HMRC is increasingly turning to debt collection agencies in its bid to boost its take of outstanding tax and VAT. Furthermore, the Government department is also becoming more reliant on credit agencies as it tries to reduce fraud.

Public services lose £31 billion each year due to fraud and error, and losses due to tax mistakes account for nearly 20% of that total.

According to the Credit Services Association, debt collection agencies were employed to chase debt worth £58 billion last year in the UK. During the second half of 2011, the total value of debt held by members of the CSA increased by 11%.

Sara de Tute, the president of the CSA, said its not surprising that debts have increased since the credit crisis. However, the increase is also due to new private and public sector creditors who now see outsourcing their debts to professional agencies as a valid means of recovering vital funds.

Overdue debts cost the government between £7 billion and £8 billion every year and 95% of that debt is owed to HMRC and the Department of Work and Pensions. The government has now asked collection agencies to help it recoup some of those debts.

The Revenue has introduced a process for screening tax credit applications and this has saved it £50 million. The department is also developing Connect, a new system that will identify tax fraud and non-compliance. HMRC is also conducting more tax investigations and has increased the number of people it prosecutes each year to 1,000.

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

Image: Debt Trap Vector Illustration by Vectorportal

According to recently published data from KPMG, total fraud in the UK reached an all time high of £3.5 billion last year.

In the final six months of 2011, around £2.5 billion worth of fraud was unearthed. Included in that total were five cases of fraud, worth in excess of £50 million each, which have since come to court.

Forensic partner Hitesh Patel from KPMG said economic uncertainty had fuelled the increase in fraud. Government agencies and businesses have been rooting out more cases of fraud through operational changes and austerity measures, but the economic downturn has added financial pressure on employees and acted as a catalyst towards more fraud.

The public sector suffered from 68 fraud cases valued at £1.09 billion, whilst financial companies had fewer cases at 59, but these were worth £1.52 billion. Of the latter, professional criminals committed the majority of the fraud, but customers and company insiders also contributed to the numbers, KPMG discovered.

In fact KPMG found that professional criminals were responsible for a total of 98 cases of fraud worth a total of £1.4 billion. Many of these were committed online, such as phishing attacks and bank fraud.

57 cases of fraud, totalling £729 million, were committed by management, an increase of 74% from 2010. In one case, a hedge fund owner was accused on over-inflating assets after some fraudulent transactions collapsed.

Patel stressed that organisations must make sure they have robust fraud prevention mechanisms in place so that they do not lose the money they have worked so hard to make.

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

Image: I love the Light & I dig the Sun by Untitled blue

The National Audit Office recently published a report stating that £275 million worth of taxpayers’ money was wasted by the Civil Service last year on ineffectual training courses.

The NAO estimates that hundreds of millions of pounds are wasted every year as the Civil Service puts employees on expensive courses that don’t work. Less than 50% of the public sector employees questioned thought that the training they had received in the last year helped them do their work better.

Kevin Beales, the MD of the North-East based Test Factory, said these figures were probably just the tip of the iceberg of a UK culture of poor staff development. Organisations in both sectors know they need to offer staff regular opportunities for personal development if they are to get the best out of them, but they give little thought to what the needs of their staff actually are.

In order to provide suitable training, employers, including accountants for contractors, should analyse staff training needs so that they can make an informed decision on appropriate training. Employees should also be given the opportunity to identify areas where they feel they could improve leading to personalised training plans to aid their development.

Research from the CIPD suggests that workplace coaching drive business success and helps employers manage change effectively. Dr John McGurk, said companies should ne maximising the value they get from their employees and this can be best achieved by aligning coaching to business objectives.

The CIPD’s adviser for learning and talent went on to explain that about 80% of UK businesses use coaching to improve staff performance levels and maximise their employees’ potential.

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

Image: Bored by John-Morgan

BDO’s six monthly Fraud Track update shows an increase in the number of business fraud cases that were reported.

The report for the six months to the end of May 2011 also showed a year-on-year decrease in the value of fraud from more than £1 billion to £920 million. There was also a significant drop in the value of an average single fraud, down £1.5 million to £4.5 million.

However, there were 205 reported cases of fraud in the six month period, the highest number since the inception of the report.

Simon Bevan, BDO’s head of fraud services, said the insurance and finance sectors could be dealing with fraud through civil means rather than criminal prosecutions. He believes the financial services sector could be reluctant to report fraud and 90% of fraud is never reported. A lot of those who do report fraud question whether the police or the Serious Fraud Office are the best people to deal with it.

Whilst the value of reported fraud in the insurance and finance sectors has nearly halved, public sector fraud has almost doubled since this time last year.

The report also showed that only 2 cases of procurement fraud where reported to the police in the last six months, even though this is the most common type of fraud. Bevan pointed out that two-thirds of all the investigations he has conducted over the last twenty years have involved procurement fraud.

85% of buyers think they should be doing more to combat the problem of procurement fraud, according to a SM100 poll earlier this year.

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

Image: Scary Identity Thief by CarbonNYC

New research has discovered that a lot of private sector employers, including some contractor accountants, are thinking of reducing holiday entitlement to cut the cost of employee benefits.

Insurance provider Metlife surveyed 403 SMEs and found that 27% think holiday entitlement is too generous and 25% are thinking about reducing paid holiday leave.

Full-time workers in the UK are entitled to 28 days paid holiday per year, including bank holidays. Employers would like to cut 4 days paid leave to reduce costs and 36% say they are thinking about offering staff additional unpaid leave.

Dominic Grinstead, the MD of MetLife, said employers are questioning the value of employee benefits packages and paid holidays form an expensive part of the bundle. A lot of employees show that they are prepared to be flexible, but they do want something in return.

The survey also found that more than 33% of employees would work longer, but only if they received more money. However 60% of employees do not think they will get an annual salary increase in the next year and 28% have not seen their wages rise for more than two years.

Public sector employees are facing a salary freeze and although some private sector wages are increasing, the average 3% settlements are below inflation. 16% of private sector organisations are operating pay freezes, 31% intend to offer increases below RPI inflation and 17% say they will offer targeted salary rises for some of their employees only.

John Cridland, the CBI’s director-general, said he was confident that growth in the private sector will compensate for public sector job losses but inflationary pressures are causing the majority of employers to make tough decisions when it comes to pay.

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

Image: stress by madstreetz

26% of employers do not intend to increase salaries this year as sluggish private sector growth and public sector austerity measures impact companies’ capacity to reward their employees.

The latest annual Reward Survey from the CIPD shows that while 99% of employers will not be cutting pay this year, only 65% will actually be increasing it. A further 9% have delayed their review of salaries.

60% of respondents said market rates were the most important factor when it came to determining salary levels and 61% link pay to individual performance, at least in part.

67% of organisations operate reward schemes that are performance-related and the most common options are pay rises based on merit and individual bonuses. 29% also operate non-monetary awards for individual clerical and manual members of staff.

The CIPD’s performance and reward adviser, Charles Cotton, said it’s not surprising that some companies are not able to award salary increases this year. The survey results also show that employers are focusing more on linking pay and bonuses to performance.

Meanwhile, private sector pay edged up by 3% in the first quarter of this year. Inflation is hovering around 4.5% so the rise doesn’t fully compensate but it is an increase which is something public sector workers currently yearn for.

The increase in private sector pay has been led by the automotive and utilities sectors. 3% is still well below the CPI rate and when you factor in the freeze in public sector pay, the average comes out at 2.5%.

Experts are now predicting that the Bank of England will hold the base rate at its historic low of 0.5% until at least November. With inflation rising faster than wages, take-home pay will continue to shrink for a while yet.

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

Image: Rolling it… by mollypop

Boris Johnson, the Mayor of London, has said that more than 2,000 people have gained a job or been taken on as an apprentice as a direct result of a jobs and skills drive throughout the GLA.

Between April last year and March this, over 1,100 people joined apprenticeship schemes operated by the Greater London Authority Group and its contractors. Mr Johnson is now well on the way to meeting his own target of creating 3,000 apprenticeships by next year.

The Mayor has also secured jobs for more than 1,000 out of work individuals in the past year by requiring suppliers to the GLA to provide job and training opportunities as a condition of obtaining a contract.

Johnson’s programme uses public sector procurement to combat unemployment and is the first one to do so in the UK. The GLA has been talking to the government and large organisations to encourage more regions to take up this approach.

The London Organising Committee for the Olympics has now adopted the scheme, as have the Olympic Delivery Authority and Crossrail.

Meanwhile, construction firms working on Olympic projects have been warned that HMRC will crack down on any breaches of National Insurance, tax or national minimum wage regulations.

The Director General of enforcement and compliance at the Revenue, Mike Eland, said HMRC wants to help employers and contractors understand their obligations but it will also deal with people who break the law deliberately. The Olympics are a great opportunity for British companies but they must comply with employment and tax obligations.

He went on to reassure honest businesses that they have nothing to be concerned about but said that deliberate tax evaders would be tracked down and liable to criminal prosecution.

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

Image: It’s not easy being green by Daveybot

Contractor accountants may want to consider working alongside their clients to come up with cost saving measures after the ICAEW said this year promises to be extremely difficult financially for many companies.

The combination of low consumer confidence and public sector spending cuts will have a considerable impact on their revenue generating ability, the Institute warns.

ICAEW’s head of enterprise, Clive Lewis, said that despite the recent decrease, inflation is still high, but this is only one of many pressures facing companies at the moment.

In order to offset increased costs, the Institute has put forward a number of suggestions which could interest accountants, such as whether profit margins can be increased. It also suggests re-examining the fundamentals of products and services but warns against switching to cheap materials which could damage a brand and affect sales.

A lot of suppliers are offering incentives and there could be benefits to changing. There are now new suppliers with competitive prices in the market place and things could have changed significantly since a company’s supplier base was last reviewed.

Businesses should also tackle overheads such as energy costs, human resources and space. Significant improvements can be gleaned by more effective organisation of workloads and workspaces.

Leveraging the power of technology enables employees to work better, reduces the need for meetings and cuts down on communication costs, the Institute advises and companies can further cut down by taking advantage of all the tax allowances and reliefs they are entitled to.

KPMG recently reported that businesses could see £90bn added to their costs as the savings they made during the recession get wiped out. 80% of business leaders say the cost of finance is outstripping their cost-cutting efforts, whilst 76% blame salary inflation.

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

Image: I sing the body electric by atomicjeep

The latest ‘Employee Outlook’ survey from the CIPD suggests that UK workers are feeling increasingly insecure about their jobs.

21% of employees now think it is likely that they will be made redundant as a result of the recession, a rise of one percentage point on the previous quarter.

Not surprisingly, the highest level of concern is found in the public sector, with 30% of employees believing they are likely to lose their job. 27% of those in voluntary sector share the same sentiment but only 19% of private sector workers express concern.

Job satisfaction fell five points during the quarter to +34. Employees in the voluntary sector are most satisfied whilst those in the private sector are least satisfied.

The survey also discovered that 24% of respondents were looking for a new position with a new company, up from 19% in the previous quarter.

Research from staffbay.com suggests that figure could be even higher. It claims that since the two consecutive bank holidays, there are now four times the normal level of people looking for new employment.

The founder of the online recruitment platform explained that bank holidays give us the chance to reflect on our career path and back to work blues hit people strongly enough to encourage them to apply for new positions.

However, according to the latest Reed Job index, there was a 2% drop in vacancy numbers last month. Since December 2009, 25% more job opportunities have been created in the private sector and year on year demand is 22% higher.

Demand in banking and leisure and tourism fell back last month whilst customer service, engineering, IT and manufacturing were among the sectors to record an increased job demand.

The bank holidays may have played a part in the drop in demand as UK businesses experienced a disjointed period with the two long weekends, suggested the MD of reed.co.uk, Martin Warnes.

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

Image: Pro Nikon Photographer at Morro Rock 04 Dec 2007 by mikebaird

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.

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

Image: Heart Monitor by Rennett Stowe

IT contractor accountants may want to tell their clients about a new report from Deloitte, which suggests that the public sector should make use of online channels of service in order to cut costs and improve levels of quality and support.

The government austerity measures are so severe that the public sector must encourage people to find cheaper and more efficient ways to conduct their business.

The report points out that there are some individual successes, such as encouraging people to file self-assessment tax returns online, but the coalition must do a lot more if it wants to cut costs in the long-term.

Deloitte’s public sector director, Joel Bellman, said the public sector tends to think of digital services as add-ons to telephone, paper and face-to-face contact rather than an alternative. Therefore they are only achieving a fraction of the possible savings.

Bellman went on to say that a range of new digital services will be launched in such sectors as benefit payment, education, environment, health, local government and social care.

The report ends up by saying that the coalition needs to adopt a clear strategy for the adoption of online alternatives.

The Chartered Institute for IT (BCS) is also urging the government to focus on using IT more effectively.

At the beginning of the year, the BCS put forward a range of proposals on how to get the most out of its IT infrastructure. At the time, the Institute said that an effective implementation policy had to be done in collaboration with academia and the private sector.

The BCS argued that the government needs to define core standards across all aspects of IT and information management. Effective governance will only come about if the government centralises fiscal and managerial authority and technical leadership, BCS’s chief executive, David Clarke said.

In order to adapt to the austerity environment, it will be necessary to invest in new IT and keep abreast of new technological developments. More government IT professionals should also follow a clear career path so that senior people will be equipped with the necessary skills to manage delivery and relationships, Clarke concluded.

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

Image: write down my name … by josef.stuefer

Accountants should be aware that the end of the present tax year is fast approaching and HMRC has reminded the UK small business community that changes to corporation tax are imminent.

As from the start of the new tax year, corporation tax filing and payments will need to be made electronically. Furthermore, all company tax returns for accounting periods that ended after March 2010 will also have to be filed in XBRL or iXBRL format.

Payment of corporation tax will have to be made by Direct Debit, credit or debit card, using either bank transfer or the BillPay service.

An HMRC spokesperson explained that these changes will affect associations, charities, clubs, co-operatives and societies as well as any limited company. Firms will be able to use commercially available software to file or the department’s own CT software aimed at firms with less complex taxation affairs, the Revenue added.

As from April next year, firms will also have to submit their VAT returns online.

Meanwhile, the Institute of Directors is calling on the government to reduce corporation tax until it reaches 15% in 2020. People are starting to think of the UK as a high-tax economy and that will not encourage foreign companies to invest here.

The IoD wants the UK to have the lowest rate of corporation tax throughout the world. It has estimated that this could be achieved at a cost of £9 billion a year, a figure which could be achieved by continuing restraint on public sector growth.

By reducing corporation tax to just 15%, the UK would be sending out the strong message that it is open for business.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Micro Ecosystem by PierrePocs