Tax Investigation? Don’t Panic!

IMAGE - tax invesitgationThink of it as a ‘compliance check’ – something that all taxpayers may face at some point. Being investigated by HMRC is not an inference that you have done something wrong within your accounts or tax affairs. You may have been randomly selected or work with a person or organisation involved with a tax investigation.

Tax investigations can feel intrusive and unsettling. However common sense, honesty and following these tips can lower the stress and complexity involved…

6 Tax investigation Tips

1. Keep Calm and Quiet

It’s easy to panic when the brown envelope arrives. Remember – if you have not done anything wrong, you should have nothing to worry about. It’s also best to restrict the people you tell to your adviser (such as your accountant) and maybe close family. This avoids the myriad of well-intentioned but often inaccurate advice that will be confusing and distracting.

2.  Be 100% Honest

Always be completely honest and transparent with HMRC. If you’re unsure of the answer to a question, say “I don’t know” rather than guess or tell a half-truth. Thanks to a vast array of systems and information, comprehensive material about you and your business will be accessed as an investigation begins.

3. Take Professional Advice

It’s important to know your rights during a tax investigation. For example, do you know that the HMRC cannot insist that you meet with its representative? (If you go ahead with a meeting, insist upon seeing an agenda in advance.) Appropriate advice from a tax expert will save time and anxiety during the investigation.

4. Keep Accurate Records

Make sure that your accounting information is readily available. (This is made much easier by using online accounting systems such as Xero.) You are obliged to keep financial records for six years from the end of the last financial year (companies) or last tax year (individuals) that they relate to. If there are any gaps, HMRC will use its own calculations. Without accurate records, these figures cannot be disputed.

5. Cooperate

Being obstructive will not help the investigation. It’s best to cooperate and follow the guidance of your advisor, (who will have experience of working with other clients going through tax investigations). If a mistake is spotted, pay any monies owed as soon as possible. This demonstrates complete cooperation and reduces any penalties involved.

6. Learn

If you have done something wrong, even as a genuine mistake, HMRC is likely to revisit your affairs in the future. Make sure that you learn from your mistakes.

IMAGE - hiding from tax investigation“We understand that being involved with a tax investigation can be worrying,” says Suzanne Spicer of Spicer & Co Chartered Accountants. “Discrepancies are not always intentional. Mistakes happen. It’s important to be open and honest with HMRC… and with the professional who is giving you guidance.

“Plus, we offer a Tax Investigation Service for our clients which means that you won’t incur any additional accountancy fees should HMRC investigate you and/or your business. This is available to all our clients and offers fantastic peace of mind.”

Would you like reassurance that you’re ‘squeaky clean’ should a tax investigation take place?

Would you want to avoid additional fees should an investigation happen?

Contact the friendly team at Spicer & Co – we love to talk about tax! We’ll put the kettle on and have a chat without obligation. There’s no need to dread the arrival of a brown envelope from HMRC.

Tax-Free ISA Turn 20

IMAGE: Tax-Free ISA turns 20Happy Birthday ISA!

The tax-saving ISA accounts turn 20 years old this year. The “Individual Savings Account” allows you to hold cash, shares, and unit trusts free of tax on dividends, interest, and capital gains.

Having replaced the Tax-Exempt Special Savings Accounts (TESSAs) and Personal Equity Plans (PEPs), the ISA accounts come in seven varieties:

  • – Basic ISA. This is the most popular type of ISA and is used to shelter cash savings, as well as stock-market investments from both income and capital gains tax.
  • – Junior ISA
  • – Inheritance ISA
  • – Help To Buy ISA
  • – Flexible ISA
  • – Innovative Finance ISA
  • – Lifetime ISA

To celebrate 20 years since the first ISA was introduced, here are seven top tips about the unique savings account:

1.     Use it or Lose it

Each adult can save up £20,000 in an ISA each tax year. But – make sure you use your allowance. If you miss one year, or don’t invest the full £20,000, you can’t save your remaining allowance during a following year. Your allowance is refreshed to a maximum of £20,000 at the start of each tax year, (6 April). (When the ISA was introduced in 1999, the maximum savings limit was £7,000.)

2.     Spreading Your Cash

You can invest in one of each type of ISA during a tax year. For example – you can invest in a Cash ISA and also a Stocks & Shares ISA within the same year, as long as the total you invest doesn’t exceed £20,000. It isn’t possible to invest in more than one Cash ISA during the same year, unless you are transferring funds from an existing ISA.

3.     Here to Stay

Some people query the need for saving in ISAs following the introduction of the Personal Savings Allowance (a threshold amount beneath which interest earned on savings is tax-free). “The need for ISA savings largely depends upon the amount you are saving and/or investing during the tax year,” says Suzanne Spicer, Chartered Accountant at Spicer & Co. “It’s also important to bear in mind that the PSA level is likely to change over time, whereas ISAs are almost certainly going to continue to offer a tax-free wrapper.”

4.     It’s All About The “I”

You can’t have a joint ISA. The ‘I’ in ISA stands for ‘Individual’.

5.     Fickle Savers are Winners

Many ISA providers accept transfers from existing ISA accounts with other banks. This means that you can keep an eye on interest rates and performance, switching to an ISA with better returns. Always check that there are no penalties involved and that you able to transfer existing ISAs into the account you want to open.

6.     Go For It!

According to a survey by Beagle Street, planning for their financial future is the thing most Brits delay (followed closely by exercising, chores and dieting). Common distractions include television, social media and going to make a cup of tea!

7.     Leave or Remain?

You are able to withdraw money from an ISA account, (please check the terms of your specific account as penalties may be payable). However – once the funds have been taken out of the ISA wrapper, they cannot be re-invested within an ISA unless the money forms part of your annual investment allowance.

“An ISA account is usually a good investment for most people,” says Suzanne. “It’s important to keep an eye on interest rates, transferring ISA funds as needed and looking for the best home for your annual allowance.”

Have a chat with the friendly team at Spicer & Co Chartered Accountants. Working across Dunstable, Luton, Leighton Buzzard, Houghton Regis and beyond, we love to maximise your potential and minimise your tax. Let’s talk.

Making Tax Digital: VAT Is Going Live!

From April 2019… next month… VAT is going digital!

IMAGE: Making Tax DigitalThe new rules require every business with a turnover greater than the VAT threshold (currently £85,000 pa) to keep VAT records digitally. Plus, their VAT returns will have to be filed using software or spreadsheets that comply with Making Tax Digital (MTD) requirements. (At Spicer & Co, we recommend using Xero accounting software.)

VAT is the first tax to adopt this new approach to filing returns and keeping records. All other taxes – such as income tax and corporation tax – will eventually be included for businesses and individuals with an annual turnover of at least £10,000.

Businesses with voluntary VAT registration (turnover less than £85,000 pa) may choose whether to continue with HMRC’s current online ‘Gateway’ system or join Making Tax Digital. (Please read our earlier article for full details about Making Tax Digital.)

Are you affected by Making Tax Digital?

If so, you need to use online accountancy software. If you are not already doing this, start investigating the options… now!

“Online accountancy offers great opportunities for businesses, independent of the Making Tax Digital requirement,” explains Suzanne Spicer, Chartered Accountant. “It also gives business owners the advantage of understanding the current business finances, rather than looking at retrospective figures. It saves a huge amount of time too!”

Would you like to know more?

Image: VAT Advice from AccountantSpicer & Co Chartered Accountants work with clients across Luton, Dunstable, Houghton Regis, Leighton Buzzard and beyond. As the number one firm of accountants in Luton and Dunstable using Xero, we are perfectly placed to help you with online accounting as well as Making Tax Digital.

As well as being online accountancy and tax experts, we also appreciate great coffee. If you have any queries about making Tax Digital and how it may affect you, let’s talk. We’ll put the kettle on! No obligation, no jargon, just friendly advice.

Accountancy Networking in Luton

Spicer and Co are delighted to be talking about Making Tax Digital at a free networking event hosted by Metro Bank’s Luton branch on Tuesday 19 February, 6pm – 8pm.

The accountancy practice in Dunstable helps clients in Luton, Houghton Regis, Leighton Buzzard as well as Dunstable, where the team is based. Their proactive, forward-thinking nature is a natural fit with Metro Bank which takes pride in its personal approach to business banking.

“Making Tax Digital begins in April for many businesses. Some owners are not fully aware of the which businesses are affected in April and the opportunities that the change offers,” says Suzanne Spicer, Chartered Accountant, who will be presenting at the event. (Take a look at our Making Tax Digital blog for an overview.)

An important requirement of Making Tax Digital is the submission of figures using online accountancy software.  Spicer & Co is proud to be the number one firm of accountants in Luton and Dunstable using Xero, an online accountancy software system.

“We’ve been using Xero for years, so we appreciate how online accounting helps your business’ accounts to become simpler, faster and more efficient,” says Suzanne. “We are big fans of networking too, so we’re looking forward to the Luton event at Metro Bank.”

As well as hearing about Making Tax Digital, the evening is the perfect opportunity to meet other local businesses plus the management team of Luton’s Metro Bank.

Would you like to come along?

Date: Tuesday 19 February

Time: 6pm – 8pm

Venue: Metro Bank, 10 – 20 Castle Street, Luton, LU1 3AJ

The networking event in Luton is free, however booking is essential.  Please book your place via Eventbrite.

See you there!

Making Tax Digital: The Countdown Begins!

If you need to complete accounts and/or submit tax returns to HMRC, you need to know about Making Tax Digital, which starts next year. It’s the biggest change to tax since the introduction of self assessment in 1996.

Computer Mouse for Online AccountingWhat is Making Tax Digital?

This initiative will require businesses and landlords to use commercial software to maintain their business records and update HMRC quarterly.

What’s involved?

The team at Spicer & Co Chartered Accountants in Dunstable have summarised the key points of Making Tax Digital:

·       Your tax affairs are updated every three months, so no cramming it all in at the end of the year

·       Cloud software records all money in and out of your business bank account

·       You have an idea of your tax bill every quarter

·       Tax planning is easier

·       Compulsory use of technology

·       More reporting deadlines

“Making Tax Digital is good news for businesses overall,” explains Suzanne Spicer of the Chartered Accountancy practice. “It’s a huge change and many people will need to change their systems to meet the reporting requirements. However online accounting systems such as Xero offer big benefits to businesses and the self-employed. As well as easier record keeping and financial planning, digital accounting saves precious time on a day-to-day basis.”

When Will It Start?

Making Tax Digital is just a few months away! 

A phased introduction will start in April 2019. This first phase will involve businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000. These businesses will need to keep VAT records digitally and file their VAT returns using compatible software, (this includes Xero and others).

From April 2020 (at the earliest), all other taxes – such as income tax and corporation tax – will be included. This will affect businesses and individuals with an annual turnover of more than £10,000.

How Will Making Tax Digital Work?

Firstly, businesses will be issued with a digital tax account.

Some information will automatically flow into the digital tax account (such as bank interest). Data will need to be checked and then any gaps in income and expenses completed before filing with HMRC.

What Happens Now?

Spicer & Co Chartered Accountants recommend three steps to prepare for Making Tax Digital:

1.     Check when you must start filing quarterly returns (April 2019 or April 2020)

2.     Investigate online accounting software options (if you don’t already use one)

3.     Keep up-to-date by signing up to our newsletter and keeping an eye on our blog. We will guide you through the changes with regular updates, including jargon-free explanations of the details issued by HMRC. Plus – you are welcome to contact us if you have any queries.

“The transition to the Making Tax Digital requirements will be much easier if your records are on a cloud platform accessible to both yourself and your accountant,” explains Suzanne. “Now is the time to make the changes – especially if you are VAT-registered and have a turnover of more than £85,000.”

She adds: “Above all, remember that we’re here to help with understanding how Making Tax Digital will affect your business and answer any queries about cloud-based accounting.”

Would you like to know more about how Making Tax Digital affects you?

Contact the friendly team at Spicer & Co. Our tax experts are always happy to have a chat and a coffee without obligation. Let’s talk.

National Minimum Wage: Avoid Hefty Payroll Fines

HMRC sets a national minimum wage to ensure that everyone is paid and treated fairlIMAGE - employeesy in the workplace.

Employers who pay workers less than the minimum wage not only have to pay back arrears of wages to the worker at current minimum wage rates but also face financial penalties of up to 200% of arrears, capped at £20,000 per worker.

As well as facing financial penalties, those who don’t pay their employees correctly and have payroll arrears of more than £100 are ‘named and shamed’ in a public government list. The list is available online and draws the attention of the national press. The most recent list included nearly 240 employers. £1.44m in back pay was identified for 22,400 workers, with the employers fined additional £1.97m.

The list was topped by Sportswift Limited, trading as Card Factory (failed to pay £430,097.87 to 10,256 workers) and T.J. Morris Limited, trading as Home Bargains, (failed to pay £272,228.44 to 6,743 workers).

Be aware that it isn’t just large companies and big numbers that are named publically. The list includes sports clubs, car washes, care services, newsagents and restaurants – a convenience store was listed as owing £102.19 to one worker.

Low Paying Sectors

HMRC regularly targets sectors for investigation:

– Hospitality: 43 employers named for underpaying 5,726 workers a total of £460,459
– Hairdressing: 19 employers named for underpaying 152 workers a total of £43,938
– Retail: 18 employers named for underpaying 85 workers a total of £27,332

IMAGE - equestrian rosette wining horseAnother group in the spotlight is the equestrian sector. Some riders have been fined more than £30,000 for failing to pay their staff the National Minimum Wage (NMW). Lucy Katan, executive director of the British Grooms Association (BGA) and Equestrian Employers Association (EEA) told Horse & Hound magazine: “Non-compliant employers need to watch out, HMRC is coming to get them and they are putting their businesses at risk. The equestrian industry is not immune and as more and more people become aware [that employers must pay the NMW], more people will go to HMRC and they will investigate.”

What is the Current National Minimum Wage?

Age

– 25 years and over – £7.83

– 21 to 24 years – £7.38

– 18 to 20 years – £5.90

– Under 18 years – £4.20

Plus

– Apprentice – £3.70

(Please note that these rates are correct as of April 2018 and will change in April 2019.)

Are You Paying Your Employees Correctly?

Talk to the friendly team at Spicer & Co. We are proactive payroll experts and cut through the jargon of legislation to explain exactly what’s involved with paying your team the right amount at the right time. Contact us for an initial chat without obligation. We’re here to help.

Spicer & Co: Hand-Picked Chartered Accountants

Spicer & Co Chartered Accountants is pleased to announce that its accountancy firm is now part of Handpicked Accountants. This is an online portal which connects company directors and small business owners with qualified, reputable and trustworthy accountants in their local areas.

Wordle about accountancy“Handpicked Accountants is more than simply an online directory of accountants,” says Suzanne Spicer, Chartered Accountant and founder of Spicer & Co.

To help you make an informed choice, Handpicked Accountants has identified around 1,000 of the most reliable, reputable and experienced accountants across the UK; enabling you to search on a local level for the accountancy services you require.

“We work across the Dunstable, Luton, Leighton Buzzard and Houghton Regis areas,” explains Suzanne. “For example, if you’re looking for accountant near Leighton Buzzard to help you or your business, it’s much safer to talk to someone who has been recommended – that’s where Handpicked Accountants can help.”

Accountancy meetingHandpicked Accountants has carefully chosen a network of recommended, experienced professionals who can be trusted to do a good job, stating: “We believe that choosing an accountant is one of the key business decisions you will make. It is imperative that you can talk freely on a professional and, also, social level. Good open communication is important because you need to be able to pick up the phone and have a chat about how your business is going to grow over the medium to long term.”

You can read Spicer & Co’s profile on Handpicked Accountants here.

And the winner is… Spicer & Co Chartered Accountants!

Last Thursday was a special evening full of glamour, excitement and anticipation –  it was the awards ceremony for this year’s SME Bedfordshire Business Awards.

Dunstable’s Spicer & Co team was involved with three categories. The chartered accountancy practice was competing for two awards and its networking group, Pride of Dunstable, for another accolade. (Read more about our three nominations.)

Well… we did it!

Spicer & Co Chartered Accountants are award winners

Spicer & Co won the Dunstable Business of Year Award PLUS Pride of Dunstable was named as “Networking Group of the Year”. Wow!

Business Award winner logoThe judges commented that Spicer & Co is an “impressive Dunstable business – customer focussed and highly involved in local community.” Pride of Dunstable was described as “an enjoyable, fun looking supper club, proud of their town.” What amazing feedback!

Suzanne and Steve Spicer of Spicer & Co were at the ceremony to collect the awards. “We had a fabulous evening, made perfect by being announced as winners! We would like to congratulate all the winners and above all, we would like to thank our team for their hard work and our clients for their support.  This really is an incredible result – we are so proud!”

To discuss any accountancy needs and discover why Spicer & Co Chartered Accountants is Dunstable’s best business, call in for a no-obligation chat. We finished the bubbly, however we promise to put the kettle on!

Accounting Excellence Award Nomination for Spicer & Co

2018 is turning out to be the year of awards for Spicer & Co Chartered Accountants! Fresh from being nominated for two SME Business Awards and two British Accounting Marketing Awards, the Dunstable practice is proud to be shortlisted for the 2018 Accounting Excellence Awards.

“We are thrilled to be nominated for the Best Small Practice award,” says Suzanne Spicer, founder of Spicer & Co and Chartered Accountants. “This is a hotly contested category with only six finalists chosen from across the UK.”

The Practice category of Accounting Excellence Awards is for accounting firms that are leading the way with forward-thinking, innovative growth strategies, and are pushing the standards of excellence in the profession.

Accounting Excellence is AccountingWEB’s programme of excellence, inspiration and celebration for the accounting profession. Now in its eighth year, AccountingWEB’s annual awards programme has evolved to reflect the contribution of the whole accounting industry.

The winners of the coveted awards will be announced at a glittering black-tie event on 20 September in London. The team at Spicer & Co will have their glad rags on and everything crossed.

“Obviously it would be great to win the award,” adds Suzanne. “However we are so proud to be finalists that we’ll be definitely be celebrating – as winner or finalist!”