Thursday 22 December 2011

HMRC extends business records checking

HMRC have announced that they are extending their Business Records Checks programme.

These checks were piloted earlier this year and involved checks on the adequacy of Small and Medium Sized Entities’ business records. The pilots apparently found that around 44% of businesses visited had issues with their record-keeping, while around 12% of those visited had seriously inadequate records.

HMRC are now extending this activity from mid-September to cover a number of key areas across the UK. As part of this, the number of full-time staff employed on the programme will rise from 30 to 120.

HMRC are planning to complete up to 12,000 checks by the end of the current financial year, with 20,000 provisionally planned for 2012/13. HMRC are increasing the number of visits so it can refine the process, before final decisions on a national roll-out are taken in the New Year. If you have any concerns in this area please contact us.

Good economic news

Looks like the economy is growing strongly again http://www.bbc.co.uk/news/business-16300104

The negative effect of the 50% tax rate

Last night I was listening to the Aston Villa v Arsenal game on Radio 5 Live. The commentators observed the lack of effort made by the Russian player Andre Arsharvin and made the point that he stopped trying when then 50% tax rate came in. Apparently he is on record as saying that it is a major disincentive and he wants to move in the January transfer window to a lower tax country.

It's hard to feel any sympathy with such a highly paid player, but it does neatly illustrate the point about how much a disincentive 50% tax is - and of course it's not really 50%, but 52% when you take into account the NIC.

Keeping 48% of what you make is never going to incentivise anyone.

It's no surprise that economic growth is sluggish when there is no incentive to grow your business.

Instead of our economy getting 40% of Arsharvin's wages, we are now going to get nothing and someone else's economy will benefit instead.

It makes no sense.

Tax rates need to be reduced to stimulate the economy.

Maggie Thatcher proved that in the early 1980's when she reduced Labour's basic rate of tax of 34% and look what happened - we had a boom all through the 1980s!!

Wednesday 21 December 2011

FSA report into the collapse of RBS

So now we know! The Regulators have at last reported on the collapse of RBS.

Bankers have preached at businesses for years to avoid two cardinal errors - overtrading and too much gearing.

Unfortunately RBS didn't heed their own advice!!

Between 2003 and 2007 they quadrupled the size of their balance sheet - sounds like overtrading to me!

But they didn't heed the warning signs and blindly launched into taking over ABNM Amro.

All they got from ABNM Amro was two lever arch files and a CD. Despite this lack of information, RBS paid £21 billion for ABNM Amro - and had got no idea what they were buying!

To compound this error, RBS made another mistake! It borrowed 100% of the £21 billion !!!

If this was not a big enough error, RBS made another mistake by having the debts as very short term!!

No wonder it fell over after a such a series of poor decisions - you don't have to be a high flying City financier to know that breaking some very basic banking rules would end in tears.

Oh and by the way - when RBS finally did look at ABNM Amro, it discovered that its balance sheet was riddled with dodgy sub-prime loans!!

What a catalogue of errors!

Valuable guidance on Christmas gifts

http://www.peninsula-uk.com/blog/blogentries/53/Bribery-Act-at-Christmas.html

Friday 9 December 2011

Good advice from Abbey Tax about capital allowances

With the publication of their response on 6 December 2011, HMRC have now sought to clarify that “expenditure on a fixture can only be written off once against taxable profits over its economic life”. To this end the new legislation places responsibility onto the seller and purchaser of commercial properties to agree what level of pooled expenditure is to be sold/purchased as a result of the property transaction. This takes effect for all expenditure incurred on or after 1 April 2012 for Companies (6 April 2012 for Individuals and Partnerships).

This agreement is to be achieved using the current legislation under:

  • Section 198/199 CAA election, where the seller & purchaser make a joint election, which effectively fixes the value of the pool.

  • Section 563 CAA where the parties are unable to agree on a value within two years of the transaction, resulting in the matter being referred to the First Tier Tribunal for a decision.

The new legislation makes the availability of Capital Allowances to a purchaser of fixtures conditional on the following three points:

  • Previous qualifying expenditure being pooled prior to any property sale.

  • The seller and purchaser agreeing (within a two year period from the transaction date) to fix the pool value.

  • A written statement from a past owner confirming the disposal value of the pool that he has some time earlier been required to bring into account.

Quite clearly the first two bullet points will be the main focus for the majority of property transactions. With the onus being placed on the seller/purchaser to agree figures there is a clear opportunity for the accountancy profession to maximise the tax position for their client, by ensuring all qualifying items are pooled prior to the point of sale enabling a S198 election to be put into the sale agreement. Our full briefing on the Capital Allowances Consultation Response can be found on our website here which also details HMRC’s revised legislation on items that qualify for Feed-in Tariffs and Renewable Heat Incentives.

Friday 2 December 2011

employment law proposals

http://howespercival.cmail2.com/t/ViewEmail/y/EEE5C03805E5EDFA/6C2848FFEBD38F247F4E5A579FEBB2E9

It is ridiculous that the Government are proposing that if you are an employer and you lose a Tribunal case, you get fined. If you are an employee though and you lose, you don't get fined!!