September 2007 Newsletter

Welcome to Prime Chartered Accountants E-News

As ever at Prime, we provide our clients and contacts with pro-active advice on the latest issues and regulatory changes that could impact on their business or personal lives.

The “hysteria” and panic that surrounded the Northern Rock saga this week has certainly raised investor’s awareness of “Risk”. With the current perceived instability in the world’s financial Services market and concerns surrounding the property slow-down, business owners, investors and savers are asking us, “What should we do with our money?”

There is no simple answer, but if you need advice regarding your savings and investments or if you haven’t yet addressed your Inheritance Tax Planning, give us a call and arrange a meeting with one of our team at Prime Financial Advisers Ltd.

This month’s edition covers some interesting developments. If you have any questions at all about the issues raised, do not hesitate to contact us.

(Laurence Moore, Chairman, Prime Chartered Accountants Group)

Tax relief for running a business from home

New guidance has been issued by H M Revenue & Customs with regard to tax relief in respect of the use of private home for business purposes. This replaces the somewhat sparse information that previously existed.

Even if the self-employed carry on most of their business elsewhere they are still entitled to a deduction for part of their household expenses provided that there are times when part of their home is used solely for business purposes. If it was only minor use, for example, writing up the business records at home, a reasonable estimate may be accepted without detailed enquiry.

Different methods of apportioning items like expenditure will be relevant, depending on the type of expenditure.

If this affects you, read our factsheet.

If you want more information about this, contact Sarah Nickols in Prime Coventry on 024 7655 4310 or Jan Hornby in Prime Solihull on 0121 711 2468.

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Test case issue to resolve bank charges debate

The Office of Fair Trading (OFT) is taking a case to the High Court to decide whether or not the level of unauthorised overdraft charges made by banks are legal. According to the OFT, tens of thousands of complaints that these charges are unfair have been received by the County Courts and the Financial Ombudsman Service.

The debate considers whether, under current consumer law, it is lawful for banks to charge a penalty for unauthorised overdrafts and ‘bounced cheques’ in excess of the administrative costs needed to process them. In many cases, these penalties can be £30 or more for each transaction which occurs whilst an individual’s bank account is in the red. Consumer groups argue that the actual administrative costs involved are a fraction of the penalties.

As a result of high profile campaigns by consumer groups, thousands of dissatisfied bank customers have been sending their banks letters of complaint demanding refunds. Some banks have settled out of court rather than reveal the actual cost of dealing with overdrafts and bounced cheques.

There have been several cases where the courts have found in favour of the bank which has left the question of bank charges unresolved. The OFT has entered into an agreement with eight leading high street banks to bring a test case to the High Court to resolve the legal issues.

Until the case is settled, decisions on all existing and future claims for refunds are likely to be put on hold. Estimates for when a case might be brought before the High Court range from November 2007 to early spring 2008.

Internet Link:- OFT website.

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HMRC apologise for payment delay

HMRC have apologised to small employers, those with less than 50 employees, awaiting their £150 tax-free incentive payment in respect of the 2006/07 tax year. The incentive payment is due where an employer, or their agent, successfully filed their Employer's Annual Return form P35 and the supporting employee forms P14s online.

According to HMRC the large numbers of people claiming their payment by cheque has led to a delay and many employers may not receive their cheques until December 2007.

HMRC advise that requests for payment by cheque should only be made by those employers who have little or no PAYE deductions to pay over. Employers who have to make monthly or quarterly PAYE payments to HMRC are able to reduce their payment by the £150 incentive payment.

If you want to discuss this in more detail contact Monima Das Prime Paysolve Manager on 024 7655 4321.

Internet Link:- HMRC tax free incentive payments.

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HSE Launch Risk Assessments Factsheets

The Health and Safety Executive (HSE) has produced a range of risk assessment factsheets for different business sectors. According to the HSE, the example risk assessments aim to show businesses that ‘risk assessments are about identifying practical actions to protect people from harm and injury, not a bureaucratic experience’.

Business types already covered include contract bricklayers, an estate agency, a motor vehicle repair shop, a convenience store/newsagent, an office, general office cleaning and a warehouse. Further examples will be added to the website from time to time.

Internet Link:- HSE risk examples.

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VAT change for invoices

HMRC have issued guidance on changes to the rules regarding the information to be shown on invoices issued from 1 October 2007. Some of the changes are very minor and reflect current normal business practice. However some businesses will need to amend their current invoices to comply with the guidance.

The businesses most likely to be affected by the new requirements are those:

• using the margin scheme for second-hand goods, antiques, works of art, and collectors’ items
• involved in making travel related supplies that fall within the scope of the Tour Operators’ Margin Scheme
• involved in intra EU supplies of goods and services
• making supplies where the customer accounts for the VAT. This VAT treatment is sometimes known as a ‘reverse charge.’

Please do get in touch if you would like further clarification of how these changes will affect you.

Internet Link:- HMRC guidance.

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Thinking ahead about powers of attorney

If you become too ill or muddled to manage your affairs, it is important to have someone who can step in and carry out this vital function. You can make the process much easier if you set up an enduring power of attorney (EPA). This process, however, is about to be replaced. An EPA can help avoid very considerable distress, worry, inconvenience and expense where a person can no longer make important financial decisions for themselves.

Enduring powers of attorney will be replaced by lasting powers of attorney from 1 October 2007, and there will be some considerable differences under the new system. An enduring power of attorney allows you to appoint someone of your own choice – called an attorney – to manage your finances. Although the power can be used immediately if you want, the main benefit is that it allows a smooth takeover if you lose mental capacity.

The new lasting power of attorney (LPA) will allow you to appoint an attorney to make decisions about your health and welfare as well as your finances. You will be able to appoint different attorneys for these different purposes, and will be able to limit the powers of each attorney to specific situations.

There are other differences between the old EPAs and the new LPAs. An LPA can only be used after a person has lost mental capacity rather than immediately. A certificate of capacity will be needed for the LPA stating that the person was mentally capable at the time he or she signed the LPA, which may sometimes be difficult to judge.

If you are thinking of making an EPA or LPA, you should obtain clear legal advice. Above all, you should think very carefully about who would be the best person – or people – to manage your affairs as an attorney. Existing EPAs will remain valid after October. If you have one, you may wish to review its terms to see if it should be changed to an LPA. If you do not have an EPA you may want to consider setting one up before the new rules are introduced, since many lawyers believe that the old regime has certain advantages, particularly regarding cost.

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Is your IT security up to the job?

Almost half of small companies believe they are too small to be affected by cybercrime and fail to take the issue seriously enough, research by internet security firm McAfee suggests.

A staggering 47% of IT decision-makers from across Europe said they thought cybercrime was an issue for larger organisations and 45% thought they would not be victims because they were not well enough known.

Over half (58%) of those polled said they did not think they were a valuable target while 56% suggested criminals would be unable to make any money out of their firm.

As a result of this flippancy, 28% of small companies spend just one hour a week implementing IT security measures despite almost one in five (19%) admitting that an attack could put them out of business.

“Cyber-criminals don‘t discriminate; to them size doesn‘t matter,” said Greg Day, senior security analyst at McAfee. “Every SMB, even very small ones, will have customer details or financial information that will be of use to a cyber criminal.”

McAfee is warning companies that they can be victims of viruses, hacking, spyware, spam and even ransomware just as easily as larger companies, which can result in stolen data, computer downtime, decreased productivity, lack of compliance and loss of sales and reputation.

If you need help with this or a review of your IT security contact Nick Ballard our IT Manager on 07792 605536.

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Recognition for Prime Partners

Two of Prime's partners have been shortlisted in different categories of the FirstPro - Professional of the Year Awards 2007.

Laurence Moore, Chairman of Prime Chartered Accountants has been shortlisted in the Financial Professional category and Morgan Davies, Prime's newest partner has been shortlisted in the Young professional category.

The Awards Ceremony itself will be held at the Ricoh Arena on 5th October 2007.

Laurence Moore, when told of his success at the shortlisting phase said "It is quite an honour to be included in the shortlist of the Financial Professional category of this prestigious award. Regardless of whether Morgan or I are successful on the night we are looking forward to what promises to be an exciting event".

The evening is set to be one of the biggest events in the Coventry and Warwickshire business calendar. Lord Eddie George, the man who was Governor of the Bank of England from 1993 - 2003 will be the after dinner speaker. Sky’s Gary Newbon will be the compere for the evening.

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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.