VAT Rate Reduction

From 01st Dec 08 the standard rate of VAT will reduce to 15% in order to boost consumer spending. It will revert back to 17.5% on 31st Dec 09.

This is going to cause complications for VAT registered businesses as they will need to decide if they are going to pass on this reduction to their consumers and if so how. There is no need to make a change to VAT inclusive prices but you do need to record the correct rate internally.

The VAT due on all your sales must be recorded at the correct rate from 1st Dec 08. Only VAT at the standard rate has reduced and zero and reduced rate VAT remains the same.

So, if you sold something for £1175 inc VAT now (Nov) you will have collected £175 in VAT for the Chancellor. If, however, your sale was made in Dec and you charged £1175 inc VAT then you would only have collected £153.26 VAT and have made an extra £21.74 profit.

Invoices issued after 1st Dec 08 must show the new 15% for standard rated items. However, if your invoice is for something that was completely delivered before 18th Nov 08, or you were paid for the complete sale before 1st Dec 08, you should use the old rate of 17.5%.

There are specific rules to consider if your business receives stage payments for long contracts. The VAT date is the date you issue an invoice or receive a stage payment, so if the invoice is issued after 1st Dec 08 you must account for the VAT at 15%, even if the work it relates to has been carried out before this date.

For those businesses that use the flat rate scheme there will be a new flat rate for each sector. You must look up your new rate here (appendix E). You must apply the new rate from 1st Dec 08 to stay on the flat rate scheme.

If you use the cash accounting scheme you will need to be ensure systems are in place to record when the sale was made and when the invoice was issued. You need to pay over VAT of 17.5% for sales made before 1st Dec 08 even if you receive the payment on or after this date.

Please be aware that this is my interpretation of the rules regarding the reduction in the VAT Rate and I strongly advise everyone that is unsure of the rules, and how they will affect their business to seek the guidance of their accountants. Please ask your accountant to run through the VAT rules in relation to your business.

Remember this VAT change is only temporary and everything will revert to 'normal' on 1st Jan 10.

If you need help changing your systems or recording your invoices correctly give me a shout!

Late Payment Legislation

With the current economic climate more and more of my clients are asking for advice on collecting late payments and how to charge interest.

There is, of course, legislation surrounding this but people don't seem to know where to find it.

payontime.co.uk

contains a wealth of information including calculators to help you work out how much statutory interest you can charge, if that's the stage you have reached, as well as a calculator to help you work out the contractual interest rates you might have in your terms and conditions.

If you need help with credit control, feel free to contact me. Some people just don't like to phone people up and chase payment. The good news is you don't have to!! Let Officebird take the awkwardness out of late payment situations.

Tax on Luxuries

Whilst completing Tax returns and VAT returns this month I have again hit the anomaly in the UK VAT law which always make me giggle.

As you will probably know there are intricacies such as there being no VAT on tea or coffee but if you pour hot water on it and sell it then it becomes a service and is therefore taxable. I can understand the logic behind this but what I have never been able to fathom is why chocolate biscuits are taxable and yet chocolate cake isn't! Perhaps it is an insight into the minds of those at Westminster, it would seem that they want us to eat cake. Looking back at history we all know what happens when figures of authority say "Let them eat cake!"

Company Name Display Rules Will Change in October

New laws will come into force in October that govern the display of company names at premises. The Companies (Trading Disclosures) Regulations 2008 are effective as of 1 October this year, and will mean that companies will have to display their registered name at their registered office and their inspection place, as well as any place where a company carries on business.

The name has to be displayed continuously inside the premesis (rather than outside as before) in a place that is easily viewable by any visitor to that premises.

See more at: http://www.out-law.com/page-9419

How to reduce your tax bill: Expenses claims for home working

I've come across a fantastic article for reducing you tax bill.

Read it at: http://www.businesszone.co.uk/cgi-bin/item.cgi?id=188610&d=1095&h=1097&f=1096

Hope it helps you pay less to the tax man!

Minimum Wage Set to Increase

Bibby Financial Services have conducted research that concluded a third of small and medium, sized businesses are not aware of the National Minimum Wage rise due in October. The wage will increase from £5.52ph for adults aged 22 and over to £5.73 ph.

Make sure your payroll stystems are updated appropriately and don't forget to check with the Job Centre about how this would effect any help you get from them for New Deal employees.

Self Assessment Tax Deadline Looming

Don't forget the deadline for paper returns is 31st Oct 08. Online filing has a later dealine of 31st Jan 09. So if you are sitting there with a box of paper all higgledy piggledy then get it too me sooner rather than later to ensure you meet the dealinges. Don't wait for the last minute as you'll only get stressed about it.

SME's Too Busy For Holidays

Lloyds TSB Business Insurance have carried out some research and found that more than a fifth of small business owners say they are too busy to take time off, with almost six in ten business owners saying they take less than ten days a year.

Of those who do manage to tear themselves away from work, more than 60% take a mobile phone with them, while almost 20% take a laptop so they can check their work emails.

Isn't it sad that the reasons a lot of people start businesses such as work/life balance, being your own boss, choosing your own hours and flexibility, are the very things that seem to be lacking for many small business owners with so many of them unable to take a short holiday.

So how can you combat this? By using the services of an Office Bird of course!!

Officebird can take care of your calls, sort out your emails and keep things ticking over, allowing you a relaxing holiday safe in the knowledge that your business is in safe and capable hands. For more information please go to www.officebird.co.uk

Credit Crunch

The term Credit Crunch...

"a sudden and drastic reduction
in the availability of credit"

...has now become so much a part of everyday life that it has been included in the 11th edition of The Chambers Dictionary.

Just thought you'd like to know!

HMRC Raise The Limit for Traders to Correct VAT Mistakes

HM Revenue & Customs has announced plans to let businesses correct their own errors of up to £10,000 on their VAT returns.For the new VAT period, starting July 1 2008, the tax authority will raise the current £2,000 limit below which traders can currently amend their VAT mistakes by £8,000.This means that if taxpayers discover an error of up to £10,000 on their previous VAT return, they can amend it on the next return, rather than make a separate disclosure to HMRC.

The full article can be found here.

This has to be good news for businesses of all sizes. If you think you have found a VAT error on a previous statement and need some help correcting it please contact me to see if I can be of assistance.

Revolutionise The Way Your Business Runs

What with talk of the ‘Credit Crunch’ and media reports of the impending decline of the economy businesses are looking at innovative ways to increase efficiency and slash overheads.

In times like these many companies look to trim their biggest overhead, which is often the wage bill. Few companies feel comfortable increasing staffing levels.

So how can a business continue to grow and become more efficient with out the stff, and the headaches they sometimes bring? By outsourcing tasks to a Virtual Assistant (VA). A VA is a cost effective solution for businesses of all sizes. They generally have a better skill set than people looking for work, are highly experienced and used to running a business themselves. A VA can assist with cash flow by helping with credit control and getting invoices out in a timely manner. A VA will take on administration, call answering and secretarial duties allowing companies to get away from the desk and spend more time on income generation activities. Plus you only pay for the time you need. No more paying for holidays, lunch or cigarette breaks. A VA charges for the exact time spent working for your business.

For more information on Virtual Assistants or to arrange a consultation please contact Officebird on 0845 6346502 or visit www.officebird.co.uk

AVG Causes 'Fake Traffic' to websites

If you use AVG anti-virus software you may be interested in the article below. If you don't use AVG you can still be affected as the system creates fake traffic to your website which messes with any stats analysis you you. Basically when you search for something on Google AVG scans every website in order to declare it safe, or not. By doing so the site registers a visit before the person searching actually clicks into your site, which obviously messes up you webstats.

Check this out for more info:

http://www.theregister.co.uk/2008/07/07/avg_stems_fake_traffic/

New Service - Registered Office and Mailing Address

I have now put into place all the procedures needed to be able to offer services as a Registered Office and a Business Mailing Address.

For more info please contact me on the usual numbers.

New Guidance for the Self Employed

Well it's probably about time I started using this news page!

New guidance from the HMRC has recently been issued covering what can be claimed by self employed people working from home. You will need an area of your home set up as an office and used exclusively for business use for set hours of the day/week. So I won't get much for sitting on the sofa with my laptop!!

You can claim for a proportion of mortgage interest and even a cleaner.

This link: http://www.contractoruk.com/news/003842.html explains all.

Don't forget to ask your accountant about the new guidance and he can help you work out the numbers.

Welcome

Hi

The news is that I am creating my web site at the moment - and this is going to be my news page.

Enjoy

Sara