#Bookkeeping

Private Sector IR35 Changes From 6 April 2021

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The new rules for IR35, which is another name for off-payroll working, will hit businesses from the private sector from 6 April 2021. They should have been in place in April 2020 but have been held back due to the COVID-19 crisis. These rules have been live in the public sector since April 2017. In a nutshell the changes mean that it will be the responsibility of the client and not the contractor to determine the employment status of contractors. In the latest article from Caroline Streatfield Bookkeeping, based in Eastbourne, East Sussex we look at what constitutes Off-Payroll working (IR35), why the new rules are being implemented, the main changes, your responsibilities according to the government and how we can help you.

Why are the new rules being implemented?

It was a year ago that Steve Barclay MP, Chief Secretary to the Treasury made an announcement that the Off-Payroll private sector rollout would be deferred for a year. It was made clear that this was a deferral and not a cancellation. The aim is ensure that people who work in a similar way to an employee but through their own limited companies broadly pay the same tax as those employed directly. By implementing the new rules, the tax advantages of individuals providing services via a limited company will be removed.

What Is Off-Payroll working?

This is a term used by HM Revenue & Customs (HMRC) to describe the following situation:

It is when an individual provides their own personal services via their own private company, known as their Personal Service Company (PSC) to an end client where the following test is met: if the worker is actually providing those services directly to the end client, the worker would thereby meet the employment status tests to make them an actual employee of the end client.

Main Changes To IR35

  • The end-client is responsible for determining if a contract is inside or outside IR35
  • Small businesses are exempt from the new rules
  • A Status Determination Statement must be provided by the end-client confirming the IR35 status of a contract
  • IR35 status dispute is led by the end-client
  • The 5% administration allowance is to be withdrawn although it will continue for PSCs working with small end clients
  • Employment tax liabilities are transferred to a relevant person who is any party involved in the payment to a PSC

What Constitutes A Small Business?

 End clients are classified as small businesses if they meet two of the following criteria for two consecutive financial years:

  • Annual turnover of no more than £10.2m
  • Balance sheet total of no more than £5.1m
  • No more than 50 employees

 Your responsibilities from 6 April 2021

You may have Tax and National Insurance responsibilities. This will apply if your worker provides services to a small private organisation and the off-payroll working rules apply. You will then be responsible for deducting tax and National Insurance from your worker’s fees and paying them to HMRC. When it comes to paying your worker, you could find yourself in a situation whereby your income for your worker’s services will have already had tax and National Insurance contributions deducted from them. If your worker provides services to public authority or to a medium or large-sized private sector client and the off-payroll working rules apply, it will mean that when you pay the worker they do not need to pay tax and National Insurance contributions again on those fees.

How can Caroline Streatfield Bookkeeping help you with the new IR35 rules?

Off-payroll (IR35) working is a broad topic and it’s not straightforward determining if the rules apply to you. However, from April 6th 2021 the emphasis will be on you as an employer to determine the contractor status. If you are struggling with off-payroll working, Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex can help you unravel this complicated status. Call us on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk. We will visit your home or workplace, if possible within East Sussex and can also work remotely to cover other locations, which are further afield.

What Happens When You Get A VAT Inspection?

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A VAT Inspection can immediately cause stress, anxiety and panic, and has long been associated with being every business owners worst nightmare. However, knowing what to expect and getting prepared can really help for the visit from HMRC so that the inspection can be carried out quickly and without too much fuss. In this article we give you a brief synopsis of what VAT is and who has to pay it before giving you tips to help you prepare for a VAT inspection, what you might expect on a visit from HMRC and what happens afterwards.

What is VAT and who has to pay it?

Value Added Tax (VAT) is charged by businesses on services or products at the point of sale and the customer pays it. There’s no getting away from, working out your VAT is painstaking, complex and time-consuming. What’s worse is if you get it wrong, you can incur some heavy penalties. Whether you have to legally register for VAT or not is dependent on your annual turnover and the type of products you are selling. The current VAT threshold is £85,000 and so if your business turns over this amount and more, you must register for VAT and complete a return. Currently, there are 3 rates of VAT, namely Standard, Reduced and Zero.

Why is  HMRC carrying out a VAT inspection on my business?

In a nutshell, the purpose of a VAT inspection is to check you are paying and reclaiming the correct amount of VAT. Today, VAT inspections are triggered by HMRC risk assessments. There are a number of reasons why you may be visited including a change in your level of VAT repayments, a credibility check on your business when compared with similar enterprises, the risk of your business sector and a comparison of your annual account figures to the VAT return figures.

What do HMRC do if they plan to visit?

  • You are usually contacted by HMRC to arrange a visit
  • You can expect about 7 days notice
  • HMRC will confirm what information they want to see and how long the visit is likely to take
  • HMRC will inform you if they want to inspect your premises

Whilst you can ask HMRC to delay their visit, it’s possible that they will visit without an appointment and/or telephone you about your VAT. The regularity of the checks depends on the size and complexity of your business and whether you have submitted late or incorrect VAT Returns before.

What to do for an impending VAT inspection visit?

  • Review your accounting records
  • If you cannot do this, ask your bookkeeper to help you
  • Make any improvements or corrections before HMRC arrive
  • Your bookkeeper will help you to access your accounting processes and suggest improvements

What happens during the visit?

If you have any problems with your VAT, HMRC will work with you to right any problems. You will also be advised about any additional tax or penalties you have to pay. It is certainly in your interests to be helpful, as this will help to reduce the amount of the penalty.

What happens after the visit by HMRC to carry out a VAT inspection?

At the end of the inspection, the HMRC officers will set up a meeting to discuss the findings. You will hear in writing from HMRC about any concerns or issues that they have found during their visit.

  • What you must do to improve your VAT record keeping
  • Any corrections you must make to your VAT account
  • Whether you are overpaying or underpaying your VAT
  • Any penalties you have to pay

If any serious problems are discovered, fines can be levied of up to 30% of the underpaid VAT.

How can Caroline Streatfield Bookkeeping help you with your VAT returns?

Many business owners dread being told they have to have a VAT inspection. However, with the right advice, transparency and being compliant, you should be able to come through the process relatively unscathed. It is crucial to prepare yourself for a VAT inspection and talking to a professional bookkeeper about the ins and outs will put you in good stead. If you need help with your accounting records, why not talk to the experts at Caroline Streatfield Bookkeeping? We work with a lot of start-ups and SMEs who find keeping track of their finances essential for keeping their companies running smoothly. For more information, call Caroline on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk

How Useful Is A Cash Flow Forecast?

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A Cash Flow forecast is not ‘an interesting piece of information’ to have, it’s an essential tool for your business planning. You could say that every business should have one. It will help to identify if there are peaks and troughs in your business. It will identify that perhaps more money comes in (inflow) or goes out (outflow) at a particular time of year. The forecast usually covers a period of 12 months with a month-to-month analysis, although some businesses may require a day-to-day analysis and larger companies may need to produce a cash flow forecast for 3-5 years. In the latest article from Caroline Streatfield Bookkeeping based in Eastbourne in East Sussex, we look into the definition of a cash flow forecast, how it will help your business and why you need one.

What is a cash flow forecast?

This predicts the net cash flows of your business for a future period. It determines what will be coming into your bank account and what will be going out. By discovering these figures, you will have an estimate of your bank balance for each period covered, for example each month. In the perfect scenario, you will be looking for your cash inflows to be more than your cash outflows. The elements involved in a cash flow forecast are the opening balance, monies received, monies going out, the difference between these which can be a negative or positive figure and of course your closing bank balance.

How will a cash flow forecast help your business?

 If you are a new business, it will initially help you to identify how much capital you need for your start-up costs and cover initial trading.

  • Highlight any shortfalls in your cash balances
  • Identify any increases in costs
  • Give the trading performance of your company
  • Analyse your business to check it is performing as you want it to

An early warning system for you to take the necessary action

If there is a potential shortfall in income, a cash shortage or increases in your costs are expected, it will act as an early warning system and give you the opportunity to take action. This could determine if you need a loan or an overdraft and if you do need to borrow money, how much your business can afford. It will also act as a guide so that you can stay on track and remain within your financial limits.

Why do you need a forecast?
  • To pay suppliers and employees
  • Your bank may want to see it
  • Helpful for financial planning
  • Keep track of overdue payments
  • Plan for shortfalls
  • Manage surplus cash

The bottom line is that you need a healthy cash flow

It may be a clichéd saying but in business, “Cash is King”! Without a healthy cash flow, your business won’t survive. And it is particularly important for SMEs and start-ups to know where they stand in financial terms. If you know in advance that you have a potential shortfall looming, you can do something about it.

Contacting Caroline Streatfield Bookkeeping for your cash flow forecast

Used effectively, a cash flow forecast is a very valuable tool to have for your business. It is in essence central to maintaining the financial stability of your company. If you need help with your cash flow forecast, why not talk to the experts at Caroline Streatfield Bookkeeping? We work with a lot of start-ups and SMEs who find keeping track of their finances essential for keeping their companies running smoothly. For more information, call Caroline on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk

Deadline Is Approaching – Less Than 100 Days To File Your Self Assessment

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File your self-assessment now!

The deadline of 31 January 2021 to file Self Assessment forms is fast approaching and will be here before we know it. Even though it has been an extraordinary year, you will still have to file your Self Assessment forms by the deadline. You should have been notified by HMRC as to whether you need to file a Self Assessment tax return and of course if you are not sure, please call the friendly team at Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex. We will be delighted to offer help and any guidance you may need. We strongly advise you do not leave filing your Self Assessment form until the last moment. The sooner your tax return is submitted, the quicker you will know how much your tax contribution will be.

Changes to the furlough scheme due to the second lockdown

The furlough scheme was due to end at the end of October but is now being extended until December. It will help employers who had previously had to top up furloughed wages by 20% with the government paying 60%. The state will now put in the full 80%, but as an employer you will have to cover your employees’ national insurance and pension contributions. To be eligible, employees must have been on the payroll by 30 October 2020.

Self-Employment Income Support Scheme Grant Extension (SEISS)

 There are also changes to the Self-Employment Income Support Scheme (SEISS) with the government taking more action to support the self-employed. The SEISS Grant Extension will provide critical support to the self-employed in the form of 2 grants. These are available for two 3-month periods covering November 2020 to January 2021 and February 2021 to April 2021. For the first period, the government will provide a taxable grant covering 55% of average trading profits, which will cover 3 months of profits, capped at £5,160. It will be paid out in a single instalment. This is an increase to the previously announced level of 40% of trading profits to 80% for November 2020. The second grant starting on 1 February 2021 will be reviewed and an announcement made in due course. You should note that the grants are taxable income and subject to National Insurance contributions.

How can Caroline Streatfield Bookkeeping Help Your Business

 If you are a local tradesman or professional wanting bookkeeping and Self Assessment services, Caroline Streatfield Bookkeeping is here to help. Much of our business comes through referrals with recommendations coming because of our personal approach and our honest and open pricing structure. We are here to help all types and sizes of businesses and will listen and respond to the needs of each client – we know that one size does not fit all. Call us on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk to find out more.

A word of warning about scam emails and text messages

HMRC has pointed out that there has been an increase in scam emails, calls and texts. Please do not respond if someone claiming to be from HMRC contacts you. They may say that financial help can be claimed or that you are owed a tax refund and will ask for personal information including your name, credit card and/or bank details. Please note that you can forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599. Again, if you are not sure, please do get in touch with Caroline Streatfield Bookkeeping.

Less than 100 days to file your tax return.

Meet The Team At Caroline Streatfield Bookkeeping

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It’s all the 20s at Caroline Streatfield Bookkeeping as this year, 2020 the company celebrates 20 years in business. Caroline actually started the business in her bedroom all those years ago, but things have moved on and the company has grown as the number of clients has increased. Today, Caroline Streatfield Bookkeeping has a staff of 5 including the boss with the newest recruit having just been appointed. Also, there’s a slight change of scenery for Caroline and her team. Bigger offices were required and CSB has literally moved up in the world from its previous ground floor location to a larger office on the second floor of Archer House in Eastbourne, which has a separate meeting room. Caroline freely admits that meeting clients is one of the best parts of her job and having a dedicated room for this purpose fits the bill perfectly.

Caroline has carefully recruited her staff and key elements are not only having the required qualifications and knowledge but also an understanding that each client is an individual with an emphasis on personal service. These are the main ingredients to its success.

Let’s meet the team!

Caroline Streatfield

The Boss

Qualified Institute of Chartered Bookkeepers Associate

 

In 2000, Caroline enrolled as a student on the Institute of Certified Bookkeepers training course and took and passed the exam in the same year. She set up her own business the same year and you could say that the rest is history. Caroline and her family live in the centre of Eastbourne and enjoy taking advantage of the social life and the activities that it offers. She can often be found at the bandstand on the seafront especially when country music is on the menu.

Claudia Sander

Account Manager

Qualified Fellow of the Institute of Chartered Secretaries

Claudia has gained international experience having resided in Germany and South Africa. She also ran her own accountancy practice for many years and now looks after the annual accounts for the largest client at Caroline Streatfield Bookkeeping. In her spare time Claudia likes to keep fit.

Juliet Hills

Senior Bookkeeper and Office Manager

Qualified AAT

After qualifying as a bookkeeper, Juliet gained experience in the industry before joining CSB in July 2019. She keeps everything running smoothly in the office ensuring that all the deadlines are met and clients and staff are looked after. Juliet also assists with the preparation of personal tax returns. In her spare time Juliet likes to go swimming and exercise her Cockapoo by taking him on long walks.

Anne Peterson 

Payroll Professional 

Qualified Associate of the Chartered Institute of Payroll Professionals

Having qualified eight years ago, Anne provides a full payroll and automatic enrolment service for CSB clients. She is always on hand to answer any queries and has been very busy administering the Job Retention Scheme for many clients. Anne is a northern lass at heart and she spends any spare time visiting and hosting family.

Ksenia Sibbles

Bookkeeper

Qualified AAT Level 4

Ksenia is the newest member of the team. She previously worked as a bookkeeper and has a good technical knowledge of keeping records for small businesses on QuickBooks. A growing family keeps Ksenia very busy and she enjoys keeping them entertained and eating out with them.

Joe Streatfield

Handyman/Tea Boy

Joe is the youngest member at CSB and likes to help around the office. His tea making skills could be refined, but he shows great enthusiasm!

How Caroline Streatfield Bookkeeping can help you

The client list at Caroline Streatfield Bookkeeping is growing with many coming to the company by way of referrals. If you are a newly created or established business looking for an experienced and yet realistically priced Bookkeeping Company, please get in touch. You can expect personal service and your own account manager from Caroline and her excellent and qualified team. Call 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk

The team are looking forward to meeting you at Archer House, which is very accessible and has lots of free parking. It also meets all the COVID-19 health and safety measures including social distancing requirements. If you are not comfortable with a personal meeting, we are happy to work with you via phone, email or a video conference call.

Changes To Off-Payroll Working (IR35) Rules – Effective 6th April 2020

Paul Cooper IR35, News, Off-Payroll Working , , , ,

New rules will come into effect from 6th April 2020 for off-payroll working (IR35). The draft legislation was published in the Finance Bill 2019-20, which amongst other tax measures, introduced important changes for workers providing services through an intermediary in the private sector, known as off-payroll working. The Chancellor of the Exchequer will confirm the final contents of the bill in the 11th March budget and the changes will affect any contractors who are working through a Personal Service Company (PSC), recruitment agencies as well as large and medium sized end clients. In the latest blog from Caroline Streatfield Bookkeeping with offices in Eastbourne, we look into off-payroll working in more detail, the main changes and what you will need to prepare.

 What Is Off-Payroll Working?

This is a term used by HM Revenue & Customs (HMRC) to describe the following situation:

It is when an individual provides their own personal services via their own private company, known as their Personal Service Company (PSC) to an end client where the following test is met: if the worker is actually providing those services directly to the end client, the worker would thereby meet the employment status tests to make them an actual employee of the end client.

Main Changes To IR35

  • The end-client is responsible for determining if a contract is inside or outside IR35
  • Small businesses are exempt from the new rules
  • A Status Determination Statement must be provided by the end-client confirming the IR35 status of a contract
  • IR35 status dispute is led by the end-client
  • The 5% administration allowance is to be withdrawn although it will continue for PSCs working with small end clients
  • Employment tax liabilities are transferred to a relevant person who is any party involved in the payment to a PSC

What Constitutes A Small Business?

  • Annual turnover is less than £10.2m
  • Balance sheet total is less than £5.1m
  • Fewer than 50 employees

What You Need To Do As A Client

It will be your responsibility to decide upon the employment status of a worker and it must be done with every contract that you agree with an agency or worker. Once you have decided you will need to:

  • Pass on the reasons for your decision to the worker or the organisation you contract with
  • Keep detailed records of the employment status including reasons and the fees paid
  • Have processes in place that can deal with any disagreements that may arise

Conclusion

Off-payroll (IR35) working is a large topic and it can be problematic determining if the rules apply. However, from April 6th the emphasis will be on you as an employer to determine the contractor status.

What To Do Next

If you are struggling with off-payroll working, Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex can help you unravel this complicated status. Call us on 07982 682746 or email us. We will visit your home or workplace within East Sussex and can also work remotely to cover other locations, which are further afield.

Next time, we’ll be talking more about this topic, so be sure to stay tuned to our blog.

January 31st Is Looming – Last Call To File Online And Pay Your Taxes

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Christmas and New Year have come and gone and January 31st 2020 will soon be here. Here at Caroline Streatfield Bookkeeping based in Eastbourne with clients throughout Sussex, we’ve been helping you with Self Assessment including articles about Allowable Business Expenses and Capital Expenses and in our latest blog, we’re going to clarify a few more points including, who needs to file, how you register and send, some helpful tips for filling out the form and the penalties that you might incur if you don’t file and pay.

Who Needs To Send A Tax Return?

You are required to send a tax return if during the last tax year, 6th April 2018 to April 5th 2019, you find yourself in the following categories:

  • You are self-employed as a ‘sole trader’ and you have earned more than £1,000
  • You are a partner in a business partnership

You may also need to send in a self assessment form if you have any other income that is not taxed including:

  • Monies received for renting out a property
  • Tips and commission
  • Income from savings, investments and dividends
  • Foreign income

Registering and Sending

The online service is available so that you can fill out and send your tax return to HM revenue and Customs (HMRC) and if you don’t finish it, don’t worry as you can go back to it at anytime. You’ll also be able to check all of your details, view your return and print your tax calculation.

If you haven’t filed before, you will need to register and once you have done this, you will be sent your Unique Taxpayer Reference (UTR). Once you have set up your account, you will receive an activation code in the post.

 

Filling Out The Form

This can be somewhat daunting and there is certain information that you will need. The HMRC does provide help sheets and supplementary pages or you can contact your bookkeeper for help.

  • 10 digit UTR
  • National Insurance number
  • Untaxed income details
  • Records of expenses relating to your self employment
  • P60
  • Any contributions to pensions or charities that might be eligible for tax relief

Penalties

Let’s face it, nobody wants to be hit with a penalty and you will get one if you miss the deadline for submitting your self assessment form or you fail to pay the tax you owe. The penalty is £100 if your tax return is up to 3 months late or your payment is not received in time and you will also be charged interest on late payments.

Conclusion

There really isn’t long to go and if you haven’t done it yet, this is your last urgent call. If you are filing online you need to submit your return by midnight on 31st January 2020 and you must pay any tax that you owe by this date as well.

What To Do Next

If you’re not sure, please do get in touch with Caroline Streatfield Bookkeeping in Eastbourne. Call us on 07982 682746 or email to find out how we can help you. We will visit your home or workplace within East Sussex and can also work remotely to cover other locations, which are further afield.

Keep looking at our website for future tax changes that will be coming into force in 2020.

 

 

Self Assessment – Time Is Running Out – A Guide To Allowable Business Expenses

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Think back to January 2019 – were you rushing around and panicing because you hadn’t filed your Self Assessment form? Here, at Caroline Streatfield Bookkeeping, we are giving you a bit more time. The tax return deadline for filing your online Self Assessment for the tax year ending April 2019 is midnight on 31st January 2020 and your bill has to be paid by then as well. Unfortunately, if you wanted to file a paper return, you’ve missed the deadline of 31st October 2019.

What Are Allowable Expenses?

In the latest blog from Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex, we are able to help you file online and we’re also going to try and explain your general allowable expenses. Some people think that everything you spend is an allowable expense, but it doesn’t quite work like that, although knowing what is allowable is extremely important, as deducting this from your business income will determine how much profit you have made from your business. It’s quite expected that your business will have various running costs but of course allowable expenses do not include monies you take from your business to buy personal items.

What HMRC Says

We’ve gone straight to the HMRC website for the following:

  • The expense must have been for the sole purpose of earning business profits called the ‘wholly and exclusively rule’.
  • Some items bought for your business might also be used for private reasons and here you can only claim the business part of the costs.

Items Used For Business And Privately

In a nutshell, there are 3 items that immediately spring to mind, your mobile phone, your home and your mode of transport. You will have to find a reasonable method of calculating how much of the costs are incurred by your business and by you personally. Other costs which you can claim as allowable expenses are office stationery, which will include postage, printing, ink cartridges, computer software etc. You might also have clothing expenses such as uniforms, staff costs, advertising and marketing fees such as website costs and training courses.

Phones

With reference to your phone, it’s going to quite simple to work out if you have a monthly contract and itemised bill, but if you are on “Pay as you Go”, you will have to make a fair assessment.

Your Home As An Allowable Expense

This will come into play if you have a room which is set aside for business use and here you will be able to claim a proportion of household costs including heating, lighting, insurance, rent or mortgage interest. There are also other considerations including the number of rooms excluding halls, toilets and bathrooms and how many days of the week and hours per day you spend in the dedicated business room.

 

Vehicle And Travel Expenses

 This is a broad field and in relation to your vehicle will include insurance, repairs, servicing, fuel, parking charges, licence fees and breakdown cover. Travel incorporates train, bus, air and taxi fares, hotel rooms and meals on stays while you are away. It’s worth noting that allowable business expenses do not include travel between home and work and any vehicle fines you may incur.

What To Do Next

If you are struggling with filing your online assessment form, Caroline Streatfield Bookkeeping, based in Eastbourne in East Sussex offers a Self Assessment tax service. Call us on 07982 682746 or email info@bookkeepereastbourne.co.uk to find out how we can help you. We will visit your home or workplace within East Sussex and can also work remotely to cover other locations, which are further afield.

Next time, we’ll be talking about capital allowances, so be sure to stay tuned to our blog.