April 2008 Newsletter

FOREWORD

WELCOME TO PRIME CHARTERED ACCOUNTANTS (PRIME) APRIL E-NEWS.

Welcome to Prime’s April E-News. Well, it has been dominating the news, but there can be no denying that the impact of the Global Credit Crunch is finally being felt by local businesses and consumers; slamming the brakes on the economic growth we have been enjoying over recent years.

Economic growth is expected to be around 1.8% this year, down from a little over 3% last year. Credit conditions have deteriorated, with a marked increase in the spreads that banks are demanding on loans to the business sector. The record cost of oil and increasing prices of other core commodities combined with an increased taxation burden are putting real pressures on business owners.

Add to the mix, the long awaited housing slump, which has knocked consumer confidence, it’s fair to say that things are not easy in the current environment. Business commentators are warning that it is likely that things will be tough for the next couple of years.

So what should you do?

Firstly, if you are available, please come along to our new Solihull and South Birmingham Business Academy. It will help to share your experiences with other business owners and our guest speaker will help you S.U.M.O (Shut Up and Move On)!

Secondly, well things could be worse! Interest rates are low, it looks like a further quarter point reduction is likely to be announced soon by the Bank of England.

Remember, there is still capital out there to support the right businesses and the right ideas.

Look for the opportunity and stay positive! At these times, it is more important than ever for clients to look at their businesses and think:

• What can we do better?
• How can we differentiate ourselves?
• What changes in technologies or lifestyles can we exploit to generate new opportunities?

It is often during adverse times that entrepreneurial businesses re-evaluate themselves, regroup and emerge stronger and more profitable than ever!

Laurence Moore
Partner, Prime Chartered Accountants

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CIS businesses beware

We have recently come across examples of companies registered under the CIS rules to be paid gross by Contractors, losing that status because their PAYE/NI payments were a day late.

PAYE/NI must be paid over by the 19th of the following month. If HMRC record you as being late, even by a day, three times in a 12 month period they will remove your gross status. This can have serious cash flow problems depending on the amount of your turnover covered by the CIS rules and the size of your regular PAYE/NI payments (companies who suffer tax deducted from turnover can recover it by deducting it from their PAYE/NI payments).

Late payments of other tax such as corporation tax or self assessment tax can also result in the gross status being withdrawn.

If you need help with these complicated rules please contact Sarah Nickols in Coventry on 024 7655 4310 or Jan Hornby in our Solihull office on 0121 711 2468. If you would like us to process your CIS returns online contact Monima Das in our Prime Paysolve bureau on 024 7622 0208.

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Filing deadlines and late filing penalties

At the moment, limited companies have to file their accounts at Companies House within 10 months of their year end otherwise they are fined £100 (this increases to £250 when they are more than 3 months late. For accounting periods beginning on or after 6th April 2008 the filing deadline is 9 months after the year end.

Penalties have been increased for late filing of accounts; this will affect all companies whose accounts are filed after 31 January 2009.

The new penalties are substantially higher than at present – see table below.

The penalty is DOUBLED for any company which also filed late the previous year.

This means it is even more important now that we are able to complete our work in good time before the latest filing date.

How late are the accounts?	Penalty - Ltd Co
Not more than one month	£150
More than one month but less than three	£375
More than three months but not more than six	£750
More than six	£1,500

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Solihull and South Birmingham Business Academy

We would be delighted if you would be able to join us at the launch of Solihull and South Birmingham’s Business Academy on May 8th 2008 at 18.00 hours.

So, what is the Solihull Business Academy?

The objective of the Solihull Business Academy is to provide an exclusive and stimulating environment where leading business people can meet to exchange ideas and knowledge and be inspired by top business speakers.

To celebrate the launch of The Solihull and South Birmingham Business Academy, our presentation will be delivered by Paul McGee, an international business speaker and best selling author.

Paul’s style is funny, motivational, interactive, practical and provides delegates with a memorable, motivational, 'moving on' experience. To highlight the outstanding professionalism of our speaker you are welcome to take a look at his website: www.TheSumoGuy.com

To find out more information about this event and to reserve your FREE place, please click here.

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Minimum wage rises

The National Minimum Wage will rise to £5.73 (£5.52) an hour in October 2008. The hourly rate for 18 to 21 year olds will increase to £4.77 (£4.60 for 16 and 17 year olds to £3.53 (£3.40) an hour.

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Entrepreneurs' Relief draft legislation

As you will probably know by now, as part of the changes to Capital Gains Tax, the old Business Taper Relief rules have been replaced by a new Entrepreneurs Relief.

The first £1m of gains qualifying for relief will be charged at an effective rate of 10%.

Gains in excess of £1m will be charged at 18%. An individual will be able to make more than one claim for relief, up to a lifetime total of £1m of gains.

The new relief is similar to Retirement Relief, which was phased out with the introduction of taper relief, but the new rules are designed to be simpler:

• There will be no minimum age limit
• Relief will be available where the relevant conditions are met for a period of one year ending with the disposal / cessation.
• The relief may be available to gains arising on the disposal of:
• The whole, or part, of a trading business that is carried on by the individual, either alone or in partnership
• Assets used in a business which has ceased
• Shares in a trading company, or holding company of a trading group, provided that broadly the individual owns at least 5% of the voting rights in the company and is an officer or employee of the company
• Assets used in a partnership or by a company but owned by an individual if the assets disposed of are ‘associated’ with a disposal of shares or an interest in partnership assets. The individual must make the disposal as part of their withdrawal from participation in the partnership or the company
• Certain disposals by trustees of business assets and company shares where a ‘qualifying beneficiary’ has a qualifying interest in the business / shares.
• A trading business includes professions but only includes a property business if it is a ‘furnished holiday lettings’ business.

This is a complex area and, if you have any queries or concerns, please contact Sarah Nickols in Coventry on 024 7655 4310 or Jan Hornby in our Solihull office on 0121 711 2468.

Internet link: HMRC guidance

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Online submission of employer's forms

The employer’s annual returns P35 and P14 (P60) are due for submission to HMRC by 19 May 2008. There is a tax free incentive payment due of £100 for small employers, those with less than 50 employees, who successfully file their returns electronically.

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Disclaimer
This newsletter is published for the information of clients and other recipients of our email newsletters. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this newsletter can be accepted by the firm.