Be aware the taxman is getting tougher with penalty increases and regulation changes. Here is a round up of new HMRC penalties and powers:

Penalties for late tax returns have risen significantly – a return filed 6 months after the deadline could attract a fine of at least £1,300.

Another big change is that fines will no longer be cancelled if the taxpayer owes no money to HMRC, because there is no extra tax to pay or because it had been paid.

There are new penalties for filing late returns and for late payments. Read more for penalties.

Small businesses should watch out for spot checks as HMRC rolls out its “test and learn” trial.

New measures to clamp down on tax evasion

Individuals who deliberately evade tax will now be subject to detailed inspection for up to 5 years. If the taxman finds someone has continued to deliberately evade tax, it may instigate criminal proceedings.

Tougher penalties for offshore tax evasion introduced 6 April 2011.

If you have any worries or concerns contact me on 01344 620495 or mark.busby@dbsellek.co.uk

You probably haven’t had time to consider the impact of the proposed pension changes on your business. So we thought you might find this useful:

What are the changes?

From 2012 the onus will be on employers to automatically enrol staff into a pension scheme and for contributions to be mandatory. This could be an existing company scheme (if it meets the necessary criteria) or NESTs (National Employment Savings Trusts) which are being introduced by the Government to replace the ubiquitous Stakeholder Pension. Currently, employers need only offer a pension for five or more staff and contributions are optional.

When will this happen?

The new rules under the Pensions Act 2008 will come into effect from next year and are being phased in depending on business size.

Who is it for?

This will affect all employees aged between 22 years and the state pension age earning more than £7,475 and not already in a qualifying pension.

What will it cost?

This has caused much confusion but the aim is for staff to contribute 8% of their qualifying earnings towards retirement. Of this 8%, employers will eventually have to fund 3%.

What should I do next?

Don’t wait until 2012 – get in touch with us now to find out how the new rules will affect your business. We can advise on tax planning issues and put you in touch with an independent financial adviser should you require professional financial planning advice. We have no commission arrangement or affiliation with this adviser other than we think you’ll like them!

Please contact me for an initial discussion on 01344 620495 or mark.busby@dbsellek.co.uk

If your annual income has reached £100,000 you will need to complete a tax return for the Inland Revenue. This allows for the collection of any outstanding tax owing that may not be collected through the PAYE (Pay as You Earn) system. Similarly, it allows for any refunds owing too!

If you would like us to help you with your tax return we would be pleased to do so. If your tax affairs are complex or you are receiving income from more than one source then you may be interested in our bespoke tax planning advisory service.

Either way we should be pleased to discuss any concerns you may have with your tax return or tax planning affairs. You can reach me on 01344 620495 or mark.busby@dbsellek.co.uk

Being a contractor under the Construction Industry Scheme (CIS) is complex with the onus firmly on you to ensure you and your subcontractors are compliant with their tax liabilities. The message from the Taxman is loud and clear – know and comply with the CIS rules, avoid mistakes and file your CIS return on time or face the penalties!

Here are some of the important CIS rules contractors need to be aware of:

Keep checking the CIS and employment status of your subcontractors on a regular basis to ensure you deduct the correct amount of tax from sales invoices.

Be prompt when sending information to your accountant for filing your monthly CIS return. There is an automatic penalty for late returns starting at £100 for 50 or fewer contractors.

Remember to send a monthly deduction statement to those subcontractors whose pay you are required to make a deduction.

If you work under the CIS scheme as a subcontractor in your own right and you wish to maintain gross status you must fulfil various tax and record keeping obligations, which will be checked at an annual compliance review by HM Revenue & Customs. Some larger companies may refuse to deal with non-gross status companies.

Be aware contractors are liable for non-compliance by overseas contractors and subcontractors used for UK installations.

Read more on CIS obligations

Let us know if you have any worries or concerns. Lately we’ve been fairly successful in helping Construction clients retain their gross status!

VAT Alert

1. Did you realise that you are responsible for ensuring subcontractors are registered for VAT?  This can typically affect Construction businesses who can unknowingly reach the £73,000 VAT threshold very quickly. This can only be good news for subcontractors helping them avoid penalties and cash flow issues should they have to pay back VAT.
2. Watch overseas subcontractors you engage as they can unwittingly reach the VAT threshold and often don’t think they need to register

If you’re worried about CIS or VAT please call Lindsay Gray on 01344 620495 or lindsay.gray@dbsellek.co.uk

The  message is loud and clear if you’re a contractor under the Construction Industry Scheme (CIS) - avoid mistakes and file your CIS return on time. 

Beware the Taxman is cracking down on late and inaccurate CIS returns with automatic penalties. Whatever the reason for a late return, the basic automatic penalty is £100 for one with 50 or fewer subcontractors on it. There is no leniency for inaccuracies either so should you forget to sign your return there will be no extra time allowed for sending it back again. Penalties are charged for each month a return is late.

CIS penalty update

Delivering outstanding customer service is the key to long-term customer relationships and business survival. Today’s customers will no longer put up with a raw deal and they don’t care who they tell. With the huge advances in Twitter and Face Book unhappy customers can literally spread discontent around the globe in express time. Social media has empowered the individual and given them a far reaching voice.

For many, customer service means nothing more than answering the phone or doing their job. What it should mean though is avoiding people saying anything negative about you and proactively finding those individuals who will say nice things about you and your brand both on and offline. So it pays to have a dedicated person within your organisation tuning into social media sites and other media listening to what is being said about you and your products or services. This then gives you the platform to respond to customers immediately dealing with negative remarks and encouraging positive customer feedback from your advocates.

In Professional services like Accountancy it can be difficult to identify a true point of differentiation. Clients have specific criteria when looking for an Accountant and of course, price is important but equally we are finding that being local, personal attention and hands-on Partners are top of their wish list too. What we’ve tried to do at Davis Burton Sellek is to engage with clients by being friendly but professional, listen to their needs (from the type of coffee they like to drink to what they enjoy doing at the weekends) and to explain accountancy and taxation in plain English. This has created a rather special client base who not only think of us as long-term partners but in many cases regard us as firm friends – something which I am extremely proud of.

Follow DBS tweets at: http://twitter.com/dbsellek

Spring has sprung at last and where was I this lunchtime? I was inside listening to none other than Mr Osborne’s dulcet tones telling us how we’re all in this together for this, his second Budget. I have to say Mr Osborne certainly gave a polished performance today. I get the feeling he’s probably been having some secret voice coaching since the last Budget. Maybe he’s been taking lessons from the King’s Speech and Colin Firth.

So here’s the thing, rather than simply repeating the Chancellor’s Spring Budget announcements which can be quite dry, I thought I’d give you my Jeremy Clarkson slant and tell it how it is. It looks like the Chancellor is broadly encouraging investment into the UK ish. Whether you agree or disagree with Osborne’s announcements today, his focus was definitely macroeconomic and not micro with his attention firmly on attracting inward investment and heading off  a steady exodus of high earners and companies to more pleasant tax-efficient climes. Yet I can’t quite get my head around the fact he wants to charge Non-Domiciles £50,000 but then let them off remittance taxation if they invest back into the UK economy.

Chill the bubbly if you’re a business owner thinking of selling your business any time soon then get on the phone to your accountant or investment adviser. You’ll now be far better off with the Chancellor’s pledge to double Entrepreneur’s relief from £5 to £10 million. And if you’re the type of investor who likes to take a punt and invest in the more risky entrepreneurial type companies then you can now invest more heavily and get more tax relief when investing in Enterprise Investment Scheme qualifying companies

As Osborne struggles to compete and support the private business, he knew he needed to do something about taxation. So his decision to reduce Corporation Tax by 2% in 2011 falling to 23% by 2014 is good news indeed. He left the Smaller Companies rate of Corporation Tax well-alone and this will fall to 20% from 2012. He also plans to remove the burden of red tape, delay Small Business rate increases and make credit more readily available for the business start-up and SME. Not quite sure where Boris Johnson will set up his enterprise zone though – maybe a Gin Distillation factory in Knightsbridge?

For those of you in a charitable mood you can now also get a discount on your Inheritance Taxation which can’t be bad. And of course the ubiquitous pothole pot means you can now lobby your local council to improve a road near you. While the 45 pence mileage rate rise for the first 10,000 miles was a nice surprise but a long time coming and why the 25p rate on mileage thereafter?  An added bonus and welcome respite came when the Chancellor finally saw sense and cut fuel duty by 1p per litre from 6pm 23 March.

To sum up, hold onto your hats folks we’re in for a rocky ride!

The Spring Budget 2011 is going to be particularly difficult for voters and Lib Dem back bench benchers. What with a shrinking economy, rising inflation and oil prices, a declining house market and rising interest rates anytime soon, the Coalition finds itself between a rock and a hard place. Cameron is now turning his attention to the small business and entrepreneur to help lift the country out of recession.

I would hazard a guess that most announcements were made in the last Budget but I wouldn’t put it past the Chancellor to use the first Budget for some favourable business tax reforms which demonstrate his plans to boost the economy.

So this is what I expect from the Chancellor’s Budget on 23 March:

Predictions for individuals

Personal Allowance will go up

I am confident that the personal tax allowance rise from £6,475 to £7,475 predicted in the last Budget will happen in April 2011 and that there will be a further rise of £1000 in 2012/13. Basic rate payers will be happy but many tax payers will now find themselves falling into the higher rate tax band when the basic rate limit drops from £37,400 to £35,000. In effect the middle will be further squeezed as the basic rate drop negates any increase in personal allowance. There will be yet more misery in April 2012 for those find themselves paying the higher rate when Child benefit is removed. I’m not sure how the Coalition plans to address those earners not paying income tax under £10,000 pledge but whatever they do, they’ll tread carefully to avoid another university fee backlash.

Non-domiciles face a tough time

There is still this disjuncture between personal tax for overseas individuals and taxation for overseas corporates. The Coalition has a dilemma since they have to be seen taxing non-doms but also encouraging UK investment. My guess is they will introduce high level rules for individuals to show they are doing something but then will soften the corporate rules so businesses can pay out to overseas parent companies.

Fuel Duty postponed - Both Osborne and Cameron have hinted they will postpone the 1% increase on Fuel duty.  This will obviously leave a funding gap.

Inheritance tax frozen – It is likely the Chancellor will go ahead with the freeze of the nil-rate band @ £325,000 for individuals and £650,000 for couples.

Showroom car tax rears its ugly head – I suspect this one will still go ahead although it’s not widely remembered. Alistair Darling’s 2008 announcement for a one-off car tax for new cars registered and purchased after 1 April 2011.

Predictions for Businesses

Corporation tax to go down

I am confident the Chancellor will keep his promise to reduce the rate of corporation tax to 27% in April and then 26% the following April. I also fully expect him to confirm the lowering of the Small Companies tax rate down from 20% from 1 April 2011.

Capital allowance stays the same

Cameron is signalling that he will do everything he can for SMEs and enterprises. So I don’t see tax rates going up for businesses but I’m not sure that they will adjust capital allowances either. They could think about introducing enterprise zones but could potentially run into problems with the EC.

VAT no change

I think it’s very unlikely the Chancellor will raid the VAT treasure chest so soon.

Enterprise – the billion dollar question!

I really hope the Coalition make good on their pledge to make it easier for small businesses to trade and create more of an enterprise culture. There is currently nothing in the legislation that recognises small businesses are different to big industry corporates. SMEs need better rules to allow them to operate more easily. They need to remove restrictive tax and employment rules and essentially deregulate businesses.

Budget Prediction Summary

What with predicted inflation and interest rate rises, 2011/12 is going to be a more expensive year and consequently small businesses and individuals will need to react. So pick up the phone now and call 01344 620495 to see how we can help you and/or your business plans.

Follow my live Budget tweets http://twitter.com/dbsellek 12.30pm Wed 23 March 2011

The passing away of one of Hollywood’s greats, Jane Russell, at 89 reminds me of a bygone era of glamour and glitz. The only hint of glamour in 2011 is the forthcoming wedding of Kate and William on Friday 29 April and although this will boost tourism and the economy, the tax payer still has to cough up for security.

With little else to cheer about, Chancellor George Osborne faces a tough Budget on 23 March but the Coalition are clear about one thing – entrepreneurs and small businesses are integral to getting the economy back on its feet. This was the message in Cameron’s Party Conference Spring speech last week where he fully backed the small business saying “enterprise is the only hope for growth” and vowed that the budget would be “the most pro growth the country has seen for a generation.”

Whilst the Coalition are backing enterprise the same cannot be said of the poor individual. Unlike the big corporates we’re all feeling the pinch. Osborne is already hinting at putting off the 1% fuel duty rise due in April to ease pressures on families suffering from recent oil prices. I expect further misery next month as the Chancellor brings in national insurance and tax changes announced by the previous government.

So here’s a quick refresher to remind you what’s coming your way in April. Individuals will be squeezed on all fronts with a 1% rise in national insurance. High earners will be no better off given their personal allowances are in effect frozen, not to mention eroded by inflation running at 4%.

While basic rate tax payers can look forward to a slight increase in their allowances this will of course be offset by the afore mentioned NIC rise and those on salaries in that narrow band between £7,475 and £7,228  will feel the full brunt of the NIC rise with no income tax deduction to soften the blow.

So forearmed is forewarned and if you need help deciphering how you’re going to be squeezed after April please contact me on 01344 620495.

Stamp duty is due to rise to 5% on £1 million-plus houses from this April. In the Budget 2010, the then Chancellor, Alistair Darling, announced an increase in stamp duty on all £1 millon-plus  house purchases from the current rate of 4% to 5%. The change will mean that those who buy £1 million-plus homes will pay at least £10,000 more in tax from the new tax year, 6 April 2011.

In real terms, this will mean stumping up between £40,000 and £50,000 for stamp duty on a property worth £1 million or more. Based on Land Registry figures this will scoop up an estimated 10,000 to 15,000 home buyers paying the higher rate stamp duty each tax year.

I don’t believe we’ve seen the predicted spike in £1 million-plus home purchases from those cash rich home purchasers trying to avoid the rise in stamp duty.

If you’re worried or concerned about yet another squeeze on high earners contact me for tax planning  strategies and my penny’s worth on the stamp duty rise.