comments below.

Tips for a better business—from Balance Accountants

2.  Concentrate on the parts of the business that give the greatest return

There is a well known principle called the 80/20 rule which is the subject of a whole book written by someone called Richard Koch. Essentially the rule states that 80% of what you achieve comes from 20 % of the effort that you put in.  In other words, a few things are important but many other things are not.

For example—20% of customers, markets and products/services generate 80% of profits.

It makes sense to use the 80/20 rule in your own business by identifying the 20% of your customers, markets, products and services that generate 80% of your profits and then explore what you can do to get more of your 20% customers, sell more of your 20% products/services and penetrate more of your 20% markets and channels.  Also explore how you can make your 80% customers, products, services, markets and channels more profitable.  And if that isn’t possible, consider scaling down or even withdrawing from these areas.

Balance Accountants specialise in helping business owners to have better, more profitable and more enjoyable businesses. If your business is not performing as well as you want it to then you should contact us now.

Tips for a better business—from Balance Accountants

1.      Systems are essential for every business

Many business owners do not really have a business—they have a job—and they have the worst boss in the world—themselves—and as a result they end up putting in more and more hours and becoming more and more stressed—sound familiar???  Do you hear yourself saying, “If only my employees could do things as well as me then I wouldn’t have a problem”?

Fortunately there is a solution.  You need to devise a means whereby others can do everything in the same way and to the same high standards that you would do it yourself.  You need to create SYSTEMS for your business—procedures, manuals, written scripts, standard forms, templates, checklists and instructions that can be used to guide and train your employees to do everything in the same manner and to the same high standard every time.

At Balance Accountants we show our clients how to systemise their businesses but we also practice what we preach because our own business is completely systemised and this allows the owners to step back from working IN the business and start working ON it.

Just imagine how much less stressed you will be when the business does not depend on you.  When you know that everything is being done to the same high standard that you expect and when you are in complete control of your work-life balance because you are able to choose how much or how little work you personally have to do.

Balance Accountants specialise in helping business owners to have better, more profitable and more enjoyable businesses.  If your business is not performing as well as you want it to then you should contact us now.

Severe Penalties for Late Submission of 2010/2011 Self Assessment Tax Returns

HMRC have increased the penalties that it charges for the self-assessment tax returns that are due to be filed for the 2010/2011 tax year.

Charges that will apply from 1 February 2012 relating to self-assessment tax returns for 2010/2011 are as follows:

Penalties for Late Submission of Tax Returns

One Day Late
You will be charged an initial £100 even if you have no tax to pay or you have already paid the tax that you owe.

Three Months Late
You will be charged an automatic daily penalty of £10 per day up to a maximum of £900.

Six Months Late
You will be charged further penalties which are the greater of 5% of the tax due or £300.

Twelve Months Late
You will be charged further penalties which are the greater of 5% of the tax due or £300.
In serious cases you face a higher penalty of up to 100% of the tax due.

Penalties for Late Payment of Tax

30 Days Late
You will be charged an initial 5% of any unpaid tax.

Six Months Late
You will be charged a further 5% of any unpaid tax.

Twelve Months Late
You will be charged a further 5% of any unpaid tax.

All of these penalties are in addition to the interest that HMRC will charge on outstanding tax and penalties.

This article was compiled by Deborah Bradley on behalf of the Balance Team.  If you have any comments please leave them below.

Business Records Checks Campaign

HMRC have announced a consultation on their planned programme of checks on business records within the small and medium enterprise (SME) sector.

They attempt to justify the introduction of this programme by claiming that research by the OCED suggests (to HMRC that is) that poor business record keeping is responsible for the loss of tax in up to 2 million SME cases annually.

The consultation exercise is limited to consideration of the best way to implement the programme – not whether it is a good idea in the first place.

This is an ideal time, therefore, for you to take stock of your book keeping; have it reviewed by your accountant if you want to ensure that it will withstand any new attack from HMRC under this programme.

How this campaign will manifest itself is yet to be seen.  HMRC said it will use its existing powers to tackle the worst cases each year from the second half of 2011. Penalties will be imposed for “significant record keeping failures,” it said.

It also has no precise definition of unsatisfactory book keeping.  However, it gave the following examples for inspectors:

  • Untidy and unanalysed records such as a box full of invoices, bank statements, cheque stubs and so on, not supported by an analysis book such as ‘Simplex’.
  • Analysis books not completed regularly – a system whereby books are written up more than four weeks after the event is not as reliable as books completed contemporaneously.
  • Cash books not written up in date order indicating that the books may have been written up from the bank statements
  • Significant unanalysed and un-vouched round sums.

We will be publishing information and guidance here over the coming weeks and months to help with this issue.  The best insurance against falling foul of this campaign is to have robust book keeping systems in place.  If you are a uncertain as to whether your records would live up to scrutiny then common sense says it would help your cause to be seen to be making improvements currently.

One question that I would like to know the answer to is how will HMRC know which businesses ought to be targeted before they’ve had access to the books and records?  As already stated HMRC are currently considering how to implement the programme.  Are we able to assume at this point that, in simple terms, they will either choose who to investigate based on statistical indicators, or they will increase the number of enquiries raised with the main intention to review the standard of bookkeeping rather than review the accuracy of the submitted tax return?  Am I being too cynical? – it has been known.  It could be that they run a series of initial visits to determine who’s records need closer scrutiny.

Many Balance clients have some peace of mind as they have taken out Tax Investigation Insurance with us and this does cover the cost of the time we have to spend dealing with tax enquiries on their behalf.  So if there is suddenly a wave of new investigations at least they don’t have to worry about unexpected accountancy fees.  The insurance, however, obviously does not cover any tax due, or penalties and interest raised.

As already mentioned, we will be gradually publishing various guides to cover what we consider to be the main areas for concern.  However, in the meantime if you have any particular suggestions regarding what areas you’d like guidance on first please let us know in the comment box below, or contact us directly.

This article was compiled by Deborah Balance on behalf of the Balance Team.

Online Statements

This is not quite a tax saving tip, but taking this advice could save you money.  Many banks and businesses are encouraging you to receive online bills and statements, rather than sending paper copies in the post.  If any statements, bills etc. are used to prepare your tax return you will need to retain copies to support the return.

You may not have access to online statements and information indefinitely.  Some businesses are only making a rolling six months of statements available.  If you don’t download a store copies of statements as you go then you may need to pay for copy statements at a later date.  It can therefore, save you money by getting into the habit of downloading statements and documents throughout the year, as well as storing them and backing them up.

Extract taken from our 2010 Summer edition Tax newsletter – if you would like to subscribe please leave your details here.

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