£565 million more bagged from small traders by HMRC

Amid longstanding reports of more aggressive action by HM Revenue & Customs against small traders, it will surprise few clients of Guildford accounting firms like Sherwin Currid (http://www.sherwincurrid.com) to read that the taxman gained an extra £565 million in revenue from small and medium-sized enterprises last year, according to figures obtained by an adviser. The statistics showed a 31 per cent boost in additional yield from investigations into the tax compliance of small firms, compared to the previous year.

It is part of a trend of HMRC taking a harder line on small businesses since it was told by chancellor George Osborne in 2010 to draw in a further £7 billion annually from compliance activity. Since then, the tax authority has established around 40 separate task forces, to enable long and thorough investigations into individuals and businesses. These specialist groups have already gathered a total exceeding £60 million, amid reports that one task force with responsibility for tackling fast food industry non-compliance has accrued £25 million alone.

Certainly, the figures are a strong signal to small trader clients of Guildford accountants that they are bearing the brunt of the taxman's crackdowns. Although much of the media's focus has been on large corporations using such practices as profit-shifting to lessen their tax liability, HMRC's tougher stance on smaller businesses has attracted fewer headlines. Another indication of this hardened approach is the expectation that a tax force dedicated to the South Wales tourism industry, set up in July, will raise about £2.5 million.

HMRC was recently granted new powers enabling it to assess every UK business's credit and debit card payments to expose those traders failing to disclose all of their income, with individuals and businesses having also been named and shamed for a failure to pay tax. However, small firms' relative lack of resources compared to the larger companies makes them more susceptible to reporting and accounting errors, and the situation is no different for small traders in Guildford. Not all of them can easily afford the best quality accountants in Guildford, increasing the chances of mistakes in their tax returns and other paperwork.

Such a lack of time, money and expert help also minimises small firms' room for manoeuvre in HMRC negotiations, should they be accused of underpayment. The best advice that can therefore be given to the UK's smallest businesses is to prepare well and think ahead. The HMRC's ever-growing yield from small traders is the clearest indication yet that they must keep their tax affairs in order - or face the consequences. With its personalised and friendly service from its well-qualified Guildford accountants, Sherwin Currid (http://www.sherwincurrid.com) is well-placed to assist small firms in the local area to operate more tax-efficiently.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

Freelancers should take note of the simplified expenses regime

Of all of the recent developments that the clients of Freelancer Accounting’s (http://www.freelanceraccounting.com) accountants for freelancers should take note of, the greatest is surely the simplified expenses regime that is now in place. There are certain business costs that freelancers can deduct from their income to calculate their taxable profit, which in practice amounts to their allowable expenses lowering their income tax. The newly simplified regime enables the use of flat rates, removing the need to figure out your actual business expenses, which can involve more complicated calculations.

The new regime replaces the non-statutory deductions that could previously be claimed for business mileage, board and lodgings or use of home. Simplified expenses can only be used by sole traders and business partnerships, with limited companies and limited liability partnerships excluded. The new regime enables those freelancers using our accountancy services to calculate their allowable vehicle expenditure using a mileage-based flat rate – for cars and goods vehicles, 45p per mile for the first 10,000 miles and 25p per mile thereafter. Motorcycles are subject to a rate of 24p per mile. Businesses that have opted to use the scheme for a vehicle must continue to do so for the duration of that vehicle’s time with the business. You are not able to use the scheme, should capital allowances have already been claimed in respect of that vehicle.

Clients of our accountants in Reading also have the option to claim relief for the use of their home as a business, again via a flat rate scheme, as a replacement for more detailed expenses claims relating to gas, electricity, telephone and broadband costs. You will be able to deduct £10 a month if you spend 25 hours or more a month working at home, rising to £18 a month if you work 51 or more hours a month. Those working 101 hours or more a month, meanwhile, will be able to access a £26 monthly deduction.

There is also a flat rate scheme available to the trader using premises primarily for trade purposes, but where private use necessitates an adjustment. In this case, the allowable deduction will be calculated by the deduction of the authorised amount from the actual expenses incurred. Only such expenses as household goods or services, food, non-alcoholic drinks and utilities are designed to be covered by the scheme, with others – such as mortgage interest and council tax – still needing to be apportioned. The number of people in occupation will determine the exact rate, which could be £350 per month for one person or as much as £650 per month for three people or more.

Are you identifying every possible opportunity to legally and efficiently minimise your tax liabilities? Get in touch with Freelancer Accounting (http://www.freelanceraccounting.com) for more information on the latest legislation surrounding expenses, as well as for informed assistance with the rest of your taxation and accounting affairs from one of our seasoned accountants in Guildford.

Editor’s Note: Freelancer Accounting (http://www.freelanceraccounting.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

What you need to know about subcontracting

As a freelancer and client of one of our accountants for freelancers here at Freelancer Accounting (http://www.freelanceraccounting.com), chances are that you’ll be used to adopting flexible approaches to assignments, based on such factors as your current workload and personal circumstances. Certainly, there are few freelancers who haven’t at least considered subcontracting – whether doing it for someone else or getting another person to subcontract for them. But what are the advantages and disadvantages of subcontracting?

It’s possible that you will have considered finding a subcontractor if an opportunity suddenly arises for work that you don’t have the free time to complete yourself, given other ongoing projects. Of course, you could always turn down the offer of work, but in the case of many clients, a similar opportunity may not arise from them again. But if you try to tackle the work yourself despite your crowded schedule, it’s very likely that the results won’t be up to standard.

That’s why, especially if the client is a massive one that you value your relationship with and that is offering money that you just can’t turn down, you might be tempted to bring in a subcontractor. Certainly, this is something that many of the clients of our contractor accountants do very successfully, as it lifts pressure off them and even places them in a position to attract bigger jobs than previously. There is, however, the potential for more stress, as you’ll suddenly be a client yourself and need to manage your subcontractor to ensure that they produce work of a satisfactory standard.

This project management side of things is something that our small business accountants always urge clients to bear in mind when they are negotiating fees. You might need to learn to manage staff, having never done it before. As so often, though, thorough preparation makes a big difference. Before you take on a worker, peruse their CV and do a bit of other research on them. Ask for samples of previous work, and pay attention to the seemingly small things that could indicate your likely experience of working with them – such as how long they take to answer an email.

Alternatively, of course, you may fancy becoming a subcontractor yourself, which allows you to take on grander projects than you might have previously been able to attract on your own. Doing this can be a good experience if you want to move up another level, but on the minus side, it’s likely that you won’t receive credit for the work. Earnings may also be lower.

Nonetheless, as a client of one of Freelancer Accounting’s (http://www.freelanceraccounting.com) accountants in Guildford, you may feel that the downsides are a worthwhile price to pay for the chance to take on more intriguing and prestigious assignments. Contact us now for tailored advice on your accounting and tax affairs as a freelancer.

Editor’s Note: Freelancer Accounting (http://www.freelanceraccounting.com) is represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Please direct all press queries to Louise Byrne. Email: louise@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

What are the penalties for tax return inaccuracies?

Let’s imagine that – like so many other freelancers – you left last month’s self-assessment tax return a little too late. You seemed to get everything done in time, but now your bookkeeper has informed you that there were inaccuracies. The taxman’s penalty regime for such mistakes is just one of many reasons for getting Freelancer Accounting’s (http://www.freelanceraccounting.com) accountants for freelancers to help you with such a vital task. But what do you need to know if it’s too late?

Our accountants in Guildford would advise you that HM Revenue & Customs assesses penalties for incorrect returns on the basis of whether the error could be deemed negligent, concealment or a mistake. Failure to comply could land you with a £300 fine, or you could even end up paying £60 a day if the error is not corrected. Tax-geared penalties exist for those that fail to comply in an attempt to pay less tax, while if you have gone as far as concealing and/or destroying documents, you could be in danger of a prison term of as long as two years.

You may want to disclose the error to HMRC of your own accord – a process known as ‘unprompted disclosure’ – or you may be the subject of ‘prompted disclosure’, which is when HMRC approaches you. In both cases, prospective clients of our accountants in Richmond should be aware that penalties apply, but that they are higher if the latter category applies. The exact penalty depends on the type of error that was made, which may have been careless, deliberate but not concealed or even both deliberate and concealed.

Voluntarily informing HMRC of a careless error is obviously the eventuality that will bring you the minimum penalty, with between 0% and 30% potentially needing to be paid by you. In the event of a genuine error, you won’t need to pay a thing, but if you failed to take “reasonable care”, a penalty at the higher end of that percentage bracket can be expected. Meanwhile, depending on the seriousness, telling HMRC about a deliberate error, but which you did not try to conceal, attracts a penalty between 20% and 70%. For the final error type, one that was deliberate and that you also tried to conceal, voluntary disclosure is likely to mean a fine of between 30% and 100% of the “potential lost revenue”.

As for cases of prompted disclosure, simply careless errors result in 15% to 30% penalties, with genuine errors leading to no penalty at all. Errors that were deliberate but that you made no attempt to conceal equate to a penalty of between 35% and 70%, while deliberate errors that you did try to conceal are likely to bring you a fine of between 50% and 100% of the “potential lost revenue”.

Here at Freelancer Accounting (http://www.freelanceraccounting.com), our small business accountants would also remind you that these above penalties can be simultaneously enforced, which is even more reason to seek our services to help to eliminate errors in the first place.

Editor’s Note: Freelancer Accounting (http://www.freelanceraccounting.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

How Sherwin Currid assists small businesses

As PCG accredited accountants in Guildford, Sherwin Currid (http://sherwincurrid.com/) helps companies with their accounting and tax obligations, but there are specific ways in which we assist small businesses which provides real peace of mind.

While no firm could claim to enjoy fulfilling the requirements set out by the taxman, there are arguably more headaches involved for the smaller firm. Not having the budget to hire an in-house accountant, for one, and not having the time or resources to tackle accounting issues in good time to avoid last-minute deadline stresses, for another. Sherwin Currid are small business accountants in Surrey which specialise in providing peace of mind in the knowledge that all tax and accountancy affairs are in hand, and here’s how.

First, we are specialised in the field of small business accounting, so we are always in-the-know when it comes to the specifics that relate to the tax ramifications for SMEs. We are also an ACCA practice and are accredited by the PCG for our expertise in Contractors and Freelancers operating through Personal Service Companies. Then there is the fact that there are no hidden charges and all our fees are fixed, so smaller firms can confidently budget without fear of any nasty surprises. We also pride ourselves on swift and guaranteed turnaround times and the fact that we offer a friendly and personalised service.

Last, but certainly not least, there is the affordability of our services. While just about all British companies are feeling the pinch at the moment, smaller firms can really struggle to maintain a healthy profit margin, or in some cases, just tick over until the wider economic climate improves. Unfortunately, the old adage that the only two things which are unavoidable in life are death and taxes is true, so small businesses can’t afford to ignore their tax and accountancy obligations no matter how much they are watching their bottom line. That’s why we have ensured that our fees are highly competitive – and peace of mind is thrown in for free! To find out the prices for our full range of services, visit our website at http://sherwincurrid.com/.

Editor’s Note: Sherwin Currid (http://sherwincurrid.com/) is represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Please direct all press queries to Louise Byrne. Email: louise@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.

What does my accountant need to tell me about Partnerships?

As has been previously covered on the Sherwin Currid (http://www.sherwincurrid.com) blog, for those wishing to start a business in the most hassle-free possible way, the option exists to begin trading as a Sole Trader. This removes much of the administrative burden of that other option, Limited Company formation, but what would a good tax accountant in Surrey recommend if there is more than one of you wishing to go into business together?

Well, in that situation, a Partnership is the closest equivalent to Sole Trader status. Although it is a more complicated process than that of becoming a Sole Trader, entering into a Partnership still somewhat simplifies the tax and accounting process. A standard Partnership lacks any legal status, as would be the case with a Limited Company. It simply links together two self-employed individuals in a basic business structure, with the partners having personal liability for any debts that they incur in running the business.

Those who desire the separate legal status that is enjoyed by a Limited Company are advised by our Guildford accountants to register a Limited Liability Partnership with Companies House. As the name suggests, this arrangement limits the liability of the partners for the debt that they incur in running the business, giving them a similar status to Company Directors. Nonetheless, given that the business profit of each partner is taxed alongside their existing personal income, a Partnership does not usually cause too many accounting headaches.

For tax purposes, when the business is started, each partner will need to inform HMRC of their self-employed status. Sherwin Currid's accountants in Woking frequently advise on choosing the right business name for the Partnership, with any 'offensive' words needing to be avoided. Nor are you permitted to use certain 'sensitive' terms, like 'Chartered', 'Authority' or 'Council' that imply any special status that does not exist. Trademarked names, such as 'Microsoft', will also need to be avoided in your business name. In the case of Limited Liability Partnerships, Companies House must accept the proposed name.

Partners are urged by our accountants in Guildford to keep accurate and up-to-date records of all business transactions and accounts. These will be needed in a standard Partnership for the submission of an annual self-assessment form, complete with Partnership page, to HMRC. Self Assessment forms must be submitted yearly by not only each partner, but also the Partnership itself. All of these entities will need to be registered for Self Assessment, which will involve income tax and Class 4 National Insurance Contributions being paid on all profits.

There are also various legal issues that you will need to be prepared for when you enter into a Partnership, and our small business accountants in Woking and accross Surrey can advise you on all of these. Contact Sherwin Currid (http://www.sherwincurrid.com) for more information on our expertise in relation to Partnerships, including Limited Liability Partnerships.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) is represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Please direct all press queries to Louise Byrne. Email: louise@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.