You did, of course, submit your self-assessment tax return before end of January. But even with the deadline extended to 2 February this year, the revenue’s coffers are to be boosted by around £85 million from the automatic penalties levied on the 850,000 people who didn’t. Even those registered as self-employed but with no tax payment due should have submitted a return, and will be fined £100 if they didn’t. Penalty notices are being sent out right now.
Reasonable Excuses
Of course some of them will have been unable to do so for acceptable reasons. They might have been incapacitated by a serious illness. They might have been unable to focus on business or admin because of the demise of a loved one, classed as a family bereavement. These will probably be accepted by HMRC as a legitimate excuse for not filing on time.
If someone had a serious problem with a computer or internet connection, that might also be accepted. Or if there was a failure of the HMRC system, it would be recognised as not the fault of the person trying to submit.
Excuses that are not acceptable include claiming an inability to deal with the complications of the HMRC system online, or that an agent who was supposed to do it proved unreliable. The responsibility for submission lies with the individual concerned and no one can pass the buck.
Advice for the Late Filers
If you know anyone in that position, do advise them not to delay any longer. If they haven’t yet filed their return on line, the longer they wait to do so, the worse the penalties can get. From May 4th, it will cost them an extra £10 a day. Even a reasonable excuse can only be temporary, unless an illness is terminal. Life goes on beyond grieving, and unfortunately, tax affairs still need sorting out.
Advice for Those with Penalty Notices
If they think they have a reasonable excuse, they need to appeal in writing in to HMRC, making sure it will get to them by March 31st. This is the cut-off point, after which appeals will not even be considered.
Some people will have deregistered as self-employed and/or received a notice saying they are not required to complete a self-assessment return. Hopefully they will have kept the correspondence, so they can contact the revenue with their proof.
Your advice might also include a recommendation to find some reputable bookkeepers, who would never have let this happen in the first place.
Sunday, 25 March 2012
Monday, 12 March 2012
SME Relief from Onerous Reporting Requirements
A recent EU directive allows countries to relieve smaller companies of their most exacting accounting and reporting regulations. Individual countries can make their own arrangements for this, and the UK’s Department for Business Innovation and Skills (BIS) has announced that changes will be implemented here as soon as possible. This has been interpreted as a possible topic for the chancellor’s budget of March 21st.
Who Might Benefit
BIS has indicated that around 1.5 million micro-companies in the UK might be included in this aspect of deregulation. These are companies that satisfy at least two of the following requirements: they employ no more than 10 people on average per year; turnover does not exceed £700,000; they have no more than £350 million on the balance sheet.
How the Regulations will Change
For these so-called micro-companies, all the accounts and reports that SMEs are currently required to deliver annually to Companies House will be simplified. For example, a cash based trading statement will replace the profit and loss account. A statement of position will be another requirement, replacing the balance sheet. And the annual return will be much simpler. The reporting burdens on the businesses involved will certainly be less onerous.
Concerns About the Changes
Business leaders are considering whether they are really helpful to small businesses. Some accountants are looking at how much work will be needed to transform records from an accrual to a cash basis, and the time and cost that will be involved. Others are wondering if the new style reports could hinder business growth if potential funders or partners want to undertake due diligence exercises to assess risk.
The management of small businesses is just as dependent on accurate information to inform their decisions as those in larger enterprises. To perform their day-to-day activities, they will still need to know about cash flow, actual and predicted, and to keep tabs on debtors and creditors. As the Institute of Chartered Accountants England and Wales has pointed out in its response to the BIS announcement, “the information requirements of management should be the primary driver of business record keeping”.
How helpful is a trading statement that shows turnover but doesn’t show the costs associated with that trading? Year on year comparisons will not be possible. How can you spot escalating costs and other trends that will need to be investigated? How can profit margins be assessed?
The records you keep will still need to be comprehensive, even if you are not required to make them all public. Talk to your outsourced bookkeepers for advice.
Who Might Benefit
BIS has indicated that around 1.5 million micro-companies in the UK might be included in this aspect of deregulation. These are companies that satisfy at least two of the following requirements: they employ no more than 10 people on average per year; turnover does not exceed £700,000; they have no more than £350 million on the balance sheet.
How the Regulations will Change
For these so-called micro-companies, all the accounts and reports that SMEs are currently required to deliver annually to Companies House will be simplified. For example, a cash based trading statement will replace the profit and loss account. A statement of position will be another requirement, replacing the balance sheet. And the annual return will be much simpler. The reporting burdens on the businesses involved will certainly be less onerous.
Concerns About the Changes
Business leaders are considering whether they are really helpful to small businesses. Some accountants are looking at how much work will be needed to transform records from an accrual to a cash basis, and the time and cost that will be involved. Others are wondering if the new style reports could hinder business growth if potential funders or partners want to undertake due diligence exercises to assess risk.
The management of small businesses is just as dependent on accurate information to inform their decisions as those in larger enterprises. To perform their day-to-day activities, they will still need to know about cash flow, actual and predicted, and to keep tabs on debtors and creditors. As the Institute of Chartered Accountants England and Wales has pointed out in its response to the BIS announcement, “the information requirements of management should be the primary driver of business record keeping”.
How helpful is a trading statement that shows turnover but doesn’t show the costs associated with that trading? Year on year comparisons will not be possible. How can you spot escalating costs and other trends that will need to be investigated? How can profit margins be assessed?
The records you keep will still need to be comprehensive, even if you are not required to make them all public. Talk to your outsourced bookkeepers for advice.
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