June 2008 Newsletter

FOREWORD

WELCOME TO PRIME CHARTERED ACCOUNTANTS JUNE E-NEWS.

At least the weather seems to be picking up. It’s a shame the same can’t be said for the general economic climate.

At Prime, we are coming across a number of businesses who are suffering as a result of the global turn down, and the government aren’t helping with the whole 10p tax fiasco adding confusion and concern.

Our e-news this month includes help in the form of a fact sheet, with ideas on the steps you can take to shore up your business to ride out the storm, along with news on new filing deadlines and penalties and some general snippets of business news you may have missed.

Let’s hope the weather stays fine – and the economic temperature starts to rise too.

If you need business or financial advice or support, contact Prime Chartered Accountants in Coventry on 024 7622 0208 or Solihull 0121 711 2468.

Laurence Moore
Partner, Prime Chartered Accountants

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10% tax rate climb down

Following extensive media coverage, and potentially faced with a back-bench revolt and the possibility that the Finance Bill would be compromised, the new Chancellor Alistair Darling has announced an increase in the personal allowance of £600, from £5,435 to £6,035; and a reduction in the basic rate limit of £1,200, from £36,000 to £34,800.

These changes mean that basic rate taxpayers will benefit by £120 per tax year whilst the position of higher rate taxpayers will be unchanged.

HMRC have issued guidance to employers advising them that they should not make any adjustments to employees’ tax code numbers and should continue to use the allowances and guidance published in May 2008. This means that employees will not see the impact of these changes yet.

HMRC have advised that they will be issuing details in the next few weeks of how and when the changes will be implemented. We will keep you informed of developments.

In the meantime we are anticipating the following impact …… payroll systems, software changes, etc.

Internet link: HMRC guidance

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Tough times for business

In the current global economic climate, small and medium-sized enterprises (SMEs) will probably be concerned about the consequences for their business. It will be a case of the survival of the fittest. The Prime fact sheet on how to survive in the current economic climate on our website provides some useful pointers if your business is suffering.

The fact sheet contains tips on:

• Money management - where you can save money
• Cash flow - tightening credit control and keeping in touch with creditors
• Forward planning – looking at the forward order book and at planned expenditure
• Staffing issues – consider alternative to taking on new staff

If you need support with any of these issues contact any of the Prime partners.

Internet link: Prime fact sheet – Riding the Wave of Global Recession

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Take care what information you post on the internet

It has been reported in the Daily Express that tax inspectors are searching social networking sites for potential tax evaders, who may be ‘advertising’ their wealth or assets which may lead HMRC to believe they have ‘hidden’ remuneration.

Taxpayers are being warned to be careful about what personal information they post on social networking websites as officials prepare to scour the likes of Facebook and Bebo for tax evaders. The article claims that HMRC's Irish counterpart has already started to browse social networking websites.

Internet link: The Daily Express website

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SMP and salary sacrifice arrangements

HMRC have published some guidance on the complex area of salary sacrifice and entitlements to both statutory maternity pay and continuing non cash benefits during maternity leave.

The guidance covers areas such as calculating maternity pay entitlement for those individuals who receive childcare vouchers. It also includes guidance on entitlement to non cash benefits during maternity leave.

To read more about this complex area, please visit the link below or call Monima Das on 024 7655 4324.

Internet link: HMRC guidance

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Drive to help women boost their state pension

Women pensioners could boost their state pension or even be in line for a windfall payment under special terms.

But they need to act quickly as the arrangement, which allows people to pay for missed National Insurance contributions, will be unavailable in less than two years.

Women who have gaps in their National Insurance record for years between April 1996 and April 2002 are entitled to ‘buy back’ the missing years at a special rate. Any improvements in State Pension are backdated to when women first drew their State Pension and could result in a lump sum pay out.

Internet links: Pensions service website, Pensions service advice and Press release

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Entrepreneurs Relief

This has recently replaced the old Business Assets Taper Relief as the main relief for Entrepreneurs selling their businesses, promising an effective tax rate on gains of 10%.

However the rules are different, in particular in how they affect:

• Gains on property from where the business is run
• Small shareholdings and shareholdings where the shareholder does not work in the business

If you believe that either of those issues may affect you, contact Prime Chartered Accountants so that we can advise you with regard to your own situation on 024 7622 0208 or 0121 711 2468.

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Remuneration strategy

We are all generally aware that paying dividends out to director shareholder clients instead of additional salary can save tax and national insurance. It used to be the case that once a company’s profits exceeded the small company’s corporation rate limit that taking salary or bonus then became more effective than dividends. That has changed since April 2008. If you want to discuss that in more detail, contact your Prime partner in Coventry on 024 7622 0208 or Solihull on 0121 711 2468.

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Penalties Increased for Late Filing of Accounts

For many years the filing deadline for accounts to be delivered to Companies House has been 10 months after the year end. New regulations which came into force on 6 April 2008 change all that. For all companies with accounting periods starting on or after this date the filing deadline is reduced from 10 months to 9 months.

And it doesn’t pay to get it wrong.

Filing 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 as illustrated in the table below and the penalty is doubled for any company which also filed late the previous year.

How late are the accounts?	Penalty for a 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

Client News

Birmingham solicitors on the acquisition trail (more ...)

Prime prevent business owner barking up the wrong tree (more ...)

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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.