IR35 in the Public Sector How could this affect your business? Introduction IR35 is a piece of legislation that allows HMRC to collect additional payment where a contractor is an employee in all but name. If a contractor is operating through an intermediary, such as a limited company, and but for that intermediary they would be an employee of their client, IR35 applies. New rules for IR35 will apply from the 1st of April 2020 in the Private Sector as they have been applied in the Public Sector for the last two years. Each business needs to assess the Risk and implications of these new rules and make the necessary changes to procedures before early April 2020. Who will be affected in the Private Sector? Medium and Large Companies will be the initial target of the IR35 rules and they will follow the rules that now apply in the Public Sector. Small businesses do not have a definition for IR35 but the definition will probably follow the criteria in Companies Act 2006. How … [Read more...]
Financial information you need to run your business effectively
In order to manage your business effectively you need to be sure that it has enough cash to keep trading and that it is running profitably. To ensure this happens, I recommend you review your financial status at the start of each and every business week. You will have financial records, probably in one of the most popular accounting software packages such as Sage, QuickBooks or Xero. Either your own staff or your accountants will use these to prepare VAT returns and the other legal requirements such as the annual accounts required by Companies House. These accounting systems can also produce many of the essential figures you need to review on a weekly basis. Additionally, you need to forecast which clients are likely to pay their invoices this week. This is often not the same as those who should pay this week. Accurately forecasting your weekly cashflow is a skill every business needs to master. Not all of the figures in the list below will apply to all businesses. You … [Read more...]
Forensic Accounting
Forensic Accounting is a branch of accounting that describes the work of an accountant who investigates and reports on the financial activities of a business or individual with the aim of producing information for the settlement of disputes. Forensic means “suitable for use in a Court of Law.” Some of the uses of Forensic Accounting information are:- Economic damages calculations, losses suffered from a tort or breach of contract. Post Acquisition disputes such as earnouts or breaches of warranties Bankruptcy, insolvency and reorganisations Fraud Business Valuation – Going and gone concern. Computer forensics and discovery. Family disputes for the valuations for divorce etc. A forensic accountant will: Collect all the data. Data preparation and processing Analysis of the information to produce information. Reporting the findings of the investigation. An example of forensic analytics would be to review … [Read more...]
Making Tax Digital
This is the new initiative by HMRC for which the consultation document has come out. Consultation will close 7th November with draft legislation in December and the start of implementation in 2017 with full implementation as from 5 April 2018 with all taxpayers on stream by 1st January 2019. It will apply to all taxpayers both business and SA taxpayers. For businesses it will be a major change to the way they relate and report to HMRC. In this article we will only address MTD as applicable businesses. The MTD for businesses will apply to all businesses with a turnover greater than £10,000 p.a. Submissions to HMRC must be made quarterly with a 5th adjusting submission 9 months after the financial year-end. Submissions must use commercial software. The free HMRC software has been withdrawn. Micro businesses used to keeping their records on spreadsheets which are submitted to their accountants once a year will now be required to purchase software or … [Read more...]
What makes for a good Financial Model? (Part 2)
In part one of this blog, I introduced financial modelling and how it could help your business. Now I move on to the important qualities of a good financial model. So, what makes for a good Financial Model? No two financial models can be exactly alike, and one size fits all does not work in our experience. Every single business, big or small, successful or struggling, demands a comprehensive and unique approach to financial modelling. Often, the financial model developed one year for a business needs a complete re-assessment to meet the demands of new market opportunities, changing environment, or changes in financial conditions the following year. Flexibility is a fundamental element in the design and construction of a robust, dynamic financial model. No matter how sophisticated the model, the key focus should always be on the most sensitive yet obvious inputs, e.g. Units Produced, Market Demand, Revenue, Profit, Cash Flow, etc. Is building a Financial Model an ART or a SCIENCE? … [Read more...]
What is Financial Modelling and how can it help my business? Part 1
What is Financial Modelling? -- Business owners have posed this question to me often. While there can be several complicated definitions, simply put, it is the practice of projecting a business’s operating and financial results. Financial modelling allows you to see into the financial future of your business, to plan, and to understand if sufficient cash is available to meet your future operating needs. Is Financial Modelling relevant to me? Every business, large or small, growing or struggling, needs to create robust business plans backed by sound financial forecasts. Successful businesses usually do this better than the ones that are struggling. Or reversing the argument, businesses that create sound financial forecasts are far more likely to succeed over time than the ones that do not. What kind of questions can financial modelling answer? The short answer is – almost all types. Here are some examples: For start-up businesses How much capital will I need? How many … [Read more...]
What does Brexit mean for the future of R&D Tax Credits?
The initial shock waves from Britain voting to leave the EU are subsiding, however the longer term impacts are yet to be felt. The big question for those UK companies claiming R&D tax relief and tax credits is - What does Brexit mean for our R&D claims? General opinion is that there will be no immediate impact. Over the longer term there could even be some positive outcomes, as the UK will no longer be bound by EU regulations that put restrictions on how R&D tax relief and tax credits are framed. The UK government, like many other countries around the world, uses tax incentives, such as the tax reductions and cash credits available under the R&D schemes, to make the UK more attractive for companies. They see the R&D tax credit schemes as critical to underpinning UK economic growth and competitiveness by supporting investment in innovation across all industries and sectors. Their belief in the schemes is evidenced by the many recent improvements made - … [Read more...]
A view of what’s to come with HMRC’s Digital Tax Accounts for businesses and individuals
HMRC has embarked on a scheme to introduce digital tax accounts for individuals and businesses over the 2015-2016 calendar year with implementation dates in 2017. This scheme is not without its controversy largely around HMRC’s consultation (or lack thereof) and the way it’s been implemented. Digital tax accounts are not unique as a number of other jurisdictions have already introduced them. The digital tax accounts are broad in their implication as they include pre-populating self-assessment returns, quarterly tax reporting by businesses and individuals, tax on-line as well as an anti-money laundering service. Pre-populating the SA return with information known to HMRC will by itself be useful if, and it’s a big if, one can trust HMRC to enter the correct information. If HMRC’s past performance is any guide this may become a problematic area as changing what are known as incorrect figures has yet to be configured. Furthermore, unlike some other jurisdictions, banks and listed … [Read more...]
A New Lender who even likes start-ups
At the end of last year I had a meeting with an interesting lender. They do short term loans from just 3 months, but unlike most short term lenders they will also do loans of up to 10 years. They like new starts, adverse credit and sole traders. They will lend from £25,000 to £1m. It is quite quick taking around 2-3 weeks to get a loan. The interest rates start at 1.16% per month, which is lower than the usual adverse credit lender. The only stipulation is that the client must be a home owner with enough free equity in their property. The lender is happy to take 2nd, 3rd and even 4th charges against the property. Getting funding for start-ups is very difficult these days and most have to resort to equity Crowdfunding and therefore sell a % of their companies and usually too cheaply. Now there is an alternative, a lender who will happily lend to start-ups that have free equity in their homes. … [Read more...]
The Autumn spending review relating to property
Landlords and Second Home Levy New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016, raising about £1bn in England and Wales will have to pay a 3% surcharge on each stamp duty band. George Osborne said the new surcharge would raise extra money. This change, would "choke off" investment in rented properties for the small investors and those who are thinking about investing as a pension plan for the future. This is likely to turn many new and existing landlords away from the sector and reduce the number of homes to rent and almost certainly driving up rents for the millions. Higher rents make it even less likely that those on low or modest incomes will ever be able to raise the deposit required to realise their dream of home ownership, despite new Help to Buy ISAs or capital loans for Londoners that were unveiled in the Autumn spending Review– first-time buyers will still need to find around 5% of the total purchase price as their share of the … [Read more...]
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