Archive for August, 2018

The Benefits of Hiring an Accountant for Your Small Business

Thursday, August 30th, 2018

Accountancy services are available in many forms and can be tailored to the needs of any business, whether big or small. We often find that smaller businesses who don’t possess the required in house expertise to oversee their own accounting processes stand to benefit the most from an accountant.

As specialists in small business accounting, we can provide you and your business with the guidance and expertise that you need to succeed and continue to see growth. Here are several ways that we can help you by the provision of a variety of accounting services.

  1. Tax Advice

Taxation is often the single largest hurdle for many small companies, whether the application of VAT or end of year tax returns. HMRC provides a significant amount of guidance on these topics but we find that delving into the detail and ensuring that you obtain the information that is applicable to you can be daunting.

Our core service offering includes tax services which are designed to explain to you exactly how you are able to fulfil your tax obligations as a business in the most beneficial way to you.

  1. Tax Preparation Services

As an experienced tax accountant, we can take ownership and responsibility for compiling all of the necessary paperwork throughout the financial year, in preparation for submitting your end of year tax return.

This includes small business bookkeeping where we will assist you in gathering receipts and invoices so that they are present when we require them. Once your tax return is due, we will then compile and submit it on your behalf, leaving you in full compliance of your tax responsibilities as a company.

  1. Driving Business Efficiency

Our small business accounting services are designed to streamline your company, identifying processes which are unnecessary or obsolete with the goal of lowering your overheads and expenses.

We find that there are usually considerable savings to be made simply by tweaking existing systems and making the operation of your company more efficient. This includes reducing unnecessary expenditure and ensuring that outstanding invoices are paid to you on time.

  1. Managing Complex Accounting Tasks

Depending on the nature of your business, you may find that you are often involved in transactions or need to oversee accounting processes that require specialist knowledge. And if you do not possess the required knowledge, completing these tasks can often be time consuming.

As a business accountant, we can assist you with making and receiving large payments, managing recurring payment schedules, operating your payroll systems and ensuring that your financial affairs are always up to date and accurate.

  1. Small Business Advice

Having worked with a vast number of businesses, we can provide you with a range of general advice and guidance. Whether you’re considering an acquisition of a new company or wish to expand organically, we can provide you with guidance on the best way to achieve your aims.

Barron & Co Ltd: Your Local Chartered Accountants

We possess extensive experience in providing bookkeeping services for small businesses in addition to a range of related accountancy services and can adapt to the needs of your business.

Hire us as your accountants in Birmingham by calling us today on 0121 426 4155 or by visiting us at our office which is located at Abacus Court, Bull Street, Harborne, B17 0HH.

VAT before and after Brexit

Wednesday, August 29th, 2018

Businesses that buy goods from the EU or export goods to the EU would be advised to read the recent guidance from HMRC that is published under the title:

"VAT for businesses if there is no Brexit deal"

The stated purpose of the document is reproduced below. The full text can be read online at  https://www.gov.uk/government/publications/vat-for-businesses-if-theres-no-brexit-deal/vat-for-businesses-if-theres-no-brexit-deal

The purpose of this notice is, in the event that the UK leaves the EU on 29 March 2019 with no agreement, to inform UK businesses of the implications for VAT rules for goods and services traded between the UK and EU member states. It outlines the impacts and gives information for businesses to take into consideration.

While the UK government is confident that it will agree a good deal for both sides, as a responsible government it will continue to prepare for all scenarios, including the unlikely outcome that the UK leaves the EU on 29 March 2019 without a deal.

This is contingency planning for a scenario that the UK government does not expect to happen, but people should be reassured that the government is taking a responsible approach.

It is important that businesses consider how a ‘no deal’ scenario could affect them and begin to take steps to mitigate against such a risk, however unlikely. This technical notice provides further details to support early planning on VAT to help businesses understand the potential impacts, and government will provide further details, including specific actions that businesses should take, in due course.

For most UK businesses there will be no change to VAT rules. UK businesses that are affected may wish to consult other relevant technical notices, including the Trading with the EU if there’s no Brexit deal notice, which covers customs, excise and import processes at the border.

If your business buys and/or sells goods to the EU you may want to start your contingency planning now, and, of course, VAT is just one of the issues you may need to consider. We can help.

An Overview of Forming a Limited Company

Tuesday, August 28th, 2018

There are several vehicles through which you can legally perform services on behalf of third parties in exchange for remuneration. The most common of these is the Pay As You Earn (PAYE) system where you are directly employed by a company who handles your tax and national insurance liabilities on your behalf.

But what if you’re self-employed? If you’re in this position, you have several options available to you including the formation of a limited company, allowing you to operate as a legal entity and exchange services for payment.

As a chartered accountant, we can advise you on setting up such a company to provide you with the most efficient way of providing your services to your customers.

What is a Limited Company?

A limited company is best described as an entity which acts as an umbrella for the conducting of business transactions. Whether you’re an individual and don’t plan to hire any employees or already manage a team of staff, the formation of a limited company can be used to cover your activities.

Unlike carrying out these activities as a sole trader, you are seen as an employee of your company and therefore benefit from the separation of your personal assets and liabilities from those of the company.

How Do I Set Up a Limited Company?

The process is straightforward but there are several important details which need to be collated. As your accountant, we will handle this process on your behalf to ensure that your company is registered properly and you can begin trading immediately.

Small Business Accounting

You will be required to submit details of your earnings, typically on an annual basis as you are subject to both corporation tax in addition to tax on your personal salary and any dividend you pay yourself.

As your bookkeeping tax account, we will assist you in ensuring that all necessary financial information is present such as invoices, receipts and details of your expenses. Our tax preparation services will then see us collate these documents to assess how much tax you are due to pay.

Once your tax submission is required by HMRC, we will then submit it on your behalf and manage any further liaison required with the tax authorities.

The Benefits of Operating Under a Limited Company

For many self-employed people, this method of working is usually most beneficial for several reasons;

  • Your tax liability can often be reduced compared to other methods of working, saving you money and allowing you to keep more of your earnings.
  • You gain increased commercial credibility through the formation of a limited company.
  • You are personally protected in the event that your business fails, with any liabilities remaining those of the company.

Barron & Co Ltd: Providing a Variety of Small Business Accounting Services

As an experienced business accountant, we have the ability to provide you with a wealth of expertise in all matters pertaining to the operation of your business. Whether you’re looking for a new tax accountant or require professional tax services, we can provide the guidance you require.

Call us today on 0121 426 4155 to discuss your requirements with a member of our team or visit us at our premises which are located at Abacus Court, Bull Street, Harborne, B17 0HH to hire us as your accountants in Birmingham.

Where there is a Will…

Tuesday, August 28th, 2018

None of us relish the thought of our own demise which probably explains why approximately 70% of us have not made a Will. With no direction, who will inherit your worldly goods if you die without making a Will? The legal jargon is dying 'intestate'.

Consider Louis, 75 years old and deeply into avoidance when it comes to considering his estate. Let speculate that he died recently, and his estate was subject to the rules and regulations that apply in England. He is married, and his estate is worth more than £1m. He has two children, Kate and Ian, each with two children (Louis’s grandchildren). Louis has no time for his son and has no intention of leaving him a bean.

But Louis has no Will.

The remainder of his estate after costs and taxes (let’s say this is £1m) will be divided under the intestacy rules as follows:

• His wife will keep assets (including property) up to £250,000.

• His wife gets an absolute interest in half of what’s left, £375,000, and

• The other half is divided up between the two children, Kate and Ian. 

Accordingly, and against his unwritten wishes, the errant son, Ian, received £187,500.

Louis’s family is a fairly typical structure, but there are numerous variations that can create all sorts of complications if there is no Will that expresses the deceased person’s wishes. 

Perhaps the most alarming example is where a couple have lived together for some time but never married or created a civil partnership. The surviving partner in these circumstances would have no right to inherit if their partner did not leave a Will.

The remedy, obviously, is make a Will. If your affairs are straight-forward the cost should be affordable, and your immediate family will benefit from your estate based on your intentions, not the grey dictat of the rules of intestacy.

How Your Small Business Can Benefit from Hiring an Accountant

Sunday, August 26th, 2018

It’s tempting to try and do it all when you start a business, but perhaps you don’t realise all the benefits that hiring an accountant could do for your business. There are some aspects of accounting that people simply aren’t aware of, but when you speak to a company such as Barron & Co about small business accounting services, you may discover that it makes perfect business sense to bring us into the fold.

So, here’s some ways we can help that you may not have considered:

  1. We can help you grow

As accountants who deal with businesses every day, our experience informs our decisions and we’ve seen what works and what doesn’t work. Our financial expertise and our lengthy experience come together and we can look at your business and help you make the right decisions to make your company progress. We can also advise on where you could cut costs, in order to spend more wisely elsewhere. Sometimes it’s about investing, sometimes it’s about connecting, but we’re confident that with our advice, your small business can prosper and grow.

  1. We can help you develop partnerships 

You may think all we are good for is bookkeeping and tax preparation services (and we are great at those!) but also consider how many people we do this for. We are connected to different industries and players through our client list, so this creates great opportunities to network. Get to know us and whom we work with, and see how you can build partnerships, through your accountant. It’s not just the people we know that can help you either, we can help you decide who the right people to work with are, by performing financial analysis.

  1. A chartered accountant can perform competitor analysis

It’s important to know where you stand with the competition. It helps you see what you can do more of, what you can do less of, and maybe when it’s time to try something new. Your local accountants are experts on competitor analysis, which requires time, effort, a considerable amount of knowledge on the market and finance, as well as technical ability. It’s very possible that in running your business, you have neither the time nor the inclination to perform competitor analysis, but we can harvest the right data for you and help you with making crucial decisions based on your place in the market.

  1. We can keep you on track

When running a business, sometimes you can lose sight of things or let certain things slide. If you’re very entrepreneurial new ideas can distract you. You may have hired us as your tax accountants but we make it our business to keep you on track, so that mistakes don’t cost you your business or affect your finances. We know what needs to be done to maintain profitability and it’s in our interest to help you. 

Small Business Accounting Services in Birmingham

If these surprising benefits have made you consider calling on an accountant to help you’re your small business, then pick up the phone and give Barron & Co a call on 0121 426 4155 or complete the form on our website https://barronandco.co.uk and we’ll be happy to contact you!

Information You Need When Registering for Self Assessment

Friday, August 24th, 2018

The system used by the HM Revenue and Customs (HMRC) to collect income tax is referred to as self assessment. Today, most citizens register for self assessment online. It can be confusing for some, especially if you are new to this, so Barron & Co Solicitors have drawn up an easy guide.

When registering online, you can either choose to register for GOV.UK Verify service or register through the Government Gateway ID. There is also an option for paper self-assessment, whereby you register by phone or mail. All you need to do is download and fill a form and send it to HMRC. Once you are successfully registered, you’ll receive your 10-digit Unique Tax Reference (UTR) number, which you’ll need for all your future tax returns. Here we shall have a look at the basic information you need in order to register for self assessment.

Where to start

To begin with, start working on bank statement and do a few calculations taking into account the following elements:

1] Employment income: You need a P60 ‘End of Year Certificate’ in case you have more than one job or have other sources of income

2] Self-employment income: Add up all your invoices and every business expense

3] Rental income: The total amount you paid as rent in that financial year

4] Interest: Analyse your bank statements carefully to calculate the total amount paid as interests, including loans, credit cards, as well as the amount accrued as interest

5] Dividends: Refer to your dividend voucher numbers to calculate this if you run a limited company

6] Foreign income: Include the total amount you received from overseas

7] Partnership income: This refers to any income that is received as a result of a partnership undertaking. In such a scenario, each partner is expected to submit his or her own self-assessment.

8] Capital Gains: Mention the amount earned through selling or trading in rental property and shares respectively.

9] Unemployment benefit: This section is for the unemployment benefits received and also includes the P45.

10] Employee benefits: The P11D form is meant to declare the employee benefits received in the form of job perks and so the total amount needs to be calculated.

11] State Benefits: This applies if you receive a pension or any other state benefit and you need to calculate the tax on the same.

12] Charitable Giving: Mention the total amount paid as charitable donations in that year.

Chartered and Tax Accountants in Birmingham

If you are a resident of Birmingham and need help with your tax returns or any other accounting services, simply get in touch with Barron & Co Ltd. We are a Chartered Accountants firm that offers tax accounting, bookkeeping services, small business accounting, and other accounting services. Just give us a call on 01214264155.

What has hope got to do with it?

Wednesday, August 22nd, 2018

In a recent tax case, Pallister v Revenue & Customs, Pallister’s son (PJ) was left a share in his deceased parent’s investment property in June 2012. A local surveyor valued the property at £1.2m and this was the figure used to determine the deceased parent’s inheritance tax bill.

 

Subsequently, the property was sold in March 2014 for £2.5m.

 

HMRC were peeved. Less than two years had passed and PJ’s share of 88% in the property had seemingly increased in value by almost 100%. They therefore challenged the earlier valuation for inheritance tax purposes on the basis that “hope” value should have been considered in the probate valuation.

 

Hope in this context is defined by HMRC as:

 

A component part of the open market value in appropriate cases, whether or not planning permission had been sought or granted.

 

The courts agreed with HMRC and after a degree of wrangling the £1.2m probate valuation was increased to £1.6m. The increase in the valuation likely cost PJ a further £160,000 in inheritance tax.

 

In their IHT Tax Toolkit, HMRC have added the following advice:

 

It is important to properly ascertain the value of assets. For assets with a material value you are strongly advised to instruct a qualified independent valuer, to make sure the valuation is made for the purposes of the relevant legislation, and for houses, land and buildings, it meets Royal Institution of Chartered Surveyors (RICS) or equivalent standards. Some issues are easily overlooked when instructions are given. For example, the potential for the development of the land, the existence of tenancies or occupancy by people other than the deceased. Copies of relevant agreements, or full details where only an oral agreement exists, are often not given to the valuer so misunderstandings arise. Where we are satisfied that all the relevant information has been considered by the valuer, we are less likely to challenge the valuation.

 

No doubt surviving families will always be willing to proffer the lowest valuation for a property to keep IHT liabilities to a minimum, even if the surveyor appointed is not advised of past, lapsed, planning consents, or the impending likelihood of future changes that would not be resisted by planning authorities.

 

As we can witness in the Pallister case, overlooking hope value can have expensive consequences.

Boosting recycling through the tax system

Monday, August 20th, 2018

The government has announced that it has received record-breaking support from members of the public to counter the blight of plastic waste. Here’s what they said:

Individuals, businesses and campaign groups have expressed overwhelming support for action on tackling the impact of plastics on our environment.

The backing comes as HM Treasury publishes the summary of responses to its recent call for evidence on how tax can be used to reduce plastic waste. The call attracted an unprecedented 162,000 responses, the highest in the Treasury’s history.

The Chancellor, Philip Hammond, has reiterated the department’s commitment to act through the tax system to reduce the amount of single-use plastic waste. The views received will help inform and shape the government’s approach ahead of this year’s Budget.

Measures which received noteworthy public support and are being considered include using the tax system to:

  • encourage greater use of recycled plastic in manufacturing rather than new plastic,
  • discourage the use of difficult to recycle plastics, like carbon black plastic,
  • reduce demand for single-use plastics like coffee-cups and takeaway boxes,
  • encourage further recycling as opposed to incineration.

 

It will be interesting to see Mr Hammond’s more detailed ideas if and when they become part of the Autumn Budget later this year.

According to Treasury sources, the department is also looking at how it could further support measures to fund the development of new, greener products and innovative processes that will help ensure a more sustainable future for the country.

This work forms part of the government’s overall commitment to eliminate all avoidable plastic waste. It builds on the recently announced £20 million plastics innovation fund – to support the production of sustainable and recyclable plastics – and follows the £61.4 million announced by the Prime Minister to be invested in tackling plastic in the world’s oceans.

New ideas from government think tank

Wednesday, August 15th, 2018

At the beginning of August, the Office for Tax Simplification (OTS) – a government department charged with coming up with new ideas to simplify our tax system – issued a number of reports and recommendations. They include a number of interesting topics and we have shared the conclusions below:

Changes to capital allowances

At present, businesses depreciate assets in their accounts and this process creates a reserve in their accounts such that when the assets are worn out, there is a fund of profits and cash to replace them. For tax purposes, this depreciation charge is added back in tax computations and is replaced by a deduction for capital allowances.

The OTS are now suggesting that trying to align tax relief with the depreciation charge in the accounts would be too complex, but they have suggested that the scope of some capital allowances should be widened.

Lookthrough taxation

Lookthrough taxation was an idea to charge the shareholders of small companies to income tax and National Insurance on the profits of their company rather than tax the company on those same profits using the present corporation tax rules.

If adopted this would have had a dramatic effect on the taxation of small companies. Thankfully, the OTS have considered this notion and have concluded that it’s application would complicate rather than simplify matters for small companies

Sole enterprise with protected assets (SEPA)

This is an interesting and welcome option to the legal status that sole traders could adopt.

At present, sole traders can be personally liable for the commercial liabilities of their businesses: there is no way to protect their personal assets, and in particular their family home, in the event that their business becomes insolvent.

The OTS have now recommended that sole traders be offered a new form of status. The principle behind SEPA is that it will allow an individual to continue to trade as a sole trader whilst offering protection for their primary residence against claims arising from the business. The primary residence will not be protected from personal claims nor will any other asset be protected.

In conclusion

These ideas are by no means certain to find their way onto the statute books. The Treasury will consider the OTS findings and may include the changes in future legislation. We will have to wait and see.

Tax Diary August/September 2018

Monday, August 13th, 2018

1 August 2018 – Due date for Corporation Tax due for the year ended 31 October 2017.

19 August 2018 – PAYE and NIC deductions due for month ended 5 August 2018. (If you pay your tax electronically the due date is 22 August 2018)

19 August 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2018.

19 August 2018 – CIS tax deducted for the month ended 5 August 2018 is payable by today.

1 September 2018 – Due date for Corporation Tax due for the year ended 30 November 2017.

19 September 2018 – PAYE and NIC deductions due for month ended 5 September 2018. (If you pay your tax electronically the due date is 22 September 2018)

19 September 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2018.

19 September 2018 – CIS tax deducted for the month ended 5 September 2018 is payable by today.