We’re All In!

autoenrolment imageAuto-enrolment legislation is certainly burdensome and as many smaller employers are now rapidly approaching the time to implement their workplace pension they all encounter similar kinds of issues when coming up to their staging deadline. Problems can potentially be costly and are frequently overlooked by employers, but a few straightforward steps can iron out the difficulties.

Here are some top tips from Robert Woolley of HPH, Chartered Accountants on how to avoid the pitfalls:

DO

Choose the right pension scheme

NEST is the government-backed pension company, which offers a free scheme. The set-up procedures are simple and it’s the ideal option when you have very few employees making contributions.

Set up the scheme in time

Reminders are sent up to a year in advance, so it’s easy to put them to one side. Make sure you are properly prepared and don’t miss your staging date.

Prepare employee communications in time

You need to send letters to every employee, even if they’re not eligible to join the pension. Even if you choose to postpone assessment, you must still write.

Make sure you test internet access to the pension website

You will be expected to update monthly or weekly through the online portals of the pension providers. You should therefore register and test the process.

DON’T

Expect employees to choose ‘not to join’

If your staff meet the eligible criteria, they have to be auto enrolled. The only option they have is to opt out of the pension scheme.

Assume it doesn’t apply to you or your employees

Even if you have no eligible employees, they must receive statutory notices and be told they can ask to join a scheme. As an employer, you have to provide for them and know which provider you can use.

Believe postponement means you can do nothing for three months

While you can defer assessment of employees for up to three months with a postponement, you still have to hand out statutory notices and have a pension in place. Employees can opt in during the postponement period, so it’s not necessarily fixed.

Forget to make your statutory declaration

This can’t be made until after postponement, so is often four months after the staging date. With all the hassle involved in auto-enrolment, it’s easy to forget!

Remember, it’s hard to get everything right by yourself. It’s always worth getting professional support and advice in the process.  Contact the HPH Payroll Team for expert help and advice.

Back to main website: http://www.hphonline.co.uk/

The information contained within the above blog article is for general information purposes and may be time critical; it does not constitute professional advice. We accept no responsibility for any loss which may arise from reliance on the information contained in the blog article. Always seek professional advice before acting.

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Pass Word And Collect £50K

masked-robberAs the tax system becomes fully digital, businesses and individuals will have to be more conscious than ever of data security, argues Robert Woolley of HPH Accountants LLP.

We’ve seen a lot of discussion of HMRC’s ‘Making Tax Digital’ project – something which is going to necessitate most businesses and many landlords acquiring new software at their own expense. Of course, there are benefits of storing data in the cloud – the 24/7 access, free support and automatic updates, as well as simple-to-use interfaces.

These strengths are, however, also a weakness.

Potentially the new system might allow other unauthorised people to access your accounting data, so it’s important you take some simple steps to make everything secure.

Here are my top tips:

  1. Change your passwords regularly.
  2. Use a long password which includes symbols and numbers – this can even be an expression or a sentence without spaces and punctuation.
  3. If you have a lot of online accounts, get a password management system such as Last Pass, which enables you to store all your passwords securely.
  4. Wherever you can, use “two-factor authentication”. In simple terms, this could involve a code which is sent by text to your mobile phone.
  5. Do not leave your password written down for others to see – it is amazing how many people do this is in a business environment!
  6. Never divulge your password to anyone.
  7. If you are contacted by anyone purporting to be from your internet provider, software provider etc., ensure you ring them back from a different phone on the normal number before divulging the answer to any security questions.

These simple tips will help you stay secure as long as you follow them consistently.

I make these points because I know only too well the effect a security breach can have in the real world.

A client was recently contacted by people purporting to be from his bank, explaining that they were calling to prevent a fraudulent transaction on the account. To clear security, he provided mother’s maiden name and two digits of his six-digit pin code.  The client rang the bank back, but from the same telephone. This is a mistake, as fraudsters can hold the line open for a few minutes. He gave his date of birth and another two digits of the pin, in order to be put through.  He was then asked for another two digits and his home address, to be extra safe!

A well-executed, 10-minute process resulted in the fraudsters obtaining all security data which then enabled them to contact the bank themselves and make an overseas payment.  An hour later, £50,000 had been transferred out and the insurance company refused the claim due to the fact that security data been given to the fraudsters.

The conmen were able to gather enough information about the client’s bank transactions (by intercepting emails and accessing online systems) to sound very knowledgeable, making the scam more convincing. Something easily prevented…

If you think that your online presence requires additional security measures then colleagues from HPH’s IT company ABC Solutions will be able to help you. Contact us now, no passwords required!!!

Back to main website: http://www.hphonline.co.uk/

The information contained within the above blog article is for general information purposes and may be time critical; it does not constitute professional advice. We accept no responsibility for any loss which may arise from reliance on the information contained in the blog article. Always seek professional advice before acting.

Doctor, Doctor Tell Me The News…..

DoctorWho is responsible for deciding on IR35 status in the NHS? And what are the implications of the new rules introduced in April 2017? You might like to carry out a health check on your approach to locum staff, Robert Woolley of HPH Accountants LLP explains.

IR35 has always been a thorny and complex issue and it’s being scrutinised again in the National Health Service in the light of changes which took effect at the start of the 2017-8 tax year.

These regulations are essentially there to ensure that individuals who provide services through an intermediary pay the correct amount of tax. Immediately we are confronted with the question of who is genuinely self-employed and who might be deemed, in fact, to be an employee.

In the NHS, where there is a great deal of use of ‘locum’ staff, the whole issue is high profile.

Now, it’s no longer the responsibility of the intermediary to make a judgement about the application of IR35, but rather the ‘public authority’ itself. Where the rule does apply, it’s the responsibility of the ‘fee-paying’ NHS body to deduct tax and NI at source.

Originally, the advice from NHS Improvement had therefore been for health service managers to put agency, bank and locum staff on the payroll along with PAYE employees. It has become clear, however, that the Revenue expects decisions to be made on a case-by-case basis rather than in a blanket way.

According to their instructions to colleagues, any adjudication on an individual’s status must be done ‘fairly, accurately and take into account all relevant factors, including representations which may be provided by the individual.’

Thankfully, there’s a simple online tool (www.gov.uk/guidance/check-employment-status-for-tax) provided by HMRC which helps to decide on an individual’s status, although there may also be a case for taking professional advice where any complexities arise.

If you require any assistance with employment status issues don’t hesitate to contact the HPH team.

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The information contained within the above blog article is for general information purposes and may be time critical; it does not constitute professional advice. We accept no responsibility for any loss which may arise from reliance on the information contained in the blog article. Always seek professional advice before acting.

To VAT, Or Not To VAT – That Is The Question?

Exploration vehicleHMRC is looking closely at the VAT charged in certain industries, writes Robert Woolley of HPH Accountants LLP. And it could lead to significant VAT cost, including penalties.

For many businesses providing services, the rules around charging VAT are pretty straightforward. If you’re unsure as to whether VAT is chargeable, most companies in the past have erred on the side of caution and added the sales tax to their bill. After all, their customer will simply claim it back in the input column of their regular VAT return.

Recently, however, we’ve noticed HMRC challenging input VAT where they claim it should never have been charged.  In the best case scenario, this can require obtaining a credit note from the supplier, causing unnecessary inconvenience.  However, in the worst case, the supplier may no longer be in business meaning there is no scope to obtain a refund of the VAT incorrectly paid and, in certain circumstances, it can also lead to potential penalties.

The oil and gas sector produces a number of complexities around the place of supply of service.  For example, someone in York might be working for another company based in the UK, but remotely monitoring geological activities in, say, the Caspian Sea. This means that there is room for interpretation over issues such as land-related services and place of supply.

Another market in which complications arise is the construction industry in areas such as relief for new builds. Again, we see push back from HMRC over interpretations of when VAT is chargeable and when it’s not.

Of course, it’s possible to make honest mistakes with your VAT and it may be that you’re in the kind of business where you can only make a decision about charging on a case-by-case, invoice-by-invoice basis. Some forward-thinking accountancy firms are providing straightforward tools to help you, whether you are the supplier or the recipient, make a choice which avoids falling foul of HMRC. If you’re up front about any errors, it will cost you less in penalties than if the Revenue uncovers the discrepancy themselves.

Back to main website: http://www.hphonline.co.uk/

The information contained within the above blog article is for general information purposes and may be time critical; it does not constitute professional advice. We accept no responsibility for any loss which may arise from reliance on the information contained in the blog article. Always seek professional advice before acting.

HOW TO AVOID A POST-PARTY HANGOVER

Party CelebrationWhen the pre-occupation with Political Parties has receded after the General Election on 8 June your thoughts may turn to having fun either to celebrate or banish the blues; Robert Woolley of HPH Accountants LLP takes a look at the tax implications of holding a summer bash at your workplace.

If you’re looking to plan a party for your employees, it’s worth bearing in mind the potential tax implications. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.

But what about the consequences for the employees themselves? Will they have to pay tax on the benefit?

The general rule is that as long as the total costs of all employee annual functions in a tax year are less than £150 per head (VAT inclusive), there will be no tax implications for the employees themselves. In considering this limit, it is necessary to include all the costs of an event including any food, drinks, entertainment, transport and accommodation that you provide.

If the total costs are above the limit of £150, the employee will have to pay tax on the full cost of the benefit. In that scenario, it should be reported on each employee’s P11D or, alternatively, you may choose to enter into a PAYE Settlement Agreement with HMRC to cover the tax.

It is also worth noting that a new exemption in relation to employee entertainment was introduced on 6th April 2016.  From this date, a benefit provided by an employer to an employee was made exempt from tax and need not be reported to HMRC on a P11D if all of the following conditions are satisfied:

  • The cost of providing the benefit does not exceed £50;
  • The benefit is not cash or cash vouchers;
  • The employee is not entitled to the benefit as part of any contractual obligation; and

Where the employer is a close company and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family), the exemption is capped at a total of £300 in the tax year.

Example

A company holds two annual functions open to all its employees in the tax year – a Summer party and a Christmas party.

The total costs of the Summer party, including transport and accommodation, are £10,000 including VAT. The total number of attendees was 100, so the cost per head was therefore £100.

The Christmas party cost £8,000 including VAT, and 100 people attended this. The cost per head is therefore £80.

The total cost per head for both functions is £180, so they cannot both qualify for an exemption. As the cost per head of each party is not more than £150, either event can qualify on its own, however it is more beneficial overall for the costlier Summer party to be exempted.

If an employee attends both events, they will be taxed only on the benefit of £80 for the Christmas party. If they only attend the Summer party, there will be no taxable benefit because that event is exempt. If they only attend the Christmas party, they will be taxed on the benefit of £80.

Both functions would be taxable if the average cost per head of each of the events exceeded £150. This limit is not an allowance to be set against an amount that exceeds that figure.

It’s worth talking to your accountant if you have any concerns about the tax implications of the summer party season ahead. That way, everyone can enjoy the event without a financial hangover.

Back to main website: http://www.hphonline.co.uk/

The information contained within the above blog article is for general information purposes and may be time critical; it does not constitute professional advice. We accept no responsibility for any loss which may arise from reliance on the information contained in the blog article. Always seek professional advice before acting.

Is the snap election a taxation Godsend?

Ballot Box

The Government is rushing through the Finance Bill 2017 with only four hours of debate, due to the decision to hold a General Election. How has the limited timeframe affected the legislation?

Ian Humphries of HPH Accountants LLP highlights some of the provisions that have been dropped.

You may have heard about HMRC’s attempt to make the filing of tax information and returns more efficient under the banner of ‘Making Tax Digital’ or MTD. The idea is that by uploading income and expenditure via cloud-based software or apps, the submission of information would become faster and easier.

The initiative, however, has now been subject to delay. Initially scheduled to affect large businesses from April 2018 and the self-employed and landlords, with income in excess of £10,000, from April 2019, the plans have now been put off for at least a year.  The introduction of MTD has been controversial and the delay may allow HMRC to consider the likely consequences.

Many taxpayers would have been disappointed by the recent Budget announcement of the reduction in the dividend allowance from £5,000 to £2,000, which was due to take effect from 6 April 2018. This would have reduced the potential tax-free income to £14,500 and given some tax payers an additional bill of £150. However, lack of time to debate this in the Finance Act has meant that the £5,000 allowance has been retained.

Also disappearing are the-tax free trading and rental allowances for those self-employed individuals and landlords whose total income is less than £1,000. Had these measures been passed, then they would have taken out of tax those individuals who, for example, trade on eBay or householders who let out their drives.

Since April 2015, the Money Purchase Annual Allowance (MPAA) – an annual allowance of £10,000 in respect of money purchase pension contributions – has applied to individuals who have flexibly accessed their pension benefits. Its introduction was to ensure there are no potential recycling issues, with individuals claiming further tax relief on any new contributions made, having just accessed pension benefits under the new flexible arrangements. It was intended to reduce this allowance to £4,000, but that proposal has been scrapped.

Legislation that would have seen IHT chargeable on all UK property, regardless of ownership structure and affecting all non -UK domiciled individuals, has also avoided ending up on the statute book.

If you’re celebrating at any of delays described above, it’s likely that your elation will be short-lived. You should be prepared for some – or all – of these provisions to re-appear in future legislation.

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The information contained within the above blog article is for general information purposes and may be time critical; it does not constitute professional advice. We accept no responsibility for any loss which may arise from reliance on the information contained in the blog article. Always seek professional advice before acting.

MTD – do the noughts and ones add up?

DigitalRichard Clarkson of HPH Accountants LLP has been closely involved in discussions of the government’s plans to digitise the tax reporting system.

Here he gives his own perspective on a number of the questions accountants and their clients are asking.

Is the whole ‘Making Tax Digital’ (MTD) project actually going ahead?

Yes. A number of related consultations were launched in November last year, but it’s pretty clear the plans will proceed, albeit with a few fairly minor concessions. We were hoping to get the final shape of it in the 2017 Finance Bill. However, this is light on detail and it is clear that a lot of the rules are going to be made by regulations, which will minimise parliamentary scrutiny.

The plans are controversial, aren’t they?

Again, yes. The Treasury Select Committee, chaired by Andrew Tyrie MP, supports the principle of digitisation. At the same time, they’ve gone through the proposals in forensic detail, taken evidence from a variety of people including the Federation of Small Businesses, and concluded that a year’s lead time for the project just isn’t enough. At the moment, their feeling is the supposed benefits just aren’t proven. They recommend pilot schemes to see how the idea works in practice.

What will the new regime actually mean for businesses?

Effectively, you’ll be making five tax returns a year. HMRC doesn’t see it that way, but you’re going to be expected to report quarterly on your income, expenditure and taxable profit. If that’s not a tax return, then what is? You can paint stripes on a horse, but that doesn’t make it a zebra!

You’ll then have to put in a further return at the end of the year, making corrections as appropriate to your earlier submissions. You will need software to upload the relevant data to the Revenue.

Will smaller businesses be able to cope?

That’s a good question. HMRC assumes that everyone will use business software and it will be a straightforward data dump. But a lot of small businesses don’t have the correct level of sophistication. Can their software deal with debtors and creditors, for instance? With stock and work in progress? We’ve been told that it will be possible for very small companies to submit three-line accounts – their turnover, expenses and profit. But if that’s it, there does really seem little point to the whole exercise.

Are there any exemptions?

Practically none. Your turnover would have to be lower than £10,000 per annum to stay outside the new digital system.

Could it be that we’ll have to pay tax quarterly?

For the moment, the answer is no, although many people have speculated that this may be the long-term goal of the government.

What are the cost implications for business?

It seems very likely that larger accountancy bills will become the norm. And although there’s some suggestion that companies may be able to continue using Excel spreadsheets with some kind of technological bolt-on, the chances are you’ll need some new software. The government is trying to persuade developers to offer this for free, but whether that comes to fruition remains to be seen. There is bound to be expense in setting the new system up, training people in its use and so on.

Back to main website: http://www.hphonline.co.uk/

The information contained within the above blog article is for general information purposes and may be time critical; it does not constitute professional advice. We accept no responsibility for any loss which may arise from reliance on the information contained in the blog article. Always seek professional advice before acting.