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Hats off to Mr Norden who has won the football predictor league again!!!

Mark has retained the Norden's football predictor title yet again with a total of 2310 points. All he need's now is Watford to win the playoff final and he will be happy as a pig in ****!

Pete Winter is the runner up in second place. He had a good final week, but nowhere near enough to bridge the gap to Mark.

The Goldstone's (Jack & Steve) took the other champions league places. As Arsenal fans this must amuse them to see Spurs fan Stephen Silver just miss out in 5th position as per the Premier League! Stephen obviously let his heart rule his head by predicting Arsenal to draw with his banker chip and Spurs to win 3-0.

Kane Hopps has a good final couple of weeks of the season helping him break into the top ten!

Jack Norden wins the youth trophy.

JoeyWallen the cat wins the Pets trophy.

Sam Moss wins to the trophy for quickest drop down the league from top to 15th.

Man City fan JAFEICA wins the wooden spoon with 115 points. Looks like he gave up after 7 weeks so hardly surprising.

I would just like to say thank you to everyone that took part in the Nordens Predictor league and I hope you all join us again next season.

See the top ten below…

HMRC to contact up to 5m over incorrect tax

HMRC estimates suggest up to 5m people may have paid an incorrect amount of tax in 2012/2013.

The department has begun its end of year reconciliation process (EoYR), two months earlier than usual, and expects to finish the adjustments by October. HMRC says it plans to process overpayments and underpayments together, rather than as separate phases, in order to speed up the process of making corrections to tax gathered under PAYE.

HMRC calculates that between 2.1m and 3.5m individuals have paid too much tax, while between 1.2m and 1.6m have paid too little. The average repayment to those who have overpaid is £379, while the average shortfall is £537.

Taxpayers who do not complete Self Assessment tax returns and owe less than £50 will not have to pay anything; those with more to pay will start to receive notifications four months earlier than last year, which HMRC says is designed to help them plan their finances further in advance. Most repayments will be handled via changes in the individualÂ’s tax code, while those due a refund will start receiving payable orders from HMRC from next month.

HMRC says that 85% of people on PAYE pay the correct amount of tax, and that many of the adjustments are down to changes in an individualÂ’s circumstances over the year. It also says it will be sympathetic to those who say they will have difficulty paying any additional tax due, with the option to spread over a maximum of three years if necessary.

Companies House closes down 'Twitter Tool' company for failing to file accounts

Companies House has shown that it shows no favouritism to larger companies in a recent case where it closed down Tweetdeck Limited for failing to file its accounts.

The company was dissolved on the 7th May after several warnings.

The online tool for Twitter users was acquired by Twitter in 2011 for an estimated £25m. Twitter itself was sanctioned and issued various warnings by Companies House for failure to file its accounts. According to filings on Companies House the last set of accounts were made up to 31 December 2011 but were filed on 28 December 2012.

A source at Companies House said that although they have dissolved Tweetdeck it expects that Twitter will strip the assets from Tweetdeck and assimilate them into its own organisation. In this case there would be no change to the end user.

"Companies House goes through a strict compliance process to try and ensure companies file documentation in a timely manner," a spokesman for Companies House said.

"Unfortunately, in a small number of cases, matters proceeded to strike off, as in this case. It is incumbent on all directors to ensure documentation is submitted appropriately and it is always disappointing when this is not the case."

If you have received any letters from Companies House you are unsure about, please speak to Joe at Nordens and he will clarify the situation for you.

HMRC names and shames tax defaulters

HMRC has published its second list of deliberate tax defaulters, who have been subject to an investigation and were found to owe more than £25,000 in tax.

Among the 15 individuals and small businesses named are a kebab shop owner in Peterborough, who faces a £22,000 penalty for failing to repay around £41,000 in taxes, as well as two pub landlords, several property and construction operators and a recruitment agency based in Knightsbridge.

The lowest fine recorded on the list is £16,000 paid by a Manchester pub landlord over unpaid tax of around £26,000, while Birmingham-based labour provider Paymaster Ltd was fined £1.1m on nearly £2m of unpaid tax.

Others featuring on the list are an Indian restaurant owner, fined £19,000 on £34,000 of tax owing, a wholesaler supplier of petroleum who owed over £1m of taxes and was fined £700,000, and a Sheffield scrap metal merchant fined £48,000 for not paying £88,000 in taxes. In total, the defaulters on the list owe a total of £4.6m in unpaid tax.

HMRC has the power to publish the names of anyone who deliberately fails to comply with tax obligations or makes deliberate errors on a tax return under section 94 of the Finance Act 2009. The department published its first list of deliberate defaulters in February this year, and this is the next quarterly update. Names remain on the list for up to 12 months, and HMRC says they will monitor the individuals and businesses closely for five years to ensure there are no further problems with tax payments.

Spring your business ahead with our seasonal special offer

As a business owner, it’s your job to make your business successful. As your accountants and business advisers, part of our job is to show you how. So would you like us to help you grow it larger, faster or simply more profitably – at no cost to you? The economy’s tough, everyone knows that, yet most of our clients are flourishing. Successful companies are aware that the UK’s overall economic success or failure need not impact adversely on them. With the right guidance and pragmatic planning, there are several ways to ensure your business can thrive, starting now!

Throughout June, the Institute of Chartered Accountants is offering small to medium sized businesses a free advice session with an ICAEW chartered accountant. We think our clients shouldn’t have to wait a month to receive valuable advice that could boost their income right now. We also don’t agree with limiting that advice to commercial ventures of a certain size. Whether you’re a start-up company, self-employed trader, contractor or the entrepreneurial owner of a small or medium sized business, we’re happy to share our expertise with you.

In line with the national scheme, we’re offering you a free business advice session with a qualified member of our team. We’ll look at practical ways to improve your activities and increase your bottom line. This may involve discussing loans, capital and finance, adjusting your profit margins or looking at staff retention. We regularly review your tax and regulatory requirements through our SmarTax system to ensure you never encounter problems with HMRC; now we can look at this together to make sure you understand that side of your business, and know where we can save you money.

We may discuss expansion plans, possibly even new options such as export, if that’s something that may work for you, or creating new jobs. And of course, if you don’t feel you’re ready to grow just yet but need help to manage your current finances, that’s a perfect place for us to start.

The point is for us to work together to create a plan for long-term, sustainable growth. A plan that works for your business, and works for you! And not just during the month of June – we’re here to give you strategic and business advice whenever you need it. Our strategic business planning sessions are usually £1500 but we’re offering them completely free until the end of July to enable all our clients to maximise their business potential for the summer and beyond!

So speak to us today about business and strategy. As members of the ICAEW and Association of Strategic Business Planners we have the knowledge to help your business grow. And with our added experience of running various businesses, we understand what you need to succeed. Call us on 0208 530 0720 to book a complimentary session, or email mark@nordens.co.uk.

Making accountancy fashionable

With top clients showing at London Fashion Week and a key role to play at Graduate Fashion Week, Mark Norden tells London Accountant about the impact of the catwalk on the capital.

Mark Norden, founding partner of Nordens accountancy practice in South Woodford, has carved a successful niche as accountant and business adviser to the fashion world. Many of his clients were showing their latest designs at London Fashion Week, he is closely involved with the Centre for Fashion Enterprise and is now gearing up for Graduate Fashion Week in June – Norden is on GFW’s executive and acts as the organisation’s trustee treasurer. He is also closely involved with Fashion Scout, an international showcase that provides a platform for design talent in London, Paris and Kiev.

Norden established his practice in 2002, having previously worked in the turnaround sector. He set out with a clear ambition to work with those businesses and individuals based in the creative industries, an ambition that he has been able to fulfill over the subsequent 10 years.

London Accountant: So how did you come to be so closely involved with the fashion world?

Mark Norden: We had a few fashion designers as clients, which led us to dealing with the Centre for Fashion and Enterprise, part of the London College of Fashion. We provided mentoring to the students, offered some accountancy and strategic business advice. I now also lecture at the college.

We like working with creative people because they are very interesting but, understandably, are not up to speed on accountancy matters! Having a good understanding of what they are about really helps us.

And this all led me to becoming a trustee and treasurer for Graduate Fashion Week. GFW will really drive the industry forward; it is really trying to change the whole ethos of the industry. The level of enthusiasm is just incredible.

LA: What are the issues facing young designers entering the fashion industry today?

MN: They are young and will know about the technicalities of fashion design, but they are inexperienced and have little idea about running a business.

They often will have no money behind them, but have to pay for everything up front. Cash flow can be horrible. When I lecture at the college, it becomes clear they have little idea about managing finance, so we work with the banks, who do actually want to lend, so they have some working capital. This allows them to grow their own businesses without having to rely on their own money.

LA: But London still has a fantastic reputation for producing great designers and leading innovation, hasn’t it?

MN: It is such a hotspot. I was talking the other day to someone who was in New York but wanted to come back to London because it was such a small area with such a large number of creative people. And it is not just fashion; we are involved across all the creative industries in London – music, film, internet and entertainment businesses. These are all areas where the UK is a leader.

LA: And what about the future?

MN: The world’s changing. The recession, ironically, has allowed people to do things differently, industries are now being disrupted. You can see this in east London, there are so many things going on there, it is such a creative hotbed.

Graduate Fashion Week is on 2 - 5 June; London Fashion Week is on 13 – 17 September.

For more opinion, news and features, go to London Accountant

Can Mark Norden cope under pressure???

You may think the above headline refers to Mark growing his business during a double dip recession, but no it's far more important than that! We are now on the home straight in the Nordens football predictor league and his healthy lead has been massively reduced!

Pete Winter & Jack Goldstone (HARDYS FC) have closed the gap and are in striking distance going into the final few weeks. Pete has had a great month with 400 points compared to Mark's 145 points. Is this a minor blip for Mark or will he regain his form to retain his league title?

Don't rule out Steve Goldstone (ABJ UNITED) either. Steve wisely avoided picking Spurs winning against Wigan and therefore gained points where many others failed. As an Arsenal fan this must have gave him some extra satisfaction.

Stephen Silver's suffers from some bad form. Last month he was a real contender, but looks like he is now doing a Sam Moss.

Lisa Gold is currently making the girls proud with a fifth position. Unless the last few weeks go horribly wrong for her, she will also be able to celebrate the fact of having the most football knowledge in the Gold household!

Roberts1956 has the best score of the week. This is mainly due to correctly picking a draw in the Reading vs QPR game with the banker chip.

Can we also all welcome Kirsty Willis to the first page of the league. Woo hoo. It's good to see she hasn't gave up. Let's see if you can break into the top twenty by the end of the season?

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

How to gain financial freedom in a more nurturing businesses environment

Running a successful business is about more than simply making money. Providing a service that delights customers, is sustainable and adds value is of primary importance in this ever competitive market. Yet success rarely happens spontaneously; we all need an example to follow.

Last week a group of ‘evolutionary entrepreneurs’ lit the way for enthusiastic businesses to follow. Dragon’s Den’s Rachel Elnaugh organised a day of inspirational talks and workshops in the heart of London. The optimistically named Prosperity 2013 brought together a band of motivators intent on improving the ethos behind business dealings.

The driving force behind the event stemmed from the tensions built up around mistrust of Britain’s authority. Enforced austerity, political resentment and a lack of trust in our financial establishment has led to disillusionment in business. So Rachel Elnaugh has earmarked 2013 as the time to embrace a new era for business.
The seminar aimed to help businesses reconnect to the beneficial 'flow' of money energy, deepen their fulfilment in doing business and gain practical help and advice on ways to gain financial freedom.

Which of these thought leaders most inspires you – and whose advice do you think would make you more successful?

Sir Tim Smit is the visionary who created The Eden Project in Cornwall, a hugely successful tourist attraction fashioned from a disused quarry. His passion was evident as he explained how he pursued his dream from a seedling idea to a completed, flourishing indoor rainforest. He advocates social entrepreneurship as the way forward for successful business.
Digital entrepreneur Shaa Wasmund created an internet portal for smart business people and has authored several books providing thought provoking advice. She spoke of the power of collaboration in business, along with how to create a strong personal brand.
Nikki Slade is one of the UK's leading Vibrational Harmony Experts and empowers her clients to transform their life through the magic of sound. Her performance skills have energised many events all around the world. Nikki used her talents to get the energy flowing and transform everyone at a cellular level to raise their 'prosperity vibration!
One of the UK’s leaders in PR, Lynne Franks created London Fashion Week and the British Fashion Awards, and was the inspiration for Jennifer Saunders’ Absolutely Fabulous character Edina. Lynne spoke of the magic of the 'feminine' in business - and how collaborative, ethical heart-centred brands are capturing the imagination of the world.
Mark Attwood’s internet marketing skills gave him a £30 million turnover with the world’s first online skip hire company, later developed into a national tool hire company - without him owning a single piece of equipment! Mark showed how powerful joint venture collaborations can be, discussing, amongst other things, the importance of building your marketing around your personal brand.
Guardian columnist Rev Dr Giles Fraser gave outspoken and insightful views on everything from religion to politics and consumerism to spirituality. He spoke animatedly about how money and spirituality mix can mix.
Rachel Elnaugh, the day’s organiser, created Red Letter Days and starred in the early series Dragons' Den. As a business mentor, speaker and author, she helps entrepreneurs on their business journey. Rachel spoke of the importance of building your 'Tribe' in business and why quality is more important than quantity. She also threw some light onto creating systems to support small businesses who may find technology a struggle or who run their business on a tight budget.

So whose advice would help you take your business to the next level? Mark has been involved with each of these business guidance experts and he is happy to pass on their tips as part of Nordens’ strategic planning advice. Call him today to find out more, or email mark@nordens.co.uk.

Bank of England & Treasury to extend lending scheme

A joint Bank of England and Treasury announcement to extend its flagship lending scheme, with a focus on finance for SMEs, has been dismissed as unlikely to clear the credit bottleneck that banks are currently struggling with.

As part of changes to the Funding for Lending Scheme (FLS), incentives for banks to increase lending to smaller businesses have been improved. For every £1 of net lending to SMEs in 2014, banks will be able to draw £5 from the scheme, and to encourage such action sooner rather than later, every £1 of net lending to SMEs during the remainder of 2013 will be worth £10 of initial borrowing allowance in 2014.

Introduced in August last year, FLS will now not end until January 2015 and George Osborne, Chancellor of the Exchequer, said: This is a big boost for the small and medium sized businesses that are at the heart of the British economy. The Funding for Lending Scheme has already reduced the costs of household mortgages and loans for businesses. This innovative extension will now do even more for [sic] SMEs so that they can play their full part in creating new jobs.

However, Adam Tavener, chairman of Clifton Asset Management, said: The banks themselves have warned that this extension will not clear the credit bottleneck on its own and it is our view that this further inducement to pass on the benefits of subsidised lending to SMEs will only have a marginal effect.

HMRC makes over 40,000 requests to view private details

HMRC has made over 40,000 requests to view peoples private communication details in three years, a Freedom of Information request has revealed.

The 41,351 requests includes information covering text messages, emails and phone calls.

Only two police forces, the Met and Merseyside, made more applications for private data, according to civil liberties campaign group, Big Brother Watch, which obtained the figures for 2009 to 2011.

Emma Carr, deputy director of civil liberties campaign group Big Brother Watch, said: These figures show the taxman uses snooping powers more often than nearly every police force in the country. So itÂ’s strange that nobody has mentioned the governments Communications Data Bill will give the taxman access to who you email or chat online with and what websites you visit.

Home Secretary Theresa May is spearheading the introduction of the controversial Communications Data Bill which will force all service providers to retain information for a year.

An HMRC spokesman said: HMRC uses Regulation of Investigatory Powers Act (RIPA) powers in support of its investigations into criminal attacks on the UK tax system.

He said it only used RIPA powers where we have a criminal investigation underway which is where we suspect a fraud has been committed, adding that of the 14,381 interventions in 2011, all of them related to 5,005 individual communications information requests.

The government recently published its Levelling the Tax Playing Field document, which set out the progress made in its drive against tax avoidance.

Among its successes are six corporate tax loopholes closed, a move which it says has protected over £1bn in revenue and yielded over £500m.

Since 2010, HMRC has won more than 50 tax avoidance cases.

HMRC issues May Day warning on late SA tax returns

Anyone that still hasn't sent in their 2011/12 tax return online could be hit with more penalties from next month, HMRC has warned.

From 1 May, HMRC says it will charge a £10 daily penalty for each day an online return is late, up to a maximum of 90 days. This is in addition to the initial £100 late-filing penalty for missing the 31 January filing deadline.

For paper returns, daily penalties started on 1 February, as they were due by the earlier deadline of 31 October.

HMRC urges people not to send a paper return now as it will trigger an amount equal to, or close to, the maximum daily penalty charge of £900.

And it warns that penalties of at least £300 (or 5% of the tax due, if it is more) will be issued for returns that are six and 12 months late.

Anyone who's received a late-filing penalty and hasn't yet sent a return, but thinks they don't need to be in Self Assessment, should call Tham at Nordens on 020 8530 0720. If HMRC agrees, the return and any penalty will be cancelled.

Report rejects excuses for weak lending

A report from the National Institute of Economic and Social Research (NIESR) will today reveal that an "economically damaging" shortage of lending to SMEs cannot be blamed on weak demand or the poor quality of applicants.

The NIESR will reject banks' claims that their consistently weak lending to SMEs is simply down to a lack of desire for credit and that there is clear evidence of on-going tight credit supply conditions. The report does accept that demand for credit from SMEs is also "probably" subdued. However, it says this is partly down to a "high level of discouragement from application" for loans as well as the continued high cost of borrowing for small businesses as cuts in interest rates by the Bank of England have not been not passed on.

The Daily Telegraph

Companies reported over unpaid internships

Jo Swinson, the Minister for Employment Relations, has referred 100 companies to HMRC after she received information from Intern Aware that they are allegedly breaching minimum wage laws by employing unpaid interns. The companies being investigated are from sectors such as design, fashion, media and marketing.

Ben Lyons, of Intern Aware, said: "Despite the Government admitting that many unpaid internships break the National Minimum Wage Law, until today very little action had been promised to tackle the problem. This is extremely welcome."

The Times

What is Automatic Enrolment?

Automatic Enrolment is now a law whereby all UK employers must provide a workplace pension for their employees. All employees will be automatically enrolled in this pension scheme and all employers and employees must contribute into these pensions.

Auto Enrolment is already up and running. The deadline for employers to be fully compliant depends on the size of your company. Most small to medium sized companies will need to be compliant from the second half of 2013.

Happy birthday to VAT

Value Added Tax, the sales tax levied on everyday items, celebrates its 40th birthday on Monday. In its first year, VAT was levied at just 10% and raised only £1.5bn for the public purse.

However, this year according to the ICAEW, VAT is expected to generate £84bn - more than 13% of the government's total revenue. Deloitte has estimated that since its inception more than £1.6trn has been paid in VAT. Chas Roy-Chowdhury, head of taxation at ACCA, said: "Forty years of VAT is not a cause for celebration. It is a reminder of the never-ending headache VAT creates for businesses." He said the tax has become "a complicated stumbling block for small businesses and sole traders", many of whom struggle with the complicated tax.

Unwelcome Visitors

HMRC has said it will begin a programme of unannounced visits from tax officials, combined with in-depth compliance checks on those who have already received tax penalties.

Those targeted will include people who have received a penalty for dishonestly evading VAT, as well as those who become deliberately insolvent as a way to dodge paying tax. The taxman will also be providing voluntary home visits to those who want help with taxes. HMRC said it will close all 281 of its inquiry centres next year in favour of "mobile services", which will see inspectors visiting people at their homes. The tax office said it will provide home visits and telephone advisers to customers instead of the drop-in centres, which helped 2.5m customers last year.

Mark Norden of Nordens commented that this change in strategy is in line with hmrc closing its local offices.

The Daily Telegraph (Web)

Help to get Â£2,000 off next years employers national insurance

As explained in an earlier article, the new Employment Allowance was announced in the Budget.

While we only have an outline of how it might work at the moment, we understand that UK businesses and charities will be able to apply for up to £2,000 off their employers’ NIC bill in April 2014 which should be a useful boost to small and growing businesses and charities.

It may also help them take on new staff. Unlike the National Insurance holiday which was regional, this will apply to all businesses and charities regardless of age, size or location from April 2014.

The Employment Allowance will be delivered through standard payroll software and HMRC’s Real-Time Information system. Employers will only need to confirm their eligibility through their regular payroll processes and the £2,000 will be deducted from their employer NICs liability, starting with the first payroll after April 2014, until it is used up.

To help explain how the Employment Allowance will work, the Treasury has created amini-website and online calculator to illustrate the effect of the allowance. Please post your comments about the online calculator and thoughts on how the scheme can be made as simple as possible, below.

House of Lords throws out relevant clause in Growth and Infrastructure Bill

Employee shareholders are a new type of shareholder, proposed on 8 October 2012, who renounce employee rights in exchange for between £2,000 and £50,000 shares in the company for which they work.

It was announced in Budget 2013 that employee shareholders will benefit from two tax reliefs with effect from 1 September 2013 when the new status comes into force, namely:

* gains on up to £50,000 of shares acquired by employee shareholders will be exempt from capital gains tax, and
* the first £2,000 of share value that employees receive under the new status will be free from income tax and NIC when they acquire the shares.

The new employment status was in Clause 27 of the Growth and Infrastructure Bil. However, on 20 March the House of Lords at Report stage voted against Clause 27, which means that the clause has been deleted from the Bill.

What will happen next? Will the government get employee shareholders onto the statute book? Watch this space!

Loss buying clampdown-budget 2013

Governments immediate clampdown on the practice of loss buying is set to catch companies engaged in genuine commercial transactions.

The practice used by companies that have incurred a significant loss and wish to realise an immediate economic benefit from that by selling on the loss so another party can claim the corporation tax loss relief is expected to raise over £1bn, the Treasury has estimated.

In line with the clampdown, companies can expect to find their actions considered retrospectively up to the 20 March 2013, the day of the Budget.

The Treasury will be issuing draft legislation on this, and there will then be proper consultation with a view to making sure it works and that it doesnt catch companies that it is not mean to catch.

Legislation will be introduced to extend the restrictions on access to brought forward losses following a change in ownership of a company.

The legislation will extend the rules so that they apply to shell companies with brought forward non-trading loan relationship deficits or non-trading intangible fixed asset debits. This is to ensure that companies which do not carry on a property or investment business or trade are nevertheless caught.

It will also amend the rules to make it clear that they apply where a transfer of a trade within a group occurs after a change in ownership of a company, so eliminating a technical defect which HMRC has long disputed.

These changes apply where a change of ownership takes place on or after 20 March 2013.

Could this be a Budget for growth?

The economic news continues to be bad and the Financial Times headline on Budget morning suggested that it would be a “bleak budget”. In the end the Chancellor made the best of a very difficult situation and he may finally be able to bring about some of the growth that has so far proved elusive for this Government.

We are less optimistic about the public finances which we think may turn out to be in worse shape in the future than the Chancellor is currently projecting.

The Centre for Business and Economic Research (CeBR) with which ICAEW produces its Economic Forecasts thinks that the medium-term economic growth forecasts announced by the Office for Budget Responsibility (OBR) look unreasonable and are unlikely to be achieved, and the borrowing figures are going to be, potentially, much higher than the Chancellor is currently anticipating. This could start to cause serious problems if the interest rates that the Government has to pay to service the public debt also rise in the future.

There was much to applaud in the Chancellor’s announcements including a further reduction in the headline rate of corporation tax to 20% from 2015 onwards, which means the same rate applies to all companies and the existing complexity caused by the small companies rate of tax and marginal relief will no longer exist.

One innovative measure is the “employment allowance” which will provide up to £2,000 per year for all businesses and charities to offset against their employers’ NIC bills from April 2014. It is intended that it will be easy to administer and the Government will be consulting with ICAEW and other organisations on the detailed design. If this succeeds in overcoming the difficult of growing businesses taking on employees then it will be a very beneficial change. The estimated cost of this measure starts at £1.25bn in 2014/15 so it is anticipated that it will have a significant impact.

The increase in the personal allowance to £10,000 is being introduced a year earlier than anticipated and will come in from April next year. When there is a rise in the personal allowance this usually means the Chancellor lowers the threshold for the higher rate of tax, so that it only benefits people on lower incomes. The increase in the personal allowance is taking people out of income tax but not out of National Insurance, and it would be nice to feel that at some stage in the future a Chancellor will take up the challenge of aligning the two.

On the income tax front there is also going to be a new benefit of £1,200 towards childcare vouchers. This new scheme was announced the day before the Budget and our more detailed posting explains what is being proposed and sets out some of our concerns about the somewhat piecemeal approach of the Government in this area.

There is also going to be a new “Help to Buy scheme” which, in its title, is clearly designed to remind the electorate of Mrs Thatcher’s “Right to Buy” which allowed council tenants to buy their own homes in the 1980s. The scheme will offer mortgage guarantees to prospective house-buyers. We have a number of concerns about this, from both an economic and accounting perspective. On the economy: will this simply inflate the housing market further? From an accounting perspective, will this be off balance sheet lending? After all, giving an interest free loan for five years does cost the taxpayer something, and we would have to make a provision for expected losses. There are other costs that the Government doesn’t accrue for, such as student debt that will eventually need to be written off, and also pension liabilities.

Avoidance remains a key concern for the Government and the various measures announced by the Chancellor are anticipated to bring in more than £1bn per year once they are fully operational from next year. The major money spinners are the deals with the UK offshore islands concerning undeclared income in accounts in those countries. There are also going to be moves to stop the exploitation of corporation tax losses and “misuse” of partnerships. The legislation to stop the former will be in Finance Bill 2013, while there will be consultation on the latter with a view to legislation next year.

The introduction of a General Anti-Abuse Rule (GAAR) is now in the finishing straight having been started by the Graham Aaronson study which began in late 2010. The amount of tax that the GAAR will bring in is expected to be about £50m, as it was always intended that it would only target the most egregious of schemes and not mainstream tax planning.

Finally the Government is going ahead with proposals to prevent businesses getting government contracts if they have been involved in “non compliance”. There was a Parliamentary announcement about this last September by the Chief Secretary to the Treasury but a formal consultation only took place over a two-week period last month. We were critical of a number of the proposals and we are delighted that the Government has listened to our concerns and modified the proposals in a number of important respects. “Non compliance” has been more narrowly defined, only procurement contracts in excess of £5m will be affected, there will be no retrospection and the policy will be reviewed after 12 months.

The Chancellor said that he wanted to help to create an aspirational nation and he has made a bold attempt to do so. With a 1p drop in the cost of a pint of beer there will be many raising their glasses to his potential success.

Oh No... Mark Norden is back to the top of the league!

With two month remaining in the premier league season our worries are becoming a reality… Mark Norden could win the Nordens Predictor league again and Stephen Silver is looking like our only hope to prevent this from happening.

The main reason for Mark's rise to the top of the league is his prediction of Wigan beating Newcastle 2-1 with his banker chip. What makes this worse is Wigan's late goal should have been disallowed due to a hand ball. So if we remove the 90 points he gained for this game he should actually be on 1625 points which drops him back down to second position. Plus Stephen Silver predicted a draw in this game which will be +15 instead of -10. So I make that Stephen on 1670 points and Mark on 1625. Maybe be should have a vote on this??? :)

Jack Norden is the second highest scorer on the week with 75 points. He is gradually regaining his early season form and is looking like a contender to finish in the top ten.

LeytonHawke has a good month with 270 points. It will be interesting see if he is going to change his alliance to West Ham in the coming seasons from Orient. After all they will just be down the road with the fancy new Olympic stadium. Sorry! Couldn't help it! ;)

Poor old Kirsty Willis is still fighting against other people in the league who haven't made a prediction for months. As the weeks worst scorer with -40 points my advice might actually be don't make any more predictions. At least this way you will still finish above Mitch Hahn!

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

Sod the recession â€“ make your splash in the deep blue ocean of success

All this talk of triple dip recession…
It’s getting me down my friend, like a cat in a bag
waiting to drown.
This time I’m comin’ down!

My business skills may be slightly better than my poetry (although a published poet thought that was good!) but this much is true: We have been in a recession, out of a recession, then back in another recession for a lifetime. But, consider this… maybe where we are is, and will be, the norm for the foreseeable future!

So what does that really mean to you and me as business owners? My experience has shown me that some business owners thrive during good times whilst others fail, and some businesses flourish during bad times, watching their contemporaries fall flat. So, yet again, what difference does it make to us?

I have to say that, with good planning, strategy and a realistic control of your expenditure, you can maintain a steady cash flow and encourage an attractive rate of growth, whatever the economists are telling you. But you’re not interested in that, because you have heard it a million times before - and it applies whether we are in a recession or not!

So, how about this… Business owners are more likely to succeed during a recession if they can become ‘disruptive’ in their industries. Disruptive? What does that mean?

It means they don’t carry on doing what everyone else is doing, simply because the rest of the world is doing it. Take the following example. Have I mentioned my non-conformity theory? It’s been repeatedly stated that 95% of business owners don’t succeed. (Obviously not Nordens’ clients!) Yet the powers that be want us to conform to ‘normality,’ which means following the 95% that fail. My theory is that we would be pretty crazy to meet that expectation and plod along like baby lemmings, waiting for the inevitable!

Let’s focus on the 5% who succeed. They totally disrupt the ‘norm’ in their industry by turning the service or product into what the end user really wants, rather than what the business owner thinks they should provide based on their sales history.

Take Steve Jobs. He went a step further, eschewing the idea of customer forums and surveys and claiming it was ridiculous to expect customers to know what they want: ‘Tell them what they want.’ His theory was that if you offer something that’s really great, customers won’t remember how they lived without it. You shouldn’t expect them to know what they need. Steve Jobs led the 5%, but he wasn’t unique.

My favourite book on the subject is “Blue Ocean Strategy” by W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute, based at the French ‘Institut Européen d'Administration des Affaires’ – one of the largest graduate business schools in the world. The book defines an ‘unbeatable strategy’ to generate growth and profits, in which we should create new demand in an uncontested market space (the Blue Ocean) rather than compete head-on with existing suppliers in the current industry (the Red Ocean).

So would you rather be one of the 95% battling it out in the deep red sea or will you disruptively dive into the blue ocean to swim with the 5%? I know which I’ve chosen! Rather than doing what you did yesterday and the day before that and the day before that, spend some time in your dreaming room, imagining how you are going to disrupt your industry.

The strategic business advice we provide will place you in the blue ocean – are you ready to make a splash?

Â£100m national Insurance Loophole Closed !!

A £100m National Insurance tax loophole that is depriving the Treasury of tax revenue is to be shut down.

Treasury chief secretary Danny Alexander said that the offshore payroll services loophole, which enabled British companies to avoid paying tax for thousands of workers, would be closed.

Speaking at the Scottish Lib Dem conference on 16 March, he said some 100,000 employees Â– primarily nurses, teachers, and oil and gas workers - were believed to have their salaries paid via offshore payroll services operating out of Jersey and Guernsey.

He said it was Â‘completely counter to the spirit of the lawÂ’ and Â‘neither right nor fairÂ’. Alexander warned that many staff who were paid in this way would be unaware that they may be ineligible for statutory sick pay.

Alexander said: Â‘A few months ago, at Inverness airport, a man told me that he was now being paid through an intermediary rather than direct by his British employer so that it could avoid paying its fair share of employers national insurance. I went back to the treasury to investigate. And it turns out that he's not alone.

Â‘By running their payroll through an offshore location like Jersey, these intermediaries can avoid paying employment tax at a cost to the Exchequer of around £100m a year Â– and rising. Completely counter to the spirit of the law. Neither right nor fair.

Â‘In the Budget we will introduce new powers to clamp down on companies who avoid tax by putting their payrolls in tax havens. Our message is clear. British firms employing workers in Britain must pay British taxes. This is just one part of a much bigger package that we will announce at the Budget. There is no hiding place. Everyone must pay their fair share.Â’

Third of private landlords fail to declare income

Around a third of buy-to-let landlords could be dodging their tax on their rental income at a cost of £550m to the taxpayer, new figures reveal.

Some 1m private landlords have failed to declare any revenue in the past tax year, in contrast to the 1.9m that did, investigative news agency Exaro reports.

Those evading tax could face a crackdown from HMRC in 2013, following an announcement from the tax authority late last year that it was launching a special taskforce to target private landlords, initially in the south-east, to include those that are letting properties out and not disclosing the income on their tax returns.

HMRC estimates the evaded amount to be around £550m a year.

An HMRC spokesman said: Â‘Nearly a billion pounds has been made available to us to tackle tax dodging and we expect this work to bring in an extra £22bn by 2014/15. Some of this will come from the minority of landlords who are currently dodging their tax.Â’

HMRC targets second home sales

People that haven’t paid tax on profits from the sale of second homes face fines and prison as part of the latest campaign against tax evasion by HMRC.

The property sales campaign is aimed at those selling homes in the UK or abroad, where CGT should be paid on any profits made, including properties people have sold that were given to them, and the sale of holiday homes.

People will have until 9 August to tell HMRC about any unpaid tax on property sales, and until 6 September to pay the tax owed.

After 6 September, HMRC will take a closer look at the tax affairs of those who have sold properties other than their main home, but who appear to have paid no CGT.

Those who come forward voluntarily will pay a lower penalty than if HMRC approaches them first.

Marian Wilson, head of HMRC campaigns, said: “Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract CGT. They need to look at our website or contact us. Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support are available.”

Gary Ashford, a spokesman from the CIOT, warned that the September deadline may not give people enough time to calculated tax owed from property sales.

“While September seems like a long way away, it can take a while to pull together relevant documentation to establish the extent of any omission.

“Rather than launching different targeted campaigns in rapid succession, HMRC should focus their efforts on a big national campaign open to all taxpayers whose tax affairs are not up to date. A one-off ‘general disclosure facility’ that lasts sufficiently long and is sufficiently attractive to get people to come forward to clean the slate would make sense.”

A spokesman for HMRC said it did not have a target for the amount of tax it wanted to raise from its property campaign. Data from the 2011 census indicates that 1.57 million people living in England and Wales have a second address in the UK, whilst a further 820,000 indicated that they have a second address outside of the UK, he said.

HMRC has recently interrogated data on over 10m property transactions to identify which ones may not have been accurately returned by customers, he said.

HMRC said that its campaigns against tax evasion in different parts of the economy have raised £547 million from voluntary disclosures, and nearly £140m from follow-up activity, including 20,000 completed investigations.

Campaigns have targeted offshore investments, medical professionals, plumbers, VAT defaulters, coaches and tutors, electricians, online traders and higher rate taxpayers with outstanding tax returns. There are 13 criminal investigations underway, with five convictions already secured, according to HMRC.

Joe Sword at Nordens says that this is another example of HMRC targeting specific easy to reach areas and therefore anyone who has sold a property that wasn’t their main home should contact the Nordens tax team, who will be able to assist in checking whether the correct level of tax was paid on the sale. The penalties for non payment could be substantial and it is vital that you seek professional advice if you feel you may have under declared tax.

Download the Nordens App!

Now we’re at your fingertips, 24/7. Being the proactive, finger-on-the-pulse accountants that we are, we’re very happy to announce the birth of our new baby: the Nordens Accountancy App!

This free App provides you with dates, rates and fantastic information, giving you up to the minute news and advice at your fingertips. Being incredibly busy, as you invariably are, you can now check your payment dates on the go to make sure you never miss a deadline. So quick and so simple!

What’s your estate worth? Any idea what would be owed in inheritance tax if you got hit by an asteroid? Well now you can find out at the touch of a button. Our clever calculators let you work out approximate figures for a whole host of scenarios. Of course you’re not really going to get hit by an asteroid, so use our App for business planning: see in seconds how you can increase your profits, work out your overall annual contractual rate or check your tax liability for driving a company car.

Handy Tax Tables show at a glance all the rates you might check to ensure your financial position is at its best. Ranging from the standard accountancy features such as Income Tax Relief and Vat, the list also runs through items that could benefit you as a developing business. Everything is covered, from Charitable Giving and Stamp Duty rates, through to Fuel Benefits and Working Tax Credit.

All these amazing tools can be yours right now by visiting this link: http://www.nordens.co.uk/app/

Your new App is completely free, so please tell your friends – they can have fun and get financially-savvy too, compliments of your favourite accountants!

Penalties for late Self Assessment Tax Returns

Was the return due in the first place? If not, you may be able to get the penalty cancelled.

HMRC is in the process of issuing around 850,000 penalty notices for late self assessment tax returns.

This time last year HMRC announced that it would cancel penalties for a late SA return if a taxpayer should not have been sent a notice to file in the first place – in other words, where the taxpayer did not meet the criteria for being within SA.

While there has been no similar announcement this year, we understand that it is now HMRC’s usual practice to cancel penalties in this situation. So if you receive a penalty notice, contact us and we may be able to have it cancelled.

Silver or Norden??? Two months to go! Who will it be?

The Nordens football predictor league now looks as though it's a two man race between current leader Stephen Silver and Mark Norden. Who will finish triumphant?

Hardys FC AKA Jack Goldstone is the closest challenger to the top two in third position. However Jack will need to make his move soon to make up the 130 point gap to second position.

Last month I asked if Mossy16 AKA Sam Moss has turned into Kevin Keegan? It appears much much worse as he is now fighting to stay in the top 10! Even Lisa Gold is above him now! ;)

Kane2602 AKA Kane Hoops is the weeks top scorer with 175 points mainly thanks to predicting the correct score in the Arsenal vs Villa game.

Alan Cohen also has a great week with 160 points. I did notice Alan got a bit too confident with the West Ham vs Spurs game by predicting 0 - 3! Bloody Gareth Bale! The sooner he leaves Spurs the better for West Ham fans. Can't help admiring the talent though!

Leon Gold is the worst scorer of the week with -35. Not really surprising considering he put his banker chip on Reading winning! What were you thinking?

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

More HMRC task forces on the prowl

HMRC has set up 35 task forces since the first one targeting restaurants was launched in May 2011. The initiatives bring together teams that carry out short bursts of concerted “1:1 compliance activity” in areas where there is evidence of high risk of tax evasion and fraud.

The latest task forces (and the amounts they expect to raises) will focus on:

- Northern Ireland (£3.45m)
- Fast food outlets in East Anglia (£5m)
- Fraudulent refund claims in the South East (£6m)
- Midlands jewellery trade (£2.5m)

Treasury minister David Gauke claimed that the 12 task forces launched in 2011-12 are “on track to collect more than £50m” and expected to see another £90 million from the 30+ taskforces launched since.

The cumulative amounts sound impressive in a press release, but HMRC plays its cards close to its chest about revealing how effective the different exercises have been. The philosophy of targeting low hanging fruit among small businesses while taking a more relaxed view of dubious avoidance strategies amoung larger corporations does not sit well with the accountancy profession, or the MPs on the Public Accounts Committee, who regularly criticise HMRC’s anti-avoidance strategy.

Tham Tharmarasa at Nordens says, we can see these new task forces are just scraping the tip of the iceberg in relation to the substantial unpaid tax and they appear somewhat insignificant in light of significant schemes set up by the big corporations to avoid tax. HMRC inspectors are turning up at clients premises unannounced in order to see how businesses operate and even perhaps buy a meal (in the case of restaurants) to trace it to the books and records at a later date.

The UK looks set to avoid a triple-dip recession

The UK looks set to avoid a triple-dip recession according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM). Business confidence is at its highest since Q2 2011 and suggests that growth will resume this quarter.

Key findings for Q1 2013 show:

- The BCM Confidence Index stands at +12.8, up from +4.2 in Q4 2012, suggesting GDP will grow by 0.4% in Q1 2013
- The availability of management skills is a concern as companies look to increase headcount – leading to a fear that the right people will not be in place when the recovery starts
- Businesses are still cautious to invest in the recovery, highlighted by continued low capital investment and salary growth

Michael Izza, chief executive of ICAEW, said 'There was a risk that, combined with the traditional January blues, the bad weather and some high profile retail collapses, talk of a triple dip recession could become self-fulfilling.

These results show that we are set to avoid a third period of technical recession, but no one should be complacent. There is only one way out of our economic malaise, and that’s to increase our economic output. Such a task isn’t going to be easy, or indeed quick'.

Grant Thornton UK LLP CEO, Scott Barnes said: 'Export growth rose slightly this quarter as the global economy picked up. This could be a sign that the export-led recovery we need may be beginning.

This is coupled with an improvement in both profit and turnover growth, which companies expect to increase in the year ahead. Despite a rise in confidence though, companies’ modest plans for capital investment are a worry as this is crucial to a strong and sustained recovery'.

Availability of management skills an issue

There is continuing good news for the labour market as private sector recruitment increases as do hiring expectations for the next 12 months. Firms have seen a 1% increase in staff in the last year and plan to increase headcount by 1.5% over the next 12 months. One in 10 firms say the availability of management skills is a greater challenge than a year ago, suggesting that companies may struggle to recruit the right people to lead the recovery.

Improvement in most financial indicators

Companies reported an increase in turnover of 3.3% in the past 12 months, and expect a rise of 4.6% in the year ahead. Similarly profits grew by 2.5% in the past 12 months and are expected to grow by 3.9% in 2013. Although below the pre-crisis averages(of 6.5% reported turnover growth and 5.3% reported profit growth), expectations are more optimistic than they have been in recent quarters.

Positive confidence across all sectors and regions

Confidence is positive across all regions with the South East and Wales among the most optimistic. Businesses in all sectors also reported a positive trend with IT & Communications and Construction recording the highest Confidence Indexes.

Clamp down on offshore account holders, as the pressure on tax havens mounts.

THE UK AND ISLE OF MAN have struck a deal in a bid to clamp down on offshore account holders, as the pressure on tax havens mounts.

The information-sharing deal - the first struck with a Crown dependency - will see financial information on UK taxpayers with accounts in the Isle of Man reported to HM Revenue & Customs automatically every year.

UK residents with assets concealed on the island will have until September 2016 to disclose details to the taxman and pay any tax owed to the HMRC, as well as a fine between 10% and 20%. While in most cases, the deal will see evaders escape prosecution, HMRC offered no guarantees.

Unlike a similar deal with Switzerland, anonymity will not be enshrined, while the deal will not have the immunity from criminal prosecution seen in the Liechtenstein Disclosure Facility. The UK received its first payment from Switzerland, amounting to £340m, last month.

The deal will take effect from 6 April, and as yet there are no details of how it will be administered by the taxman. Further details are expected in before April.

However, the facility closely follows a US law, the Foreign Account Tax Compliance Act, which requires governments to disclose the identities of Americans holding assets in their jurisdictions.

Chancellor George Osborne hailed the move as one which "will greatly enhance HMRC's ability to clamp down on those who try to hide their money offshore", while expressing hopes that Channel Island nations will follow the Isle of Man's lead.

Mark Norden of Nordens commented that this agreement is the continuation of HMRC working closer with tax havens and is a more cost efficient strategy to encourage disclosure and collect further levels of tax.

Stitch me, lift me, tuck me: how cosmetic surgery reflects good business practice

One of our clients is currently enjoying television stardom! Staff at The Harley Street Skin Clinic are the very watchable subjects of Sky Living’s documentary series: Stitch me, Lift me, Tuck me.

Whilst the TV cameras may have targeted this hugely successful business based on its celebrity clientele, the fact is that cosmetic surgery is big business. With £2billion spent annually on botox, moob removal and tummy tucks (and that’s just the men), our obsession with physical perfection is constantly growing.

So how does this relate to you? You may not desire or need any physical improvements (lucky you!), but there’s a good chance your business could do with a facelift. What this exclusive clinic and its showcase client base reflects are principles that can increase productivity in any successful business.

For a start, the British public are going to great lengths to look good personally, a reminder of the truth in the old adage ‘first impressions count.’ In business, your branding provides your public face. Website headers and background designs provide your commercial ‘skin’ and should be fresh and reflective of the image you want your business to present.

Body language and the way your present yourself can be transposed as your social media presence. Does yours reflect your branding, with cover pictures and avatars that tie in with your overall business identity? Just as you care for yourself: moisturising your skin, dabbing balm on your lips, so you should pay constant attention to your on-line image to maximise your business potential.

Behind the scenes running of your business is akin to the butt lifts that Dr Aamer Khan performs on a regular basis. Just as your bum provides a base to keep you firmly seated and able to get on with whatever you’re doing, your accounting system needs to be robust enough to harness your finances, while slightly sexy so the figures are always on your mind and you’re happy to watch them grow. A simple package such as n-books looks appealing and leaves you feeling in control and one step ahead – no need to be chasing your tail or covering your ass!

Dr Khan’s expertise was demonstrated on TV as he transferred unwanted fat from a topless model’s hips to increase the size of her boobs. This procedure mirrors the way your assets can be shifted to enhance areas of your business that can be more profitable with a little investment. The logistics may be simple and the results outstanding.

Harley Street Skin boasts 80 satisfied clients a day; wouldn’t you like to make that same claim? Isn’t it time to strive for some added perfection? If so, grab the love handles of your business. Planning your next move and strategically setting clear targets will help you identify ways to structure your services so they become more appealing to your customers. A little sucking and tweaking can achieve the epitome of business success, without the pain of going under the knife.

Ten tips for social media success

Many businesses don’t make the best use of social media, simply because they don’t understand its potential or how to harness it. The following tips show how it should be working for you.

1. Have a realistic plan

Without a realistic social media marketing plan you’ll never know how you’re performing and it’s easy to lose momentum. Some businesses are able to delegate responsibility for tweeting and posting to a specific member of the team, whereas other small businesses don’t have that luxury. If you can only spend 10 minutes a day engaging with your clients, prospective customers and followers, that’s fine – as long as you make that time productive and effective.

2. Build relationships

Contrary to popular belief, social media is not simply a numbers game. Having 20,000 followers on the other side of the world if your business provides a service in London is not helpful. Facilities to ‘buy’ followers claim to increase your ‘social proof’ but it’s perfectly acceptable to cultivate relationships with the people who are interested in you and what you can offer. So have conversations, learn about each other, build trust – and then develop a grounding from which to buy.

3. Reinforce your branding

Your social media platforms should reflect your branding. Website colours, clear use of your logo, a recognisable photo of you… Some people don’t bother with a profile picture on LinkedIn or Twitter – but how can anyone think they present a professional image of themselves without one? Would you do business with an egg?

4. Make it easier for people find your business on-line

Many businesses don’t understand how Google ranks them, and what they can do to help themselves climb the page ladder. Some still view search engine optimisation (SEO) as a technical or mystical entity beyond their control - well it’s not. You can promote yourself in search rankings simply by engaging properly in social media.

5. Be creative with keywords

Google loves ‘keywords’ – those terms that are specific to your business. Include them in your social media posts to help your business be found more easily.

6. Don’t panic about ‘sharing fresh content’

The internet is overrun with lists of the social media mistakes people make and how to rectify them, usually beginning with a reminder that your content should be ‘fresh, interesting and relevant’ to your audience. Well yes, it should – but it’s all subjective. If you’re not a naturally gifted writer don’t panic about writing ‘fresh content’ – it’s fine to share other people’s interesting stuff.

7. Don’t bore your audience

Many articles will tell you not to promote your businesses in more than 20% of your posts as that’s not engaging – instead you should share interesting content. Again, subjective! Some social media ‘experts’ tweet their 80% about their personal views on life, politics, TV or what their cat did this morning. Interesting and engaging?? I think not. What’s more important is actually conversing with your followers. There’s nothing wrong in consistently posting about your best selling products or offering them the choice to read your blog or check out your services. The key is to reciprocate by showing your interest in whatever they post.

8. Be patient

There is no quick fix in business that will get you to the top without a good deal of hard work. Like anything else, social media needs thought, planning, doing, measuring, refocusing, adjusting, rinse, repeat – it takes time. You’re building a community that values you, trusts you, shares your ideals and wants to work with you. Be realistic about the time that takes.

9. Choose your social media platforms

You can pick and choose where to share information and promote your business. Just because everyone else is on Facebook it doesn’t mean you must be. Find out where your clients are and take aim. Make sure your social media marketing strategy justifies whether or not you’re visible on key sites.

10. Play nicely

Acknowledge people who share your content with their own followers and thank people for promoting you. Be polite, be friendly, be yourself. At the other end of cyberspace is a real person; whether you hope to meet them, do business with them or simply share information, they are not mini search engines – play nicely.

Imaginative Training and Development is offering special rates for Norden’s clients until 31 March, for social media training, profile set-up and management. Call Renée on 0208 551 7077 or email: Ren@ImaginativeTraining.com quoting ‘Nordens2013’.

About the author

Renée Wallen trains businesses in social media marketing and management. She writes website copy, blogs, articles – in fact, anything you need written. Author of The Colours Inbetween (because life’s not black and white, or any shade of grey) – a bestseller that charts how social media helped her business to grow. Ren@ImaginativeTraining.com | @WeekendWitch | LinkedIn/Renée Wallen

SELF-ASSESSMENT TAX DODGERS to be targeted by HMRC taskforce

Taskforces usually operate in "short, sharp bursts of activity" in targeted areas of the country and perceived high-risk industries. The new operation will be looking at around 400 taxpayers in London and the South-East, with an expected yield of £6m.

Further reading:

- Tax taskforce to target London lawyers
- HMRC's taskforces: Who are they and what do they do?

Taskforces tackling tax evasion in Northern Ireland, the jewellery trade in the Midlands and fast food outlets in East Anglia are also underway.

The aim is to induce traders in the target industries and areas to voluntarily come forward and settle any outstanding tax liabilities they might have by generating publicity in the local area. Compliance checks are carried out, as well as announced and unannounced visits.

Taskforces are a result of the government's £917m spending review investment to tackle tax evasion, avoidance and fraud from 2011/12, although it is not known what proportion of that budget the taskforces account for. It is hoped, however, it will raise an additional £7bn each year by 2014/15.

HMRC director-general for enforcement and compliance Jennie Grainger said: "Up to 400 people will be targeted by this taskforce. The message is clear - if you choose to defraud the tax system or seek to evade tax, we can and will track you down. You will face not only a heavy fine, but possibly a criminal prosecution as well."

Joe Sword at Nordens says, this is another indication of HMRC stepping up their efforts to close in on those who owe tax, we would therefore advise anyone who hasn’t completed a tax return and feels they should have, or those that are unsure whether they need to complete one, to contact the office on 0208 530 0720 to discuss the matter further.

UK looks set to avoid a triple-dip recession

The UK looks set to avoid a triple-dip recession according to the latest ICAEW UK Business Confidence Monitor (BCM). Business confidence is at its highest since Q2 2011 and suggests that growth will resume this quarter.

Key findings for Q1 2013 show:

- The BCM Confidence Index stands at +12.8, up from +4.2 in Q4 2012, suggesting GDP will grow by 0.4% in Q1 2013
- The availability of management skills is a concern as companies look to increase headcount – leading to a fear that the right people will not be in place when the recovery starts
- Businesses are still cautious to invest in the recovery, highlighted by continued low capital investment and salary growth

Michael Izza, chief executive of ICAEW, said 'There was a risk that, combined with the traditional January blues, the bad weather and some high profile retail collapses, talk of a triple dip recession could become self-fulfilling.

These results show that we are set to avoid a third period of technical recession, but no one should be complacent. There is only one way out of our economic malaise, and that’s to increase our economic output. Such a task isn’t going to be easy, or indeed quick'.

Grant Thornton UK LLP CEO, Scott Barnes said: 'Export growth rose slightly this quarter as the global economy picked up. This could be a sign that the export-led recovery we need may be beginning.

This is coupled with an improvement in both profit and turnover growth, which companies expect to increase in the year ahead. Despite a rise in confidence though, companies’ modest plans for capital investment are a worry as this is crucial to a strong and sustained recovery'.

Availability of management skills an issue

There is continuing good news for the labour market as private sector recruitment increases as do hiring expectations for the next 12 months. Firms have seen a 1% increase in staff in the last year and plan to increase headcount by 1.5% over the next 12 months. One in 10 firms say the availability of management skills is a greater challenge than a year ago, suggesting that companies may struggle to recruit the right people to lead the recovery.

Improvement in most financial indicators

Companies reported an increase in turnover of 3.3% in the past 12 months, and expect a rise of 4.6% in the year ahead. Similarly profits grew by 2.5% in the past 12 months and are expected to grow by 3.9% in 2013. Although below the pre-crisis averages(of 6.5% reported turnover growth and 5.3% reported profit growth), expectations are more optimistic than they have been in recent quarters.

Positive confidence across all sectors and regions

Confidence is positive across all regions with the South East and Wales among the most optimistic. Businesses in all sectors also reported a positive trend with IT & Communications and Construction recording the highest Confidence Indexes

A record year for filing on time and filing online

A record 9.61 million people found “inner peace” and sent their tax return on time this year, HM Revenue and Customs (HMRC) revealed today.

With 10.34 million people in Self Assessment in 2011-12, this means that around 93 out of every 100 taxpayers (92.9 per cent) met the return deadlines – 31 October for paper and 31 January for online.

Of the 9.61 million on-time tax returns, 7.93 million (82.5 per cent) were sent online – a record number. The remaining 1.68 million (17.5 per cent) were sent on paper.

Anyone who hasn’t yet sent their 2011-12 tax return to HMRC will have already incurred a £100 late-filing penalty. To avoid any further penalties, they should send their return as soon as possible, as well as pay any outstanding tax due for the 2011-12 tax year.

The busiest day for online returns was 31 January, when HMRC received 578,000. The busiest hour occurred between 4pm and 5pm on 31 January, when 46,000 returns – more than 12 per second – were received by HMRC.

In the run up to the 31 January deadline, even the Christmas holidays didn’t stop the flow of online returns to HMRC, with 1,548 people putting the festivities on hold and sending their tax return online on Christmas Day, and another 4,685 on Boxing Day. New Year’s Eve saw 27,161 people celebrate by sending their tax return over the internet, while another 12,077 were suitably recovered on New Year’s Day to do the same.

Has Sam Moss turned into Kevin Keegan? Has he lost his nerve in the Norden Predictor League?

January has not been a good month for Mossy16 AKA Sam Moss by scoring -100 points. This has therefore allowed Stephen Silver shoot to the top of the league with 1360 points.

Mark Norden must have got a bit excited knowing he had predicted the Everton vs West Brom correctly with his banker chip. He must have thought he toped the league! However Stephen Silver made the same prediction to keep Mark in second position. ha ha

AleeC enters the top ten with 115 points in a hard to predict month. Can the good form continue?

Spurs supporters have best performing teams with 3 teams in the top 10 followed by Arsenal and Chelsea with 2 teams each.

Lisa Gold has a nightmare of a week with -60 points. Only one prediction correct this week! However the winner of the weeks worst score goes to Joey Wallen with -65 points. Oh dear!

Looking towards the bottom of the league there are a few people that have threw their toys out of the pram and don't want to play anymore. :(

Kirsty Willis and Kevin Coller must be a little frustrated as they are getting beat by people who haven't participated for the last couple of months!

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

HMRC to scrutinise firms with outstanding VAT

The taxman has warned they will target approximately 50,000 companies that have failed to pay their VAT on time meaning their tax affairs will come under the spotlight.

More than 600,000 businesses currently file their VAT returns on a monthly basis but around 50,000 are to be told that, from 28th February, their tax affairs will come under greater inspection if they still have VAT outstanding.

Some of those businesses will have already received an assessment of VAT for the periods in question.

The VAT Outstanding Returns campaign is aimed at firms that have one or more VAT returns outstanding and have been told that if they have not already submitted their returns they should do so without further delay.

By using HMRC’s new amnesty and coming forward voluntarily, businesses may receive better terms with lower penalties imposed than if HMRC catch them first.

Companies with outstanding VAT returns should submit and bring their VAT affairs up to date before 28th February 2013.

If they fail to do so, HMRC have warned they will use their legal powers to pursue those non-compliant companies.

Failing to submit VAT returns is an offence which can result in default surcharges, penalties of up to 100% of the tax due and even a prison sentence.

HMRC launches VAT non-filers campaign

HMRC will target up to 50,000 businesses that have failed to submit VAT returns with warnings that their tax affairs will be closely scrutinised.

The Revenue warned that if returns remain outstanding after 28 February their tax affairs will attract "greater attention".

The VAT Outstanding Returns campaign will rely on businesses coming forward voluntarily before that date and in return will receive better terms, “as any penalty they pay may be lower than if HMRC comes to them first,” according to a press statement.

People can take part in the campaign by:

- Completing and paying any outstanding VAT returns immediately
- Telling HMRC if they have stopped trading or have changed their business details

The terms on offer are expected to be similar to other campaigns – those opting to make voluntary disclosures will be entitled to pay reduced penalties (10% of tax owed for carelessness and 20% for deliberate understatements or non-disclosures) compared to penalties of up to 100% of the tax due if HMRC identifies them without prompting.

Last May HMRC launched a new amnesty campaign targeting businesses trading above the VAT threshold without being registered. At the time AccountingWEB reported that HMRC had raised more than £500m from voluntary disclosures and a further £100m from follow-up activity.

Marian Wilson, head of HMRC campaigns, said HMRC would use its legal powers to pursue outstanding returns and any unpaid VAT.

“Penalties, or even criminal investigation, could follow,” Wilson said.

For the full guidance on the campaign visit the HMRC website.

Fashioning successful business: accountancy support for fledgling design labels

Over the past decade, specialist accountancy firm Nordens has strengthened its relationship with some of today’s leading fashion designers, as well as the emerging creative stars of tomorrow. Working closely with the Centre for Fashion Enterprise (CFE), the London-based company plays a crucial role in nurturing talented designers from their initial creative stages to fully fledged, thriving businesses.

As industry talent may be aware, the CFE’s range of programmes is devoted to promoting realistic business expectations and opportunities to young fashion labels. These designers are reliant on receiving relevant and targeted business advice to enable them to succeed in today’s volatile market. Nordens provides a professional niche within these programmes, with its unique blend of traditional accountancy and contemporary strategic planning services being an ideal solution for the vibrant fashion industry.

The award-winning company’s founder, Mark Norden FCA FSBP, dedicates his personal time without charge to ensure that CFE’s seedling businesses are given a valuable understanding of risk, strategy and the emotional demands of building a successful venture. His first-hand experience in creating steady profits for start-up companies and small enterprises has benefitted a host of recognised fashion labels across all areas of the industry, including accessories and shoes.

Mark supports the CFE designers by running dynamic workshops and one-to-one mentoring sessions on areas such as tax, credit control, bookkeeping and strategic planning, He is a member of an expert panel lecturing for Market Entry delegates, and a key influencer at Fashion Bootcamp. As a member of the Graduate Fashion Week management team he provides an avenue to influence designers’ business sense prior to even starting their commercial ventures.

Mark and his team provide these young designers with the tools and knowledge to develop their own business infrastructure and growth strategies, enabling them to support their natural creative abilities with commercial acumen. They’ve been instrumental in catapulting many of their successful fashion clients through investment and expansion stages to become household names.

Nordens understands the distinctive pressures facing fashion design businesses, such as funding production, employing freelancers and import and export dealings. Coupled with generic issues like cashflow and debt financing, the team recognises that it can be a tough path for any growing business; so they maintain strategies to help clients avoid any such obstacles - or smoothly tackle the inevitable ones. The regular business clinics they provide for the fashion industry have proven invaluable to many!

Designers who choose Nordens receive a first class service from a dedicated member of the team, ensuring specific fashion expertise and business continuity. CFE designers also benefit from a generously subsidised accountancy fee to support them through their initial growth period. If you work in the industry and would like to know more about the services available to designers, or to discuss the CFE’s projects, call Mark or Mitch on 0208 530 0720.

Principal Private Residence (PPR) case reported yesterday

In one of those ‘How did this get to tribunal?’ cases HMRC were left with red faces in the recent case of Ellis v HMRC. The facts are short and sweet. The taxpayer had two residences which HMRC accepted in court. They had made a PPR election, which was valid. HMRCs argument was that it was not their main residence. Unfortunately for them, this shows a fundamental misunderstanding of the rules surrounding PPR. As the Tribunal judge had to point out to them, where an election is validly made, the concept of a 'main' residence is irrelevant. All that is needed is to show it was a residence – it doesn’t have to be the main residence – as long as an election has been made. The point to take from this is that PPR elections are really important for clients who have more than one residence. If the taxpayer had not made an election, they may well have lost this case.

Speak to Tham Tharmarasa at Nordens if you would like assistance with Prinicipal Private Residence claims

VAT outstanding returns campaign

The latest in what has turned out to a long line of campaigns by HMRC is the VAT Outstanding Returns campaign. The campaign has just started and is aimed at businesses that have one or more VAT return outstanding. These businesses are being given an opportunity to get up to date and pay the tax they owe by 28 February 2013. The carrot is that if they do so they will be able to settle on better terms, including lower penalties.

The stick is that after 28 February HMRC will chase firms with outstanding VAT returns and will not show any leniency on penalties.

Speak to Kirsty Willis in our VAT department to discuss your VAT position.

HMRC sends out tax return reminders

HMRC is sending out reminders to taxpayers who it believes have not yet submitted their tax returns for the year to April 2012.

Mark Norden notes that the letters say that the recipients may not have submitted a return, which is welcome, since the reminder letters we have seen are dated mid December 2012.

The letter contains a useful reminder of what to do if the individual has lost their User ID and password, ‘If you have lost one, either speak to us or go to online.hmrc.gov.uk and click on Lost password or Lost User ID.’ and a warning that it can take two weeks to replace them. Taxpayers are asked to contact HMRC by 21 January 2013 to make sure that they arrive in time.

The letters are also very blunt about how the penalty rules could result in a penalty of up to £1,600 accruing, even if no tax is due.

Start-up loans scheme expanded

The government is expanding its start-up loans scheme, which offers young entrepreneurs loans of about £2,500 to help them start businesses.

The scheme had originally been aimed at 18-to-24-year-olds, but is now being expanded to those aged up to 30.

To cater for the wider age band, the funding available for start-up loans will rise from £82m to £112m.

But the scheme, which was announced at the end of May, has only lent out £1.5m so far.

The Start-up Loans Company, which runs the scheme, said the relatively slow start was due to the time taken to set up local partnerships, but that the pace of loans had picked up during December.

The target is to lend all £112m by April 2015.

More than 3,000 people have applied for the loans so far, but if the target is to be met then almost 45,000 entrepreneurs will have to take out the loans.

The expansion was officially announced by Prime Minister David Cameron at an event in Preston.

He said there were record numbers of new companies starting and the start-up scheme was "absolutely vital for the future of our country".

"The government's role has got to be to try to do everything we can to encourage more start-ups and then to help them to grow, to get finance and take people on," he told an audience of young people and entrepreneurs.

Mr Cameron said banks should also be doing more: "A lot of this should be the job of banks, but frankly after the terrible problems of 2008-9... there are gaps in the market".

One of those gaps was start-up finance, he said. "I am not content to sit back and wait for the banks to get on with this work."

Slow Start

But Labour's shadow business secretary Chuka Umunna criticised the way the scheme was being delivered.

"With our economy flat-lining it's essential that initiatives like the Start-up Loans scheme are delivered effectively if they are to provide real opportunities for our young entrepreneurs."

Mr Umunna said the numbers of loan given out so far was massively behind target and the government needed to tackle a lack of awareness about the scheme.

Start-up loans have generally been welcomed by business groups, although there have been suggestions that the average of £2,500 on offer may not be enough to make a difference.

"It is not about creating the next multinational, it is about creating a series of micro-businesses, giving you enough capital to start your own business," said Ketan Makwana, from Rockstar Youth, one of the organisations administering the loans.

But Mr Makwana said the most important part of the scheme was the advice and mentoring that young people get along with the loan.

He told the BBC that he rejected the "cynical view" that the programme was a cheap way of getting people off the unemployment register.

"What it is doing is inspiring a generation to get Britain back into business," he told BBC Radio 4's Today programme.

"It is giving an opportunity to those who want to start a business and maybe increase employment opportunities for others in the future."

Major Shift

The Start-up Loans Company is chaired by James Caan, who is best known for his appearances on the television programme Dragons' Den.

"I am delighted to see that more and more young people are now looking to set up their own business," said Mr Caan.

"What is clear about the scheme is the take-up is there.

"We have already backed 460 businesses in the last three months. We are looking to back 100 businesses a week," he told BBC News.

One of the first to be offered a loan was Elena Mingas who used the money to open a fashion business, Tangle Dress Design in Bury.

"The time to do something is when you are young. I know for a fact, because I have tried all the other places, that the support isn't there for us."

She said she hoped the scheme would help overcome a negative attitude towards young people and show would they could achieve.

The scheme was created by government enterprise advisor Lord Young, whose report on small businesses last year suggested that if the UK was as entrepreneurial as the US, an extra 900,000 businesses could be set up.

The loans must be repaid within five years, and interest will be charged at the level of inflation measured by the the Retail Prices Index (RPI), plus 3%.

RPI in November stood at 3.0%.

The loans are part of the government's attempts to reduce youth unemployment.

The most recent official figures showed that 17.9% of 16-to-24-year-olds who were not in full-time education were unemployed.

ABJ United is now a serious contender for the Nordens Super Cup

Steve Goldstone the manager of ABJ United has a great December in the Nordens football predictor league with 410 points so far. The leader Sam Moss has a rare poor week with minus 15 points. Mark Norden and Stephen Silver are also piling the pressure on the top two.

The battle in the Gold household continues to keep us on the edge of the seat. Last month I questioned Leon and asked if he was the man of the house as Lisa his wife was beating him. I'm proud to say Leon has made a good step forward for mankind and regained his position! However with Lisa is only 25 points behind, so the position can easily be reversed.

I don't know if you have all noticed, but in recent week I (petewinter) have entered the top ten! :) I can't help, but to be quite excited by this as I usually just try and avoid drop to the second page! I am putting my banker chip on Stoke beating Southampton at home next. This may make or break me!

AleeC jumps 5 places in the recent week with 60 points. Not an amazing score, but he has benefited from those around him scoring badly.

Mitch Gold has a poor week with minus 20. Looking at his predictions I'm not surprised as he put he banker chip on QPR winning!!! I know Mr Twitch is now there, but I think you may have a little too much confidence in him!

Looking towards the bottom of the league roberts1956 makes great progress by being the highest scorer of the week with 135 points. This is mainly down to predicting Stoke to beat Liverpool 3-1 and using his banker chip. I can't imagine many people got that result correct!

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

HMRC: Last chance for Swiss account holders to disclose

HM Revenue & Customs will write to account holders this week warning that should they fail to disclose their affairs fully and pay, penalties of up to 150% of the amount owed could be imposed.

The move is the third tranche of letters sent to UK holders of Swiss bank accounts and is part of the UK-Swiss tax agreement which is due to come into force in the new year.

After 1 January, accounts held by individual UK taxpayers in Switzerland will be subject to a one-off deduction in 2013, as long as the account was open on 31 December 2010 and is open on 31 May 2013.

That deduction will settle income tax, capital gains tax, inheritance tax and VAT liabilities in relation to the account. However, the deduction will not be applied should the account holder instruct the bank to disclose details of the account to HMRC. Instead, the Revenue would only seek unpaid taxes with relevant interest and penalties.

From January, income and gains derived from investments held by UK taxpayers in Swiss banks will be subject to a new withholding tax, with the rates comparable to the top UK rates and payment satisfying UK liabilities. As with the amnesty, the withholding tax will not apply if the account-holder authorises disclosure of details of income and gains to the taxman.

HMRC director-general of enforcement and compliance Jennie Grainger said: "We are working carefully through the offshore data we have received and this work has so far brought in £100m in unpaid tax that would otherwise have remained lost to the UK.

"The ground-breaking agreement between the UK and the Swiss Confederation which is about to come into force will bring in up to £5bn in tax revenue to the UK. We will use the technology, data and skills at our disposal to tackle those who engage in offshore evasion. The net is closing in."

Tax returns: HMRC warning to 300,000 late filers

About 300,000 people who have failed to send in their tax returns for 2010-11 may have their goods seized. The UK tax body is sending warning letters to those who have now run up late-filing penalties of £1,300 for that year, under self-assessment.

They can still pay, or ask for the penalty to be taken off their income in 2013-14 if they are in the PAYE system.

The letters are part of a continuing campaign against a persistent minority of non-filers.

A spokesman for HM Revenue & Customs (HMRC) said the defaulters could still pay their fines, and submit the late tax returns.

"These non-filers have ignored numerous communications from HMRC, dating back to April 2011, including flyers, reminder letters, penalty notices and warning letters," he said.

"A customer can still phone us if they think they should not be in self-assessment, and will be taken through a number of questions to indicate if they should be in self-assessment or not.

"If they shouldn't have been in it for 2010-11, penalties will then be waived," he added.

An HMRC spokesman stressed that the arrival of debt collectors on someone's doorstep would be at the end of process.

About 7,000 higher-rate taxpayers who had missed tax returns from earlier years were sent similar warning letters in October.

Joe Sword of Nordens advised any tax payers who hadn’t submitted their 2010-11 tax return to speak to their accountant as soon as possible to resolve the problem.

Looking to invest in the fashion stars of the future?

Join the Fashion Enterprise in collaboration with Angel Capital Group on 11th December at The Hospital Club for an opportunity to meet and network with selected leading London Fashion Week designers seeking investment.

WHEN: Tuesday 11th December: 14.30 to 18.30
WHERE: The Hospital Club, 24 Endell St, Covent Garden

To confirm your attendance, please contact: email: k.little@fashion.arts.ac.uk
Please reply by Tuesday 4th December.

About the event

The Centre for Fashion Enterprise in collaboration with Angel Capital Group cordially invite you to a showcasing and pitching event for selected entrepreneurs in the fashion industry seeking investment to support growth and international success. This event which is being held in the chic and creative atmosphere of the Hospital Club, Covent Garden, offers unique access to six highly innovative and exciting young fashion design businesses who have all participated in a programme of business development and support offered by the prestigious Centre for Fashion Enterprise. Many of these businesses have already achieved UK and international market success, as well as major awards and are now looking to grow their business. They showcase on the catwalk at London Fashion Week, are stocked in exclusive boutiques across the world and worn by high profile movie stars, musicians and journalists amongst others.

The event will enable investors new to fashion to gain further market intelligence about the fashion sector and how fashion businesses operate and to identify why this sector offers opportunities for investment. Six companies will make presentations followed by Q and A. Each company will also showcase their fashion designs and products, offering extensive opportunities to view the products and have direct interaction with the individual businesses. Further blind summaries of participating businesses will be made available to all participating investors prior to the event. All participants will receive a copy of a brochure giving details and executive summaries of pitching companies at the event.

Are you a successful entrepreneur from the fashion business or related areas? If so, we would encourage you to attend this event and consider investing in these exciting businesses and bring both investment and your experience of the fashion market. Notably, take advantage of the amazing tax breaks available to support angel investors in early stage businesses, including 50%tax break for investing in seed stage projects.

Please also feel free to pass this invitation to further investment contacts.

www.fashion-enterprise.com

www.angelcapital.co.uk

Autumn statement headlines

When the coalition came to power in 2010 announced that they would be scrapping the pre-budget report. It was therefore a surprise yesterday when a raft of tax announcements were made which would usually come under the heading of budget announcements. However, most of these are headlines without the usual supporting notes and documents. So what has actually been announced?

The personal allowance will increase in 2013/14 by £1,335 to £9,440, however the benefit of this will barely be felt by higher rate taxpayers as there is a reduction of the higher rate limit by £2,360 to £32,010. For 2014/15 and 2015/16 the higher rate threshold will rise by 1% per annum, rather than by inflation. This will mean a decrease in real terms and will pull more taxpayers into higher rate tax.

The corporation tax rate will be further reduced to 21% in April 2014, an additional 1% cut over that previously announced. The small companies rate remains at 20% and there will be by 2014 little differential between the two. It was only in 2009 that the large company rate was 28%. Presumably, the next time the rate is reduced the small companies rate will be abolished. We will wait and see.

The Annual Investment Allowance for capital allowance purposes has been temporarily increased by a factor of 10, from £25,000 to £250,000 per annum. This will apply from 1 January 2013 for a period of two years. Interestingly, there will now be some companies with January and February 2013 year ends who will have some tricky calculations to undertake as there will have been three rates of annual investment allowance in force in the accounting period. Clients should consider delaying expenditure to ensure that the AIA is maximised.

The capital gains tax annual exemption for individuals will be increased by 1% for 2014/15 and 2015/16 to £11,000 and £11,100 respectively.

The annual amount for pensions contributions will be reduced from £50,000 to £40,000 from 6 April 2014 and the lifetime allowance will be reduced at that point from £1.5 million to £1.25 million. Affected clients will be able to elect for ‘fixed protection 2014’ and will need to take advice to consider whether this is appropriate for them.

Despite a consultation on the taxation of controlling persons over the summer, HMRC have decided not to implement any legislation on this, instead they will be strengthening the existing IR35 rules and these will be more rigorously policed.

The ‘employee-owner’ shares which will be introduced from April 2013 where employees give up some of
their employment rights for shares which are free of capital gains tax on disposal have the crucial problem of suffering an immediate National Insurance and income tax charge may grant. HMRC have announced that they are looking at ways of reducing this immediate tax charge. No further details are currently available.

Unincorporated businesses will have the choice of a cash basis introduced for 2013/14 as well as the ability to use flat rate deductions for some items of expenditure. This may be different to the cash basis which will be used for universal credits from October 2013.

The IHT nil rate band will increase in 2015/16 to £329,000, the first increase since April 2009.

Stephen is up to Silver medal position in the Nordens Super Cup

Stephen Silver has a great final week in November with 180 points in the Nordens football predictor league. However there is no shifting the ever consistent Sam Moss from top spot!

Jack Norden was leading the league earlier in the month, but unfortunately he could not continue this good form, dropping to 4th position just below his father Mark. Stop smiling Mark!

Mark Lopez has a great month rising to 7th position. In the final week of November he manage to pick the result 8 of the 9 games correctly. Mark also didn't let his heart rule his head by predicting Chelsea to only draw at home with Fulham, then again history between these teams show that the last 5000 games have been draws! (Okay slight exaggeration).

Do my eyes deceive me??? We have a female in the top ten! Lisa Gold has hit some good form! Leon what happened? She has over took you! Time for you to show her who is the man of the house again. I expect you to regain your position by the end of December or you may have to hand over your trousers!

Time for a celebration for Sharon Brooks… She is off the bottom of the league - Woo Hoo! Sharon has moved up the scary heights of 31 position (Third from bottom). Well done! ;)

Roberts1956 is now unfortunately winning the race for the wooden spoon with Man City fan JAFEICA close behind.

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

Removal of the vat registration threshold

Businesses which are not established in the UK must register

From 1 December 2012, non-established taxable persons (NETPs) will no longer be able to benefit from the UK VAT registration threshold. HMRC has issued Revenue & Customs Brief 31/12 to explain the rules. - Read more

This will come as a shock to some small businesses operating across borders.

These businesses will be required to register for UK VAT when they make their first supply of goods or services here regardless of the value. NETPs that are already making supplies here will be required to register for UK VAT with effect from 1 December 2012.

From 1 December 2012, any non-established business which makes or intends to make taxable supplies in the next 30 days has 30 days from the date it formed that intention to notify HMRC that it is required to register for VAT. Businesses which become required to register in the UK on 1 December 2012 will have to notify HMRC of that fact by 30 December 2012.

A business not established in the UK will be required to register from the earliest of the date that it made or expected to make taxable supplies in the UK (but no earlier than 1 December 2012). Non-established businesses which are aware that they will need to be registered from 1 December 2012 (for example, because they are already making supplies in the UK under the current threshold) can provide advance notice to HMRC, and they will be registered for VAT from 1 December 2012.

Existing UK place of supply rules have not been changed. Overseas businesses making only reverse charge supplies of services to the UK will not normally be affected by the removal of the threshold. However, there are some exceptions that are taxable supplies in the UK where they are supplied to a private customer rather than to a business, for example, services in connection with land which is located in the UK or entertainment services when the performance takes place in the UK.

Overseas businesses only involved in distance sales or acquisitions are not affected by the removal of the VAT registration threshold.

Any NETP business which is required or entitled to register for VAT can apply for VAT registration either online or by completing form VAT 1.

Mark Norden
Nordens Chartered Accountants and Strategic Business Advisors

HMRC has launched the latest in its series of taskforces

The latest targets are property rental in the South East, the rag trade in the North and Midlands and the alcohol industry in Scotland.

HMRC has launched the latest in its series of taskforces.

Taskforces are specialist teams that aim to seek out tax evaders. They do this with intensive bursts of activity in specific high risk trade sectors and locations in the UK where there is evidence of high risk of tax evasion.

The latest taskforces are aimed at:

The rag trade, targeted at manufacturing, wholesale, retail and textile recycling in the Midlands, North Wales and the North West. - Read more

Rental property, targeted at the rental property sector in the South East. - Read more

The alcohol industry in Scotland, including Aberdeen and Inverness. - Read more

HMRC has launched 30 taskforces since May 2011. The first taskforce targeted the restaurant trade from 12 May 2011. Taskforces are a result of the Government’s £917m spending review investment to tackle tax evasion, avoidance and fraud, which aims to raise an additional £7bn each year by 2014/15.HMRC has said it is on target to collect more than £50mn as a result of taskforces launched in 2011/12

Taskforces should not be confused with campaigns, which are another of HMRC’s methods of tackling non-compliance. Both taskforces and campaigns are targeted at specific taxpayer groups, but there are important differences:

Taskforces actively seek out defaulters. They focus on very specific business sectors and locations using a short sharp burst of activity. The teams draw together compliance and enforcement staff from across HMRC. They will visit traders to examine their records and carry out other investigations.

In contrast, campaigns are designed to encourage voluntary disclosure. The obligation is on the taxpayer to come forward and calculate and pay their tax by a set deadline. More details are on the campaigns section of the HMRC website. At the moment there is just one live campaign: the Direct Selling campaign, which has a deadline fordisclosures of 28 February 2013.

Mark Norden
Nordens Chartered Accountants and Strategic Business Advisors

HMRC's increase tax yield through investigations

Investigations into personal tax returns netted HMRC 64% more cash in 2011/12 - £441m up from £269m in 2010/11 figures obtained under a Freedom of Information request have shown.

What has led to this increase? HMRC, like everyone in the current climate, are looking to maximise their income and an easy way for them to take a more aggressive approach to investigations. They have ambitious targets set by the treasury to try and meet.

Recent ‘taskforces’ focussed on specific sectors and geographical locations have added to their haul as well as a push on buy-to-let owners under declaring rental income and capital gains. Another report out this week shows that they paid £374k to informers in the same period, an increase of 21% on the previous year. Aggrieved spouses on divorce seem to be a particularly rich source of information.

However, just because HMRC say tax is due, it doesn’t necessarily mean they are correct. And just because they ask for something, it doesn’t necessarily mean that they are entitled to it. Our team of experts has many years of experience in dealing with personal tax investigations of all sizes and we are available to make sure that your clients are not helping HMRC to reach their target.

HMRC lose important CIS Gross Status Case

In a very recent decision in the case of J P Whitter (Waterwell Engineers) Ltd the first tier tribunal overturned HMRCs withdrawal of gross payment status from a taxpayer. The taxpayer had suffered cashflow problems and had paid its PAYE late on several occasions in 2008 and 2009. They had twice before been threatened with the withdrawal of their gross payment status and had given undertakings to improve. They paid late for at least seven consecutive months in 2010/11, including one payment which was over 118 days late.

The taxpayer appealed because the effect on their business would be disastrous and this was disproportionate given the trivial nature of the compliance failure. The tribunal agreed that HMRC should have taken the financial effect into consideration and reinstated gross payment status.

Withdrawal of gross payment status can be disastrous for a business so this is a welcome result. If you would like to discuss any issues relating to CIS then please ring Tham on 020 8530 0720

Tham Tharmarasa - For he's a jolly good fellow!

Nordens Chartered Accountants and Strategic Business Planners is pleased to announce that senior accountant and practice manager Tham Tharmarasa has been granted Fellowship of the Association of Chartered Certified Accountants (ACCA).

This fellowship is bestowed upon accountants who meet certain criteria. This includes a stringent requirement to achieve a specified level of Continuous Professional Development, a factor that is echoed at every level within Nordens’ practice. Tham’s recognition in the accountancy field is indicative of the ethos of continuous staff development that the firm nurtures. He manages a dynamic team, many of whom joined as young trainees and have studied and learned under their manager's direction. So clients remain secure in the knowledge that their accountancy and tax matters are handled by a team of the most highly qualified accountancy professionals. Over the past two years, four members of staff have passed relevant exams and two more people are expected to complete their studies by Christmas.

Tham joined Nordens when it was a fledgling practice, newly opened in south Woodford. He has contributed to the firm’s incredible growth over the past decade and seen a second branch open in the heart of Soho to handle London-based media and fashion clients. He is proud of his professional achievements, and happy to be an integral member of a company that has given him the opportunity to reach his own potential. Mark Norden, the company’s founder, describes his protégé as a dedicated accountancy expert whose easy going manner makes him popular with colleagues and clients alike.

Tham can now use the letters FCCA after his name and describe himself as Fellow of ACCA, as well as a Director of Nordens. If you would like his advice on any accountancy and tax related issues, you can call him on 020 8530 0720 or email tham@nordens.co.uk.

Business Records Checks - The Roll Out !!

Last year HMRC devised and began testing a new compliance procedure – Business Records Checks (BRCs). The aim was to visit smaller businesses and identify those that are not keeping adequate records.

HMRC has now announced that BRCs will be re-launched from 1 November 2012. The roll-out of BRCs will be done region by region, over a 14-week period beginning on 1 November 2012 and ending early in 2013. This is not a recommencement of the pilot but a full roll-out of the BRC process.

The first stage is that HMRC’s computer-driven risk analysis produces a list of cases for possible BRCs. BRCs will therefore only be targeted at businesses where HMRC perceives some risk that records may be inadequate. Staff in local offices will not be able to add to this list.

An HMRC Compliance Centre will write to those on the list saying that you are being considered for a BRC and that the writer will phone them a week later to ask a few questions.

If you receive one of these letters don’t wait for the phone call, SPEAK TO NORDENS and we will be able to answer their questions.

There will be penalties where the records are inadequate and remain inadequate at the follow-up visit. The penalty will be £500 for the first offence, though for businesses in their first year of trading it will be £250. If during the BRC HMRC finds that the taxpayer has deliberately destroyed records, a penalty of £3,000 would apply (or £1,500 if only some of them had been destroyed).

Please speak to us if you receive the letter or if you have any concerns about your Business Records

Company insolvencies at lowest since 2008

Figures from the Insolvency Service have shown that the number of companies going bust in England and Wales has fallen to its lowest level since the financial crisis. In the third quarter 3,971 firms went bankrupt, down 2.8% on the previous three months and almost 15% lower than the first quarter. The figure is the lowest since the second quarter of 2008.

Mark Norden of Nordens said "the figures appear to be positive for the UK to come out of recession. However, ironically for the UK to achieve any significant level of growth, it is necessary for some of the zombie companies to go out of business, as they are only surviving due to the exceptionally low interest rates.

Personal insolvencies rose slightly to 28,062, 2.5% up on the second quarter but 7.2% lower than a year ago. Separately, a report by Experian has revealed that people living in seaside towns and in Scotland are suffering from the highest level of personal insolvencies.

Hardy's FC shoots up to second in the Nordens Super Cup

Hardy's FC AKA Jack Goldstone scores 335 points during October which takes him up to second place and applies pressure on leader Sam Moss. Sam has now been leading for 3 months! Can anyone knock him off the top spot during November?

Six year old Jack Norden also has a great month with 340 points. This takes him up to third position. However I have heard rumours that this great form has caused tension in the Norden's house. I believe Mark is struggling with the embarrassment of Jack beating him and he is thinking about grounding him and removing access to computers! Face it Mark! He is better than you and will be taking over your business too before you know it! :)

West Ham fan Joe Sword also has a great month. Life seems to be going fan fairly well for Hammers fans so far this season. Let hope this is not to do with having a easier start to the season!

Leyton Orient fan leytonhawke is now in the top ten. It must be nose bleed time for
leytonhawke. I can't imagine he / she is use to looking that high up the league table?

Goonerboy2 AKA Ben Goldstone has a superb final week in October with 215 points. This is much needed for Ben as his start to this season has been poor compared to last year.

Lisa Gold is in the highest place out of the girls in 19th place. Yiota is close behind in 21st. I have to click on to the second page to find the other girls. Disappointing season so far really, but there is still plenty of time for a come back.

Last placed Sharon Brook commented the below last month…

"I know I'm doing terribly - Delia wants me to stop supporting Norwich as they were doing well last season until I started supporting them. I'm proving to be the kiss of death to Norwich!"

Nothing has changed for Sharon? Can you swap to supporting Spurs as it would be nice to see them go through a run of bad form!

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

Payment days improve

Experian says that large companies are finally addressing their poor payment practices towards suppliers.

The credit rating agency found that businesses settled their bills 1.3 days earlier in the third quarter of this year compared to the same period in 2011 - although they still took an average of 24.88 days beyond agreed terms to pay up.

HMRC turns to informers

The FT reports that HMRC is using disgruntled divorcees and former employees for information on tax evaders. The High Net Worth unit is focusing on individuals worth more than £30m, and its Affluence unit - aimed at those with at least £1m - is paying rewards for information on people suspected of not paying tax.

HMRC said it received 74,000 reports through its tax evasion hotline last year but that payment depended on many factors, especially the value of the information and the quality of the result. According to a Freedom of Information request, income from personal tax investigations jumped 64% to £440.6m in the 2011-2012 tax year. The pressure to meet a Treasury target of £7bn in additional revenue a year by 2014-2015 was behind a more detailed scrutiny of self-assessment returns.

Why aren't banks lending? What are the alternatives?

Over the last year, the media has been full of stories about banks not lending to small businesses. The figures bear out the hype – BDRC Continental’s SME Finance Monitor found that a third of businesses applying for loans were being turned down, while a fifth of overdraft applications met the same fate. New banking regulations like the Basel III agreement mean that banks are required to hold more capital and therefore lend to fewer high-risk ventures. In the current economic climate banks are particularly risk averse, making it harder for them to justify providing credit to enterprises. Lending to SMEs is weighted as relatively high risk and should, when combined with rising capital requirements and turbulent capital markets, result in a disproportionately high cost of capital for banks when lending to such businesses.

This is the antithesis of what SMEs need to grow and expand. Earlier in the year it was reported that an independently monitored appeals process set up by the British Bankers Association overturned 40% of rejected loan applications for bank loans. As there have been so many overturns you can come to the conclusion that the banks have not been lending to viable businesses. If there is only a small percentage of companies that have actually appealed then it stands to reason that there must be a huge number of worthwhile businesses that are having their growth plans stalled by banks’ failure to lend credit.

SMEs are the key to economic growth; they account for nearly half the UK’s GDP and employ 60% of its workforce. 7% of businesses in the UK are high growth enterprises that create 60% of new jobs, it is imperative that SMEs have access to lines of credit in order to boost their cash flow and prepare for growth. Lack of a proper cash cushion can seriously impede a small or medium sized enterprise from employing new staff or taking on larger clients. Without a decent cash reserve a firm’s options for growth are limited, but what are SMEs to do if they can’t obtain credit from a bank?

Due to the lack of confidence that has stimulated from the current economic climate many companies have used this opportunity to push back on payment terms and extend them. Typically payment can take anything from 30 days to 120 days to be paid. Long payments are bad news for SMEs that want to take on more orders but are unable to do so because of a lack of working capital.

We are working with MarketInvoice who provide an online invoice discounting solution to address the credit squeeze and the perennial problem of late & long payments as well as seasonal cash flow fluctuations. Factoring is a long-existing type of asset-based finance that allows businesses to raise working capital through the selling of debtor invoices. Businesses obtain upfront rather than waiting out the long payment terms large customers demand (commonly between 30 & 120 days.) Traditional forms of invoice finance have a bad reputation for high fees, a lack of transparency, and demanding onerous guarantees.

MarketInvoice has revolutionised the industry by enabling UK businesses to grow by ‘selling’ invoices to a global network of professional investors via online auction. The solution is flexible, meaning that companies can selectively sell their invoices on our platform without having to enter into a whole turnover facility; businesses receive cash overnight, with no onerous lock-ins, personal guarantees or debentures. Compared with a loan, online invoice finance is more scalable, less collateralised and much less of a long-term commitment. MarketInvoice connects SMEs in need of working capital to professional, institutional investors.

Connected Pictures is a London-based production company that produces video content for large corporates including SKY, HSBC, and Tesco. Project-oriented work of the type that production companies do can make managing cash flow a challenge. Often there are long periods between payments, despite working regularly and keeping clients happy. The economic climate made the financial pressure on Connected Pictures harder to manage, and they came to MarketInvoice looking for a flexible solution that suited the nature of their business. The MarketInvoice invoice auction model appealed to Connected Pictures as they could select which customer invoices they would raise finance on, and would only incur fees when they needed to use it. After testing the platform with a smaller invoice, the company have regularly used our service for larger invoices. Connected Pictures have been able to obtain instant cash of up to 85% total invoice value, with fees as low as 1.25% of invoice value.

Ramiro Ramirez the finance officer of Connected Pictures had this to say: “We approached our bank regarding invoice discounting but they wanted a guaranteed amount of turnover each year, in addition to monthly and annual fees. We could not guarantee we were going to put that much revenue through invoice discounting because of the nature of our business. MarketInvoice’s flexible approach and transaction-only fees appealed to us.”

In a couple of weeks, Nordens will be celebrating its tenth anniversary!

To mark this milestone, we’re offering all our clients the opportunity to benefit from a free session with our strategic business planning experts. This focused and dedicated advice session would usually cost £1500 (+vat), but we’re offering it to you completely free of charge!

No strings, no hidden extras, just solid business planning and advice over a mug of coffee and a jaffa cake.

If you’re uncertain what strategic business planning is actually about, answer this question…

· Would you like more clients, greater sales and a higher turnover?

If your answer is yes, you would benefit from strategic business planning! We can develop a plan to get your business where it needs to be, then help you get there. It’s all about making it what you want – it’s your vision. We’ll start by working out the best ways to resolve your immediate problems and clear your mind, so you’re ready to plan a strategy. Together, we’ll create agreed and effective action plans that deliver measureable results. For example, we’ll show you how to increase your profits with no net cost to you – does that sound like something you’d like to know?

Your business is unique, and the session may highlight areas where our business partners can support you. If so, we’ll join forces with specialists who can assist your business growth, such as financial advisors, HR consultants, franchising experts, solicitors, insurance agents and more. And if you decide that strategic business planning is the way forward to ensure your continued business growth, we’ll be happy to chat about that after your free session.

To take advantage of this offer, call us today, quoting ‘Birthday Offer’ – you need to confirm your session by 30 November, but we’ll meet with you any time up to Christmas. We look forward to guiding you towards the business success you deserve!

Economy set to contract with weak growth in 2013

This report considers the outlook for the UK economy based on the views of ICAEW Chartered Accountants running all types of businesses across the UK, surveyed through the quarterly ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).

Download UK Economic Forecast Q3 2012 PDF

Audit exemptions to be extended from 1 October

The government will press ahead with its plan to align mandatory audit thresholds with accounting thresholds for small companies from 1 October.

In a press release issued on 6 September, the Department of Business Innovation and Skills confirmed that small businesses will not need to subject their accounts to an audit if they meet two out of the three qualifying criteria for small company accounts:

- Fewer than 50 employees
- Balance sheet total: no more than £3.26m
- Turnover below £6.5m.

Subsidiary companies will be let off mandatory audits if their parent companies guarantee their liabilities. Dormant subsidiaries - up to 67,000 in number - will no longer need to prepare and file annual accounts, provided they receive a similar guarantee.

In another related reform, companies that currently prepare their accounts under international standards will be able to change their accounting framework to UK GAAP provided they have not moved to UK GAAP in the previous five years.

George Osborne: Drop rights for a stake in firm

Employees will be able to forfeit some employment rights in exchange for a stake in the firm they work for, the chancellor has announced.

George Osborne, in his Conservative conference speech, said that the shares that workers were given would be exempt from capital gains tax.

He claimed that the owner-employee contract would be ideal for staff at fast-growing firms.

But unions have said it would be an attack on workers' rights.

Rights forfeited

The UK Treasury said that companies of any size would be able to use the new contract, with a planned start date of April next year.

Employees would be given shares valued at between £2,000 and £50,000, which would be exempt of any capital gains tax.

The thinking is that workers would be more closely linked with the success, or otherwise, of the company they worked for, and so be more engaged.

However, in return, staff would have to give up various employment rights. These include:

* Cover for unfair dismissal and redundancy
* The right to request flexible working and time off for training
* Mothers giving eight weeks' notice of the date they are to return from maternity leave. Instead they must give 16 weeks' notice

Under the plans, the new contracts would be optional for those already working for a firm that wishes to offer the new deal.

However, companies could decide to offer solely the new kind of contract to new staff.

"This idea is particularly suited to new businesses starting up and small and medium-sized firms," Mr Osborne said.

"Get shares and become owners of the company you work for. Owners, workers and the taxman, all in it together."

'No game-changer'

John Longworth, director general of the British Chambers of Commerce (BCC), gave the proposal a cautious welcome.

"[This] could be a useful option for some new and fast-growing businesses. It is an innovative and imaginative proposal that deserves to be tried out, but it is unlikely to be a game-changer," he said.

John Walker, of the Federation of Small Businesses, also said that only a few businesses might adopt the scheme, although it was an "innovative policy".

But the idea was condemned by TUC general secretary Brendan Barber.

"We deplore any attack on maternity provision or protection against unfair dismissal," he said.

"But these complex proposals do not look as if they will have very much impact, as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions.

"This looks more to be said for effect than because it will make much difference, but we will be vigilant to ensure that they do not represent the thin end of a future anti-employee wedge."

The plans come shortly after the government received a report by venture capitalist Adrian Beecroft that made suggestions about reducing red tape for businesses, but which prompted a political row.

Great Businesses Don't Start With a Plan

This article has the best title ever and is an extract from an article in the Harvard Business Review.

It has a great title and we thoroughly agree with the content. If you are setting up a new business, why not get together with us to discuss the strategy!

Great Businesses Don't Start With a Plan

You want to start a business. So you need a plan, right? No. Not really.

As part of the research for a book I'm co-authoring - Heart, Smarts, Guts, and Luck, due out in August from HBR Press - my colleagues and I interviewed and surveyed hundreds of successful entrepreneurs around the globe to better understand what it takes to be an entrepreneur and build a really great business. One of our most striking findings was that of the entrepreneurs we surveyed who had a successful exit (that is, an IPO or sale to another firm), about 70% did NOT start with a business plan.

Instead, their business journeys originated in a different place, a place we call the Heart. They were conceived not with a document but with a feeling and doing for an authentic vision. Clarity of purpose and passion ruled the day with less time spent writing about an idea and more time spent just doing it.

It's not that all planning is bad. It's that efforts to write the "perfect" business plan usually lead to being precisely incorrect rather than approximately correct. One problem is that the content that most people focus on in business plans has little to do with the reality that will actually emerge. Many start-up plans emphasize some gigantic potential market and how getting just the smallest sliver of it will make them and investors rich. A colleague of mine offers the hypothetical example of selling a bar of soap for a dollar every month to just 0.5% percent of the people in China. It's nearly a $100M business! Good luck making it happen, though.

At a business's inception, resources are limited, and the best content for a business plan is real-world data based on testing aspects of the concept. These experiments need not be complex. You want simple, iterative tests that are easily measurable and let you know whether you are winning or not.

It's not just start-ups. The strategic architecture of any business should incorporate facts from real world testing to allow one to adjust course as necessary. This is what Henry Mintzberg, a seminal figure in competitive strategy theory, once described as "emergent" or "evolutionary" strategy. My business partner Mats Lederhausen (formerly global head of strategy for McDonald's as well as former Executive Chairman of Chipotle) has his own saying for it: think big, start small, then scale or fail fast.

So don't worry too much about a business plan. But to guide your thinking, improve a pitch to prospective investors, or better align your teams, consider these design points:

1. Identify and clearly articulate your Heart and purpose. Whether you want to call it vision, Heart, purpose or calling, be very clear on the why of a business — the bigger goal at hand.

2. The team is more important than any idea or plan. The top three priorities should be people, followed by people, and then people.

3. Think big, start small, then scale or fail fast. Per Lederhausen's advice, set the right first "start small" milestone; it will usually involve seeing people's willingness to buy or at least try your product.

4. Focus on a well-defined market sub-segment or niche. At least to start, think of where you can potentially be the best. This strategy is almost always more successful than being just another player in a massive market.

5. Understand your business model. How you will make money is more important than pages of Excel showing financials that are simply too hard to predict at this early stage anyway. Understand instead the basic way you will make money - is it through transactions, advertising, subscriptions, etc?

There appears to be a perennial market for how-to classes, books, and templates that promise almost "color by number" instructions for populating business plans. While aspects of those tools are helpful for a structured approach, they are more likely to mislead because of their emphasis on completing the plan of a business before uncovering its soul and demonstrating whether others connect with it. People feel a sense of accomplishment upon completing their plan, but what does that plan really get them? Filling worksheets can never replace zeroing in on the passion and purpose of your business. That Heart has to be there day one. The most researched business plan holds little value without a genuine Heart behind the idea and the Guts to just get it going.

Billionaires cool on London property as rich-bashing grows

LONDON (Reuters) - The love affair between the global super-rich and London property is souring as UK politicians tap into a mood of public resentment of the wealthy, with tax increases and rhetoric playing up their own humble origins.

Prices of homes costing more than 10 million pounds have risen 56 percent since 2007 as overseas investors park money in the relative safety of London bricks and mortar, with foreign buyers accounting for about a two thirds of deals, a report by property consultant Knight Frank shows.

Prices in top neighbourhoods, such as Mayfair and Kensington, will be flat next year after a slowdown that began in March with a coalition government budget that included a proposed "mansion tax", Knight Frank said on Friday.

Alex Michelin, founding partner of luxury developer Finchatton, said: "A 3.5 million pound house in Chelsea was put on sale in March, but interest cooled rapidly after the budget. It was like the buyers disappeared into quicksand."

Last month's sale of a property called Gordon House to developers the Candy Brothers was a key test of appetite because of the high asking price of 75 million pounds. It was bought for closer to 65 million, three sources told Reuters.

Personal wealth is a divisive issue in British politics, with Conservative Prime Minister David Cameron frequently under attack for his privileged upbringing, while many in the country suffer under austerity measures. Cameron is the latest in a long line of British prime ministers to have attended Eton, one of the UK's top fee-paying schools.

Ed Miliband, leader of the opposition Labour Party, featured in a political broadcast on Tuesday that emphasised his state-school background, despite subsequent reports that his Primrose Hill home is worth 1.6 million pounds.

Last year's opening of the luxury One Hyde Park development near Harrods department store, with accompanying tales of stamp duty avoidance and opulent second homes sitting empty, helped to spark the government scrutiny, two sources told Reuters.

The March budget introduced a 15 percent rate of stamp duty for purchases of more than 2 million pounds through a company - a method commonly used by wealthy buyers to avoid paying stamp duty and remain anonymous.

It also launched a consultation process on plans to levy an annual charge on properties worth more than 2 million pounds and extend capital gains tax to include overseas individuals who buy property through companies. The government hopes to impose the charge from April next year.

The consultation period ends on Tuesday, but uncertainty has put a brake on the market, particularly for homes costing between 2 million pounds and 5 million pounds. Buyers of properties in this range tend to be less able to pay the extra taxes, Knight Frank said.

Opponents of the tax increases say that the influx of the super-rich, many of whom come from Russia, Eastern Europe and the Middle East, benefits the economy because they spend money in local businesses.

"For Nick Clegg (Lib Dem leader and deputy prime minister) to stamp on successful people buying property in London is a short-sighted mistake," said Michelin, who will expand into New York and the south of France because of the uncertainty.

Many buyers are sitting on the fence until the picture clears, said Damian Bloom, a London-based partner at law firm Berwin Leighton Paisner, who specialises in the tax affairs of the super wealthy.

"George Osborne (the Chancellor of the Exchequer) would have to make an awful lot of speeches about how wonderful London is to counteract the fact that when clients pick up the phone to say ‘I want to buy a house', the first thing they do is hit a whole load of problems," Bloom said.

A slowdown in the market, however, would be welcomed by those who argue that the chasm in living standards is morally repugnant and exacerbates a housing shortage in London.

The Smith Institute, a left-leaning think tank, found in July that "many areas of inner London have become prohibitively expensive for local residents and too many luxury flats remain empty and treated as lucrative investments".

Much of London's continuing appeal lies in the fact that wealthy foreigners are not taxed on their overseas wealth if they are not domiciled in the UK, though recent policies impose a levy of up to 50,000 pounds on longer-term residents.

Buyers are also still attracted to London because it is outside the euro zone and alternatives such as France have become even more unwelcoming to the rich after the election of left-wing Prime Minister Francois Hollande.

The London slowdown could be temporary as buyers wait for the outcome of the consultation and seek loopholes in the new laws, said Sophie Dworetzsky, a partner at law firm Withers.

"What might be happening is everyone's taking a bit of a break while they figure out what they can do in terms of (ownership) structures. It might just be a lull before it kicks off again."

National Minimum Wage Increased

The national minimum wage for workers aged 21 and over increased 11p on Monday 1 October to £6.19 an hour. This is mandatory for every company. “Anything with an hourly rate will have to be changed. This happens every year, so it should be quite straight forward for businesses,” Thomson said.

The minimum wage does not apply to the self-employed.

Companies that employ apprentices should note their rate increased from £2.60 to £2.65 per hour, with the accommodation offset increasing from £4.73 to £4.82 per day.

Pensions Automatic Enrolment

Auto-enrolment was officially launched on Monday, with organisations employing more than 5,000 staff now required to put employees aged 22 and over into pension schemes. Under the phased implementation programme companies with 250 employees will be brought in in stages between October 2012 and February 2014, while those with fewer than 50 will be phased in from 1 June 2015 to April 2017.

Sharon Brooks said that although the changes will not affect small businesses for at least three years employers need to get their processes in place early.

“Some of the difficulties with auto-enrolment would be communicating with workers, checking the age of workers to ensure they’re eligible and implementing the changes. It would be advisable for employers to have everything in place as soon as possible,” she said.

The main challenges companies will be procedural, ensuring that a pension scheme is in place and altering payroll processes to direct and record payments into the fund.

The Pensions Regulator offered the following advice:

- Be aware of your staging date. You can find this out on the official Pensions Regulator website
- Identify and automatically enrol any eligible workers
- Decide whether you want to use postponement
- Review your existing pension arrangements, or set up a new one
- Let your workers know about the changes, as required by law
- Register with the Pensions Regulator after your staging date.

IR35 investigations double and tax yield up five times

The taxman has more than doubled the number of IR35 investigations last year and increased the yield from IR35 cases by five times in a clear sign that HM Revenue and Customs intends to get tougher with freelancers and IR35.
The increased activity came at a time when the Government was under considerable attack for allowing some of its senior public sector workers, such as head of Students Loan Company, Ed Lester, to operate through their own limited companies, which were seen as a means of avoiding tax and NICs. The Government promised to clean up its own Whitehall act and bring private sector companies in line too.

IR35 investigations into freelancers more than doubled last year from 23 to 59; and the tax yield from IR35 cases rose fivefold to £1.25 million in 2011-12 from £219,000 the previous year.

It is widely known that HMRC and the Treasury have been looking closely at a number of areas where they perceive tax take can be increased through cracking down on tax avoidance activities. Now, the evidence suggests that HMRC is actively backing up their political masters demands for a tightening up in freelancers and contractors who operate through the so-called 'personal service companies'.

Big picture
Based on information received from a number of sources, the full picture on IR35 investigations and yield now looks like this:

Investigations opened...
2000/2001...........16
2001/2002..........261
2002/2003........1,016
2003/2004........1,166
2004/2005..........771
2005/2006..........656
2006/2007..........158
2007/2008..........104
2008/2009...........25
2009/2010...........12
2010/2011...........23
2011/2012...........59

Tax yield from IR35 investigations in...
2000/2001.............nil
2001/2002.............nil
2002/2003..........£946,275
2003/2004........£1,973,851
2004/2005........£1,447,796
2005/2006........£2,316,351
2006/2007........£1,906,619
2007/2008........£1,730,640
2008/2009....... £1,430,358
2009/2010..........£155,502
2010/2011..........£219,180
2011/2012........£1,250,000

If you have any concerns that IR35 may apply to your company, speak to Tham in our South Woodford office.

Celebrities and their finances

You may think that British celebrities have little reason to worry about finances. After all, they enjoy massive pay for having fun, and stand to gain from all sorts of publicity-rich income, from simple book signings to glossy magazine shoots. Yet many of our rich and famous manage to find themselves with serious money problems and Mitch Hahn from Nordens one of UK’s leading accountancy and strategic planners who specialise in Celebrity accounts tells us why :

" If we consider it realistically, the reasons are clear: maintaining luxury lifestyles with multiple homes around the globe and extended families to support, on an income that is sometimes unpredictable, would take its toll on any of us. Surgery to stay beautiful, babies popping out the woodwork, designer clothes, private jets – it all eats up hard cash. But the main cause of financial trouble that our celebrities face is, of course, the friendly tax man.

The Jimmy Carr scandal is still fairly fresh in people’s minds. As the beneficiary of an off-shore accountancy arrangement, the comedian was found to be hiding a substantial amount of income from the taxman. In fact, the Jersey-based firm under fire was said to be ‘helping’ its clients to cheat the taxman out of around £168m a year.

If you’re not keen on comedy celebrities, you might be more interested in the comings and goings of our sportspeople. Football manager Harry Redknapp went on trial for tax evasion earlier this year along with Sheffield Wednesday chairman, Milan Mandaric. Allegations were heard about shady dealings and a Monaco bank account, but neither celebrity received a conviction. Unlike Lester Piggott, the champion jockey who was sentenced to three years in jail in 1987 for his failure to declare £3m of income. An easy mistake to make, when you have a £20m fortune in secret bank accounts in the Cayman Islands and Singapore. At the time, Piggott starred in the country’s largest ever tax-dodge case, although it didn’t hurt his career – he went on to win thousands after his release. Wonder if he was as upfront with the subsequent income as he was with his riding whip.

Chris Eubank, middleweight and super-middleweight boxing champion, turned out to be a lightweight in controlling his financial affairs when he was declared bankrupt for owing unpaid tax. And yet another champion – Adrian Lewis – was forced to use his £200,000 world darts prize to pay off his tax bill… twice!! Bet he was thinking about aiming the darts at his accountant after that!

The Redknapp trial raised the question of where to cross the fine line between tax evasion and tax avoidance. Is there even a difference? Yes, as it turns out. Former Prime Minister Tony Blair earned a cool £12m but managed to pay only £315k of tax – less than 3%. How did that work out? Well, it seems that someone clever in his company channelled millions of pounds through a network of companies, making it difficult for the tax man to keep track.

Of course, it’s not just tax that causes our celebrities to wind up financial down-and-outs. Marriage, divorce and being silly all count too.

Kerry Katona passes on all counts. After being declared bankrupt (another story of an unpaid tax bill), she apparently screamed at her accountant, blaming him rather than acknowledging her own excessive spending and lack of saving – then threw hot tea over him. She ended up in a prison cell for assault. Still bankrupt.

Some people just can’t control their impulse to spend spend spend. The Duchess of York, Sarah Ferguson, received a huge annual allowance from her ex-husband Prince Andrew. Yet even with her substantial income from book writing, TV presenting and simply being a famous, if somewhat naughty, ex-royal, she was unable to afford the lifestyle she’d created. She’s rebuilding her life and her image yet again, following a disastrous attempt to make money by selling access to the Royal family.

So get-rich-quick schemes like Fergie’s don’t always work. Cheating the taxman doesn’t work. Chucking tea doesn’t work. What does work is solid and reliable tax planning, and a strategic business plan that will grow your profits steadily and healthily. If your accountant isn’t doing that for you, speak to us. We specialise in all areas of accountancy for celebrities, aspiring celebrities and non-celebrities "

Mossy fights off Norden to maintain lead in the Super Cup

Sam Moss has a superb final week in the Nordens football predictor league with 205 points. He has AVB to thank, due to predicting Spurs 2-1 win over QPR and banking 90 points! Sam also predicted the correct scoreline for 3 other games.

Stephen Silver has a great month shooting up to third position. Stephen maybe a new player in the Nordens Super Cup, but he is already showing he has the quality to be competing for the league title.

Jack Norden rises to 6 position with 170 points in the recent week. Jack managed to predict 4 scores correctly. I have also noticed Jack is not silly enough to follow his Dad in supporting Watford. However I still don't think he has found his team yet… All I am saying is maybe he should try on a claret and blue shirt!

Can't see any girls in the top ten??? Enough said!

Mitch Gold has a terrible month falling from 10th position down to 29th. Where did it all go wrong? Looking at his predictions he has no confidence in his own team Fulham.

Sharon Brook is also doing amazingly bad! Delia Smith would be disappointed in you!

Chelsea fans KevinColler and Roberts1956 also need to improve like their £50 million pound striker Torres! You can't buy your way to victory if this league! Same goes for Man City fan JAFEICA.

Good luck to everyone next month! My banker chip is going on a Newcastle win away at Reading, but I wouldn't recommend following my predictions!

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

The government is on track to raise Â£4bn to crack down on tax dodgers

The government is on track to raise £4bn this year via schemes to crack down on tax dodgers, Chief Secretary to the Treasury Danny Alexander has said.

The Lib Dems have pledged to raise £9bn by tackling tax avoidance by 2015.

Mr Alexander promised to get more from the "small minority of wealthy people who don't play by the rules".

The number of staff dealing with tax-evasion in Liechtenstein will be doubled as part of a crackdown on those "hiding" assets in offshore havens.

At the 2010 conference, Mr Alexander announced £900m in extra resources for Revenue & Customs to identify and pursue tax dodgers, both in the UK and those with offshore interests.

'Good progress'

In an update on the issue, Mr Alexander said the UK was making "good progress" which "we should all be proud of".

"Fair taxes in tough times means everyone playing by the same rule book, and everyone paying their fair share," he said.

"We have this message to the small minority of wealthy people who don't play by the rules.

"We are coming to get you and you will pay your fair share."

The last Labour government signed a deal with Liechtenstein in 2009 to recover lost tax from British nationals holding bank accounts in the Alpine tax haven.

Up to 5,000 British investors are thought to have secret accounts.

Since 2009, they have been offered the chance to volunteer details of their deposits in return for penalties, capped at 10% of tax evaded over the past 10 years.

Mr Alexander said the last government expected the agreement to raise £1bn but the coalition now believed it would yield £3bn and it was devoting extra manpower to oversee the process.

More broadly, the Treasury Secretary insisted there must be no let-up in austerity measures, saying the commitment to fiscal discipline was the "foundation" on which the UK economy is built.

But he said the government would use the strength of its balance sheet to support investment in infrastructure, initially guaranteeing the delivery of new rolling stock for Crossrail.

Earlier, the Lib Dem conference voted to re-emphasise the party's commitment to a "manison tax".

This says that any value above £2m on a home must be subject to a 1% annual charge.

Let Me At It - Lettings Relief for Residential Properties

There is a very generous tax relief available where properties which have once been the principal private residence of the taxpayer and have been let at some point in the ownership, are sold.

This is commonly known as “lettings relief”. This is often missed or not maximised but for a couple in joint ownership, the capital gains tax saving can amount to more than £22,000.

It is very important if you sell a property which has previously been a principal private residence and has been let at some point, that carful note is taken of the dates the property was occupied and the use to which the property was put. This data needs to be carefully considered in the light of exemptions available to maximise your tax relief.

Speak to Tham for more details

The Patent Box - a lower rate of corporation tax

What Is ‘The Patent Box’?

This is a new preferential tax regime that will tax UK companies on qualifying patent related income at a reduced rate of only 10% instead of the long term mainstream corporation tax rate of 22%. For companies which are technologically advanced or deploy innovative solutions this is a huge opportunity to reduce their UK corporation tax bill.

With the introduction of the patent box and further improvements made to the R&D tax relief system the Government is promoting the UK as the place to be for innovation and technology related industries.

Key Things You Need To Know

- Qualifying profits are taxed a 10% (phased in over five years)
- Qualifying profits include those from product sales and licence fee income
- Existing patents are eligible, not just new ones
- A patent held on the smallest component of a product can qualify the profits from the sale of the whole product.
- Any UK company with qualifying income can elect to apply the new rules
- R&D tax relief will continue to be available even where a patent box claim is made
- A simplified calculation will be available for smaller claims

The Details - In Brief

What?
- Income from the sale of products incorporating a patented invention
- Licence fees and royalties
- Proceeds of sale of a patent
- Other indirect income derived from patents

From:
- UK patents
- European Patent Office patents
- Patents granted by certain EU member states
- NOT US patents

When?
- The new rules come into effect from 1 April 2013. There will be transitional rules phasing in the full benefit of this reduced rate over a five year period. Start planning now.

Why?
- An eventual corporation tax rate of 10% on qualifying profits compared to a long term headline rate of 22%.

How?
- Identify the relevant patent-related income and associated trade profits.
- Apply certain statutory deductions to the profits to arrive at Patent Box Profit.
- Tax Patent Box Profit at the reduced rate by applying a deduction to total taxable profit.

The Important Questions

What are the key questions that companies now need to be answering?
- Do you have any patents covering your existing products and processes?
- Can you get a patent for existing processes?
- Will you be launching new products?
- Who owns your intellectual property?
- If you have overseas operations should you be considering centralising patent ownership in the UK?

The Next Steps?

There are a number of things you should consider doing in advance of 1 April 2013 and with which our tax specialist partners can provide assistance:
- Identify qualifying income and expense allocations
- Ensure your structure qualifies
- Consider & model the benefit
- Undertake an Intellectual Property audit to ensure all such property is captured with the appropriate rights

No patent?

If your company hasn’t yet considered registering patents then it may be worth considering the benefit of doing so. We can introduce you to specialist patent attorneys and work jointly together with them to help you secure the advantages of the patent box regime.

Small businesses struggling to raise finance is Misleading

BBC business news has reported today that small firms are struggling to raise the money they need to expand. Businesses want to invest and grow but they need a helping hand to do so.

This hand doesn’t necessarily have to be a traditional bank. A survey carried out by the Federation of Small Businesses (FSB) found that 42% of companies are turned down for loans. However, Mark Norden, owner of Nordens Chartered Accountants and Strategic Business Advisors, points out that the report is misleading. “The majority of small business owners that we work with are not approaching the banks to raise finance as they expect to be turned down. Instead, they are trying to improve control of their businesses and - in particular - cash flow, so that the business operates more efficiently. This leads to their companies growing at a slower, but steady pace, and the controlled growth allows them to build more profitable businesses of more substance."

FSB recognises that lenders continue to provide credit, and they help customers to find alternative sources of funding. Mark agrees: “Considering the Bank of England's support through quantitative easing, it's disgraceful that the banks still aren't lending; however we are definitely seeing more small companies becoming substantial. We work with a number of organisations who provide finance so, if the company is viable, there is always an affordable alternative to the banks.”

Nordens provides advice on all aspects of business planning, tax planning and accountancy - and they’re happy to offer a free initial consultation.

Call Mark or a member of his team on 0208 530 0720, or email mark@nordens.co.uk.

Confidence falls as businesses struggle with new economic landscape

Business confidence has deteriorated despite export growth holding up, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM). This quarter’s Confidence Index confirms the fragility of the UK economy as companies have not yet come to terms with the implications of such a sustained period of low economic growth.

Key findings for Q3 2012 show

- The BCM Confidence Index stands at +1.1, down from +12.0 in Q2 2012. This is the fourth largest quarterly decline since BCM began
- Businesses have revised down their expectations of future turnover and profit growth as domestic demand remains weak
- Despite companies having cash, firms expect capital investments to increase by just 1% over the next 12 months – a worrying sign for economic prospects
- Expected export growth over the next 12 months is still broadly at pre-financial crisis levels though, meaning an export-led recovery remains a possibility

Michael Izza, chief executive of ICAEW, said: “We have not yet been able to capitalise on the cautious optimism we saw from businesses earlier in the year. As we search for signs that growth is accelerating, businesses are holding back on investing, still nervous about the future. What is clear is that we have to break the circle and take advantage of the opportunities that are around today. Investment in housing and new infrastructure might just bring the growth and confidence that we need.”

Grant Thornton CEO, Scott Barnes said: "The findings for this quarter are not a surprise. Global growth has slowed, markets have responded downwards and the eurozone crisis will not go away. The one positive note is the encouraging levels of exports. Inward investment and overseas expansion will be core to improving the UK economy and as such we applaud any Government initiative that seeks to promote UK business on the international stage."

GDP to flatline in Q3 2012
The fall in confidence by nearly 11 points implies GDP growth of +0.1% in Q3 2012. This follows the recent ONS first estimate of -0.7% for Q2 2012. Business Performance Indicators such as expected turnover and profit growth have also both fallen back as companies become more realistic about the economic conditions.

Inflation to fall back further
Reported growth in selling prices has fallen to its lowest level since Q1 2011 this quarter. This suggests that inflation is unlikely to be a problem for the UK economy over the next few years. Weak demand for goods and services will curb prices and the Bank of England has already signalled it is worried about inflation falling below its target of 2%.

Future exports and recruitment remain positive
The slowdown in global trade has hit exports and expected growth has weakened to its lowest level since Q4 2009. Forecast growth in exports remains positive though, with an increase of 3.6% predicted for the next 12 months. This matches the growth rate seen for exports prior to the recession.

Firms also have cautious plans to take on new staff. There has been a 0.9% increase in headcount in the past year and a 1.2% increase expected in the next twelve months.

Retail, Construction and Property sectors least confident
The retail sector saw a big fall in confidence this quarter from +10.6 in Q2 to -6.4, perhaps down to the wet weather through May and June. Construction and Property continue to reflect the volatility of the economy with falls in confidence from +5.5 last quarter to -8.1 and +4.5 to -2.5 respectively.

Lawyers next for HMRC

London lawyers have become the latest target in HMRC’s taskforce initiative as the Revenue widens its net to tackle tax dodgers from hair and beauty businesses to the motor trade in Scotland.

HMRC has called the latest campaign an “intensive burst” of activity in specific high-risk trade sectors and locations, and is expected to bring in £19.5m.

In what appears to be a firmer and more Draconian approach to targeting the professions, the threat to accountants could be just around the corner.

Last October TAXtv presenter Giles Mooney predicted this possible outcome. He said he'd heard “rumours” that lawyers and accountants could be next in line: “HMRC already knows how many clients an accountant has and has an idea on fee structures, the Revenue's computer could easily check to see if an accountant's declared revenue was lower than expected.”

On the announcement this week, exchequer secretary David Gauke said: “We have made it clear that we will not tolerate tax evasion and we are determined to crack down on the minority who choose to break the rules. Everyone needs to pay the taxes they owe in full.

“It is not fair that at a time when most hard-working people are paying the right tax, others are trying to get out of paying what they should.”

Gary Ashford, who represents the CIOT on HMRC’s Compliance Reform Forum, said the range of groups targeted shows how widely HMRC are casting their net.

“The use of a taskforce tells us that HMRC have evidence of evasion in the sector that they are targeting. Lawyers are the first professional group to be covered by a taskforce. Previously doctors and dentists, and tutors and coaches have been covered by disclosure campaigns.”

Ashford added that it was clear HMRC is getting increasingly tough in their determination to reach their target of bringing in an extra £7bn over the parliament through initiatives to tackle tax avoidance, evasion and fraud.

The new target areas include:

- Legal profession
- Hair and beauty trade in the North East - expected to recover more than £3.5m
- Grocery and retail trade - expected to recover more than £7m
- Restaurants in the South East and Solent - expected to recover more than £2.5m
- Scottish motor trade - expected to recover more than £3m

HMRC has launched 30 taskforces since May 2011.

Sam Moss storms to an early lead in the Nordens football predictor mini league

Unlike his team Spurs Sam Moss has a good start to the new premiership season with 125 points. Part of his early lead is due to him betting against his team in Gameweek 1 (Newcastle 2 - 1 Spurs).

Only 5 points behind we have Leon Gold in second place. Makes a change that Leon is ahead of his wife Lisa! I'm sure Lisa will be fighting back. Who will win the battle of the Gold's???

Alan Cohen in third position was so confident of his abilities he thought that he would wait and give everyone else a chance by only joining in Gameweek 2. I bet many others wished they did this too as Gameweek 1 was hard to predict and many people ended up with negative points!

Worryingly Mark Norden the winner of the last 2 premiership seasons is flying high again. Surely not again! Mark has to be the man to beat.

It's good to see we have a few newcomers to the Nordens Super Cup this year, with 31 players so far it should be a highly competitive.

Richie Caplin has started the best of the newcomers. Fellow newcomer and Chelsea fan Kevin Coller is also in the top 10.

I have also noticed we have a Leyton Orient fan (leytonhawke) and Bournmouth fan (JoeyWallen) in the league. Good to see more of a mixture of supported clubs. It must make Mark happier to see other lower league sides in the league to join Watford! :)

Sharon Brooks must have changed her alliance as I'm sure she wasn't a Norwich fan last season??? She was a Arsenal fan if I remember correctly? Maybe she wanted a transfer like most of the Arsenal players!

Talking about Arsenal fans… What has happened to Yiota??? Yiota destroyed the competition in the Nordens Euro Cup, but has she lost her magic touch? Time will tell!

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

HMRC goes public with 20 most wanted fraudsters

HMRC has published a rogues gallery of its top 20 most-wanted criminals who have fled the country owing the taxman a staggering £765m between them.

And in an unprecedented move, it has called on the public to help track them down by publishing the tax fugitives mugshots.

Heading the list is Hussain Chohan, 44, convicted at Birmingham Crown Court for his part in a £200m fraud, which involved importing 2.25 tonnes of tobacco worth £750,000 in duty.

Chohan, believed to be hiding in Dubai, was sentenced to 11 years for smuggling, fraud and failing to appear in court. He has been served with a £33m confiscation order.

Another on the list is Nasser Ahmed who fled to Pakistan or Dubai before being sentenced to six years in jail at Bristol Crown Court for his role in a £156m VAT fraud.

Darsim Abdullah, from London, is also being sought after fleeing to Iraq before being sentenced. He was convicted at Guildford Crown Court as part of a 12-man crime group that laundered between £1m - £4m a month from the proceeds of crime. The total figure stands at £24m.

David Gauke, the Exchequer secretary, said: The government is absolutely committed to tackling tax evasion and fraud. These criminals have collectively cost the taxpayer over £765m and HMRC will pursue them relentlessly. We hope that publishing their pictures in this way will enable members of the public to contribute to the effort to catch them.

HMRC says tax evasion and fraud costs the UK taxpayer around £10bn a year in lost revenues. It has invested over £900m in the department to ramp up its ability to recover an additional £7bn each year in tax revenue.

The trio and 17 pictures and details of other fraudsters can be viewed on HMRCs Flickr page.

Usain Bolt hits out at UK tax hurdles

Usain Bolt fans will not see the Olympic champion in action again in the UK unless the tax laws are changed, the sprinter has warned.

Bolt has said he will not compete in this country because he objects to a law that sees him taxed on global sponsorship and endorsement earnings as well as paying the 50% higher earning rate on any winnings and appearance fees.

The Jamaican runner had not raced in the UK for three years prior to this year's Olympics, when he won gold medals in the 100m, 200m and 4x100m relay. He only agreed to run in London after HMRC announced a tax amnesty for competitors.

Bolt said: As soon as the law changes I'll be here all the time. I love being here, I have so many Jamaican fans here and it's wonderful.

In 2010 Bolt pulled out of the Aviva London Grand Prix because of his views on the UK tax regime. He chose to compete in Paris instead, for which he was paid $250,000 (£167,000) for his appearance. His agent Ricky Simms said if the fee had been earned in London, Bolt would also have been liable for taxation on worldwide sponsorship earnings accrued during his time in the UK.

While he would have only been in Britain for a matter of days, Bolts contract with Puma alone is estimated to be worth £12.5m, which means his final tax bill combined with travel costs could have added up to more than his fee.

Simms said that British tax law haskept a lot of the big stars in other sports away from Britain.

Tennis ace Rafa Nadal decided against playing at this year's Aegon Championship at Queen's Club because of concerns over potential UK tax demands. He opted to compete in the Gerry Weber Open in Germany, where he received an estimated £750,000.

Nadal was reported as saying: The truth is, in the UK you have a big regime for tax, it's not about the money for playing. They [HMRC] take from the sponsors, from Babolat, from Nike and from my watches. This is very difficult. I am playing in the UK and losing money. I did a lot more for the last four years, but it is more and more difficult to play in the UK.

An HMRC spokesperson said: The government put in place a tax exemption so that non-resident Olympic and Paralympic athletes would not pay UK tax on their income from Olympic and Paralympic appearances. Any tax on other UK income such athletes receive can in most cases be off-set against tax paid in their home country.

Business confidence hits all-time low, says BDO

UK business confidence has slumped to its lowest point this year amid fluctuating economic prospects, according to research by BDO.

The BDO Optimism Index, which predicts business performance two quarters ahead, has hit a seven-month low in the firmÂ’s latest Business Trends report. The indicator fell for the fifth consecutive month, from 93.5 in June to 93.1 in July.

BDO says there was a brief resurgence in business confidence in Q1 2012, where confidence reached as high as 98, but the index is now at the lowest level since December 2011. The poor performance is a sign that contraction will continue for the remainder of 2012.

The research suggests the manufacturing sector is bucking the overall trend. Manufacturing confidence levels improved substantially, up from 83.8 in June to 90.5 this month, following a decline of 8.4 points from May to June.

In contrast, service sector confidence declined in July, falling by 2.1 points to 93.8, despite showing consistent increases between February and May.

BDO partner Peter Hemington said: Â‘This monthÂ’s figures serve as a stark reminder of the continuing difficulties the UK economy faces, with zigzagging business confidence undermining the improvement in confidence that we saw at the start of 2012.Â’

Accountancy Age, 14 August 2012

Tax penalties of Â£1,200 sent out by HMRC

HMRC has run a number of campaigns aiming to ensure people file returns and pay penalties. About 500,000 people are being sent notices of penalties of at least £1,200 for failing to submit their self-assessment tax returns.

The HM Revenue and Customs (HMRC) penalty is made up of £900 in daily fines alongside a late-filing penalty of £300 or 5% of the tax due. Some penalties might be waived on proof of a reasonable excuse, such as a family illness. The number of penalties levied has fallen in 2012.

Deadline

Millions of people in the UK fill in self-assessment tax forms each year.
The deadline for online returns this year was 2 February, while paper returns would need to have been submitted by the end of the previous October.

"We want the returns, not the penalties. This year, half a million more people have filed their return - which means we are issuing 44% fewer penalties," the HMRC said.

"But despite several reminders, nearly 6% of people have not sent their 2010/11 tax returns to us and they will be getting a penalty.

"We recognise that there will be some people within this group who do not need to be in self-assessment, and we will be happy to remove them from the system and cancel their penalty."

The penalties being issued over the next few weeks are in addition to £100 late-filing penalties for missing the deadline, which were sent out in late February and early March.

BBC News 14 August 2012

Late P11D penalty warning despite submission on time?

A client yesterday received an HMRC warning letter headed 'P11D(b) interim penalty letter' and, in big, bold letters, 'Outstanding expenses and benefits forms P11D and P11D(b): you need to act'. It goes on to say that HMRC had written in June to remind the client of the 6 July P11D deadline and warning of a penalty. Then: "We are writing to all employer and their agents who have not submitted returns ..."

The client was angry that his P11Ds had not been submitted, so he called. They had gone in, and they had been acknowledged, but HMRC had sent the letter anyway.

If the client had continued reading, the letter said lower down 'If you have already filed ... thank you. Please ignore this letter.' But he didn't get that far before he saw red.

It took a member of staff about an hour to deal with (pacify) the client, check the files, speak to HMRC to get to the bottom of it and give the story to the client. A total waste of time for all concerned.

HMRC told us that they won't have logged all the P11Ds until late August, so it doesn't know yet who has submitted and who hasn't. This presumably means that the letter was simply sent to everyone who was expected to submit, as a reminder of the penalty for late filing. This is understandable, given the timescales for logging and contacting employers, but the wording chosen was very poor.

Knowing that they were writing to everyone, including the compliant (who will now be totally hacked off), why didn't the letter start with "Please ignore this letter if you have submitted all your P11Ds"? In big, bold letters?

After all the effort that went into agreeing a good P35 warning letter this year, it is frustrating and disappointing to receive such an ill-thought-out, unnecessary warning that has wasted so much time.

Written by another frustrated accountant !!

Bank Loan Refusal Often Offends!

Last week we learned that 60% of micro firms who appeal against a bank loan rejection succeed in getting that decision overturned. This was according to a report by an independent appeals reviewer on the Banking Taskforce appeals process.

That’s a statistic you might want to share. Access to finance is an issue we’ve been campaigning on for SMEs for several years now, and we know our members help businesses with credit applications..

This statistic (60%) does seem rather high, so let’s put that in context.

This is 60% of 2177 appeals that were made last year, which is a tiny proportion, just 2% of the 114,000 applications for credit that were declined.

The banks received 827,000 applications for credit last year, and of these 86% were accepted. So just 0.3% of all applications were appealed.

Most of those appeals were from small businesses looking for a relatively small amount of credit: over 60% were for sums under £10k.

The report could not determine whether the businesses appealing were mainly those who know that something went wrong with their application, or whether many businesses were not aware that an appeals process existed.

The report says that the SME Finance Monitor suggests that only 19% of businesses were aware of the appeals process, and none appealed because “they did not think it would change anything”. However, 19% of those who were turned down were also referred to other forms of finance.

Of course, we know that the era of easy credit is at an end. Banks have relatively slim margins on loans: if only 2 or 3 loans in 100 default, then those 100 loans become unprofitable. According to the report, most credit was rejected because of personal credit scoring, with the second reason affordability (ie the ability of the customer to repay the loan).

The report has called for personal credit scoring to be made more transparent so that people can better understand how they will be judged when applying for credit.

But I think the report does send out the message that if your business feels that their case for credit is strong, it may well be worth appealing.

Michael Izza - ICAEW

Managing an HMRC dawn raid

First steps

- In the event of a raid, please call us immediately
- Check the identity of the HMRC team leader and ask them to speak with us on the telephone before the search starts
- You should be presented with a copy of the search warrant (if not ask to see it). Send a pdf copy to your solicitor
- Ask that all members of the HMRC search team remain in the Reception area of your premises, and ensure that members of your staff remain with them. However, it is vital that the officers are not physically obstructed

Do HMRC have to wait for your solicitors to arrive before commencing the search?

- No, but you should ask courteously that HMRC delay further action until your solicitor arrives. This is a reasonable request, particularly if you are able to provide a definite timescale for your adviser's arrival, but do not be surprised if HMRC refuse. A search warrant will usually limit the time during which HMRC are entitled to remain on the premises so they may be reluctant to delay their search any longer than is necessary for you to telephone your solicitor

If HMRC refuse to wait, what should I do before HMRC commence the search?

- Allocate a member of your staff to "shadow" each officer of the search team. The role of the shadow is to keep a record of all documents examined, copied or removed by the HMRC officer he or she is monitoring

Can members of staff be interviewed, searched or arrested?

- The investigating officers are not permitted to interview or interrogate you or any member of staff at the premises. Any questions should be restricted to immediate issues relating to the search or the whereabouts of documents
- HMRCís officers may search persons on the premises if they have reasonable cause to believe that a person has material likely to be of substantial value to the investigation of the alleged offence on his or her person. Personal searches may only be carried out by a person of the same gender
- An authorised officer of HMRC has the power to arrest without a warrant if he has reasonable grounds for suspecting that an offence has been committed and if he has reasonable grounds to suspect the person of being guilty of it
- The officers should not be physically obstructed and it is vital that no attempt is made to conceal documentation or
information held. All of these could amount to arrestable offences

What about documents protected by Legal Privilege?

- LPP must be asserted where relevant, as documents subject to LPP are outside the scope of a search warrant. If no agreement can be reached, the documents should be placed in sealed envelopes pending resolution of the issue

What about information stored electronically?

- HMRC are entitled to obtain information stored in any electronic form. HMRC have equipment to enable them to copy data without removing computers from your premisesñ but they can take them if they wish. If they do, it will be months before you see them again. So make sure- now- that you have offsite backups of all your data

74,000 tip-offs about alleged tax dodging in 2011

HMRCs tax evasion hotline received over 74,000 tip-offs about alleged tax dodging in 2011, a fall of around 9% from the previous year.

The hot line has amassed some 412,111 alerts over the last five years, according to figures obtained under a Freedom of Information request by publishing group, Bloomsbury Professional.

A spokesman for the taxman, said: Â‘HMRC has a responsibility to ensure everyone pays the tax that they owe, and clamping down on those who try to cheat the system is a key priority. We value the information we receive from the public through the tax evasion hotline, and all information is analysed and a decision made on the most appropriate course of action.Â’

HMRC said it uses the information provided by the public in much of its enforcement and compliance activity.

An HMRC spokesperson said: Â‘We are developing ways of exploiting the intelligence with our powerful profiling capability to match commercial, wealth and behavioural risk with important intelligence from taxpayers who are concerned about those that avoid paying their fair share.Â’

The department says it also shares that intelligence with other government departments and law enforcement agencies.

A 2008 National Audit Office report revealed that just £2.6m in tax was collected as the result of the hotline in 2006-07, less than the expected £32.5m.

Tham Tharmarasa is appointed a Director of Nordens

Mark is delighted to announce that, with immediate effect, Tham Tharmarasa ACCA, BA (Hons) is appointed a Director of Nordens.

Tham joined the company as a trainee accountant in 2004 when the practice was still in its infancy, and has helped to structure it into the successful concern it is today. As a Chartered Certified Accountant (ACCA) qualifying ‘on the job,’ as well as a recently appointed ACA affiliate, he swiftly rose through the ranks to his current position of Practice Manager. It's down to Tham to ensure the practice runs professionally and smoothly at all times.

His end-of-year meetings result in happy clients, as his skill at identifying tax advantages and improved accounting schemes is legendary. Holding a double-edged sword, Tham also acts as Nordens' HR specialist, competently handling the team’s contracts, training and staff procedures.

Always professional, always proactive, always approachable and sometimes right about the football scores, family man Tham has been an asset to Nordens from the start.

We’re thrilled that his contribution has been formally recognised and he has officially achieved the success he deserves.

Call girl jailed for tax evasion

A £1,000-a-night escort has been jailed for 16 months for tax evasion after she cheated HMRC out of tens of thousands of pounds.

A 29 year-old self-employed escort earned more than £300,000 in two years, which allowed her to study for a master's degree and put down a £110,000 cash deposit on a £360,000 apartment in Knightsbridge.

In an eerie replay of the notorious ‘Belle du Jour’ blog (pictured above), she used her earnings in part to fund her academic career. Southwark Crown Court heard she started working as a prostitute to fund a master's degree at the University of Westminster.

As reported in The Telegraph Judge Peter Testar said she had deliberately avoided paying any tax on her earnings from the start.

"The amount of tax which is subject to this charge which has been evaded is £120,000. In my judgment this was an offence that was fraudulent from the outset carried out over a significant period of time,” he said.

"From the outset the defendant made the decision that she was not going to account to the public authorities for the money that she was receiving from her occupation."

She failed to file any tax returns for most of her decade-long working career, however the court heard that precise figures were difficult to establish "given the nature of the employment she was engaged in".

Please speak to our “Call Girl” specialist, Mitch Hahn, if you need assistance!

Yiota thrashes the competition in the Nordens Euro Cup

Even though Euro 2012 has yet to reach it's finale, the Nordens Euro Cup has been all over since the end of the group stages due to an amazing round of predictions by Yiota Koshias.

In round 3 Yiota managed to predict the result and score correctly for 6 out of 8 games. The guys in the Nordens office worked out that if she put £10 on this combination of results she would have won £12 million. That is a lot of shoes! However if I am to be critical she made poor use of her banker chip!

Not only has Yiota stormed to an early win in the Nordens Euro Cup she is currently 25th in the whole talkSPORT predictor league with 410 points. Her highest position was 12th. Unfortunately she won't be able to win the overall league now with one game to go, but you have to applaud the effort!

Joe Sword is the closest contender in second place with 295 points. Followed by Strider333 in third position with 250 points.

Mark Norden, ABJ United and Mitch Gold also competed well.

If you hadn't already noticed we now have competition from another Norden in the league! Jack Norden (Mark's son) joined the Nordens Euro Cup late so it was hard for him to get a high placement, but we could all be in trouble if he competes in the next premier league competition under Mark's coaching!

lgold6 has won the wooden spoon! Understandably the identity of this player has been hidden, but I assume it's some one in the Gold family?

Nathan Brooks, julietravers, AaronB and Kane Hopps also make the top 5… if you turn the league upside down!

Hope you all enjoyed predicting on the Euro 2012. It certainly makes watching the games more interesting. I bet many of you also predicted Ashley Young would miss his penalty after a poor competition. Oh well maybe Brazil 2014!

We now have around 7 weeks till the start of the new Premier League season and the next Nordens predictor league. Watch out for the next Nordens football predictor league email to join.

As always if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

Nordens Goes Mobile

As 90 million people now have a smartphone, it’s becoming more crucial that your website is optimised for mobiles. A massive 82% of smart phone users receive their email via a mobile and they are highly likely to click on links and view websites via their smart phone.

So to make life easier for you, we’ve gone mobile! If you search for us on your phone, you’ll see a new look Nordens – same excellent service of course, now with a simpler interface that your phone will love! You can read about us, check out our services, access your n-books accounting software and, best of all, call us with one click .

Big company - under scrutiny over how much tax it pays

The script is becoming very familiar. A big company finds itself under scrutiny over how much tax it pays. When the answer turns out to be “not very much”, there is a chorus of disapproval.

Vodafone is the latest name to be caught out. Last weekend it found itself accused of depriving the Treasury of tens of millions in revenues. In the last tax year, its corporation tax payments in Britain fell to nothing from £140m a year earlier. That is despite the fact that it is one of the biggest companies in Britain, with one of the best-known brands.

Vodafone is hardly alone here. A string of recent revelations have shown how little corporation tax big global firms now pay. Most of the big American internet firms, such as Amazon, Google and Apple, have found themselves in trouble for paying hardly any British taxes, even though they have huge businesses in this country.

So have companies such as Alliance Boots, which operates the high-street pharmacy chain, and others that have moved their head offices to other countries.

No doubt we’ll hear of more in the next few months. After all, this makes an easy story for the media. Pick on a big company, preferably one that everyone has heard of. Check how much corporation tax it pays from its British accounts, then compare that to its sales – and point out just how little it is paying.

The cries of outrage that follow are predictable. We’ve heard a lot about how corporate fat cats are paying nothing in tax while the rest of us pay more and more. We hear plenty about how cuts in public spending could be avoided if only the likes of Vodafone and Google could be made to pay their fair share.

The trouble is, this is all nonsense. Corporation tax is a stupid tax. There is no reason at all why companies should be expected to pay it if they can legally avoid doing so. In fact, Britain would be better off getting rid of this tax altogether, rather than harassing companies that legitimately decide they’d rather do something else with their money than help out the British government. There are two reasons why corporation tax doesn’t make much sense – and the bigger the company, the less sense it makes.

First, it is very difficult to collect. One of the first principles of any sensible tax is that it should be very hard to avoid – as well as being clear, transparent and fair.

Corporation tax doesn’t pass any of those tests. The more globalised the economy becomes, the harder it is to collect. Many companies shift their base to Ireland where the tax is much lower. Others create holding companies in Luxembourg or Switzerland, where generous tax reliefs are available.

With a huge company trading in dozens of countries, it is not hard for clever lawyers and accountants to get together and find ways of switching profits from one place to another so that the tax bill drops dramatically.

Worse, the more business gets done online, the harder it gets. When you bought a book from a local branch of a book chain, it was easy to say where it was sold and where the tax should be paid. But an e-book may well come from a server in Luxembourg. The same is true of any web-based transaction – it is simple to transfer these transactions to a country with lower tax rates.

It should be no great surprise then that the amount collected from corporation tax has been falling steadily. In 1996 it brought in the equivalent of 9.7% of Britain’s GDP. This year it was only 7.6%. In truth, corporation tax is rapidly becoming a tax on companies that don’t want the public relations trouble that comes with minimising their tax bill. But that is hardly a fair basis for a tax system.

Next, it is a mistake to think that companies actually pay tax – anymore than your TV pays the TV licence, or your house pays the council tax.

A company is an inanimate object. The tax is paid by the shareholders, the directors, the staff and the customers – in the form of lower dividends, lower wages and higher prices. Money doesn’t sit around in company bank accounts, for the simple reason that companies don’t need to eat or find somewhere to live or look after their children. If they didn’t need to pay corporate taxes, then dividends or salaries would be higher, or prices would be lower – or probably a mixture of all three.

In reality, corporation taxes are a form of disguised personal taxation – because the tax ends up being paid by individuals. These taxes are easy for governments to levy because it doesn’t feel like anyone is actually paying them. But surely it would be better to tax people directly, rather than through companies – at least that way people would know how much they are paying and could vote the government that levied them out of office if they didn’t like it. Rather than try to harass and intimidate companies into paying a tax they can fairly easily avoid if they feel like it, Britain would be better off taking a really radical step. How about becoming the first major economy to abolish corporation tax altogether?

The patent box - a lower rate of corporation tax

What Is ‘The Patent Box’?

This is a new preferential tax regime that will tax UK companies on qualifying patent related income at a reduced rate of only 10% instead of the long term mainstream corporation tax rate of 22%.

For companies which are technologically advanced or deploy innovative solutions this is a huge opportunity to reduce their UK corporation tax bill.

With the introduction of the patent box and further improvements made to the R&D tax relief system the Government is promoting the UK as the place to be for innovation and technology related industries.

Key Things You Need To Know

• Qualifying profits are taxed a 10% (phased in over five years)
• Qualifying profits include those from product sales and licence fee income
• Existing patents are eligible, not just new ones
• A patent held on the smallest component of a product can qualify the profits from the sale of the whole product.
• Any UK company with qualifying income can elect to apply the new rules
• R&D tax relief will continue to be available even where a patent box claim is made
• A simplified calculation will be available for smaller claims

The Details - In Brief

What?
• Income from the sale of products incorporating a patented invention
• Licence fees and royalties
• Proceeds of sale of a patent
• Other indirect income derived from patents

From:
• UK patents
• European Patent Office patents
• Patents granted by certain EU member states
• NOT US patents

When?
• The new rules come into effect from 1 April 2013. There will be transitional rules phasing in the full benefit of this reduced rate over a five year period. Start planning now.

Why?
• An eventual corporation tax rate of 10% on qualifying profits compared to a long term headline rate of 22%.

How?
• Identify the relevant patent-related income and associated trade profits.
• Apply certain statutory deductions to the profits to arrive at Patent Box Profit.
• Tax Patent Box Profit at the reduced rate by applying a deduction to total taxable profit.

The Important Questions

What are the key questions that companies now need to be answering?

• Do you have any patents covering your existing products and processes?
• Can you get a patent for existing processes?
• Will you be launching new products?
• Who owns your intellectual property?
• If you have overseas operations should you be considering centralising patent ownership in the UK?

The Next Steps?

There are a number of things you should consider doing in advance of 1 April 2013 and which Nordens working together with our tax specialists can provide assistance:

• Identify qualifying income and expense allocations
• Ensure your structure qualifies
• Consider & model the benefit
• Undertake an Intellectual Property audit to ensure all such property is captured with the appropriate rights

No patent?

If your company hasn’t yet considered registering patents then it may be worth considering the benefit of doing so. We can introduce you to specialist patent attorneys and work jointly together with them to help you secure the advantages of the patent box regime.

Four million taxpayers hang up on HMRC in frustration

HOLDING FOR AN AVERAGE OF SIX MINUTES, frustrated quarter of callers to HM Revenue & Customs' PAYE helpline, figures released under the Freedom of Information Act show.

The data demonstrates that some 28% of callers gave up part way through their call, up 10% from 2009, when the waiting time was one minute and 53 seconds. Last year, the average was 5 minutes and 45 seconds, reports The Telegraph.

The news comes just weeks after it was revealed one in four tax helpline calls go unanswered, and months after government figures showed complaints over delays had gone up by nearly a third.

HMRC received more than 76,000 complaints from taxpayers in the last year, up from 73,000 the previous year but down from 84,500 in the 2008/09 tax year.

Complaints, though, rose from 16,882 in 2008/09 to 22,185 in 2010/11, leading to claims the taxman's call centres were understaffed.

Fewer than half of taxpayers got through to an operator on first attempt, against benchmarks of 90%.

In May, Exchequer secretary David Gauke admitted the Revenue "recognises there are further improvements to be made and aim to achieve 90% of call attempts handled by 2014/15".

New round of tax returns means new opportunity for criminals

Each year at about this time, the new batch of self assessment tax returns are issued, bringing with them a fresh opportunity for fraudsters to attack.

We have just been advised that the self assessment tax return fraudsters have struck again.

Please be aware of the risk and as usual be vigilant and keep a close watch on your passwords.

The fraud involves repayment claims which are submitted to HMRC online using valid log in details and passwords, requesting payment to a third party bank account.

Don’t give them any details as HMRC do not contact tax payers by e-mail !!

Notice to file a self assessment tax return

Proposal for statutory power to allow HMRC to withdraw a ‘notice to file’.

HMRC tries to ensure that it only seeks self assessment (SA) tax returns from those people whose circumstances make it appropriate for them to be in the SA regime. A consultation, Withdrawing a notice to file a Self Assessment return, has now been launched.

There is currently no express statutory power to rescind a notice to file once it has been issued and there is no right of appeal against a notice to file. But since February 2012 HMRC has invited those individuals who have received a notice to file a SA return, but who think they should not be within SA, to contact the department. If HMRC agrees that a return is not needed, the notice to file a return is withdrawn and at the same time any late filing penalty cancelled. There are no statutory criteria setting out when HMRC will require a SA return but the most common reasons are where a person:

- is self-employed or a partner in a business at any time in the year;
- is a company director;
- receives income over £100,000;
- receives more than £10,000 in savings and investment income;
- receives income from letting out property;
- receives foreign income liable to UK tax; or
- is an employee claiming expenses or professional subscriptions of £2,500 or more.

This is not an exhaustive list as the power to issue a notice to file is flexible. There is also a range of less common circumstances where a return may be necessary, for example, if individuals need to complete a SA return to claim certain sorts of relief or to crystallise a tax debt.

Start-up loans scheme to help young people launched

An £82m loan scheme for young people wanting to create a business is being launched by PM David Cameron.
People aged between 18 and 24 can apply for funds, expected to typically be about £2,500. Mr Cameron said he hoped the initiative could lead to 30,000 more start-ups and give a boost to economic growth.

The loans must be repaid within five years, and interest will be charged at the level of the Retail Prices Index plus 3%. Mr Cameron said he wanted young people to have the confidence and support to turn "that spark of an idea into the next global brand".

It came as an enterprise review said the UK would have 900,000 more businesses if it had the same rate of entrepreneurship as the US.
The review, by former Conservative minister Lord Young of Graffham, said that "many don't realise the opportunities that enterprise offers".
He told BBC News that the money from the government was necessary because young entrepreneurs did not have many sources of funding. "A bank would not give it to a young person without any track record," he said.

"It's more than money," he added. "What they're getting are mentors - it's advice that really counts." The Prince's Trust, which provides grants of about the same amount to young people wanting to start businesses, will also be involved in the new scheme.

"We know from our experience at The Prince's Trust that supporting young people into self-employment can help turn their lives around," said Alan Kennedy, its director of operations. "We're really pleased to be a part of this initiative as it will enable us to help even more disadvantaged young people through our popular Enterprise Programme."

'So-called recession'

Back in November 2010, Lord Young was rebuked by Mr Cameron for claiming most Britons had "never had it so good" despite the "so-called recession". Lord Young, who served in Margaret Thatcher's cabinet in the 1980s, said on Monday that small businesses "are the engine room of our economy and critical to future economic growth."

He added: "But we cannot be complacent. Now, more than ever, we have got to get behind our small businesses and encourage even more people to seize the opportunities and support that there is to start up on their own." The StartUp Loans scheme will be chaired by entrepreneur and Dragons' Den participant James Caan, and administered by groups that already work with young people. "One of the reasons I'm being involved is I am an entrepreneur, I have built a business before, I understand the challenges," he told BBC News.
"As chairman of the StartUp Loans company my challenge is to ensure that these funds are distributed without red tape, and give young people the opportunity that I absolutely believe they need."

Mr Cameron said: "I want this to be the year where people can think: yes, I can do it; that we can get as many viable businesses as possible off the ground, that people can have a go and that we see a whole new wave of entrepreneurs who start small but think big."
The interest rate of RPI +3% is reasonable compared with the alternatives available to small businesses, according to a business loans expert.

RPI in April stood at 3.5%. "It's a very realistic and manageable rate for small businesses as opposed to credit cards and overdrafts which would be much more expensive," said Eddy Weatherill, chief executive of the Independent Banking Advisory Service. Young entrepreneurs would find unsecured business loans "difficult to come by from banks", he added.

Mark wins Copa Del Nordens and Nordens employees jobs are safe for another year!

The employees at Nordens have let Mark Norden win the Copa Del Nordens football predictor league again so their jobs are safe for another year!

Some of you may not know that Nordens employees have to sign a contract upon joining with terms and conditions that include... "Any employee that beats Mark Norden in the Copa Del Nordens football predictor league will be fired on the spot!" So on the safe side each week everyone has predicted a couple of games incorrectly on purpose… honest!

Darren Hahn came the closest to getting fired in second place with 1925 points. Great season for Darren. Maybe this will make up for his team Spurs missing out of Champions League football. Chelsea & Arsenal fans stop laughing. he he he.

Yiota and Lisa have made the girls proud with high positions. Fair play, they obviously know their stuff! Boys - Ask them if they understand the offside rule to see if it was a fluke? ;)

Footyguru AKA Stewart Reed makes the top ten with a superb final day of predictions! He managed to predict the result of 9 out of 10 games correctly. He also got the score correct of the Norwich Vs Villa game with his banker chip! Well done Stewart! Mossy16 AKA Sam Moss also had a cracker with his final predictions - 170 points!

Lgold5 AKA Leon Gold gets a nose bleed with the dizzy height of 20th position. I don't know if you have worked it out, but you are 420 points behind Lisa. Enough said! ;)

Not including the bottom 4 people who obviously gave up part of the way through the season the relegation places include…

27 - Laura1912 AKA Laura Hawkins
28 - tonym67 AKA Tony Morrison
29 - HARDYS FC AKA Jack Goldstone

Pete Winter just misses out on relegation. Yes I did decide 3 teams get relegated! Also lucky that Laura didn't start till week 7. :)

I would just like to say thank you to everyone that took part in the Copa Del Nordens and I hope you all join us again next season. Next season you will also get to predict West Ham results. Unfortunately Watford fans will just have to dream that Elton John decides to put all his money in to the clubs rather spending it on dodgy wigs!

Remember if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

Graduate Fashion Week

Hot on the nine-inch heels of our involvement with London Fashion Week, Mark is thrilled to be appointed as Treasurer for Graduate Fashion Week (GFW). With responsibility for budgets and assisting with strategy, he’ll be a driving force in helping the exceptionally talented university-leavers to make their mark on the catwalk and beyond.

GFW is the largest fashion event of its kind in the world, celebrating the work of over 1000 BA fashion degree students across the UK. By showcasing the cream of the talent for 2012, the event offers the designers exposure to international media, stylists, journalists and potential employers. And it places Britain at the heart of the global fashion industry.

Mark’s going to enjoy working with esteemed fashion specialists such as GFW’s chairman, Rob Templeman and Managing Director Martyn Roberts. Liaising closely with industry experts Hilary Alexander (Fashion Director of the Daily Telegraph) and the British Retail Consortium will give him the opportunity to expand on the work he already does with emerging designers via the Centre for Fashion Enterprise. It also might encourage him to brighten up the office in some fancy clothes…

GFW is taking place at Earl’s Court from 10-13 June 2012. Find out more and book your tickets here.

East London Small Business Loans

If you run a small business in the East London area, you’ll be interested to hear that Mark is on the loan panel of the East London Small Business Centre (ELSBC). As a respected businessman who has run successful - and some less-than-happy - ventures, it’s been recognised that he has the experience on both sides of the fence to make decisions as to whether or not companies should be loaned money.

ELSBC has provided substantial loans to small businesses in East London for a quarter of a century. So if you’re just starting your venture and haven’t been able to secure finance elsewhere, you may be entitled to an ELSBC new business loan of up to £10,000. Or, for more established clients, up to £25,000 is available. And, unlike banks, the lending is not credit scored – you simply need to present a comprehensive and viable business plan, which Mark and his ELSBC colleagues will assess. In fact, we can work with you to produce your business plan and support you through the whole application process (although Mark wouldn’t be allowed to assess applications if he was involved in creating them).

Some smaller, more specific loans are available too. For example, if you’re a fashion designer, you’ll already know that we offer a specialised accountancy and planning service just for you. But you may not have been aware that you could be eligible for a short-term 'clothing loan' from ELSBC to help you meet orders. If you'd like to find out more about this, call or email Mitch Hahn.

And remember, here at Nordens we’re all trained to assist you in raising traditional and non-traditional finance. Call us to find out more.

Director disqualification: what you need to know !!

"News International and its parent News Corporation exhibited wilful blindness, for which the companies' directors ...should ultimately take responsibility”; “We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company,” so concluded the cross party bench committee of MPs.

Media regulator Ofcom intends to examine the report to consider its options but there is another government body that could also be interested.

The Department for Business, Innovation and Skills (BIS) has the power to disqualify directors from holding corporate office (in any company be it a small private limited one or large News Corporation-size plc’s) where it is satisfied that there is sufficient evidence of “unfitness” as under the Company Directors Disqualification Act 1986 (CDDA) .

Disqualifications other than in relation to insolvency proceedings are extremely rare; most disqualifications being dealt with by the Insolvency Service (IS - as part of the BIS) but its work is limited to cases of wrongdoing resulting in insolvency. According to IS statistics, there were 20,000 corporate insolvencies in 2011 with the number of directors disqualified being 1,437.

Grounds for disqualification

No director should be punished for commercial misjudgement but the IS will need to be satisfied that there is a case for gross negligence or total incompetence.

There are in fact, many grounds for disqualification which may be automatically enforced depending upon the relevant Act section, for example:

- Individual bankruptcy - unless the court allows the director to continue
- Breach of Health and Safety regulations (although according to an HSE-commissioned report published in 2007 on the effectiveness of the CDDA, company directors are almost 300 times more likely to be disqualified for financial reasons than for breaching health and safety rules)
- Wrongful or fraudulent trading
- Mental Health legislation
- Infringement of competition rules
- Persistent breach of statutory obligations (e.g. failure to submit accounts on time - cases have been brought following false accounting and evading VAT)
- Conviction of an indictable offence connected with the promotion, formation, management or liquidation of the company

What is considered?

Insolvency practitioners (IP’s) are required to make a report for the IS to consider whether:

- there were any mitigating factors (e.g was it solely the downturn that affected the company’s cash position and profit) or the directors negligence that caused the company’s insolvency
- the directors continued trading or otherwise defrauded the company’s creditors while the company was known to be insolvent
- the case is a matter of public interest
- there was deliberate and persistent failure to pay liabilities (e.g. VAT and PAYE deductions) to the Crown
- It is also understood that cases that the IS considers “too small” will not be pursued even if there is a prima facie case although this policy and its criteria are not publicised; a few years ago, the cut-off point was thought to be a deficiency to creditors of £100,000.

End result

The IS will apply to the court for a Disqualification Order or, alternatively, the Secretary of State may accept a Disqualification Undertaking. An ‘undertaking’ is a way for both sides to avoid the expense and upset of a court hearing where the director does not dispute the facts agreeing to the disqualification and to the conditions imposed. The conditions are the same as for an order although directors giving an undertaking can generally expect a shorter ban.

Implications

For the period of the order or undertaking (anything between two and 15 years - the average is six years), the individual is prevented from:

- being a director of a company
- acting as if they were a director
- instructing others in the management of a company
- being involved in any way in the promotion, formation or management of a company (including raising capital pre-company formation)
- acting as a company receiver or IP
- acting as a trustee of a charity or pension scheme without permission

Other bodies may not take too well to a disqualified director sitting on their committee and may not allow them to be a school governor, director of a housing association, or member of a social care body. Disqualification is usually reported to professional bodies which may affect their membership.

It is not enough to not have the title “director” - while the order or undertaking is in place that person cannot be involved in the usual running of a company and in fact, the CDDA specifically prohibits the ordering from, paying or negotiating with suppliers or customers; undertaking management consultancy or any governing role within a company or making it appear that one is able to do so. Breach is a criminal offence carrying a maximum of two years imprisonment and/or a fine.

But is disqualification effective?

Disqualification is supposed to act as a deterrent for directors’ wrongdoing, intending to raise standards of commercial governance however large the company but the vast majority of companies that fail do not go down the liquidator route. If is difficult to detect infringements of orders or undertakings, relying on members of the public to report those whom they believe are acting in breach via the Disqualified Directors hotline. IS statistics show a total of 166 convictions in 2011 for a range of offences relating to corporate and individual insolvencies although these do not specify how many prosecutions were brought for breaches of disqualification orders or undertakings. The low number could mean the legislation is having a remarkable deterrent effect or that it simply is not being enforced
The director of a company in trouble will obviously think of the here and now. Over-borrowing and personal guarantees mean directors will try to keep trading in order to avoid a collapse of their business and the subsequent enforcement of personal liability for their company’s debts. It is when their companies are facing the prospect of insolvency that such directors are most likely to treat creditors unfairly and behave in a manner which might render them unfit. The most common tactic is to withhold crown monies to ease cash flow but it is not unusual for directors to reduce or extinguish a personally guaranteed bank overdraft; pay off debts due to themselves or their families, or divert assets such as stock, equipment or vehicles away to be used in a phoenix company
Don’t think that the IS is just interested in the larger plc companies and that they will not act if a breach of an order or undertaking is proved. Take the case reported in the Bolton News last month where Matthew Sixsmith, was disqualified for eight years for allowing his father to act in the management of his company. His father had previously been disqualified for five years from April 2005.

The IS representative, Claire Entwistle, told the local newspaper that: “Where disqualified directors continue to manage the affairs of a company, they will find the protection of limited liability is not given to them and they may be criminally prosecuted... the Insolvency Service will act robustly against those who allow disqualified directors to act”. You have been warned!

HMRC has begun the process of overhauling its operation of the IR35

HMRC has begun the process of overhauling its operation of the IR35 regime for personal services companies with new guidance that sets out some basic risk factors that will affect a contractor’s chances of being investigated.

The overhaul will mean an increase in IR35 investigations, the tax department confirmed.

As expected following leaks last month, the 12 business entity tests set out in HMRC’s 47-page intermediaries legislation guidance note are illustrated by six example scenarios. HMRC said the tests are designed to build up a picture of how a contractor’s business works and how they provide their services. The tests and their scores include:

- Business premises test - Does the business own or rent business premises separately from the contractor’s home or end client’s premises? (10 points if yes)
- PII test - Does the contractor need professional indemnity insurance? (2 points if yes)
- Efficiency test - Has the business had the opportunity in the past two years to increase its revenue by working more efficiently? (10 points if yes)
- Assistance test - Does the business employ any workers who bring in at least 25% of the yearly turnover? (35 points if yes)
- Advertising test - Has the business spent over £1,200 on advertising in the past year; entertainment does not count as advertising (2 points if yes)
- Previous PAYE test - During the past year, has the end client engaged you with no major changes to your working arrangements (Minus 15 points if yes)
- Business plan test - Does your business have a business plan with a regularly updated cash flow forecast, and does it have a business bank account, identified by the bank as such and separate from your personal account? (1 point if yes to both parts of the question)
Repair at own expense test - Would the business have to bear the cost of rectifying any mistakes? (4 points if yes)
- Client risk test - During the past two years, has the business been unable to recover payment amounting to more than 10% of yearly turnover? (10 points if yes)
- Billing test - Does the business invoice for work carried out before being paid and negotiate payment terms? (2 points if yes)
- Right of substitution test - Does the business have the right to send a substitute? (2 points if yes)
- Actual substitution test - Has the business hired anyone in the previous two years to do the work it has taken on? (20 points if yes)

The scores used to assess contractors’ risk profiles are as follows:

Less than 10 points High risk
10-20 points Medium risk
More than 20 points Low risk

The HMRC guide explains that the tests are not set in stone, and are an extension of the risk-based approach to extends to all of its investigations.

Paul Mason, manager of the contractors division at investigations insurance specialist Abbeytax, met with HMRC officials this week to discuss the new tests. “HMRC’s new approach hasn’t changed a great deal,” he told AccountingWEB.

“They already undertake risk assessments of who is most likely for investigation. The business entity tests are something you can use to self-assess to see how you score by their internal rating. But they aren’t telling us what the detailed risk criteria are because of the fear people will arrange their affairs accordingly.”

As every other adviser or specialist in this field would agree, Mason added that the business entity tests are just a diagnostic tool. The actual application of IR35 will always come down to employment status factors that must be tested against case law going back to the 1968 Ready Mixed Concrete decision.

But along with the new guidance, Mason did learn that HMRC is drawing together specialist IR35 teams at offices in Salford, Edinburgh and Croydon to pilot the new approach to investigations. The objective of the exercise will be to address the risk of avoidance of employment taxes, including National Insurance, according to HMRC. “This will mean that there will be an increase of the number of investigations opened for IR35 reasons over the coming year and subsequent years,” a spokesman confirmed to AccountingWEB.

He explained that the new operational approach to IR35 will involve:

- Strengthening specialist teams, to reduce the length of time an IR35 enquiry takes.
- Tighter risk assessment process to select the highest risk cases for review.
- At the start of an enquiry, HMRC will take into account a contractor's reasons why they think IR35 does not apply, along with evidence to support their view, rather than asking for a long list of documents.
- Beefed up helpline/review service for contractors staffed with specialist staff who can offer informed opinions on IR35.

“In the past, HMRC had people dotted around the country who dealt with IR35 enquiries. Now having specialist teams to police the legislation should lead to a more consistent approach,” said Mason.

Dave Chaplin of ContractorCalculator.co.uk was underwhelmed by the new guidance. “HMRC has chosen to retain the same scoring that will be applied to contractors’ answers,” he said.

“This would appear to put the vast majority of genuine limited company contractors at medium or high risk of their businesses being branded as not being genuine companies. And the result of that may well be HMRC continuing to waste time and resources investigating cases it has little or no chance of winning.”

HMRC sends 12,000 wrong penalty letters

The tax department has been caught out by yet another bungle in its penalty letter dispatching system.

HMRC moved swiftly this morning to apologise for sending 12,000 penalty notices to people who have been taken out of the Self Assessment (SA) process.

An HMRC spokesman said: “We have identified that nearly 12,000 people have been sent a Self Assessment daily penalty letter in error. We are very sorry and can reassure these customers that we know who they are and that this letter is incorrect - they do not owe a penalty. We are writing to all of them to apologise and to explain this error.

“The 12,000 customers are among the 130,000 who we have already taken out of Self Assessment, following a cleanse of the database and our invitation to customers to contact us if they felt they shouldn’t be in Self Assessment. We can reassure these customers that they have been removed from Self Assessment.”

“The cases have all been removed and are being corrected individually. We are urgently examining what happened and are acting on lessons learned from this error,” the spokesman added.

The latest incident is the third to occur in this area in the past year. In March, HMRC sent 17,000 letters wrongly claiming payments were late because payments received between 14-16 December 2011 were not recorded against outstanding charges until after the reminders had been selected for issue.

The previous incident was a simpler logistical error, when a lack of paper reportedly caused a number of statements of account to be sent out after the 31 July deadline last year. Yet it still echoes with news last week that the department had underestimated the workload that would result from its data cleansing exercise and had to switch more than 350 staff on to the task.

While HMRC has responded more quickly to this incident and is sending out letters to put taxpayers’ minds at rest, the sequence of events raises questions about whether the department learned anything from the previous incidents and has been able to put in place better review processes before dispatching penalty notices.

On this point, the deparment responded: “There is a detailed sampling process in place to ensure we only issue penalties correctly but this error was not picked up in the scans. We will be looking at the process again to make sure this error will not recur. There are over 9m taxpayers in Self Assessment . Unfortunately with a project of this scale things will very occasionally go wrong. We make every effort to minimise mistakes but when they occur we sort things out as quickly as possible.

“Over the last year we have worked very closely with agent stakeholders to devise a campaign which has been very successful in taking people out of SA. We have had a record number of taxpayers file on time, reversing a seven-year trend. We have lots more work to do but we are moving forward and whilst we deeply regret the issue of these incorrect letters, it should not be forgotten that this year at our invitation over 130,000 people have already been taken out of SA and people are still calling. We have nearly halved the numbers of people who received £100 penalties in comparison to last year and turned around years of late filing patterns.”

We've finally launched our blog and we'd love you to read it!

A couple of times each week we’ll be giving you a glimpse into what goes on in our corner of the world. It’s not about tax, it’s not about accountancy – we send you enough info about all that already – it’s about odd little things that go on in the office. It will give you a chance to find out a bit more about us too, and the relationships we have with each other. It’s no soap opera (well not yet, anyway) but watch this space… www.nordens.co.uk/blog/

Copa Del Nordens - Is it all over or will Mark do a Keegan?

Mark Norden has extended his lead to a massive 305 points going into the final month of the season. Surely he will be the champion unless he has a Kevin Keegan moment and Darren Hahn tries some mind games!

What happened to goonerboy2 AKA Ben Goldstone? His early season form was excellent, but he has now dropped to ninth position and is now at risk of not finishing in the top ten. His recent form resembles Harry Redknapp. Has he been touted for the England job too and took his mind off the job in hand?

Third position looks as though it is between Joe Sumray and Yiota or shall I say Spurs vs Arsenal! Can Joe do it or will it be Yiota who makes the girls proud with a top three position???

Good to see Strider333 AKA David Brooks up to sixth position. At least there is one West Ham fan performing well. Looks like the payoffs for the Hammers unless we have a miracle and get promoted in second position on the final day in the championship. Fingers crossed!!!

Towards the bottom of the league and excluding the people that have obviously gave up it looks like we have a battle between HARDYS FC AKA Jack Goldstone and Tony Morrison. Can Jack manage to have a good last month and overtake Tony for the dizzy height of 28 position?

Good luck to everyone for the final month! Remember if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

Economic Insight April 2012

UK looks set to avoid recession, though the recovery will be choppy

This month will see the release of the initial estimate of economic growth in the first quarter of 2012, which will show whether or not the UK has avoided recession (for now). Overall, the latest economic data suggest the UK economy will expand at the start of the year, with the latest leading indicators pointing to growth in both the manufacturing and services sectors. An easing of concerns about an immediate financial crisis in the eurozone means that the shortterm economic outlook looks better now than at the start of the year.

Positive growth at the start of the year should take some pressure off the government over its handling of the economy, though the consensus view remains that the recovery will be choppy with considerable downside risks to growth. Moreover, not everyone is convinced that the UK has avoided a recession – despite encouraging signs from leading indicators, the Organisation for Economic Co-operation and Development (OECD) has recently forecast that the UK economy will contract by 0.1% in Q1 2012.

Economists almost unanimously believe the eurozone is in the midst of a recession at present, as fiscal austerity in countries with high levels of government debt constrains growth. In the last quarter of 2011 even the German economy contracted, illustrating the economic fragility engulfing the single currency area at present. This fragility will bear down on UK – and world – growth over the coming quarters.

Household spending power will struggle to grow …

The Office for National Statistics (ONS) has revised down its estimate of GDP growth in the final quarter of 2011. The latest data showed that GDP contracted at a quarter-on-quarter rate of 0.3% in Q4 2011, down from previous estimates of 0.2%. The latest data also showed a 0.2% decline in real (ie, inflation adjusted)household disposable incomes in the final quarter of 2011 compared with Q3 2011, meaning that household spending power continued to fall at the end of the year.

As Figure 1 shows, for the year as a whole real incomes fell by 1.2% in 2011, as household incomes failed to keep pace with the rising cost of living – inflation was almost double average earnings growth last year. Furthermore, real incomes aren’t expected to recover strongly any time soon, as unemployment rises and earnings growth remains weak. The Office for Budget Responsibility (OBR) expects real incomes to grow by just 0.2% and 0.5% in 2012 and 2013 respectively. This means that, even in 2013, real incomes will be some 0.7% below their 2009 peak.

Squeezed spending power points to a frail consumer environment in the short term, which will heavily bear down on the UK economic recovery, given that household consumption accounts for about 60% of national income.

… though personal allowance increase will provide respite for most workers

The March 2012 Budget announced a further increase in income tax-free personal allowances from next year – in April 2013, personal allowances will be increased to £9,205, reducing the amount of income tax paid by the typical UK household. This is an increase of £1,100 from its current level and a big step towards the government’s goal of raising the personal allowance to £10,000 by the
end of the current parliament. The increase in the 2013/14 allowance is expected to lift an additional 840,000 people out of income tax altogether.

Those on relatively high incomes will, however, see a higher proportion of their income subject to the 40% rate of income tax, which was something of a ‘stealth tax’ in the 2012 Budget – Figure 2 illustrates. The threshold at which income is subject to 40% income tax is being reduced from £42,475 this year to £41,450 from next April, dragging more earners into the higher tax bracket. Pensioners will also be hit by a planned freeze in agerelated allowances in the Budget – the so-called ‘granny tax’.

The highest earners in the country will enjoy a tax cut from next year, as the top rate of income tax for those earning more than £150,000 per year is reduced from 50% to 45%. This was a controversial announcement, given that the tax cut for top earners comes at a time when many households continue to struggle with the ongoing economic squeeze on living standards. Although new analysis by HM Revenue & Customs casts doubt on the notion that the 50% rate of income tax raised much tax revenue, the reduction in the top rate of income tax remains unpalatable among the electorate – a YouGov poll conducted the day after Budget day showed 55% of people opposed the decision to cut the 50% tax rate to 45%, with just 32% in support.

OBR sharply revises down investment forecasts

In its latest forecasts, the OBR sharply revised down its estimate of business investment growth this year – business investment is now expected to grow by 0.7% in 2012, down from 7.6% in the OBR’s November forecast. As Figure 3 shows, the latest growth forecast is broadly in line with that indicated by businesses in the last ICAEW/Grant Thornton Business Confidence Monitor (BCM); in the Q1 2012 BCM, businesses on average expected to increase capital investment by 0.9% over the next 12 months.

The latest view from the OBR suggests that an investmentled recovery will not emerge until next year at the earliest. Business sentiment remains weak while lending to small and medium sized businesses continues to contract according to the latest Bank of England Trends in Lending publication. Until confidence among business improves and access to credit becomes less tight, investment growth is likely to remain constrained.

Despite the sharp downward revision in business investment growth this year, the OBR still expects very strong growth in the medium term; business investment is expected to rise by nearly 9% in 2013 and by over 10% in both 2015 and 2016. This is well in excess of average growth in the years before the recession; between 2000 and 2007, business investment growth averaged just 3.3% per year. Against a backdrop of prolonged fiscal austerity and economic weakness in the UK, it is unclear why business investment will grow as strongly as the OBR anticipates.

Petrol prices hit a record high

With global oil prices remaining stubbornly elevated – brent crude oil continues to trade at over $120 per barrel – the price of petrol in the UK has risen in recent weeks to reach a record high, as shown in Figure 4 below.

Panic buying of petrol towards the end of March – following government announcements that motorists should fill up their cars in preparation for a strike among fuel tanker drivers – has pushed up the price of petrol still further, as petrol stations ran out of cheaper stocks of fuel. The cost of filling up a family car with a 70-litre tank now stands at close to £100 – a significant squeeze on household budgets. And petrol prices can be expected to remain elevated or rise still further in the summer, as a planned three-pence-per-litre fuel duty rise goes ahead in August, despite speculation that the Chancellor would postpone the rise in last month’s Budget.

High transport prices risk keeping inflation in the UK elevated for longer, which will hit household budgets as well as making for a challenging policy environment for the Bank of England, which is meant to keep annual consumer price inflation at close to 2.0%. Inflation currently stands comfortably above this, at 3.4% on the latest (February) data.

Controversial Budget will dominate local election debates

While most commentators believe the UK economy has avoided recession at the start of 2012, few believe that economic growth will be by any means robust – the road to recovery remains choppy, with substantial downside risks that could derail the economy. High transport costs mean that inflation could remain elevated for some time, while ongoing instability in the eurozone threatens to significantly bear down on UK and world economic growth.

The measures announced in last month’s Budget remain subject to controversy. Although the planned increase in personal allowances next year will boost the incomes of most workers, some will be impacted by the reduction in the 40% income tax threshold, while pensioners will be hit by a freeze in age-related allowances. The reduction in the top rate of income tax from 50% to 45% from next year has also prompted cries that the recent Budget benefits the richest members of society at the expense of others – a likely key theme in the upcoming May 2012 local elections.

Plumber Jailed For Tax Fraud

A plumber based in the West Midlands was jailed for 12 months on 27th March 2012 for tax fraud. He had traded for 10 years as a self employed plumber and was found to have evaded £91000 of income tax and national insurance.

This reinforces the hard-line message which HMRC has been sending out over the last 2 years, that deliberate tax evasion will not be tolerated and that prosecutions will increase significantly in future in an effort to encourage offenders to come forward and make a disclosure of irregularities to HMRC.

There have been a number of special campaigns over the last few years where HMRC has focussed attention on certain sectors, and plumbers were given the opportunity to come forward with a disclosure of irregularities in a special campaign launched by HMRC in 2011. It appears that 9 more plumbers have been arrested and investigations are ongoing with further prosecutions likely.

Adrian Farley, Assistant Director of Criminal Investigation for HMRC said of this successful prosecution:

“Today’s sentencing is a result of our drive to clamp down on tax evasion committed specifically by plumbers, gas fitters, heating engineers, electricians and others who fail to declare their earnings and pay the right tax. I would ask anyone with information about people who may be involved in tax evasion to contact the Tax Evasion Hotline.”

Regardless of whether or not a particular sector has been targeted, it is clear that anyone who has deliberately evaded tax in the past, or who is so doing at the present, is extremely vulnerable to attack by HMRC, with a large influx of hungry, newly trained investigators actively seeking worthwhile cases.

Anyone who makes a voluntary disclosure to HMRC will not as a rule be prosecuted provided the disclosure is full and complete and penalties will generally be no more than 10-20% of the evaded tax, whereas penalties in cases where no disclosure is volunteered could be 100% in extreme cases.

Perhaps one of the more surprising elements of this particular case is the relatively modest amount of tax involved. £90,000 is not extraordinarily high, and the fact that the case was prosecuted shows how HMRC focus has shifted from quantum to behaviour. Clearly HMRC means business with its new, hard-line approach.

Copa Del Nordens - Noddy regains lead, while Dazza piles on the pressure with a great month!

Noddy AKA Mark Norden is back to the top of the Nordens talkSPORT predictor mini league. People who know him better will know why he has the nick name of Noddy. Does he have a likeness to the children's TV character or is there another reason I ask???

Darren Hahn storms up to third position and should now be contending for the title towards the end of the season. Unfortunately this is the complete opposite to his clubs Spurs. Looks as though it's going to be another year of hurt with Arsenal above them! Can it still change again or should they just make sure they don't lose forth to Chelsea?

ABJ United AKA Steve Goldstone hit the top ten. As does Strider333 AKA David Brooks. David - I only wish that the mighty Hammers had the same recent form as you! Is big Sam going to restore order at the Boleyn Ground or is he going to continue to ruin the famous style of play??? Time will tell!

And Now Wee AKA Jonny Deacon does well in a week that was hard to predict with 95 points. Just a shame this week also saw his club get hammered by Rangers, though I'm sure a smile will return to his face when the Scottish title is picked up any week now!

We can now say hello to Kirsty Willis on the first page of mini league. Not sure who she knocked down to the second page??? ;)

Remember if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

HMRC will address the P35 penalty controversy

An announcement from HMRC and a success for ICAEW Tax Faculty

HMRC today (19 March 2012) announced significant improvements to the P35 Employers end of year return process.

The changes represent the first fruit of the joint initiative between HMRC, ICAEW and other tax professional bodies and charities launched late last year. See our December 2011 announcement on the HMRC Joint Initiative on Service Delivery.

Penalties for late filed P35s accrue monthly but last year the first many employers knew they had incurred a fine was when they received a letter demanding four months accumulated penalties.

Other employers who thought they had filed returns electronically later discovered that they had only submitted a “test” return and that they had incurred a penalty as a result.

These problems received wide publicity and were much criticised by ICAEW members and by employers.

The new measures include more timely reminders ahead of the filing deadline on 19 May, better guidance, clearer messages to distinguish test from live returns and - most importantly - a letter which will reach employers who have not filed on time in early June so that they have an opportunity to file and cap the penalty at the one month rather than four months’ level.

Taken together these measures should significantly reduce the number of employers who face accumulating penalties and indeed any penalties at all.

Welcoming the announcement Frank Haskew, Head of the Tax Faculty, said ‘We have been working very closely with HMRC to deliver this result. It shows that the joint initiative on improving service delivery is working and that HMRC is prepared to listen. This will be very welcome news to employers who faced fines in 2011 and who will not have been relishing the prospect of a re-run in 2012. ‘

This is one of a number of areas the joint project is tackling and more than a dozen specific targets have been set for delivery throughout the current year.

The 19 March 2012 statement from HMRC is reproduced below:

‘The joint initiative between HM Revenue & Customs (HMRC), the professional bodies and tax charities, launched in late 2011, set a number of service objectives for delivery during 2012.

One of these was to work together to address concerns about the delay in informing employers that their PAYE end-of-year returns are late, and therefore subject to penalties.

The background to this issue is that where employers do not file their annual P35 return by 19 May, they incur penalties of £100 per 50 (or fewer) employees for every month (or part month) that their return is late.

In some cases, employers were unaware their returns were late until they received a first penalty letter in September covering four months’ worth of accrued penalties.

We can now announce a number of agreed measures to deal with this problem.

To help employers comply with their obligations, HMRC will:

· Change the date when we issue the “Notification to complete form P35 Employer Annual Return 2011/12” from mid-February to mid-March 2012, so that employers will receive it much nearer to the end of the tax year.

· From 28 April 2012, where we believe a 2011/12 P35 remains outstanding, we will issue an “Employer Annual Return Reminder”.

· From 31 May 2012, we will introduce a “P35 Interim Penalty Letter” which will be issued over a five-day period, so that it reaches employers within a month of the filing deadline. The letter will state that the employer has incurred a late return penalty and explain what to do to avoid it increasing. We have worked together with the professional bodies on the content of this letter and it has been tested on employers and payroll agents to make it clear and employer -focused.

· Improve the online guidance for submitting P35s online, including specific advice about the test-in-live service to reduce the number of employers who believe their test submission is the live submission. The on-screen messages within the HMRC online product will also make it much clearer that even when a successful test transmission has been made, a live transmission is still required. We would encourage those using commercial payroll software (where the text of test/ live messages may vary) to sign up for HMRC’s email alert facility to help them avoid this problem.

· Instruct Employer Helpline staff to tell employers about filing dates when setting up new employer schemes, to help them avoid a penalty.

· For next year, improve the information on the P35 and the reminders to include a warning that the first penalty notice will cover 4 months.

Taken together, these measures should help employers to avoid incurring unnecessary penalties and significantly reduce the number of cases where penalties in excess of £100 are charged.’

Stand up and be counted in response to an IRRELEVANT Budget

Nordens have today launched a new growth initiative to help local businesses stand up and be counted in restoring prosperity to the region.

Commenting on the Budget and the new initiative Nordens name partner Mark Norden said that:

- “Unfortunately, despite the hype, this Budget is largely an irrelevance. That’s not to say it doesn’t contain its share of headline grabbing announcements – it certainly does! But welcome as some of those are, the reality is that we are facing an economic growth crisis. And while 10% of the solution to that crisis may come from Budgets, for the other 90% we must look to the region’s businesses.

- The simple truth is that it is businesses and not Budgets that offer us the best hope of putting things right by replacing the jobs, income and wealth lost, and generating the extra taxes needed to sort out public finances. Budget measures such as the cut in corporation tax will only ever help a bit. It is how businesses respond that really matters, since they are the real engine of growth. So for the good of us all the region’s job and wealth creating businesses must now stand up and be counted as a matter of the utmost urgency.

- For business owners the sting in the tail from the Budget is the fact that the changes announced today look likely to give the taxman new powers to, in the words of one entrepreneur today, “bleed them dry”. The devil will of course be in the detail. But it does seem that many taxpayers will now face a more penal and less accommodating tax system, with many reliefs and legitimate forms of tax planning no longer available to them.

- Astonishingly, the Chancellor even admitted that he would be taking “five times more money each and every year from the wealthiest”. And, worryingly, many of those he is taking five times more from are the very same business leaders we need on our side.

- So, to ensure that this much tougher tax regime does not discourage local businesses from becoming the engines of growth that society desperately needs them to be, we are today launching a 2012 Tax Minimisation Review initiative. Its aim is simple: to encourage and support growth by making sure that no-one pays a single penny more than their fair share of tax. And thanks to our sponsorship it is both free and freely available to any business owner who wants to create a better future.”

Readers who do not want to pay a single penny more business and personal tax than they need to can claim a free 2012 Tax Minimisation Review by calling Mark Norden at Nordens on 020 8530 0720.

Getting young fashion businesses off the ground

This week Mark is running a series of training workshops at the Centre for Fashion Enterprise, part of the London College of Fashion. Through our extensive experience in the fashion industry, we understand the aspirations of emerging design businesses, the realistic opportunities available to them and the need for them to be commercially aware. Wednesday’s sessions aimed to empower these fledgling designer labels with the tools to develop their own business infrastructure without stress, leaving them free to run with their creativity.

Offering invaluable advice on all aspects of accounting and strategic business planning, Mark mentors the designers from the drawing board through to successful sales.

Bank lending scheme targets smaller businesses

A £20bn government scheme to try to boost bank lending to small and medium-sized enterprises (SMEs) has been launched by the chancellor.

Under the National Loan Guarantee Scheme (NLGS), such businesses will be able to access loans with interest rates one percentage point lower than those available outside the initiative.

Barclays, Santander, Lloyds and Royal Bank of Scotland have so far signed up.

Firms with an annual turnover of up to £50m will be able to participate.

The discounted loans are being made available because the government is to guarantee £20bn of the banks' own borrowing, thereby allowing the lenders to borrow more cheaply than they normally do.

The banks then pass on this cheaper funding to SMEs in the form of lower interest rates.

Lloyds said that as well as allowing it to offer customers cheaper loans, the scheme had the potential to "rekindle confidence, stimulate demand and encourage investment".

'No panacea'

Chancellor George Osborne said: "The government promised to help small businesses get access to lower interest rates. Today we deliver on that promise with a nationwide scheme."

There is a big paradox around credit easing, which some will find amusing and some will find painful”

In the first tranche of loans under NLGS, about £5bn is being made available.

John Walker, national chairman of the Federation of Small Businesses (FSB), said: "Recent FSB research indicated that around 60% of small firms believed that credit is unaffordable and so this scheme should help reduce that burden.

"What we now need to see is clear communication to small firms and bank branch staff so that everyone is aware of it, and how it will work, so that businesses can benefit from it."

The British Chambers of Commerce (BCC) has given the credit easing scheme a measured welcome.

John Longworth, BCC director general, said: "The current economic challenges mean that the government must look at new and innovative ways of providing credit to viable firms.

"While credit easing is a step in the right direction, it is not a panacea for all the problems faced by businesses trying to access finance.
"The National Loan Guarantee Scheme will make some loans more affordable. But it will not help the smaller, younger, and high-growth firms that have trouble getting credit in the first place."

Non-participants

Not all banks have signed up to the scheme, with HSBC being a notable omission.

HSBC said in a statement that while it "supports the aims of the government's credit easing programme", it was "unable to participate on commercially viable terms".

It explained that this was because unlike many other banks, it was predominantly funded by customer deposits, and therefore had "little need" to borrow funds from the wholesale markets.

It is this borrowing from the wholesale markets that the government is to guarantee under NLGS.

The Co-operative Bank also said that it was not participating in the scheme as it would be more expensive to obtain funds through NLGS than via its current methodology.

This would require additional costs to be passed on to customers, the bank said.

E-traders face tax investigations by HMRC

People who trade on the internet are being targeted in HM Revenue and Customs' latest focus on unpaid tax.

Online marketplace traders must come forward to admit any unpaid tax or face harsher penalties.

The clampdown follows other campaigns targeting doctors, plumbers, dentists and tutors.

One taxation trade body has said that the UK tax authority should have a general campaign on unpaid tax, rather than hitting individual sectors.

Deadlines

E-traders who have not paid tax need to contact HMRC by 14 June to tell them they intend to come clean. The amounts to be paid should then be disclosed by 14 September.

Anyone doing so would either avoid a fine or be ordered to pay a penalty of no more than 10% of the tax due.

Traders subsequently found to have dodged paying tax will face fines of up to 100% of the tax owed, or face a criminal investigation.

Tax campaigns by HMRC

- In 2012, campaigns to chase unpaid tax have already been conducted by HMRC into electricians, tutors and coaches
- Previous targets included plumbers, medics, offshore bank account holders and businesses not registered for VAT
- Next in line are the home maintenance sector and direct sellers

"This campaign is aimed at people using online marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed," said Marian Wilson, head of HMRC campaigns.

"Those who only sell a few items and who are not traders are unlikely to be liable to pay tax on what they sell and will not be targeted by this campaign."

'Too narrow'

Those who traded online with the aim of making a profit would be in the firing line, according to Paul Harrison, tax partner at accountants KPMG.

"The reality is that only a small percentage of people using these sites will be classed as trading by HMRC, but the tax they owe could be significant," he said.

The Chartered Institute of Taxation (CIOT) said that this was the third targeted campaign of the year so far by HMRC and should be made into a general appeal for people to confess about unpaid tax.

"There is a danger that the conveyor belt of disclosure facilities aimed at different groups will make others who wish to get their tax arrears in order wonder whether they should wait for 'their' opportunity," said Gary Ashford, from the CIOT.

"There is a risk that HMRC are missing the big picture. Rather than continuing to launch different targeted campaigns every few weeks, HMRC should focus their efforts on a big national campaign open to all taxpayers whose tax affairs are not up to date."

HMRC Target Fashion Companies

ARE YOU PAYING YOUR INTERNS?

It’s a multimillion pound enterprise, churning out shows watched by millions and helping to secure Simon Cowell an estimated £200m fortune. But X Factor has come under fire from the taxman for failing to pay even the minimum wage to intern working as stylist for the shows.

Staff employed as fashion assistants on the programme were working full-time for three-month stints, often over long hours, on an expenses-only basis. A spokesperson for show told graduate website Graduate Fog the set-up was a ‘totally normal situation’ in the industry. ‘They get great experience and are now really ready to be employed as fashion assistants, with a year’s worth of experience in three months and a great reference.

It may be the norm for budding fashionistas to work for free to get that all-important foot in the door, but companies that take on unpaid workers or pay them less than the National Minimum Wage (NMW) during their internships are probably breaking the law.

The TUC says that as many as one in three interns are being exploited through unpaid wok, despite qualifying for the minimum wage. It estimates as many as 100,000 young people will work as unpaid interns this year.

In December 2011, HM Revenue & Customs said fashion companies would be the latest target of its campaign to end the exploitation of interns. HMRC has written to a number of fashion houses and designer labels warning them about non-payment of NMW. The taxman has also convened a 35-person taskforce to undertake intelligence-led enforcement and make unannounced inspections of businesses suspected of using interns as workers.

Michelle Wyer, HMRC assistant director for National Minimum Wage, says non-payment of the NMW is not an option: ‘These letters give fashion houses plenty of warning that they are under scrutiny. If they are not playing by the rules, now is the time to put things right. Our message is clear: don’t wait for us to come knocking on your door; put things right now and avoid a penalty and possible prosecution.’

Those found to be in breach of the rules will have to repay arrears of the NMW to workers together with penalties of up to £5,000. HMRC can require employers to repay arrears dating back six years.

HMRC can also take cases to a tribunal as happened in the case of Nicola Vetta, a former art department assistant at film production company London Dreams Motion Pictures (Vetta v London Dreams Motion Pictures Ltd ET/2703377/08). Vetta was taken on by the company in July 2008 on an expenses only basis for its production Coulda Woulda Shoulda. Importantly, the tribunal’s decision confirms that workers cannot be denied their statutory rights to payment even where they respond to advertisements offering work on an expenses-only basis.

Any intern who is undertaking work-related tasks, with set hours and duty to turn up and do the work, is probably defined in law as a ‘worker’ and, as such, is eligible for the minimum wage and paid holiday rights. Any internship that does not simply involve observation and work shadowing should qualify for payment of at least £6.08 an hour if age 21 or over.

There are exemptions; interns employed as voluntary workers working in the charity sector may be exempt from the NMW, as are students undertaking work experience as part of full-time higher education courses.

HMRC has mistakenly sent out 17,000 final reminder letters due to computer error

The department apologised for the problem, thought to be affecting those who made payments between December 14th to 16th, and has cancelled penalties sent within the correspondence.

An HMRC Working Together co-ordinator told accountingweb.co.uk about why the situation has occurred.

"This problem has arisen because payments received on the 14 to 16th December, although credited to the correct customer accounts, were not allocated to outstanding charges until after the reminders had been selected for issue," they told the news provider.

Meanwhile, HMRC announced last week that taxpayers will have until March 31st to appeal against self assessment penalty notices, instead of the usual 30 days, because telephone lines are expected to be busy in the next few weeks.

Harold Rosenbaum takes on Dr X of Evil at Hoover Dam

This month Harold Rosenbaum takes on Dr X of Evil at Hoover dam. You will also find out the true identity of Dr X of Evil. The excitement is overwhelming hear at Nordens. View Harold Rosenbaum Chartered Accountant Extreme Part 5.

Yiota goes top in the Copa Del Nordens football predictor league

Step aside Arsene Wenger your time is up! It's time for a new young female manager under the name of Yiota Koshias! Topping the Copa Del Nordens will surely put her in pole position to take over from the under pressure Arsenal boss.

Arsene just because you had a brief bit of success against Spurs, it doesn't give you the right to another 7 years with no trophies! Spurs fans… It will be squeaky bum time soon if Arsenal keep closing the gap in the Premiership. Surely this is the year for Spurs to finish above Arsenal.

Darren Hahn has had a great month shooting up to 5th positions with solid weekly scoring. Lost a few points on the London derby though!

Fulham fan Lisa Gold has also had a superb run of form taking up up to 6th position. If her form continues the top three maybe in trouble next month.

Not so good month for Peter Farrelly. European football maybe slipping from his grasp unless he can turn around this poor form.

Footyguru AKA Stewart Reed has had steady form in mid-table. Can he push towards the top ten before the end of the season? Time will tell!

Near the bottom of the league we find RenLovesChocolate. You may love chocolate, but you obviously don't love football as you keep forgetting to submit your football predictions!!! Ivor Crandon and Paul Williams have obviously gave up too!

I feel a bit sorry for Howtaxi AKA Howard Cravitz as it looks as though he is really trying, but just not very good! I admire your persistence. Maybe your the ideal character for the Wolves job that nobody wants. Can't imagine Spurs knocking at your door though when Harry leaves for the England job!

Remember if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

HMRC now accepts phones are not computers after all: tax repayments are possible

HMRC now accepts that smartphones such as i phones and Blackberrys satisfy the conditions necessary to qualify as 'mobile phones'. This change was announced in Revenue & Customs Brief 02/12 issued on 20 February 2012.

An employer can provide an employee with a single mobile phone for private use without creating a taxable benefit, s 319, ITEPA 2003. However, this exemption does not apply to computers. So are i phones and Blackberrys mobile phones or computers?

Since the current rules came in a few years ago, HMRC has held the view that i phones and Blackberrys are personal digital assistants (PDAs) so like computers rather than phones. Until now, this has meant that private use of these devices could lead to a taxable benefit. In fact, many employers provide i phones and Blackberrys relying on the separate exemption in s 316, ITEPA 2003. That is, the device is provided to enable the employee to perform the duties of the job and any private use is insignificant.

HMRC now accepts that smartphones satisfy the conditions to qualify as 'mobile phones'. Note that tablet and laptop computers are still ‘computers’ and not ‘phones’.

Tax repayment claims

Employers who have provided a smartphone in 2011/12, should treat it in the same way as any other mobile phone. So only include a benefit on form P11D for any mobile phone/smartphone that is either

- over and above the first one provided to the employee, or
- provided to a member of the employee’s family or household rather than to the employee personally.

Employers who provided a smartphone between 2007/08 and 2010/11 can seek repayment of the Class 1A NICs paid on the benefit of the smartphone.

You can do this by writing to HMRC with the following information for the tax years affected:

- the names and National Insurance numbers of the affected employees
- for each affected employee, confirmation of the smartphone benefit reported on form P11D
- details of the make and model of smartphone
- the calculation of the benefit
- confirmation of where this benefit was included in form P11D
- the amount of Class 1A NICs payable as shown on the original P11D(b)
- the revised amount of Class 1A NICs now payable after deducting the Class 1A NICs originally due on smartphones.

You are asked to include a brief covering letter, with the heading 'Employment income: mobile phones exemption - smartphones' and send the information to:

Customer Operations Employer Office
BP4009
Chillingham House
Benton Park View
Newcastle Upon Tyne
NE98 1ZZ

HMRC will also use this information to identify any repayments of income tax that may be due to employees.

In order that HMRC can act on this information and make any Income Tax repayments to employees for 2007/2008, you should provide the information in respect of 2007/2008 to HMRC by 31 July 2012.

Nordens announce SME Eurofinance as a new business partner

We have teamed up with SME Eurofinance, a leading independent financial institution with a network throughout the UK. So if you need funding for assets or cash flow, please speak to your client manager to find out how we can help you gain affordable finance to suit your needs.

Below is a list of services that SME Euro Finance offer:

• Asset Finance
• Business Protection Healthcare
• Car Funding Solutions
• Cash Flow Finance
• Commercial Vehicles
• Credit Underwriting
• Education Finance
• Healthcare
• Hospitality
• Investment Opportunities Healthcare

• Manufacturing & Production
• Premises & Facilities Funding
• Professions Finance
• Public Sector Finance
• Sales Aid Finance Solutions
• Soho Media Finance Healthcare
• Sports & Leisure Healthcare
• Technology Finance
• Waste Recycling

• Download the Nordens / SME Euro Finance Presentation (PDF)

Visit the SME Euro Finance website

50p tax rate increases tax planning

Despite the governments desire to increase tax revenues from the controversial 50p tax rate for higher earners, it now looks like it may be having the opposite effect and depressing revenues.

While corporation tax leapt by 9.3% in January compared to the same month last year, total income tax payments only nudged up 2.4%.

Recent HMRC figures appear to provide evidence that the wealthy are taking steps to avoid paying the tax. JanuaryÂ’s tax take for those submitting self-assessment tax returns, was around £10bn, £500m below the same month in 2011.

Francesca Lagerberg, head of tax policy at Grant Thornton, said: 'History has shown that higher tax rates often fail to deliver quite as much money as expected. This is because it changes behaviour.

'For example, many business owners may well have accelerated dividend payments prior to the tax change to get the old, lower rate and may wait longer to pay a large dividend again. Or people may revisit how they are paid and compare the value of shares in a business rather than higher core pay.

The Treasury has indicated that figures for the 50% tax take will be published within three months, later than initially expected.

Richard Mannion, national tax director at Smith & Williamson said: 'We understood that the stats would be produced by the ONS and a paper would be published by the Treasury. They will already be able to see from the tax returns how many people paid 50% tax. I personally would have expected that they could have checked this quite easily.'

The latest tax returns will, however, reflect the impact financial crisis. 'In the 2010/11 returns people would have been impacted by the economic crisis and there was also a lot of tax planning going on.

'All of history shows that high taxes cut the tax take. But there is a political momentum behind this to make the majority feel better about the bankers' bonuses, but it is a temporary measure. I would be very surprised to see that it had been a complete disaster.'

Although the 50p tax is seen as a temporary measure, which is likely to be removed before the 2015 election, there are negative impacts on growth.

Stephen Herring, senior tax partner at BDO, said: 'It is clear that both entrepreneurs and foreign executives are more reluctant to be based in the UK because of the 50p income tax rate. Good progress is being made on reducing the corporation tax rate (hopefully to 20% or below) but this is undermined, like it or not, by the excessive top tax rate which is uncompetitive with competing economies looking to secure foreign direct investment.'

The January tax take stood at £10.35bn, a drop of £509m. The 50p tax rate was introduced by Labour in April 2010 for those earning over £150,000.

PAYE dodgers beware - HMRC can ask problem employers for a security

HMRC can ask problem employers for a security

From 6 April 2012 HMRC will be able to ask employers to pay a security where there is serious risk that they won’t pay over their PAYE tax deductions or Class 1 National Insurance contributions (NICs).

This is an extension of a power that has already been used for VAT, insurance premium tax and environmental taxes and is not aimed at employers who have genuine payment difficulties. It is aimed at employers who deliberately try to defraud the government. In HMRC’s terms, ‘These employers:

- deliberately choose not to pay
- engage in phoenixism - this is where a business evades tax by becoming insolvent and then sets up a new company the next day to continue trading
- have no qualms about building up large PAYE or NICs debts, including penalties
- do not respond to HMRC’s attempts to contact them.’

The required security will usually be either a cash deposit from the business or director - held by HMRC or paid into a joint HMRC/taxpayer bank account - or a bond from an approved financial institution which is payable on demand.

Businesses that fail to provide a security face a fine of up to £5,000, which will be enforceable by the courts.

Economic Insight February 2012

A monthly briefing from the ICAEW's economic advisers.

Businesses cautious against gloomy economic backdrop

The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) shows that business confidence remains firmly in negative territory at the start of 2012 with little movement from the previous quarter. The BCM Confidence Index rose slightly to -9.3 in Q1 2012, similar to the -9.7 result in Q4 2011.

The Confidence Index is a leading indicator for growth; it correctly predicted the end of the recession in 2009, provided early warning signs in 2007–08 and pointed towards economic contraction in Q4 2011. This quarter’s Confidence Index suggests the UK economy could already be in the midst of recession, defined as two consecutive quarters of declining gross domestic product (GDP).

BCM this quarter also shows that turnover and profit growth expectations remain well below levels seen before the financial crisis. Businesses also appear to be reining in plans for capital investment while employment growth expectations remain weak – suggesting that firms are reluctant to invest in the future. Overall, BCM points towards a long, hard road to recovery for the UK economy – something which businesses, politicians and policy-makers slowly seem to be coming to terms with.

UK economy contracts in final quarter of 2011

The Office for National Statistics’ (ONS) preliminary estimate of GDP in the UK for Q4 2011 showed the economy contracting at a quarter-on-quarter rate of 0.2%, reigniting fears that the UK could be heading for a double-dip recession. Sector data showed output in the production industries fell at a quarter-on-quarter rate of 1.2%. Output in the construction sector decreased by 0.5%, while in the services sector output was unchanged compared with Q3 2011.

An economy is technically in recession when GDP falls for two consecutive quarters, and the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) suggests that this may be the case; the BCM Confidence Index points towards a further quarterly contraction of 0.2% in the economy in Q1 2012. But, even if the UK economy does not contract further at the start of this year, growth is likely to remain lacklustre in the short term as weak consumer spending and government austerity measures bear down on the economy.

The financial crisis and subsequent recession has had a profound impact on the UK economy. Even on the latest data, GDP is still some 3.8% below its pre-recession peak in Q1 2008, as illustrated in figure 1. And GDP is even further below where it would be if the economy had continued growing at its long-term trend rate from 2008 onwards, rather than the UK entering recession followed by sluggish recovery. Indeed, if trend growth had continued, output in Q4 2011 would be a staggering 14.5% higher than it actually was – illustrating the size of the ‘output gap’ created by the financial crisis.

BCM points to slowdown in capital investment growth

With consumers seeing their spending power squeezed by rising unemployment and weak earnings growth, and the government embarking on an ambitious programme of spending cuts, business investment – along with exports – is expected to be a key driver of growth in the UK economy over the coming years. Indeed, as figure 2 shows, the Office for Budget Responsibility (OBR) expects business investment to grow strongly especially in the outer years of its forecasting horizon. In 2015, business investment is expected to grow by 13% and in 2016 it is expected to grow by 12%, in real terms. Even this year, the OBR expects business investment to grow at a relatively robust rate of about 8%.

Many analysts argue that these projections for investment are far too bullish; with a relatively gloomy economic backdrop and credit conditions still tight compared with before the financial crisis, it is unclear how and why businesses are going to expand investment spending so rapidly.

This quarter’s ICAEW/Grant Thornton UK Business Confidence Monitor suggests that these concerns about the OBR’s forecasts are well founded. Businesses expect capital investment to grow by just 0.9% over the next 12 months and capital investment growth expectations have now fallen for three consecutive quarters, indicating that businesses are becoming increasingly reluctant to invest in the future, probably related to cautiousness over the economic outlook. Overall, real-terms business investment growth of 8% this year is highly unlikely.

Unemployment continues to rise

Data from the Office for National Statistics (ONS) showed that the UK unemployment rate increased to 8.4% for the three months to November 2011, a rise of 0.3 percentage points on the quarter. The unemployment rate is now at its highest level since the three months to November 1995.

The claimant count for December rose by 1,200 from November’s total, representing a 0.1% rise from the previous month, bringing the total number of claimants to just under 1.6m, up 9.8% on a year earlier. A closer look at the claimant count data reveals more worrying trends for young people, with long-term unemployment continuing to rise sharply. Over the last six months, the number of 18–24 year olds claiming Jobseekers’ Allowance for over a year has grown by an average of 14% every month, representing a doubling of the total from July 2011. This is illustrated in figure 3.

The latest official data highlights the fragile state of the UK labour market, which is quite likely to weaken over the coming months. Slow economic growth and a realisation among businesses that economic performance is likely to remain sluggish in the medium term both seem likely to cause unemployment to rise further this year. Many economists have pointed out that unemployment rose by less than expected during the recession, suggesting that UK employers have held on to overlarge, skilled workforces in the expectation that they would avoid rehiring costs when the economy returned to solid growth. Now that a return to solid growth anytime soon seems highly unlikely, businesses may start shedding ‘surplus’ staff, which will also push up unemployment.

Emerging contrast in US and European labour markets

Further encouraging news on the health of the US economy came this month as employment levels saw a strong boost and the unemployment rate fell back to its lowest since February 2009.

Data released by the US Bureau of Labor Statistics (BLS) showed that non-farm employment rose by 243,000 in January, compared to an increase of 203,000 in December. This is particularly good news compared to market expectations of an increase of 150,000 and the estimates of ADP, a payroll processor, of 170,000. The unemployment rate fell back to 8.3% in January, the fifth consecutive month of improvements. The last time that the unemployment rate was this low was almost three years ago, before it had started to rise in earnest following the recession of 2008–09. These latest figures suggest that peak unemployment following the downturn is well past and the US economic recovery may be gaining a stronger foothold.

In the EU, by contrast, unemployment has risen in recent months, as shown in figure 4. The EU unemployment rate was 9.9% in December 2011, unchanged from November but up from 9.5% in January 2011. With the eurozone looking set to enter recession this year, unemployment is likely to rise still further across Europe, meaning that a divergence in labour market trends between the US and EU is likely to emerge over the coming months.

Overall, the US economy looks set to significantly outperform the EU economy this year, though it too remains exposed to a global economic slowdown. These economies are important to the UK; exports of goods and services to the EU accounted for 48% of total exports in 2010, while exports to the US accounted for a further 17% of exports. Any slowdown in these economies would seriously derail the prospect of an export-led recovery in the UK.

Short-term economic outlook remains weak

The short-term economic outlook for the UK remains weak. Consumers in 2012 are unlikely to see their living standards improve significantly, as rising unemployment and weak earnings growth impact on household spending power. In addition, business investment is unlikely to be buoyant while confidence in economic prospects remains fragile – as illustrated in this quarter’s ICAEW/Grant Thornton UK Business Confidence Monitor. Government spending cuts will weigh down on the economy, while the eurozone sovereign debt crisis is likely to dampen export demand.

Bank of England Governor Sir Mervyn King recently described the path to recovery as ‘arduous, long and uneven’. Indeed, it is difficult to see where significant, consistent growth will come from in the near term. Businesses appear to be preparing themselves for a long, hard road to economic recovery.

Watch out for new HMRC fines

THE ICAEW is warning accountants to take heed of the taxman's new late-filing penalties that will be introduced this week.

Last year HMRC estimated £2bn of tax was at stake from late filers who missed the 31 January deadline.

This year that deadline was extended to 3 February after HMRC staff went on strike on deadline day.

Last year, 86% of the 10.3m self-assessment taxpayers filed by the January deadline. However, of the 14% that were late in filing, 11% (about 1.1m people) still hadn't submitted their return six months later.

The new penalties are a £100 fine for missing the deadline (extended to 3 February this year); £10 a day from 1 May for 90 days a maximum of £900; £300 on 1 August or 5% of tax due - whichever is more costly; and the same penalty of £300 or 5% tax on 1 February 2013.

Fines are no longer capped at tax owed so taxpayers could face fines of up to £1,600 even if they owe nothing or are due a refund from HMRC.

HMRC announces temporary halt to Business Record Checks (BRC's) for the present

HMRC announced on the 3rd February that it is to postpone making any new business record check appointments until a revamped approach outlined in a recent report is launched early in the 2012/13 financial year.

The report following a review of BRC's carried out to date, which included discussions of the pilot programme with trade and professional bodies' representatives, found clear evidence that it is effective in improving record-keeping practices in smaller businesses. However, it recommended that the checks are more targeted in the future, linking to available education and support.

The decision to stop any further appointments being made will allow further consultation with representative bodies on the implementation of the recommendations in the review and on some details of the new approach.

In the interim, HMRC will only undertake visits already booked, as well as follow-up visits to businesses that have already been identified as having seriously inadequate statutory records.

The pilot programme of BRC's began in April last year and involved checks by HMRC on the standard of small and medium-sized enterprises' statutory business records.

HMRC have stated that up until 4th January 2012 that 2,437 business record checks had been carried out. These found that 28 per cent of those businesses visited had some issue with their record keeping, and an additional 11 per cent had issues serious enough to warrant a follow-up visit.

In making the announcement HMRC's Director of Local Compliance, Richard Summersgill, said:

"Four out of ten businesses had an issue with their business records, and of those that required a follow-up visit, we found that some 90 per cent subsequently improved their record-keeping.

However, after reviewing the pilot programme and listening to the views of businesses and representative bodies, we acknowledge the need for a fresh approach to business record checks.

The BRC visits provide benefits for the businesses and HMRC. We want businesses to pay the right amount of tax at the right time, avoiding potential interest and penalties. The checks also give greater assurance to HMRC when the business submits its tax returns."

The review states that when the programme re-starts, businesses considered to be at a higher risk of keeping inadequate records will initially be contacted by HMRC, by phone or letter, and asked about their business records. From this contact HMRC will consider whether the customer is using appropriate record-keeping systems, and identify those businesses that require a BRC visit. This initial contact will help to target those businesses that really need the help provided by a BRC visit and will reduce any burden on already compliant businesses.

If an initial visit finds a business's statutory records to be seriously inadequate, a follow-up visit will be arranged, giving them a reasonable time to get their records in order. If the records have still not improved and still demonstrate serious inadequacies, the visiting officer may refer the business for a full tax return check. If that check uncovers an incorrect return, and the inaccuracies are linked back to poor records, a record- keeping penalty would be issued.

We will keep you updated on any further developments as they happen.

Would you like cheaper more tax effective life cover?

There is a new product available specifically designed for small limited companies called "A RELEVANT LIFE PLAN"

This is suitable for limited companies who have 1-20 employees including directors.

What is a Relevant Life Plan?
A Relevant Life Plan is an individual ‘death in service’ life policy. It is a term assurance plan designed to pay a lump sum benefit if the person covered dies or is diagnosed with a terminal illness during their employment, within the term of the plan.

Relevant Life Plan’s are similar to most other types of life cover but can be a very useful tax efficient alternative providing valuable death in service benefits for you and your employees.

In most cases Relevant Life Plan premiums and paid benefits qualify for full Income Tax relief, National Insurance relief and Corporation Tax relief.

What can you save?
A Relevant Life Plan could result in savings for a business when compared with a typical life policy. Premiums could be reduced by up to 49% if you’re a higher rate taxpayer and up to 40% for a basic rate taxpayer.

Contact Mark at Nordens and we will introduce you to the financial advisor.

VAT: online returns required for all businesses from 1 April 2012

HMRC has issued an alert to VAT-registered businesses across the UK about important changes that come into effect next spring.

From 1 April 2012, all VAT-registered businesses must send their VAT returns online and pay their VAT electronically. Currently, only newly-registered businesses and those with turnover of more than £100,000 have to file and pay their VAT online.

The new rules will cover VAT returns filed for accounting periods beginning on or after 1 April 2012.

HMRC advises that if you are not already filing your VAT online, switching now makes sense. This will avoid a last minute rush, and also provide access to the benefits which online filing provides and which HMRC lists as follows:

- an automatic acknowledgement that your return has been received;

- a handy arithmetic checker to help make sure you’ve done your sums correctly; and

- an email alert to remind you when your next online return is due (as, after April, HMRC will stop sending out paper returns to businesses which are now required to file online).

Tax deadline put back by HMRC over strike

No fines will be handed out to anyone who submits their self-assessment tax returns online in the first two days of February.

The official deadline for submitting forms is 31 January, but a planned strike for that day is set to cause last-minute disruption.

So HM Revenue and Customs (HMRC) has effectively put back the deadline by two days.

More than two million people have still to file their returns online.

The tax authority has changed the procedure after earlier telling the BBC that there would be leniency owing to the strike.

The public sector union, the PCS, is planning strikes at call centres and inquiry offices to protest against the appointment of private companies to run call-handling trials in two contact centres.

Fines

The countdown to the tax return deadline has started in earnest. On Tuesday, 182,530 forms were filed online.

HMRC is introducing a much tougher system of fines this year. The £100 penalty will apply whether or not there is tax owed.

Penalties can mount up if a taxpayer neglects to send in a form, to £1,300 after six months and £1,600 after a year.

Even so, 600,000 of the nine million people who have to fill in the returns were expected to put off submitting them until 31 January.

The deadline for paper returns was on 31 October, but the online deadline is later
On past form, 15% per cent of them, about 90,000, will ring for help and may find it impossible to get an answer, owing to the strike on deadline day.

"We have always been very clear that we want the returns - not the penalties. For that reason, we do not want anyone who cannot get through for help and advice on 31 January to be disadvantaged in any way," said HMRC's acting-director of general personal tax, Stephen Banyard.

David Gauke, exchequer secretary to the Treasury, said: "This strike could have caused thousands of people to incur fines, so I am pleased that HMRC has taken this commonsense approach.

"The government does not want anyone trying to file their tax return on time to be unfairly penalised because they were unable to get through for help and advice on the 31st."

Those who have tax to pay will not face any interest on payments made on 1 and 2 February.

Appeals

Anyone who files after 2 February will be fined £100, although the normal appeals procedure is in place.

This requires taxpayers with a "reasonable excuse" to write to their tax office quoting their unique taxpayer reference. They should not wait for the penalty notice.

Examples given of valid excuses which would normally be accepted include the loss of documents through theft, fire or flood and the onset of a life-threatening illness.

Those choosing to send in tax returns on paper were required to submit them by 31 October. Some 34,000 penalty notices were sent out after the deadline passed.

Our charity of the year is Saint Francis Hospice

We’re pleased to announce that our charity of the year is Saint Francis Hospice (www.sfh.org.uk). This fantastic organisation is one of the largest adult hospices in the UK, serving around one million people. Founded over 25 years ago, and with over 200 staff and 800 volunteers, all the services provided are free of charge to patients and their families. Although the hospice is supported 30% by the NHS, almost two thirds of its running costs are met through donations. So we’ve decided to help!

We’re aiming to raise £10,000 this year…
…and we’re asking for your support!

For every new client we sign up during 2013, we’ll donate £50.

So, if you’re happy with our services, please tell your friends, family, co-workers, contractors – in fact anyone you can think of who might need the services of a first class accountancy practice and strategic planning consultancy. Each time you recommend someone who joins the Nordens’ family, the pot for Saint Francis will grow.

We’re really excited by the prospect of actively helping the people who benefit from the wonderful care provided by the hospice. Over the next few weeks, we’ll be calling you to ask you to recommend just one person who you feel would benefit from chatting to us.

But don’t wait for us to call you – if you know of someone we could help now, please let us know. Let’s work together to raise as much as we can for this worthy cause.

More about Saint Francis Hospice: www.sfh.org.uk

Peter Farrelly now has two teams in the top ten of the Copa Del Nordens

Chelsea fan Peter Farrelly has good recent form with his reserve team JCLSTech. Peter obviously has the same mentality as Andre Villas-Boas and thinks that there is no problem having a B team in the same league. We may have to refer to the Nordens Football Association rule book!

Spurs fans - I bet Harry Redknapps twitch is getting worse with all these court visits! I bet he wished he had a reliable Accountants like Nordens to keep him and his dogs on the straight and narrow!

The ongoing battle between Mark Norden and Ben Goldstone at the top of the league continues. I have recently found out that Ben is only 12 years old. Ben - Don't let school home work get in the way of your football predicting. Study hard on the football stats and don't worry about them GCSE's. You will earn much more money being a Premiership football manager, than an accountant like Mark! That's better advice than you will get from any career advisers! ;)

Lisa Gold has another great week with 125 points. This is mainly down to getting both the correct results last Sunday! It could have been better if she had the confidence to back her own team Fulham against Newcastle. Could she enter into the top ten this month???

Nathan Brooks - Great final week of scoring for you too with +110, again helped by the Sunday results.

Spurs fan "MRC" AKA Micheal Came scores high in Gameweek 21 with 135 points due to predicting the correct score and using a banker chip in the Newcastle Vs QPR game. He may have been a little too confident with predicting Spurs to beat Wolves 3-0 though. They have now been a bogie team for Spurs at home for the last two seasons.

Mitch Gold - Just seen you last 3 week scores… -80, -40 and -60. Oh dear! Let's hope things improve for you soon. Maybe a bit of assistance from Lisa would help?

Remember if you want to let out your frustrations use the comments option at the bottom of this article!

See the top ten below…

Tax return filing - what is a reasonable excuse?

In recent news items about the self assessment filing deadline we have said that you may not get a late-filing penalty if you have a ’reasonable excuse’. As the 31 January deadline approaches, this topic is appearing in the media (it will be featured on BBC Radio 4’ Moneybox today). Here we give more information about what the term means.

If you file your 2011 self assessment tax return late you will get a penalty, even if you do not owe any tax. The deadlines are 31 October 2011 if you file a paper tax return and 31 January 2012 if you file online. The first penalty is £100. To read more about the rules on penalties, refer to our news item 31 January, an even more important date.

However, you will not have a penalty if you have a reasonable excuse for filing late. ‘Reasonable’ excuse is not defined in law, but HMRC’s’ guidance explains how they interpret it.

There are no hard and fast rules – what is ‘reasonable’ will depend on the facts of the particular situation. But generally speaking, you may have a reasonable excuse if an unexpected or unusual event beyond your control prevented you from meeting the deadline. HMRC’s guidance no longer stipulates (as it used to) that a reasonable excuse must be ‘exceptional’.

Examples of a reasonable excuse might be:

- A serious illness made you incapable of filing your tax return.
- The death of a partner or close relative shortly before the deadline.
- The return was posted in good time but was lost or delayed in the post.
- Important documents have been lost, through theft, fire or flood, and can't be replaced in time.

You may also have a reasonable excuse if you had problems with the online filing process, such as:

- You received your online Activation Code, User ID or password late, even though you asked for them in good time.
- HMRC's own computer system fails.

HMRC will not accept excuses such as:

- The tax return is too complicated.
- You were too busy.
- You didn’t have all the information.

You must file your return as soon as possible after the reasonable excuse comes to an end. HMRC says it expects to receive it within 14 days of the problem ending. If you delay filing without a reasonable excuse you will get a penalty.

You should always make an effort to file on time, and not leave it in the hope that ‘reasonable excuse’ will get you out of trouble. If you have tried to get all the information but are missing some of it, you can file your tax return on time using provisional figures and send in the final ones as soon as possible.

If you file your return late and have a reasonable excuse, the best approach is to tell HMRC about it at the same time as you send in your tax return. You can do this either in a letter or (in the case of online filing) using HMRC’s special form. If you send a letter, it should be headed ‘REASONABLE EXCUSE CLAIM’ in large, bold letters. If you do this soon after the statutory filing date, and HMRC agrees that your excuse is reasonable, there should be time to prevent the issue of a late-fling penalty notice. However, if you are sent a penalty notice, you should appeal against it (within 30 days) and explain your reasonable excuse.

HMRC’s guidance is not law – it is just their interpretation of what the law means. Ultimately it is for the courts to determine what is a ‘reasonable excuse’. So if you think you have a reasonable excuse for filing late but HMRC does not agree, you can appeal against the penalty and have your case heard by an independent tribunal.

31 January SA deadline - you can still file a paper return

But be prepared to pay for it!

We have heard some pundits proclaim that it is now too late to file a paper return, but this is not true.

31 October 2011 was the deadline for submitting a self assessment tax return for 2010/11 on paper. 31 January 2012 is the deadline for filing the return online. You can continue to file on paper or online after each of these deadlines, the only difference is the amount of penalty you have to pay.

If you do file a return on paper now, it will crystallise the £100 late filing penalty. The penalty notice is likely to arrive in February 2012 when HMRC is able to see which taxpayers filed late and whether they were paper filers or online filers.

If you file on paper after 31 January 2012, the additional £10 daily penalty for filing later than 3 months after the deadline, will also start to accrue. That is why filing online is now the much cheaper option.

It is possible to claim reasonable excuse for filing late.

If you need to file a paper return after 31 October 2011 and believe you have an acceptable excuse for having to do so, you should make this clear in a covering letter setting out what the reasonable excuse claimed is. The accompanying letter should be headed ‘REASONABLE EXCUSE CLAIM’ in large, bold letters at the top, or you can use HMRC’s reasonable excuse form. Using the form makes it more easily recognised by HMRC post room staff and also ensures that you include all the necessary information.

Changes to PAYE late payments and penalties

HMRC are changing the way in which they charge penalties on late PAYE payments !!!

Below is a summary how the penalties will be calculated…….beware !!!

Notification of a late payment penalty
If a penalty is due, HMRC will send you a late payment penalty letter telling you how much you owe and when you have to pay it by. It will also tell you what to do if you think the penalty is wrong, including how to appeal. For penalties relating to late payments that occurred in the 2010-11 tax year, HMRC will send notifications of late payment penalty charges after the end of the year. HMRC has up to two years after the late payment occurred to issue a penalty letter.

Penalty rates and how they will apply
Penalties will be charged on each PAYE reference number (also called a ‘PAYE scheme’) independently. Therefore, if you operate more than one PAYE scheme you need to make sure that amounts due for each individual PAYE scheme reference is paid in full on time.

Monthly or quarterly PAYE payments
You will not be charged a penalty if only one PAYE amount is late in a tax year - unless that payment is over six months late.
The amount of the penalty will depend on how much is late and how many times your payments are late in a tax year. So if you pay part of what is due on time then any penalty will only be charged on the part that is late. The table below shows how the penalties are calculated.

Penalty charges for late monthly and quarterly PAYE payments

No. of times payments are late in a tax year	Penalty percentage	Amount to which penalty percentages apply
1	No penalty (as long as the payment is less than six months late)	Total amount that is late in the tax year (ignoring the first late payment in that tax year)
2-4	1%
5-7	2%
8-10	3%
11 or more	4%

Additional penalties for monthly and quarterly payments over six months late
If you have still not paid a monthly or quarterly amount in full, after six months you may have to pay a penalty of 5 per cent. A further penalty of 5 per cent may be charged if you have not paid after 12 months. These penalties may be charged in addition to the penalties for monthly and quarterly payments described in the previous section and apply even where only one payment in the tax year is late.

End of year adjustments
You may be charged a late payment penalty if you pay less than is actually due. This applies even where you pay roughly the right amount each month and then make an end of year adjustment. You should therefore make sure you pay in full each month, rather than estimate the amounts you need to pay.

Significant risks to world growth in 2012

A monthly briefing from the ICAEW's economic advisers.

- Download a PDF version of the report (PDF 1.8MB/4 pages)

Significant risks to world growth in 2012

This year looks set to be a challenging one for economies in the West, with significant downside risks to growth in the short term. The main driver of the weak outlook for 2012 has been the downward spiral of the eurozone which, due to lack of political commitment to agreeing a lasting solution for highly indebted states, has undermined confidence in the region and beyond.

The eurozone debt crisis makes for an ‘unusually uncertain’ global economic environment. If politicians fail to agree on a solution for the economic governance challenges facing the currency union, market pressure would likely force out one or more countries from the euro. As this would most likely cause sovereign default, damage to banks’ balance sheets may cause a renewed credit crunch and thus a major recession as lending dries up and companies and consumers stop all but the most essential spending. Even if politicians in the eurozone are able to reassure the markets that a solution to the debt crisis can be reached, a recession for the currency area will not necessarily be avoided, as fiscal austerity and economic uncompetitiveness continue to constrain growth.

The weak economic outlook for the eurozone will almost certainly make for a poor short-term growth outlook for the UK, as demand for exports dries up and businesses become more reluctant to invest. Further quantitative easing looks increasingly likely as a means of propping up what is already a fragile recovery. The Bank of England also looks set to keep its base rate on hold at a record low of 0.5% throughout 2012.

Unemployment set to rise further while earnings growth remains weak

The labour market looks set to deteriorate further this year as the UK economy struggles to grow and the public sector continues to shed jobs. Some 110,000 central and local government jobs are set to be axed in the 2012/13 fiscal year, and private sector job creation is likely to remain lacklustre over this timeframe as business confidence remains in the doldrums.

The Office for Budget Responsibility (OBR) currently expects the UK unemployment rate to rise from its current level of 8.3% to about 8.7% by the end of this year, as shown in Figure 1 below. This is equivalent to 2.8m people being out of work. Furthermore, these unemployment forecasts are based on the UK economy growing by 0.7% this year. A more sluggish pace of growth or another recession, both of which are well within the realms of possibility, would point towards even higher levels of unemployment by the end of this year.

High unemployment in the short term will bear down on living standards for those in work as employee wage bargaining power is limited by the risk of job loss. Consequently, the OBR expects average weekly earnings to grow by just 2.0% this year, far below the average of 4.3% seen over the years 2001–2007 and also below consumer price inflation, which is expected to average 2.7% this year.

Overall, weaknesses in the labour market mean that household spending power is likely to be flat at best this year, limiting the ability of consumer expenditure to drive economic growth in the short run. As household consumption accounts for some 60% of UK gross domestic product, weak growth in consumption almost certainly means weak growth for the economy as a whole.

Inflation still high on the latest data, but a sharp fall in 2012 looks likely

Although the latest official data shows annual consumer price inflation at over double the Bank of England’s central target of 2.0%, at 4.2% in December 2011, inflation can be expected to fall relatively sharply over the coming months. Cooling growth in the Western world ought to help curb commodity price growth.

Furthermore, the impact of last January’s VAT rise on the price of goods and services will drop out of the annual rate of inflation, helping to drive the fall in price growth back towards the Bank of England’s central target of 2.0%.

Figure 2 illustrates the OBR’s central projections for consumer price inflation. Weaker growth than they are expecting would likely imply a sharper and more rapid fall in price growth.

The key upside risk to inflation this year is likely to be the price of oil, which remains stubbornly high despite concerns about the global economy. Although weak demand in the West ought to bear down on commodity prices, political tensions between the West and Iran risk leading to a spike in oil prices as markets become concerned about a fall in global oil supply. This could keep inflation elevated for longer than currently expected.

Outlook for the retail sector remains challenging, but divergent

Announcements from the UK retail sector continue to paint a very mixed picture. While companies such as HMV have announced sharp falls in retail sales in recent months, other companies such as John Lewis have announced strong performance over the Christmas period – with like-for-like sales up 6.2% over the same period a year ago. Overall, evidence is beginning to emerge of a polarised retail sector, with both the luxury and value ends of the market performing relatively well while mid-market retailers continue to struggle.

Undoubtedly, the shining light in the retail sector remains non-store retailers – in particular, internet retailers. Non-store retail sales values rose by 19.1% over the 12 months to November 2011, far in excess of sales growth seen for store based retailers, as shown in Figure 3.

Internet retail sales in particular were 32.8% higher than 12 months ago in November, and accounted for 12.2% of all retail sales – up from just 3.0% five years ago. In addition to the ongoing squeeze on household incomes, traditional High Street brands in the UK need to get to grips with the changing nature of retail and how consumers choose to purchase goods and services. Failure to adapt can only result in continued financial woes for some of these companies.

US could be the economic superstar in the West this year

Data released this month by the United States Bureau of Labor Statistics (BLS) showed that non-farm employment in the US rose by 200,000 in December, significantly above the market’s median forecast of an increase of 150,000 and also more than the average gain for the prior 12 months.

The unemployment rate in the US fell by 0.2 percentage points to 8.5%, down from 8.7% in November. The latest data is encouraging news, comparing favourably with a US unemployment rate peak of 10.1% in October 2009. These figures are a tentative sign that the US’s ‘jobless’ recovery has undergone a step change and is now putting people back into work.

The US has emerged as one of the leading lights in the global economic recovery as the pace of growth in most of the other major economies, particularly in Europe, continues to slow. Indeed, it looks increasingly likely that the US will emerge as the West’s economic star in 2012. Reinforcing the view given by the latest unemployment figures, the ISM Index for Manufacturing rose to 53.9 in December, up from 52.7 in November, which signals an increase in the rate of US factory output growth.

The US Federal Reserve expects the encouraging trend in the labour market to continue. By June 2012, the Fed expects the US unemployment rate to have fallen to 8.0%. However, a continuation of positive trends in the US labour and manufacturing markets is contingent on US housing market concerns and spillovers from the eurozone sovereign debt crisis not blowing a hole below the water line in the US economy.

More QE in the pipeline this year?

Rising unemployment and a possible economic implosion in the eurozone pose a significant challenge to policy-makers in the UK. With interest rates already at rock bottom levels and fiscal stimulus measures limited by market concerns over sovereign debt, the tools available to respond to an economic slowdown or recession are now extremely limited.

However, further quantitative easing (QE) from the Bank of England remains one option for stimulating the economy, should things take a turn for the worst. By purchasing government bonds, the Bank of England can keep long-term interest rates low in addition to creating a positive wealth effect for individuals holding bonds and shares.

However, even with further QE, the short-term outlook for the UK economy is likely to remain highly challenging. Although falling inflation will provide some respite for households, this will be offset by rising unemployment and weak earnings growth.

Key dates for the month ahead

25 January - GDP Q4 2011 preliminary estimate
Prediction: Slowing growth – possible contraction

25 January - Minutes of the Monetary Policy Committee Meeting held on 11 & 12 January
Prediction: Discussion of whether further QE is needed

31 January - Lending to individuals
Prediction: Still weak

6 February - ICAEW/Grant Thornton Business Business confidence Monitor
Prediction: Business confidence still in the doldrums

- Register your interest

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Will Harold Rosenbaum be able to save his side kick Ledger Lad. View Harold Rosenbaum Chartered Accountant Extreme Part 4.

50p tax rate to stay, says Cameron

Speaking on the BBC's The Andrew Marr Show, Cameron said the 50p rate of tax on those earning more than £150,000 would continue.

'When you're taking the country through difficult times and difficult decisions, you've got to take the country with you,' said Cameron. 'I think that means permanently trying to make the argument that what you're doing is fair.'

Cameron also suggested that a mansion tax was unlikely in the Budget.

HMRC launching an investigation into secret perksÂ’ paid to Premier League footballers

HM Revenue & Customs is said to be launching an investigation into alleged secret perks paid to Premier League football players by their clubs.

According to a report in the Mail on Sunday, HMRC investigators have interviewed finance directors at several top clubs and have also sent a football clubs employment issues questionnaire to at least 24 clubs.

The newspaper says the clubs and players are being asked for details of a range of benefits which could be liable to both tax and National Insurance Contribution payments. These include first-class flights, holidays, accommodation, company cars, use of club credit cards, health care and private security.

HMRC has refused to confirm the reports that its High Net Worth unit is targeting top level footballers, saying it cannot comment on individual cases.

Business Record Checks: where now?

HMRC is continuing to pilot its Business Record Checks initiative on some 20,000 small businesses, however it has responded to objections and in December 2011 decided to undertake a strategic review of the project.

Business Record Checks have proved highly controversial on two fronts:

1) HMRC announced a continuation of an intial pilot before it had evaluated the first stage pilot, and

2) HMRC is intending to charge taxpayers penalties of up to £3,000 for any failures to keep records using section 12B TMA 1970 – records to be kept for the purposes of returns.

The Institute of Chartered Accountants (ICAEW) Tax Faculty has been vociferous in objecting to the pilot, Frank Haskew, Head of the Tax Faculty points out in a recent article in the ICAEW's Taxline that the link between bad record keeping and the tax gap is not only unproven but had HMRC properly evaluated its early findings it would have seen that there is no "pot of gold" in Business Records Checks.

The Chartered Institute of Taxation says that HMRC is wrong to charge penalties under that section: 12B does not apply to in-year record checks, because its wording does not make any sense. Andrew Gotch writing in the CIOT’s magazine Tax Adviser says that section 12B applies to records used to prepare tax returns so that in-year records cannot be judged for accuracy and any record keeping failures cannot apply under that section until the return is due/completed. Further, HMRC has new powers under Schedule 24 FA 2007 – penalties for errors and mistakes in tax returns. In its 2006 consultation on Schedule 24 HMRC used examples of record keeping failures to show how the new powers applied. It now seems clear that HMRC has either changed its policy or it deliberately mislead all during the Schedule 24 consultation.

Accountancy Age quotes Conservative MP Priti Patel as saying that "This is the persecution of small businesses at a time when they are already facing a very, very hard time...the attitude of HMRC to small businesses is frankly disgraceful when they are blatantly doing deals with large firms which have allowed them to escape millions of pounds in tax liabilities."

Where now?

HMRC's statement summarises the current position:

“HMRC recognise that the launch of the BRC pilots has caused considerable concern to the tax profession and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage. In the light of these concerns, HMRC will undertake a strategic review of the project in consultation with the professional and representative bodies. The purpose of the review is to consider the overall aims of BRCs, examine whether the current approach is the best way of achieving the policy objectives and identify what changes are needed to ensure that the objectives are achieved.

“In the meantime HMRC will continue with a limited number of BRC pilots and the results of them will be evaluated as part of the review. Richard Summersgill (HMRC’s Director, Local Compliance) and Naomi Ferguson (Director, Business Customer & Strategy) are jointly sponsoring the review and it will be led by Tracy Kirkham. HMRC will also consult with the professional bodies and other representatives through the Compliance Reform Forum and also with ABAB (the Administrative Burdens Advisory Board). HMRC expect to report initial findings in early 2012.

“Given the concerns over possible penalties, HMRC would like to take this opportunity to reassure taxpayers and agents that HMRC will not (except in extreme cases such as where a taxpayer has no records or has destroyed them) be seeking to use the record-keeping penalty provision during the pilots. No such cases have been identified so far.

“HMRC and the tax profession share the overriding policy objective, namely to ensure that businesses’ record-keeping meets the necessary statutory requirements and that their records are sufficient to enable a correct and complete tax return to be submitted within the time limits. HMRC are grateful to the representatives of business and the agent bodies for agreeing to work with them on the review and look forward to developing a shared understanding of how the overriding policy objective can be implemented with representatives’ full support.”

See Part 3 of Harold Rosenbaum Chartered Accountant Extreme

Harold Rosenbaum tackles Mr X of Evil and his false business expenses. Will he save the day again? View Harold Rosenbaum Chartered Accountant Extreme Pt. 3

Goonerboy2 regains lead in the Copa Del Nordens, knocking Mark Norden off the top spot

After two months at the top of the Copa Del Nordens football predictor league, Mark Norden gets knocked off the top spot by Goonerboy2 AKA Ben Goldstone. Well done Ben! A combination of steady weekly points by Ben and recent shocking week of -70 by Mark has seen them change position.

Hats off to Yiota! A great month of points scoring has seen her close the gap considerably. Ben and Mark - if she continues this great form you maybe in trouble.

Lisa Gold has a great week scoring 100 points in a week which sees most people struggle with Man City and Arsenal both failing to win against easier competition! Lisa I think you better give your husband a few tips too! Ha ha

Sharon Brooks is also racing up the league. My sexist comments in recent months has obviously made you girls more determined and ever! Fair play. Boys you better buck your idea's up avoid the end of season humiliation.

Darren Hahn has a recent poor week of -50. Your a Spurs fan and you put your X3 banker chip on Arsenal winning! That will teach you! I bet you won't do that again! Ha Ha.

I (petewinter) am also having a mini celebration as you can all now see me on the first page of the league! Woo too. It's so nice to not have to click the next page to see my name :) Flying high in 23rd!

Also to remind you all there is a comments option at the bottom of this article so feel free to start the banter!

See the top ten below…

UK economy to limp into New Year as global growth slows

Economic Insight December 2011

A monthly briefing from the ICAEW's economic advisers.

UK economy to limp into New Year as global growth slows

The UK economy is likely to stagnate at best in the near term and may well be contracting now according to recent indicators. Both the Bank of England and the Office for Budget Responsibility (OBR) sharply downgraded their forecasts for growth in 2012 in November as short-term indicators such as the ICAEW/Grant Thornton Business Confidence Monitor showed a sharp drop off in business confidence in the final quarter of 2011.

There is now widespread evidence that the global economy is slowing sharply as the uncertainty over the eurozone plagues financial markets and growth in real economic activity weakened the world over. Even China and India have recently reported a reduced pace of growth while the eurozone and UK could well experience recession through Q4 2011 and Q1 2012.

The key question is whether policy-makers can do enough to turn the economy around in 2012. Emerging markets are unable to escape the slowdown but are likely to have the monetary and fiscal policy firepower to turn things around through 2012. However, the outlook for the advanced economies of the West looks far tougher, particularly in the eurozone.

OBR slashes UK growth forecasts yet again

In the Autumn Statement, the OBR published its latest forecast for the UK economy with yet another downward revision to growth. The OBR now expects the UK economy to grow by just 0.9% in 2011, down from its previous projection of 1.7% in March 2011. However, there was a far larger downward revision to its bullish forecast for growth in 2012. The OBR now expects the UK economy to expand by just 0.7% next year as the economy looks set to contract in the final quarter of 2011 and growth prospects look increasingly uncertain heading into the New Year.

Although Chancellor Osborne and the government have insisted the weakness in the economy is due to problems in the eurozone, the OBR admitted to having completely underestimated the extent of the real income squeeze in 2011. The reality is that UK households have faced the biggest two-year decline in living standards in the post-war era as weak wage growth is outstripped by the rising cost of living. The OBR now agrees, forecasting a 2.3% drop in real household incomes in 2011 and expecting the squeeze on living standards to continue in 2012, with a further 0.3% decline in real income before returning to growth in 2013.

However, there was still room for optimism for the OBR. They expect the UK economy to pick up to 2.1% growth in 2013, although this is reliant on the eurozone recovering to 1.6% growth and 9% business investment growth. Indeed, the OBR forecasts a boom from 2014–16 with GDP growth averaging 2.9% per annum, consumer spending growing by 2.6% a year and business investment growing by 38% in real terms. Unless the UK dramatically improves its competitiveness, this sort of growth performance could be hard to achieve.

Weaker growth forces Chancellor to issue more debt

Slower growth means that public borrowing will be around £100bn higher than previously expected by 2015–16. The implication of this is that the government’s deficit reduction is going to take longer and the UK will continue acquiring debt. By 2015–16, public sector debt as a share of GDP will reach 77.7%, only marginally down from 78.0% in 2014–15 as shown in Figure 2. Previously, the OBR forecast that public debt would fall below 70% of GDP by 2015–16.

The key consequence of weaker growth is that the Chancellor was forced to announce additional public spending cuts for the next Parliament in order to stick to his own fiscal mandate that national debt as a proportion of GDP should fall between 2014–15 and 2015–16. Indeed, in 2015–16 total managed expenditure by the UK government is projected to be £17.2bn lower than in the March forecast – meaning that the UK faces the prospect of two Parliaments of fiscal austerity measures.

However, by cutting back some current spending commitments, the Chancellor was able to find sufficient room to push through several capital investments as part of an array of pro-growth measures. The government announced £5bn of capital additional infrastructure spending including projects such as the London Underground Northern Line extension to Battersea, the electrification of the Trans Pennine train route and a range of road building projects. While unlikely to provide an immediate boost to growth, these measures should support growth and job creation in the medium term.

Massive upwards revision to public sector job losses contributes to bleak labour market outlook

Further public spending cuts inevitably mean more public sector job losses but the OBR also revised how many jobs disappear per pound of public spending cut, so there has been a massive upward revision to the previously announced 400,000 public sector job losses. The OBR’s revised estimate for public sector job losses between Q1 2011 and Q1 2017 came in at 710,000, some 44% higher than previously estimated. Hence, the private sector has even more work to do to fill in the spare capacity created by public sector job losses.

The result of this and the bleak economic outlook is that the OBR has now admitted that we are in for an extended period of high unemployment. Unemployment on the International Labor Organisation measure is now expected to average 8.7% in 2012 – 0.6 percentage points higher than the OBR’s March projection. The cumulative effect of higher joblessness is that the claimant count measure of unemployment is projected to stand 357,000 higher in 2014 than previously expected.

This bleaker picture has been corroborated by recent outturns in the labour market data. Over the three months to September, the unemployment rate was 8.3%, up 0.4 percentage points from the previous quarter and reaching its highest level since January 1996. The timelier claimant count measure of unemployment rose by 5,300 in October too, suggesting labour market conditions remain weak coming into Q4 2011; a view supported by the Q4 2011 ICAEW/Grant Thornton Business Confidence Monitor, which pointed to weaker hiring intentions from businesses amid an increasingly uncertain environment.

Euro crisis hangs over global economy but how much will it affect UK plc?

The biggest uncertainty hanging over the global and UK economic outlook is the ongoing eurozone debt crisis. Talks between eurozone governments are ongoing and rhetoric has become stronger recently, but the world economy desperately needs firm actions to bring the crisis under control. Recent data have clearly pointed to a likely contraction in economic activity across the euro area in the final quarter of 2011 – leading many to speculate that the eurozone is likely to endure another technical recession. Further, talk of a possible eurozone break-up has led to conjecture on what the economic impact would be.

The Organisation for Economic Co-operation and Development has forecast a ‘mild recession’ in the eurozone through Q4 2011 and Q1 2012 and expects the single currency area to expand by just 0.2% in 2012. The OBR is more bullish, expecting 0.5% growth. Other commentators have speculated that a euro break-up scenario could see another deep recession, with perhaps a 3% or more contraction in euro area output.

How much would this affect the global and UK economy? The answer is: significantly, especially since UK plc’s post financial crisis ‘business model’ is heavily reliant on strong growth in exports and the euro area is by far the UK’s largest trading partner, as illustrated in Figure 4. The UK tends to sell around half of its merchandise exports to the euro area, while only around one in five exports goes to emerging economies, which although not unaffected by the global economic slowdown at present, are still likely to experience relatively strong growth; probably growing faster than advanced economies by a factor of about three. Hence, the UK real economy is likely to be hard hit by any downturn in the eurozone, notwithstanding the potential impact on financial markets and the associated effects of this.

2012 set to be another tough year as ‘flat is the new growth’

Consensus forecasts for eurozone growth have been falling consistently in recent months, with the Organisation for Economic Co-operation and Development now only forecasting 0.3% growth in 2012 (compared to 2.0% earlier in the year) and some economists predicting outright recession. This downward revision is the obvious result of a confidence crisis resulting from the fate of the euro hanging in the balance. Investors remain highly concerned about a sovereign debt default in Greece and Italy.

The increasingly challenging environment, especially in the retail sector, led Arcadia owner Sir Philip Green to declare that ‘flat is the new growth’. With about a 50% chance of another recession in the UK and growth next year set to be a very modest 0.7% on the OBR’s new central forecast, Sir Philip’s remarks match an increasingly gloomy reality. The good news is that the fall in inflation will ease the pace of real income decline in the UK. However, with the economy very weak another year of exceptionally loose monetary policy from the Bank of England seems likely, with interest rates on hold and further quantitative easing likely in 2012.

Christmas Parties - a taxable benefit?

The season of good cheer has arrived accompanied by the season of office parties, so it’s a good time to remind everyone of the tax implications of having a good time. 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 tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?
Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.

If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.

Autumn Statement 2011

Chancellor George Osborne presented the Autumn Statement to the House of Commons on 29 November 2011. This newsletter summarises the key points, and rounds up some of the recent changes announced by the Coalition Government.

Overview: Chancellor sticks to Plan A for the economy

With the latest report from the Office for Budget Responsibility painting a gloomy picture for the UK economy, Chancellor George Osborne vowed that the Government would stick to its austerity programme to protect against ‘the sovereign debt storm’.

In line with predictions, the Chancellor announced a reduction in the UK’s economic growth forecasts, with the 2011 figure revised downwards from 1.7% to 0.9%. This was accompanied by an increase in Government borrowing, with the forecast for 2011/12 rising to £127bn, and total additional borrowing amounting to £112bn over the next four years. However, the Chancellor rebuffed recent reports that the UK is set to slip back into recession in the coming months.

Key announcements for business include the introduction of further credit easing, with up to £20bn being made available to small and medium-sized businesses through the National Loan Guarantee Scheme. The business rate relief ‘holiday’ for small firms will be extended to April 2013, and a new Seed Enterprise Investment Scheme for small businesses will offer 50% income tax relief for those investing up to £100,000 in new start-ups, together with a one year freeze on capital gains tax. A £940m ‘Youth Contract’ will also aim to boost employment by means of subsidised work placements for young workers.

Also central to the announcements was confirmation of a National Infrastructure Plan to boost the UK’s road, rail and broadband facilities, to be funded by £5bn of Government spending, with a further £20bn investment expected from British pension funds.

Meanwhile, public sector workers will experience a further squeeze, with a 1% cap on pay rises, and while some benefits will rise in line with inflation, other tax credits will see below-inflation increases.

Other significant announcements include a mortgage indemnity scheme aimed at helping 100,000 people to buy homes, a doubling of the number of childcare places for two year olds in England, a new cap on regulated rail fare increases, a cancellation of the rise in fuel duty scheduled for January, and a further increase in the bank levy.

Business and investment

The Autumn Statement contained announcements affecting many aspects of business life.

Tax changes

At the last Budget the Government cut the main rate of corporation tax to 26%, and it will fall by a further 1% each year until 2014, when it will reach 23%.

Changes to the tax rules with immediate effect will ensure the amount of tax relief given to employers making asset-backed pension contributions to registered pension schemes accurately reflects the amount of payments made, and does not give rise to unintended excess relief.

The climate change levy discount on electricity for climate change agreement participants available from 1 April 2013 will be increased to 90%.

As announced, the Government will remove the VAT relief for low value goods (below £15) sent to the UK from the Channel Islands with effect from 1 April 2012.

Enterprise Zones

Enterprise Zones in six assisted areas – Black Country, Humber, Liverpool, North Eastern, Sheffield, and Tees Valley – will qualify for enhanced capital allowances. In these areas, 100% allowances will be available for plant and machinery investment incurred between April 2012 and March 2017. Discussions continue with the devolved administrations regarding enhanced capital allowances in their Enterprise Zones.

Venture Capital Schemes

The Chancellor announced a new Seed Enterprise Investment Scheme (SEIS) to encourage investment in new start-up companies. SEIS will provide income tax relief of 50% for individuals who invest in shares in qualifying companies, with an annual investment limit for individuals of £100,000 and a cumulative investment limit for companies of £150,000.

In addition, the scheme will offer a capital gains tax ‘holiday’ for investments made. This will provide for a capital gains tax exemption on gains realised on disposal of an asset in 2012/13 and invested through SEIS in the same year.

The Enterprise Investment Scheme (EIS) will be simplified by relaxing the connected person rules and the definition of shares that qualify for relief. At the same time the focus of the scheme will be tightened by the introduction of a new test to exclude companies set up for the purpose of accessing relief, exclude acquisition of shares in another company and exclude investment in Feed-in-Tariffs businesses.

In addition to these changes, the Government will remove the £1m investment limit per company for Venture Capital Trusts (VCTs) to reduce the administrative burdens of the scheme.

The Government had already announced that from 6 April 2012 the employee limit for both EIS and VCT purposes will be increased to fewer than 250 employees (currently 50), while the gross asset limit will rise to £15m before the investment.

In addition, the maximum annual amount that can be invested in a company will increase to £10m and the maximum annual amount that an individual can invest under the EIS will rise to £1m.

Business rates

The Government will extend the small business rate relief ‘holiday’ for a further six months from 1 October 2012 and give businesses the opportunity to defer 60% of the increase in their 2012/13 business rate bills as a result of the Retail Prices Index uprating, to be repaid equally across the following two years.

Employment regulation

The qualifying period for unfair dismissal claims is to be increased from one year to two years from April 2012 to help address employers’ fears about the risks of taking on a new member of staff. The Government will consult on the level of fees, to be introduced for individuals who want to bring cases to employment tribunals.

Planning law

The Government will:

review planning appeals procedures, seeking to make the process faster and more transparent, improve consistency and increase certainty of decision timescales. Proposals will be brought forward for implementation in summer 2012

consult on a proposal to allow the reconsideration of those planning obligations agreed prior to April 2010 where development is stalled; and

consult on proposals to allow existing agricultural buildings to be used for other business purposes such as offices, leisure and retail space, to make it easier for rural businesses to find the premises they need to expand.

Credit easing

The Government announced a package of up to £21bn of credit easing measures to support smaller and medium-sized businesses, comprising:

a National Loan Guarantee Scheme. Up to £20bn of guarantees for bank funding will be made available over two years. This will allow banks to offer lower cost lending to smaller businesses, subject to state aid approval; and

making available an initial £1bn through a Business Finance Partnership, which will invest in smaller and medium-sized businesses in the UK through non-bank channels.

Innovation

The Government has announced that it will:

invest an additional £75m in supporting technology-based SMEs to develop, demonstrate and commercialise new products and services

invest an additional £200m in science, including an £80m investment in the Institute for Animal Health and £25m for large-scale technology demonstrators; and

introduce an ‘above the line’ tax credit in 2013 to encourage research and development (R&D) activity by larger companies.

The Government will consult on the detail at Budget 2012 and aims to ensure that SME R&D incentives are not reduced as a result of this change. This builds on measures at Budget 2011 to increase the R&D tax credits for SMEs.

In December 2011 the Prime Minister will set out the Government’s strategy to support the life sciences work of universities, the NHS, private investors and businesses, to attract and develop talent, and improve incentives.

Following consultation over summer 2011, the Government will publish on 6 December 2011 further details of the Patent Box and its reform of the Controlled Foreign Company rules and R&D tax credits.

Housing measures

Analysis has shown that the stamp duty land tax relief for first time buyers has been ineffective in increasing the number of first time buyers entering the market. This relief will therefore end on 24 March 2012 as planned.

The ‘New build indemnity scheme’ provides a guarantee for up to 100,000 new mortgages at up to 95% loan to value for new build houses and flats in England. For each new build property sold under the scheme, the home builder will contribute 3.5% into an indemnity fund, with the Governments supporting the fund to a total of 9% of the property value. The indemnity fund pays out to the lender if a property financed under the scheme is repossessed and there is a shortfall. Builders will take the first loss in the indemnity, with the Government only being called upon to pay once the builder’s fund has been exhausted.

The Government will raise the discounts for the ‘Right to Buy scheme’. For each home purchased, the Government will provide an additional affordable home, in addition to plans to deliver up to 170,000 affordable homes through the new ‘Affordable Homes programme’.

A new £400m ‘Get Britain Building’ investment fund will support firms in need of development finance. This will be aimed at making progress on stalled sites which have planning permission and are otherwise ready to start.

Travel and infrastructure

Fuel duty

The planned 3.02p per litre fuel duty increase that was due to take effect on 1 January 2012 will be deferred to 1 August 2012, and the inflation increase that was planned for 1 August 2012 (expected to be 1.92p per litre) will be cancelled.

Roads and rail

A new National Infrastructure Plan is intended to improve Britain’s road and rail systems, with over 30 specific projects on motorways and rail lines detailed. £5bn of funding will come from government spending, with an anticipated £20bn investment coming from UK pension funds. An additional £1bn of new private sector investment in regulated industries will be supported by government guarantee.

Train fares have been expected to increase to RPI plus 3% to pay for the investment in railways and new trains. However, the Government will now limit the increase to Transport for London and regulated rail fares to RPI plus 1% for one year from January 2012.

Air Passenger Duty

The extension of Air Passenger Duty (APD) to flights taken aboard business jets, effective from 1 April 2013, will go ahead. Details will be set out following the APD consultation on 6 December 2011.

Superfast broadband

£100m will be invested to create up to 10 ‘super-connected cities’ across the UK, with 80-100 megabits per second superfast broadband and city-wide high-speed mobile connectivity. The four national capitals will all receive support from this fund, and a UK-wide competition will decide on up to six further cities that will also receive funding. These will be announced in the 2012 Budget.

A £20m Rural Community Broadband Fund will be opened to roll out superfast broadband to rural areas, and this may be extended if successful.

Pensions Update

Automatic pension enrolment delayed for small businesses

The Government has announced that small businesses will be given more than an extra year to comply with the requirements of the new automatic pension enrolment system.

Auto-enrolment is being phased in from October 2012, on a staged basis, beginning with larger employers. Following the announcement, the original April 2014 starting deadline for employers with less than 50 workers has been deferred until the start of the next Parliament.

Under the system, employers will have to enrol automatically all eligible workers into any qualifying pension scheme. This could be an existing company scheme (if it meets, or can be changed to meet, the necessary criteria) or NESTs (National Employment
Savings Trusts), a simple low-cost pension scheme being introduced by the government.

All businesses will eventually need to contribute at least 3% on a band of qualifying pensionable earnings for eligible jobholders. However, to help employers adjust, compulsory contributions will be phased in.

Employees will also contribute to their pension scheme – this will start at 1% of their salary, before later rising to 4%. An additional 1% in the form of tax relief will mean that there is a minimum 8% contribution rate.

Changes to the state pension age

The Chancellor has revealed that the rise in the state pension age to 67 will now come into effect between April 2026 and April 2028, saving an estimated £60bn between 2026/27 and 2035/36.

Meanwhile, the Government recently announced its intention to delay its plans to increase the state pension age to 66, following concerns that many thousands of women will have to wait longer to collect their pensions.

Under the plans, the pension age for women was set to rise from 60 to 65 by 2018, followed by a second increase in the pension age to 66, in April 2020. However, the second rise in the pension age will now take place in October 2020, benefiting around 245,000 women.

Jobs and education

The Government plans to invest an extra £600m to fund 100 additional Free Schools by the end of this Parliament. This will include new specialist maths Free Schools for 16-18 year olds, supported by strong university maths departments and academics.

It will also invest an additional £600m to support those local authorities with the greatest demographic pressures. This funding is expected to deliver up to an additional 40,000 school places.

Youth Contract

The Government is introducing a new ‘Youth Contract’, worth a total of £940m over the Spending Review 2010 period.

The Government will fund wage incentives for 160,000 young people to make it easier for private sector employers to take them on. In addition it will fund at least 40,000 incentive payments for small firms to take on young apprentices, and extra support from Jobcentre Plus for unemployed 18-24 year olds.

An offer of a work experience or Sector Based Work Academy place will be made to every unemployed 18-24 year old who wants one after three months on Jobseeker’s Allowance, together with a new £50m a year programme to support some of the most disadvantaged 16-17 year olds into education, an apprenticeship or a job with training.

2012/13: Tax Credits and the state pension

For 2012/13, the child element of the Child Tax Credit will be uprated by £135 per year in line with CPI, but the planned £110 above inflation increase will not go ahead.

The disability elements of tax credits will be uprated in line with CPI, but the couple and lone parent elements of the Working Tax Credit will not be uprated.

In line with the ‘triple guarantee’, the full basic State Pension will rise by £5.30 to £107.45 per week. The full couple rate will rise by £8.50 to £171.85 per week. The standard minimum income guarantee in Pension Credit will increase by 3.9% to £142.70 per week for single pensioners and £217.90 a week for pensioner couples. The threshold for Savings Credit will increase to £111.10 for single pensioners and £177.20 for pensioner couples.

Looking ahead to 2012

Income tax and personal allowances

The personal allowance for those aged under 65 increases to £8,105 from 6 April 2012. However, the advantage to higher rate taxpayers will be countered by a lowering of the higher rate threshold, to £34,370.

Capital allowances

The current system of capital allowances will see significant changes from April 2012, including a reduction in the amount of expenditure on plant and machinery which qualifies for a 100% year one write-off (via the annual investment allowance) from £100,000 to just £25,000.

In addition, for chargeable periods ending on or after 1 April 2012 (for businesses within the charge to corporation tax) and on or after 6 April 2012 (for businesses within the charge to income tax), the rates of writing down allowances will be reduced to 18% (main rate pool) and 8% (special rate pool).

Pensions tax relief lifetime limit

The lifetime allowance on money that can be accrued in a pension fund and still receive tax relief, is set to fall from £1.8m to £1.5m from April 2012.

Research & Development

The additional corporation tax deduction given to small and medium-sized enterprises for qualifying R&D expenditure will rise from 100% to 125%. It will have effect for expenditure incurred on or after 1 April 2012.

Inheritance tax

A reduced inheritance tax rate of 36% will apply from 6 April 2012 to death estates, where 10% or more of the net estate is left to charity.

If you are affected by the changes, please contact us for more information and advice.

What they said...

‘After 18 months in office the verdict is in: Plan A has failed and it has failed colossally... cutting too far and too fast has backfired and every one of the Chancellor’s claims of a year ago has completely unravelled’

Ed Balls, Shadow Chancellor

‘This Autumn Statement works with the realities of today and provides an imaginative framework for UK businesses as it strives to secure growth and jobs. This is “Plan A Plus” in all but name’

John Cridland, Confederation of British Industry

‘The biggest challenges to UK businesses remain global demand and economic uncertainty. Firms will give the Chancellor credit for pulling the levers under his control, but will remain concerned about the wider economic environment’

David Kern, British Chambers of Commerce

‘Taken as a package, the announcements in the Autumn Statement address many of the concerns raised by small businesses… the key now is for the Government to be consistent, and set to the task of translating the policy intentions into tangible actions on the ground’

John Walker, Federation of Small Businesses

Freddie Starr ate my Bookkeeping!!!

We are pleased to see Freddie Starr safely back from “I'm a Celebrity” however since his return he has decided to eat our bookkeeping.

Most of our clients like our selection of biscuits, but we have found Freddie has a very unique palate. We didn’t have any toes of camels and the office hamster had been wisely removed from the premises, so Freddie was looking around for something else in the office he could digest. Unfortunately the first item he could lay his hand on was our bookkeeping.

He started with our 2006 accounts as he said it was a vintage year, then progressed through to 2010. Let’s say he now has a stomach for numbers! (Bad gag I know, Sorry Freddie!).

Please Note: This article was provided by an ex News of the World journalist so it may not be entirely true. No phone hacking involved!

Attempted Email Fraud Scam - Please be aware

One of our banking partners has just stopped an attempted fraud on one of their customer’s accounts in West London and we thought we should bring this to your attention as it is a new type of attempted fraud.

Email from bank below...

We received an email from a business customer's genuine e-mail address that we communicate with advising that they were on a short vacation and had been mugged near the hotel they were staying in. Cash, cards and mobile phone had been stolen but luckily they still had their passports. The mail goes on to say they have visited the local police and embassy but they cannot help them to settle their hotel bill and the hotel manager won’t let them leave until they have settled this.

They go on to say they are ‘freaked out’ and in desperate need of help with a transfer of funds. We responded with a mail to advise we were looking to see how we could help and called the numbers we had on file as a security measure and left a message for the account holder to call us if they picked up the message. The account holder called us shortly after and advised they were happily at work and not overseas per the e-mail. No payment was made.

Following the attempt it became apparent that our customers e-mail account has been hacked by fraudsters in order to enable an e-mail to be sent to ourselves and then deleted from the account by the fraudster so they wouldn’t notice. This is a new/amended version of an old fax scam and is of particular concern as E-mail is such a common communication tool these days.

With the above in mind can I suggest that you do the following please:-

- Ensure that your PC/Laptop security is up to date
- Keep your passwords secret and change them regularly
- If you save messages to/from ourselves, try to keep them in a password protected area of your PC/Laptop
- Do not save my/our contact details as ‘Bank’ or similar on your PC use something else such as ‘plumber’

Remember we will never ask you for account details on line and would suggest that you do not send these to us in mails. If you need to advise of a particular account to discuss either use it’s name (EG Deposit account) or the number can be stated as XXXX1234, this will allow us to identify it through our systems.

Please rest assured that we have processes and systems in place to catch fraud attempts as they are made, but when they occasionally get through they are inconvenient for the account holder as a minimum, so I hope you’ll agree that prevention at source is the best solution.

Please feel free to forward this page link on to protect anothers.

Mark maintains his lead in the Copa Del Nordens

Even though Mark scored negative points in the final weekend of November he still managed to extend his lead to 75 points from Goonerboy2 (AKA Ben Goldstone).

Disappointed all! My Delia Smith war cry last month obviously didn’t work! :( If we don’t resolve this soon we may have to resort to dirty tricks! So as the spokeman for the Copa Del Nordens I suggest sabotage technics. A couple of suggestions below…

- If anyone sees Mark logged into the predictor league, distract him with an urgent issue while your partner in crime jumps on his computer and predicts Blackburn to thrash Man City away from home with a banker chip!
- Convince Mark falsely that key players are injured to sway his predictions.

Let's get great creative! May the force be with you!

Else where in the top ten… Peter Farrelly shoots back up the league to bronze medal position replacing Yiota. Also the man with the famous sporting surname breaks into the top ten… Can Alan Cohen keep up this recent form?

ABJ United (AKA Steve Goldstone) and TonyM67 top the point scoring in the final weekend of November while Joe Sword has a shocker with -60.

All the girls scored minus points in the final weekend of November, except Lisa Gold… Maybe if you watch a little less Strictly Come Dancing and a little more of Match of the Day your scores may improve? And no watching Robbie Savage doesn’t count!

Man United fans. You must be distraught along with Fergie! The referee obviously didn’t read his FA hand book… Page 63, paragraph 4… “No penalties may be given to away teams at Old Trafford!” Maybe the ref didn’t think old timer Rio Ferdinand could still tackle correctly!

I have also worked out that West Ham fans are the best performing supporters in the Copa Del Nordens based on the below criteria…
- More than 4 players in the league, but less than 6.

Happy days. Well done Hammers! :)

As promised last month you now have the right of reply with a comment option at the bottom of this article. Banter welcome, but please keep it clean! ;)

See the top ten below…

See Part 2 of Harold Rosenbaum Chartered Accountant Extreme

Everyone has an idol. Our one must be Harold Rosenbaum Chartered Accountant Extreme. Some times we like to act out these scenes in the office... Honest.

UK economy set to contract as business confidence collapses

Business confidence has collapsed according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM). The Confidence Index has suffered its largest quarterly decline since the survey began, indicating that the UK economy will contract by as much as 0.2% in the last quarter of 2011.

Key findings for Q4 2011

* The BCM Confidence Index (CI) has fallen from +8.1 in Q3 2011 to -9.7 and is at its lowest level since the depths of recession in 2009
* Turnover and profit growth expectations have now declined for two successive quarters, implying sluggish growth will continue
* A steep drop in capital investment growth expectations - a worrying sign of continued business nervousness - and over three-fifths of UK companies are operating below capacity

Michael Izza, Chief Executive of ICAEW, said: "In the first nine months of the year, businesses have played their part in supporting economic growth. Many are proud of their success against a backdrop of a very slow and protracted recovery. Yet they are becoming increasingly worried about the immediate outlook and the risk of a double dip recession. They are looking to Government which now needs to take urgent steps to restore business confidence and to show that it understands the need to rapidly change the mood music that the business community clearly feels."

Grant Thornton CEO, Scott Barnes said: "The extent of negative sentiment in underlying business performance indicators, with confidence dropping across the UK's regions and sectors, is worrying. Individual dynamic mid-market companies operating in niche markets continue to do well but the slump in consumer demand and the on-going crisis in the Eurozone is taking a toll. The question is less one of competitiveness and more about the resilience of domestic and international markets. Where they can, businesses need to make the most of opportunities in growing Asian and BRIC economies to maintain demand and safeguard future growth while keeping a close eye on cost and efficiency."

GDP expected to fall in Q4 2011

The Business Confidence Index closely predicts GDP growth in the eight years it has existed. The sharp drop in confidence among businesses implies that the economy is likely to contract by 0.2% in the final quarter of 2011. As such, growth for 2011 would come in at 0.9%, compared to the OBR projection of 1.7% in March of this year.

Decline in confidence across all sectors and all regions

Business confidence across all sectors has declined. Only one sector, Energy, Water & Mining, is in positive territory (+2.3). The Property sector is the least confident with a Confidence Index of -18.7, followed by Banking, Finance and Insurance (-14.6). Financial services have seen the sharpest decline in the past 12 months as the Eurozone crisis drags on. All UK regions are now negative with marked weakening in confidence in London (-10.3), the South East (-13.5) and Scotland (-14.1).

Financial performance indicators also weak

Expected turnover and profit growth have both fallen back (3.7% and 3.1% respectively). In addition, the number of new employees is only expected to increase by 0.9%, as companies are nervous about taking on new staff. With the employment market weakening, job creation among the private sector is unlikely going to be strong enough to offset rising public sector job losses. Reported and expected export growth has also been revised downwards as turbulence continues in key export markets.

Firms expect inflation to fall away

One positive note is that the BCM supports the Bank of England's view that inflation will fall back in 2012. Substantial spare capacity remains and businesses expect input prices to ease and pay growth to remain contained. This will not help salary growth though in 2012 and household income will continue to feel squeezed, especially with no real pay increases in the past two years.

Fraudsters invent a new registration requirement for VAT

The latest scam purports to relate to tax obligations under EU law.

In this case, a newly incorporated company receives a fraudulent letter ( www.hmrc.gov.uk/security/vat-scam.pdf ) asking it to pay £320 by credit card to register on the 'Intracom VAT Registry'.

The form and style of the letter suggests to the recipient that it has the official backing of the UK or EU tax authorities and it would be easy for innocent businesses to be taken in by this scam.

Further examples of current dodgy dealings can be found on the HMRC website. - www.hmrc.gov.uk/security/examples.htm

Experienced Freelance Bookkeepers Wanted

Nordens is a fast-growing company that specialises in mixing traditional accountancy with innovative strategic business planning for the media and entertainment industries. In the past year, our team has grown by 100%

Recently quoted as 'accountants to the stars!' we're currently recruiting experienced freelance bookkeepers in the London and Essex areas to provide bespoke support to a number of our clients. So if you'd like some celebrity sparkle, contact us now. We look forward to working together with you.

We are pleased to welcome Kirsty, Sam and Laura to Nordens

Kirsty, Sam and Laura have joined our rapidly expanding team at Nordens. They are already proving to be great assets to the business and will further improve the service and support to our customers.

Kirsty Willis - AAT qualified

Favourite film: Law Abiding Citizen

Having worked for another firm for four years while studying for her AAT qualification at Havering College, Kirsty likes the enjoyable, relaxed but strategic atmosphere in the Nordens office.

Read more about Kirsty

Sam Moss - BA (hons)

Favourite film: The Inbetweeners

Sam Moss finds he has joined a business that's "prosperous, ambitious and friendly!" The trainee accountant holds an impressive BA (hons) in Accounting and Finance from Birmingham City University and is now working towards his ACA qualification.

Read more about Sam

Laura Hawkins

Favourite film: Natural Born Killers

Admin assistant Laura joined the team to support Lisa in office management, and provides the first face you'll see on entering Nordens' reception area. She directs phone calls and correspondence to the right person and ensures a warm welcome when you visit.

Read more about Laura

Please make them feel very welcome and feel free to discuss their favourite films.

See the latest adventures of a Chartered Accountant

Who ever said… "Life as an accountant is boring?" See Harold Rosenbaum Chartered Accountant Extreme Part 1. That's pretty much daily life at Nordens!

Annual PAYE reconciliation process causes another media storm

The current news headlines are once again full of horror stories claiming millions of people have underpaid tax through the Pay As You Earn (PAYE) system, while others are due repayments. The real issue is how many of these under and over payments have been caused by errors and glitches in HMRC’s new computer system rather than the tax system operating as intended with HMRC undertaking reconciliations of taxpayer’s positions after the end of the tax year?

The 2010/11 PAYE reconciliation process is currently underway. We understand that all 2010/11 repayments have been dealt with; there were 2.3m of them and the average tax repaid to taxpayers was £297.

HMRC is now concentrating on the underpayments. 1.2m of these have been identified and the average tax underpaid is £512, about half of the underpaid tax identified in the 2009/10 process. For 2010/11, HMRC is using a deminimis of £50, below which it will not reclaim underpaid tax shown up by the reconciliation process. The deminimis for 2009/10 was £300.

HMRC has always endeavoured to reconcile individual taxpayers’ PAYE records, comparing the tax deducted under PAYE with other information which HMRC holds about that person’s income. Some years ago, before everything was computerised, this was done manually and was extremely labour intensive, taking many months. HMRC inevitably struggled to keep up and fell behind as the organisation was downsized.

HMRC finally installed its new NPS (National Insurance and PAYE service) computer system in summer 2009, with the aim of improving the operation of PAYE. The PAYE system has never catered well for people with more than one employment or pension, and this was not helped by having different employments/pensions dealt with by different tax offices which did not always communicate. The NPS brings together all a taxpayer’s records and so makes sure that allowances and tax rates are operated correctly across all employment or pension income sources.

The NPS has the ability to perform automated end-of-year reconciliations and send out calculation forms, P800, to those taxpayers who have under or over payments of tax for that year.

State pensioners
In our news story New state pensions missed off 2010/11 tax codes, published in March 2011, we advised that taxpayers who started receiving the state pension in 2010/11 had not had their new pension included in their PAYE codes. There are apparently 146,000 pensioners who have underpaid tax for 2010/11 and HMRC has written to them offering to spread the debt over three years.

This was a repeat of the previous year’s problem, see our January news item PAYE coding notices and reconciliations – latest information, which had affected new pensioners in 2009/10. However, for 2009/10 and earlier years HMRC decided to write off all tax underpayments caused by omitting the state pension from PAYE codes.

State pensions are not paid with tax deducted and if the taxpayer also has income which is taxed under PAYE, the tax on the state pension is usually collected by including it in the relevant PAYE code. The DWP tells HMRC when it starts to pay a state pension, so that HMRC can put it in the pensioner’s tax code.

As we explained, where this was not done properly for 2010/11, the state pension would not have been taxed and those affected would have underpaid tax. This will be one of the reconciling items for 2010/11 appearing on the tax calculation forms P800 that HMRC is currently issuing.

Unless things change, HMRC cannot write off these underpayments under the law because the underpayments are for current tax. Under ESC A19 (see below), HMRC will write off tax where it took more than 12 months after the end of the tax year to tell someone about an underpayment and the person could reasonably have believed their tax was correct.

Where underpayments are less than £2,000, they will be coded out in future years’ PAYE codes. Where the underpayments are £2,000 or more, HMRC will contact the taxpayers direct. HMRC has said it is prepared to allow taxpayers to pay over three years via coding out, commencing from 2012/13, and taxpayers who want this treatment should ask HMRC using the helpline 0845 300 0627. Agents calling on behalf of clients can call the agent dedicated line on 0845 366 7855.
The £2,000 limit is shortly to be increased to £3,000, which may help more taxpayers to spread underpayments.

Background
In 2010 HMRC began to clear its backlog of unreconciled cases. It first used NPS to reconcile PAYE records for 2008/09 and 2009/10, resulting in some 6m taxpayers being sent calculations showing either overpayments or underpayments. Our 7 September 2010 news item PAYE ‘errors’ – what’s it all about? explained the issue in detail, together with various subsequent updates (summarised in our 8 October 2010 news item on PAYE end-of-year reconciliations).

We understand that work on reconciliations for 2007/08 is now nearly complete. This is fully provided for in the national accounts. 2007/08 is as far back as HMRC plans to go chasing unpaid tax as explained in a ministerial statement on 11 January 2011. See our news item PAYE coding notices and reconciliations – latest information.

In relation to earlier years, HMRC is going back to 2003/04, but only in respect of repayments.

In relation to the specific problem of state pensioners in earlier years, HMRC identified some 250,000 taxpayers who received the state pension in 2008/09 and 2009/10 but did not have it included in their PAYE codes. Because in many of these cases the taxpayers would probably have qualified for the tax to be written off under the criteria of Extra-statutory Concession A19 (ESC A19 – see below) it was decided that HMRC would not collect any of these underpayments.

Extra-statutory concession A19
This concession applies where HMRC has been slow to use information to collect tax arrears, and the taxpayer could reasonably have believed their affairs were up to date. It is less likely to be relevant to taxpayers affected by the current rounds of PAYE reconciliations and underpayments.

The text of the concession is reproduced below. Now that a taxpayer may potentially find themselves with arrears for four years (2007/08 to 2010/11), the last part of the concession about repeated mistakes and arrears for two or more years may be relevant.

‘A19. Giving up tax where there are Revenue delays in using information

Arrears of income tax or capital gains tax may be given up if they result from the Inland Revenue's failure to make proper and timely use of information supplied by:
- a taxpayer about his or her own income, gains or personal circumstances
- an employer, where the information affects a taxpayer's coding; or
- The Department for Work and Pensions, about a taxpayer's State retirement, disability or widow's pension.

Tax will normally be given up only where the taxpayer:
- could reasonably have believed that his or her tax affairs were in order, and
- was notified of the arrears more than 12 months after the end of the tax year in which the Inland Revenue received the information indicating that more tax was due, or
- Was notified of an over-repayment after the end of the tax year following the year in which the repayment was made.

In exceptional circumstances arrears of tax notified 12 months or less after the end of the relevant tax year may be given up if the Revenue

· failed more than once to make proper use of the facts they had been given about one source of income

· allowed the arrears to build up over two whole tax years in succession by failing to make proper and timely use of information they had been given.’

Mark Norden tops the Copa Del Nordens predictor league. Fix we hear you cry!!!

Mark Norden storms up Copa Del Nordens talkSPORT predictor league to take over the lead from Goonerboy2 (AKA Ben Goldstone). That sounds suspicious I hear you say! The boss tops his own company mini league. If this wasn't an independent website we would all be demanding for a recount or would assume there has been bribery or threats of sackings!

Surely we can not let Mark finish the league on top. So it's time for me to do a Delia Smith rant… "Where are you?, Where are you? Let's be 'aving you". It's time to step up the plate everyone!

Yiota continues her good form to shoot up to third position. Can she continue this great form or will it predictably all go wrong mid-season like the Arsenal when their only remaining great player Robin Van Persie gets injured, then sold next summer and is replaced by a 16 year old french teenager.

The spurs boys Darren Hahn, Andy Lu and Joe Sumray are having a good run of form like the team they support, but don't worry everyone as just as they look as though everything is going well they will drop points to teams near the bottom of the league. I also notice you are still below the Arsenal fans Goonerboy2 and Yiota! Will it be the same old story for Spurs or will you finally finish above the Arsenal this year?

And Now Wee (AKA Jonny Deacon) has progressed up from ninth to fifth. Still some work to do Jonny! Unlike Celtic in the Scottish Premier you have more than one team to beat in this league!

Man United fans… Nathan Brooks, Tham Tharmarasa, Tony Morrison and Paul Williams. Your Copa Del Nordens predictor league form is average so all I can say is… OMG 6-1!!!

Sharon Brooks, Lisa Gold, Lesley Spalding and Laura Hawkins. What shall I say??? Not bad for girls I suppose. Sorry your form will need to improve like Yiota to get a decent mention! Your hardly going to take over from Hope Powell at this rate!

Kirsty Willis, Paul Williams and Ivor Crandon I have full respect for you! It can't be easy to be worse than me (petewinter). The bad thing is, I have really have been trying my best and studying form!!! I'm just glad there is no money involved!

Even though I am enjoying slating everyone else with no come backs. Next month I promise I will give you the chance to get me back with a comment box at the end of these articles. Until then I will carrying laughing at my own poor humour!

PLEASE NOTE: This article is not written by anybody at Nordens so if your a client who has just had your boy hood team slated please do not take your business else where! Also if you are a Watford fan tell Mark and he may even give you a discount. Come on there can't be too many of you so it won't cost him much!

See the top ten below…

Millions more in line for tax rebates

About six million people are set to receive tax rebates averaging £400, while another million will learn they have underpaid their tax by about £600.

Her Majesty's Revenue and Customs (HMRC) said letters would begin going out in the next few months, with those owing money able to pay in stages.

It is the second year tax and National Insurance discrepancies have been identified by a new computer system.

HMRC said the number of cases would reduce "as the new system beds in".

Those who will be told they have underpaid tax are expected to owe between £500 and £600 on average.

Interest paid

"In a similar exercise last year, Revenue and Customs were criticised for being insensitive over their treatment of underpayers," said BBC news correspondent John Andrew.

"This time it's being stressed that they can spread what they owe over time by having their tax code adjusted."

The rebates, which relate to overpayments in 2007-08 or earlier and will include interest, are due to be settled by December 2012.

It is estimated these will cost the government more than £2bn.

"Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch," said an HMRC spokesman.

"We are getting cases that were left unreconciled up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.

"The fact is there will always be some cases at the end of every tax year that require an under or overpayment to balance but these cases will reduce as the new system beds in."

MPs critical

Last year, HMRC identified 4.3 million people due refunds for overpayments and some 1.4 million who owed the taxman after paying too little.

These are reconciliations, checks and cross-checks to make sure you have paid the right amount of tax.

The amounts owed averaged just over £1,400, while a further 900,000 underpayments of up to £300 were written off.

The House of Commons Public Accounts Committee criticised HMRC's management of the income tax system.

The MPs said up to 22 million people had not been taxed accurately since 2004-05 causing "unacceptable uncertainty and inconvenience".

Then earlier this year, almost five million taxpayers were informed by HMRC that they had either paid too much - or too little - tax in the last financial year, 2010-11.

John Whiting of the Chartered Institute of Taxation (CIOT) said this was becoming a regular feature of the tax system.

"These are reconciliations, checks and cross-checks to make sure you have paid the right amount of tax," he said.

"Last year we had a great batch because they [the Revenue] hadn't done it for a few years.

"This year they are beginning to get into the swing of it," he added.

HMRC Permanent Secretary Dave Hartnett was widely criticised last year for a lack of sympathy towards those facing an unexpected bill, after he said tax reconciliation was a routine measure.

He later apologised and insisted HMRC did "not underestimate the distress caused to taxpayers".

State of the economy dominates party conference season

Unsurprisingly, against a backdrop of slow growth, an ongoing debt crisis on the Continent and a significant squeeze on living standards in the UK, the fragile state of the economy has dominated party conference season.

Despite rumours of a £5bn increase in government capital investment to boost growth, senior coalition figures – including David Cameron, George Osborne and Nick Clegg – have all stated over the past few days that there can be no significant deviation from the current deficit reduction plan. Rather than attempting to create more room for manoeuvre and minimise the potential political damage from changing course, the coalition has restated its commitment to ‘Plan A’, meaning that a slowing of the pace of public sector cutbacks is unlikely.

The Chancellor announced proposals for ‘credit easing’, which would involve the Treasury buying corporate bonds as a way of improving lending to businesses and preventing a second credit crunch. However, as small companies generally don’t issue bonds, it remains unclear how credit easing will benefit many businesses in the UK – full details of the scheme are yet to emerge.

The Bank of England has this month announced that it will be expanding its programme of quantitative easing by a further £75bn – surprising markets as it came a month earlier than expected and was considerably more than a predicted £50bn. This suggests the Bank’s Monetary Policy Committee is now so concerned about the economic outlook that it believes immediate and increased monetary stimulus is required to prevent a slip back into recession.

Overall, the global economic outlook remains highly fragile, with significant downside risks to growth. Even with additional quantitative easing and pro-growth measures from government, the UK economy may still struggle to gain significant momentum – especially if the ongoing sovereign debt crisis in the eurozone triggers another financial crisis.

Market losses take their toll on savers

Ongoing concerns about growth have taken their toll on stock markets in recent months, as investors throughout the world have had to concede that the emergence of the developed world economies from the most significant financial crisis in decades will be slow, choppy and with significant downside risks. In Q3 2011, the FTSE 100 saw its biggest quarterly fall in nine years.
Investors remain especially concerned about the colossal sovereign debt crisis looming over the eurozone. Despite numerous bailout fund announcements and a raft of austerity measures being implemented across the eurozone, many market analysts and economists believe this is merely papering over the cracks in the single currency area and the eurozone in its current form is inherently unsustainable – unless some countries leave the euro or there is movement towards closer fiscal integration in the single currency area.

The recent sharp fall in share prices is a major concern – not just for investment bankers and the wealthy, but for ordinary UK households. Workers who have been ploughing money into private pension schemes have seen sharp falls in the value of their funds, which are intrinsically linked to movements in the stock market. Similarly Individual Savings Accounts (ISAs) that track the FTSE 100 have seen a fall in their value since the start of the year as the index has tumbled (Figure 1). Research by financial information service Moneyfacts suggests that an average Stocks & Shares ISA of £10,000 at the start of the year is now only worth about £8,778 – a decline of over 12%. Falling markets have really begun to hit savers and those planning for retirement.

Cost of living continues to soar

The slow pace of economic recovery in the UK has yet to significantly bear down on consumer price inflation (CPI) which, at an annual rate of 4.5% in August, is still well over double the Bank of England’s central target of 2%. Households are thus facing a triple-whammy of slow earnings growth, elevated unemployment and a rising cost of living – the most prolonged squeeze on living standards since the 1920s.

And things could get worse before they get better. With all of the big six energy companies in the UK implementing price hikes, the cost of domestic gas and electricity is likely to keep inflation elevated for the rest of this year at least. The Bank of England believes the rising price of utilities – illustrated in Figure 2 – could push CPI inflation above 5% over the coming months.

Despite the high rate of inflation, the Bank of England’s Monetary Policy Committee continues to keep interest rates on hold at record lows, for fear of derailing an already fragile recovery. In addition, it has announced plans to expand its programme of quantitative easing by a further £75 billion. While this may prop up the economy, it could also keep inflation elevated for longer and the Bank of England risks losing credibility in its commitment to a 2% central target for price growth.

The current era of high inflation and slow growth means central bankers in the West are facing a difficult tradeoff between curbing price growth and securing the economic recovery – something of a headache for policymakers. But, for now at least, the need for economic growth appears to dominate the global policy debate and interest rates in the UK are unlikely to move upwards anytime soon.

Unemployment rises as public sector jobs are axed

Data released by the Office for National Statistics (ONS) showed the ILO rate of unemployment in the UK stood at 7.9% for the three months to July, up 0.3 percentage points on the quarter and the largest quarterly increase in unemployment since the three months to August 2009, when the UK was still in the midst of recession. The more timely claimant count measure rose by 20,300 between July and August, a further sign of weakening labour market conditions.

The number of people employed in the public sector fell by a staggering 111,000 between March and June 2011, suggesting that job shedding in the public sector is occurring at a much more rapid rate than anticipated; the Office for Budget Responsibility expected general government employment to fall by just 20,000 in the 2011/12 fiscal year. The fact that private sector job creation was just 41,000 over this period has prompted fears that the private sector recovery is still fragile and will be unable to offset public sector job losses over the coming quarters. A rise in the unemployment rate to above 8% looks increasingly likely.

On the upside, compared with a year ago, employment is still slightly higher. Some 264,000 private sector jobs were created over the 12 months to Q2 2011, against 240,000 public sector job losses – implying a net increase in total employment. Private sector employment is still growing according to the latest data, as shown in Figure 3. Critically, the UK labour market has made headway in rebalancing away from public sector dependence over the past year – something which is necessary to restore the government’s finances to good order.

However, there remains a real risk of private sector recruitment grinding to a standstill amid falling business confidence and concerns about the eurozone crisis, leading to a sharp deterioration in labour market conditions. As with the inflation situation, things could get worse before they get better.

The UK: A divided nation

With so much fixation on headline nationwide statistics, it can be easy for analysts to forget just how divided the UK economy is and how the burden of austerity and slow growth is hardly being shared equally. Yet any journey around the UK quickly reveals the stark differences in economic activity and employment opportunities. While over a third (36.1%) of shops in the seaside town of Margate stand vacant according to the latest statistics from the Local Data Company, retail sales in London continue to grow strongly despite the gloomy economic backdrop; in August 2011, retail sales values in the West End were 5.5% higher than a year ago and in September some 200,000 customers visited the Westfield Stratford City shopping centre on its opening day.

While 5.8% of economically active individuals in the South East were unemployed in Q2 2011, in the North East the unemployment rate was 10%, as shown in Figure 4. So as some parts of the country are flourishing or getting by, others are being strongly affected by falling real incomes and a dearth of job opportunities. Guaranteeing economic growth for the UK as a whole is proving a challenging task; guaranteeing growth for every region in the country is an even greater challenge.

Concerns about growth trigger a wave of new policy announcements

Economic policy-makers broadly have three objectives: ensuring growth, containing inflation and having a credible and sustainable fiscal strategy. Yet, worryingly, none of these objectives are being met in the UK (and much of the West) at present; inflation is running at over double the Bank of England’s central target, the government looks set to miss its deficit reduction targets and growth remains sluggish and at risk of grinding to a standstill.

The parlous economic situation in the Western economies has prompted governments and central banks to step up efforts to prevent a double-dip recession. The US Federal Reserve recently launched ‘Operation Twist’, where it plans to buy $400bn of long-dated Treasury bills to bring down long-term interest rates and boost growth. President Obama announced a $450bn jobs creation package to kick-start the US labour market, while in the eurozone politicians continue to battle for the survival of the single currency.

Party conference season in the UK has revealed an extension of the current Council Tax freeze to the 2012–13 fiscal year, increased lending to businesses, and a step up in house building, which could create up to 400,000 new jobs in the construction sector. Yet this has all been overshadowed by the Bank of England’s shock announcement for an additional £75bn of quantitative easing. Moreover, with the Q3 2011 GDP preliminary estimate due beginning of November, it could end up showing the UK economy has already started contracting and that policy-makers have acted too late to prevent a second downturn.

Key dates for the month ahead:

19 October
Event/release - Minutes of October MPC meeting
Prediction - Increased concern about the UK economy

20 October
Event/release - Trends in Lending
Prediction - Still weak

01 November
Event/release - GDP Q3 2011 preliminary estimate
Prediction - Growth close to zero

Mortgage Verification Scheme gives HMRC leads to under declared income

A new scheme to combat mortgage application fraud was launched on 1 September 2011. A by-product of this is a further source of information for HMRC to use in its risk assessment process.

HMRC, the Council of Mortgage Lenders and the Building Societies Association have worked together on the development of the Mortgage Verification Scheme and see it as an important additional tool to help beat fraud. The National Fraud Authority estimates the cost of mortgage fraud at £1 billion last year, so measures to tackle it are important.

The scheme was announced in the March 2010 Budget and has been refined during a subsequent pilot period. Mortgage lenders will only use the scheme where they suspect mortgage fraud, following their own checks.

Where they have inadequate evidence of declared income and suspect fraud, mortgage lenders will send HMRC relevant details from mortgage applications, using a secure electronic platform. HMRC will cross check the income details declared to lenders against information provided in income tax and employment returns. It will then advise lenders whether or not the details correspond. Lenders will take this into account when making subsequent lending decisions.

However, HMRC is also planning to use this information as part of its own risk assessment process when checking whether the information it has been given on applicants’ tax affairs is correct. We can see that this may lead to some problems ahead and would be interested to hear how it works in practice.

HMRC has set up a specialised unit to deal with these requests. Any mortgage lender who wishes to use the scheme may do so. Other than a fee of £14 plus VAT per case to cover HMRC’s costs, lenders face no additional fees to participate. It is not anticipated that the scheme will have any significant impact on the time taken to reach a lending decision, but it will provide HMRC with another tool in its search for under declared income.

New National Minimum Wage Rates

The adult rate of the National Minimum Wage (NMW) increases to £6.08 (£5.93) an hour from 1 October 2011. This is payable to those aged 21 and over.

The rate for those aged 18 to 20 increases to £4.98 (£4.92) and for 16 and 17 year olds to £3.68 (£3.64) an hour.

The apprentice rate, for apprentices under 19 or 19 and over, in the first year of their apprenticeship, increases to £2.60 (£2.50) an hour.

The press release confirms:

“Entitlement to the NMW does not depend on a job title but on whether the arrangement they have with an organisation makes them a worker for NMW purposes. Where an individual is a worker - and no exemption applies – then they must be paid at least the NMW.”

Employment Relations Minister Edward Davey said:

“Internships and work experience of all forms offer an excellent opportunity in helping to bridge the gap between education and the workplace. And for businesses it allows them access to a wide talent pool of some of our best and brightest who didn’t take the traditional route into a job."

“Fairness though is absolutely paramount with all placements. When a worker is entitled to the minimum wage, they should be paid it and we will continue to enforce the law. Today’s publication will help clarify this for employers and will also make sure that all interns and those on work experience placements have a better understanding of their entitlement to the minimum wage.”

HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.

Tax havens: Is the tide turning?

Around the world, grassroots opposition to tax avoidance is on the rise. But a survey shows that all but two of the UK's biggest 100 companies have subsidiaries in tax havens, from the Cayman Islands to Singapore. So is big business out of step with public opinion?

Occupy Wall Street protesters demand corporations "pay their fair share" of tax. U2 comes under fire from protesters at the Glastonbury festival who accuse the band of taking advantage of low tax rates in the Netherlands. A global day of action against tax secrecy is marked in dozens of countries from Ghana to Brazil.

Protesters stage sit-ins in shops and banks around the UK in the hope of getting tax avoidance by massive corporations on to the political agenda.

U2 have been criticised for moving their tax affairs to the Netherlands

In recent months, a loose coalition on "tax fairness" has emerged, uniting angry taxpayers, business ethics pressure groups and development NGOs. The focus is now on tax avoidance - legal arrangements to pay less tax, sometimes using complicated financial structures - rather than just illegal tax evasion.

One of the campaigning groups, charity ActionAid, has just released data that shows, it says, the "addiction" of the FTSE 100 - the UK's most valuable companies - to tax havens.

The data should have been publicly available, ActionAid says, but in many cases wasn't - the charity obtained it by filing complaints to Companies House. Then it counted how many subsidiaries each of the 100 companies has, and the proportion of them that are located in a tax haven.

The headline results are:
- Of the FTSE 100's 34,216 subsidiaries, about a quarter - 8,492 - are in tax havens
- Only two companies - financial advisers Hargreave Lansdowne and Mexican mining company Fresnillo plc - have no subsidiaries in tax havens

The Organisation for Economic Co-operation and Development (OECD) says four factors are used to determine whether a jurisdiction is a tax haven. A place can be considered a tax haven if it imposes no or only nominal taxes, if there's a lack of transparency, if there are laws that prevent the effective exchange of information with other governments and if it is trying to attract investment and transactions that are purely tax driven.

But there is no generally agreed definition of "tax haven".

For its survey, ActionAid took a list used by the US Congress and added two further jurisdictions - the US state of Delaware and the Netherlands. Some consider countries to be tax havens if - like the Republic of Ireland and the Netherlands - the way they tax cross-border income allows companies to shift profits to genuine tax havens, Bermuda or the Cayman Islands, for example, where they avoid tax altogether.

Delaware doesn't make company accounts public, and allows owners of companies to hide their identities.

ActionAid is not accusing the companies of illegal tax evasion. It acknowledges that there is not even any proof of legal tax avoidance, just a strong whiff of it.

"In most cases the huge number of subsidiaries in a given location does not reflect the actual level of business carried out. This suggests another motive for their choice," the charity says. But a whiff may be enough, in the current climate, to harm a company's reputation.

“The public debate tends to be black and white, emotive and headline-grabbing - in reality it's a much more complicated problem”
Tax specialist London

The phrase "tax haven" itself has become a dirty word, says Peter Truesdale, associate director of business advisory firm, Corporate Citizenship.

"And that is because there is a clean word, that people understand - 'transparency'. If your affairs are not transparent, why should I trust you? People think someone has something to hide."

A recent report by Mr Truesdale and two other Corporate Citizenship staff notes: "The distinction between evasion (illegal) and avoidance (lawful) has dissolved in the eyes of governments, NGOs and citizens."

Increasingly, people are demanding not just that a company's tax affairs are legal, but that they are "fair".

This is a very difficult thing to define, notes a London tax specialist at a large financial services firm, who asked to remain anonymous.
"There is a debate to be had about what proper amount of tax to pay to a particular jurisdiction. One person's perception may be very different from another's."

When directors take such decisions, he goes on, they have to bear in mind their duty to increase profits and increase value for shareholders.

But while "tax efficiency" is important, it is now rare to find companies that do not also consider how their actions will be judged in the increasingly harsh court of public opinion.

A company could look to a low-tax country to avoid extra bills when moving money around the world

"The public debate tends to be black and white, emotive and headline-grabbing," he says. "In reality it's a much more complicated problem.

From the business perspective, it can sometimes seem it is the public debate about tax that is unfair.

A company like Vodafone might point out it has businesses in 30 countries, and paid £2.6bn in corporate tax worldwide in the last financial year. Vodafone says the UK is only a small bit of the overall group, and that it effectively gives £700m to the Exchequer every year in VAT, employee taxes and national insurance.

Richard Baron, head of taxation at the UK-based Institute of Directors, says there is no doubt that there are some very complicated avoidance schemes that use tax havens but people should not always impute a "dodgy reason".

For example, a firm may have a number of businesses in Africa but it wants to group all of them under a single holding company.

"You want to make sure you don't get an extra layer of tax when the profits flow up. For that reason you may put a holding company in a low tax country and you may choose that country because it has strong corporate governance and you want to know your money is safe."
Companies also do it when they need to create a "group treasury operation" so money can flow between their different parts all around the world.

"That operation does not belong to any particular country so you put it in a low tax country as you don't want to suffer an extra bill as you move money around."

Advertising giant WPP topped ActionAid's table with 611 subsidiaries registered in places widely regarded as tax havens. But a spokesman says WPP is a holding company for 150 brands which operate in 107 countries, some of which have a lower tax rate than the UK.

"We have come top of the table because of the international spread of our business and multi-brand business model and not because of any tax initiative," he added.

David McNair, senior economic justice adviser at the charity Christian Aid, says tax havens are used in a variety of ways, but the general principle - for a business active in a number of countries - is to maximise the amount of profit made by subsidiaries based where taxes are low, at the expense of those based where taxes are high.

Which tax haven?

John Christensen of the Tax Justice Network comments:

- Bermuda is a niche market for "captive insurance" - a form of in-house insurance, where one part of a business insures the others, and may charge high fees
- The Cayman Islands offer a wide range of financial services, and is the world's main domicile for hedge funds
- Switzerland is pre-eminent for private banking
- The Republic of Ireland and the Netherlands are sometimes used as conduits to pass corporate profits to other offshore centres
- Delaware offers secrecy - it will not disclose who owns a company

This can be done by inflating or deflating prices, when the different parts of the business trade between themselves. Alternatively, one part can lend to another at a high interest rate (and profit from tax deductions on the interest payments at the same time).

There are rules - known as transfer pricing rules - which govern the prices that can be charged between companies in the same group but McNair says they are notoriously hard to apply, particularly for developing countries.

"Transfer pricing rules enshrine the 'arm's length principle'. The problem is determination of what is an arm's length price for, say, intellectual property, management services, or interest rates on an intra-company loan - where there is no open market and no comparable price to determine if the arm's length principle has been applied."

Christian Aid's concern, like ActionAid's, is that the biggest losers are developing countries, which often lack the expertise and the capacity to prevent companies exploiting tax loopholes, and when tax havens are involved their secrecy means they lack the most basic information.

ActionAid cites an estimate mentioned by the secretary general of the OECD, Angel Gurria, that developing countries lost almost three times as much to tax havens each year as they receive in aid.

Christian Aid was one of the organisers of the global day of action, on Friday, aimed at persuading the G20 to put tax secrecy on the agenda for its summit in Cannes next month.

The G20 summit in April 2009 ended with leaders declaring their intention to take action against tax havens but campaigners argue that the efforts since then to increase transparency have in practice had little effect.

According to McNair, public concerns about tax secrecy and tax fairness can be traced partly back to this summit. The recession has done the rest.

"We are facing austerity, governments are cutting basic services," he says. "If companies are getting away with escaping tax, this may be legal but it's unfair."

By Stephen Mulvey & Caroline McClatchey BBC News

Goonerboy2 (AKA Ben Goldstone) takes an early lead in the Copa Del Nordens

Step aside Arsène Wenger. After 6 years with no trophy Arsène must be feeling the pressure from up and coming managers such as Goonerboy2 (AKA Ben Goldstone) who is topping the Copa Del Nordens TalkSPORT predictor league. Ben has stormed to a 140 point lead. Can he continue this early form???

Chelsea supporter Peter Farrelly is close on Ben's heels in second position. Has he got what it takes to top the league next month or will it be a near miss just like Fernando Torres?

Spurs fans Darren Hahn and jsumray91 (AKA Joe Sumray) are in joint 3rd. I suppose this early season form must make up for the devastation on losing out on the Olympic stadium. They may say they never wanted the stadium anyway, but jealously surely must kick in when West Ham are back in the big time with their luxury arena!

Watford supporter Mark Norden is also flying high in 5th position. This must be a dizzy experience for a Watford fan! Having said that Mark did win the league last year so maybe everyone should keep a close eye on his form.

In 9th position we have "And Now Wee" (AKA Jonny Deacon). Jonny is a Celtic fan. I ask him if Celtic joined the Premiership is this where you would finish???

West Ham fans Joe Sword and Strider333 (AKA David Brooks) have made a steady start. Surely the cream will start rising to the top as the season develops.

Man United fans Nathan Brooks, Tham Tharmarasa, Tonym67 (AKA Tony Morrison) and Paul Williams will be hoping their form will grow during the season, just like Rooney's hair!

Chelsea fan JCLSTech (AKA Peter Farrelly) is currently holding the wooden spoon! Form must improve to avoid the axe from Roman Abramovich. It looks like Peter may have sneaked a reserve team into the league too???

PLEASE NOTE: These league reports are totally unbiased to supporters of any team! Honest!

See the top ten below…

World economy teetering on the edge

The past month has seen little in the way of good economic news and markets across the globe are on edge, deeply concerned about the risk of another recession in the West. The job market in the US appears to have ground to a halt, the sovereign debt crisis in the eurozone continues and the UK economy has effectively remained stagnant for the past three quarters. Leading indicators show a sharp downturn in business confidence in the West.

Policy-makers, acknowledging that the global economic recovery is far from a done deal, are refocusing on the need to bolster growth and prevent a double-dip recession. President Obama has announced a $450bn spending package aimed at boosting job creation in the US, while central banks across the developed world are maintaining their loose monetary policy stance. Overall, the West looks set for another rough period.

OBR’s forecasts look increasingly unrealistic

The Office for National Statistics’ second estimate of Gross Domestic Product (GDP) in the UK for Q2 2011 remained unchanged, with estimated quarter-on-quarter growth of just 0.2%, down from 0.5% growth in the first quarter of the year. Compared with the same quarter a year ago, economic activity rose by just 0.7%. Furthermore, output remains some 3.9% below its pre-recession peak, as shown in Figure 1.

The largest contribution to growth in the second quarter came from the business services and finance sector, which grew by 0.8% quarter on quarter. The production industries were a drag on growth, within which the manufacturing sector contracted by 0.5%. This was the first quarterly contraction for the manufacturing sector since Q3 2009. Recent survey evidence for the sector – including the ICAEW/Grant Thornton Business Confidence Monitor – has suggested a toughening outlook for manufacturing continuing into the second half of the year.

Overall, the latest data confirms that the UK economy has more or less flatlined over the past three quarters and suggests the Office for Budget Responsibility’s (OBR’s) forecast of 1.7% growth this year will be missed by quite a wide margin. With the eurozone debt crisis continuing and job creation in the US grinding to a halt, there are clear signs that this period of economic stagnation could go on for a prolonged period of time. While few commentators are calling a double-dip recession, many now acknowledge that it is becoming an increasing possibility.

Chronic shortage of housing to blame for high house prices

There has been a great deal of talk over the past few weeks about the government’s proposed changes to the planning system, which aims to reduce thousands of pages of planning rules to fewer than 60 pages. While some economists see this as a solution to the nation’s housing crisis – a result of a chronic shortage in housing relative to demand – other groups have criticised the likely impact of the proposed changes on the environment and aesthetics of the UK, fearing that they may trigger further urban sprawl, as well as threatening endangered wildlife.

Those in the pro-reform camp note that only about 13% of the UK’s land is currently classified as ‘urban’, and that we could build thousands of new homes on green space without ‘paving over the countryside’ – something which needs to be considered as rental prices in the South East and London reach exceptionally high levels and home ownership remains out of reach for the average young person.

Those cautious about planning reform broadly acknowledge the housing shortage in the UK, but they tend to argue that, rather than paving over green space, new homes should be built on brownfield sites and more should be done to bring empty homes back into use. Pro-reform groups argue that failing to use greenfield land will result in more ungenerous, frugal new developments which fall short of people’s aspirations; newly built homes in the UK currently have the smallest rooms in the EU.

However, while the environmental implications of planning reform are clearly up for debate, most economists agree that a resurgence in housebuilding could be a solution to the current economic malaise gripping the nation. The massive housebuilding boom in the 1930s helped drive the UK recovery during this period and partly explains why the UK fared relatively well compared with other developed nations during the Great Depression. The number of new dwellings built each year averaged over 300,000 during this period – far higher than that shown in recent years, as shown in Figure 2. In 1930 there were about 800,000 workers in the UK building industry, but by 1939 this number had risen to over a million. Policy-makers looking to boost growth could learn some lessons from the 1930s.

Is the 50% income tax rate curbing growth?

The issue of the 50% top rate of income tax in the UK has risen up the agenda after 20 high-profile economists signed a letter to the Financial Times urging the government to drop the top rate, claiming that it is curbing growth and stifling entrepreneurship.

While the top rate is higher than in recent years, as Figure 3 shows, there have been much higher top rates of income tax in the past. For much of the 1970s, the top rate of income tax was 83%. A 15% surcharge on ‘unearned’ income meant that some individuals were paying a marginal income tax rate of 98%.

In this context, some commentators have argued that the 50% rate of income tax is fair – in the sense that the wealthiest should pay a higher proportion of their income in tax – and still modest compared with the past. However, others point out that the globalisation of the world economy means that high rates of taxation are much less feasible than in the past – nowadays, high-end taxpayers are much more likely to shift tax regimes, moving to parts of the world with more favourable rates of income tax. Similarly, foreign entrepreneurs looking to set up in the UK may be put off because of the relatively high rate of tax. Given this, the 50% rate of income tax may in fact be leading to a loss of tax revenue in the UK.

Whatever the economic cases for and against scrapping the 50% rate, the political process places a significant constraint on change anytime soon. Although the Chancellor has described the top rate of income tax as a ‘temporary measure’, the political costs of scrapping the rate at a time of austerity would be significant, with the Conservative Party being painted as a ‘party for the rich’ and possibly leading to a decline in popularity. Within the coalition, the Liberal Democrats would almost certainly demand a tax on wealth (a ‘mansion tax’) as the price for scrapping the 50% rate of income tax. But it is likely that many Conservative MPs would rebel against such measures. The constraints imposed by the political process mean that – economically rational or irrational – the 50p tax rate is likely to be with us for some time.

Abysmal US jobs data reignites concerns about the global economy

Data released by the US Bureau of Labor Statistics (BLS) showed non-farm payroll employment in the US was unchanged in August compared with July, suggesting that the labour market recovery in the world’s largest economy has ground to a halt. The unemployment rate stood at 9.1%, largely unchanged from the previous month. Moreover, the monthly change in non-farm payroll employment for June was revised down from +46,000 to +20,000, and the change for July was revised down from +117,000 to +85,000.

The US has yet to generate sustained private sector job creation to offset job shedding in the public sector, as the US addresses its monumental level of government debt – currently standing at over $14 trillion. The non-farm payroll data continues to show a trend downward movement in the number of government employees, which fell by 17,000 in August. Local government has lost some 550,000 jobs since employment in the sector peaked in September 2008.

President Obama, commenting on the jobs market a few weeks ago, said he wanted ‘to be judged in a year from now on whether or not things have continued to get better’. The President has unveiled a $450bn package of tax cuts and spending plans aimed at creating new jobs in the US, including $50bn in spend on infrastructure projects. However, it remains unclear whether the spending package would be a long-term solution to the economic woes in the US or if it is merely a temporary measure aimed at boosting Obama’s popularity ahead of the 2012 presidential elections.

Looking at monetary policy, the weakness in the US recovery suggests that a third round of quantitative easing (‘QE3’) looks increasingly likely.

Plan to kick-start growth in the UK desperately needed

The torrent of poor economic data across the globe has placed pressure on policy-makers around the world to do something to kick-start growth. With President Obama announcing a new stimulus package to bolster job creation, George Osborne is likely to come under increasing pressure to introduce further measures that will kick-start growth in the UK.

However, this is unlikely to materialise in the form of reduced government spending cuts. The Chancellor has stated that there can be no ‘Plan B’ for the deficit reduction strategy of spending cuts and tax rises – changing course could be politically disastrous for the coalition. Moreover, such a strategy could prove risky, with markets across the globe concerned about sovereign debt. Consequently, a renewed growth agenda in the autumn is likely to focus on reducing business red tape and making it easier for businesses to hire and fire new workers. That is, the UK growth agenda is likely to focus on recharging the private sector rather than scaling back public sector reforms.

HMRC targets the fast food sector

HMRC have launched a new taskforce to target VAT fraud in London's fast food outlets. The launch of this taskforce follows the recent launch of taskforces to target the restaurant sector in London and other places in the UK. HMRC will be targeting fast food outlets suspected of deliberately keeping false records and misdeclaring their sales.

The new taskforce will be comprised of multiple teams from across HMRC including special investigations, local compliance and criminal investigation units. The launch of the new taskforce is part of the Government’s £900m investment to tackle tax evasion, avoidance and fraud. HMRC aim to raise an additional £7bn each year by 2014/15 from this investment. This is the fourth taskforce launched by HMRC since May 2011.

31 October self assessment deadline

From this year, the rule which reduced the tax return late filing penalty from £100 to nil provided that the individual had paid all their tax before 31 January, has gone. In the light of this, HMRC has provided guidance for agents on how to manage the 31 October 2011 self assessment deadline.

Important changes when filing paper tax returns
If you miss the self assessment filing deadline this year you will be immediately liable for a £100 late filing penalty. The penalty will apply even if there is no liability or if any tax due is paid in full by 31 January 2012.

These new penalties will apply to all self assessment tax returns from 2010/11 onwards. The fixed £100 penalty for failing to file a tax return on or before the filing date will therefore apply to:

- Paper returns received on or after 1 November 2011.
- Online returns received on or after 1 February 2012.

Daily penalties of £10 per day will also take effect if the tax return is still outstanding three months after the filing date. So if you file a paper return after 31 October 2011, then you will be liable to a daily penalty on 1 February 2012, three months earlier than late online filers.

Guidance to furnished holiday lettings rules

HMRC issues guidance on the new rules

HMRC has issued an advance version of a new Helpsheet (HS253) on furnished holiday lettings (FHL). The rules have changed for 2011/12 and will change again for 2012/13 and following years.

From April 2011, loss relief may only be set against income from the same FHL business.

For 2011/12 the old availability and occupation tests apply. New tests apply for 2012/13 and later.

All three of the following tests must be satisfied if a letting is to qualify:

1. The accommodation is available for commercial letting as holiday accommodation to the public for at least 140 days (210 days for 2012/13 onwards) during the tax year.

2. The accommodation is commercially let as holiday accommodation to the public for at least 70 days (105 days for 2012/13 onwards) during the tax year.

3. The accommodation must not be let for periods of longer term occupation for more than 155 days during the year.

There are two elections you can make to help you reach the occupancy threshold. If you have more than one property the ‘averaging’ election might be helpful and if you have a property that reaches the occupancy threshold in some years but not in others, you could use a ‘period of grace’ election to help you to reach the threshold.

The new period of grace election allows you to treat a year as a qualifying FHL year where you genuinely intended to meet the occupancy threshold but were unable to meet it. In the year before the first year you want to be treated as a qualifying FHL year the property must have reached the occupancy threshold, either on its own or because of an averaging election. If in the following year the property still doesn’t meet the occupancy threshold then, providing an election has been made for the earlier year, that year can also be treated as a qualifying FHL year. This means that you can have two years running where you failed to let for enough days.

If the property still doesn’t meet the required letting level in the fourth year (after two years being treated as qualifying) then that property is no longer a FHL property. The two years in which the property was treated as qualifying, still do.

Funny story... A resident of San Diego, was visiting her in-laws...

A resident of San Diego, was visiting her in-laws and while there went to a nearby supermarket to pick up some groceries.

Several people noticed her sitting in her car with the windows rolled up and her eyes closed, with both hands behind the back of her head. One customer who had been at the store for a while became concerned and walked over to the car. He noticed that her eyes now open and she looked very strange.

He asked her if she was okay and she replied that she had been shot in the back of her head and had been holding her brains in for over an hour. The man called the paramedics , who broke in to the car , because the doors were locked and she refused to remove her hands from her head.

When they finally got in, they found that she had a wad of bread dough on the back of her head. A biscuit canister had exploded from the heat, making a loud noise that sounded like a gunshot and the wad of dough had hit her in the back of the head.

When she reached back to find what it was, she felt the dough and thought that it was her brains. She initially passed out, but quickly recovered and tried to hold her brains in for over an hour until someone noticed and came to her aid. She was blond !!

Five Plumbers Arrested in Tax Raids

The Plumbers Tax Safe Plan ends on 31 August 2011and is is a chance for plumbers, gas fitters and heating engineers with undeclared taxable income to ‘come clean’ and bring their tax affairs up to date on favourable terms.

The window for making a disclosure will soon be closing – as we recently reported, the Plumbers Tax Safe Plan ends on 31 August 2011<http://www.ion.icaew.com/TaxFaculty/22700>. This deadline is for making a disclosure and paying the tax, interest and penalties – the deadline for notifying an intention to disclose has already past (it was 31 May).

However, although the guarantee of terms within the PTSP are no longer on offer, HMRC has left the PTSP disclosure route open for those in the plumbing etc industry who have unpaid tax to disclose but who have still not come forward. And it should be noted that those not in that particular industry can also come forward and are likely to get similar terms. In broad terms the PTSP offers a 10% penalty in many cases (maximum 20%) and the requirement to settle arrears for only six years rather than the 20 years that HMRC can go back in cases of fraud.

Last week HMRC announced that five plumbers have been arrested in tax raids<http://nds.coi.gov.uk/content/detail.aspx?NewsAreaId=2&ReleaseID=420817&SubjectId=2>. In addition, around 600 are under civil investigation because HMRC considers they have failed to pay the right amount of tax. More raids are expected to take place over the coming weeks across the UK.

This is the tough side of HMRC’s campaigns. Campaigns and disclosure opportunities are designed to encourage people to come forward voluntarily and sort out their tax affairs. However, HMRC has always said it will come down hard on those who choose not to come forward despite having undeclared tax, and that it will use its information sources to identity such people.

HMRC has in the past been criticised for not giving its campaigns ‘teeth’ by being seen to take tough action against tax evaders. Clearly this is changing. Mike Wells, Director HMRC Risk & Intelligence Service, said:

“These arrests are just the start. HMRC is considering hundreds of further cases for criminal investigation in the plumbing and medical professions. Some people may have thought we were bluffing when we said we have information that we will use to prosecute tax evasion.”

Woman jailed for tax credit fraud

Following an HMRC investigation a West Midlands woman, a mother of six, has been sent to prison for eight months for tax credit fraud.
She wrongly claimed in excess of £62,000 in tax credits by fraudulently claiming for nine fictitious children. The woman first claimed tax credits for her five children in 2005 (she subsequently had another child).

From 2007 onwards, she began adding fictitious children to her claim, stating that she was their foster mother. She then unsuccessfully attempted to add another six non-existent children.

David Gauke, Exchequer Secretary to the Treasury, said:
“The government will not tolerate dishonest people stealing public money which pays for vital services. This sentence shows that those who think they can cheat the benefits system should think again. The extra £900m we have invested in HMRC will allow them to carry on the fight against benefit cheats and tax fraudsters.”

Self Assessment - No interest if payment made by 27 September 2011

We have previously reported that there have been delays in HMRC sending out some of the July 2011 self assessment (SA) statements HMRC has today provided the Institute of Chartered Accountants with an update. Most importantly, HMRC says that those taxpayers who receive their SA statements in August will not be charged interest provided they pay the second 2011/12 payment on account (which would normally be due on 31 July) by 27 September 2011.

Katie Rowland the new Jewellery Designer of the year 2011

Jewellery designer Katie Rowland wins the New Designer of the Year award at the UK Jewellery Awards.

The event was held in the Grosvenor House Hotel in London’s Park Lane on the 14th of July 2011. The annual awards celebrate retail and design talent across the jewellery and watch sectors, and include 15 categories.

Nordens congratulates Katie !!

Business Payment Support Service - how's it going?

The Business Payment Support Service (BPSS) is designed to help taxpayers who are having difficulty paying all their tax on time. It provides an easy route to someone at HMRC who can make a decision.

The BPSS was set up in November 2008, in response to the economic downturn, and it is still running. HMRC regularly publishes statistics on the BPSS’s activities, and the latest report covers the period from November 2008 to 30 June 2011. It contains some interesting information.

The BPSS is open to both businesses and individuals and covers a wide range of taxes. If the taxpayer agrees Time to Pay (TTP) before the due date, and keeps to agreement, HMRC will waive penalties and surcharges (though there will still be late payment interest). More information including contact details is on the HMRC website.

A summary of the results

Since the BPSS began:

- 444,400 arrangements were granted which were worth £7.71bn.

- £6.69bn has already been paid to HMRC from mature arrangements (ie those for which payments have started).

- Demand in 2010 was 60% of the 2009 levels for the number of requests and 59% for the value considered.

- Demand in the first half of 2011 was 37% of the 2009 levels for the number of requests and 36% for the value considered.

- 46% of the total number of arrangements were for VAT, equating to 50% of the total value of all arrangements.

- 61% of the total number of arrangements were for a period of three or fewer months, equating to 65% of the total value of all arrangements.

- 61% of the total number of arrangements were for requests under £10,000, equating to 15% of the total value of all arrangements.

- 37% of the total number of arrangements were for requests between £10,000 and £100,000, equating to 59% of the total value of all arrangements.

- 23,300 TTP requests, worth a total of £1.08bn, have been refused by HMRC.

It should be noted that in these statistics HMRC counts the number of ‘arrangements’ made, not the number of taxpayers helped. Each arrangement relates to a particular head of duty, so one taxpayer owing several types of tax could have several arrangements.

The report also provides more detailed analyses of the statistics – for example, looking at UK regions, types of tax, and the peak times of demand.

Some comments on the figures
It seems from the figures that the BPSS has been successful in helping businesses and other taxpayers with relatively short-term payment problems. HMRC has also been successful in collecting the money due under TTP arrangements.

Demand for the BPSS is falling – requests in the first half of 2011 were 37% of 2009 levels.

The number of requests declined by HMRC is relatively small compared to the total TTP arrangements granted. However, the percentage of requests declined is increasing. The percentage declined was 2.7% ín 2009, 6.0% in 2010 and 11.8% in 2011.

Part of the reason for this may be that the proportion of repeat requests is growing, according to an item about the BPSS in HMRC’s Working Together Bulletin 44. HMRC states that its policy on time to pay has not changed, but it does look more closely at repeat requests to see if the business might in fact be in a position to pay, or to see if it is viable. If HMRC concludes the business is not viable, it may refuse a repeat request because giving further time to pay would put more tax at risk.

Plumbers Tax Safe Plan ends on 31 August 2011

Those with unpaid tax now need to make a disclosure.

Back in March 2011, as we reported at the time, HMRC launched a Plumbers Tax Safe Plan (PTSP). This is a chance for plumbers, gas fitters and heating engineers with undeclared taxable income to ‘come clean’ and bring their tax affairs up to date on favourable terms.
In fact, although badged as a disclosure opportunity for those in the plumbing etc trades, the PTSP terms were available to anyone with undeclared tax liabilities who wanted to come forward.

As with all such HMRC campaigns, there was a deadline to notify HMRC of the intention to use the disclosure facility, and then a longer period to make the disclosure and pay the arrears (tax, interest and penalties).

The notification deadline was 31 May and the disclosure deadline is 31 August 2011. A recent HMRC press release reminds those affected that they to get on and make the disclosure before the end of this month.

HMRC has already received payments totalling over £94,000 under the PTSP, and a further £234,756 has been offered and is expected to be paid off. HMRC has also been using third party information to open investigations into hundreds of people who have failed to come forward. Although after 31 May it is too late to obtain the PTSP terms, HMRC has left the PTSP disclosure route open for those with unpaid tax who still wish to come forward. HMRC says that although they may not receive exactly the same terms as under the PTSP, it will still be beneficial to make a disclosure because the penalties will be less than if they waited for HMRC to catch up with them.

The PTSP is only one of HMRC’s campaigns. A list of all previous, current and future campaign can be found at HMRC Campaigns.

Nordens Premiership Football Predictor

With the new football season about to start, the Nordens Premiership Football Predictor and the Financial Staffing Solutions Mickey Mouse Cup will be back in full swing .

Mark who had been the 2010/11 league leader since the second week, saw his lead cut over the final weeks of the season with Darren pulling through in to second place, Mitch in to third and and Joe drifting to fourth !! After a hard fought season, it was Lesley who finished in the relegation place but was re-elected due to financial irregularities !!

Joe stayed strong throughout the 2010/11 season to win the Cup competition !

League
1. Mark – 251
2. Darren – 240
3. Mitch H – 227
4. Joe – 226
5. Mitch G – 225
6. Lisa – 199
7. Panayiota – 195
8. Tham – 177
9. Andy – 174
10. Lesley – 168

Cup
1. Joe – 43
2. Mark – 38
3. Darren – 36
4. Mitch G – 35
4. Lisa – 35
6. Panayiota – 29
7. Andy – 22
8. Mitch H – 21
9. Lesley – 19
9. Tham - 19

Change to how HMRC will help employers who can't reconcile payments

HMRC has issued an update about reviewing PAYE payments.

Employers and accountants often ask HMRC to provide detailed lists of the PAYE payments the employer has made, and these requests are time-consuming to answer. So, in future HMRC will no longer provide full payment records!

However, it will assist where employers are having trouble reconciling their own payment records. The procedure now is for the employer to send in details of the problem and relevant payments, and HMRC will check that against its records.

Also, HMRC will answer simple questions about the allocation of the last two or three payments, either through the Payment Helpline or in writing.

The full text of the 29 July 2011 update from HMRC is as follows:

Employers who wish to review the PAYE payments they have made
We told you in April's Employer Bulletin (page 21) about changes to the way HMRC will respond to employers’ and agents’ requests for details and schedules of payments they have made.

The purpose of this article was to ask employers and agents to avoid using HMRC’s records as a first step in creating or reconciling payment schedules. The article explained that it is an employer’s responsibility to keep records and that Form P32 is readily available for use as a payment record. HMRC will, however, continue to provide you with help either through the Payment Helpline or in writing where you want to know about the allocation of the last two or three payments you have made.

The major change to our approach is where you have tried and failed to reconcile the payment position using your own records. We now ask that you forward to us the payment details that you hold rather than asking us to provide a full payment record. We will then review the details you have sent to us and reconcile them against our own records. The reason for this change is to ensure that we are reviewing payments where there is an identified problem, rather than issuing large amounts of information to you that you already hold and which often proves to be of little practical value.

If you are a large employer and are having difficulties in reconciling payments you should approach your Customer Relationship Manager as before.

From April 2012, HMRC are introducing an online tool which will allow employers and their agents to view their payment history online. The tool will not initially show full historic data but is expected to begin by showing all of the year 2011/12 and build year upon year until, eventually, a full six year payment history will be available.

Delays to July Self Assessment statements - more from HMRC

No interest charges if you pay within 30 days

We reported last week that HMRC has been slow in sending out some of the self assessment statements which show what is due at 31 July 2011 and include a payslip.

We have now received some further details from HMRC, including the news that if statements arrive late, taxpayers will not be charged interest provided they pay within 30 days of receipt of the statement.

The full text of HMRC’s statement (published on 22 July) is:

“Due to a higher than anticipated number of SA statements to be issued this year we will not be able to issue paper self assessment tax statements to all customers during the normal July period for issue. The majority will have been sent on time.

“No-one needs to worry about this and we will be sending out the statements to remaining customers soon. People will have 30 days from receipt of the statement to pay. As long as they do that, no interest will follow.

“Online customers will be able to check what's due over the internet and pay via the internet too.

“We are sorry if anyone experiences any inconvenience and we will let you have an update by the end of next week.”

You should be aware that you can download a payslip form SA361 to accompany clients’ payments. We have had some reports that this is proving tricky to find on the HMRC website, so here is the full URL – http://www.hmrc.gov.uk/agents/sa361.pdf

Self Assessment statements 31 July 2011

HMRC has told us that that there has been a delay in sending out some of the mid-year self assessment statements to taxpayers.

As these may be needed for the 31 July 2011 payments, in the absence of a statement with a payslip, you can download form SA361 from the HMRC website.

This facility will be available until 15 August.

Alternatively, payments can be made electronically or by telephone– the Paying HMRC page on the HMRC website has full details about payment methods.

Web Robots to help HMRC target 'tax cheats'

HMRC is stepping up its targeted campaigns against ‘tax cheats’ and will be using more IT, such as ‘web robot’ software, to search the internet and find targeted information about specified people and companies.

Targets to be investigated over the next year will include VAT defaulters, private tutors and e-marketplaces.
Using the software, HMRC feel that they can pinpoint more accurately people who have failed to pay the right tax and are better placed to find people who are trading without telling HMRC.

This computer system alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data. It can identify previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.

HMRC announced last month that a campaign targeting VAT rule-breakers trading above the £73,000 turnover threshold but who have not registered for VAT will be launched in the summer.

Other campaigns to be launched soon will focus on those who provide private tuition and coaching ; e-marketplaces which buy and sell goods as a trade or business; and other trades, which will build on HMRC’s plumbers’ campaign, giving an opportunity to another group of ‘trades people’ to declare unpaid tax.

HMRC’s more open approach is somewhat of a charm offensive. Although it engages more people in the process and maximises information exchange, make no mistake their ultimate aim is to reduce the tax gap by identifying and pursuing people and businesses not paying the right amount of tax.

The main difference in this campaign is that HMRC is inviting businesses to own up to their misdemeanours before they are found out and will provide them with an opportunity to put their affairs in order on the best possible terms.

It is essential for all businesses to ensure they comply with the law regarding tax and VAT and keep their paperwork in good order. This will not only help them understand how the business is performing and to have ready data to help planning ahead, it will save a lot of time and money should HMRC decide to knocking on your door.

HMRC seeks to get taxable businesses to register

HMRC has announced a new campaign aimed at businesses trading above the VAT turnover threshold of £73,000 but which have so far failed to register for VAT.

As part of the campaign, HMRC will be sending out more than 40,000 letters informing businesses how to register to pay what they owe. Under the terms of the VAT Initiative, businesses that have not registered to pay VAT can come forward at any time up to 30 September 2011 to inform HMRC that they want to take part. If they make a full disclosure, most face a relatively low penalty rate of 10% on VAT that has been paid late. They will also be invited to disclose any other tax arrears.

Where a business has to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100%. After 30 September 2011, using information pulled together from different sources, HMRC will investigate those who have failed to come forward. Substantial penalties or even criminal prosecution could follow.

To use the VAT Initiative, businesses must register with HMRC by 30 September 2011 to ‘notify’ that they plan to make a voluntary VAT disclosure. Those businesses must then provide details to HMRC about any VAT due and make arrangements to pay it, as well as any penalties due, by 31 December 2011.

Fashion Bootcamp

Mark Norden will be lecturing at the CFE Fashion Bootcamp, Looking After Your CashFlow and Finance, at the London College of Fashion

2010/11 PAYE reconciliations

HMRC has told us that will be starting the 2010/11 PAYE reconciliation exercise in July this year.

The National Insurance and PAYE Service (NPS) computer system is designed to perform automatic reconciliations of PAYE records and identify under- and overpayments. Those affected will be sent details on forms P800.

Readers will recall last year’s problems when HMRC used NPS for the first time, producing the reconciliations for 2008/09 and 2009/10 together in September 2010. Later it reconciled 2007/08 as well. Many taxpayers were surprised to receive tax demands with little warning, and quite a few P800s turned out to have errors. HMRC says NPS is now working well and the error rate in the P800s should be lower than last year.

In terms of timing, HMRC will start by sending out the forms P800 showing overpayments, starting at the end of July and finishing by the end of September 2011. HMRC estimates that between 1.7m and 3.5m taxpayers will be repaid an average of £340 each.

The P800s with underpayments will be sent in batches and will all be sent before the end of December 2011, so that underpayments can be included in 2012/13 codes where possible. Some 1.2m people will owe £500–600 each on average. Refunds will be sent by cheque in August and September.

Note that for 2010/11 underpayments:
• The de minimis below which underpayments are written off is £50. It was increased to £300 for the previous years’ exceptional circumstances but has now come back down to £50.
• The maximum liability which can be included in a PAYE code will go up from £2,000 to £3,000 for 2012/13.

For those who receive forms P800 for 2010/11 as a result of the reconciliations, the actions to take are:
• Check the form and tell HMRC if there are errors or omissions, or anything you don’t understand. You should do this even if have an overpayment, as you have an obligation to point out errors to HMRC.
• If you have an underpayment, check whether your employer might have made an error, eg operated the wrong tax code for you. It may be that HMRC should ask the employer rather than you to make good the tax lost as a result of the error.
• It is unlikely that Extra-statutory Concession A19 will apply to underpayments for 2010/11 – this is the concession under which HMRC will write off tax if it has been slow to use information and the taxpayer could reasonably have believed their tax was in order. Generally ESC A19 only applies if HMRC tells the taxpayer about outstanding tax more than a year after the end of the relevant tax year, which will not apply to 2010/11 P800s being sent out this summer. However, in some cases where HMRC has made repeated errors over the years, it is possible that ESC A19 can apply to a more recent year.
• If the underpayment is right but paying it back – either in your 2012/13 tax code or by direct payment – will cause you hardship, you should contact HMRC – it has said that it will make alternative payment arrangements in cases of financial difficulty.

Employers warned not to take hard line with parents affected by strikes

Employment lawyers have warned organisations not to refuse parents the day off tomorrow or subject them to disciplinary measures on their return, as many parents struggle to find childcare in the face of school closures.

Thursday 30 June, teachers and civil servants will take part in large-scale coordinated strike action over proposed changes to their pensions, leaving many schools under-staffed and unable to stay open.

Employers will have to decide how to deal with staff that are forced to take time off to care for their children, which could put pressure on companies with a high number of working parents.

Michael Ryley, head of the London employment group at law firm Pinsent Masons, warned that in most cases an employer would be ill-advised to refuse a working parent the day off, as they may be covered by the right to time off for dependants.

"It is a hugely dangerous call for an employer in this situation to turn down an employer request for time off", said Ryley.

"Part of the reason for the right for time off for dependants is around childcare and there are specific provisions that allow employees to take time off in an emergency breakdown of childcare."

Organisations may also face problems if they attempt to discipline workers who cannot attend work due to the school closures.
Jim Lister, head of employment at law firm Pannone, explained: "As there is no legal obligation to pay parents unable to get into work, they are entitled to unpaid leave following the breakdown of arrangements for the care of their children.

"Therefore, employers who attempt to discipline parents for not turning up for work could find themselves falling foul of the law."
Laura Chamberlain - Personnel Today.

HMRC Task Force to Investigate Restaurants

HMRC has announced that its much heralded “Task Force” set up to tackle tax evasion will focus on the restaurant trade as its first target sector, and not surprisingly, London will be the initial target area.

This is the first step taken as a result of the £900m investment to tackle tax evasion, avoidance and fraud which aims to raise an additional £7 billion per annum over the next four years, and with target yield of this magnitude, investigators are likely to be much more rigorous and considerably tougher than one might expect from the normal type of enquiry.

The restaurant trade will no doubt wonder, “Why us?”

Historically restaurants have been a lucrative source of enquiry work for HMRC. It is easy to apply a business economics model to the restaurant trade, which enables HMRC to calculate what the takings should be, based on the purchases made by the business. Restaurants take cash, which always excites HMRC – there are regularly problems with till rolls and the method of recording sales, there are often gaps in the sequence of numbered meal tickets (suggesting unrecorded sales) and as a failsafe, most investigators would fancy their chances of finding PAYE problems concerning employment status – believe it or not self employed chefs are a common feature – or tips.

Little has changed today. HMRC still conducts such exercises. An investigator will sit in a restaurant, order food, pay in cash and then check at a later date whether or not his own “cash” bill has been recorded in the books. He will count the number of customers whilst he is present, and subsequently check that all of those sales have been recorded. He will take note of the number (and names) of staff on duty and check this with PAYE records, often finding that there are staff who are not on the payroll but are being paid cash in hand, often out of unrecorded cash sales.
Food for own consumption is another area where HMRC would expect adjustments to be due, with investigators treating any claim by the proprietor that they do not personally consume food with some contempt.

It is no surprise that restaurants have been selected as the first sector targeted by the Task Force, and an aggressive approach can be expected.

HMRC Single Compliance Process

HMRC agrees to put back the start date until 20 June 2011

Last week we reported that HMRC is starting to test a new Single Compliance Process (SCP).

The professional bodies have had further discussions about this with HMRC and we can now provide an update.

Although the pilots of the SCP will begin in June as previously announced, HMRC has agreed to defer the start date a little. This will allow time to finalise some details of the process and for HMRC to produce detailed guidance for agents.

Therefore, although HMRC will start its preparatory work now, it will not be contacting businesses who have been selected for the pilot, or their representatives, until the week commencing 20 June 2011.

The SCP pilot will look at 1,100–1,200 cases in 10 different locations across the UK: Reading/Slough, Newcastle, Warrington, York, Exeter, London Euston and Southampton in England; Cardiff in Wales; Belfast and Edinburgh/Dundee.

Tax Returns - New Opportunity for Criminals !!!

New round of tax returns means new opportunity for criminals

We have just been advised by one of our members that self assessment tax return fraudsters have struck again. This may be an isolated case, but please be aware of the risk and as usual be vigilant and keep a close watch on your passwords. Change them regularly if you can. Although this is currently an HMRC requirement, it seems likely that this may need to change in the near future.

In 2010, we reported problems in mid April. In 2009, the problem seemed more widespread and carried on for slightly longer. As we explained then, the fraud involves repayment claims which are submitted to HMRC online using valid log in details and passwords, requesting payment to a third party bank account.

This year’s problem follows the same pattern.

The professional bodies and HMRC issued joint guidance in response to the fraudulent activity when it first happened. This detailed guidance is still valid and is available on http://www.icaew.com/~/media/Files/technical/Tax/Working%20with%20HMRC/prevention-of-it-related-tax-fraud-advice-for-tax-agents-and-advisers-publications-and-technical-guidance-icaew

Research & Development Tax Relief

Background – Are you making enough of the relief?

Following the recently published Dyson Report, HM Revenue & Customs (‘HMRC’) are currently considering recommendations to refocus existing R&D schemes on high tech companies, small business and new start ups. The 2011 Budget announced changes to the relief, making it more beneficial to small and medium sized companies. This is not the end of the consultation and review however, further changes have been proposed but have not been legislated. Whatever the final outcome, you should ask yourself whether you are really making enough of the relief?

Recent reports show that since its introduction in 2000/1, more than 20,000 companies have claimed relief under the R&D tax scheme. Putting this in context, in 2008/9 there were 2.27 million active companies registered at Companies House. So is the R&D relief too difficult to obtain? Or are many companies just missing the point? Is your company missing out?

Research & Development tax relief is available for companies of all sizes. It can either reduce a company’s tax bill or in smaller, loss making companies, provide a cash repayment.

But my company doesn’t undertake R&D work!
Are you sure? It may surprise you to know that not all claims for R&D relief are made by so called ‘hi-tech’ companies. In fact in many instances the companies making the claims are themselves surprised that their activities qualify as R&D.

The majority of costs that can be claimed are usually more likely to be found in the company’s books allocated to wages and salaries, tool, maintenance and power costs than they are to be found in a nominal code all of their own. They could even be on the balance sheet and not hitting the Profit & Loss account at all.

We’ve only undertaken a R&D project this year – it was a one off.
It does not matter whether it is the first time, or the 8th time that a company has claimed relief. Each claim will be considered separately. Around 30% of claims each year are made by ‘new’ companies, i.e. those making R&D tax credit claims for the first time.

What would we include in a claim? What constitutes Research or Development?
A project is R&D if the project seeks, through the resolution of scientific or technological uncertainty, to achieve an advance in overall knowledge or capability in a field of science or technology, not a company’s own state of knowledge or capability alone.

And what costs can we claim?
- Staffing costs
- Consumable items
- Subcontracted R&D
- Externally provided workers
- Qualifying indirect activities

What relief could/should my company claim?
1. Up to an additional 100% over and above the relevant expenditure against profits
2. Loss making company – future profits considered likely – carry forward of losses
3. Loss making company – future losses predicted – surrender of some or all R&D losses for cash refund
In 2008-09 only 570 companies claimed a repayable tax credit in the year!

What do we need to do to submit a claim?
HMRC recommend an overview of the claim is submitted with the return. As HMRC aim to respond to, or approve 90% of R&D credit claims within 30 days of submission, being helpful and upfront at the beginning can be beneficial to all parties.
The claim must be included within the company’s tax return and has to be made within 2 years of the end of the relevant accounting period. If your company has already filed their return for the year in question, HMRC will accept an amended return which includes the R&D claim.

Who deals with the claim?
HMRC have several specialist R&D units set up specifically to deal with all company tax returns that include a claim for relief.

Anything else we need to know? What is the future of R&D claims?
HMRC continue to believe that R&D tax credits are a worthy incentive to innovation in the UK. Currently the scheme is under consultation with all the main players in the accountancy industry and comments are expected on how the scheme currently runs and how any improvements could be made.

The Government announced in the Budget proposed amendments to the scheme. A further increase in the relief to an additional 125% over and above the relevant expenditure, removal of the current £10,000 de minimus spend and the removal of the requirement to have paid PAYE/NI in the year before any repayment is made have all been proposed from 1 April 2012 onwards. These are only proposals currently; however it would suggest that HMRC are keen to ensure more small and medium companies are able to benefit from this relief.

How can we help?
You have the technical knowledge, so let us deal with the R&D technical knowledge. Our tax specialists have experience of submitting successful claims for many different areas of industry and many different sized companies; from claims which have given additional tax relief in the hundreds of thousands, to tax repayments worth tens of thousands for loss making companies.
The first year’s claim submission is critical. Our experience gained in the detailed review of companies’ activities, the interpretation of technical material into accounting information, as well as the creation of information packs to accompany the tax return could be invaluable to you.

BBC Watchdog - HMRC Debt Collection

BBC Watchdog featured a short report on the debt collection activities of HMRC, principally about the use of an overly aggressive tone (eg, threatening to seize cars and computers, etc) and the pursuit of debts that did not exist. If you missed it, catch it on iPlayer or via the BBC website: Click here.

HMRC said it would apologise to the taxpayers featured and explained that, with billions of transactions to process, a small number of mistakes were inevitable. HMRC denied that the problem was caused by staff or budget cuts.

One of our clients recently received one of the threatening letters for an alleged debt of £5,500 from 2009-10. We had e-filed an amendment to his return, which had been e-accepted, before the deadline, so he was actually due a refund. The debt management information was weeks out of date, so the aggressive letter should never have been sent. When we spoke to the contact centre, they confirmed that there were no arrears showing on their system, but said that they had no means of feeding that information quickly to the debt collectors. They couldn't help.

The matter was resolved without the client blaming us, but still leaves a bitter taste !!!

HMRC announces crackdown on VAT rule breakers

HMRC issued a news release on Friday 20 May announcing that it is to introduce a campaign targeted at VAT rule breakers.

The new campaign will focus on individuals and businesses who are trading above the VAT threshold (currently £73,000), but who have not yet registered for VAT. The initiative is being discussed with interested parties to ensure HMRC has as much information from them as possible before launching the campaign later in the summer.

Mike Wells, HMRC's Director of Risk and Intelligence, said:
“Our aim is to get as much input as possible into our future campaigns so that the views and experience of people and organisations outside the department play a fuller part in what we design for customers.
“We are already in contact with a number of interested parties and I expect many more to contact us with their views before we finalise the design of the VAT initiative.
“This will be the model for all our future campaigns and we look forward to being even more open about the compliance activity HMRC is undertaking to ensure we reduce the tax gap and help customers pay what they owe.”

This is the latest in a series of campaigns targeting particular sources of income or professions. Previous campaigns have targeted offshore investments, medical professionals and people working in the plumbing industry. For each HMRC has used new technology and legislation to gather and analyse data, from internal and external sources, to identify people who should come forward. This has provided thousands more investigations, now being worked through, including a number of criminal investigations.

Darren Hahn, Nordens Chartered Accountants, VAT

HMRC - Single Compliance Process

On 18 May HMRC announced that it will be testing a new ‘Single Compliance Process’. The pilots will begin in June 2011.

Details are in HMRC’s press release. There is also an HMRC briefing note for agents which has been published on the ICAEW website but is not yet on the HMRC website.

So what it the Single Compliance Process (SCP) and what will it mean for tax practitioners and their clients?

The HMRC press release says:

“By simplifying and standardising the process for compliance checks HMRC will improve customer experience and reduce costs as the check will only take as long as the risks and behaviours encountered dictate”, and

“The single compliance process will focus solely on the risks and behaviours identified in cases and throughout the life of the compliance check, irrespective of the head of duty (VAT, Income Tax, Corporation Tax and PAYE) involved. The process will be capable of addressing lower risk cases at an appropriate level, but will also increase in intensity should the approach be warranted.”

In essence, the idea is that HMRC will use a uniform procedure for dealing with a compliance case – from the opening through to the conclusion – for all types of tax. Further, as part of the process HMRC will assess the risks involved in each case and consider how best to tackle it, to ensure that HMRC resources are allocated in a proportionate way. The idea is that compliance work should be carried out in a way which is more cost-effective way for both HMRC and the taxpayers, and that cases should not be allowed to run on pointlessly.

The SCP will initially be aimed at business taxpayers in the SME sector, although the approach may later be widened out to other taxpayers.

The first stage is for HMRC to test the SCP. Pilots will be run for six months from 1 June in 10 different locations across the UK: Reading/Slough, Newcastle, Warrington, York, Exeter, London Euston, Southampton, Cardiff, Belfast and Edinburgh/Dundee.

HMRC intends to roll out the new process nationally from January 2012, subject to the results of the trials.

It should be noted that the SCP is a separate initiative, and a different pilot exercise, from the Business Records Checks which HMRC started piloting recently.

The Tax Faculty and other professional bodies are in discussion with HMRC about the SCP initiative. We have questions and concerns about some aspects of it, and are obtaining more details about the process and exactly what agents can expect when the pilots start. We will publish more information and guidance for members as soon as we can.

One aspect of the SCP is worth noting: in many cases HMRC is likely to attach quite a lot of importance to meeting the taxpayer and looking at records at their business premises. It should be considered that while a meeting may well be a good idea in some enquiry cases, HMRC does not have the power to insist on one or to insist on meeting the taxpayer, though it does have the power to inspect business premises.

Nordens will cover this and other aspects of the Single Compliance Process when more detailed guidance is published.

SAVE NOW on Domestic Utility Bills

Nordens has partnered with LSI, one of the UK's leading utility brokers. Together we are proud to introduce this new cost-cutting service to all our employees.

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Have you claimed business rate relief?

Are you aware that only 84% of small businesses claimed business rate relief in 2009/10.

Business rates are charged on commercial properties such as shops, offices and factories and collected by councils. The annual bill is calculated as a percentage, currently about 40%, of a properties rateable value.

Small businesses are normally eligible for a 50% discount if their premises have a rateable value of less than £6,000, with the discount tapering for values up to £12,000.

Under the business rates holiday, however, which has just been extended to 30 September 2012, there is 100% relief for premises with a rateable value of less than £6,000, again tapering to the £12,000 cap.

Mark Norden of Nordens advises small business owners to check with their council to ensure that the reliefs are being claimed. The good news is that if you haven't claimed the relief yet, you can apply and backdate the claim to 1 April 2010 and so still benefit from the full period of the 100% discount.

Paying HMRC changes from April 2011

All change from April 2011

The rules for paying some of the most common taxes are changing.

• Corporation Tax. From 1 April 2011, companies and organisations must submit their company tax returns online and pay all corporation tax and related payments electronically. This includes interest on overdue corporation tax and penalties for not filing company tax returns on time.

When, exceptionally, payment is made by cheque after March 2011, the funds will be treated as being received by HMRC on the date when cleared funds reach HMRC's bank account - not the date when HMRC receives the cheque. See also How to pay Corporation Tax.

• Class 2 National Insurance contributions will in future become due on 31 July and 31 January, the same as self assessment income tax. See also How to pay Class 2 National Insurance contributions.

• PAYE late payment penalties. HMRC will start issuing late payment penalty notices to employers who paid their PAYE late in the 2010/11 tax year. See also How to pay PAYE late payment penalties.

• Penalties for submitting a VAT Return on paper instead of online. From April 2011 if you should have submitted your VAT Return online but sent it in by paper instead, you will be charged a penalty. These penalties will apply to returns for accounting periods ending on or after 31 March 2011. See also How to pay VAT and Find out more about penalties for submitting a VAT Return on paper instead of online.

IR35 - It is here to stay

After ten years of campaigning, lobbying, hoping and fearing, the future of IR35, the 'disguised employees tax' has been decided by the Coalition Government - it is here to stay.

Chancellor George Osborne was given three alternatives by the Office of Tax:
1) Simplification: to suspend it with a view to abolition
2) Retain it with improved administration by HMRC; or
3) To introduce business tests

In yesterday's Budget he gave his decision: IR35 will remain on the Statute Books and HMRC will improve their administration with such things as a helpline and targeted compliance activities.

Despite an admitted lack of solid information about the impact of IR35, the Chancellor decided to retain it as 'abolition would put substantial revenue at risk'. Initial reactions from many freelancers was a resigned 'better the devil you know'.

Budget Summary 2011

23 March 2011, the Chancellor of the Exchequer George Osborne delivered the 2011 Budget. The following is a summary of the main tax points of interest.

BUSINESS TAXES

Corporation Tax: from 1 April 2011, the main rate of corporation tax will be reduced to 26% and then to 25% from 1 April 2012, 24% from 1 April 2013 and 23% from 1 April 2014.

Small companies’ rate: as previously announced, this will be reduced to 20% from 1 April 2011. The effective rate of tax for profits between £300,000 and £1,500,000 is 27.5%.

Capital allowances: as previously announced, writing-down allowances will be reduced to 18% from April 2012 and the Annual Investment Allowance (AIA) reduced to £25,000. There are complex rules for computing both writing-down allowances and AIA for chargeable periods which straddle a rate of change. In addition, the Government will consult on plans to require businesses to pool their expenditure on fixtures within a building within a short period of acquisition, in order to qualify for capital allowances.

Capital allowances: short life assets – from April 2011, short life asset elections will be able to be made if a business acquires an asset and expects to sell or scrap it within an eight year period (up from the current four years). This will benefit businesses that spend more than the AIA.

Enhanced capital allowances: the energy-saving enhanced capital allowance scheme will, subject to State Aid approval, be updated during summer 2011. Also, the Government will consider introducing enhanced capital allowances to support the 21 new enterprise zones in situations where there is a strong focus on high value manufacturing.

Flat conversion allowances: these will be abolished not before 2012, with a final date set after consultation.

Mileage allowance payments: from 6 April 2011, 45p per mile (up from 40p) can be claimed for the first 10,000 miles per year travelled by an employee on business.

Company cars: the threshold of CO2 emissions used to calculate the company car tax benefit will be reduced from 6 April 2011. This means that the chargeable benefit will increase by 1% of the list price for many cars. For the fuel benefit charge, the figure used to calculate the charge will rise from £18,000 to £18,800 with effect from 6 April 2011.

Research and development: from 1 April 2011, the rate of the additional deduction available for SMEs undertaking R&D will increase from 75% to 100% of qualifying expenditure. From 1 April 2012, the deduction will increase by an additional 25%; the limit on a company’s R&D tax credit being the amount of PAYE and national insurance it pays will be scrapped; the £10,000 minimum expenditure condition will be removed and the rules governing work done by subcontractors will be changed. All changes are subject to State Aid approval.

Fair fuel stabiliser: as part of the fair fuel stabiliser, the supplementary charge on profits from UK oil and gas production will increase from 20% to 32%. If, in the future, the price of oil falls below a set trigger ($75 per barrel subject to consultation) the charge could be reduced.

Bank Levy: this will rise from 1 January 2012 to 0.078% for short-term chargeable liabilities and 0.039% for long-term chargeable equities and liabilities.

Controlled Foreign Company rules: interim improvements to the CFC rules – including a mainly entity based system operating in a targeted and more territorial way by only bringing into charge the proportion of overseas profits that have been artificially diverted from the UK – will be made in the Finance Bill 2011, ahead of full reform in 2012. A partial finance company exemption will also be introduced.

Patent box: the Government will continue to consult on a reduced 10% corporate tax rate for patent profits, with draft legislation to be published in autumn 2011, and included in Finance Bill 2012 for implementation in 2013.

Taxation of foreign branches: as previously announced there will be an opt-in exemption from corporation tax on profits of foreign branches of UK companies. Changes in relation to the way the transitional rule and the anti-diversion rules are to work have been proposed.

Corporate capital gains simplification: as previously announced, the capital losses, value shifting and degrouping charges group rules will be simplified.

IR 35 legislation: following a review of the IR35 legislation, which imposes PAYE and national insurance liabilities on certain companies used to disguise employment, HMRC has decided to retain the legislation, but intends to improve its administration by increasing specialist help and consulting interested parties. In practice, this is unlikely to mean any relaxation of the rules.

PERSONAL TAXES

Income tax: as previously announced in Budget 2010, the personal allowance will increase to £7,475 from 6 April 2011 and the basic rate will be reduced to £35,000. Budget 2011 has announced that, from 2012/13, the personal allowance will be increased to £8,105 and the basic rate limit reduced to £34,370.

National insurance: as previously announced, from 6 April 2011 employee’s national insurance rates will increase from 11% to 12% below the upper earnings limit and from 1% to 2% above that, with employer’s national insurance contributions rising from 12.8% to 13.8%.

Reform of income tax and national insurance: the Government will consult on options, stages and timing of reforms to integrate the operation of income tax and national insurance contributions. A consultation document will be issued later this year.

Enterprise Investment Scheme (EIS): the rate of income tax relief given under the EIS scheme will be increased from 20% to 30% from 6 April 2011. The maximum amount an individual can invest annually will rise to £1m from 6 April 2012. These changes are subject to State Aid approval.

EIS and venture capital trusts (VCT): Subject to State Aid approval, the threshold for the size of qualifying company for both EIS and VCT purposes will increase to 250 employees and no more than £15m of gross assets before investment. The annual amount that can be invested in an individual company through both EIS and VCTs will rise to £10m. All these changes have effect from 6 April 2012.

Disguised remuneration: as previously announced, legislation will be introduced to tackle third party arrangements including EBTs and EFRBS, which aim to avoid or defer income tax and/or national insurance. Changes to the draft legislation have been made to exclude arrangements that cannot be used for tax avoidance purposes, for example certain short-term loans, some deferred remuneration arrangements, and employment-related securities schemes.

Non-domiciles: from April 2012, the remittance basis charge will increase to £50,000 annually for non-domiciles who have been UK resident for 12 or more years. Also, the tax charge will be removed where non-domiciles remit foreign income or capital to the UK in order to make a commercial investment in UK businesses. Some other aspects of the current tax rules will be simplified to remove undue administrative burden. The Government will be consulting on these measures in June.

Statutory residence test: the Government will issue a consultation document in June and intends, from April 2012, to introduce a statutory definition of residence to provide greater certainty.

Inheritance tax: as previously announced, the threshold for the nil-rate band is frozen until April 2015. In addition, where 10% or more of a deceased’s net estate is left to charity the rate of IHT will be reduced to 36% from 6 April 2012.

Capital Gains Tax: the annual exemption for 2011/12 will rise to £10,600.

Entrepreneurs’ Relief: from 6 April 2011, the lifetime limit of gains which can benefit from ER will rise to £10m.

Gift Aid: the maximum value of benefits that individuals and companies may receive as a result of making charitable donations of more than £10,000 will increase from £500 to £2,500, subject to a 5% of the value of the gift limit. From April 2013, charities that receive donations of £10 or less will be able to apply for a gift aid style repayment without having obtained gift aid declarations, capped at £5,000 per year per charity.

Individual Savings Accounts: the annual limit is to be increased to £10,680 for 2011/12.

Junior ISAs: these will be available from autumn 2011 for any UK-resident child that does not currently hold a Child Trust Fund.

PROPERTY

Stamp Duty Land Tax (SDLT): as previously announced, a new 5% rate for purchases of residential property will apply from 6 April 2011.

SDLT: bulk residential purchases – a relief will be introduced for purchasers who acquire more than one residential property. The rate of SDLT will be determined by the mean consideration (i.e. the aggregate consideration divided by the number of dwellings) subject to a minimum rate of 1%.

SDLT: anti-avoidance – the legislation will be included in Finance Bill 2011 to make it clear that three types of SDLT avoidance schemes do not work. The changes relate to clarifying how the sub-sale and alternative finance rules interact; and how ‘financial institution’ is defined for alternative finance purposes and countering the effect of an engineered reduction in market value where properties are exchanged.

SDLT: first-time buyers – the outcome of the review of the SDLT relief for first time buyers will be announced in the autumn.

Business rates: a discount of up to 100% on business rates worth up to £275,000 over a five year period will be offered to businesses located in the new enterprise zones.

Small business rate relief (SBRR): the SBRR holiday will be extended by 1 year from October 2011.

Business Premises Renovation Allowance (BPRA): BPRA will be extended for a further five years from 2012.

Real estate investment trusts: the Government will consult on reducing the barriers to entry and investment and reducing the regulatory burden, with legislation to be included in Finance Bill 2012.

Enterprise Zones: the Government intends to create 21 new enterprise zones. A business in an enterprise zone will enjoy several advantages:
• 100% discount on rates
• enhanced capital allowances
• relaxed planning obligations

Furnished holiday lettings: as previously announced, from 2011/12 losses from furnished holiday lettings can only be set against furnished holiday lettings income rather than against total income. In 2012/13 there will be increases in the qualifying periods of availability and letting for determination of what qualifies as a furnished holiday letting.

VAT

Registration and de-registration thresholds: the registration threshold will increase to £73,000 and the de-registration threshold to £71,000. Both changes apply from 1 April 2011.

Low value consignment relief (LVCR): the threshold at which LVCR operates is being reduced from £18 to £15 from 1 November 2011. The Government is going to explore ways with the European Commission to limit LVCR and will look again in Budget 2012 about reducing the threshold further if this proves unsuccessful.

Cost-sharing exemption: consultation will continue on the options for implementing the VAT cost sharing exemption into UK legislation to allow organisations such as charities and housing associations to make efficiency savings where they work together.

Online registration: from 1 August 2012, VAT registration, de-registration and notification of changes will have to be done online.

HMRC and TAX ADMINISTRATION

Time to Pay: HMRC will continue to offer Time to Pay to all viable businesses experiencing temporary financial difficulty.

Small business: the Office of Tax Simplification will look at how to improve administration for small business with recommendations to be made for Budget 2012.

Financial security for PAYE and NICs: from April 2012, HMRC will be able to require security from an employer where there is a serious risk that PAYE and/or Class 1 NICs will go unpaid.

Review of Reliefs: following the work done by the Office of Tax Simplification, a number of reliefs including late night taxis, luncheon vouchers, flat conversion allowances, disadvantaged area relief and land remediation relief will be abolished.

Data-gathering: legislation will be introduced to enable HMRC to collect data for risk assessment and to impose a penalty if a person is aware of an inaccuracy when providing information or documents.

Disclosure of tax avoidance schemes: further changes to the ‘hallmarks’ which govern when a scheme has to be disclosed to HMRC are to be implemented in 2011/12. These include schemes that seek to avoid income tax and/or national insurance on employment income, schemes that incorporate offshore transactions to avoid corporation tax and artificial loss schemes.

Tax avoidance: the Government will be reviewing a number of areas to look at strengthening legislation that has been subject to avoidance. The first two areas will be income tax losses and unauthorised unit trusts with a view to legislation being implemented in Finance Bill 2013.

Listed tax avoidance schemes: certain known avoidance schemes will be listed in regulations and have statutory consequences attached to their use. Legislation will be included in Finance Bill 2012.

Tax-treaties anti-avoidance: Finance Bill 2012 will contain an anti-avoidance measure which would ensure that relief or exemption from UK tax is not available under a double taxation treaty where certain arrangements have been made in relation to the claim to avoid UK tax.

Online filing for corporation tax returns: from 1 April 2011 corporation tax returns must be made electronically. This includes the submission of statutory accounts in an electronic format know as iXBRL.

Are you overpaying on your utilities?

Nordens, in conjunction with LSI, one of the UK’s leading utility brokers, are offering all our clients a free, independent assessment on their utility bills. Savings of up to 25% can be achieved on your gas, electricity and telephone bills as most companies are overpaying for their utilities. Whether you are in a fixed contract or on standard tariff, LSI will carry out an independent assessment and report back to you with a detailed analysis of the savings that can be achieved, without any cost or obligation to your company.

As a valued client of Nordens you will be able to benefit from LSI’s bulk purchasing power which, in your company’s own right, you would not be able to achieve. Once a client of LSI you will be entitled to your own Account Manager to deal with any queries, rather than holding on the phone for long periods of time trying to sort out your utilities. LSI manage the accounts of some of the UK’s leading businesses and therefore you are in safe hands. It can’t be simpler.

Just email lisa@nordens.co.uk and she will arrange for an Account Manager from LSI to make contact with you. If you want to discuss this proposal beforehand with a member of LSI staff, please email leanne@lsiutilitybroker.co.uk and she will respond to you. As your accountant, part of our remit is to save your company money and to be creative and I hope this initiative goes some way to fulfilling our aim.

Budget 2011 â€“ What can we expect?

The second Budget of the Coalition Government is on 23 March 2011.

The 23 March 2011 Budget is the second Budget of the Coalition Government and follows the first, Emergency, Budget on 24 June 2010.

In this news item we consider what may be in the Budget, and what to expect in the Finance Bill.

Growth should hit the headlines

The main headlines from the Budget should come from the Government’s proposals on its Growth Strategy.

There was to have been a Green Paper last summer but instead HM Treasury and Department for Business, Innovation and Skills (BIS) outlined a Growth Review programme, in November 2010, on which the first report is promised in the current Budget.

The two principal objectives are to:

   • identify structural reforms with the potential to improve the business environment and benefit the whole economy; and
   • examine the barriers to growth that affect specific sectors and set out what Government will do to address them.

The Business, Innovation and Skills (BIS) Department published a White Paper on Trade Investment for Growth in February 2011 and this was also a major theme in Secretary of State Vince Cable’s Mansion House speech on 3 March 2011.

Economic growth is seen by most commentators, and also we believe by the Government, as the vital ingredient if the UK economy is going to produce the resources to drive down the size of the public deficit, to begin to mend the public finances and, as its name implies, get the economy growing again.

The ICAEW pre-Budget submission

Michael Izza, Chief Executive of ICAEW, wrote to the Chancellor of the Exchequer, George Osborne, at the beginning of March setting out the key issues on which ICAEW believes the Budget needs to focus. These are:

   • A more competitive approach to supporting enterprise
   • A simpler tax system
   • A skilled and socially mobile workforce
   • Better financial reporting and management across national and local government
   • Enhancing the UK’s international leadership in professional and business services

What’s going to be in the Budget?

In some ways we know more than we normally do at this stage, but in other respects much less.

Budget secrecy has been maintained to a much greater extent, at least so far, than in recent years.

What we do know a lot about is what is going to be in the Finance Bill, due to be published eight days after the Budget – because draft Finance Bill 2011 clauses were published for consultation on 9 December last year.

The Chancellor in his Budget will no doubt update us on what changes he proposes to make to the draft clauses as a result of the consultation process.

A major area of concern has been the proposals on Disguised Remuneration. Many people complained that the clauses published in December were far too widely drawn and were likely to catch a lot of ordinary and unexceptional situations. It looked at one stage as if the introduction of these provisions might be delayed but we don’t now believe that is likely as the Government is currently carrying our a further redraft of the provisions before they are published in the Finance Bill on 31 March.

The Chancellor is also likely to give us an idea of the areas on which he proposes to consult during the summer so that draft clauses can be published in the autumn, for subsequent consultation, followed by publication in Finance Bill 2012.

What else will the Chancellor announce?

New Enterprise Zones: It seems likely that the Chancellor will announce a number of new Enterprise Zones similar to the ones created by the Thatcher Government in the 1980s. Recent studies by the Work Foundation Do Enterprise Zones work? and by the Centre for Cities What would Maggie Do? suggest that the current Enterprise Zones will have to be different from their 1980 predecessors if they are going to create sustainable growth and new long term jobs. We shall have to wait and see what lessons the Chancellor has learned from the earlier experiments.

Tax Simplification: The Chancellor will give his response to the final report of the Office of Tax Simplification on Review of Tax Reliefs, published on 3 March, and on the interim report Small Business Tax Review published on 10 March. The Chancellor may give some indication of the likely future work of the Office of Tax Simplification now that the Government can draw some lessons from the initial work programme.

Changes to CGT: There has been speculation that there may be changes to CGT and, in particular, the rates but we are not convinced anything is going to change so soon after the new rates which were only introduced with effect from June last year.

Nevertheless, the Chancellor will need to confirm the CGT rates of 2011/12 and set the annual exemption.

Rates of income tax: There has been much criticism of the 50% top rate of income tax that the Coalition inherited from Labour and which only begun in April 2010, the month before the Coalition came to power. The public finances are not going to permit any immediate change but there is pressure to set out a roadmap for these and other taxes to mirror the Corporate Tax roadmap that was published last November.

Personal allowances: The Government’s The Coalition: our programme for government announced, amongst many other measures, that the personal allowance would increase to £10,000.

It is currently at £6,475 in 2010/11 and it has already been announced that it will increase to £7,475 in 2011/12. There is some speculation that the Chancellor might announce future increases at the time of the Budget.

The cost of motoring is moving towards the top of the political agenda. It seems almost inevitable that something will be announced. It is likely that the 1p increase in fuel duty will not be introduced. But what else will be done is far from clear: we are afraid you are going to have to wait until 23 March to find out.

Pension provisions: Lord Hutton’s Independent Public Service Pensions Commission presented their final report on 10 March 2011 on the reform of public sector pensions. We expect the Government to give an initial reaction to that report. The report proposes that the public sector should retain defined benefit schemes but these should be based on average career salaries and not final salaries. The government will now have to decide what should be the accrual rate, should the 1/60th per year of membership in the scheme be retained or reduced to 1/90th, what indexation should be applied to deferred and in payment pensions and, finally, what level of employee contributions should be required in the future.

Air Passenger Tax: It is also likely that the government will withdraw its proposal to change the Air Passenger Tax to a tax per aircraft rather than per passenger. The Government seems to have accepted that it is not going to be possible to make any change in the light of long standing international conventions of which the UK is a signatory. There will undoubtedly be other announcements of what is likely to be happening on the green tax and environmental front.

The review of domicile and a statutory residence test: The review of the taxation of non-domiciled individuals was announced in the Coalition Agreement but we don’t think any developments will be announced at the time of the Budget nor do we believe there will be announcements about any developments on a statutory residence test which also remains under discussion.

VAT: We can expect an announcement of the VAT registration thresholds for next year.

Tax avoidance
There will undoubtedly be some announcements in the Budget about specific measures to stop particular avoidance schemes. On 9 March 2011 there was an announcement that measures will be introduced to stop schemes which exploit the plant and machinery leasing provisions.

The review into a potential General Anti Avoidance Rule (GAAR) is currently ongoing and will report its findings at the end of October 2011. So there will be no substantive announcement on this in the Budget.

What about Finance Bill 2011?

At the time of the Autumn Statement in December draft clauses were published for consultation prior to publication of Finance Bill 2011 on 31 March 2011.

Comments on the draft Finance Bill 2011 clauses were requested by 9 February 2011 and the Tax Faculty submitted 13 separate papers to the HMRC officials in relation to their areas of responsibility: these comments were collected and published as TAXREP 5/11. We also published TAXREPs 11 to 16/11 which picked up the more important comments in individual areas, such as disguised remuneration, corporation tax etc.

Corporate tax
This is a major area of development of the tax system and the Government published its Corporation Tax Roadmap in November 2010 on which we commented in TAXREP 8/11.

A major proposal is a gradual reduction in the headline rate of corporation tax over the lifetime of the present Parliament from 28% to 24% from April 2014.

Apart from the rates the main concern of the Government has been to bring to an appropriate conclusion the consultation on how to tax Foreign Profits following the introduction of a foreign subsidiary dividend exemption in FA 2009. The main continuing issue has been the Controlled Foreign Company rules which are going to be completely overhauled from 2012 onwards. Interim Improvements to the current system are being introduced in Finance Bill 2011. There are also going to be changes to the taxation of foreign branches.

The other main changes are going to be to Intellectual Property and the new patent box regime under which there is to be a 10% tax on income from patents, including embedded patents, which will begin in 2013. There are also going to be changes to the R&D tax credits based on the recent consultation.

Capital allowances
In Finance Bill 2011 the writing down allowance for eligible expenditure on plant and machinery will come down from 20 to 18% and to 8% for the special rate pool from April 2012. The annual investment allowance will come down to £25,000 from April 2012 having been increased in Finance Act 2010 from £50,000 to £100,000 from April 2010.

Furnished holiday lettings
Relief for Furnished Holiday Lettings was to have been withdrawn from April 2010 but after much consultation a new scheme is to be introduced, in Finance Bill 2011, which will also cover the EU and EEA areas and so be compliant with the EC Treaty. In the main, in order to qualify, properties must be available for letting to the general public for 210 days and be let for 105 days. The new rules will apply from April 2012.

Pensions relief
Finance Bill 2011 will limit relief for payments towards pensions to £50,000 in any year from 2011. Any unused allowance can be carried forward for three years. The lifetime allowance is to be reduced from £1.8 to £1.5 m from 2012. The requirement for members of registered pension schemes to take out an annuity once they reach the age of 75 is to be removed.

Year End Income Tax Planning

With only a few weeks left until the end of the current tax year, below are some factors to consider before 6 April 2011.

1. INCOME TAX

Income Splitting

Every person in the UK is allowed to earn a certain amount of money each year without paying tax, known as a personal allowance. This tax year, we each have a personal allowance of £6,475, with higher allowances available to those aged 65 and above.

If you are married and one partner is not working, it makes sense to transfer savings accounts to them, so that you pay less tax as a couple. If you don't make use of your personal allowance in any tax year, you cannot carry it forward to the next year.

Individual savings account (ISA) allowance

ISAs allow you to save money free of income tax and capital gains tax. This tax year, you are allowed to put £5,100 into cash ISA, and the same amount into a stocks and shares ISA, or you can put the whole £10,200 allowance into stocks and shares.

From April 2011, you will be able to invest £5,340 in cash ISA, and £5,340 in a stocks and shares ISA. Alternatively, you can invest your whole £10,680 ISA allowance in stocks and shares. Any allowance not used by the April 5 deadline will be lost forever.

Pension Contributions

For every £80 a basic-rate taxpayer put into their pension this tax year, the government will top it up by £20, so that the total contribution to your pension is £100. This is because you get basic rate tax relief on pensions at 20 %. Higher rate earners do even better because they can get up to 40 % tax relief, so £100 paid into a pension will only cost £60, and top rate taxpayers receive 50% on their contributions - that is £1 from the government for every £1 they save.

From April, however, the maximum amount that savers can put into pensions and claim tax relief on will be reduced from £255,000 to £50,000. That means if you want to make a big lump sum payment into your pension you'd do well to do so before the end of this tax year.

2. INHERITANCE TAX

The inheritance tax (IHT) annual exemption of £3,000 on individual gifts can be carried forward for one tax year. So if you have not used the exemption this year or last year you could make a gift of up to £6,000 free from IHT

Gifts made during your lifetime are usually potentially exempt transfers (PETs) and providing you survive seven years from the making of the gift, the gift falls out of your estate for IHT purposes.

Gifts of £250 to individuals are also exempt

Ensure that you have a Will that it leaves your estate to those you intend, and that it is tax efficient

3. CAPITAL GAINS TAX

The capital gains tax (CGT) annual exemption is currently £10,100 and must be utilised by 5 April 2011 otherwise it will be lost.

The tax on capital gains is either 18% or 28% depending on your marginal rate of tax.
Consider whether you have any brought forward capital losses that could be offset against current year gains.

If you hold shares in a company, you may qualify for Entrepreneurs’ Relief, which potentially allows up to £5million of gains to be taxable at only 10%.

If you have more than one property, consider which should be deemed to be your principal private residence (PPR) and therefore exempt from CGT.

Corporation Tax Electronically

From 1 April 2011, companies and organisations will have to submit their Company Tax returns online and pay all Corporation Tax and related payments electronically. Related payments include interest charges on overdue Corporation Tax and penalties for not filing Company Tax Returns on time.

Are Sponsorship Payments Allowable Tax Expenses?

The HMRC Tribunal recently had to determine the deductibility of sponsorship payments and concluded that no tax relief was available. This case contains a key lesson for anyone seeking tax relief for such payments.

The taxpayer company was owned and controlled by Mr C who was keen on rugby and the company made substantial sponsorship payments to the local rugby club.

The owner also became heavily involved in running the club, being instrumental in making it more successful. He said he wanted to do this because it would help raise the profile of his company and make him well-known in the local business community.

The company claimed the sponsorship payments to the rugby club were deductible as expenses incurred "wholly and exclusively" for the purposes of the business.

HMRC refused the claim on the basis that the expenditure had a dual purpose: the payments were at least in part to support the club and to enable Mr C to pursue his interest in it.

The Judge noted that:

"The requirement of ‘wholly and exclusively ... for the purposes of the trade’ is a restrictive one, and it would be surprising if the provision allowed the deduction of sums (and in this case substantial sums) laid out for the immediate purpose of promoting the trade of someone other than the taxpayer, in circumstances where the ‘knock-on’ benefits to the taxpayer’s trade, whilst real, were intangible and hard to quantify."

The Tribunal therefore concluded that the sums paid had not been made wholly and exclusively for the purpose of the trade and were therefore not deductible. The taxpayer’s appeal was dismissed.

Plumbers' tax disclosure plan is 'open to anyone'

Plumbers, gas fitters, heating engineers and ‘members of associated trades’ who sign up to a new disclosure facility and pay outstanding tax liabilities are to be offered a reduced penalty. But experts say that the new disclosure facility announced this morning appears to be open to anyone who has not fully disclosed their income.

HMRC said the new Plumbers Tax Safe Plan (PTSP) represents a ‘clampdown on trades people failing to declare their earnings and pay tax’. But the terms are ‘in line with those HMRC offers for any full and accurate unprompted voluntary disclosure of tax liabilities’.

HMRC guidance published today says: ‘Customers who voluntarily come forward and put right their tax position can expect very similar terms to those on offer through PTSP.’

An HMRC spokesman told Tax Journal that a taxpayer who is outside the scope of the new facility will not be guaranteed exactly the same terms but can expect ‘broadly the same terms’ as one who qualifies. ‘It will always be cheaper for people to make a voluntary disclosure,’ he said.

The Chartered Institute of Taxation said: ‘HMRC are saying that if anyone else voluntarily comes forward to put their tax affairs in order they can expect broadly the same terms to those on offer through the Plumbers Plan. This appears to amount to a General Disclosure Opportunity of the kind the Institute has been calling for.’

Taxpayers participating in the plan will need to tell HMRC by 31 May of their intention to disclose what they owe. They will have until August 31 to ‘make their disclosure and arrange for payment to be made’. Those making a full disclosure will be charged ‘a low penalty rate – 10% for most who sign up, with a maximum rate of 20%’.

Mike Wells, HMRC's Director of Risk and Intelligence, said: ‘This is the first step in enabling those with undisclosed income or gains to avoid a full tax investigation with much higher penalties. The message is clear – contact us before we contact you.’

Business Record Checks

In December 2010 HMRC published a consultation paper on Business Record Checks, a program that will look to review the adequacy of the business records produced by small businesses.

In the latter part of 2011, HMRC are likely to start a campaign 50,000 checks annually for the next four years. A penalty of £3,000 can be levied for failure to maintain proper records and this will increase the likelihood of further enquiries.

2010 saw an increase in the number of PAYE and VAT compliance reviews by HMRC and this pattern looks likely to continue.

We offer a full health check of your company’s accounting records to ensure that they are being maintained properly.

Economics - Double Dip Will Be Avoided !!!

This quarter’s ICAEW/Grant Thornton Business Confidence Monitor(BCM) shows the downward trend in the BCM Confidence Index which began in Q2 2010 has started to slow in Q1 2011, as illustrated in Figure 1. This mainly reflects a gradual return to normality as the UK economy moves further away from the financial crisis. The Confidence Index points to a return to positive economic growth in Q1 2011, following the 0.5% quarterly contaction in GDP seen in Q4 2010. A significant portion of this contraction is probably attributable to the bad weather and we are likely to see displaced economic activity from last year boosting growth in Q1 2011. This is especially likely to be the case for the construction sector, as projects held up by the snow resumed at the start of this year.

The BCM suggests firms’ financial performance continues to improve, with annual growth rates for turnover, profits and exports all strengthening in Q1 2011 compared with the previous quarter, to stand at their highest levels since the end of 2008.

While the key performance indicators in this quarter’s report paint a fairly optimistic picture for the year ahead, the BCM also points to a number of challenges to business emerging. Reported annual input price growth edged up this quarter to 2.4% – its highest level since Q1 2009 and likely reflecting soaring global commodity prices. Furthermore, the proportion of firms reporting government support for business to be a greater challenge than 12 months ago continued to move upwards this quarter while more than one in five businesses reported the tax burden to be a greater challenge to business performance. Both these findings suggest the government still has its work cut out in convincing businesses that Britain is ‘open for business’.

UK clocks up record goods trade deficit in December

Data released earlier this month from the Office for National Statistics (ONS) showed the UK trade deficit for goods and services was £4.8bn in December, compared with a deficit of £3.9bn in November. This worsening in the deficit was unexpected, given that most economists are expecting net exports to be a key driver of the recovery over the coming years.

The trade surplus in services fell slightly at the end of the year – from £4.5bn in November to £4.4bn in December. More strikingly, as Figure 2 shows, the deficit on trade in goods hit an all-time high of £9.2bn in December, compared with £8.5bn in November. This was partly due to increased imports of oil and erratics (defined as ships, aircraft, precious stones and silver), though even once these types of goods are excluded; the goods trade deficit was still £8.2bn. For 2010 as a whole, the 16.9% annual growth in goods exports failed to outstrip 17.2% growth in imports.

It is disappointing that the UK’s trade balance has failed to improve despite an ongoing period of weak sterling, low interest rates and robust growth in the manufacturing sector. With ongoing concerns about the strength of domestic demand in the UK this year as government austerity measures come into effect, movements in the trade balance will be closely watched for signs of the much-talked-about export-led recovery actually emerging.

Global commodity prices continue to soar

Since mid-2009, global commodity prices have rebounded strongly, following a sharp contraction during the global economic downturn. The price of Brent crude oil has recently passed the psychologically important $100 per barrel mark, as tensions in North Africa combined with demand in the developing world pushed prices upward (see Figure 3). Oil prices are likely to remain elevated as fears continue about a contagion of political unrest. In particular there are fears that the crises seen in Egypt and Tunisia will spread to other parts of the Middle East.

Other hard commodities have risen sharply – copper futures have hit a record high amid rising demand from the developing world. And it is not just hard commodities that have shot up in recent months. Critically, soft commodities – foodstuffs and crops such as cotton – have soared as global adverse weather conditions led to poor harvests in 2010. As a result of tight supply, the United Nations Food Price Index (a measure of global food prices) reached a record high in January, surpassing its previous peak during the 2008 bout of global inflation. The price of cotton recently reached its highest level since the American Civil War in the mid-nineteenth century.

Ultimately, these movements in global commodity markets will impact on the price of consumer goods in the UK, feeding through into higher petrol, food and clothing prices, among others.

High inflation squeezes real incomes…

Despite average weekly earnings growth recovering in recent months, as Figure 4 shows, inflation continues to outpace income growth. While earnings grew faster than the consumer price index between 2001 and 2007, from 2008 onwards they have failed to keep pace with the rising cost of living.

This environment of falling real incomes has prompted Bank of England governor Mervyn King to warn that UK households are currently going through the longest period of falling living standards since the 1920s, and that real incomes by the end of 2011 are likely to have fallen to 2005 levels – implying a significant erosion of household spending power.

This squeeze on real incomes is likely to suppress household consumption over the coming year, especially consumption of non-essential goods. With private consumption accounting for about 62% of GDP in the UK, weak growth in consumer demand will almost certainly result in weak overall economic growth this year – unless a significant bounce-back in business investment and net exports picks up the slack.

… though interest rates remain on hold

Despite the inflationary environment across the world at present, the Bank of England decided to keep interest rates on hold for the 23rd month in succession after the Monetary Policy Committee’s (MPC) February meeting – Figure 5 illustrates.

While a few months ago relatively few commentators were advocating an interest rate rise by the Bank, the debate on monetary policy is becoming increasingly divided. This is illustrated in the minutes from the January MPC meeting which showed Martin Weale joining Andrew Sentance in favour of a 25 basis point rate rise last month, and Adam Posen continuing to call for an expansion of the Bank’s programme of quantitative easing to help bolster the economic recovery.

While some economists believe interest rates need to rise now lest the Bank of England’s commitment to targeting inflation loses credibility, others think the UK economy is too fragile to sustain a rate rise – pointing to Q4 2010’s GDP figures which showed a surprising 0.5% quarterly contraction. There is also a need to bear in mind the impending fiscal tightening by central and local government, and the need to ensure this does not pull down growth into further negative territory.

2011 will be a difficult year for consumers

Many forward-looking economic indicators at the start of this year – such as the ICAEW/Grant Thornton Business Confidence Monitor – point to a return to growth at the start of 2011, despite the setback seen at the end of 2010. However, rising commodity prices and historically weak income growth will make this year difficult for UK households even as (and if) the economy expands.

It remains to be seen how government spending cuts will be felt in 2011, though it appears many local authorities are front-loading their austerity measures by axing staff and services such as libraries this year. This is contrary to the Office for Budget Responsibility’s (OBR’s) forecasts, which show the heaviest cuts and job losses occurring towards the end of the parliamentary term – another factor suggesting the OBR is too optimistic about the economic outlook for 2011. Key dates for the month ahead.

Did you know that businesses are NOT obliged to give staff the day off for the Royal Wedding?

Businesses are only really obliged to honour their contracts of employment, so the issue of time off for the Royal Wedding depends entirely on how these have been written.

Particularly, the question is whether or not companies include public holidays within staff’s annual leave entitlement. Under European law, all full-time workers are entitled to at least 28 days of annual leave.

While some employers choose to express this in their contracts as being 20 days holiday plus the eight bank holidays, more and more are stating that all workers get 28 days leave, including bank holidays.

Those who give staff 20 days plus bank holidays will this year have to give workers 29 days off, as April 29th is an official bank holiday. But those who include public holidays within the annual leave entitlement face a simple choice: give staff the day off out of goodwill, close down the business on April 29th but take it out of workers’ holiday entitlement, or keep calm on and carry on.

Nordens Tax Diary

We have added a "Tax Diary" to our website to help you avoid missing important tax deadlines. This feed will be automatically updated every month.

The view the "Nordens Tax Diary" click here.

December Tax Update

In his Autumn Statement on 29 November 2010, Chancellor George Osborne presented his reaction to the economic forecasts of the Office for Budget Responsibility, and also outlined the Government's plans for reforming corporate tax over the next five years.

Shortly afterwards, on 9 December, the Government published draft clauses of the Finance Bill 2011, as part of its policy to publicise tax changes early, allowing proposed legislation to be scrutinised and improving predictability in the tax system.

This factsheet rounds up some of the main draft tax measures announced on 9 December. Full details can be found on the Treasury website at www.hm-treasury.gov.uk/finance_bill_2011.htm

Income tax and personal allowances

For 2011/12, the personal allowance for those aged under 65 will increase by £1,000 to £7,475. This is intended to be the first step towards the Government's longer term aim of increasing the personal allowance to £10,000.

However, the basic rate limit will reduce from the current £37,400 to £35,000. Therefore individuals will pay 40% tax rather than the basic rate of 20% when their total income exceeds £42,475.

The 'additional rate' of income tax of 50% - which applies to taxable income above £150,000 - will be maintained for 2011/12.

If dividend income is part of total income this is taxed at 10% where it falls within the basic rate band, 32.5% where liable at the higher rate of tax and 42.5% where liable to the additional rate of tax.

Furnished Holiday Lettings (FHL)

Historically, income from FHL in the UK has broadly been treated as trading income, with certain specified tax advantages (see below), although it remains chargeable as property income. The rules are to be changed, partly to encompass the requirement to extend relief to FHL in the European Economic Area (EEA).

The law will be changed by Finance Bill 2011 so that:

FHL in both the UK and EEA will be eligible as qualifying FHL within the (revised) special tax rules. This is the current situation but is not within the legislation;
the minimum period over which a qualifying property must be available for letting to the public in the relevant period is increased from 140 days to 210 days in a year with effect from April 2012;
the minimum period over which a qualifying property is actually let to the public in the relevant period is increased from 70 days to 105 days in a year with effect from April 2012;
losses made in a qualifying UK or EEA FHL business may only be set against income from the same UK or EEA FHL business; and
a "period of grace" will be introduced to allow businesses that don't continue to meet the "actually let" requirement for one or two years to elect to continue to qualify throughout that period.

All other aspects will remain the same so that the commercial letting of furnished holiday accommodation is treated as a trade for the following purposes:

capital allowances;
certain capital gains reliefs (including business asset roll-over relief, entrepreneurs' relief, relief for gifts of business assets, relief for loans to traders and exemptions for disposals of shares by companies with a substantial shareholding); and
relevant UK earnings when calculating the maximum relief due for an individual's pension contributions.

Apart from conditions already mentioned, the following conditions must also be met:

the business must be carried on commercially, and with a view to a profit;
the total periods of "longer term occupation" must not exceed 155 days during the relevant period (normally the tax year). A period of "longer term occupation" is a letting to the same person for longer than 31 continuous days.

Generally, the changes have effect on and after 1 April 2011 for companies and 6 April 2011 for individuals and partnerships. The increase in the number of days for which a property is actually let or available in order to qualify for FHL will have effect from 1 April 2012 and 6 April 2012 for companies and individuals (and partnerships) respectively.

'Junior ISA'

Following the demise of the Child Trust Fund (CTF), the Government has announced that it will create a new tax-free Junior Individual Savings Account (ISA). It intends to publish draft legislation - including detailed secondary legislation - in spring 2011.

The new Junior ISA will have similar terms and conditions to the adult version. Investments will be available in cash or stocks and shares and all returns will be tax-free. Annual contributions will be capped, although the annual investment maximum has yet to be announced. Funds placed in a Junior ISA will be owned by the child but investments will be locked in until the child reaches 18 years of age. They can then withdraw their money without losing any tax benefits.

The Government has confirmed that Junior ISAs should be available by autumn 2011. However, this means that there will be a period of around a year when parents of newborn children will not be able to invest in either a CTF or a Junior ISA. Consequently, eligibility for the new ISA will be back dated to ensure that no child born after the end of CTF eligibility will miss out on the opportunity.

Unlike CTFs, the Government will not be making any direct contributions into the Junior ISA. However, parents will be able to invest money for their children without having to pay tax on it. Currently, anti-avoidance rules mean that parents who transfer their own money into their child's name have to pay the tax on interest where it exceeds £100 per year. The Junior ISA will give parents an exemption from this.

2011/12 ISA subscriptions

As announced in the Labour Government's last Budget, increases in the annual investment allowance for cash and shares ISAs will be linked to the Retail Price Index (RPI). HMRC has confirmed that the annual subscription limit for 2011/12 will rise from £10,200 to £10,680, up to £5,340 of which can be invested in a cash-only ISA.

National Insurance Contributions

The Government has confirmed that the changes to the rates of National Insurance Contributions (NICs) announced by the previous Government would be made. From April 2011 a further 1% will apply to the rates applicable to employers, employees and the self-employed.The main rate of Class 1 (employee) NICs will be 12%, while the Class 4 rate will be 9%. The employer rate will increase to 13.8%. The additional rate of Class 1 and 4 contributions payable will be increased from 1% to 2%.

From April the level at which employees start to pay contributions will increase to £139 per week (the primary threshold) and for employers the weekly limit will be £136 (secondary threshold). The primary and secondary thresholds were aligned at £110 for 2010/11.

The upper earnings limit and the upper profits limit will continue to be aligned with the income tax higher rate threshold of £42,475.

'Tainted' charitable donations

The Government has released draft legislation to deny tax relief on charitable donations where one of the main purposes of the donation is to receive an advantage for the donor or connected person directly or indirectly from the charity. These donations will be known as 'tainted donations' and there is no monetary limit on the amount of the donation which may be caught by these rules. The rules will affect charity donations made on or after 1 April 2011 and replace the existing 'substantial donor' rules.

Pensions: requirement to buy an annuity

The pensions tax rules that make it obligatory for members of registered pension schemes to secure an income, usually by buying an annuity, by age 75 are to be removed. This will involve, amongst other things, changes to the rules applying to income drawdown arrangements.
With effect on or after 6 April 2011:

individuals with defined contribution pension savings from which they have not yet taken a pension will be able to defer a decision to take benefits from their scheme indefinitely
individuals with a lifetime pension income of at least £20,000 a year will be able to gain access to their drawdown pension funds without any cap on the withdrawals they may make
the age 75 ceiling will be removed from most lump sums to which entitlement arises
the tax rate on lump sum death benefits will be 55%
there will be certain transitional arrangements.

Employer-supported childcare (ESC)

The current limit on the amount of exempt income associated with childcare vouchers and directly contracted childcare for employees in an ESC scheme, is £55 per week. From 6 April 2011 this will be restricted in cases where employees join a scheme and their earnings and taxable benefits are liable to tax at the higher or additional rates.

At the beginning of the relevant tax year, employers will be required to estimate the level of employment earnings that their employee is likely to receive during that year (ignoring potential bonus and overtime payments, but including other known taxable benefits). Income for the purpose of the calculation will be reduced by the personal allowance as shown on the individual's tax code for the relevant employment.

If the level of income is within the basic rate band, the employee will be entitled to relief on up to the full £55 per week, but if it exceeds the 50% rate threshold for the year, the employee will be entitled to relief on just £22 per week; and if it is between the above two bands the employee will be entitled to relief on £28 per week.

Anyone already in a scheme by 5 April 2011 will not be affected by these changes as long as they remain within the same scheme.The existing tax and NICs exemptions for workplace nurseries will remain.

Tax relief for ESC schemes applies only if a number of conditions are met. One of these conditions is that the scheme must be open generally to employees (i.e. available to all). Many employers use salary sacrifice or flexible remuneration arrangements to provide access to schemes. These arrangements cannot be applied to workers earning at or near the National Minimum Wage (NMW) because of legislation in that area, which means that the schemes strictly fall outside the conditions for the relief.

The new measure amends the conditions to allow employers to make their ESC schemes unavailable to those employees earning at or near NMW levels, where the schemes are delivered through salary sacrifice or flexible remuneration arrangements. This does not prevent employers from offering ESC schemes to these employees that do not rely on salary sacrifice arrangements.

This measure ensures that employers can continue to offer ESC schemes that rely on salary sacrifice arrangements, without compromising tax relief for employees. This is consistent with the Government's objective of keeping the tax system as simple as possible. The measure does not undermine the protection afforded to employees earning at or near the NMW, and does not prevent employers continuing to offer ESC schemes to these employees.

Corporation tax rates

It has already been announced that the main rate of corporation tax (generally applying to companies with profits of more than £1.5 million) is to reduce from 28% to 27% from 1 April 2011, with progressive annual 1% cuts so that the main rate will be 24% by 1 April 2014.

The Government has confirmed that legislation will be introduced to reduce the main rate of corporation tax to 26% from 1 April 2012.

Also with effect from 1 April 2011, the small profits rate of corporation tax (which generally applies to companies with up to £300,000 of profits) is to reduce from 21% to 20%. The effective marginal corporation tax rate for profits between £300,000 and £1.5 million will therefore be 28.75% from 1 April 2011.

Associated companies

A new measure amends corporation tax small profits rate legislation. It will ensure that companies are not held to be associated through an attribution of rights (solely by virtue of relationships between individuals), but only where the level of commercial interdependence between the companies themselves makes it appropriate to do so.

The tax effect on companies which are held to be associated is to lower the profit threshold at which they fall within the main rate of corporation tax, in proportion to the number of associated companies.

Corporate capital gains simplification

As part of the Government's determination to simplify various aspects of the tax system, considerable consultation has led to proposals to simplify particular aspects of corporate capital gains:

Simplifying the rules for the calculation of chargeable gains "degrouping charges" for companies
Removing some existing restrictions on the use of capital losses within a group of companies after a change of ownership
Replacing existing "value shifting" provisions with a new targeted anti-avoidance rule.

VAT on business samples

Where businesses provide samples of their products free of charge to individuals for marketing purposes, the first sample is currently not liable to VAT. Legislation will be introduced in Finance Bill 2011 to extend the relief so that none of the samples is liable.

Beer duty

The Finance Bill 2011 will introduce legislation for a new duty on beers exceeding 7.5% abv that are produced in or imported into the UK. The new duty is to be levied in addition to the existing general duty on beer.

The legislation will also change the taxation of low strength beers by introducing a reduced rate of general beer duty at or below 2.8% abv.

Small Brewery Beer relief will still be available on general beer duty payable on beers above 7.5% abv but it will not apply to the new high strength beer duty. The relief will also not apply to beers at or below 2.8% abv qualifying for the new reduced rate.

To discuss how the announcements may affect your business and your personal finances, please contact us.

DISCLAIMER: This newsletter is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

Nordens welcome Panayiota

Panayiota joined Nordens in November 2010.

Panayiota is currently taking the 2nd level of the ACCA exams and based on her first weeks scores in our internal premiership score predictor is heading towards being manager of the month for December 2010 !!!

Britain 'on the mend', Osborne insists

Presenting his first Autumn Statement as Chancellor of the Exchequer, Chancellor George Osborne has asserted that Britain is 'on track' to recover from the deepest recession of post-war times.

The Statement was largely a response to the first Autumn forecast from the independent Office for Budget Responsibility (OBR), created by the Coalition Government earlier this year.

Despite issuing a cautionary note on the reliability of forecasts, Mr Osborne went on to argue that the OBR report vindicated the Government's 'decisive action' on the economy.

As widely predicted by economists, the economic growth forecast for 2010 was increased, from 1.2% to 1.8%. However, the estimates for 2011 and 2012 were reduced from 2.3% to 2.1%, and from 2.8% to 2.6% respectively, with the forthcoming increase in VAT - coupled with over £80 billion of spending cuts - expected to slow the pace and result in a period of 'sluggish growth'. Meanwhile public borrowing forecasts for the current financial year have been revised downwards by £1 billion, and borrowing is expected to fall from £148.5 billion to £18 billion in 2015/16.

Mr Osborne was keen to emphasise the OBR's view that Britain will not experience a double-dip recession, and that there will instead be a 'gradual rebalancing' of the economy, with the Government set to reach its target of eliminating the current structural deficit a year early.

Turning to employment, the Chancellor highlighted the OBR's prediction that public sector job losses over the coming four years will be lower than previously expected, falling from 490,000 to 330,000. This was said to be a result of the Government's emphasis on making welfare cuts, rather than reductions in departmental spending.

The Chancellor also set out a number of measures intended to support UK economic growth, with the announcement of a programme of 'significant and far-reaching' reforms to corporation tax to improve competitiveness, including plans to introduce a lower 10% rate of corporation tax on profits from patents. A new Growth Review has also been launched, with priority being given to planning and employment law, support for exporters and inward investors, and reforms to the competition regime.

The 2010 Comprehensive Spending Review

In recent years, Government spending has consistently exceeded Government receipts, resulting in an annual deficit and a spiralling national debt. Tackling this deficit has become the Coalition’s top priority, prompting the Government to conduct a detailed review of public spending.

Chancellor George Osborne presented the Comprehensive Spending Review to the House of Commons on 20 October 2010. He unveiled over £80 billion in public sector spending cuts, including £7 billion in welfare savings, as part of the Government’s commitment to eliminate the deficit by 2015. With Government departmental budget cuts averaging 19% over four years, the Chancellor estimated that around 490,000 public sector jobs may be lost, now predicted at £330,000.

Some of the key points from the Spending Review are outlined below:

• The state retirement age for men and women is to be equalised at 65 by November 2018. It will rise to 66 for men and women by 2020 – four years ahead of the previous plan.

• Proposals will be set out to replace all working-age benefits and tax credits with a single, simple Universal Credit over the course of the next two Parliaments.

• The educational maintenance allowance for 16-19 year olds will be dropped.

• The child element of the Child Tax Credit will be increased by £30 in 2011/12 and £50 in 2012/13 above indexation, meaning annual increases of £180 and then £110 above the level promised by the Labour Government.

• The Chancellor confirmed that Child Benefit will be removed from families with a higher-rate taxpayer. Child Benefit will now continue to be paid until a child leaves full-time education at the age of 18 or even 19.

• Universal benefits for pensioners will be retained exactly as budgeted for by the previous Government and the temporary increase in the Cold Weather Payment will be made permanent.

• Apprenticeship funding will be increased by 50% over the next four years, covering 75,000 extra places.

• The Train to Gain programme will be dropped and replaced with an SME-focused training scheme.

• A permanent tax levy on banks is being introduced.

Pensions tax relief - the latest changes

In the Emergency Budget, the Government made it clear that it intended to replace a series of complicated changes to the pensions regime, due to start next April. Draft replacement legislation has recently been issued, with rules which apply to everyone, rather than targeting high earners. Annual allowance The main change will be to reduce the annual allowance (AA) from its current level of £255,000 to £50,000 with effect from 6 April 2011. AA is the amount by which the total pension savings can grow each year; above this value the surplus gives rise to an annual allowance charge as the individual’s top slice of income. Pension savings Members of defined contribution (DC) schemes, in particular personal pensions (PPs), will need to look at the total of the contributions (whether personal, employer or third party) during the pension input period (PIP) for all of their pension savings. The PIP is usually the scheme year to the anniversary date which falls within the relevant tax year. Members of defined benefits (DB) schemes, such as occupational final salary schemes, will have to work out how much their accrued pension has increased during the PIP. Example Self employed personal pension with AA charge Alison, who is self employed, has taxable income of £110,000 in 2011/12. She is a member of two different PP schemes. Scheme A has a PIP ending on 31 March; Scheme B’s ends on 30 November. She contributes £2,000 per month (£2,500 before basic rate tax relief) to Scheme A and £2,800 per month (£3,500 before tax relief) to Scheme B. She has been contributing similar amounts to these schemes for the previous three tax years. During the tax year ending 5 April 2012, her total pension contributions are:

Scheme A (year to 31 March 2012)	£30,000
Scheme B (year to 30 November 2011)	£42,000
Total pension savings	£72,000
AA for 2011/12	£(50,000)
Excess subject to AA charge	£22,000

The AA charge will therefore be £8,800 (£22,000 @ 40%). The three year carry forward rule Unused AA for the previous three tax years can be carried forward and added to the current year’s £50,000 AA. For the tax year 2011/12, the first of the new regime, carry-forward will be available against an assumed AA of £50,000 for each of the tax years 2008/09, 2009/10 and 2010/11. No carry forward is available from an earlier tax year unless the individual was a member of a registered pension scheme at some time during that tax year. Lifetime limit The lifetime limit, which sets the maximum figure for tax-relieved savings in the fund, currently stands at £1.8 million. However, this limit is to be reduced to £1.5 million, probably from April 2012. For more information on the new rules, please contact us.

Change in the standard rate of VAT

The standard rate of VAT is set to rise from 17.5% to 20% on 4 January 2011. It is hoped the additional revenue generated from the increase will help to reduce the UK deficit. Applying the higher rate The rate of VAT that businesses charge depends on the date that goods or services are supplied. For VAT purposes this is the date that goods physically change hands (or a service is completed); or payment is received; or an invoice is issued – whichever is the earliest. The rules are modified in certain situations, including when there is a change in the standard rate of VAT. For any supplies of standard-rated goods or services that take place on or after 4 January 2011 businesses should charge VAT at the new rate of 20%. As a consequence, firms currently calculating their VAT using the VAT fraction of 7/47 should use the new fraction of 1/6 from 4 January 2011. Zero-rated supplies, such as basic foodstuffs, children’s clothing and books; exempt supplies, such as education and health; and supplies subject to VAT at the reduced 5% rate, such as domestic fuel and power, are not affected by the change. Anti-forestalling legislation Finance (No.2) Act 2010 included anti-forestalling legislation to prevent the 17.5% rate applying to supplies of goods or services that are provided on or after 4 January 2011. The legislation prevents forestalling by introducing a supplementary charge to VAT of 2.5% on the supply of goods or services where the customer cannot recover all the VAT on the supply, and one or more of the following conditions are met: • the supplier and customer are connected parties; • the value of the supply (and any related supplies made under the same scheme) exceeds £100,000. But this does not apply if the prepayment or issuing of an advance VAT invoice is normal commercial practice; • the supplier or someone connected to the supplier funds a prepayment for the goods or services; or • an advance VAT invoice is issued where payment is not due in full within six months (except hire purchase invoices issued in accordance with normal commercial practice). • The supplementary charge to VAT is due on 4 January 2011 and must be accounted for on the supplier’s VAT return covering that date.

Looking ahead

On 9 December the Government will publish draft clauses planned for inclusion in the Finance Bill 2011. This fulfils the Governments pledge to publish draft clauses for each Finance Bill at least three months in advance. The change forms part of the Coalitions new approach to tax policy making, which is supposedly based on predictability, stability and simplicity.

At the same time, the Government will also report back on several key consultations including:

• Tax policy making: a new approach

• Simplification of Corporate Capital Gains for companies

• Pensions Annuitisation

• Furnished Holiday Lettings and

• The review of HM Revenue and Customs powers.

The Chancellor has already announced that the 2011 Budget will take place on 23 March. While it is unclear exactly what new measures will be included, there are some changes that have already been announced for the 2011/12 tax year. These include an increase in the personal income tax allowance, a rise in national insurance contribution rates, and a reduction in the corporation tax rate.

What they said...

Employment is growing. The deficit is falling. Unemployment is set to fall. The plan is working.

Chancellor of the Exchequer, George Osborne

This Autumn Statement does nothing to alleviate the effects of the summer recklessness that led the Chancellor to gamble with our future.

Shadow Chancellor, Alan Johnson

The Growth Review demonstrates a welcome focus by the Government on returning the UK economy to balanced, sustainable growth something that will reassure businesses as they look towards making 2011 a Year for Growth.

David Frost, British Chambers of Commerce

'In short, by 2015 the UK economy will still not be back to where it was before the recession hit in 2008. No politician should seize on these figures as some sort of good news story, least of all one that has just abandoned their plans to publish a jobs and growth strategy for the country.

Brendan Barber, Trades Union Congress

Emergency Budget Highlights

Following a review, the newly appointed Chancellor George Osborne delivered an Emergency Budget on 22 June 2010.

Some of the key announcements are outlined below.

Value Added Tax (VAT)

As widely anticipated, an increase in the standard rate of VAT was confirmed, and will see the main rate rising from 17.5% to 20% on 4 January 2011. The move is expected to raise more than £13 billion a year by the end of the Parliament.

Capital gains tax (CGT)

A new 28% top rate of CGT has come into effect for gains realised after 22 June 2010, where an individual has total taxable income and gains of more than the basic rate limit for income tax (£37,400 for 2010/11). The lifetime limit for Entrepreneurs’ Relief, which reduces the effective CGT on qualifying gains to 10%, has been raised from £2 million to £5 million.

Personal allowance

With the aim of protecting lower earners from the squeeze, the income tax personal allowance will rise to £7,475 in April 2011, removing around 880,000 people from the requirement to pay any income tax. However, higher rate taxpayers will be prevented from reaping the benefits of the changes by means of a reduction in the basic rate limit for 2011/12.

National insurance contributions (NICs)

Employers will see an increase in the threshold at which they start to pay national insurance contributions, which will rise by £21 a week above indexation. In addition, qualifying new businesses in targeted areas of the UK can now enjoy a national insurance ‘holiday’ of up to £5,000 for each of the first 10 employees hired within the first year of business.

Corporation tax

Corporation tax will be reduced to 27% from April 2011, with a further series of 1% cuts taking place each year until the rate reaches 24% in 2014. The small profits rate will also be cut from 21% to 20% from April 2011.

Small business finance

In a bid to improve access to finance for small businesses, a new Enterprise Capital fund of £37.5 million has been introduced, and the Enterprise Finance Guarantee is providing £200 million of additional lending until 31 March 2011.

Other announcements included a series of proposed changes to capital allowances to take effect from April 2012, plans to replace Air Passenger Duty with a per-plane aviation duty, and the creation of the new Office of Tax Simplification.

Corporate Tax - The 'five year plan'

Alongside the Chancellor’s Autumn Statement on 29 November, the Treasury published the Government’s plan to reform the corporate tax system over the next five years.

Key elements include:

• Reiterating the Government’s intention to reduce the main rate of corporation tax – intended to give the UK the lowest main rate in the G7 and the fifth lowest in the G20.
• Focusing more on profits from UK activity in determining the tax base rather than attributing the worldwide income of a group to the UK.
• Taking action to reform the Controlled Foreign Company (CFC) regime and the taxation of foreign branches by adopting a more territorial approach.
• Identifying where the tax system can be simplified to reduce compliance costs on business.
• Improving the effectiveness of research and development tax credits.
• Introducing a preferential regime for profits arising from patents, known as a Patent Box.

The Patent Box regime will be optional, but companies opting in can expect profits from patents first commercialised after 29 November 2010 to be taxed at a 10% rate from 1 April 2013.

Timetable

Following the publishing of papers and more details between now and Spring 2011, we will see legislation on capital allowances reductions, on CFC rules interim improvements and on foreign branch reform in Finance Act 2011, with the completion of the CFC changes and legislation on the Patent Box following in Finance Bill 2012. Some draft legislation will be published on 9 December 2010.

Alongside these changes, Spring 2011 sees the first planned reduction in the rates of corporation tax, with the main rate set to fall to 24% by Spring 2014.

Traditional Business Plans Don't Work!

Are you surprised! It is probably something you have thought about but not shared, certainly not with your accountant or bank managers and especially not when you were attempting to raise funds for your business! But why don't traditional business plans work? In theory surely they should be the successful driving force behind any business.

Are you surprised!

It is probably something you have thought about but not shared, certainly not with your accountant or bank managers and especially not when you were attempting to raise funds for your business!

But why don't traditional business plans work? In theory surely they should be the successful driving force behind any business.

We all know that the aim of a business plan is to assist a business in achieving its goals. However, almost all, once written are filed away never to see the light of day again. Hence, here lies the fatal error and the death of the business plan. Business plans, like life in general, cannot be viewed as static; everyday brings change and even though the end goal may or may not stay the same it is highly likely the path that leads there will not look anything like the original business plan even after a short period of time has elapsed.

A better tool in helping businesses gain success is the strategic business plan. It starts with a vision, a vision of how that company will look like and operate. It then looks closely at where the business is presently; its current strategies, tactics, systems, qualifications and most importantly the current organisational hierarchy. This is where the plan begins, by looking at the here and now and identifying what needs to change to make that vision a reality.

It is of upmost importance that a strategic business plan is:

• Reviewed, re-evaluated and updated regularly. It doesn't matter if the plan is not being followed but more importantly that progression is being made.

• Not just for the business owner. It is imperative that it include others. Staff and managers should be included and be made part of the plan. In many instances it is prudent to include external professionals to aid the preparation and also the execution of the strategic business plan.

Nordens, as well as being a chartered accountancy practice, is a member of the highly regarded Association of Strategic Business Planners and are making full use of their innovative systems to assist many of our clients with successfully building their businesses and taking them to the next level.

If you are interested in developing the strategy for your business, contact Mark or Mitch.

Franology teams up with Nordens

Nordens has teamed up with Franology (www.franology.co.uk) the new style franchise consultancy to offer clients advice and project management if they are considering expanding their business activities under license.

Franology was set up in 2009 by Chris Gibson, a 10 year veteran of executive franchise management in the UK and internationally, to offer advice to new and fledgling franchise companies that identified the potential of growth through licensed partners. The philosophy is simple with pragmatic affordable advice coupled with ongoing mentoring and involvement to ensure success which has already shown improved results for clients compared to the historic consultancy firms that only work up to launch for their clients usually.

Chris Gibson who has run a number of companies in the UK and overseas as CEO decided that franchise consultancy needed a fresh approach and that ethically working with a client to ensure success was a better option for everyone. This shared philosophy with Mark Norden has resulted in a complete service now being available for Nordens clients and those of Franology.

For more information on how franchising might be a real option for your business, contact Mitch Hahn on (020 3405 1949) to arrange a free initial meeting.

Companies House Accounts Deadline

As a reminder, Companies House shortened the deadlines for filing limited company accounts to 9 months after the year end rather than 10 months. This means that if you have a year end of 31 March 2010, the accounts need to be filed by 31 December 2010. Please provide us with any outstanding information as soon as possible to allow us to meet the deadlines, especially with the Christmas holidays shortening December.

The Second Budget 2010

In the lead-up to the 6 May General Election, the Conservatives announced that if victorious they would hold an 'Emergency Budget' within 50 days of taking office, primarily to tackle the UK's economic deficit. Other measures promised in their manifesto included plans to cut inheritance tax and a new tax break for married couples.

As it turned out, the hung parliament and the subsequent formation of the Coalition Government meant that any Conservative and Liberal Democrat pre-election pledges were superseded by a 'Programme for Government', which included elements from the manifestos of both parties, as well as numerous compromises and some new policies.

The 50-day Emergency Budget, however, survived the negotiations. Along with the Programme for Government and the autumn Spending Review, Chancellor George Osborne's statement on 22 June could indicate the direction of the Coalition's policy for years to come.

Download a PDF of Nordens full Budget Report

Emergency Measures for an Emergency Budget Capital Gains Tax

The new Lib-Con Coalition Government has announced that there will be an Emergency Budget on 22 June 2010 and that reform of capital gains tax will feature amongst a number of tax changes. The Coalition Agreement between the two parties refers to "a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities".

This could mean that subject to some backbench disquiet, capital gains tax rates applicable to gains arising from the disposal of non-business assets could rise to 40% or even 50% following 22 June this year. Whilst it is most likely that any increase to capital gains tax will take effect from 6 April, it's not beyond the realms of possibility that the rate will be raised effective from Budget Day. Therefore where sales of non-business assets are contemplated, consideration should be given to expediting the sale to before 22 June 2010 if at all possible, remembering that the key date for capital gains tax is the contract, rather than the completion date.

Download a PDF of Nordens full Budget Report

2009/10 Year End Strategies

The end of the tax or business accounting year is a key time to focus on tax and financial planning, but you should also try and think about these issues throughout the rest of the year.

Many of the strategies outlined in this guide need not wait until the end of the year, though in some cases timing is critical.

While opinions vary as to the likely rate of the UK's recovery from the recession, by preparing and updating a forecast of income and outgoings you can identify times when money may be short and plan for them. We can help you with this.

Download a PDF of Nordens 2009/10 Year End Strategies Guide

November 2009 Newsletter

Welcome to our latest newsletter and we have taken the opportunity to summarise some of the latest announcements issued by HM Revenue and Customs that you wight not have notice but may be of interest including...

• National Minimum Wage Rates
• State Pension Age
• Paying PAYE on Time
• The time limits for claiming tax back are changing
• Climate Change - Enhanced Capital Allowances
• Major Changes to VAT
• HMRC Email Spams
• Tax Return Reminder

Download a PDF of Nordens November 2009 Newsletter

October 2009 Newsletter

The Companies Act 2006 received Royal Assent on 8 November 2006, and has been introduced in a series of stages. 1 October 2009 sees the coming into force of the final 500 or so sections of the Act.

Many features of company law date back more than 100 years, and are not necessarily suitable for regulating modern companies. The Act acknowledges that a vast proportion of companies registered in the UK are small owner-managed private companies and introduces significant measures designed to modernise and simplify company law and thereby reduce the regulatory burden.

Download a PDF of Nordens October 2009 Newsletter

May 2009 Newsletter

As you may be aware, we have changed the name of our accountancy practice from Mark Norden & Co., to Nordens and incorporated our new branding. The change of name is to reflect that it's no longer Mark and his dog working in the practice and that we have a suitably qualified team who can assist with your needs and requirements.

In this newsletter, we will deal with:
• The first green shoots of recovery, satellite navigation and how we can assist
• Reasons to prepare your accounts early, part 2!
• Win rebates on holiday homes
• An inspector calls!

Download a PDF of Nordens May 2009 Newsletter