Business News


Tax payment deadline is looming

By Kevin Peachey - Personal finance reporter.

28th July 2017

Taxpayers are being urged not to overlook a looming payment deadline owing to summer holidays, otherwise they face a fine.

Nearly five million self-employed people, company directors and those with more than one source of income may have to pay tax by 31 July.

The major filing deadline for those in the self-assessment system is 31 January.

However, those who make payments on account face a deadline on Monday.

Martin Gilchrist, of accountants Gilchrist & Co (CA) Ltd, says: "Individuals completing annual tax returns within the self-assessment regime and making payments on account should be making a payment.

"Typically self-employed traders, those with rental income and those with large amounts of investment income are included in this group, which paid over £6.6bn to the Revenue in July last year."

Payments on account are based on the previous tax year's income tax liability, assuming that this will not change.

Chas Roy-Chowdhury, head of taxation at the accountancy association, the ACCA, said that summer getaways often led to people forgetting about the deadline - but such a mistake could lead to a fine of 5% of the tax owed.

"Ignorance and naivety are no excuse when it comes to tax filing," he said.

"Many holidaymakers have probably been more focused on exchange rates and how to afford those extra holiday treats.

"However, this [tax payment] is not something that can be left until you come back from your summer break, or even leaving it until the last minute and trying to do it yourself. The consequences of not paying on time or paying the wrong amount are high."

Blick Graduate Entrepreneurs In Residence

Posted: July 11th, 2016

Are you a recent graduate? Do you have a creative business idea?

If so, you should apply to be the first Blick Graduate Entrepreneurs in Residence!

Blick are offering free workspace to 2 recent graduates (must have graduated 2015 or 2016) who want to develop their creative business idea. The Graduate Residents will get their own free deskpace at Blick Studios for six months, where they will be able to develop their ideas and network with other creative and tech professionals, and they will have access to fantastic resources while they do it.

Blick are delighted to offer taught support as a part of this programme. Successful Graduates in Residence will have the opportunity to work with Christopher Murphy, Senior Lecturer at Belfast School of Art, who will cover: marketing and promotion; pricing and positioning; project management; and leadership and management sessions. This competition is open to students who graduated or will graduate between July 2015 and September 2016.

Whether you have a product you would like to develop, a business you’d like to set up, or simply a chance to explore how your final project could create paid work, this is a great space for your idea to grow.

Blick have made the selection process as open as possible. To enter please complete the following application online by 5pm on 31st August.

Blick will shortlist 5 submissions and let finalists know by 9th September. Shortlisted candidates will make a 5-minute pitch to our panel of judges at the Graduate Resident Pitch (date to be confirmed) and a winner will be selected!

Blick are keen to hear fresh voices and new ideas—if in doubt, apply!


Recruiting Now - FREE Business Course** PLEASE SHARE

Have you recently left school/ college/ university and need some help with progressing into employment? Or would you like to explore the option of self-employment?

We have the course just for you - Exploring Enterprise 3 Programme. This FREE course offers bespoke one to one support and guidance to suit your individual needs and offers a CCEA accredited qualification in Understanding Business Enterprise!

Next course starting Monday 18th September @ LEDCOM, Larne 9.30am - 2.30pm for a period of 3 weeks.

Limited spaces available - contact Laura for more info or to secure your FREE place - Tel 028 2826 9973 ext. 215 or Email lauramccourt@ledcomwbp.org

This project is an Enterprise Northern Ireland initiative which is part funded through the Northern Ireland European Social Fund 2014-2020 Investment for Jobs and Growth Programme, the Department for the Economy and the Mid and East Antrim Borough Council.

This has been the "worst year ever" for errors with HMRC software!

8th Jul 2017

HMRC has told software producers that a revised tax calculation to fix some of the online filing problems for 2016/17 returns may be issued to go live in October.

Advertisement

Worst year ever

HMRC has admitted that the ordering of allowances and deductions in the 2016/17 SA tax computation has caused the majority of problems when designing the tax software standards for that year. Its normal procedure would be to fix the software standards after the end of the SA tax return filing season, so the problems identified don’t reoccur for the next tax year. In the meantime, all the identified problems are excluded from the categories of tax returns which can be filed online.

Rob Ellis, CEO of BTCSoftware, can’t remember a year when there have been so many exclusions from filing SA tax returns online. For the 2016/17 tax returns 16 new examples have been added to the online filing exclusions list, which is now in version 4; there is a version 5 of this list under construction.

Volumes of paper

If a taxpayer’s circumstances fall within one of the exclusions, the tax return must be filed on paper to avoid an incorrect tax computation from being generated. If a paper tax return, for an online exclusions case, is filed after 31 October, it will qualify as a reasonable excuse for not filing online. However, to avoid a penalty being issued, the tax agent should submit this reasonable excuse form with the paper tax return.

Several AccountingWEB members commenting on my earlier article say they have seen a large number of clients who fall within the exclusions. For example, taxpayers with high levels of interest or dividend income and little or no earnings.

Timing of submissions

In the months of April to September, relatively low volumes of tax returns are submitted. HMRC’s records show that the majority of the returns are submitted from October onwards, and around half of all tax returns are submitted online in January (see graph for 2015/16 returns). Thus, to avoid a mountain of paper tax returns landing on HMRC, a fix for the online submission problems needs to be found sooner rather than later.

The professional bodies including the CIOT and ICAEW Tax Faculty have advised members to delay filing paper tax returns for a ‘few weeks until details of the possible solutions are available’.

In year fix

In view of the anticipated number of paper tax returns, HMRC is considering issuing an in-year fix for the tax return software standards. This has never been done before in the history of self-assessment. The “fix” will cover exclusions numbered 48 to 56, 58 and 59, which all relate to the ordering of allowances. There will be only one in-year fix issued, and HMRC are hoping that this adjustment to the standards for the tax calculation won’t generate more problems.

How long?

Ellis confirmed that BTC Software would need about six weeks to programme and test any new software standards provided by HMRC for the 2016/17 tax returns. In order to roll-out a new version of the tax return software in say October, HMRC would need to provide the revised tax computation to the software producers by mid-August.

Communication to taxpayers

Many tax agents and software producers are anxious that some tax returns which have already been submitted have generated incorrect tax computations, as the relevant exclusion wasn’t identified before the return was submitted. This could apply to either online and paper tax returns. HMRC should be able to pick-out the affected online submissions, but the paper tax returns won’t be identified until they are processed.

HMRC is considering how it can communicate this issue to the affected taxpayers, by way of an amended tax computation (SA 302) or a separate letter. In either case discussions will take place between HMRC and the professional bodies as to how taxpayers will be informed.

Northern Ireland economy in the slow lane: Chartered Accountants Survey 2017

Gavin Walker | June 19, 2017

The Chartered Accountants Survey 2017, a survey of 315 Chartered Accountants across all sectors of the Northern Ireland economy, suggests slow growth for the local economy in the year ahead.

The survey by Chartered Accountants Ulster Society found that its members regarded political uncertainty and Brexit instability as key issues likely to affect the economy over the next 12 months.

Cuts in government spending, concerns around the increasing cost of doing business and rising inflation also featured as negative factors affecting the local economy.

The Economy

In general terms, while 72% said that they believed the economy was growing slowly or moderately, only 13% viewed prospects for the year ahead as ‘good’ or ‘very good’, significantly down from 32% of members in the previous year.

29% saw prospects for the coming year as ‘poor’ or ‘very poor’, a rise of 11% points since last year.

The issues felt to have the most potential to negatively affect the economy in the year ahead were political instability (95% of respondents) and Brexit uncertainty (80% of respondents).

On a more encouraging note, 37% of those surveyed identified an improving global outlook as a potential upside.

Brexit

59% of respondents said it was ‘critical’ to protect the Common Travel Area with the Republic of Ireland, while 95% were opposed to a hard border. 96% said they wanted free trade in goods, services and capital to be an important aspect of any deal negotiated with the EU.

4 out of 5 Chartered Accountants believed that Northern Ireland will be more negatively affected by Brexit compared to the rest of the UK.

Corporation Tax

A reduced rate of Corporation Tax in Northern Ireland was identified as potentially a major benefit for the local economy, with 63% saying a lower rate would have a positive effect on Northern Ireland’s economic performance.

Jobs, Skills & Wages

On the issue of jobs and skills, the survey showed that over half of respondents did not expect head count in their own organisations to change, with 27% expecting an increase in employment levels and 16% expecting a reduction. Two in every five of those surveyed said that their organisation was currently experiencing skills shortages.

The survey did predict a squeeze on wages, with more than 7 in 10 expecting wage increases for the coming year to be below the current rate of inflation (2.9%, Office for National Statistics, June 2017).

Pamela McCreedy, Chair of Chartered Accountants Ulster Society which represents over 4,000 Chartered Accountants in Northern Ireland, said: “Despite an improving global economy our members are predicting more modest prospects locally, with economic prospects slipping back from 2016 and 2015 levels.

“The uncertainty created by Brexit stands out. Our members clearly feel that Northern Ireland may be more negatively impacted by Brexit than other UK regions and have sent a strong message that they see avoiding a hard border with the Republic of Ireland and free trade with the EU as vital components of any Brexit negotiations.

“I believe that the business community will press forward despite the perceived challenges. We hope that the local political parties will be able to resolve outstanding issues so that a Budget and a new Programme for Government be put into place which can give direction and clarity for Northern Ireland.”

Independent economist Maureen O’Reilly, who formulated and analysed the survey of Northern Ireland’s Chartered Accountants said: “The survey results suggest that the broad view of members is that Northern Ireland’s economic prospects are weakening.

“Most Chartered Accountants in the survey believe that the economy is either growing slowly or indeed stagnant and do not feel a strong sense of positivity about prospects in the year ahead. Only 13% viewing prospects as good or better. Uncertainty and instability are certainly weighing down on views around the performance of the local economy in the near term at least.”

Key findings in the survey include:

  • 60% feel that the NI economy is growing slowly; 12% growing moderately; 21% feel the economy is stagnant.
  • 58% Feel the outlook for the NI economy in the year ahead is ‘Fair’; 26% feel the outlook is ‘Poor’ and 3% ‘Very Poor’; 11% say ‘Good’; and 2% ‘Very Good’
  • Brexit was rated as ‘strongly negative’ for the local economy in the coming year by 51%; A further 29% viewed it as a ‘negative’ factor.
  • Political uncertainty, Government spending cuts, increased business costs and rising inflation were all highlighted as impacting negatively on the local economy.
  • A reduced Corporation Tax rate for NI and an improving global outlook were cited as the most positive factors for the local economy in the year ahead.
  • 315 Chartered Accountants took part in the survey.

Don't worry! While our marvelous leaders are crashing our economy and undermining the efforts of those who work for a living... They are still getting paid (and getting a pay rise) for not working! Maybe we could pay them just to go away...

Corporation tax levy in limbo until functioning Executive is established

By John Mulgrew

The cut-rate business levy was backed and marketed by former First Minister Arlene Foster and Deputy First Minister Martin McGuinness

The Government has warned corporation tax powers cannot be handed to Northern Ireland without a working Executive.

It came after Stormont finally admitted its target date for getting the power to lower the business levy "may slip" amid the collapse of power-sharing.

And despite months of luring major foreign investment on the premise that Northern Ireland will have a lower 12.5% rate by April next year, Invest NI has admitted it will "amend its international sales and marketing activity to reflect this".

The cut-rate business levy was backed and marketed by former First Minister Arlene Foster and Deputy First Minister Martin McGuinness. It has been used as one of the main marketing tools by Invest NI, in order to sell Northern Ireland to major international investors, including the US.

The campaign even drafted in Ballymena's own Hollywood superstar Liam Neeson, who said "the commitment of the Northern Ireland Executive to reduce the rate of corporation tax to 12.5% from April 2018 really is a potential game-changer for our economy".

But despite corporation tax being once again thrown into limbo, Invest NI says it will "continue to promote the commitment to a reduced rate".

Plans to give Northern Ireland the power to control the business levy, allowing it to compete on a level playing field with the Republic, are dependent on Stormont being able to "demonstrate that its finances are on a sustainable footing for the long term".

That condition was outlined in both the Stormont House and Fresh Start Agreements.

A spokesman for the Department of Finance (DoF) said: "DoF and the Department for the Economy are committed to the introduction of a reduced corporation tax rate of 12.5% in line with the commitment in the Fresh Start Agreement, which is still guiding the activities of Invest NI in promoting foreign direct investment.

"However, we recognise the fact that the conditions for implementation are not in place at the present time and as a result the proposed implementation date of April 2018 may now slip.

"It will be for incoming ministers to decide on the steps needed to confirm the timing of introduction of the reduced rate and agree an implementation plan."

And Invest NI has said it is still actively using the devolution and lower rate of corporation as a selling point for investment.

A spokeswoman said: "The intention to reduce the rate of corporation tax remains and we will therefore continue to highlight this to potential investors."

"The statement issued today by the Department of Finance has indicated that the proposed implementation date of April 2018 may now slip.

"We will therefore amend our international sales and marketing activity to reflect this.

"We will continue to promote the commitment to a reduced rate and the additional benefit this will have on investment projects and will await on incoming Ministers to confirm the timing of implementation."

On its website, Invest NI still states that "from April 2018 Northern Ireland's corporation tax rate will be 12.5%".

Meanwhile, Westminster reiterated that "the devolution of these powers cannot happen until an Executive is in place" and remains "subject to the conditions around financial sustainability".

A Government spokesman said: "We remain fully committed to the devolution of corporation tax powers in Northern Ireland, subject to the conditions around financial sustainability as set out in the Stormont House and Fresh Start Agreements.

"The Government continues to make practical arrangements and stands ready to move forward with devolving these powers when a devolved government is returned.

"The target date at which an incoming Executive wishes to implement a reduced rate of corporation tax is a matter for it, subject to the conditions around financial sustainability as set out in the Stormont House and Fresh Start Agreements."

Belfast Telegraph

Errors in tax return software force paper filing

27th Mar 2017

Glitches in tax return software standards mean that two groups of taxpayers may have to submit their 2016/17 tax returns on paper, instead of electronically, to ensure that they don’t overpay their tax.

Dividend confusion

The problems stem from the interaction between the separate allowances for savings and dividends, the personal allowance, and the additional rate of tax on income over £150,000. The two groups of taxpayers affected appear to be:

  1. those with total income made up of savings and non-savings income over £32,000 of which the non-savings income is between £11,000 and £16,000
  2. those with non-dividend income of £27,000 to £32,000 plus dividends which take their total income to more than £145,000

Individual taxpayers (not trustees or personal representatives) are entitled to the dividend allowance of £5,000, which taxes the first £5,000 of dividends at 0%, within the tax band the dividends fall into. Dividends are taxed as the highest slice of income.

Group A

These taxpayers should benefit from the savings rate band of up to £5,000 as their non-savings income not covered by the personal allowance will not use all of the savings rate band. The HMRC tax return software specification fails to give the benefit of the savings rate band in this scenario and hence overcharges taxpayers in this group by up to £1,000.

Example

A taxpayer with non-savings income of £11,000 and savings income of £26,000. The correct amount of tax for 2016/17 is £4,000. Using software based on the HMRC software standards will calculate the tax as £5,000. If you file online the taxpayer will be overcharged by £1,000.

Group B

These taxpayers do not receive any personal savings allowance, as their income makes them additional rate taxpayers. However, they do qualify for the £5,000 dividend tax allowance. The HMRC tax software specification incorrectly deducts the dividend tax allowance that falls in the unused basic rate band from the higher rate band which then pushes dividends up into the additional rate. This error could cost up to £280 if the return is filed electronically instead of by paper.

Software standards

These problems illustrate an underlying issue with the standards set for tax software by HMRC.

All tax software developers are required to produce tax return software which abides by computational standards set by HMRC. If the software doesn’t follow those computational rules, the tax return will be rejected by the HMRC’s electronic gateway. This is a sensible control mechanism.

Software developers have confirmed that the 2016/17 tax return software has to have identical calculations to those performed by the HMRC system, or it cannot be approved by HMRC. Any software house using the HMRC computations should be able to successfully file a return in the excluded scenarios, but the tax due will be overstated. Any software house not using the HMRC computations would suffer mass rejections of returns.

Work around

HMRC has added the scenarios for taxpayers in groups A and B to their exclusions list which was issued on 17 March. The official instruction is to file the returns for taxpayers who fall these groups using a paper return rather than by online filing. This means the affected taxpayers will remain on the ‘paper filing’ list until filing for 2016/17 tax returns is completed.

Tim Good and Giles Mooney, two of the directors of Absolute Software, have been working with HMRC and speaking to the Treasury about this year’s complexity following HMRC’s decision to use Good’s spreadsheet calculator algorithms as the basis for their calculation software this year. It appears that HMRC’s specification for its own tax calculation software includes two errors, which are not present in the spreadsheet.

Tim Good explained: “I had a meeting with HMRC last November to clarify the computational issues and it looked as though they were going to be able to get it sorted in time for the new reporting season. But apparently, the team responsible for coding the main HMRC self assessment system was simply unable to complete the task from the Excel algorithms in time.

I have every sympathy for the HMRC team – the villain of the piece is the horrendous complexity that the interaction between the allowances gives rise to in certain (not that unusual) combinations of income.

We thought we were there just in time for the 2017 software release in early April but because of the coding problems they have encountered, HMRC has decided to go ahead with the instruction that all returns for the scenarios on the exclusions list should be filed on paper.”

Not software supplier’s fault

Whenever HMRC’s software standards are not in line with tax law, tax returns with incorrect tax computations are successfully submitted while correct returns may be rejected. These errors are only spotted when the same tax calculation is performed independently say on paper, or in this case, on a stand-alone spreadsheet.

The solution is to have an independent body check the tax software standards set by HMRC, to ensure they are correct and in line with tax law. HMRC should not be permitted to check its own homework, as it does now.

This is not the first error to arise from incorrect tax software standards and it won’t be the last.

Don’t blame your software supplier – it really isn’t their fault.

HMRC uses “nuclear option” to target unpaid business taxes

2,065 companies were liquidated in 2016 as a result of unpaid business taxes

HMRC’s pursuit of unpaid business taxes has stepped up a level, as new figures reveal the tax office applied for a record number of court orders to seize company assets in 2016.

Research from finance advisor Funding Options found HMRC applications to liquidate firms with outstanding tax bills rose by 12 per cent in 2016 from the 3,485 made in 2015.

Of the 3,900 wind up applications, HMRC successfully seized the assets of 2,065 owners with unpaid business taxes, a success rate of 48 per cent.

“Shutting a company down is the biggest weapon in HMRC’s arsenal, but it’s one the taxman is using more and more,” said Conrad Ford, CEO of Funding Options.

The high-profile case of Google, which in 2016 was reported to have owed almost £600m in unpaid business taxes to HMRC, and controversial tax evasion schemes have increased public and political pressure on the tax office to approach debt collecting with the full force of its powers.

The growing use of court orders confirmed both HMRC’s tough stance on unpaid business taxes as well as ongoing cash flow challenges faced by small UK business owners, who could be most at risk of the apparent “nuclear option”.

Despite the rise of alternative finance providers, and specialist lenders such as the StartUp Loans Company and the British Business Bank (BBB), Britain’s entrepreneurs have still struggled to find the financial “cushion” that can protect larger companies when VAT and corporation tax deadlines arrive.

Ford added that HMRC’s hard-line position created “difficult choices” for small business owners who are struggling to pay employees, suppliers and escalating tax bills.

“It’s vital that [small business owners] don’t stick their heads in the sand: they need to try to work with HMRC to prevent arrears backing up. They should also take pro-active steps to make sure they have a funding safety net readily available for when they need it,” he said.

Ford advised the owners of small firms to consider the various sources of finance available to their company, such as invoice finance to boost short-term cash flow and crowdfunding to support business growth.

“The good news is that identifying the right source of funding is becoming easier thanks to the government’s Bank Referral Scheme, which provides access to alternative finance for firms unable to obtain traditional loans,” he added.

The scheme involves nine high street lenders sharing details with alternative finance providers to support small business owners who have been rejected for finance.

A BBB source told Business Advice that the Bank Referral Scheme would remove barriers to financial access for small companies.

“The Bank Referral Scheme acknowledges that the problem in Britain isn’t with supply [of access to finance] it’s with transparency. What’s holding back growth is that small business owners don’t know where to access finance if bank’s turn them down.”

Have a look at other HMRC content:

ABOUT THE EXPERT

Simon Caldwell

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

Small businesses back House of Lords’ digital tax proposals

Among the digital tax proposals put forward by the committee was a two-year delay to Making Tax Digital

The Federation of Small Businesses (FSB) has backed a House of Lords report that calls for significant digital tax proposals, including a full delay of Making Tax Digital until 2020.

Current plans for fully digitised tax returns, set to be introduced in April 2018, were rebuffed by the Economic Affairs Committee in a review of the government’s draft finance bill, which outlined reforms to support small business owners in compliance.

Among the digital tax proposals put forward by the committee were recommendations to delay the scheme for a further two years, giving government time to fully pilot and raise awareness of the switch, and to re-assess the benefits and costs of Making Tax Digital to small business owners.

The report stated that current government assessment of the costs and benefits of Making Tax Digital were “not based on adequate evidence”.

Lord Hollick, chairman of the Economic Affairs Committee stated that government needed to better protect vulnerable business owners already braced for business rate hikes and cuts to the tax free dividend allowance.

“Today’s cross-party report from the House of Lords backs FSB proposals to make the government’s Making Tax Digital programme work,” said Mike Cherry, chairman of the FSB.

In the recent Spring Budget, chancellor Philip Hammond stated that businesses and sole traders under the £81,000 VAT threshold would be given a year’s delay in compliance, entering in April 2019.

“This does not go nearly far enough,” Hollick told the committee. “[The government] needs to further delay the scheme’s implementation, and take a more incremental and gradual approach based upon the evidence from the pilot,” he added.

Cherry agreed that raising the barrier of entry was crucial in protecting those likely to be affected the most.

“A delay to 2020 would give hard-pressed business owners time to get their systems ready, and a higher exemption threshold would take out those that are going to be struggling the most with this change. In addition, we want to see a more comprehensive impact assessment as more details of the scheme become clear,” he added.

In response to a pubic consultation in January 2017, HMRC confirmed that an exemption threshold of £10,000 would be introduced, removing obligations of the UK’s smallest businesses. Among other digital tax proposals, HMRC stated that business owners would be able to test submission software, and hinted that spreadsheets could be used to submit tax records.

The Economic Affairs Committee heard in February from Roger Southam, a member of the Administrative Burdens Advisory Board (ABAB), a body within HMRC, that small business owners could face a “ten to twelve-year payback” following the switch to digital tax returns.

Southam added that some would “never see a return” on their investment.

“The burden and sheer costs to get there are huge,” he warned. “For [owners of] smaller businesses, they won’t only be buying into software, some won’t even have the equipment. So you’re actually buying hardware as well as software.”

Have a look at other HMRC content:

ABOUT THE EXPERT

Simon Caldwell

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

HMRC introduces errors into people's tax returns

HMRC has inserted errors on some individuals' tax returns

18 MARCH 2017 • 7:41AM

The taxman is introducing errors into self-employed individuals’ tax returns, resulting in their failure to pay sufficient National Insurance, leading accountants have claimed.

The errors relate to changes to the NI system announced by the previous government. From April 2015, workers’ “Class 2” National Insurance contributions have been declared on self-assessment tax returns. Previously they had been paid to HMRC by direct debit.

The £2.80 per week charge is supposed to be paid by all self-employed individuals and partners in partnerships, and counts towards individuals’ entitlement to state pension and maternity leave.

But many taxpayers now find that where they submitted tax returns that correctly reported their Class 2 NIC liability, HMRC is actively “correcting” such returns by removing the Class 2 NIC liability. This appears to be “because the self-assessment system does not expect it to be paid”, accountants speculated.

Taxman unleashes its 'snooper computer': what information does its have on you?

George Bull, a tax expert at accounting firm RSM, said he and his colleagues initially detected a few cases of this error and were now seeing new incidences emerging on a “daily basis”. It was not affecting every self-employed individual’s return, Mr Bull said.

HMRC’s frontline staff have acknowledged the errors to accountants, and say they are due to a “technical fault” with HMRC systems that has been “reported internally”.

The concern is that individuals will either not spot the “correction” made by HMRC or believe that the removal of NI contributions from their return is correct. “The problem is self-employed who file who see an adjustment coming through, which is probably in their favour and small – the risk is they will breathe a sigh of relief and think they don’t owe HMRC any more and leave it at that,” said Mr Bull.

“Then after 30 days, on the face of it, the whole thing is final. The issue is not so much the repayment itself, but the fact that if the NIC record is amended to show zero contributions for a year, people risk losing benefits as their record will become incomplete.”

Of greatest concern is workers’ entitlement to a state pension. Individuals need 35 years of NI contributions to be entitled to the full state pension.

HMRC initially denied the problem. It later admitted the errors, but claimed that they affected only a “handful of people”.

Five things in the Spring Budget you may have missed

What does the hidden detail of the Spring Budget announcement reveal?

At just 64 pages long, Philip Hammond’s first Spring Budget announcement, delivered on 8 March, was one of the shortest given by any chancellor in recent decades.

As was expected this time around, there were few major upsets or obvious surprises in his speech, as Hammond took the opportunity to reassure us all the economy was being steered in the right direction – by a government that was “taking the next steps to prepare Britain for a global future”. Whether you believe that or not is a debate for a different article.

In most Budget announcements, however, the devil is often in the detail, and despite Hammond’s “keep calm and carry on” rhetoric, there are a few things, hidden in the small print of the chancellor’s Red Book and the Office of Budget Responsibility’s (OBR) impact assessment, the government may have tried to brush under the carpet.

Business Advice has identified a few aspects of this year’s Spring Budget you may have missed, but that ultimately may end up having an impact on small business owners.

(1) Changes to NICs could cost the self-employed big in years to come

As a standout announcement in this Spring Budget, Hammond has had to defend his decision to increase Class 4 national insurance contributions (NICs) for self-employed people tirelessly since revealing the plan on 8 March.

The chancellor has been accused of breaking a Tory manifesto pledge from 2015, in which David Cameron promised tax and NIC hikes would not be introduced until at least 2020.

By breaking that promise, Hammond has faced criticism from ministers and commentators on all sides of the political spectrum for his plan to increase Class 4 NICs, which he said will raise £145m a year for public services when combined with the intended abolition of Class 2 NICs.

The chancellor, on top of the initial political scorning he’s received for the new measures, may also come under fire from the UK’s self-employed population in years to come, as it seems he also failed to mention the scarily high standalone costs raising Class 4 NIC is likely to bring.

Table 2.1 on page 26 of the Budget report outlines that raising Class 4 NICs incrementally from 9 per cent to 11 per cent by 2020 will cost self-employed people around £325m in 2018/19, £645m in 2019/20, £595m in 2020/21 and £495m in 2021/22. In total, the hikes will cost self-employed roughly £2bn – a significantly higher figure than the £145m a year Hammond outlined in his speech.

(2) The National Living Wage will not hit its 2020 target

Further small print, on page 58 of the OBR’s impact assessment, suggests the government’s pledge to increase the National Living Wage (NLW) to £9 an hour by 2020 is overly ambitious, and that the amount NLW will increase by will be lower.

Due to lower UK earnings forecasts since George Osborne made his final Budget announcement last year, the OBR predicted NLW will be £8.75 an hour by 2020.

The OBR doesn’t have powers to set the NLW rate, but it’s predictions are based on labour market growth forecasts that the government follow closely.

(3) Van drivers could be in line for a diesel tax this Autumn

The chancellor angered some green campaigners on 8 March by failing to address air pollution – a problem which has been blamed for the deaths of up to 9,400 people a year in London – in his speech to the House of Commons.

But, according to a Budget report footnote, the government “will continue to explore appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017.”

(4) The fiscal outlook may not be so great after all

At the start of his speech, the chancellor made a big deal of the level of public borrowing in the UK this year, citing that total borrowing had been revised down from £68.2bn to £51.7bn in 2016/17.

While this may go some way towards justifying the government’s austerity measures, a closer look at the Budget report suggests a large portion of this has been due to a change in the date which the UK has had to pay certain fees to the EU.

The Budget report stated that this one-off date change, moving the timings of some government spending on EU contributions from 2016/17 to 2017/18, is outside of the government’s control yet drastically impacts the annual public borrowing figures.

(3) A change to rent-a-room relief could close a tax loophole for Airbnb users

Small print contained in the Budget report also reveals a government plot to rewrite the rules on “rent-a-room relief” – a tax break designed to encourage lodging and make renting more affordable.

Rent-a-room relief lets people who let out a room in their property to a lodger earn £7,500 before they start paying tax on it.

The tax break currently includes individuals who let their room out on popular travel site Airbnb, but contained in this year’s Spring Budget report was the following footnote:

“The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings. This will align the relief more closely with its intended purpose, to increase supply of affordable long-term lodgings.”

Hammond appears intent on stopping Airbnb users saving a little extra cash.

Also see 500-word summary of the Spring Budget 2017 for small businesses and self-employed.

Spring Budget 2017

8 March 2017

How does the Budget affect Northern Ireland businesses?

The Chancellor, Philip Hammond, delivered his Spring Budget 2017 statement on Wednesday 8 March 2017. We have summarised the key points from the Budget and highlighted key issues affecting Northern Ireland businesses.

Growth

Growth forecast for the next few years:

  • 2.0% in 2017
  • 1.6% in 2018
  • 1.7% in 2019
  • 1.9% in 2020
  • 2.0% in 2021

Government borrowing and debt

Borrowing:

  • £51.7 billion in 2016-17
  • £58.3 billion in 2017-18
  • £40.8 billion in 2018-19
  • £21.4 billion in 2019-20
  • £20.6 billion in 2020-21
  • £16.8 billion in 2021-22

Debt forecast:

  • 86.6% in 2016-17
  • 88.8% in 2017-18
  • 88.5% in 2018-19
  • 86.9% in 2019-20
  • 83.0% in 2020-21
  • 79.8% in 2021-22

Northern Ireland specific announcements

An additional funding of almost £120 million for the Northern Ireland Executive.

Corporation Tax

From April 2017 the Corporation Tax rate is to fall to 19% and then fall again to 17% from April 2020. Northern Ireland plans to introduce a Corporation tax rate of 12.5% in 2018.

Tax avoidance and evasion

From July 2017 the government will introduce a tough new financial penalty for professionals who enable a tax avoidance arrangement that is later defeated by HM Revenue & Customs.

Business rates

A number of changes for business rates were announced but these do not apply to Northern Ireland.

Income tax

The personal allowance will rise to £11,500 from April 2017 and £45,000 for the higher rate threshold. The government also confirmed their commitment to increasing these thresholds to £12,500 and £50,000 respectively by the end of this parliament.

Self-employed taxes

The Chancellor highlighted the differences between the National Insurance contributions (NICs) of the employed and self-employed. For example, an employee earning £32,000 will incur between him and his employer £6,170 of NICs. A self-employed person earning the equivalent amount will pay just £2,300.

To address this issue, Class 2 NICs are to be abolished in April 2018 and from this date the main rate of Class 4 NICs for the self-employed will increase to 10% with a further increase to 11% in April 2019. Since Class 4 NICs are chargeable as a proportion of profits, all self-employed people earning less than £16,250 will still see a reduction in their total NICs bill.

Savings

As announced previously the Lifetime ISA will be introduced in April 2017. The annual ISA allowance will increase to £20,000 from April 2017.

The new NS&I bond announced at the Autumn Statement will be available from April 2017 and will pay 2.2% on deposits up to £3,000.

Dividend Allowance

The tax-free dividend allowance for director/shareholders will be reduced from £5,000 to £2,000 from April 2018.

Duties and levies

Vehicle Excise Duty rates for hauliers and the HGV Road User Levy have been frozen. A new minimum excise duty on cigarettes will be introduced based on a pack price of £7.35.

There are no changes to previously planned upratings of duties on alcohol and tobacco. Therefore from 13 March 2017, the duty rates on beer, cider, wine and spirits will increase by RPI inflation. As announced at Budget 2014, duty rates on all tobacco products will increase by 2% above RPI inflation. This change will come into effect from 6pm on 8 March 2017.

The final rates for the soft drinks levy have been set at 18 pence per litre for the main rate and 24 pence per litre for the higher band.

Childcare

The tax-free childcare policy will be introduced in April 2017 and will allow families across the UK to receive up to £2,000 a year towards the cost of childcare for each child under 12 years old. See help paying for childcare(link is external).

In order to help people back into employment after a career break, £5 million will be committed to promoting returnships to the public and private sector.

VAT

From 1 April 2017 the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000. See registering for VAT.

Unincorporated businesses and landlords with turnover below the VAT threshold will have until April 2019 before digital record keeping and quarterly updates become mandatory. Those with annual turnover above the VAT threshold will still be required to keep digital records and send HMRC quarterly updates from April 2018

Small firms bear brunt of HMRC corporation tax payment crackdown

Corporate tax investigators are thought to be unfairly targeting small firms

HMRC raised some £450m in corporation tax payment by investigating small UK businesses in the last tax year, new statistics from accounting firm UHY Hacker Young have shown.

Small firms became an increasingly “easy target” for the tax authority’s investigators in the 2015/16 tax year according to the report, as the amount of corporation tax raised from larger firms last year fell.

Seeking to reduce the corporation tax gap, HMRC collected a total of £2.6bn in corporation tax in 2015/16 – a 25 per cent decrease from the £3.5bn collected the year before.

As a proportion of total UK corporation tax liabilities, small business’ share of the corporation tax gap increased from 9.2 per cent in 2013/14 to 9.5 per cent in 2014/15, while large business’ share remained far lower.

Commenting on the new data, UHY Hacker Young tax partner, Roy Maugham, said it was likely small business owners would continue to be targeted by HMRC, as many lack the resources or knowledge to challenge government investigators.

“Whilst larger companies such as Google or Amazon have the resources to deal with a tax enquiry, smaller businesses could be put under significant financial stress if under investigation by HMRC.

“HMRC need to ensure that their investigations are targeted and focus on genuine abuse- those that are knowingly avoiding tax.”

The so-called “tax gap” is the difference between the amount of tax the government should in theory collect, against the amount that’s collected each year. HMRC’s most recent estimates put the tax gap at £3.7bn in total.

Maugham went on to say: “With a high share of the corporation tax gap, small businesses are likely to continue to be a target for HMRC in the future. HMRC is under pressure to recover increasing amounts of tax.”

ABOUT THE EXPERT

Fred Heritage

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

Making Tax Digital is a Train Wreck that we can see happening in slow motion!

Andrew Jackson, chair of the UK200Group tax panel, says the law governing relationships and taxpayer obligations should be hammered out before the IT infrastructure is designed for Making Tax Digital (MTD).

The Treasury is expected to feedback on the MTD consultation document responses later this month, but despite the tight timescales, there is still scope for the tax department to re-think how it approaches rollout.

Jackson told AccountingWEB.co.uk: “It is a good thing that it [MTD] will happen and there are an awful lot of very good things that could be done there, but they need to be in the right order. They need to be thought-out and we need time to bed it all in. The problem is, hardly a day goes by without yet another example of one part of HMRC not talking to another. It really doesn’t give you confidence that it will be ready in just over a year’s time.

“That timescale is the big problem they’ve got,” he added. “They probably recognise that thinking it through would be nice, but they haven’t got time to think about what they’re doing before they do it because they’ve got to get it done by next April. They’ve got to leap before they look.”

According to Jackson, HMRC is proposing to tackle MTD in the wrong order.

HRMC should start by building better infrastructure to share information and at the same time establish the principles of the relationships between HMRC, taxpayers and agents. From there, the Revenue can identify new areas of information provision to help people understand the principles of the new relationships in a digitised regime.

Putting digital tax accounts (DTAs) in place, in a similar fashion to what HMRC is doing with personal tax accounts (PTAs), and increasing the ability to exchange information should be the first stage:

“Get a platform in place that’s optional to use, get that working, when we know that works make it mandatory and start bringing in the other stages. But until you’ve got the operating system installed you can’t be forcing people to use the applications,” Jackson told AccountingWEB.co.uk.

“They could say to taxpayers, ‘here’s the digital tax account, if you want to update it every quarter then great, here’s the mechanism to do so’, but if they don’t want it to happen they have the ability not to as it’s not mandatory. Then you would have the PR victory of saying ‘we have digital tax accounts and that’s what we said we were going to do’, but without really irritating people by forcing them into it before they are ready. That would be the sensible way to do it.”

Jackson added: “By saying ‘here’s an untested platform, we don’t know how it works, you don’t know how it works, but you’re going to have to go straight in there and then we’re going to start charging penalties if you get it wrong’: That really raises the stakes”.

Agent relationship

MTD will significantly change the relationship between HMRC, agents and taxpayers. For Jackson the big issue is how MTD impacts practitioners.

According to Jackson HMRC should default to communicating with the agent, as most clients would prefer the agent to sort everything out with HMRC, with the taxpayer signing documents and the occasional cheque. HMRC should only move away from that default position if the taxpayer actively wants to deal directly, or if the agent relationship isn’t working.

Jackson said HMRC needs to re-think how it deals with agents, as they’re the ones who are going to make it [MTD] work: “Taxpayers are going to be faced with this and say to their accountant ‘what do we have to do?’ If we say ‘we can’t do it because HMRC won’t let us’ then the whole project falls down.

“If we’re able to say ‘we can deal with HMRC, we can do your tax’ that really empowers and enables agents, which means HMRC is dealing with people who know what they’re talking about. It cuts out duplication of effort and allows us to do what the clients want us to do, which is to take a weight off their mind. It also saves HMRC a lot of time and effort, allowing them to deploy their resources more efficiently.”

Jackson compared agent involvement in MTD to the process of purchasing a property: “If you look at other areas of life, like house-buying, it gets left to the professionals and that works well.”

He added that changes in the rights and responsibilities of various parties should not be introduced until the necessary technology has been tested over a full compliance cycle.

On whether a delay to the MTD project is on the cards, Jackson said the project was already being delayed as people were expecting something of substance in the Autumn Statement.

“Like RTI and Universal Credit, it’s great in theory but they just can’t get it done in the timescale,” he said.

Andrew Jackson’s full article can be read in the latest edition of Taxation magazine. Do you think HMRC needs to re-think how it delivers a digital tax system?

About the author

Robert Lovell

I'm the managing editor of AccountingWEB.co.uk and play a key role in the site’s day-to-day operation to ensure it fulfils our members' needs.

Did you receive a 'less that festive' letter from HMRC just before Christmas?

Ten thousand taxpayers received a letter from HMRC just before Christmas. But these festive letters didn’t wish the recipient seasons greetings, but encouraged the individual to review their 2014/15 self assessment tax returns.

The pre-Christmas nudge letters – a concept first introduced by the Behavioural Insight Team (BIT) - aimed to prod taxpayers who may be underpaying taxes, in particular those who have declared a bank interest on their 2014/15 tax return.

However, the timing of the letters caused some commentators - including an article in The Times – to label HMRC’s efforts as “far from festive”.

According to the accountancy firm RSM the letters led to HMRC being “inundated” with calls from concerned taxpayers. And causing further annoyance, the letters omitted a noticeable addressee: the recipient’s tax adviser.

In the letter – dated 19 December – HMRC wrote: “It’s important to make sure that the figures shown on your tax return are right. Sometimes people make mistakes because they don’t take enough care while others deliberately get their figures wrong.”

HMRC then pointed out that it is the individual’s responsibility to make sure their tax return is complete and correct, before giving asking them to “reconsider” the entries on their return.

The letter then outlined what the individual should do: check their tax return entries are complete and correct, and if there’s a mistake, to amend it and inform HMRC.

But in its weekly tax briefing RSM complained that the letters will cause concern to “law-abiding people who fully believe they have disclosed everything properly”, and asked whether this approach to tax compliance is justifiable.

“Having raised these issues with HMRC we are told that the department has no information to suggest that the individuals targeted have missed anything off their returns – apparently it’s just a case of asking them to double-check,” said RSM’s Mike Down.

Do nudges work?

Although the timing of the letters caused RSM to brand HMRC as “Scrooge-like”, according to research the theory behind nudges actually works.

As reported in the Behavioural Insight Team’s (BIT) annual update, HMRC trialled reminder letters in 2015 to prevent late self assessment payments. The trial worked: payment rates increased.

The experiment separated the individuals into three groups: people new to self assessment but who had missed the first payment; those who had been late several times in the past; and those who had been late before but made the first payment.

The results spoke for themselves: the first group increased by 34%; the second group by 59% increase; and the third group by 22%.

Michael Hallsworth, the BIT director of health and tax, said the effects of these prevention letters “endured even after HMRC had undertaken other enforcement actions” and the payment rates from those receiving letters were still higher.

More recently, HMRC attached post-it notes on letters to tax avoidance scheme users. This approach was inspired by a US study which found that people are more likely to respond to the personal touch, like handwriting the person’s name or a post-it note.

While it will take several months to collate the data from the current campaign to determine its success, an HMRC spokesperson said: “We have written to 10,000 customers who appear to have under-declared untaxed interest to encourage them to get their tax affairs up to date and get things right from now on. We are offering help and support to do that.”

Meanwhile, RSM’s Down questioned the “unnecessary stress” caused by the nudge letters and the threat of penalties: “We urge HMRC to think more carefully about the deeper implications of future 'nudge' campaigns.” He added: “Does the department want to anger fully compliant and “innocent” taxpayers, including old age pensioners?”

About the author

Richard Hattersley

Journalist and community assistant for AccountingWEB, who specialises in community focused content. He helps manage and moderate the AccountingWEB community.

Samsung launches $150 million VC fund to invest in early-stage startups

Thu at 10:19 AM

  • Samsung’s technology investment subsidiary, Samsung NEXT, has announced the launch of the Samsung NEXT Fund, a $150 million venture capital investment fund created to increase Samsung’s global support of early stage startups pursuing advanced software and services innovation.
  • “We see software and services becoming a core part of Samsung Electronics’ DNA, and startups are key to achieving this vision,” said David Eun, President and Founder of Samsung NEXT. “Samsung continues to embrace entrepreneurship at all levels and this Fund shows our unwavering commitment to support great startups worldwide.”
  • The new Fund will target pre-Seed to Series B investments in startup ecosystems around the world, with a specific focus on startups that are developing virtual reality, artificial intelligence, IoT and other new and emerging technologies.
  • “We’re very passionate about partnering with startups and developing meaningful relationships in startup ecosystems around the world,” said Emily Becher, Managing Director of Samsung NEXT Start and head of Samsung NEXT’s international expansion. “We leverage local experts to fuel traction and drive scale for startups right where they are.”
  • To coincide with Samsung NEXT’s international expansion and launch of the Fund, the company has initiated its first major rebrand effort which includes the renaming of its organisation to “Samsung NEXT” and the release of a new logo and website. Before the rebrand Samsung NEXT was known as the amsung Global Innovation Center.

About Sync NI

Sync NI is the leading media outlet for Northern Ireland’s Technology and Business Industries

Five things you need to know about the new £1 coin.

By IAIN LYNN - Wednesday 04 January 2017

The Royal Mint is preparing to launch a new £1 coin, set to enter circulation in early 2017. The old £1 coin is being replaced for the first time in 30 years due to concerns over its vulnerability to sophisticated forgers.

Gone is the old style round, all gold coin and in its place will be a 12-sided, bimetallic coin with a hidden high-security feature to protect it from counterfeiting.

5 things you need to know

1. It comes into circulation in March 2017

2. It will be 12-sided

3. The new coin will be bimetallic - the outer ring is gold coloured (nickel-brass) and the inner ring is silver coloured (nickel- plated alloy).

4. It features a new design showing the English rose, the Welsh leek, the Scottish thistle and the Northern Irish shamrock emerging from one stem within a royal coronet.

5. It is thinner and lighter than the existing £1 coin but is slightly larger.

Businesses are now being urged to ensure they prepare for the new coin coming into circulation.

There will be a six-month transition period between March and October 2017, when both the old £1 coin and the new £1 coin will be accepted but after October 2017, the old coin will no longer be accepted or distributed, though people will be able to deposit them in their bank accounts.

Is Companies House rejecting more accounts?

Jennifer Adams considers whether there has been an increase in the number of accounts being rejected by Companies House and looks at what can be done to ensure that submissions are accepted first time round.

Back in October 2016 the ICAEW revealed that their research had identified a surge in rejections of accounts by Companies House as a result, they said, of 'uncertainty over filing options' now that small companies no longer have the option to submit abbreviated accounts for periods beginning on or after 1 January 2016.

Companies House responded that, according to their statistics, there had been no increase of the rejection rate, which remained static at 2.2%. This statistic was confirmed by Jack Mansfield, head of digital take-up at Companies House, at a recent Companies House talking points webinar. However, 88,000 accounts are rejected every year, some more than once.

Method of submissions

The Companies House annual report 2016 states that the compliance rate for filing of accounts is high at over 99%, with 94.4% of those being filed on time. In excess of 2.7m sets of accounts a year are received in both digital and paper format.

For all its success in digitalising its business, Companies House still handles 1.7m paper documents each year which, according to a Companies House blog, equates to 120 tonnes in weight. Weekly timescales between receipt of paper documents to being logged onscreen can be viewed here.

Online documents are usually processed within 24 hours, paper documents take about a week to process (longer at peak times). As of 2 January 2017 accounts received on 17 December 2016 are being processed. Of course there are many forms that cannot be filed online, but Companies House is working towards full digital filing by 2018/19.

Rejections – paper v electronic submissions

It will come as no surprise to learn that the majority of rejections relate to paper-submitted accounts - 6% compared with 2% for accounts filed via third-party software and 0.3% for web filing. Twenty per cent of accounts are still submitted on paper which, by default, means a higher rejection rate.

Many of these submissions will be by non practitioners but the fact that Companies House felt the need to hold a webinar aimed specifically at agents means that this percentage includes practitioners.

The submission of paper accounts to Companies House was the subject of an AccountingWEB Any Answers question a couple of weeks ago with comments confirming that paper submission is still being used by a number of agents for a variety of reasons.

Reasons for rejection

Filing electronically is not fail safe and there are still some points that need to be checked on submission. As previously mentioned, the rejection rate is lower if using web filing software, and this is partly due to the fact that more types of account can be submitted via this method where validation is built in.

The reasons for rejection (in percentage order) include:

  • Duplicate made up date

The highest number of rejections is for accounts with the same made up date as a previously submitted set of accounts. Accounts can be amended or revised but this can only be done on paper, must be marked ‘amending’ or ‘revised’ as appropriate, and must be for the same period as the original accounts. The original accounts remain on file at Companies House.

  • Incorrect company name and/or company number

The company's name and registration number must be consistent throughout the document and match that which is held on Companies House records (i.e. the name on incorporation). Webfiling will issue a warning if no match is found. Software users need to ensure that the original name is loaded when setting up a client, but the submission will be rejected by the Companies House computer should the name or number be incorrect.

  • Accounting reference date incorrect or missing

The accounting reference date must be the same as the dates given on the public record and be consistent. The date can be changed via WebFiling using form AA01 (LL AA01 for LLPs). Accounts can be prepared with a made up date more than seven days either side of the accounting reference date, but the form must be received before the filing deadline for the specified period has passed. Many rejections are invariably as a result of previous years' accounts being used as a template for the current year's accounts and updating of the date is forgotten.

  • Director's name or signature missing

WebFiling or other software have automated checking which looks for the presence of a 'tagged' name. The signature is provided in the form of the company authentication code which is used instead of a director’s actual signature. Digital submissions will indicate if the name is missing.

With paper accounts a signature and the name of the person signing the accounts must be given at the foot of the balance sheet after any statements. The director or secretary signing on behalf of the board must provide their printed name (signature not required) on the director’s report.

  • Incorrect statements to the accounts

Rejection under this heading is not foolproof under third-party software, which may give the user different options. Details of the new statements can be found in the ICAEW factsheet Filing options under the Small Companies Regime.

Are Companies House being pedantic?

This was a question asked by Blakely, although about a form that can currently only be filed by paper. Regardless, the consensus of members was agreement. Members need to remember the case of Sebry v Companies House 2015, where a blunder by a Companies House employee over a single letter in a name was all that was needed to cause Mr Sebry's company to collapse and cost the government £8.8m in compensation.

In this case Companies House erroneously recorded that the firm had been wound up when it was in fact another, entirely unconnected, company which had been liquidated. By the time Companies House rectified the mistake just three days later, it was too late as Companies House had already sold the name to various credit agencies. As a result the company lost key contracts, supplier credit terms and cash advances from its bank and led to the company filing for its own administration.

AccountingWEB member pstoneman also discovered that non compliance can be costly when a typo resulted in rejection.

Members have posted queries on rejection due to the interchanging use of the words 'Ltd' and 'Limited' and '&' instead of 'and'.

Companies House confirm that using "&" instead of "and" is not acceptable and will result in rejection, but interchangeable use of the words "Ltd" and "Limited' is acceptable, as confirmed in the talking points webinar.

Going forward – relevant points

Whilst publicity has centred on HMRC's Making Tax Digital plans, in comparison Companies House has been quietly getting on with its aim of full digital compliance by the end of 2018/19.

Comments made at the talking points webinar with reference to this aim included:

  • Software providers have been issued with the facility to submit accounts under IFRS, FRS102, FRS102 (1a), and the "filleted format".
  • LLP electronic submission – this facility was made available to software providers in July but is not available on Webfiling as yet. It is apparently on their ‘to do list’, but meanwhile they have been concentrating on ‘filleted format'.
  • CIC submission is currently not possible – again on their 'to do list'.
  • Although Companies House refute the upsurge comment made by ICEAW they do acknowledge that there has been some confusion amongst staff between the difference between abbreviated accounts and 'filleted' post 1 Jan 2016 accounts. In the webinar Companies House suggested that such accounts show the word 'filletted'. This is not a legal requirement, although they said it would assist them in their task.

Further reading:

About the author

Jennifer Adams

Jennifer Adams is Consulting Editor of AccountingWEB and is a professional business author specialising in corporate governance and taxation. She runs her own accounting and consultancy business...

63,000 Northern Ireland homes cannot receive decent broadband – OFCOM

Gavin Walker | December 2016

The number of Northern Ireland properties unable to get a decent broadband connection has fallen by more than 40,000 over the past year, new research by Ofcom has found.

But 63,000 Northern Ireland homes and offices – or 8% of properties – remain unable to sign up for broadband speeds over 10 Mbit/s, the speed required to meet a typical household’s digital needs. This is down from 107,000, or 14%, last year.

The findings are part of Ofcom’s Connected Nations 2016 Northern Ireland report – an in-depth look at the state of the Northern Ireland’s telecoms and wireless networks. This year’s report shows good progress on the availability and take-up of communications services, which are crucial to people’s personal and working lives.

However, the report finds there is more to do – particularly in boosting mobile and broadband coverage, and improving the quality of service provided by telecoms companies.

For example, rural areas still lag behind on broadband. Around a quarter of properties (59,000) in rural Northern Ireland cannot receive a connection of over 10 Mbit/s, often because they are situated a long way from the telephone exchange or local street cabinet.

To help close this speed gap, Ofcom has today set out its technical advice for the Government on implementing its plans, announced in 2015, for universal broadband.

Today’s Connected Nations report also presents the current level of mobile coverage across the country. While the picture is improving, with 4G reaching more premises, coverage still falls short and Ofcom wants to see better coverage across the UK’s landmass.

So we have begun discussions with mobile operators to look at radical and ambitious solutions to deliver universal mobile coverage, to keep pace with consumers’ needs.

Jonathan Rose, Ofcom Northern Ireland Director, said: “Mobile and broadband coverage continued to grow this year, but too many people and businesses are still struggling for a good service. We think that is unacceptable.

“So we’re challenging mobile operators to go beyond built-up areas, and provide coverage across the UK’s countryside and transport networks. Today we’ve also provided technical advice to support the Government’s plans for universal, decent broadband.”

Achieving decent, universal broadband

The number of properties lacking access to decent broadband has fallen significantly in recent years, and is likely to fall further, given on-going investments by industry and Government.

But the universal service would ensure every home and small business in the country has the right to a decent, affordable broadband connection of 10 Mbit/s or above by the end of the current parliament.

Ofcom’s analysis shows that this speed is sufficient to meet the current needs of a typical household. The online activity of users who can access this speed is far less constrained than those who cannot.

However, households are likely to need greater speeds as new, data-hungry applications emerge. We will therefore monitor the universal service and recommend its minimum speed to rise when necessary.

The final design of the service will be decided by Government, and then implemented by Ofcom. We have today set out technical advice to inform the Government’s decisions on factors such as speed, eligibility, affordability and funding.

As part of this, we have scoped three potential scenarios – standard broadband offering

a 10 Mbit/s download speed; a more highly specified version of this service, including a 1Mbit/s upload speed; and a superfast broadband service.

Government has said its preference is for the universal service to be funded by industry. Under this model, the companies providing the universal service would recover any unfair cost burden from a fund paid into by a range of telecoms companies.

Ofcom has also considered the need for universal broadband to reach the most vulnerable customers, including those on low incomes. There could be a need for a social tariff to provide affordable broadband for these customers, as there is for landline telephones today.

A third of homes are now ‘superfast’

The coverage and quality of broadband across the UK has increased significantly over the past year, the Connected Nations report finds.

The average download speed of a broadband service in Northern Ireland jumped by 21% in the last year, from 28 Mbit/s to 34 Mbit/s. This reflects not only better coverage, but also people choosing to pay for faster broadband packages.

Around a third of Northern Ireland homes (34%, or 254,000) have now chosen to take up superfast broadband – a download speed of 30 Mbit/s or more – up from 29% a year earlier.

Superfast broadband is now available to eight in ten Northern Ireland homes (83%), up from 77% last year. This has been driven by BT upgrading its network and on-going investment by the Northern Ireland Executive.

Superfast services are now available to 71% of small and medium sized enterprises or SMEs – up from 66% in 2015.

4G mobile spreading fast

Mobile coverage has also improved in the last year. Six in ten premises (64%) can now receive an indoor 4G signal from all networks, up from just 37% last year, as operators continue to roll out faster mobile broadband.

Ofcom rules mean that O2 must deliver a mobile data service to 95% of premises in Northern Ireland by the end of next year, and other operators are expected to follow in order to remain competitive.

Mobile phone users increasingly need coverage everywhere, so Ofcom is examining how regulation can help make that happen, and has called on network operators to go beyond current targets by exploring options for reaching areas without premises – such as transport lines and remote locations.

International comparisons

Ofcom has also published its International Communications Market Report 2016, which compares communications services in 19 major countries.

Among these, the UK has the fifth best availability of broadband services offering 10 Mbit/s or above – ahead of almost all European countries, but behind Singapore, Japan, South Korea and the Netherlands.

The UK also performs well on the availability of broadband connections involving fibre optic cables – such as fibre running to the street cabinet – ranking fifth behind the Netherlands, South Korea, Japan and Singapore.

However, Ofcom remains concerned that the UK has very low coverage of ‘full fibre’ broadband, where cable and fibre lines connect directly to homes and offices. Here the UK ranks seventeenth out of 19 countries. To address this, Ofcom is requiring BT to allow other providers to use its infrastructure to build their own fibre networks, directly to premises.

The UK performs well on prices, ranking second – out of five major European countries, plus the USA – for the cheapest communication services. Low prices in the UK were largely driven by cheaper mobile phone services, particularly for tariffs that include a high data allowance.

Check your mobile and broadband today

People can check whether their mobile reception and home broadband connections are giving them the best service, using the new version of Ofcom’s app for smartphones and tablets, launched today.

The Ofcom Mobile and Broadband Checker now checks the performance of the user’s mobile reception, as well as their home broadband. If the app finds a problem with either, it will explain possible causes and provide practical troubleshooting advice.

The app also shows voice, 3G or 4G coverage from all major network operators, both indoors and outdoors, at any location in the UK – allowing people to compare which network offers the best service in places such as the home or office. Broadband availability and speed information is available using address-level data for the first time.

The app is free to download and available for both Apple and Android devices from the Apple App Store or Google Play. It is also available as a web based version for desktop and laptop devices.

Local economy growth funding being wasted on bureaucracy, research finds


PUBLISHED 29/12/2016

Red tape is using up millions of pounds designed to help local economies, the Local Government Association says

Millions of pounds is being wasted on bureaucracy for funds aimed at boosting local economies, new research has found.

The study commissioned by the Local Government Association (LGA) shows £23 billion of growth funding is spread across 70 schemes, managed by 22 Government departments and agencies.

The LGA has now called on the Government to replace this fragmented system with a single investment fund, to make things simpler for local authorities and businesses.

Mark Hawthorne, chairman of the LGA's people and places board, said: "Millions of pounds and hundreds of days of officer time are tied up just trying to access vital growth funding.

"This is proving completely counterproductive to our efforts to create jobs, build homes and develop the infrastructure we need to get our economy growing.

"The current system, which requires millions of pounds of public money to be spent on bidding for funds from the public purse, creates uncertainty for businesses and investors.

"Councils and businesses want to spend this money on improving the economy, not reams of costly bureaucracy."

The LGA has dubbed the current situation "a maze of complexity", with different departments using different bidding processes and operating to their own timescales.

For instance, some £10.5 billion of skills and employment funding is scattered across 20 national schemes, with councils also having to stay on top of different schemes for things like housing and transport.

The LGA's research found that in most areas the funding streams had little or no connection to local efforts to drive growth and create jobs.

However, some progress has been made, as two years ago similar research found that more than £22 billion was spread across 120 funding streams managed by 20 Government departments.

Tax forum slates HMRC's ‘controversial’ Making Tax Digital plans

The government’s consultation process for HMRC’s flagship making tax digital (MTD) proposals has been heavily criticised as being too rushed and leaving little time for a successful implementation in an end of year report on tax policy from the Tax Professionals Forum


22 Dec 2016

Pat Sweet

Reporter, CCH Daily and Accountancy

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The forum’s fifth independent report, covering the period from 1 April 2015 to 15 September 2016, describes HMRC’s Making Tax Digital plans as ‘very controversial.’

It points out that the government launched the consultation at stage two of the process, omitting stage one completely.

The report states: ‘It would have been far better to have honoured the policy framework and started at stage one, rather than seek to forge straight through to stage two. This observation is concerning as it is the third time that the forum has raised this issue.’

The forum warns that this means the consultation is taking place within a fixed framework ‘which may be suboptimal’. As a result the policy may have to go back to the drawing board at a late stage, with the risk that the final policy is rushed through with too little time to consider all the issues.

in its review of the development of MTD, the forum says when it was first announced in December 2015 HMRC set out its intention to transform the tax system, but although this implied radical change to the system, few details were given.

The report states: ‘It is rare that wholesale changes are made to both the rules for taxing business and also to the system of administrating tax within the same short time frame, yet this is what MTD proposes to do.’

The forum takes issue with the timings of the consultation, pointing out that six consultation documents, containing 243 pages, were published simultaneously for feedback by a deadline of 7 November 2016. The 2016 Autumn Statement announced that, in order to consider the large number of responses received, the government will publish its response to the consultation in January 2017.

The forum says that this approach means the government is paying no more ‘lip service’ to the idea of early and continuing engagement on tax changes.

The report states: ‘Furthermore, the consultation is only asking for views on the design and how it should be implemented, not on alternatives. This limits considerably its scope which is not within the spirit of the framework, particularly for a policy for which there is little evidence that the cost of administration for UK businesses has been estimated accurately.’

It is also critical of the timescale ahead, pointing out that as implementation is scheduled to begin in April 2018, so legislation will need to be implemented by Finance Act 2017. The draft Finance Bill 2017 clauses will be open for consultation for just eight weeks, which will include the Christmas period and a very busy self-assessment period for accountants and tax advisers.

The report says: ‘Overall, the timetable for implementing a package of policy changes of this magnitude is extraordinarily short and we caution government to reflect fully on the responses to its consultations and take the time to get it right.’

In its wider comments on tax policy development over the year, the forum sounds a warning about what may happen in future.

Its report states: ‘The extent of reform being undertaken by HMRC and the Treasury is such that the members are concerned that this may extend beyond the ability of the government to deliver within the timescale.

‘We would recommend that the government considers the extent of work that is likely to be involved in implementing the current amount of policy change, the future policies that the government wishes to introduce and the consequential work that will arise in preparation for the exit of the UK from the EU. It will be important to prioritise proposals and to consider where lies the limit of deliverability.’

The forum meets bi-annually to advise government as part of a commitment to reform the framework for developing tax policy and making tax law. Members include Chris Sanger, global head of tax policy at EY and chairman of the tax policy committee of the ICAEW’s tax faculty; Jane McCormick, global head of tax at KPMG; Stephen Herring, head of taxation, Institute of Directors; Anita Monteith, technical lead and senior policy advisor, ICAEW tax faculty; and Jonathan Riley, head of tax, Grant Thornton UK.