Archive for July, 2013

Protecting Your Wealth For The Next Generation

Tuesday, July 30th, 2013

Many people work hard for many years to accumulate wealth that they can pass on to their children. They pay tax on all of their earnings but the government still wants 40% Inheritance Tax on death and for them to pay care home fees. With relatively simple planning, it is possible to preserve most of your wealth, so we are pleased to announce that our next seminar on 17 September will address the subject.  It is titled ‘Protecting Your Wealth for the Next Generation’ and will cover all aspects of planning around Inheritance Tax and Care Home Fees. We will have three speakers at the event: John McCleary (McCleary & Company Ltd, Chartered Accountant), John Neill (Watson & Neill, Solicitors) and Jason Holmes (Lumen Financial Planning Ltd).

The event will take place at Lough Neagh Discover Centre, Oxford Island, Lurgan.

Registration and bacon Rolls will be from 9.00am for a 9.30am start and we should be finished by 11.30am.

If you would like to register for the event, simply email .

Everyone is welcome, so feel free to bring colleagues, family and friends but please register them, so that we can have bacon rolls for them!

Starting in business

Tuesday, July 30th, 2013

We take a look at what to do, and what to avoid, when starting-up a new business.

Around 400,000 businesses start up every year. It is estimated that around one third of these cease trading within the first three years. But new business owners do not set out to fail. So what steps can you take to ensure you don’t fall into the failure category?

Starting up a new business can seem like a minefield. Should you trade as a sole trader or as a partnership or company? Start-up costs also require funding, which has to be found and secured. Then there are administrative responsibilities such as bookkeeping and invoice processing. When you register your new business with HM Revenue & Customs you must also decide if you need to register for VAT and PAYE (Pay As You Earn). The VAT registration threshold is currently £79,000 and there are a range of schemes which may be appropriate for your new business. As for PAYE, you may have heard about the new system that requires employers to report payments to staff in real time. This has added another layer of responsibility for business owners.

But, when you start up, what you really want to do is take your entrepreneurial talents into the marketplace, make a profit and enjoy your new found freedom.

Some may have thought it was that easy and maybe many of them are the ones that do not make it past the three year mile post. Here are some important tips to help your start-up get off, and stay off, the ground.


Consider the franchise model

While there is an upfront cost when buying into a franchise, you have the advantage of buying into the expertise of the franchisor. You will need to research which franchises might be appropriate for you but there are always a wide range available. Franchisors offer varying services and so research, particularly talking to those who are experienced in franchising, is important. Maybe you could arrange to talk with those who are operating a franchise in which you have an interest.

There are more than 900 franchises available in the UK, which together turn over more than £13 billion and employ more than half a million people. The British Franchise Association reports that 91 per cent of franchises are profitable, which means that nine per cent are not. Careful planning is essential as your investment is at risk if the business fails.


Business structure is important

There are advantages and disadvantages for each trading structure – be it a limited company or an unincorporated business – with respect to control, perception, support and costs.

The choice of business structure can also be relevant in how you extract money from the business. A limited company is a useful tax shelter but only until you take the money out for personal use. There are different ways of doing this, for example with salaries, dividends, loans or rent.

We can discuss your options and the implications of each of these with you, to help you determine which is most suitable.


Fail to plan and you plan to fail

The more forethought you can give to the task of running your business, the more likely you are to succeed.

We can help you plan but here are just a few questions you might like to consider before you start:

  • What are your prospects given that the economic climate remains a difficult one?
  • Have you any funds you can put into the business?
  • Do you need help raising finance for your business?
  • Are you familiar with the legal requirements that will be placed on you as a business proprietor?
  • Have you considered how much you will earn during your first year?
  • After business expenses, including taxation and national insurance, have you estimated what your salary and profit are likely to be?
  • What are your income requirements?
  • Have you considered how you can minimise your tax liability so that you keep more of what you earn?
  • Have you considered how technology can benefit your business?
  • Have you decided how the internet can be used to your advantage?
  • Does social media have a role to play in promoting you and your business?
  • When do you envisage retiring? Some business owners have failed to make enough money to save for their future aspirations.

Always keep your medium and long-term goals in mind. Running your business more cost-effectively can be achieved only if you have the vision to project your goals into the future.


Where do start-ups incur costs?

  • Advertising, marketing and promotion
  • Communications and infrastructure
  • Cost of finance
  • Equipment
  • Insurance
  • Office supplies
  • Professional fees
  • Product development
  • Transport
  • Website and technology


How we can help

We aim to make sure you are as successful as possible and, with careful planning and the right advice, we can help you earn more and pay less tax.

Viewing us as your business adviser, as well as professionals trained in traditional accountancy and tax compliance, could boost your company’s bottom line. We are experienced at guiding businesses through the start-up period and, as well as advising you on what to do, we can give you some tips about what not to do.

As well as taking care of your routine accountancy duties, we can also give advice on budgets, profitability improvement and operational procedures.

Other services we can offer:

  • Developing your business plan
  • Helping you identify sources of start-up funding
  • Preparing budgets and making projections
  • Acting as a referral source to help you find a solicitor, banker or insurance agent
  • Devising the best structure for your business and advising you on when to incorporate
  • Advising you on the acquisition and implementation of a computer system and software.


Contact us with any questions you may have about starting out in business.

Did you have an Equitable Life Policy?

Tuesday, July 30th, 2013

MPs have been criticising the Treasury regarding their handling of the compensation scheme for Equitable Life policy holders. On its own admission the Treasury estimates that between 17% and 20% of eligible policy holders may not receive the compensation they are due as they cannot be traced.

The current Equitable Life Payment Scheme is due to close March 2014. Any policy holders who have not been compensated by this date will lose out.

MPs were particularly annoyed that the Treasury had not taken advantage of data offered to them by the Equitable Members Action Group. They had provided contact details for 350,000 policy holders. The data was not used due to concerns about Data Protection.

Further, the Treasury does not intend to publicise the formal closure of the scheme until September 2013, which limits the time for unpaid policy holders to respond and file an application for compensation.

If you have had a qualifying policy and have received no compensation as yet, take a look at the Equitable Life Payment Scheme website at

Economic Update: August 2013

Monday, July 29th, 2013


Is the UK finally on the road to economic recovery? We take a look at how our economy has fared over the last six months.

Looking back

Although economic recovery in the UK remains slower than anyone would like, the past six months have shown encouraging signs of an economy beginning to get back on track. Following contraction in the last part of 2012, news that the economy grew by 0.3 per cent in the first three months of 2013 was welcomed. The positive growth figures, albeit small, helped the UK avoid its third technical recession since 2008.

In fact, recent revisions to official Office for National Statistics (ONS) data have called the notion of the UK’s ‘double dip’ recession into doubt. ONS data now shows that UK GDP stayed level between the fourth quarter of 2011 and the first quarter of 2012, rather than falling 0.1 per cent as previously thought. While the revision brought some good news, it also revealed that the 2008/09 recession was much deeper than originally believed – the economy shrank by 7.2 per cent from peak to trough, rather than by the previous estimate of 6.3 per cent.

Key metrics

GDP (gross domestic product)

Following a contraction of 0.2 per cent in the final part of 2012, figures from the ONS in June show that the UK economy grew 0.3 per cent in the first quarter of 2013. The largest contributions came from the services sector and production, increasing by 0.5 per cent and 0.3 per cent respectively. Construction and manufacturing, however, continue to struggle, contracting 1.8 per cent and 0.2 per cent respectively in Q1 2013.

Continuing on this upward trend, the preliminary estimate for GDP in the second quarter of 2013 is 0.6 per cent, with all four main industrial groups (agriculture, production, construction and services) recording positive growth on the quarter. The services sector was again the biggest contributor to overall growth, growing 0.6 per cent. Production industries also grew by 0.6 per cent, with manufacturing within this increasing 0.4 per cent following negative growth of 0.2 per cent in Q1 2013.

Elsewhere, retail figures from the ONS saw the volume of goods sold increase by 2.2 per cent in June compared with June 2012, and rise 0.2 per cent from May 2013. Although the monthly increase was modest, it follows a strong May in which sales rose 2.1 per cent on the previous month.

Jobs and unemployment

The labour market remains surprisingly resilient despite tough economic conditions. Latest labour market data from the ONS shows employment in the UK was up in the three months to May 2013, while unemployment fell slightly. During this period there were 29.7 million individuals in employment, a rise of 16,000 on the quarter and 336,000 on the year. This means 71.4 per cent of the UK’s population is currently in work.

Unemployment fell by 57,000 in the same period, leaving 2.51 million people unable to find work. The unemployment rate is therefore broadly unchanged from the previous quarter, at 7.8 cent. Meanwhile, the number claiming Jobseeker’s Allowance fell by 21,200 between May and June – a 117,700 reduction on the year and the lowest number of claimants since March 2011.

There were 529,000 job vacancies in April and June, the most since the end of 2008. Average pay in the UK (excluding bonuses) stood at £446 per week in May, a rise of 1.7 per cent year-on-year for the three months to May. This still remains below the current rate of inflation.


An increase in the cost of petrol and diesel and clothing and footwear helped to unexpectedly push the Consumer Prices Index (CPI) measure of inflation up to 2.7 per cent in May. The CPI measure increased again in June, to 2.9 per cent. Despite reaching a 14-month high, the ONS said that inflation remains ‘fairly calm.’ A 7.4 per cent increase in the cost of air fares in May helped push inflation up, before a fall back in June which acted as a downward pressure on inflation for that month.

Bank rates and quantitative easing (QE)

The total level of QE remains at £375 billion to date, with the last round of asset purchases occurring back in July 2012. The Bank of England’s (BoE) Monetary Policy Committee has also voted to keep the base rate of interest unchanged at its historic 0.5 per cent low.

Looking forward

Despite ongoing problems at home and threats from abroad, former BoE Governor Mervyn King said he’d seen ‘a welcome change in the economic outlook’ when he presented his last quarterly inflation report as the Bank’s Governor. King predicted a ‘modest and sustained’ recovery with 0.5 per cent GDP growth in the second quarter of 2013 and a strengthening over the course of the year.

King warned that inflation could remain ‘stubbornly high’ until 2015, with predictions of further rises in the coming months. It means that the Bank will find it difficult to reach its two per cent inflation target by the end of the year. Despite an easing of inflation since its peak in 2011, stagnant wages and benefit cuts are continuing to have a tough impact on household living standards and spending.

Director general of the British Chambers of Commerce, John Longworth, summed up the business sentiment: “Any growth, however small, is good news and will boost the confidence of many firms across the UK. As things stand, the economy is likely to remain subdued for some time, although we do expect slow and steady growth to continue throughout 2013.”

Business protection and opportunities

With the economic landscape holding a glimmer of hope and business confidence on numerous measures continuing to grow, business planning and preparation remain as important as ever. These are just some of the measures you can take to protect your business and make the most of opportunities that come your way.

Prepare a business plan

An up-to-date business plan is essential for start-ups and established firms alike and it is likely that any plans you may have had in place are now out of date. A good plan can help you raise finance, decide on the best operating structure, calculate the potential for profit and the rate at which you expect to grow, amongst many other things.

Plan effectively for tax

Planning for the year ahead can make a big difference in saving your business money. Are you aware of all your tax liabilities, and when they will need to be accounted for to HMRC? Substantial penalties can apply for incorrect or late tax returns.

Take advantage of tax reliefs

Are you aware of the available tax reliefs your business could take advantage of? For instance, smaller businesses are able to make tax savings using the VAT flat rate scheme in the first year of trading. You could also claim tax relief and VAT relief for certain expenditures incurred before you start trading.

Maintain healthy cash flow

The knock on effects of businesses delaying payments to suppliers has increased since the economic downturn. With trading conditions still tight it is important to manage your debt and cash flow effectively as possible. This may involve invoicing as soon as possible, establishing clear credit terms and chasing bad debtors.

Capital expenditures

Some deductions can be claimed on business equipment in lieu of depreciation. This includes vans and fixtures in buildings where you may be able to claim a full 100 per cent deduction up to £250,000 against profits. Most other plant and machinery qualifies for an allowance of 18 per cent.


We can help you to identify and grasp any opportunities that could help your business prosper over the coming months. Please contact us to find out how.





Tax Diary August/September 2013

Monday, July 29th, 2013

 1 August 2013 – Due date for corporation tax due for the year ended 31 October 2012.

 19 August 2013 – PAYE and NIC deductions due for month ended 5 August 2013. (If you pay your tax electronically the due date is 22 August 2013)

 19 August 2013 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2013.

 19 August 2013 – CIS tax deducted for the month ended 5 August 2013 is payable by today.

 1 September 2013 – Due date for corporation tax due for the year ended 30 November 2012.

 19 September 2013 – PAYE and NIC deductions due for month ended 5 September 2013. (If you pay your tax electronically the due date is 22 September 2013)

 19 September 2013 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2013.

 19 September 2013 – CIS tax deducted for the month ended 5 September 2013 is payable by today.

Committee of Public Accounts comments on HMRC 2012-13 numbers

Monday, July 29th, 2013

We thought readers might be interested to see how well HMRC have done in the last year, collecting our taxes and tackling fraud.

The following statement is reproduced from Parliament’s website and was made by The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, on 2 July 2013.

 “These accounts give us a mixed picture. One of the most startling figures is the tax gap for VAT, which HMRC estimates at £9.6 billion. That is a huge amount of money – 10% of the VAT that should be collected and a third of the overall tax gap. Yet despite some progress, HMRC still does not comprehensively check all VAT returns and its response to the emerging threat from online trading has been far too slow.

I welcome the progress HMRC is making in tackling fraud and error in the tax credit system, but with £2 billion in overpayments last year it still has a long way to go.  And the personal tax credit debt balance is going up, not down. It now stands at £4.8bn, over £1bn greater than the target HMRC hopes to meet by the end of March 2015.

HMRC met its target to operate a normal PAYE service by March 2013, following previous problems. But it had to forego £953.3 million of tax in the process and there remain questions about its capacity to handle in year changes to taxpayer records. I also have concerns about HMRC’s Real Time Information system (RTI), which has been rolled out before being fully tested. HMRC has chosen not to add in contingency for significant extra costs or measures to deal with major technical failure. This is worrying as the current cost of RTI is already expected to be £115.5m more than originally planned. HMRC is leaving itself exposed, which could be a real concern for DWP as Universal Credit relies on RTI.

HMRC is responsible for collecting all the tax due. It must do more to crack down on tax avoidance. And it needs to put taxpayers – the customer – at the heart of its services.”

HMRC sets up a further task force

Monday, July 29th, 2013

Holiday businesses in Devon, Cornwall, North Wales, the Lake District and Blackpool area beware: the taxman has set up a further task force to seek out and bring to account business owners who are not declaring the correct information on their tax returns.

 The taskforces are trained to focus on particular business sectors and may have some flexibility regarding the level of penalties they levy – this is likely to depend on how co-operative the defaulting tax payer is during their investigation.

 It would be sensible for holiday businesses to get their house in order.

 HMRC will be interested in a range of compliance activity and taxes. For example:

  1. Payroll and PAYE compliance – particularly adherence to the new Real Time Reporting system. For businesses affected they will no doubt be asking questions about tips and gratuities and how these are treated for tax purposes.
  2. VAT
  3. Record keeping – this will include evidence of income and how this reconciles with booking diaries and systems. Do the numbers add up?

 If your business operates in one of the targeted areas you would be well advised to review your systems, be prepared. Don’t wait until the brown envelope drops through your letter box.

Deductions for loans against Inheritance Tax (IHT)

Monday, July 29th, 2013

Generally speaking, debts of a person’s estate are deductible for IHT purposes – though there are some circumstances where specific debts cannot be deducted such as where the deceased had previously made a gift to the person who made the loan. Following this year’s Finance Act, which became law on 17 July, there are several changes affecting deaths on or after that date.

 The changes will affect deductions for debt in the following ways:

  1. Generally, a deduction will be denied unless the debt is repaid on or after death out of the estate.  However, a deduction may still be permitted where the debt has been retained for sound commercial reasons, and gaining a tax advantage was not one of the main purposes for keeping it.
  1. Debts will not be taken into account as deductions for IHT purposes if they were taken out to purchase, maintain or enhance property excluded from IHT. If, however, the amount of the debt exceeds the value of the excluded property, and is not perceived to have a tax avoidance motive, then the balance may be allowed as a deduction.  This will affect relatively few people.
  1. Debts taken out to acquire property which benefits from business property relief or agricultural property relief must first be deducted from the value of that property with only the balance being deductible from the chargeable estate.  Previously, debts were deductible from the value of the property on which they were secured (which was usually chargeable) rather than from the property they were used to acquire, so this change means that such debts may no longer obtain the IHT savings they previously did.  However, following a change to the original Finance Bill, this particular rule only applies to debts incurred on or after 6 April 2013 – so arrangements existing at that date remain effective.  Even so, this change will affect many who are farmers or run their own businesses (whether as sole traders, partnerships or companies) and take out new finance or possibly reorganise existing finance.

These changes could have a significant impact on estate planning. We recommend that any individual who is relying on a debt reduction to minimise future IHT payments should seek advice.

HMRCs My Tax Return Catch Up campaign

Monday, July 29th, 2013

If you have been sent a tax return for any tax year up to 5 April 2012, and it has not been submitted, you may want to consider taking part in this campaign.

 In a nut-shell HMRC are offering to look kindly on any penalties chargeable, as a result of late filing or late payment of any taxes due, as long as you submit all outstanding returns and pay any taxes shown to be payable.

 To take part in this offer is fairly straight forward:

  1. Firstly, you need to advise HMRC that you want to take part in the campaign – we can do this for you.
  2. Secondly, you will need to complete and submit all the outstanding returns – again we can help.
  3. And last, but not least, you will need to pay any taxes due.

 There is a deadline you need to consider; you must complete all of the three stages set out above by 15 October 2013.

 HMRC have offered to consider extended payment plans if your individual circumstances warrant this requirement.

 Of course it may be that you are due tax refunds for certain years, and this will be determined when your returns are completed, in which case HMRC will make appropriate refunds to you. However, any refunds of tax for 2008-09 and earlier are time barred and cannot be repaid unless you have received an estimated determination of taxes due within the last twelve months, and this is greater than the tax found to be due.

Danske Bank Warns of Phishing attempts to access online banking systems

Monday, July 29th, 2013

Danske bank have recently written to customers, warning of recent attempts to extract log in details in phone calls to customers.  It appears than the fraudsters have been successful at least some of the time and have extracted funds from the customers accounts.

The bank have made it clear that no employee will ever contact a customer and ask for their log-on details.  They also point out that it is the customer's responsibility to keep their log on details secure!

The Danske Bank Letter is reproduced below

Warning- phishing attempts to gain access to online banking systems



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