Category Archives: Business News

2020 Vision For Making Tax Digital

 

 

 

An announcement yesterday from HM Treasury delayed the timetable for the Making Tax Digital (MTD) initiative imposing quarterly tax returns on businesses. The change in policy has been driven by concerns from business owners and professional bodies regarding the pace of the proposed changes. The new timetable gives business owners until 2020 to adapt to keeping digital records and updating HMRC for other taxes. Those businesses below the VAT threshold will be able to voluntarily file digitally for other taxes should they chose to do so.

From April 2019 businesses with turnover above the VAT threshold (currently £85,000) will have to keep digital records for VAT purposes only, filing returns with an MTD compatible software. Critically however businesses will not be asked to keep digital records, or to update HMRC quarterly until at least 2020.

The government’s original plan, laid out in the March 2015 Budget, required unincorporated businesses with turnover above the VAT threshold to submit quarterly returns to HMRC from April 2018 and those with lower turnover to follow suit from April 2019. Limited companies of all sizes we due to follow these rules from April 2020.

If you would like to discuss any Cloud Accounting requirements or find out about how Making Tax Digital will affect your business, please contact Jill Morris (jill.morris@pmm.co.uk)

HMRC Inheritance Tax receipts at a record high


Inheritance tax paid by British families has hit a record high of £5.1bn in the year to May 2017.

This is largely caused by the fiscal drag of continuing house price inflation compared to the frozen inheritance tax nil rate band of £325,000.

The new residence nil rate band which came into effect on 6 April this year may start to reduce the inheritance tax take figures, but the complexity of the new rules and the relatively narrow band of people for whom it will be of benefit mean it is unlikely to have a dramatic effect.

Inheritance Tax by the numbers

  • Inheritance tax is charged at 40% on the portion of a deceased person’s estate over and above the nil rate band of £325,000.
  • Anything left to a spouse is exempt (providing they are UK domiciled).
  • If the deceased person is a widow or widower, they may also have inherited their former spouse’s nil rate band if they didn’t use it, meaning they can have £650,000 of exemption.
  • The residence nil rate band adds another £100,000 of exemption per person – but with a complex set of conditions surrounding it. This allowance increases by £25,000 per year until it reaches £175,000 per person in April 2020.
  • You can also inherit your deceased spouse’s residence nil rate band if they didn’t use it.
  • Adding all those nil rate and residence nil rate bands together means that couples can get up to £1million of inheritance tax exemption if they plan properly.

Inheritance tax is complex and thinking about what you want to happen after your death can be daunting.  However, if you don’t want your family to be contributing to the Government’s tax receipts, you need to face it.  Our job is to make that as clear and painless as possible for you, helping you understand the options available to you and making sure that your estate and pension planning are aligned.

We draw on our strong blend of tax and financial planning expertise, coupled with our personal touch, to help our clients build the right solution for their families.

For more information, talk to us and we’d be more than happy to help.

Jane Parry – Tax Partner
jane.parry@pmm.co.uk
01254 679131

PM+M Fundraising for Bury Hospice

 

A team at PM+M’s Bury office has entered the Bury Hospice Corporate Challenge.  There are various fundraising plans afoot which will take place between now and the end of October, when the challenge finishes.  The team at our Bury office have been given £50 to start their fundraising and are determined to turn this into as much money as possible in aid of the Hospice.

The first fundraiser is taking place over the course of Thursday 29th June with a cake sale around the businesses based at Waterfold Business Park, where our Bury office is situated.  The enthusiasm from the local businesses has been great and we just hope we have enough cakes to put a smile on everyone’s face and to raise as much as we can before the first league table for the challenge is published at the end of June. Mary Berry, watch your back!

There is also a ‘Guess the number of sweets in the jar’ and clients, contacts and visitors to our office can take part.  The number is a safely guarded secret!

We’re having fun working as a team on this challenge and the reward will most definitely be the funds raised for such a worthy cause, close to our Bury office.

If you have any items that would be worth donating to a car boot sale, please contact Helen Clayton on 0161 641 8684 or email helen.clayton@pmm.co.uk.

Watch this space for news of future events – we hope you will be able to support us along the way.

Cloud accounting – the future of your business

Cloud seminar

On Thursday 25 May, the PM+M Run My Business Team were joined by Cloud Software providers Xero and ReceiptBank to deliver our first Cloud Accounting Seminar.

This first seminar was an introduction for our clients to our cloud team and the services we carry out.  The cloud team has one objective: to make life easier for our clients.

With the arrival of Making Tax Digital for Businesses (MTDfB) scheduled to start in 2018, the need for businesses to hold their records digitally has never been more important. The new rules will force all businesses to submit quarterly accounting information to HMRC in an electronic format.  Under current proposals, the first wave of sole trader and partnership businesses will come into the new regime in April 2018, with more joining in 2019 and all businesses and companies scheduled to be within the regime by April 2020.

Cloud accounting offers a platform for individuals and businesses to record transactions digitally to help with the MTDfB process but, more importantly, to benefit from being able to view business finances in real time for better decision making and save time by automating processing.

The dedicated cloud teamwork with several different Cloud Accounting Software packages and work with clients to implement and train on the systems but also to look at specific add-ons that will help to streamline the business.

At the seminar, Xero demonstrated some of its most useful features for automating processes such as the direct bank feeds, auto-matching and customised online invoicing.  The add-on ReceiptBank demonstrated their integration into Xero. This add-on allows users to scan or email purchase invoices into the software which then extracts all the key information and posts it into your accounts system “hands-free”. Both systems have apps which can be downloaded to mobile phones, tablets etc. making them completely mobile.

If you would like to discuss any Cloud Accounting requirements or find out about how Making Tax Digital will affect your business, please contact Jill Morris (jill.morris@pmm.co.uk)

After the election…

shutterstock_533906236
After what has seemed a long election campaign, we finally have a result. And rather than the anticipated increase in seats for the Conservative Party, the UK woke up to find Theresa May’s party no longer enjoyed a parliamentary majority, and would seek to govern in coalition with the Democratic Unionist Party.

Uncertainty resulting from the vote has seen the value of Sterling drift downwards, and it may require a stabilisation of the political situation before the Pound recovers. Shares haven’t been adversely affected so far, with the FTSE index trading at higher levels than the previous day’s close.

What was seen as an opportunity to strengthen Theresa May’s hand, ahead of Brexit negotiations appears to have backfired, and adds doubt to the process and the timescales involved. The government will also to seek to ensure that any political uncertainty does not carry over into the wider economy. Multinational businesses usually prefer to operate and invest in a stable political environment.

For investors, don’t panic. Make sure you are invested in a sufficiently diversified portfolio. And if you are a little unsure, take advice.

Asset based lending and your MBO

shutterstock_518102962
One of the key objectives of any management buy-out (MBO) team is usually to minimise the level of equity funding required to complete the deal. A greater proportion of funding derived from debt means a greater proportion of equity in the hands of the MBO team, and what is not to like about that?

So, what is asset based lending (“ABL”)? An ABL facility is provided against a wider pool of assets than mere factoring or invoice discounting and so, in theory, a greater amount of funding should be possible. The debtors will, of course, be included via invoice finance, but a lender will also include stock, plant and equipment and possibly property, although property lending is not necessarily everybody’s cup of tea. You could also securitise forward income streams assuming they are sufficiently robust.

Historically, smaller SMEs have found it difficult to secure ABL facilities but in recent years the number of providers lending to this sector has increased markedly. Invoices will normally attract an advance rate of somewhere between 70% and 90% with stock and plant possibly up to 75% of net orderly liquidation value. What does that mean I can hear you say? Basically, because assets such as stock and plant usually carry a higher realisation risk than debtors, the lender will independently assess what they might be able to sell those assets for in the open market on a reasonably quick but controlled basis, knock off some costs and then lend up to 75% of the net figure. Hence their back is covered but you get more borrowing.

For companies with very strong cash flow, an ABL may also consider a top up cash flow term loan to increase liquidity and headroom.

There are some key benefits to ABL. As your business grows, so can the borrowing when you need additional working capital. Security is very specific and because additional assets can be included and assessed separately, more funding can be unlocked than through a traditional bank loan or overdraft. ABL is often much quicker to deliver, with additional funding as the business grows being speedily provided. For larger companies, pricing ought to be competitive with more traditional lines of funding.

There can be some things to watch out for though. For smaller companies, the pricing may well be more expensive as small often equates to greater risk in the eyes of a lender. But hey, you got your money, didn’t you? If your business is cyclical, your funding line can reduce quickly as your debtors fall in the off season. In this case, it is critical that you have quality forecasts available so that you understand the working capital requirements at all stages of your business cycle. You really don’t want to over-borrow against debtors at a high point to get the deal done but then find you run out of cash subsequently.

If you are contemplating an MBO or perhaps an acquisition, get in touch. We know the market and have the experience to help you.

Jim Akrill
Jim Akrill
Corporate Finance Partner
Email: jim.akrill@pmm.co.uk
Tel: 01254 679131

 

 

 

Quarterly Economic Review

shutterstock_580430338

The East Lancashire Chamber of Commerce are giving you the opportunity, once again, to tell the Government what it’s like doing business in East Lancashire in 2017.

The survey is carried out quarterly and is taken very seriously by central Government as it provides an economic snapshot of the area. It’s important that as many businesses as possible complete the survey so that the results provide a true reflection across all sectors and that the Government has the best information on which to make important decisions that may impact our area over the next few months.

To complete the survey, please click the button below.

484987987

A spotlight on our new partners

pmm-2
I am delighted to announce that Antony Keen and Helen Binns have been promoted to partner in PM+M.

Antony has been with PM+M for 29 years, man and boy.  He is a director of PM+M Wealth Management and continues with that role, giving financial planning, investment and pension advice to a wide range of clients.  Alongside that, his partnership role will see him playing a wider role across the firm and its future development.

Helen Binns heads up our Burnley office, having been with PM+M for 11 years.   She works with various charities and companies with turnovers from £50,000 all the way up to £50m in various sectors with all aspects of accounting, auditing and financial management.  She will continue to head up our Burnley team and will also take on a wider role in the leadership team of the firm.

I firmly believe that Antony and Helen’s promotions are hugely deserved as they are both incredibly talented in their respective fields. They embody what PM+M stands for with their unwavering commitment to both their clients and the success and culture of the firm. To keep PM+M thriving in the future, it’s key that we have a strong succession plan in place. As part of that, it is fantastic to reward and promote talent from within our own ranks.

This is just a small taste of why PM+M placed 3rd in the UK for best accountancy employer at the Accountancy Age awards back in December 2016.

jane-parry-website
Jane Parry
Managing Partner
jane.parry@pmm.co.uk
If you are interested in joining the PM+M team, click below.

f731d508-4662-4f1c-b204-90197f8a007e-large

Tax confusion due to Finance Bill changes

shutterstock_101302753
The original Finance Bill 2017 published in March amounted to 762 pages and contained draft legislation on a whole range of tax changes which were due to take effect from 1 April this year for companies and 6 April this year for individuals.  However, the imminent general election has caused all that to change.

Vast swathes of legislation have been dropped from the Bill –  72 out of 135 clauses and 18 out of 29 schedules have been dropped.  The volume of the bill has effectively decreased by over 80%. This is to allow time for the Bill to be debated and passed before parliament shuts down in the run-up to the General Election.

This has caused confusion and uncertainty for many taxpayers who were expecting to be affected by tax changes taking effect from 1 or 6 April or who were hoping to use the new legislation to carry out tax planning transactions.

Some of the key pieces of legislation removed from the Bill were:

  • Making tax digital – the Government has reaffirmed its commitment to making tax digital but it is not known whether the intended start date of 1 April 2018 will be delayed.  This is an enormous project and uncertainty for taxpayers is increasing as we get nearer to 1 April 2018 with no clear idea of what the requirements of the new system will be.
  • Changes to corporate loss relief – new rules were due to take effect bringing increased flexibility for brought forward tax losses and restrictions on the use of losses for large companies.  It is not now clear when those rules will take effect and this is causing uncertainty for many companies as to their tax position.
  • Restrictions to corporate interest deductibility – due to commence on 1 April 2017 but now uncertain.
  • The relaxation of the Substantial Shareholdings Exemption which allows the tax-free sale of qualifying shareholdings by companies – a major widening of these rules was due to commence on 1 April 2017 and a number of groups of companies were planning to restructure their holdings utilising the new rules.
  • The reduction of the dividend allowance from £5,000 to £2,000 due in 2018/19 – as yet there is no indication that this will change.
  • The £1,000 tax-free allowance for property and sundry income which was due to come into effect on 6 April 2017.
  • First year allowances on electric vehicle charging points – due from 1 April 2017.

Assuming no major surprises in the election result, it is expected that the government will legislate at their earliest opportunity at the start of the new parliament.  However, it is unlikely that such legislation will be retrospective in respect of the proposals due to start on 1 April 2017 but this has not been confirmed.  In the meantime, our advice is to hold fire on any planning under the new rules and keep a close eye on developments.

For further advice on any of the above issues contact Claire Astley on Claire.astley@pmm.co.uk or Jonathan Cunningham on jonathan.cunningham@pmm.co.uk

Companies House

shutterstock_115187251 (1)

Companies House is the vehicle through which businesses, accountants and other professional advisors file various information, which is then made publicly available.  It’s an organisation that deals with volume and there are various performance metrics in place.

Its most recent business plan encompasses objectives similar to those that you might expect to see in your own business:

  • Providing excellence in company registration and search
  • Helping companies to ensure their recorded information is current, complete and correct
  • Building a high-performance culture by adapting to and embracing change.

I’m not sure I’ve ever considered Companies House to be a business. It’s just been a place where certain documents must be filed, where I can access publicly available information and where I can do some research on businesses that I would like to work with.  The above certainly changes my view on this and the business plan certainly supports a move into current times.  We need an efficient delivery model that is easy to engage with and reduces the administrative burden, wherever possible, for businesses.

The introduction of the confirmation statement last year, which replaced the annual return, is one way in which filings have changed.  Online filing has evolved considerably in recent years, resulting in less paperwork and postage costs. The aim for 2017 is to achieve a take-up of 87% of digital filing services.  There is also a focus now on increasing the number of accounts to be filed digitally – the aim being 99% to be filed online.  This is a far cry from arranging a courier at the last minute to get down to Cardiff in order to meet a filing deadline. It will still need some planning to ensure deadlines are met (hopefully not at the last minute to save everyone the unnecessary stress) but hopefully the push towards digital will be a positive move for all users.

Pauline Rigby, a partner in Corporate and Restructuring at Forbes Solicitors, commented “Companies House has since 2014 been working on its strategy. At that time they prepared a 5 year plan. Very similar to other businesses, 3 years into that plan and Companies House have taken time to reflect on what they’ve achieved and how their strategy needs to be amended to move them further forwards to ensure that their strategy reflects wider changes in society. Online filing and accessibility has to be key as well as retaining a fluid strategy just like any other business.”

If you have any queries on changes in what should be filed and when and how, then please do get in touch with Anne Ramsden by email at anne.ramsden@pmm.co.uk or by calling 01254 679131.