Top seven reasons to switch accountants…

February 16, 2016 - By David Rodick ACCA
You’ve managed so far, but you’re not entirely sure if your accountant is right for you. The service seems fine: Once a year you get a request for records and a few months later you receive a set of accounts. But perhaps you’re missing the dialogue – someone you can talk to about your ideas. Perhaps your business has now entered a new phase and you need guidance from someone who has been there before.

Here David Rodick of Beans shares his reasons that its time to choose your new financial partner… First the basics:

Qualified?

Does your accountant have a professional qualification?
Believe it or not, you don’t need any qualifications to call yourself an accountant. Anyone can set up as an accountant with no training at all. Contrast that with a professionally qualified accountant who will often have a university degree, followed by at least three years of intensive training. They are governed by their professional bodies that monitor their members to ensure they deliver high levels of service and meet rigorous ethical standards. If your accountant has the letters ICAEW, ICAS, CIMA or ACCA, then they are professionally qualified.

Specialised?

Does your accountant specialise in your particular market sector or the type of business that you have created? For example, at Beans we specialise in start-ups, small businesses and contractors. That means we understand the challenges the people running these businesses face.
Does your accountant have experience in the real world? Look out for an accountant who has spent time outside an accountancy practice as they can relate to the day to day problems of running a business. For example the directors at Beans pursued careers in the corporate world, after training with an accounting practice. This gives them valuable commercial experience to share with clients.

Values?

Does your current accountant value you?
Do they spend time to understand your business and welcome your questions?
And when you meet your accountant, who do you see: The partner or the trainee?

At Beans we always put our client at ease. Our aim is to offer the best possible financial advice in easy-to-understand, jargon-free language and at affordable prices. We don’t just count your beans, we help them grow!

Becoming a Contractor

March 2, 2016
Being your own boss is a dream that many people have – not having to take orders from a supervisor (for whom you have little respect!), being the master of your own destiny, away from petty company politics, doing what you are good at and enjoy for the people you want to work with, and earning more money that you would in an ordinary job! But is being a contractor of freelance all that it is cracked up to be?

As a one-man-band you do not have the job security you have been used to, nor the network of colleagues for support and advice. And generating business is solely down to you… as is the tedious administrative side of the business…the bookkeeping…the cash-flow…the tax, National Insurance and VAT… So when are you going to have time to do what you originally dreamed of?

Choosing and setting up the right legal structure for your new business is the first priority. Should it have sole-trader status or perhaps limited liability? And have you got to grips with your fundamental tax and national insurance responsibilities?

For instance, also known as the ‘intermediaries legislation’, IR35 was established precisely for those who would normally be treated as full time employees, but who have chosen to supply their services via a personal service company. It is therefore essential for contractors to understand exactly how it affects them – and how to ensure compliance – even before securing their first job!

If you have been a full-time employee, then finding work may not have been part of your remit. As a contractor, it is now! Depending on the particular talents and services you are trying to sell, you may need to consider advertising in the local, regional or trade press. You may need brochures and other publicity material. But, most important of all, you WILL need to build up a business network to find the right opportunities. Chambers of commerce, business clubs and even bespoke websites, such as contractor.co.uk, are great for this and can provide you with some essential material and leads. But social media is certainly coming into its own and, used properly, sites such as LinkedIn can often provide an instant list of prospective clients.

An experienced and sympathetic accountant – preferably from the very early stages of your exciting plans to cut loose from the old nine-to-five drudgery – can act as your mentor, your rock and your trusted friend to guide you along the bureaucratic road to job satisfaction.

He or she will be able to advise on VAT registration, tax optimisation and NI matters, capital and every day expenses that can be claimed against the business, public liability or professional indemnity insurances that might be required for your business, and – further along the line when business has never been so good – wealth management and pension plans.

Choose your accountant carefully, making sure that he or she has the necessary expertise and experience you require as a contractor, and let them get on with the boring bits whilst you turn the world upside down with your talents!

Are you a Limited company working in the public sector?

From 6 April 2017:

Workers providing their services via a PSC ( Personal Service Limited Company) to a public sector body may be treated for tax as if they are employees.
The rules move the responsibility for deciding whether the off-payroll worker rules apply will move from the PSC to the public authority or agency who wishes to engage the personal services of the PSC’s worker.
The public authority or agency will be responsible for deducting and paying over employment taxes and NICs where the rules apply and there is a ‘deemed direct payment’.
The public authority or agency will also have to pay employer’s NIC on the deemed direct payment.
The 5% flat rate deduction that applies to PSCs who are subject to IR35 will not be available when calculating the deemed direct payment.
A PSC may still claim its expenses for corporation tax: however it may not have any income to offset against its costs.
Tax relief for travel follows on from the changes made in 2015/16 whereby the 24 month rule will apply when travel, subsistence and related costs cannot be claimed where assignments exceed or are likely to exceed 24 months.
These are big changes and we intend to brief face to face or by telephone any of our clients who are likely to be impacted. HMRC can immediately influence the public sector because they are all government departments. The big prize going forward is the consistent application of these rules to the private sector and so we need to watch this space.

HMRC Digitalisation = End of the Accountant?

HMRC has issued details about its Making Tax Digital project which aims to help millions of businesses to get their tax bills right first time, without the need for an annual tax return. Sounds great but what is behind it and what does it mean for our clients?

So HMRC say that they know that the majority of businesses want to get their tax right first time but more than £8 billion a year is currently lost in tax as a result of avoidable taxpayer error by small businesses. Big number that, but then Vodafone got away with a huge amount of tax and penalty recently, when they settled their case with HMRC it’s a pity HMRC still need to pick, on small businesses.

So HMRC believe that Making Tax Digital will help businesses to get their tax right first time; it will help reduce the likelihood of errors, lower the chance of unwelcome compliance checks and give them greater certainty that they are getting things right. HMRC surprisingly haven’t got the resources anymore to get out and check businesses as frequently so the fallback approach is create an IT system that requires more effort from business owners and saves HMRC time.

They also underestimate the real impact and costs of making the self employed and landlords file five tax returns per year. But the big win for HMRC is that with this digital approach HMRC get access to your monthly income and that means they know what you are earning real time and they can adjust benefit claims in real time as well. Also they get regular access to client bank account information something we as your accountant never give to HMRC.

Here at Beans we welcome improvements that help our clients and we are optimists. But this project is not all it seems and although our role in supporting our clients will inevitably change we don’t believe this will threaten the business owner and accountant relationship but as with previous big HMRC projects it will probably strengthen it. We will keep you informed and let you know the strengths and weaknesses of this project and its timings.

What’s new in VAT?

Feb 21, 2017

In October 2016 changes to the VAT Flat Rate scheme were announced in order to stop the misuse of the flat rate VAT scheme.

  • From April 2017 HMRC will introduce a new category of trader, a ‘limited cost trader’, with a Flat Rate Scheme percentage of 16.5%
  • Under the new proposal a business within the FRS will have to consider for each accounting period whether it meets the conditions for a limited cost trader.
  • If so its Flat Rate percentage will be 16.5% regardless of their business sector.A business is a limited cost trader if its VAT inclusive expenditure on goods is:
  • Who is a limited cost trader?
  • Less than 2% of relevant turnover, or
  • More than 2% but less than £1,000 per year, pro-rated for the length of the VAT return period, e.g. £250 per quarter.Goods are those used exclusively for business purposes, excluding
  • Relevant turnover is the amount that you apply your flat rate scheme percentage to, i.e. VAT inclusive supplies, including exempt supplies.
  • Capital expenditure
  • Food & drink for consumption by the Flat Rate business or its employees
  • Vehicles, vehicle parts and fuel, unless the business is one which supplies transport services such as a taxi business

Beans will as always be proactive ahead of this change. We will identify in March any clients at risk under this new rule and sit down or telephone to discuss the changes with our clients and the recommended next steps. For some clients it might

Top Contractors Websites

Original article by Petra Criffer and now updated on a regular basis

  • PORTALS
  • PROFESSIONAL
  • GOV
  • MARKETS
  • RECRUITMENT
  • LEGAL
  • STAYS
  • ACCOUNTANTS

BEANS - Smart Contractor Accountants

Specialist contractor / freelancer accountants UK wide.

Enter your text here...

Enter your text here...

vv

Home working and claiming the costs

Employees and Directors (as employees) are permitted to claim costs of for working at home from their employer tax free. HMRC’s own manuals instruct their tax officers to accept all reasonable claims for minor use of home.

As a rule only costs that have increased as a result of home-working are allowable. To keep things simple, HMRC allows a flat £4 per week, or £18 per month (excluding business telephone calls) which can be claimed back from the company, without the need for any receipts.

Alternatively a claim can be made for a limited number of expenses, as long as they are not for services already being provided for personal use, or for dual purpose (eg broadband line shared by the household as well as the business).

If an employee is not reimbursed by the employer, then the employee may make a claim on his personal tax return, but only where working from home is necessarily in the performance of duties for employment. HMRC have various criteria which must be met including the provision that there can be no element of choice. Where there is an element of choice, the ‘necessarily’ test fails.  So the arrangement is always best documented in the employment contract.

So there are three options for claiming back expenses open to employees and directors working from home:

  1. Flat £4 per week, or £18 per month
  2. Claim for actual costs, which may include:
  • Metered light and heat
  • Calls made on your home telephone
  • Insurance, if there is business equipment insured under that policy
  • Repairs if incurred on business equipment
  • ISP/broadband costs, if dedicated to the business
  • A proportion of the cleaning costs of your workspace, if the work is of the type that requires extra cleaning.
  • In order to establish the proportion of household costs used by the business, work out the percentage of your property which is used for business purposes, what proportion of a utility bill that can be apportioned to business use (e.g. lighting or heating), and for how long each day the service is used for solely business reasons (for example, the business area only needs to have lighting for 50% of the day).
  • Costs must be incremental ie they have increased as a result of the business activities being performed from home. Costs that are explicitly excluded are:
  • Mortgage interest or rent
  • Water rates
  • Expenses that do not have receipts i.e. cash wages of a cleaner.

      3 .Renting out your property to the business

Alternatively the employee may be able to rent out part of the property to the employer. This will allow tax relief on mortgage interest and council tax. This needs careful planning and Beans will help explain the potential advantages of this approach in a lot more detail.