How to pay less tax – HMRC now fine you £10 per day if your tax return is more than 3 months late – should you be worried?

How to pay less tax – File your return on time and save £000’s in fines

Small business owners or anyone who needs to file a personal tax return may be aware that there are penalties imposed by HMRC for late filing. But did you know that from this year these penalties have increased dramatically.

In the past, if you failed to file your tax return, you automatically received a £100 fine.

From April 6^th, the rules have changed. You still receive your £100 fine, but in addition, if your return is three months late, you now start to receive a fine of £10 per day for every day until you file your return.
This rule applies for 90 days, resulting in an additional £900 fine on top of the £100 already levied giving a grand total of £1,000

If you still haven’t filed your tax return after 6 months, then additional fines begin to accrue.

These take the form of an automatic £300 fine or 5% of the tax due – whichever is the greatest.

Where the return is more than 12 months late a penalty is imposed which is based on a percentage of the tax due and the reason for the delay.  The maximum percentage which can be levied is 100% if the delay is deliberate and concealed, 70% where it is deliberate but not concealed and 5% where the delay is for any other reason.

So if you leave it to 12 months, another minimum fine of £300 or a minimum 5% of the tax due.

If you are 12 months late filing your return, this adds up to a minimum fine of £1,600.

These charges can seem really harsh as they even apply to people who owe nothing, and even those who are owed a refund by HMRC!

So, don’t delay and get your tax returns submitted in good time – If in doubt, consult your accountant.

New Accountant for Small Business – Transform Accounting – The Essex Accountant

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How to save money on your tax returns? – File them on time and don’t get fined.

There is nothing worse than having to pay your tax bill and having to pay fines for late filing.

Do you ever get confused by the deadlines imposed by HMRC for filing your tax returns?
Here are some simple dates and guidelines to bear in mind so that you don’t end up paying HMRC more than you have to.

When are my tax returns due? What are the deadlines I must not miss?

Individuals – Employees and Sole Traders

Individuals who need to submit a tax return should do so after the end of the tax year (5^th April).

It must be submitted to HMRC by 31^st October if you wish to do this on a paper based form.

Alternatively, if you wish to file your tax return online, then you have until 31^st January to make that submission.

Remember that these are the final deadlines, you really should have your accounts filed in plenty of time so that you don’t even get close to these deadlines.

Filing your tax return in plenty of time does not mean that you will pay more tax, or that you will have to pay your taxes any earlier, in fact, quite the opposite is true.

If you want HMRC to collect a tax underpayment of less than £2,000 through your tax code (i.e. – spread it evenly over the next year rather than a single bill), then this must be filed before 30^th December.

If you miss the deadline of 31^st January, then you will incur additional fines from HMRC.

If you have not been sent a notification asking you to complete a tax return and you think that you need to complete one, you must tell HMRC by 5^th October to avoid a tax penalty.

Payments

Subject to certain exceptions, the taxpayer has to make two equal payments on account on 31 January in the tax year and on 31 July following the tax year, with a final balancing payment on the following 31 January.  Payments on account are based on the income tax liability of the preceding tax year, as reduced for any tax deducted at source.  There is a de minimis limit below which payments on account do not have to be made.  No payments on account are required if the outstanding income tax liability for the previous year was less than £1.000, or if more than 80% of tax for the previous year was deducted at source.  The balancing payment comprises the balance of income tax due and any capital gains tax.

Limited Companies

If you trade as a limited company, the period covered by your tax return is not the tax year, but is instead the accounting year that has been adopted by your company

This return must be filed within 12 months of the end of your company year end.
All limited company returns must be filed online – these can no longer be made on paper based forms.

If the return date is missed, then you will begin to incur fines from HMRC even if you have paid the tax.

Payments:

Remember corporation tax must be paid before the return is due.  Payments are due from small companies* 9 months and 1 day following the end of your company year end.  For example if you make your accounts up to 31^st December each year, payment will be due on 1^st October in the following year.

*Small companies are those with profits of less than £1.5 million (correct at May 2012)

Accountants

It is usually wise to employ the services of a suitably qualified accountant to help with your tax returns.
Not only will they take the hassle and confusion out of having to prepare your returns, they usually will ensure that your return is as efficient as possible which will often result in you paying less tax.

Your accountant will make a submission on your behalf by acting as your “agent”.
They will make this submission online on your behalf.
Remember, both accountants and HMRC are at their busiest as the tax deadlines approach and many will offer discounts for early filing to avoid these busy times.

See the Transform Accounting website for details of how to save up to 20% for early tax filing.

Tax Returns For Small Business and Individuals – Transform Accounting – The Essex Accountant

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Predicting the trends ahead in 2012 for Finance Systems

The role of the Financial Systems Manager has become very diverse as technology evolves. What are the new trends ahead in 2012?

I recently took part in an on line debate for Finance systems managers that began with this question.
Most of the views seemed to revolve around cloud based computing, but I came up with a couple of others and thought I would share on my blog… here are my views as at May 2012.

For 2012, the cloud versus premise decision will be a big driver for larger organizations and is with us already.

With major software houses such as SAP and Oracle very publicly changing their selling model from selling purchased software with annual maintenance fees (premise based) systems to selling hosted versions of their “new” software (there must be something in it for them financially to make this switch?)… then the role of the finance systems manager tied to these vendors will very much be one of contract management, SLEs, fees monitoring and potential legal issues if these run into trouble.

The themes I anticipate for 2012 will remain greater system integration, business intelligence and cost reduction.

Speaking from the financial services sector (insurance), compliance and regulation such as Solvency 2 will become an even greater driver of our profession and the systems and audit that will be required to support this.

A few other personal predictions for 2012 and how technology might impact our profession:

– The challenge of embracing and controlling mobile computing is already with us although many organizations have yet to address this. This may be especially relevant to those finance systems managers working in practice as their customers want to use mobile computing.

– The “big data” issue – i.e. – how to store, secure and make use of the exponential increases in data collected by all our businesses

– The new trends in social computing that become normal very quickly and impact our business operations and thus our accounting ( eg – facebook, groupon, twitter, youtube, etc ). Inevitably, there will be a new “facebook” or “groupon” that will come along and be the new big thing. A lot of businesses need to monitor and join these new innovations and the finance function and systems must support this in evaluating these trends and technologies and converting these ideas into business cases with real costs and potential income streams.

Looking further ahead beyond 2012…. A few predictions?

– RFID (Radio Frequency Identification Tags) are already being deployed in the form of sensors for all sorts of things and will eventually become common – eg – sensors on car components to tell you if they are like to fail. These will find their way into all sorts of things (supermarkets, bridges, buildings, people!) and this will have a knock on effect on the back office and finance systems that support them (eg – billing, cost control, financial analysis ). Financial analysts and the systems they work with embrace this technology in evaluating trends, business opportunities and cost analysis.

– Moores law for processing power and network band width increases are generating greater opportunities for large scale data flows and data processing/data mining which could not previously be performed. This will increase as more data is collected and stored. Moores law has been criticised recently, saying that this level of increase cannot go on forever, but we have heard this sort of comment many times before and it has always proven to be wrong.

– With the development of wireless, internet, cellular telephony, TV, Radio (predicted in some quarters to merge into one wireless medium with far greater bandwidth than currently available), this may generate changes in personal and mobile computing. This may result in changes to the way invoicing and payments for goods and services are handled for most businesses. Again, the finance function and finance systems will need to support this change. Some of this has begun already (eg oyster cards).

Any other predictions? What do you see in your crystal ball?

 

 

Accountant Brentwood – Transform Accounting – The Essex Accountants

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How to pay less tax on investments – ISA’s

Individual Savings Accounts (ISA’s)

If you are a UK tax payer on a low income, you might not have to pay any tax at all, but if you are a standard or higher rate tax payer, you will have to pay tax on both your salary and any interest you receive from your savings accounts.

But, there savings and investment schemes available to UK tax payers that can generate a tax free return.

These are known as Individual Savings Accounts or ISA’s.

Question – Why should you set up an ISA?

Answer – You don’t pay tax on the interest or dividends you receive from an ISA and any profits from investments are free of capital gains tax. If that sounds good, read on.

Key Facts
For the 2012-13 tax year, the maximum you can put into an ISA is £11,280

There are two potential elements to an ISA – a Cash ISA and a Stocks and Shares ISA.

A cash ISA behaves like a deposit in a bank or building society, but without any tax.
This is considered a very safe investment with low risk, although interest rates are currently very low.
The maximum that can be put into a cash ISA is £5,640 for 2012-13 tax tear.

A stocks and shares ISA is quite flexible and can be comprised of any combination of the following ;
Most UK stocks and shares
Most US and European stocks and shares
Most Exchange Traded Funds
UK Government Gilts and Corporate Bonds
Investment Funds

The maximum amount that can be put into a stocks and shares ISA is £11,280 for the 2012-13 tax year.

Note that you can have both a Cash ISA and a Stocks and shares ISA, but that the total of both must not exceed the limit of £11,280

How Much Will I Save?

If you are a higher rate tax payer, you will save 40% on any savings interest sheltered within an ISA.
If you are a basic rate tax payer, you will save 20% on any savings interest sheltered within an ISA.
If you pay the ‘saving rate’ of tax for savings, you will save 10% on any savings interest sheltered within an ISA.

Capital Gains

If you make gains of more than £10,600 from the sales of shares in a given year, you would normally have to pay capital gains tax on the amount of gain above £10,600.
There would be no tax to pay if these gains where sheltered within an ISA.

Question – What are the downsides of an ISA?

Answer – There are few downsides to an ISA.
The main one is that losses on an ISA investment  (in Stocks and shares) cannot be used to offset capital gains tax on investments held outside an ISA.

The Essex accountant, bookkeeper service and tax return specialists dedicated to helping you get your financial house in order and keeping it that way.

We specialise in being an accountant for small business, helping small business owners keep tax bills to a minimum, maximise profits and ensure you meet every statutory deadline without any headaches.

Accountant Harlow – Transform Accounting – The Essex Accountants

Disclaimer – The information presented in this article is intended for education purposes and is not intended to be used as the sole basis for any investment decision nor should it be construed as advice intended to meet the investment needs of any investor. The author may hold positions referred to in this article. Please perform your own research or contact a qualified financial adviser prior to making any investment decisions.

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Sage and Microsoft Reach for the Cloud at last

It appears that accounting and bookkeeping software authors Sage have finally woken up to the potential of cloud based computing by announcing a strategic alliance with IT giant Microsoft.

They hope to be able to offer a cloud based accounting software solution so that their customers can choose to either host their own systems (on premise) or to access via the internet to a system running sage software (cloud), meaning that the user will not have to worry about software installs, backups, updates etc. The cloud based infrastructure will be provided by Microsoft’s substantial data centers.

But, these offerings are not expected to be available from some time in 2013.

Sage hasn’t had a lot of luck with its system development recently with its Sage One system being criticized as being too basic for many businesses and its offerings for iXBRL tax filing were dogged by development problems resulting in Sage announcing two weeks before the due implementation date that it wouldn’t be ready and having to resort to using Thomson Reuters One source system as a stop gap until it was ready.

Microsoft has also hardly set the world on fire with their accounting system offerings in the UK in the last decade, despite a number of high profile acquisitions.

The expectation is that the combination of these two companies will result in excellent integration between the cloud based Sage products and cloud based versions of Microsoft’s office suite.

But the acid test will be once the products are actually available. With many competitors already offering impressive cloud based solutions, and the Sage/Microsoft offering still a long way off. Many potential new clients who specifically wanted cloud based software will have chosen their competitors, and Sage may have trouble persuading their current customers to make the switch. For this to succeed, Sage will need to modernize their current products before their cloud launch and increase the flexibility in their pricing model.

I fear an online version of their current products just won’t cut it.

If you are going to be late to the party, you better be good!

Accountant Chelmsford – Transform Accounting – Accountant Essex

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How to know when shares in a company are a good buy?

What to look for when reviewing a stock chart.

In the world of investing, there are no guarantees, but by reading stock charts and historical patterns, you can maximise your probabilities of making a good return on your investment, whilst keeping risk under control.
Here are a few tips to bear in mind when you are considering investing in some shares.

1 – Are the shares in an uptrend?

To check if a stock is in an uptrend, we need to review a stock chart.  The most important thing to look for is a stock that is trending steadily higher, though not exploding.
– The ideal stock chart should be steadily rising at a 30 to 45 degree angle – i.e. – moving up slowly and gently.
– You probably would not want to buy a stock that is either flat or going down.

But what about a stock chart that shows the share price is exploding upwards at say a 60 degree angle?
Greed may tell you this is a great buy and you should jump on the bandwagon quick as it is skyrocketing!
However, many times a price crash will follow a parabolic rise, so jump on the bandwagon at your own risk.
Look for a calm, comfortable rising uptrend in price if you want to remain a calm, comfortable investor.

2 – Look for Stability in Price

Stock prices that are very jumpy are often referred to as being “volatile”.
Small jumps either up or down are perfectly normal and acceptable, but share prices that spike up and down wildly are best to be avoided. Ideally, look for stability, not volatility.

3 – Volume Trends

People who carefully study stock charts before making investment decisions (known as chartists) also like to view the volume of shares traded in conjunction with the price movements.
If you look at a typical stock chart, as well as the price section (usually presented by a line chart), there is often a volume section underneath (presented as a bar chart). The higher the bar, the higher the volume of shares traded.

The ideal picture is steadily rising volume, combined with a steadily rising price.

If the stock price is rising, but the volume is decreasing, this should be considered a warning sign that a fall may be on its way as people are becoming less interested in owning the stock.

The worst case scenario is an increasing volume trend combined with a decreasing price. This clearly shows that more people do not want to own the share and are selling as the price declines. Steer well clear of this one.

4 – Moving Averages

A moving average chart plots the average price of a stock over a given period of time.
This period of time can vary, but the most commonly used are the 50 day and 200 day moving averages.

Typically, the moving average is plotted on a chart combined with the share price.

The ideal to look for is a moving average that is trending upwards AND a price that is also trending upwards and above the moving average.
These 4 tips will not guarantee success in investing, but they are a useful technique to help filter out stocks and shares that you should not buy. If followed, you will avoid investing in shares that are in a downtrend or experience major volatility.

Accountant Ongar – Transform Accounting – The Essex Accountants

Disclaimer – This article is for education purposes only and is not intended as a recommendation to buy or sell any security. The author may hold positions referred to in this article. Please perform your own research or contact a qualified financial adviser prior to making any investment decisions.

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Accounting for the Small Business Owner – Where to Begin? Try Lesson 1 – The Primary Statements

Owners and managers of small businesses often have to be a jack of all trades when it comes to running their own business. They need to be experts in their core business of course, be that web design, plumbing, baking, childcare or anything else. But they also need to turn their hand to marketing, administration, sales negotiation and staff recruitment.

Another area where a basic understanding will greatly benefit any small business owner or manager is accounting and tax.
Of course, many business owners wisely trust their accounting, tax and vat returns to a suitably qualified accountant such as Transform Accounting.

Transform Accounting takes pride in working with clients whatever their level or desire for understanding financial statements and always take the time to explain financial matters in plain English. We think it is important to offer a service where we are always available to explain any financial matters that arise during the year.

A business owner or anyone who is thinking of starting a business who doesn’t understand the primary financial statements is like an airline pilot who doesn’t understand the instrument readouts in the cockpit. He could run the business and land the plane safely, but knowing how to read the vital signs along the way will help his business flourish.

The starting point for anyone wanting to understand more about accounts would be the three primary financial statements – the Balance Sheet, The Profit and Loss account and the Cash Flow statement.

Three basic financial statements are;

1. Balance Sheet – A summary of the financial position of the business at a certain period of time.
   In plain English, this is a summary of the assets that you own, money that is owed to you, money that you owe to other people and the cash you have in the bank (or overdraft with the bank).
2. Profit and Loss account – A summary of income and expenditure over a given time period.
   In plain English, this is summary of sales, cost of sales (eg purchases of stock) and expenses over a given time period, that when added together determines the Profit (or loss) for that period.This statement can go by a variety of name such as the income statement, operating statement or earnings statement and is often abbreviated to the ”P&L Account”
3. Cash flow statement– A summary of cash inflows and cash outflows for a given period. This report can tell the owners of a business how the cash position is developing which can be very useful in the management of a business.

By the way – “The bottom line” is found in the Profit and Loss account, not the balance sheet!

In future blogs, we will go into more detail regarding each of these statements.

Romford Accountant – Transform Accounting – Essex Accountants

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Scary Brown envelopes from HMRC – Will you get one and Why?

The UK tax year ended on 5^th April and HMRC are now in full swing sorting out who has paid too much tax, and who has paid too little, sending out either a rebate or a tax demand

Don’t panic! 2 in 3 chance that the brown envelope will bear good news

This week, about 1.5 million people will get a tax demand through the post averaging £537

3 ½ million will get a rebate averaging £380

If your letter bears good news, HMRC say they will get the rebate to you within 30 days or after the next payday if it is to be included in your tax code for PAYE employees.

If the news isn’t so good and HMRC have presented you with a big demand, it may be too much to pay through this years tax codes. Don’t ignore it, speak to the HMRC and they will usually agree to give you the time that you need to settle the bill.

The taxman claims that 98% of the tax codes that they issue are right, provided they are provided the right information on time.

If that is the case, a question that many ask – If the tax man gets our P45s and P60’s – then why this discrepancy at the end of the year?

If you just have a single job or pension during the year, then your tax should be about right and there shouldn’t be any more to pay and the tax system will usually keep up.

However, if you have more than one job or move jobs during the year, then the tax system just doesn’t keep up.

HMRC are working with employers to develop a new system called “Real Time Information” which is being piloted now and comes into full force in April 2014. If it works as planned, then the in year changes in peoples employment gets factored in at HMRC much sooner so that this catch up exercise doesn’t need to happen.

But this wont come be fully working until 2015, so we have three more years of waiting for the little brown envelope to drop through your letterbox.

Accountant Epping – Transform Accounting

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Introducing the Transform Accounting Blog

Congratulations on finding the newly launched Transform Accounting Blog.

Transform Accounting are Chartered Management Accountants providing accounting, tax and bookkeeper services to our clients,  dedicated to helping you get your financial house in order and keeping it that way.

Based in Ongar, Essex, UK, we specialise in being an accountant for small business, helping small business owners keep tax bills to a minimum, maximise profits and ensure you meet every statutory deadline without any headaches.

To learn more about us, take a look at our web site here – Accountant Ongar.

We hope to use our blog as a way of updating our clients and anyone who is interested on what is going on in the financial world or learning more about tax, accounting and small businesses.

We are aware that not everyone finds accountancy to be the most exciting subject in the world!

But do not fear – our blog is going to contain postings on a wide variety of financial topics ranging from money saving ideas, famous people in the finance world, investments, finance in the news, and search engine optimisation.

Hopefully we can also pass on a few tips about tax and accounting along the way and save you some money.

We would love you to post comments, and any requests for future postings would be great.

Please remember to check out our web site at – Accountant Essex

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“We’re not just a bunch of accountants” – David Cameron

“We’re not just a bunch of accountants” – David Cameron

This was the offending headline in the Daily Telegraph on the 7^th May, attributed to Prime Minister David Cameron.
The result?

A storm blowing up as accountants from all over the country took offence.

The ACCA (Association of Chartered Certified Accountants) were seen to tweet
“Wouldn’t any government kill to be as well thought of as accountants”?

Michael Izza, CEO of the ICAEW (Institute of Chartered Accountants England and Wales) was prompted to describe the Prime Minister’s comments as “uninformed and ill judged”.
Before jumping on the bandwagon to criticize the Prime Minister, let’s just take a closer look at what he actually said in full, rather than just the newspaper headline.

“People want to know that we’re not just a bunch of accountants trying to turn round the British economy as if it were a failing economy, but that we are resolutely on their side as we do this work”

To those not familiar with the accountancy profession, there are many types of accountants with different qualifications, often performing quite different services for different types of client.
In no particular order, these range from producers of statutory financial accounts, HMRC tax returns, auditors, bookkeepers ,mergers and acquisitions, internal management accounts and other niche specialisms such as tax planning, finance systems accountants and forensic accountants.

In this particular instance, it appears clear that the Prime Minister was actually referring to “Insolvency Practitioners”, a specialist type of accountant or lawyer who assists with picking up the pieces of a business that has gone horribly wrong, hence insolvent.

Clearly the Prime Minister was trying to say that he felt his government were not acting as if they were “Insolvency Practitioners” working with a failed business (ie – the British economy) and was trying to talk up the British economy by saying that it wasn’t failing and his government were working hard to keep it that way.

This line is of course a story delivered by a politician that we have all heard on numerous occasions before, and where is the fun for the media in reporting the same story again and again? Instead, we got a sound bite gone wrong, and a good opportunity for the media to have a bit of fun setting the leader of the Conservative party against possibly one of the most conservative professions, to see how they might react. And react they did.
But would the country be better off it were run by a “bunch of accountants”?

Well, given the choice of qualified, regulated, conservative (with a small “c”) professionals, or unregulated and untrustworthy career politicians focused on the next election, just maybe we wouldn’t have got into the mess that we are in now.

In most organisations, it is the Finance Director, with his hand on the purse strings who reins in his senior colleagues when their ambitions, spending or risk taking get out of hand.

Now, wouldn’t listening to “a bunch of accountants” have been a good idea for banks and Prime Ministers alike?

Essex Accountant – Transform Accounting

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