November Newsletter 2016

The Government’s landmark 'Making Tax Digital' initiative, which aims to create a 'transparent and accessible tax system fit for the digital age', may be delayed until 2019 for many businesses. This follows concerns over the 'short' timetable for the implementation of the initiative. The Government has now released six consultation documents, which focus on key issues relating to the new digital drive.

Meanwhile, the Small Business Minister, Margot James, has confirmed new measures designed to support the Prompt Payment Code and help tackle the problem of late payment, including the Government's ambition of payments being made within 30 days.

Finally, with Autumn now upon us, Chancellor Philip Hammond recently announced that he will deliver his first Autumn Statement on Wednesday 23 November. Following the Brexit vote, many expect the Chancellor's 'mini-Budget' to unveil a raft of announcements designed to support the UK economy. As always, we will keep you updated on all of the major announcements, following the Chancellor's speech.


BPU Team successfully complete the Cardiff 10K and Cardiff Half Marathon

Huge congratulations to the BPU team who all successfully completed the Cardiff 10K in September raising money for our chosen charities, KPC Youth and The Movember Foundation. Also many congratulations to Lynnette Davies, BPU's Practice Manager, who also completed the Cardiff Half Marathon a week later.

Well done to everyone that took part!


Staff Updates at BPU

Congratulations to Aled ap Neill who has now been promoted to Manager within the Accounts department. Aled has recently returned to BPU after working in a variety of roles in accountancy practices in West and South Wales and is relishing a new challenge following a period in industry. Aled is also a fluent Welsh speaker.

Also we are delighted that Alice Evans joined our tax department on the 1st November. Alice is CTA and STEP qualified and is joining us as she relocates from Swansea to Cardiff.

A very warm welcome also to our two new ACA students, Katherine Williams and Charlotte Winterbourn who recently joined us to begin their training.


University of South Wales/ ICAEW Tutor's Prize

We were delighted that one of our students at BPU Chartered Accountants, David Kidner, was awarded the annual prize for the university's professional accounting student who achieved the highest combined passing score in their ACA Advanced Level examinations.


Is Your Company Missing Out on R&D Tax Relief?

A lot of UK companies and businesses are not taking advantage of tax relief they could be entitled to. Many activities warrant R&D Tax relief but companies may be unaware of the full extent of what R&D activities may encompass.

R&D tax credit can provide companies with a cash payment or an additional tax deduction who incur qualifying costs in developing new products, processes or services.

If your company and it's R&D development projects meet the necessary conditions, then tax relief is available at varying rates. The current rates of relief are as follows:

  • for small and medium-sized companies paying corporation tax at 20%, the effective rate of tax relief is 46% (that is a tax deduction of 230% on the expenditure). For small and medium-sized companies not yet in profit, the relief can be converted into a tax credit payment effectively worth 33.35% of the expenditure
  • an alternative 11% 'Above the Line' (ATL) credit exists for large company R&D expenditure. The credit is fully payable, net of tax, to companies with no corporation tax liability. The ATL credit scheme was optional until it became mandatory on 1 April 2016
  • SMEs barred from claiming SME R&D tax credit by virtue of receiving some other form of state aid (usually a grant) for the same project will be able to claim the large company R&D tax credit. Therefore they will qualify for relief on 130% of their R&D expenditure. An SME may also be entitled to the large company R&D tax credit for certain work that has been subcontracted to it.

As the points above demonstrate, the tax relief associated with R&D activity can be very valuable.  If a claim for R&D relief is to be made, you will need to consider the following questions.

  1. Is the project making an advancement?  This could include developing and improving a product or process, by making it bigger; smaller; cheaper; faster, duplicating an existing process, service but in a new or appreciably improved way etc.
  2. Is the project overcoming technological uncertainties? This question is designed to determine whether a competent expert in the field will already know the answer to the research or development being undertaken. Minor or routine uncertainties that do not materially affect the underlying science or technology or where there is no real technical challenge will not qualify (e.g. routine copying).
  3. Was the answer/outcome readily deducible?  This precludes R&D from qualifying if the answer was quickly determined.

At BPU we have helped clients put forward their cases to HMRC to ensure they receive any R&D tax relief that they were entitled to. We would be more than happy to work with you and advise on your bespoke circumstances and assist in making a claim as well as ongoing record keeping.


The Xero Certified Advisory Team at BPU

Welcome to your BPU Xero Advisory Team, they would love to speak to clients that are interested in using cloud based accounting software and explain the real benefits in implementing this within your business.

See below an overview of the benefits of using Xero:

  • Very cost effective, saving your business time and money as opposed to traditional on-line accounting systems.
  • One of the most secure ways to store information. In the unlikely event of a fire or a laptop being stolen, rest assured that your business information is safe and secure in the cloud software. In addition to this if you invite users to view your data, you can control the level of access.
  • Your business is able to work smarter and faster.
  • You can use it on the go via your mobile or from any device with internet connection, .
  • Provides a better overview of your finances and improves collaboration with your data and your accountants, you can both view the same screen.
  • The software can integrate with a whole ecosystem of add-ons too.

Call the team any time and speak to Dawn Bevan, Aminah Peertum, James Verdon, Zyaad Peertum or Rozie Khan on 02920 734100.


Making Tax Digital 'delayed until 2019' for many businesses

The introduction of HMRC's new Making Tax Digital (MTD) drive may be delayed until 2019 for most businesses, the Financial Secretary to the Treasury, Jane Ellison, has stated.

The announcement came in response to critics' concerns over HMRC's 'short' timetable for implementing the new scheme.

Delaying the initiative will give larger businesses more time to prepare and adjust, the Secretary announced in a speech at the HMRC Annual Conference.

Some business owners have raised particular concerns over the plans relating to digital record-keeping and quarterly updating.

The Government has also confirmed that the exemption from quarterly returns applying to individuals with secondary incomes of less than £10,000 a year (from self-employment or property) will now be extended to all unincorporated businesses and landlords with annual incomes below £10,000.

Ms Ellison stated that the Government aims to provide businesses and individuals with the 'kind of digital services they expect in the 21st century'.

HMRC has released six consultation documents outlining the plans for MTD, and how businesses and individuals will transition to the online filing system.

These consultations focus on a number of key areas, including how digital recording and quarterly updating will operate, extending cash basis accounting to landlords, and proposals to simplify the penalty system for late filing.

The consultations run until 7 November.

To find out more about the Making Tax Digital initiative, please visit the Hot Topics section of our website.


Growth & Prosperity Fund

BPU would like to make all of our clients aware of a new initiative that Business Wales has recently launched called Growth & Prosperity Fund. BPU would be very happy to discuss your prospects further in obtaining such grants worth between £5k- £25k (50% of the total project costs.)

Eligibility:

  • Existing SME business with less than 250 employees
  • Based in Wales
  • Support projects that create jobs, exploit new markets to grow business, or invest in Superfast Broadband
  • B2B (Business to Business) not retail

If this is of interest please contact us on 02920 734100.


QUOTE OF THE MONTH

'We expect polymer notes to last at least two-and-a-half times longer than the current generation of fivers, and therefore reduce future costs of production.'

The Governor of the Bank of England, Mark Carney, commenting on the launch of the new polymer £5 note.


WEBSITE OF THE MONTH

www.smallbusinessheroes.co.uk

Topical articles and advice on various aspects of running a business.


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