Category: Business Help

Don’t let the Christmas period get in the way of the Self-Assessment deadline!

Posted on | by Jade Donno | Leave a Comment on Don’t let the Christmas period get in the way of the Self-Assessment deadline!

Don’t let the Christmas period get in the way of the self-assessment deadline!

Christmas is always a busy time of year, but for us it doesn’t stop after the festivities are over. With the Self-Assessment tax return deadline on January 31st, January is our busiest time of year.

A self-assessment tax return is required if you are a sole trader earning over the personal tax allowance, the director of a company who receives dividends, or if you have additional income which is not taxed through PAYE. If you are a client of ours on our Young Business service, Growing Business service, Rapid Growth service, or a sole trader then we take can care of this for you.

Send us your information early to avoid missing the deadline

Our clients on these services have the stress of completing their tax return taken away as we do a calculation to work out how much tax they owe and complete all the HMRC forms on their behalf. Once the tax return is approved by the client, we make sure it is filed with HMRC before the deadline.

As a firm, we try to prepare early by requesting all the information we need to complete your tax return at the end of the tax year on April 5th. This allows us to avoid the rush and get many tax returns in well ahead of the deadline. Our tax return clients will have received an email from us asking them to upload their documents to our secure platform. This platform is fully compliant with GDPR and data protection regulations, so there is no need to worry about your personal information!

We also send regular reminder emails throughout the year to make sure that all our clients don’t forget to send their documents to us on time. It is important to send us this information as early as possible as you can face a penalty from HMRC if you do not get us the required information in time for us to complete and file your tax return.

By sending us all the information we need before Christmas, you can relax over the festive period knowing that your self-assessment will be taken care of!

No one wants a Tax Investigation.

Posted on | by Jade Donno | Leave a Comment on No one wants a Tax Investigation.

No one wants a Tax Investigation.

It is true that as business owners we don’t want HMRC asking awkward questions and taking up our precious time by visiting us on a routine (or not!) compliance visit.

This week two of our clients have been subject to compliance visits from HMRC, one for PAYE and CIS, and the other for VAT. Understandably, our clients in both cases were worried by a visit from HMRC and needed our support from start to finish.

PAYE Investigation

In the case of the PAYE compliance, which included CIS, we were able to speak to our client before the meeting, attend the meeting along with our client, and reply to HMRC’s request in order to close the enquiry. We dealt with the issues and questions raised in the meeting successfully and HMRC could see that we had a good handle on our client’s business. They have now closed the case without penalty or further tax charge.  Our client was very happy that we were able to attend and support them at the meeting as it gave them extra peace of mind.

VAT Investigation

The VAT visit was very similar. We briefed our client before the meeting and attended the meeting with the VAT officer. One item was picked up by HMRC and a small adjustment will be made on the next return. In this case HMRC were complimentary about our business set up and the service that we provide our client, especially in understanding the business from the client’s point of view. This client is also really pleased with the service and were reassured by the fact that we were able to attend the meeting and deal with any questions that came up.

We have you covered

We insure ALL of our clients to cover our fees for dealing with HMRC from start to finish in these situations.  We often have clients tell us that they are covered by The Chamber of Commerce or The Federation for Small Businesses, however the cover from both organisations does not allow us to deal with any investigation that may occur, and so our support is limited. It is for this reason that we took the decision to fully cover our clients for no additional charge.

We appreciate that no one wants a Tax Investigation, however if a client does have an investigation it is really important that we are there, as we can help the client to deal with HMRC effectively. In both cases this week HMRC didn’t find anything of significance and both of our clients were very happy with our service. They were especially happy that our fees for assisting with the visits are covered by the insurance policy benefit that we have taken on their behalf and that there was no extra cost to them.

Hands with a house

Thinking of Applying for a Mortgage?

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Are you thinking of getting a mortgage?

This year we have had an abundance of clients applying for mortgages. Applying for a mortgage can be stressful and this is even more true for business owners. Once you have applied everything is suddenly urgent and happens all at once. This can then result in stress, tears and quite possibly a few temper tantrums!

To avoid any strops, here is a list of the best ways you can prepare before applying as a business owner:

  • When you get the lightbulb moment that you want to apply for a mortgage, give us a call or an email. We can then offer you our advice and possibly get you in touch with an appropriate mortgage adviser. It also allows us to plan and prepare to avoid any delays.
  • Mortgage lenders are going to asses your income. They will ask for your SA302/ Tax calculation which will confirm your salary and/or dividends. They will also ask for your company accounts to confirm your salary and net profits after tax but before dividends. Collating this information prior to applying for your mortgage will hopefully make the process run smoother.
  • To even think about applying for a mortgage your business will need to have been trading for at least 12 months but ideally 24 months.
  • The mortgage lender will look into your balance sheet. This will be to check that your assets outweigh your liabilities. If they do not, in the mortgage lenders eyes your company could be in a position that it will not lend against.
  • Some mortgage lenders will average out your salary and/or dividends over the past two years. As a growing business this may not be beneficial. There are some lenders that will just consider your latest year, it is probably best to instruct a mortgage adviser to help choose an appropriate lender.
  • Decreasing profits can be a bit tricky. If your profits are decreasing this also means your income is decreasing. This will result in mortgage lenders asking questions as they will be concerned that this could be a consistent problem. Before applying, it is probably best to be sure you have a strong constant source of income.
  • Mortgage lenders can also ask for an ‘accountants’ certificate’. If asked for we can complete, but there is a charge!
  • If using a mortgage adviser, please give us written permission to talk to them. As due to GDPR we cannot hand over any of your personal data without your permission!

TOP TIP – Plan Plan Plan. We can not stress this enough, even if it is a five year plan let us know as soon as possible so we can help you get your mortgage rather than fighting fire.  Decisions over tax saving or getting your mortgage need to be made at least 12 months in advance in many cases.

 

hands with a car

Is the Jaguar i-Pace a good company car?

Posted on | by Jade Donno | Leave a Comment on Is the Jaguar i-Pace a good company car?

Is the Jaguar i-pace a good company car?

Here at 1 Accounts in Haverhill and Cambridge we are often asked can I buy a car within the company?  The answer is of course yes. However when benefit in kind tax and class 1A National Insurance is explained our clients most likely either buy the car privately or buy a Van.

Things may be about to change with Electric Cars.  One of our clients has just purchased a Jaguar i-Pace and Paul Donno our Director also has his eye on one for next year, although his wife Jenni still needs a little convincing!

There are of course other Electric cars on the market and the bigger luxury brands will be competing hard to get the company car market, with Audi and BMW starting to offer full electric.

Our Favourite 

The i-pace is our favourite at the moment and it is 2019 World Car of the year. Take a look

Our Calculations 

We are expecting a high increase in electric vehicles next year due to the new benefit in kind rates which are very attractive.

Our calculations are based on the advertised basic price of £64,495.

The rate for the tax year 6 April 2019 to 2020 is 16% and this is a Benefit in kind of £10,319.  If you are a basic rate taxpayer the tax payable is £2,064 and higher rate tax payer (40%) £4,128.  Your company will also pay 13.8% in Class 1A National Insurance of £8,900.

However the Benefit in Kind Charge for the tax year 6 April 2020 to 5 April 2021 is just 2% and this is a benefit in kind charge of £1,290.  The tax charge is £258 Basic rate and £516 Higher Rate with a class 1A payment of £178.

As you can see the saving is a huge £12,334 which includes the Class1A NI.

It is also worth considering the Work Place Charging Scheme allowing you to provide charging points for your workforce. Click here to find out more.

Capital Allowance 

The other real benefit is Capital Allowance. Electric cars qualify for First Year allowances which means that the entire purchase price is allowable against Corporation Tax. If you buy the vehicle after 1 April 2020 this rate is 17%.  Based on the Jaguar i-pace that is a Corporation Tax saving of £2,193. Click here to read more. 

Our Recommendation 

We recommend the electric car for your company vehicle from 6 April 2020, make sure that if fits your personal and business needs.  We would expect demand on the popular models to be high and waiting lists long therefore you may want to start looking very soon.

Be careful of any caveat relating to Brexit as we understand that some manufacturers are asking you to sign to accept an increase in duty especially if we have no deal.

We expect to see many electric cars around Haverhill next year. Paul is hopeful on persuading Jenni to have one (on the company of course).

Tax Building Blocks

Making Tax Digital – Are You Ready?

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Making Tax Digital – Are You Ready?

July 2019 marks the period that you have to submit your VAT returns using HMRC’s new Making Tax Digital (MTD) regime. Already Accountants, VAT registered businesses and HMRC are struggling to cope.

Take a look at Accounting Web’s report on how HMRC’s systems were already struggling in May – Read report here

If you have not addressed MTD you need to do this NOW!

Your accountant should have been in touch to make sure your systems allows you to send HMRC compatible VAT returns. You may have been offered a bridging software to read from Excel (or other non-compliant accounting products) to then transfer to HMRC. In our opinion this is a sticky plaster over an open wound and not a long term solution. You have probably been given this type of software because your accountant does not understand or is overstretched.

Our recommendation is that you use Xero or SageOne to manage your businesses finances. Both pieces of software are fully compatible with MTD. 1 Accounts are Making Tax Digital certified and can help you transfer your business over to software that will not only be compliant but save you heaps of time to.

You should make sure your accountant can help you through the process of transitioning you to online software, registering you for MTD and maintaining your VAT returns. HMRC have some guidance on their website we recommend reading – Read article here.

If your VAT return (period ending 30th June 2019) is not filed by the 7th of August 2019 you may get a fine from HMRC. It is unknown to us if HMRC’s systems will be able to cope with this months filings. Our advice would be don’t leave it till the last minute.

 

should I employ a business coach?

Should business employ a business coach?

Posted on | by Jade Donno

Should Business’ Employ a business coach? – Absolutely!

A note from Paul

Over the years I have seen many people that say they are business coaches and I really would not trust them to deliver, especially those that are part of a franchise and just follow set procedures.

A business coach should understand your business, understand you and work to empower you to put your business in the direction that it wants to go.

Our first coach

My first encounter of a coach was about 20 years ago and the lady Gabriel Blackman-Shepperd was a life coach, she helped me to understand issue facing me at the time and my vision of the future, interestingly some of my vision at that time remains today.  Gabriel understood me and worked really hard to focus me.

Coming to present day I have used three business coaches, all of whom have had a significant impact on my business.

Tough Times 

Starting 1 Accounts Online was at a really difficult time, coming off of a terrible experience in my business career & my youngest daughter becoming confined to a wheel chair; I had lost a bit of the original spark I had and needed some guidance on where we were going.

The government had a great scheme in place where they funded a coach and I took on the services of Dominic Bowles who really helped me and my wife Jenni.

Dominic worked hard on the ethos of our business and his advise will always be part of our business regardless of changes.

Dominic helped us get personal and business goals which we smashed!  We also learnt  that family values are so important to Jenni and me and that this had to come through our business as well, something we had lost sight of over the previous couple of years!

Dominic has been back a few times since and we really value his input.

Pricing change

When we first started our Online business we had a specific business model that we identified would not work in the long term and this was based on price.  Price was OK to start with as it was only Jenni and me working from home but to move the business forwards I needed to really understand my pricing.

I signed up to a program with Mark Wickersham who is well known in our industry and via webinars and reading I started to understand pricing, my market place and the real psychology behind price.  This time spent with Mark was really important to us.

Once I had what I wanted I stopped the coaching and I think it is really important to know when you have gained what you need from your coach, but do not be afraid to return to brush up on your knowledge.

Skip to the present 

Our latest coach Heather Townsend has been a really interesting partnership.  I first met Heather at the Practice Excellence Awards where we won best New Practice in the UK, as you can imagine I was on top of the world and thought I knew everything.  Heather said that she would love to work with us and could really help us, at the time I really doubted that!

Six months ago we joined Heathers Millionaire Accountants program and it is really only today that I have seen real value in the process.  Heather no doubt will tell people that I am a really difficult person to recognise my achievements as my growth is never enough, she constantly reminds me that 62% growth last year is really good and yes I suppose it is.

Sitting back today reflecting on Heathers input to our business has been enormous.  With Growth comes pain and my real pain was systems and lack of robust systems to grow with us.  We started setting up Karbon four months ago and Jade (our practice manager and my daughter) has worked relentlessly in getting this right for us.  Karbon have also been a great partner in improving the software.

We have also changed our Tax and Accounting software to TaxCalc and the monthly saving has been over £800 per month, more than covering Heathers fees.

We have introduced daily team meetings, led by Jade and weekly full meetings led by Jade as well, these meetings have really helped to Gel the team together and our apprentices are now flying and having an important and significant impact on our business and our clients businesses.

We are also instigating our monthly management meeting with three of us focusing on driving the business forwards.

I also spend Wednesdays working from home and specifically working on the business, as a business owner this is so important to the business.

All of the above has been so positive on the team, our client service and the bottom line that we are looking forward to Heather and her team working hard to reach the goal we both promised our selves at the start of the process.

Top Tip – 

Chose your coach wisely, give them at least six months to prove themselves and re-evaluate what they deliver to your business.  Heather may not want to be but she is stuck with us for at least another six months and more than likely beyond!

 

What is MTD?

What Is Making Tax Digital?

Posted on | by Jade Donno

What is MTD?

Fact: 

All of our clients are Making Tax Digital (MTD) compliant because they use the latest online accounting software provided by the market leaders – Sage and Xero.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a government initiative which aims to transform the administration of tax to create a simpler, more effective and efficient tax regime that makes it easier for taxpayers to get their tax right.  (Let’s not forget to mention the estimated additional revenue of £610 million for HMRC as a result of the reduction in tax errors!)

Businesses that meet the criteria will be required to file their tax online, make online payments and keep digital records.

Quite simply, Making Tax Digital (MTD) is all about managing your accounts online.

Who is affected?

On 1st April 2019, all UK businesses that are VAT registered and operating above the £85,000 VAT threshold will be required to keep their records digitally and to submit VAT returns to HMRC using MTD compliant software.

Other areas of MTD, such as income tax and corporation tax, have been put on hold until 2020, at the earliest.

What do I need to do now?

If you are not VAT registered then you do not need to do anything at the moment. Just keep an eye on your turnover and if you think you are nearing the threshold give us a call on 01440 844 986. You should also be mindful of announcements from HMRC as to when income tax and corporation tax will be covered by MTD.

If you are already using MTD compliant accounting software then you do not need to take any further action.

If you are not using an MTD compliant accounting software, such as Xero or Sage Business Cloud, and you are above the £85,000 VAT threshold it’s time to call 1 Accounts!

Ditch the dinosaurs…

Many “traditional” accountants are panicking because they have not embraced the digital revolution. They have chosen to continue with desktop based systems, time sheets and outdated processes.  With the deadline for MTD looming they are now in danger of extinction!

This is the advice from the ICAEW (Institute of Chartered Accountants in England and Wales) for their members:-

Preparing your practice for MTD

Agents will need to take steps to prepare both their own practices and their clients for the disruption that Making Tax Digital and digitalisation will cause to the market for accounting and tax services.

 

Pick the pioneers…

1 Accounts was established in 2013 with the sole focus of moving businesses from the traditional accountancy model to online accounting with all its time and money saving benefits. The team at 1 Accounts are experts in cloud accounting, they did their learning on the “digitalisation of accounting services” years ago and have the accolades to prove it –  Sage UK’s Top Online Accountants, 2020 Innovation Awards 2016 most ‘Innovative Practice’ and a Xero Gold Champion Partner with a Making Tax Digital Ready classification.

The dinosaurs will be charging their clients for the privilege of learning about the “new ways” and converting clients from desk based systems to online systems. Just think – if they are operating time sheets, every hour has to be accounted for! Do you want to pay for them to catch up?