Most contractor accountants probably agreed with the FPB when it criticised the Revenue for closing down its online services throughout the Easter holidays.

Just before the holiday, the Forum of Private Business said the shutdown showed HMRC did not understand the needs of businesses. The Revenue only announced it would close down the entire online network a few days before the 2011-12 financial year came to an end. Its IT systems were to be out of action throughout the holiday so that upgrade and maintenance work could be carried out.

Although the majority of services should have been back online by 6am on the 10th April, some would not be available until the 11th.

This shutdown affected anybody wanting to file PAYE, Self Assessment, Corporation Tax and CIS returns, as well as those submitting stamp taxes, pension schemes and Child Trust Funds.

The online VAT filing service remained online until midnight on the official deadline date and was then taken offline for a few days.

A Revenue spokesman said systems had to be taken down so the department could ready them for the new tax year and more scheduled maintenance might need to take place in October.

Phil Orford, the FPB’s chief executive, said the work took place at a totally inappropriate time and businesses will struggle to understand why HMRC is upgrading its systems at such a critical time in the tax calendar. The fact that the Revenue only gave businesses a few days notice of the shutdown showed it did not understand their needs.

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Freelancers may be interested to learn that The Business Woman’s Network and the FPB are supporting the call for a national day to celebrate UK micro business owners.

The online business knowledge website wanobe.com launched the idea of a day to celebrate the UK entrepreneurs who run the 4.5 million small firms in Britain.

David Noble, the managing director of Wanobe.com said the men and women who run the UK’s small businesses represent dynamism for the battered economy at a time of high unemployment and are the nation’s unsung heroes.

95% of all companies in the UK are micro enterprises and between them they employ 33% of the workforce. Noble says it’s now time to acknowledge the vital role entrepreneurs play in driving the economy.

The FPB has already launched its own initiative called ‘Get Britain Trading’. Phil McCabe, the PR manager for the Forum, said although micro-business entrepreneurs are spearheading the fight to drive the British economy, a lot of people have no idea what it takes to run a business. Having a dedicated day to celebrate the contributions and efforts of small business entrepreneurs would be a wonderful way to highlight how commitment, creativity and bright ideas generate new jobs and help stimulate economic growth.

The Business Woman’s Network’s Mandie Holgate, explained that there are now more than 950,000 self employed females in the UK and around 15% of firms are majority owned by women. They should be extremely proud of the contribution they make to both society and the economy.

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Contractors may have already encountered difficulties trying to obtain finance from their bank.

Shawbrook Bank has now published research findings that confirm that the leading UK banks are making it too hard for small businesses to get a loan.

45% of SMEs say that the level of bureaucracy is too high and a mere 6% think the process they have to go through when they apply for a loan is transparent. Furthermore, 89% of respondents said the banks lacked common sense when it comes to lending.

The CEO of Shawbrook Bank, Owen Woodley, said smaller forms should be receiving as much assistance as they need to help them grow and become successful. It’s a matter of grave concern that so many of them feel the loan application system is unclear and obstructive.

It is vital for a small business to be able to access the right finance when they need it if they are to expand and in order to achieve that we must have a lending process that is straightforward and efficient.

Shawbrook recently promised that it would make £250 million available to UK small enterprises next year.

Another problem facing small businesses is that credit agencies appear to have very different ways of assessing credit worthiness.

A recent study of the credit reports of private firms discovered a 150% average variation rate in the credit limits recommended by three high profile agencies. Although agencies do use different criteria to base their scores on, the size of the discrepancies is causing concern.

Phil McCabe from the FPB pointed out that a flawed credit report could mean the difference between success and failure for an entrepreneur.

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Accountants for contractors may be interested to learn that HMRC has launched a consultation on the proposal to make online filing of VAT returns compulsory for firms with a turnover of under £100,000.

The Revenue wants more businesses, and individuals, to go digital and conduct their transactions online.

If approved, the VAT filing requirement will come into force next April. HMRC would also like to see all businesses use online systems for registering and deregistering for VAT and amending their company details. There are no plans to make the registration requirements mandatory yet.

The Revenue has been moving business taxation online since 2006 and online is fast becoming the default channel for business taxation. Lord Carter said in his original review of online services that legislation was necessary to combat general business inertia and that this should take place in stages.

HMRC says that processing will be both quicker and more accurate once filing is conducted online and that should appeal to companies.

However, the FPB says small businesses are paying the price of inadequate online tax systems and red tape continues to hold back SMEs ability to comply with tax regulations.

Andrew Needham, the tax advisor to the FPB, said the tax system includes complex and cumbersome online procedures. Furthermore, he said that HMRC employees received no training on dealing with VAT returns submitted electronically; a situation he found mystifying.

It now takes up to 50 days to complete VAT registration due to extended verification procedures and small businesses are suffering. Late payment of PAYE attracts penalties but small businesses are battling with the worst cash flow problems in 20 years.

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Britain’s sole traders and contractor accountants have lost faith in the country’s banking system, according to the Forum of Private Business.

The FPB is now calling on the government to introduce new measures to restore smaller enterprises’ trust in banks.

The British Bankers’ Association recently published research showing that about 670,000 UK firms have needed funding in the past 12 months but did not submit an application for it. 18% of companies believe they will require finance within the next three months but say they will not be able to apply unless there is a significant improvement in the country’s economic conditions.

The FPB’s senior policy adviser, Alex Jackman, pointed out that the report showed that small businesses have a crisis of confidence when it comes to the banking system in the UK. As well as practical measures to restore confidence, innovative funders must also be allowed to compete in the current bank dominated finance market.

The Bank of England published its Trends in Lending report for May recently and it showed a record decline in the number of approved loans for smaller enterprises. It also stated that the average interest rate payable on small business loans is 4.66%. Two years ago, the rate was 4.29%.

John Walker, the national chairman of the FSB, said that entrepreneurs and limited company contractors should be able to take advantage of healthy competition from the UK’s banks. He pointed out that the 4.8 million small businesses in the UK are the ones that will create jobs and drive the economic recovery, and yet they are getting a worse deal than their larger counterparts.

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Following the news last week that the big banks could miss the SME lending targets agree by Project Merlin, the Forum of Private Businesses called for better competition, local bank managers to have lending powers and more investment in regional branches.

The chief executive of the FPB, Phil Orford, said the Forum wants banks to invest and regional services and give local bank managers the power to make lending decisions as they are best placed to understand individual local companies, which could include accountants for contractors. The current over-centralised, tick box mentality must go, he added.

The Project Merlin banks released a joint statement claiming that demand for small business funding has declined. However, the latest survey of small businesses from the Department of Business, Innovation and Skills discovered that over a quarter of SMEs looked for finance last year and just over half of them had difficulties getting funding from the first institution they went to.

Orford went on to say that regardless of the banks’ comments, there is still a pressing need for affordable funding. The main problem is that mainstream lenders are increasingly alienating small businesses. The big banks dominate and this has led to a lack of competition. Although there are a few innovative funding platforms, they are struggling to break into the market.

HSBC has said it is willing to welcome firms with viable propositions. In fact HSBC’s head of small business banking, Huw Morgan, said the bank would like to see more companies asking for funding.

He went on to say that businesses are now feeling more positive about their ability to grow. A lot of firms are scrutinising their customer base to see how they can expand by entering new markets and offering more.

Morgan finished off by saying that the bank will fund firms that have done their research and have a clear business strategy.

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The Forum of Private Business has claimed that small businesses in the UK are still having difficulties accessing finance. In fact, the situation has got so bad that it’s hard for them to reach a negotiating point with the major banks.

FPB spokesman, Phil McCabe, said there is a breakdown in communication in the way lenders judge risk. In the not too distant past, decision making would be done by the local bank manager. He would normally know business customers and therefore be in an ideal position to decide where a loan was a risk worth taking.

Now that decision making has been largely centralised, the banks are less likely to know about their small customers and the local business environment. The Forum would like to see improved local decision making powers and a better local presence, he went on to say.

However, small business owners also need to up their game and produce better, more comprehensive financial information if they want the banks to say yes, he concluded.

The problem is not just in England either. The FSB has pointed out that lending in Scotland is dominated by two large banks.

The East Scotland chairman of the FSB, Michael Dixon, said there had been a huge issue over small business finance in the last three years, due mainly to the domination of RBS and the Lloyds Banking Group.

At a recent hustings event, Dixon asked party leaders what measures they would take to help firms get the finance they require to help the economy grow.

Tavish Scott, the Scottish Lib Dem leader, said his party would ensure there was a business-led, regional development bank structure across the country and although it would still be commercial lending, it would make sure finance was available.

Alex Salmond, the SNP leader was quick to criticise this proposal saying you can’t solve the problem by setting up a new bank to replace the existing ones. The answer is to make sure the banking market is competitive.

The Scottish people are voting for a new parliament this Thursday and Alex Salmond’s SNP party is currently ahead in the polls. It will be interesting to see how he makes the market competitive if he gets re-elected and will the English government follow his lead?

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Small businesses and contractor accountants are now less confident in their ability to create new jobs, according to research conducted by the FPB.

The end of last year was hard for the small business community and more of them than expected reduced their headcount. The immediate outlook is a little more encouraging and fewer SMEs expect to cut their payroll. However, business confidence is still weak in areas that depend heavily on the public sector. In Northern Ireland, confidence levels are at -25% and in Wales -11%.

22% of small businesses intend to hire new employees this year but this figure is well down on the 30% who were optimistic of growing their workforce when asked last December.

Two thirds of those planning to hire, expect to take on ready-trained employees whilst a third think they will have to devote time to training their new recruits.

37% of respondents to the survey expressed concerns about whether new employees would be able to fit in, 36% worried about the cost and amount of time needed to comply with employment regulations and a similar percentage said the lack of specialist or technical skills amongst new-hires made them anxious.

John Walker, the chairman of the FPB, said it was worrying that more small businesses than anticipated had to make staff redundant, especially with female and youth unemployment edging towards 1 million.

Small businesses need the government to give them a hand if they are to pick up the fallout from the austerity drive, he pointed out.

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Small businesses and accountants for contractors denied funding from one of the big 5 banks now have the opportunity to get their application reviewed by another person within the bank under the new loan appeal system launched by the Business Finance Taskforce last week.

This individual will not have taken part in the initial decision making process. The big banks also need to provide unsuccessful applicants with information on alternative ways to obtain finance, or put them in contact with a business mentor.

Professor Russel Griggs has been appointed as the external independent reviewer and he will report each year on the effectiveness of the scheme.

The FPB believes this is a welcome move and if it is implemented correctly it will help restore a measure of trust in bank lending. However, the Forum stresses that business owners must take advantage of the appeals process if they think they have been treated unfairly. Even if they think they will still be refused, lodging an appeal will create accurate data on how effective the system actually is.

Phil Orford, the FPB chief executive, pointed out that the Better Business Finance campaign has ensured that the major banks now have to spell out the standards businesses can expect to receive, and SMEs can obtain online support and access to an appeals process if they feel lenders are not living up to the standards.

Brian Mairs from the British Bankers Association explained that any company turning over up to £25 million can use the appeals process if it feels it has received unfair treatment over a loan application. The appeal must be launched within 30 days. The BBA also pointed out that the initiative is not designed to increase the amount of money lent to small businesses, rather to ensure that lending decisions are correct.

The FSB has given a cautious welcome to the new system. Any measures that increase transparency and fairness have to be a good thing, a spokesman for the FSB commented. However, the Federation is disappointed that the system is not open to all businesses regardless of size or number of staff employed.

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External reviewers have been appointed by the Business Finance Taskforce to ensure the Big 5 British banks stick to their promise of a ‘fair, prompt and transparent’ appeals process for companies that are refused loans.

The review team will be led by Professor Russel Griggs and supported by Promontory, a consultancy firm. HM Treasury and the BIS Department have backed the selections.

Companies can see details of the treatment they should receive from the Taskforce banks by checking the website or the site of their own bank.

The chief executive of the BBA, Angela Knight, explained that last October the Business Finance Taskforce agreed to 17 initiatives aimed at supporting UK SMEs. One of these was to set up a monitored process for appeals. The Taskforce banks have agreed a common set of principles for operating individual appeals and these should help businesses receive the support they need to grow.

Phil Orford, the CEO of the FPB, said business owners should not let the banks off the hook; rather they should lodge an appeal as soon as possible if they are denied funding. Otherwise the financial institutions will be able to say that SMEs are satisfied with lending decisions.

Meanwhile, Barclays Bank credit card division has recently acquired the credit card portfolio of MBNA Europe in a move which will expose the high street bank to around £130 million of outstanding debts.

Bob Diamond, the new chief executive of Barclays, has decided that the bank should increase its appetite for risk if it is to meet its profitability targets for the next three years.

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For the last couple of years, SMEs and contractor accountants have had difficulties accessing finance and the problem still isn’t going away, says Ed Moss from the Manufacturing Institute.

Despite the banks assuring us that they are open for business and ready to help, people still don’t trust them.

Could that situation be about to change? The European Commission recently announced the introduction of a European Union Small Business Act. Included in the policies is an action plan intended to improve access to finance for SMEs’, help them enter the venture capital markets and raise awareness of SMEs potential amongst investors.

One measure that might help small business cash flow is the requirement for public sector organisations to settle their debts within 30 days. The public sector has been criticised for a long time for its tardiness in paying suppliers; many of whom are small enterprises who have been struggling to keep afloat since the start of the recession.

Ed Moss also pointed out that banks could help SMEs if they speed up the cheque clearing system. If you pay a cheque into the bank on Monday, you have to wait until Thursday before it clears. In Sweden and Greece, you pay the cheque in at 10:00 and it’s cleared by 12:00 the same day or the bank is fined.

Moss made his comments after the FPB revealed that over 200 entrepreneurs are supporting the Get Britain Trading campaign designed to promote the contribution small enterprises make to the country’s economy.

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HMRC is in hot water yet again; this time over data showing that over 9 million National Insurance contributions dating back as far as 2004–05 have not been added to employees’ records.

The total monetary value of these unmatched contributions is in excess of £1.2 billion.

Ian Liddell-Grainger, the MP who chairs the All Party Parliamentary Group on Taxation, warned taxpayers that their pensions might be affected if HMRC does not resolve this backlog.

The problem stems from mistakes on the P14 forms that employers submit to HMRC every May. These forms log the NI and PAYE contributions for individual employees. If the Revenue finds an error, it is supposed to contact the employer in order to obtain the correct information. However, it appears that administrative corners were cut and this did not happen.

The MP said that taxpayers with unmatched NICs may need to find their old payslips or ask their employer to verify the contributions paid.

In order to qualify for a full state pension, individuals have to have paid contributions for a minimum of 30 years.

Employers have reacted angrily to suggestions that they are to blame for this situation. Phil McCabe from the FPB pointed out that HMRC has a track record of poor levels of efficiency and administration and the tax system needs simplification.

HMRC has fought back at the media coverage by posting a notice on its website saying that the department has not lost the contributions. Unmatched contributions are placed in a suspense account until they can be correctly allocated.

A spokesman for the Revenue explained that they write to individuals if they see a gap in contributions and respond to the situation immediately if someone reports a gap. It is simply not true that millions of people will lose their correct pension entitlement.

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