We are holding at seminar at Northamton Saints RFC on September 26th, starting at 7.30pm. If you would like an invitation and you are not already a client do please contact us. This is an important subject and warrants your attention.
The government appear to be persevering with their attempt to further computerise tax collection and administration. Despite initially postponing it’s implementation, April 2019 has now been targeted for the next attempt; at first for VAT registered businesses.
This approach has a number of issues, not least the ability of some tax payers to comply with the required changes. Software houses are frenetically trying to adopt their packages and hoping they are able to comply with needs that have not as yet been fully explained.
Apologies for continued scepticism, but what is the point of reporting data that means very little on a quarterly basis? An arable farmer for instance will produce loss:loss:loss and a profit (hopefully) when the harvest takes place. If the object is to speed up the receipt of cash why not merely allow for quarterly Self assessment payments? In days gone by Advanced Corporation Tax was accounted for quarterly so this is nothing new.
As a firm we will be addressing the issue and advising the clients accordingly. Initially the major changes will be based around the bookkeeping requirements.
Much of the accountants compliance work is carried out in the summer months, usually triggered by the end of the fiscal year on 5th April. This year has been no different, with most of the March and April year ends now completed and ‘put to bed’.
However, what is different this year is that the shadow of Brexit and its implications loom large over most clients affairs. To date it appears that the UK government have still to establish their negotiating position (if indeed they actually have one) and even if they manage to do so, they then need to convince the EU of its validity, whilst still holding the Tory Party together. I would suggest this is a very, very difficult trick to pull off and it still appears to me doubtful that it can actually be achieved. It seems odd to me that one party is trusted with / blamed for the negotiations when presumably the 52% of Brexiteers were of all political persuasions.
In the meanwhile business is left to soldier on. Farmers don’t know if they are to lose their SFP after 2022 and since June 2016 the Pound has been on a rollercoaster ride. Quite how any meaningful budgeting can be carried out, save the zero base approach is difficult to imagine.
Not unreasonably, banks are also getting more jittery as they too dislike uncertainty and again, it appears to me that they are taking a more strident approach to overdraft levels and the like.
In short it is a mess. The summer may have come and gone reasonably pleasantly, but I do fear the next 12 months will not be as pleasant economically. It would be a farce for the British economy to implode as a result of an inconceived referendum aimed squarely at a section of the Tory Party.
Only in Britain……….
The Digital tax initiative has now been postponed. Common sense would appear to have prevailed.
The next step in the government’s apparent headlong rush into online dependency appears to be the prospect of quarterly tax returns.
This quite bonkers idea is clearly to assist the government to get their hands on the tax revenues quarterly rather than the current half year installments, as is the case for most self employed. As usual it is dressed up under the banner of ‘tax simplification’, which clearly it is not.
So, if this ridiculous idea persists, the role of the bookkeeper will re-emerge. It will no longer be good enough to do the quarterly VAT returns and then give the year end records to the accountant. The figures will have to already be submitted to HMRC.
Quite why quarterly payments on account are not good enough I have no idea, but the new ‘system’ will require a degree of precision if chaos is not to follow shortly after. Imagine quarterly arable farming accounts – loss – loss – loss – profit. How are they to be catered for?
Anyway, the point of the article is firstly to point out the nonsense that is envisaged and secondly to alert the client to the fact that their bookkeeping will have to be sufficiently robust to cater for the demands of the new system.
Many clients have old accounting systems that work well as far as they are concerned. Unfortunately it would appear sensible for these to be critically reviewed and renewed if appropriate. Obviously, should any assistance be require in this regard do please get in touch. Recently, the House of Lords have placed a partial brake on the implementation of this nonsense, it is to be hoped that they persist.
Phillip Hammond delivered his first and apparently the last Spring budget yesterday. We attach the entire white paper for your perusal.
It has not gone down particularly well. It was not expected to go down well with Mr.Corbyn and Mr.O’Donnell; little does, but the increase in the National Insurance rate for the self employed has incensed many within Mr.Hammond’s own party. The conservatives do not have a large majority and with labour pledged to oppose, national insurance may well become a political chip.
Changes to the dividend tax exemption will not be popular either, but at least these were not manifesto pledges. It is most likely however that the word Hammond did not even mention will be the biggest determinant in both his and his party’s fortunes. Brexit.
Apart from various mitigants against the effects of the business rates revaluation property taxes have remained largely unchanged.
As usual, if you have any specific questions based on your own circumstances please do not hesitate to make contact.
Philip Hammond confirmed some months ago that the Single Farm Payment would be with us ‘until 2020’. I am still not entirely clear what this precisely means. Presumably the 2019 reporting and payment season will hold true, but in all liklihood there will be an election in Spring 2020, so what happens therafter is anyones guess.
However, it must be questionable if the current system and level of support will remain. Faced with a number of competing claims I would have thought it unlikely that farms subsidies would prevail, despite the obvious implication that unsubsidised UK farmers will be competing head on with subsidised European farmers.
Practical implications apply here too. It must be unwise to enter into new longer term FBT’s unless the uncertainty of 2020 is catered for in the small print. More pressingly, what will be the financial implication on the individual farm business if the support mechanism is withdrawn? Given the stark fact that UK farmers are certainly unable to influence world prices, it would be prudent to establish now just how long the existing business could survive without support. If the answer is ‘not long’ then at least there are 2-3 years to be able to do something about the expected outcome.
Consequently and unfortunately it is difficult for this writer to be economically optimistic. When all forms of business strive for economies of scale, the UK are now seemingly going in the opposite direction. Constitutionally we may well have regained control of our laws, all well and good. It is just to be hoped that the country is able to be economically prosperous enough to enjoy the new freedoms that may bring.
We are embarrassed to be associated by profession with Price Waterhouse Coopers and their incompetent handling of what should actually be quite an easy job – handing envelopes to celebrities to open and read out a name.
Were we given the simple task to perform, the winner of Best film would obviously be ‘The Railway Children’, best actor would be Bernard Cribbins and best actress Jenny Agutter.
How could they get it so wrong?
In so far as it is possible we are attempting to establish a ‘stand alone’ payroll department so as to be able to properly specialise in this area which continues to be ever more bureaucratic and demanding. Chris Dowdy, who came with us from CVDFK has agreed to head up the new department, a role she previously held at Derngate Mews. Cath and Caroline will continue to support her and provide any holiday cover, so do please continue to employ your usual channels of communication.
Due largely to an increasing workload the partners are pleased to announce that Patience Jamella has been recruited to assist and support Mark Watkins and Sam Leatherland in the tax department. Patience is Rhodesian by birth and has worked in this country for a number of years, including stints at local rivals Grant Thornton.