In the last couple of years however HMRC have been showing considerable interest in the tax status of locums i.e. whether they are self employed or are in fact employees of the practices they’re working at.

The issue of whether somebody is self employed or employed is one that HMRC have taken up in many industries and it is unlikely that this will ever cease. When tested in the Courts it boils down to what the relationship is between the “employer” and “employee” and how they are engaged. Essentially the Courts look at the way that one person acts for the other person and what is written in the contract, if indeed one exists.

HMRC look for signs of employment and would ask the following types of questions:-

• Does the locum chose the day/times that he or she works?
• Is the locum able to take time off when he or she likes?
• Does the locum have to have professional indemnity insurance?
• Does the locum provide major items of equipment?
• Does the locum work at his or her own premises (unlikley)?
• Does the locum engage his or her own staff?
• Does the locum keep any new patients who are referred to him or her?
• Could the locum engage a substitute?

Anyone engaging a locum should consider the above questions and generally consider the relationship they have with them. At the end of the day if HMRC come after somebody it will be the person they consider to be the employer and not the employee as it would have been their responsibility to have deducted tax.

In order to get things in place you should consider some of the following actions:-

• Ensure that at some point work is offered to the locum which they reject in writing.
• Try to vary the days that are worked.
• Don’t include the locum on the practice’s PI policy.
• Limit the amount of control exerted over the locum.
• Ensure that the locum is responsible for finding a substitute should they be unable to work.
• Consider a substitute retainer.

If you’re concerned about the situation with your locum and would like to discuss this please contact us to discuss this with us on a confidential basis.

This means that stylists whose turnover is below the VAT threshold and who are not registered for VAT cannot reclaim the VAT charged and will have to pass it on the their clients through higher prices or take the hit and make less money.

It has further implications depending on the size of the salon. The income must now be taken into account when considering if a salon needs to register for VAT i.e. is it above the threshold.

The clarification is written into law from 1 October but HMRC still take the view that VAT is applicable now.

The thrust of their argument is that what the stylist receives is a supply of services not a licence to occupy land.

If a salon rents out an exclusive area to say a beautician and provides little in the way of services it is still arguable that it is rent and no VAT needs to be charged although each case must be looked at on its own merits.

If this affects you and you would like to discuss it please contact us.

This 2012 budget breakdown report, which was written immediately after the Chancellor of the Exchequer delivered his Budget Speech, is intended to provide an overview of the latest announcements and recent measures most likely to affect you or your business.

Throughout this guide we have included tips and ideas for effective tax and financial planning, but it is important to remember that this planning should be an ongoing, year-round process, not something that is left until the last minute.

We can help you to reassess your plans regularly, and adapt them as your personal and business circumstances change. With our help, you can plan for a rewarding and financially secure future.

Please note: while most taxation changes take effect from the start of the financial year, or tax year, some may not take effect until 2013, or later. Where relevant, details of these changes have been included in this Report. Throughout the Report, ‘HMRC’ refers to HM Revenue & Customs.

Click here to read our 2012 Budget Report

As a result, the HMRC are now chasing traders who hadn’t thought to declare or pay their online trading taxes accumulated in this manner, and consequently it would be advantageous to the tax man if they made themselves known, rather than having to pull information together from a variety of data sources to start a pursuit.

With this in mind the HMRC are to conduct a Q&A session on Twitter next week, where individuals concerned about their tax liabilities can find out exactly where they stand. Furthermore, should they subsequently find that they do owe tax then if they volunteer this information (and of course, pay the outstanding amount) then penalties will be reduced and in some cases even waived.

Following on from the trialling of “nudge” tactics, the HMRC are clearly trying to appear more customer friendly, and this campaign follows hot on the heels of similar activities targeted at medical professionals, plumbers and VAT defaulters.

As Marian Wilson, Head of HMRC’s Campaigns, explains: ““We want to help people trading online to understand when they need to pay tax, and how to do that. This Twitter Q&A will try to answer their questions and clear up any grey areas.”

The HMRC’s venture into social media doesn’t just stop at Twitter, however. They have also recently released a YouTube video that outlines most of the issues related to online traders and this can be viewed at http://www.youtube.com/watch?v=uptdjVD2LgI. Such activities display a greater willingness by the HMRC to interact with their customers, making them more approachable at last.

If you have been trading online and the HMRC has confirmed that you have tax to pay, it is often worthwhile sitting down with a qualified accountant to find out exactly what your position is in order to avoid being liable for further penalties.

As 6^th April draws closer, and the government’s Seed Enterprise Investment Scheme comes into effect, there are plenty of would-be investors questioning whether it could be the vehicle for them to maximise their investment’s return. Investors tax relief does just that

On the face of it the numbers make SEIS extremely appealing – up to 50% income tax relief for anyone investing, and significant capital gains tax exemption particularly in the next tax year 2012/3. George Osborne is clearly keen to kick-start investment in new businesses and by giving these concessions he’s made it rather inviting for investors to push their money in that direction.

When explaining his rationale behind the scheme, the Chancellor told the Commons: “We've supported enterprise by increasing the generosity on the Enterprise Investment Scheme. Today, we are extending this scheme specifically to help new start-up businesses get the seed investment they need.

“Even at the best of times they can struggle to get the finance they need – and in the current credit conditions that struggle too often ends in failure.”

Ultimately, it makes investing in the business of a friend or relative that much less risky, while at the same time enabling entrepreneurs to attain enough financial backing to make a success of their new ventures, which, the government hopes, will be the foundation for a period of economic growth.

As with all things tax-related the government has had to make it complicated enough to minimise the risk of abuse of the system, and appear to have covered themselves with the associated legislation.  It does mean, of course, that it is advisable to employ a good accountant to manage the tax element of this for you, but that would be the case with all investments and can’t really be considered a genuine barrier to entry.

If you are serious about investing in new businesses then SEIS could prove to be particularly enticing for those who are looking to maximise their returns

This would be a considerable blow to higher rate tax payers who get the additional relief through their tax payments via the self-assessment system.

There are quite difficult practical difficulties in doing this but it would be an easy target, popular with the many basic rate tax payers.

A second option the government is rumoured to have considered is a reduction in the annual allowance. At present, the annual allowance is £50,000, although you can bring forward unused relief from three years before.

If you are a higher rate tax payer and are considering making a one off contribution before 5 April 2012 it might be worth doing it before Budget day

One standard HMRC letter urged people to pay their tax return on time, and another spoke of how "nine out of 10 people in Britain pay their tax on time", as well as claiming that most people in the reader's local area, or postcode, had in fact paid their tax already.   Interestingly, the government released results last week explaining that there was a 15% better response rate to the latter request.

This isn’t the first time that the government has trialled “nudge” tactics, as their Behavioural Insights Team has experimented with response rates on matters ranging from personalised texts to people who owe money to the court to letters including photographs of untaxed vehicles demanding payment.

What is particularly interesting in this development is that it shows the continuing evolution of how the HMRC wants to interact with its customers.  Time was, that a gruff letter would be all the communication one would receive before a follow-up either threatening a fine or delivering one.  Indeed, it seemed to be that the only people who could really get to grips with the HMRC’s labyrinthine system were those qualified to do so: accountants.

Traditionally the HMC were considered to give a very poor service to those who needed to fill in self-assessment claims forms.  Often, because of customer services systems that weren’t congruent they appeared unhelpful and regularly seemed short of people, an impression that was backed up by the closure of several drop-in centres and a phone line that was almost always busy.

Clearly the HMRC is experimenting with the idea that in order to receive more self-assessments completed on time they need to appear more customer friendly and helpful.  Although there’s no less emphasis on the “stick” these days – penalties are always available – the tone of their communications now seems to be more persuasive.

Tactics such as those proposed by the Behavioural Insights Team have not only suggested a more effective way of influencing individuals to complete their self-assessment, but also create a more pleasant experience when doing so.  And for that at least, they should be applauded. “

Owners of small businesses are split into two camps: those that have been the subject of  HMRC tax investigations (and lived to tell the tale!) and those that have heard the stories of just how painful an investigation can be and dread the day they receive the ominous notice that they are to be investigated.

Tax investigations may are conducted completely at random: your business may never be the subject of one or it may have to deal with this somewhat trying situation more than once.  So what can you do to minimise the impact of an investigation on your business?

The investigation itself is going to cost you in terms of time, and there’s very little you can do about the stresses involved with it, but it’s also going to cost you financially as you pay your accountant for the extra work you require from him to do the work associated with the investigation.  This, however, is something you can plan for.

Fee protection has been around for a number of years now, and while you can’t insure against the findings of the investigation – such as extra tax payments or even penalties – you can against your accountant’s time and subsequent fees.   Fee protection typically covers an accountant’s fees for the work he carries out defending you from the investigation, as well HMRC visits and written enquiries.

The average cost of accountancy fees for a business to undergo an investigation is approximately £4,000*and with many small businesses unable to afford such a sum there is suddenly a very good reason to pay a premium that is typically in the low hundreds each year.  It’s not inconceivable that a surprise set of accountancy fees such as this could drastically affect the cash flow of a business such as a small hairdresser or a dry cleaner.  Indeed, by taking out the insurance it means that cash flow is much easier to predict and a business less complicated to run.

Yet the take-up rate is very low, often because business owners believe an investigation will never happen to them or because they never quite get round to putting the insurance in place.  Once they have been the subject of an investigation, however, business owners are usually keen to find a way to avoid as much of that pain as possible should it happen again.

If you want an accountant that offers fee protection then contact us today to discuss how we can bring you peace of mind.

* Source: http://www.feeprotection.com/

It used to be the case that only the brave or foolhardy would venture into online accounting packages, which were invariably clunky, non user-friendly and could often be far more trouble than they were worth.

Now, however, online accounting packages are much more stable, infinitely slicker and are functional as well as being incredibly convenient.

Although initially I was very skeptical, but now  Iam very impressed with today’s sleek, powerful software packages and would happily recommend online accounting to my many longstanding clients.

There are many benefits to today’s online accounting packages. For a start, you can access your accounting data and reports from anywhere, whether you’re in the office, at home, or using a mobile device on the go.

In addition to this, most packages offer multi-user facilities, including a hierarchy structure to keep some information confidential from certain members of staff as you wish. The software is updated automatically so you get immediate access to improvements as well as being kept up to date with legislation changes such as increases in VAT.

Benefits

And, although some clients may be concerned about the cost of such software, I  believe the benefits of online accounting far outweigh any concerns about outlay.

Packages are generally charged on a monthly fee which might seem expensive to some. But, when taking the cost and time to deal with upgrades into account, this is a reasonably-priced option for the person who wants to stay up to date and informed. And, unlike many desktop packages, online systems tend to offer data download from banks as standard in addition to direct filing of VAT returns.

Maybe the best advantage of this software for us as an accountancy firm is the ability to look at clients’ records in real time, so that we can offer them immediate help, support and advice with any problems they are having.  Get in touch if you would like to know more about these services and discover how the full online accounting benefits can add up to a huge range of benefits for your business.

At the same time the Chancellor is extending 100% capital allowance write off for plant and machinery investment incurred between April 2012 and March 2017 in six enterprise zones, principally areas in the north of England.

Although both of these measures are positive and can only encourage direct investment in businesses and/or equipment it seems to us that the tax break would have been better if the 100% capital allowances had been extended to the whole of the UK.  It is all very well encouraging people to make direct investments into small businesses which are of course risky but surely it is better to encourage existing businesses to invest in equipment and get an immediate cash flow advantage.  After all not that many people have £100,000 sitting around that they wish to invest in a new business and it is only they who get the tax benefit.  There are plenty of businesses who need to invest in plant and machinery but could do with a bit of cash flow help them achieve it.

To Read More, Please Download Our Autumn Newsletter

test