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Are you a small business owner? Find time to switch off!

Small business owners typically take far less time off than employed individuals and struggle to strike a good work-life balance. This leads us to the question; have you thought about taking a break recently?

According to a study carried out by Direct Line for Business, many small and medium-sized enterprises (SMEs) are struggling to stay on top of their workloads, with bosses working long hours to ensure that their business is operating smoothly and that they are fulfilling their tax and compliance responsibilities.

The research revealed that as many as one in eight (16 per cent) SME decision-makers had not taken any time off in the past 12 months. This figure increased to 18 per cent among micro-businesses with 10 or fewer employees – and rose to a third (33 per cent) among even smaller sole traders.

A fifth of those surveyed reported finding it difficult to ‘switch off’ when they did take time away from the business and many were fearful of the impact that taking time off would have.

However, taking a break is not just important for your own health, but also for the health of your business. Here are just a few good reasons to make time for some down time:

1. Avoid unnecessary stress and burn-out

Owning and running a small business (or any business for that fact) can be extremely demanding; from retaining staff, keeping up with the competition and meeting customer needs to just generally making sure your operation runs like clockwork.

Taking a break provides you with the perfect opportunity to unwind and can be the key to avoiding unnecessary burn-out. Thinking of nothing but your business 24/7 can be more of a hindrance than a help, as mounting stress impedes your ability to make good decisions and maximise your performance.

Allow yourself some down time and, chances are, you’ll prevent potential issues further down the line.

2. A fresh perspective

Getting away from the office environment and leaving your emails, texts and meetings behind can be good for your business. Sitting at your desk 365 days a year is a quick way to incite stagnation and sluggishness.

A change of scenery and a chance to clear your mind can work wonders and your brain will be buzzing with new ideas before you know it!

3. Learn more about your business

It perhaps sounds counterintuitive, but by taking a break from your business you might learn a little more about it.

Despite what you might think, it’s actually very rare that a business will suffer a critical issue whilst the proprietor is on vacation. Biting the bullet and spending some time away from work might be what you need to reassure you that your business won’t suffer if you switch off for a week.

In addition, if you’re lucky enough to have a team of people working for you, leaving them in charge, whilst you recharge, presents the perfect opportunity to see how they pull together in your absence.

Things tend to look different when you’re on the outside looking in, so use the opportunity to gain a new perspective to your advantage.

4. What do we work for?

What do we work for, if not to enjoy the fruits of our labour? After ploughing all your time and energy into improving profits and growing your business throughout the year, you should at least be able to benefit from the results once in a while.

Don’t work so hard that you lose sight of why you started your business in the first place.

Here at George Hay We work with small businesses every day, offering them the support and advice they need to succeed in running an efficient operation. We can take care of your accounting and outsourcing needs, giving you more time to work towards your goals and nurture your business, but also giving you peace of mind when it does come time to take a well-earned break.

If you’d like to find out more about how we can help, have a look around our website.

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What triggers a tax investigation?

Since 2010, HM Revenue & Customs’ (HMRC) total revenue from tax has increased year-on-year and in 2016-17 reached £574.9bn[1], with £28.9bn of this generated as a result of compliance activities[2].

These figures demonstrate that HMRC has, in recent years, taken a much more steadfast approach to identifying non-compliance and pursuing those responsible, leaving no stone unturned.

It continues to invest large sums of money into its cutting-edge ‘Connect’ software which pinpoints anomalies in data, obtained from a range of sources, and directs HMRC towards people who may not be fulfilling their tax liabilities.

HMRC has been open about its intentions to pursue those who deliberately cheat the system and refuse to pay the sums that they owe, and its latest initiatives and plans to crackdown on tax avoidance and evasion are never far from the headlines.

From landlords and overseas investors, to the gig economy and SME’s and from trusts to online retailers; the truth is, no matter how big your business is, what sector you operate in or how long you’ve been in business, you are not immune.

Even if you have nothing to hide, there are several potential triggers that can raise HMRC’s suspicions and could leave you facing a tax investigation. Here, we identify some of these triggers and how you can reduce the risk of being HMRC’s next target:

1. Are you on time or always late?

If you consistently file your tax return late, HMRC will become suspicious. Being at the helm of a business is demanding and it can be all too easy to forget important dates and deadlines. However, submitting your return on time can save you a whole lot of stress in the long run.

2. Inconsistent cash flow

If HMRC notice sudden or sizeable changes to your reported income and outgoings, for example if your income plummets and your expenditure sky-rockets, alarm bells may begin to ring. The key here, is being able to explain why the fluctuations have occurred and to be able to provide evidence if necessary.

3. Is there something missing? 

Be sure that you’ve declared all your sources of income; regardless of whether it innocently slipped your mind, HMRC have the technology and will to dig deeper if it suspects you’ve deliberately omitted important information. With the rise in the use of social media, it’s worth noting that HMRC do also use these platforms to identify potential tax evasion. For example, if you share that you have just purchased a flashy new car, yet your tax return declares only minimal income, this could lead to an enquiry.

4. Be accurate, avoid errors

None of us are perfect and we all make mistakes but if they are making a regular appearance on your tax returns, HMRC will want to know why. Granted, tax returns can be complicated but you should be confident that your return is accurate and free of errors before you submit it.

5. Take responsibility for your records

Never underestimate the importance of keeping your records in order and up-to-date. If you can do this, you will undoubtedly find that the process of completing and submitting your tax return becomes quicker and easier. In addition, the information you do submit is less likely to contain errors.

6. Is HMRC targeting your sector?

Sometimes it can be as simple as your sector having been identified as HMRC’s next target. As we said at the start of this blog post, no business is immune and HMRC is watching; whether you rent property, provide legal advice, build offices or run a restaurant, you are at risk. Often, in these cases, there is nothing you can do but be prepared.

7. Conform to the norm

HMRC will likely compare your figures, to those reported by other businesses like yours. If you stand out as significantly over- or under-performing in relation to the industry average, this may prompt them to investigate further. Standing out from your competitors is typically a good thing but, when it comes to your figures, conforming to the norm might not be so bad. There may be a reason that you are under- or over-performing – just be prepared to explain this to HMRC.

8. No rhyme nor reason

In some cases, there may be no rhyme or reason for a tax investigation. Random selection is less common, but still possible all the same. The best thing you can do is make yourself less susceptible to an investigation by managing the other risks discussed in this post.

How can my accountant help?

Preparing and filing your tax return takes time; time that would be better spent on running your business. Not only this, but in the absence of expert knowledge and years of experience it is all too easy to make costly errors. Errors ultimately cause delays and will leave you feeling unnecessarily stressed.

You can easily avoid this by entrusting us with your annual tax return. Our trusted tax advisers will assist you with fulfilling your self-assessment obligations, whilst saving you time and money, helping you to grow your business and eliminating worry along the way.

As your accountant, we are also your best defence if you do find yourself subject to a tax investigation. Investigations can be disruptive, intrusive and expensive. This is why it’s imperative that you take expert advice and guidance when dealing with HMRC. We can:

• Translate the complexities of a tax investigation
• Manage dialogue with HMRC, acting as a barrier between you and the tax man
• Assist with the submission of documentation or information required by HMRC
• Minimise the impact of a tax investigation upon your personal and business life
• Aim to secure an outcome that satisfies both parties

We have years of experience when it comes to dealing with both personal and business tax enquiries and investigations, helping our clients to reach a satisfactory conclusion and leaving them with peace of mind when it comes to their tax affairs.

We also offer a Tax Investigation Fee Protection Service; you can find out more about the service and the protection it provides here. If you’d like to discuss your circumstances in more detail, contact us today.

[1], [2] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/628377/HMRC_Annual_Report_and_Accounts_2016-17__print_.pdf

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The perks of using our client portal

You will hopefully be aware of the General Data Protection Regulations (GDPR) that came into effect on 25th May 2018.

In response to GDPR…

In response to these regulations, any business who stores or processes personal data has had to implement appropriate processes and procedures to safeguard people’s information and protect against data breaches.

As Accountants, we are in regular contact with our clients and the nature of the work that we carry out for them often requires personal data to be exchanged.

Often, email is the quickest and most efficient way of communicating with our clients. However, the new regulations mean that personal data sent via email must be better protected, to prevent anyone but the intended recipient from accessing it.

This could see password protected documents and more lengthy exchanges becoming the norm.

At George Hay we consider our client portal to be the most secure method of exchanging data and so, in the coming weeks and months, we’ll be encouraging more of our clients to use it.

As well as being secure, we anticipate that as a result of the changes in legislation, the client portal could quickly become the most efficient means of sending information to and receiving information from our clients.

Embracing change can be challenging…

Many of our clients have been using the client portal for some time now and many more are now choosing to use it in the wake of GDPR.

However, we understand that some individuals will be reluctant to explore the capabilities of the client portal.

When change is afoot, it can be difficult to get our heads around how we can accommodate it. Often though, we look back and wish we’d embraced it sooner.

Embracing change can not only be easier than we initially anticipate, but it can often have unexpected benefits too.

Client portal: what are the perks?

1. Better protection: You now have the option to turn on two-factor authentication when using our client portal. This means that when you log in, you will receive an email shortly after containing a unique code. You must then enter this code online to confirm your identity. Two-factor authentication can be set-up via the account menu.

2. Improved security: All passwords are encrypted via a salting and hashing algorithm. This means no-one can view your password, including us.

3. In-built and insightful tools: These include, for example, a password strength indicator that helps you to ensure your passwords are difficult to crack.

4. Encryption: As documents are uploaded to the portal, they are encrypted by way of SSL and AES technologies. This means your personal data is kept safe whilst it makes its way to us and vice versa.

5. Collaborative: You can give us access to all your business-critical information as you get it. Once uploaded, only you and us can view the files in question. The portal is a safe, simple and secure platform that enables us to work more intuitively alongside our clients.

6. Accessible: The portal can be accessed anywhere at any time on your desktop and on your mobile device.

7. GDPR compliant: Importantly, the portal fulfils the security requirements set out under the new GDPR legislation.

Efficient, effective, safe & secure

Ultimately, the client portal facilitates efficient and effective exchange of sensitive and confidential information, whilst also giving you peace of mind that your data is safe and secure.

If you’re already using the portal and have any questions, or if you’re not currently using it but you would like to, please don’t hesitate to contact your usual adviser.

If you’d like to find out more about George Hay and the services we offer to our clients, explore our website here.

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Self-employed should be aware of self-assessment registration deadline

HMRC must know about any new source of income by 5th October in the tax year following it’s establishment. The concern, with only a short time left to register for self-assessment, is that self-employed and gig-economy workers may be unaware of this requirement.

Should you be registered for self-assessment?

For these individuals, work doesn’t always come in a steady stream and assignments may be ‘one-off’, or otherwise very casual. This leads to uncertainty about whether income is or is not taxable. The truth is that even the most casual activity, or one-off job, may be taxable.

The Low Income Tax Reforms Group (LITRG) is concerned that self-employed and gig-economy workers may not fully understand their responsibilities. Even where no Income Tax or National Insurance is due, HMRC should still be notified of any new income. In these instances, preparing and filing a self-assessment tax return may still be necessary.

You can find out if you need to register for self-assessment and send a self-assessment tax return here on the GOV.UK website.

Failure to notify HMRC and failure to prepare and submit a return accordingly may result in financial penalties. 

Where the 5th October deadline is missed, the individual should still register for self-assessment as soon as possible. If the tax owed is paid on time (31st January 2018), then penalties may not be imposed.

Simple assessments

In the same week, as various reminders emerge about self-assessment, HMRC also began to rollout simple assessment notices. These notify taxpayers of Income Tax or Capital Gains Tax due without the need for a tax return submission.

HMRC will only issue these in straight-forward cases, where it has access to all the 3rd party information it needs.

Although this seems to be a step towards improving the efficiency of the tax system and making it easier for the taxpayer to navigate, it is not entirely failsafe. If a taxpayer receives a simple assessment notice, it is vital that they carefully check the details that HMRC has used for its calculations and ultimately whether they agree with any amount owing as a result.

HMRC are allowing a 60-day period, within which taxpayers must query a notice if they believe it to be incorrect. We urge taxpayers to engage swiftly upon receipt of a simple assessment notice. If you fail to query the notice within 60 days, you cannot appeal and you must pay any tax due.

Here at George Hay, whether self-assessment or simple assessment we can help you to fulfil your obligations. Contact us today on 01767 315010, to find out more.

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HMRC release September 2017 advisory fuel rates

HMRC has now published the latest advisory fuel rates (AFR), effective from 1 September 2017, for users of company cars.

If you drive a company car, you can’t claim business mileage but you can recoup the cost of fuel for business journeys using HMRC’s recommended advisory fuel rates.

Compared with the rates applied in the previous quarter, there have been only 4 changes; the rates for diesel and LPG vehicles, over 2000cc, have fallen by 1 pence per mile as well as petrol and LPG vehicles between 1401cc and 2000cc which are also subject to the same reduction.

Advisory fuel rates are applicable only under the following circumstances:
– To reimburse employees for any business travel in their company car; or otherwise,
– to reclaim money from employees to cover the cost of fuel for personal travel in their company car

The new advisory fuel rates

HMRC accepts that there is no taxable profit on reimbursed travel expenses, where the rate per mile paid does not exceed the AFR. Likewise, in these circumstances, no Class 1A national insurance is payable.

Advisory fuel rates are calculated based on engine size and the type of fuel that the vehicle requires. Below are the rates effective from 1 September:

advisory fuel rates

 

 

 

advisory fuel rates

The above applies to all journeys, made on or after 1 September, until further notice. However, for one month from the date of change, employers can opt to use the previous quarter’s rates.

HMRC review the AFR four times a year and take into account recent fluctuations in the cost of fuel when doing so. It will publish rates for the next quarter shortly before 1 December 2017.

So how will it affect you?

If you… cover the cost of fuel yourself your employer can choose whether or not they wish to reimburse you. Should they opt to reimburse you, the rate that you receive must be correct. If the rate you receive is higher than the AFR, your employer must provide evidence to support the higher rate. You may face tax and national insurance liabilities if use of the higher rate cannot be justified.

If you… use a company card to pay for fuel then you will likely find yourself repaying your employer for any private trips that you take in the company car. In some cases, if you have the relevant evidence, you may repay at a lower rate, relative to the cost of your fuel.

If you… don’t pay anything towards your fuel and your employers covers the total cost you may have to pay fuel benefit tax.

Tax relief

There are a couple of instances whereby you may be eligible to claim tax relief on fuel costs, as follows:

– Your employers pays you less than the advisory rate
– Your employer does not reimburse you at all

Either way, you’ll need to fill in HMRC Form P87, or a self assessment tax return if your claim exceeds £2,500 and keep records to support your business mileage and fuel costs.

Further information about advisory fuel rates can be found here on the GOV.UK website.

 

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Contact Us

Our Offices

Bedfordshire (Biggleswade)
Brigham House, 93 High Street, Biggleswade, Bedfordshire, SG18 0LD
Tel: 01767 315010

Hertfordshire (Letchworth)
Unit 1b, Focus 4, Fourth Avenue, Letchworth Garden City, Hertfordshire, SG6 2TU
Tel: 01462 708810

Cambridgeshire (Huntingdon)
St George’s House, George Street, Huntingdon, Cambridgeshire, PE29 3GH
Tel: 01480 426500
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