Online accountants could find themselves in more demand following the news that the number of small businesses in the UK is increasing.

Creditsafe, the intelligence supplier, recently published data showing that the number of start-ups more than compensated for the increase in insolvencies last year.

The organisation’s figures show that 470,000 new businesses started up in 2011 and even after taking insolvencies into account, business numbers rose by 455,000. Creditsafe believes that if the trend continues this year, 2012 will be the year of the start-up.

Creditsafe’s business development director, David Knowles, pointed out that although 2011 was a difficult year, the Great British entrepreneurial spirit is alive and kicking. Despite a higher number of companies going insolvent, the number of new firms has increased steadily over the past two years and growth in the business population actually accelerated last year.

John Walker, the national chairman of the FSB is also confident that 2012 will be a good year for small businesses. The Queen’s Diamond Jubilee and the Olympic Games put the UK very much at the centre of the global stage this year and these events could provide golden opportunities for the small business community to expand.

He explained that a lot of small firms want to grow and innovate this year and the Olympics and the Jubilee will not only boost people’s spirits but also provide opportunities for expansion and diversification. In addition, exports reached record levels last year and small businesses may be able to develop further into vibrant Asian markets.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: New MacBook Air by mendhak

You cannot have failed to notice that there’s been a bit of trouble brewing in the Eurozone recently.

The UK’s membership of the European Union has never suited everybody and sure enough, the “Get out of Europe” brigade is having a field day.

Since we joined the EU, it’s been quick to impose thousands of regulations on us, many of which are expensive to implement and heap pointless bureaucracy on British businesses.

Take the Agency Workers Directive for example. The CBI warned that 250,000 jobs could be at stake if it was implemented and Open Europe has estimated that 80% of those affected will be in the UK. Furthermore, the impact assessment conducted by the Government estimated that it would cost British businesses £3.7 billion to prepare for AWR.

Then we have health and safety regulations. It has been estimated that health and safety regulations have cost the British economy £176 billion over the last thirteen years and 71% of that can be attributed to legislation from the EU. That’s almost £125 billion the UK has spent courtesy of the bureaucrats in Brussels.

If countries continue to muddle through the current crisis, the chances are that nations like Greece, Italy, Japan, Portugal and Spain plunge back into recession. There would also be a 70% chance of that happening in the UK.

Amid all the chaos it would have been easy to miss one piece of good news from the ONS! The UK CPI inflation rate dropped to 4.8% and the RPI fell to 5.2% last month; both down 0.2 percentage points. The Bank of England now expects inflation will drop to under 2% within the next 18 months. That will be something to look forward to!

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Blowing in the Wind by Blowing in the Wind

It may come as no surprise to some contractor accountants to hear that HMRC is going to have a new permanent secretary for tax next summer.

In addition to announcing the retirement of Dave Hartnett, the government has also revealed that Lin Homer, the permanent secretary at the DoT will take over as chief executive at HMRC.

Homer may find she is taking over during a period of disarray as the Revenue looks for somebody to fill board chairman Mike Clasper’s position and a successor to Hartnett.

Qualified lawywer Homer said she would benefit from the continuity and experience provided by Hartnett and Clasper as she settles into her role at HMRC. Hartnett has done great things for the UK in the battle against tax evasion, avoidance and fraud and without him, billions more tax could have been lost.

Despite his high profile stance against fraudsters, Hartnett has been involved in more than his fair share of controversy recently. His role in negotiating disputed corporate tax settlements with companies like Goldman Sachs and Vodafone brought him into the spotlight and led to calls for his resignation.

UK Uncut members last month held a protest calling for Hartnett’s resignation and ever since the HMRC coding fiasco in 2010, numerous people have been calling for changes at the top of the Revenue.

Dame Leslie Strathie, the outgoing chief executive, resigned last month for health reasons, and with Hartnett soon to go, the protesters have got their way.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: charade #90 answer by ndrwfgg

Advisors have criticised George Osborne’s decision to restrict the 100% capital allowance to specific enterprise zones.

The Chancellor said that the 100% capital allowance would be available to companies in the Black Country, Humber, Liverpool, Sheffield and the Tees Valley. Firms in the North Eastern zone will also benefit and the relief might be extended to the Port of Blyth.

In his Autumn Statement last week, Osborne also announced a second enterprise zone in the Humber estuary and one in Lancashire to bring the total up to 24.

Stephen Herring from BDO said it was regrettable that the government has only granted the 100% capital allowances to less than a third of enterprise zones. He believes this tax relief targeting is unjust and all zones should be treated the same for tax relief purposes.

The 100% tax relief will only available on depreciation of plant and machinery expenditure, a measure that Harinder Soor from KPMG says is not as generous as enterprise zones in the 1980s and 90s received when tax relief was also allowed on buildings and structures.

The Chancellor also announced a National Loan Guarantee Scheme that should reduce the cost of borrowing for small businesses and an extension of the business rates relief.

Entrepreneurs welcomed the announcement of the National Loan Guarantee Scheme. The CEO of borro, Paul Aitken, said this was a positive step towards helping small businesses access much-needed finance. However, he was concerned that larger businesses would get the most benefit from the scheme, rather than small firms looking for immediate finance.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: You can almost see the grass grow by aussiegall

HMRC has warned online accountants not to get hit by unexpected charges if they’re doing their Christmas shopping abroad.

Angela Shephard, the head of customs policy at the Revenue, explained that a lot of people go abroad to buy Christmas presents, or shop online from countries outwith the European Union, believing that the goods are cheaper. However, the price you see may not be the final price you pay.  There is a limit to the amount you can purchase abroad before becoming liable for import duty or VAT.

People arriving in the UK by commercial air or sea transport, from a country that is not part of the EU, are allowed to bring in goods to the value of £390 duty and VAT free. Alcohol, tobacco and fuel are subject to separate allowances. Individuals arriving by other means are only allowed goods valued at up to £270.

If you purchase Christmas gifts over the Internet from a non-EU country, you will be liable for VAT if the package is valued at more than £15. Customs duty may also have to be paid if the goods are valued at more than £135.

If you receive a present from a non-EU country, you will be liable for import VAT if the value of the gift exceeds £40.

Individuals can bring back as many duty and tax paid goods as they like from another EU country providing they are for their own use. However, customs officials are within their rights to ask questions if you return from France with your vehicle weighed down with beer, cigarettes, wine and spirits.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: christmas 2007 by paparutzi

Online accountants may be interested to learn that 38% of SMEs in the UK will expect all their documents to be processed digitally within the next 2 years.

New research from CCH also found that just under three quarters of SMEs want to send at least 50% of their data to their accountant digitally.

SMEs are embracing online technology and many of them have now migrated sales, purchasing, recruitment and marketing functions online as a means of saving both time and money. Small firms also conduct accounting, banking and insurance functions online. In fact 60% of the survey’s respondents said they conducted at least some of their banking online.

CCH Software’s head, Simon Crompton, explained that there was a growing appetite for online systems, especially among younger entrepreneurs. SMEs are a driving force when it comes to adopting new technology and accountants need to ask their clients where they stand on the issue.

Some firms may opt to continue accessing their accounting services as before, but the majority will not want to do this indefinitely and the results of the survey seem to back this up.

Accountants do seem to be getting the message. 44% of SMEs said they could access at least one service online. Some accountants allow clients to enter their data into an online accounting system, whilst others will accept scanned documents via email. SMEs that do not already enjoy these benefits are hoping to see them within the next two years.

Crompton continued by encouraging accountants to establish their credibility and introduce software to show their clients that they are moving towards the online accountancy environment they want to see. Just in case contractor accountants need any further encouragement, he also pointed out that 31% of SMEs said integration with their accountant’s system was considered a key benefit.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: King Cloud by akakumo

Accountants might be interested to learn that the long-running saga concerning the tax residency status of Robert Gaines-Cooper finally reached its conclusion in the Supreme Court last week.

This residency dispute has been going on for many years. Gaines-Cooper claimed that as he spent the majority of his time living in the Seychelles, he was not a UK resident. However, HMRC disagreed on the grounds that he still had strong links with the UK and therefore he was resident.

Last Wednesday, the Lord Justices ruled in favour of the Revenue and now concerns are being raised that HMRC will start to pursue thousands of Brits who have left the UK for tax purposes.

Jason Collins, a partner at law form McGrigors, said the floodgates have been opened and tax exiles would be well advised to obtain urgent advice on their status from a reputable firm of online accountants.

He went on to explain that Gaines-Cooper had determined his residency status by following the guidance in HMRC document IR20. This document should have provided certainty over the Revenue’s rules for determining whether or not a taxpayer should be treated as a UK resident, and yet this case proves that that certainty does not exist.

Although the Lord Justices did criticise HMRC over the lack of clarity in the IR20 guidelines, they did point out that taxpayers could contact a Revenue office for advice if they had difficulty interpreting the regulations.

The government is hoping to introduce a statutory residence test that will be both simple and transparent and Collins said its introduction is now more important than ever.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Palm Trees by ajcreencia

Nearly half of the UK’s B2B businesses, including accountants for contractors, are not utilising social media to their best advantage, according to research conducted by PricewaterhouseCooper.

The survey found that although companies are investing money in social media, they are not laying down clear usage strategies or investing in the necessary human resources to make it effective. In fact, less than one in eight B2B companies have a dedicated full-time social media team.

Sean Mahdi, from PwC, explained that social media is transforming the way we work and communicate with each other. Businesses have to adapt to a new way of engaging with customers, who increasingly put more trust in their peers.

B2C companies appear to be exploiting social media with much more success than B2B organisations, he added.

Social media is not only used to drive sales. It can be used to create loyalty to a particular brand, demonstrate that a company is being transparent and responsible and used to create two way dialogue. It is therefore essential for businesses to draw up a strong social media strategy in order to interact successfully with customers.

Network security professionals agree that using social media in the workplace can be good for business, but that it can create risks that companies lack the tools to address.

The Ponemon Institute questioned 4,640 IT practitioners and contractors in twelve countries, including the UK and Hong Kong, and 63% of respondents said that social media usage put their organisation at risk. 52% said their business suffered more malware and virus attacks now that their employees used social media.

Even though the majority of companies allow their employees to use social media at work, 89% of respondents felt it diminished productivity.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Social Media Magazin by some_communication

Two years ago, HMRC set up the High Net Worth Unit to look into the personal tax affairs of the UK’s wealthiest citizens; a move which appears to have paid dividends.

Since the unit was set up, it has recovered a total of £247 million; £85 million in 2009/11 and £162 million last year. Initial projections were that the unit would yield between £50 million and £100 million every year so it is already exceeding expectations.

David Gauke, the Exchequer Secretary to the Treasury, explained that everybody must pay their fair share of tax, and by working in conjunction with tax agents and online accountants, the Revenue’s HNWU team has been able to make sure the complicated tax affairs of the rich are dealt with accurately.

Meanwhile, HMRC has been criticised for its tactics over the issuance of penalty notices to employers who are late submitting tax returns.

In a recent tax tribunal case it was revealed that the Revenue did not issue a penalty notice until the taxpayer had already amassed fines worth £400. If the penalty notice had been issued in the first month, the fine would only have been £100.

Some employers genuinely forget to submit their return and higher penalties are disproportionate when an early reminder could be enough to inform them of their mistake, said Rob Durrant-Walker from the York Office of UHY Hacker Young.

He went on to say that HMRC should be concentrating on making sure everybody pays the correct amount of tax and helping them to do so rather than adding on extra charges.

The Revenue is also implementing a new penalty regime for self-assessment taxpayers who file their returns late. In an important change to the previous rules, failure to submit a tax return will result in an automatic £100 fine, even if the taxpayer does not owe any money.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Washing Machines by mikecogh

Accountancy students, the online accountants of the future, are feeling confident about their future employment prospects despite the constrained jobs market and tough economic climate, according to a study carried out by CIMA.

The Institute found that more than 90% of CIMA students are confident that their job is secure, at least for the remainder of 2011. Furthermore, 60% are optimistic enough to think about changing jobs within the next couple of years.

CIMA accountants expect their salary to rise by 6% over the next two years, despite wage inflation in the UK currently just 2%. The majority of students who responded to the survey think we’ve seen the worst of the cutbacks and 27% believe hiring will increase this year.

David Rowsby, CIMA’s regional director for Europe, said finance students are confident that they have strong qualifications which have a unique focus on business. With economic uncertainty continuing in many parts of the world, students think a professional accountancy qualification from CIMA is the best way to forge a career in the global environment, he added.

The survey also found that 57% of accountants in the UK are happy with their salary, but more than 50% of respondents expect to receive an increase within the next 12 months.

The high level of confidence in job security amongst accountancy students may well be justified as demand for qualified finance professionals soared last month.

According to the Reed Job Index, demand for qualified accountants registered 134 last month, compared to 127 the previous month. However, in real terms, salaries have dropped since December 2009 registering 98 – 2 points under the 100 point baseline.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Sunshine by aussiegall

Analyst firm Gartner has predicted that a lot of businesses will concentrate on revising their privacy policies next year in the wake of ever-advancing technology.

The firm expects more than 50% of companies to tweak, or update, their existing policies to fit new regulations and the increased threat of cyber crime. Data breaches will more than likely be at the forefront of many privacy officers’ minds, Gartner suggests. However, it went on to say that the majority of companies should have adequate controls in place already and should only need to devote around 10% of their time to data security issues.

The second most likely area for privacy officers to focus on is location-based services such as cloud computing. The remote nature of these services makes them at odds with privacy. Another task will be to evaluate and create a process for determining the sensitivity of different sorts of information, but as with data security, once a process is established, it should only take around 10% of people’s time to maintain.

Finally, Gartner warns privacy officers that they must take the ever-changing regulatory environment into consideration and ensure they adjust company policies without getting too distracted by the changes.

Meanwhile, Stuart Hibbert, the chief executive of icomplete.com, has been extolling the benefits of cloud computing services. He explained that the cloud can provide businesses with low cost, high levels of functionality.

The biggest benefit of taking to the cloud is that you don’t need to buy your own servers, set the system up or back it up at the end of the day. It’s available 24/7 at a very small price. Hibbert also claimed that businesses will see increased productivity if they move to the cloud because users spend less time chasing people up.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Privacy by rpongsaj

The Chartered Institute of Taxation says there are a significant number of issues that need to be addressed before HMRC can implement the tax agent strategy.

The Revenue recently published proposals that would allow authorised tax agents, including some online accountants, to use a self serve system allowing them greater access to its systems. Under the scheme, advisors that had already enrolled would be able to amend PAYE codings and change addresses themselves.

Whilst the initiative has been welcomed by many in the profession, the CIoT and the ATT have said that there needs to be an independent body overseeing the disenrollment and suspension of advisors. Around 1,500 members of the CIoT contributed their views and they highlighted concerns over data security and the additional burden a self serve system could put on the advisors.

The president of the ATT, Andrew Meeson, said there needs to be further clarification over who will be able to access self-serve. A lot of people feel that unrepresented individuals should have some access. We also need to receive some reassurance about data security within the Revenue’s systems if all agents have access. Professional agents will not want to take part in the system until these issues are resolved, he added.

Anthony Thomas, the CIoT’s president, went further saying tax advisors are not going to be interested in self-serve if it forms part of an unpalatable package which will cause problems later.

The closing date for responses to HMRC’s consultation on the tax agent strategy is September 16th.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Concern by quinn.anya