If you reclaim VAT on your expenditure, please note that HMRC have published new company car advisory fuel rates to take effect from 1 December 2011.

These rates apply to all journeys on or after 1 December 2011 until further notice, allowing them to reflect fuel prices more quickly. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.

The advisory fuel rates for journeys undertaken on or after 1 December 2011 are:

Please note that most rates have not changed. However the rate for LPG cars has reduced for those with an engine size of 1400cc or less.

Other points to be aware of about the advisory fuel rates:

• Employers do not need a dispensation to use these rates.
• Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
• The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like more information, please contact me.

HMRC does not mess around when it comes to late filing of your company’s records.

What are late filing penalties?

Late filing penalties were introduced in 1992 to encourage directors of limited companies to file their accounts on time because they must provide this statutory information for the public record.

What changes have been introduced?

• All penalties have been increased to take account of inflation between 1992 and 2007.
• A faster rate of increase in penalties for companies who file more than one month late.
• A doubling of the penalty for any company which files late having also filed late in the previous year.

What are the new late filing penalties?

The new table of penalties is a follows:

In addition where there was a failure to comply with filing requirements in relation to the previous financial year (and that the previous financial year had begun on or after 6th April 2008), the penalty will be double that shown in the table.

When do these new penalties apply?

The new penalties apply from 1st February 2009.

I was asked to give my point of view on a local radio programme today, regarding the latest government statistics about the increase in the amount of time the average employee spends at work. The argument was that the average worker in the UK works harder than their EU counterparts.

To me, the statistic says we are working longer, not harder. To be working harder, the statistic would be about output, results, even job satisfaction; not about how long we sit at our desks.

As a freelancer, I am always conscious about how I am valued. I have learnt that my value is assessed first and foremost by whether I get the job done. How long I will take, or how much I will charge is a secondary issue. If I do the job well, but take longer to do it than is really necessary just makes me more expensive, not better. Who do you know that would pay for unnecessary hours, or for poor quality?

And yet, that is what many employers do. They pay workers to be at their desks, measuring their contribution in time and cost, not quality. This charade is also played by employees, who are willing to put in extra time at work for free, perhaps hoping that this show of commitment secures their place in the company.

Do you value each employee by their cost, by how much time they spend at work, or by what they do for you?

I was put in a difficult position by a client recently. I was helping them with their self assessment tax return, and was being pressured to include a couple of expenses that I did not consider to be legitimate business costs.

Within reason, and subject to some legal exceptions, a business is allowed to incur a wide range of expenses in the furtherance of its objectives. When you are self employed, or a sole trader, the onus of responsibility is the other way round – the basic assumption is that all expenditure is personal, unless you can demonstrate that it is business related.

In particular, I was being asked to include two items of significant value as business expenses, based on their presence on a credit card statement and the client’s insistence that they were business related. Bearing in mind that I had already had to consider whether towels and a set of weighing scales could be included, I felt the lack of any appropriate or independent evidence of the two items, such as a copy of the invoice and the fact the two large expenses were bought in the previous accounting period, I decided that, in my professional judgement, I would not allow them. This did not please my client.

Accounting is often considered an exact science. In my view, it is an art. Its purpose is to paint a true and fair picture of what has happened, in a way that makes sense to the person looking at the information.

It is the responsibility of whoever is putting the accounts together to ensure that there is appropriate evidence to support their view. Of course, what you might want to see may vary depending on whether you are the business or the tax man.

Important Information on the National Minimum Wage

From 1st October 2011 the national minimum wage rates are:

• £6.08 per hour for workers aged 21 or more

• £4.98 per hour for workers aged 18-20

• £3.68 per hour for workers aged 16-17

• £2.60 – for apprentices who are under 19 or are 19 years or over and in the first year of their apprenticeship

Failure to pay the minimum rate is a criminal offence.

HMRC really doesn’t mess about:

If you miss the Self Assessment filing deadline you will be immediately liable for a £100 late filing penalty. The penalty will apply even if there is no liability, or if any tax due is paid in full by 31 January 2012.

These new penalties will apply to all Self Assessment tax returns from 2010-11 onwards. The fixed £100 penalty for failing to file a tax return on or before the filing date will therefore apply to:
• paper returns received on or after 1 November 2011.
• online returns received on or after 1 February 2012.
Daily penalties of £10 per day will also take effect if the tax return is still outstanding three months after the filing date. So if you file a paper return after 31 October 2011, you will be liable to a daily penalty on 1 February 2012 – that’s three months earlier than online filers. All the more reason to file your tax return online.

http://www.hmrc.gov.uk/sa/deadlines-penalties.htm#3

It’s not often that there is good news regarding funding for training and development, so this is worth shouting about!

If you have been in business for at least 12 months, have between 2 and 249 employees, and want your business to do better, then read on…

The Skills Funding Agency is offering grants to help leaders of eligible organisations to pay for training and development to help their businesses grow. The grant will pay for 50% of approved training (excluding VAT) up to £1,000. For example, if the training costs £1,000 plus VAT, you can claim back £500. If the solution costs £2,500 plus VAT, you can claim back £1,000.

Solutions need to be linked to one or more of the following:

1. Developing a highly effective personal leadership and management style,
2. Creating an effective business culture,
3. Planning and developing your business and its teams, or
4. Building high performance across your business.

These are quite broad headings, and I would be surprised if you can’t think of something you would like to improve that doesn’t fits into this criteria.

For more information, or a no-obligation chat, call me on 07913 895798 or email me on edhart@yourfbs.co.uk today!

I was weighing up some options for a client over the weekend. They are worried about what might happen if a plan didn’t work.

It got me thinking. What was the worst thing that could happen? If the plan didn’t work, there was still a business, a reputation, and a lot of goodwill. Life might not be easy, but life would carry on.

When starting a business, it is essential to know what your bottom line is. If the idea doesn’t work, when is the right time to walk away, or change the plan?

To some, running a small business is almost a hobby – the impact of financial failure is minimal due to other streams of income (for example a partner’s salary). But if the consequences of failure are more material (no money to pay the rent, buy petrol, or eat), then knowing when enough is enough starts to seem sensible.

Motivation to succeed is often fuelled by an appreciation of the consequences of failure.

In the same way that success can be measured in terms other than pounds in the bank, so can failure. Working out what you want, or what you don’t want to lose, is harder than you think when you start to think beyond the bank balance.

I am not suggesting that businesses should always worry about the worst case scenario, but I would suggest that having the option to quit while still ahead is better than the alternative.

So, having identified the worst case scenario, now it’s time to focus on the positives, aim high, and succeed!

There has been much in the press and media about how much (or little) we give to charity. Putting the inevitable debate about the accuracy of statistics to one side, I feel the story has missed the point, particularly when comparing British giving to American.

If there is a defining difference between the British and American culture it is about the role of money. In America, everything has a price. In Britain, I believe that we place a greater emphasis on support, that has no price. Whether it’s volunteering on a regular basis, caring for others, or just being there to help out, the value of what we give is worth far more than the value of our financial donations.

I am not suggesting that we shouldn’t be giving more funds to good causes, but it is also worth stopping to think for a moment about the value of your time given to help others. As businesses know, time is money, and is equally valuable whatever you do with it.

There is a debate about whether charities should record the value of non financial contributions (particularly volunteers time) in their accounts to show the true value of their “receipts”. Needless to say this has been contentious. After all, is an hour of one person’s time worth the same as another? Do we value time on the basis of what it is worth to the giver or the recipient?

What we give is personal and should reflect our ability to give, which might mean its less about money, and more about our skills and experience. To me, the important thing is that we give what we can to the community that we are part of. Sometimes just giving time is the most valuable donation of all.

I discovered an interesting economic indicator recently, the Skip Index. I have blogged before about one unusual way of judging how buoyant the local economy is, by counting cranes on the skyline (http://www.yourfbs.co.uk/what-does-economic-recovery-look-like/ ), now there is another method that doesn’t require a strained neck gazing upwards – counting skips on the road in your neighbourhood.

The principle is very simple; skips provide evidence of optimism and investment. A skip represents financial activity. This activity might be a new bathroom, a landscaped garden, a new driveway, or the installation of double glazing. The one thing these all have in common is evidence of disposable income being spent.

So, how many skips make an economic recovery? I guess that depends on the area you are looking at. It might be an area, a long road, or the whole village. Like cranes on the skyline of a city, skips come and go, but there presence is a sign of economic hope.

I wonder how many skips the Bank of England’s Monetary Policy Committee see on their way to work…