Tag Archive | "bdo"

Should the Chancellor have introduced a new income tax band?

Accountants may be interested to learn that one senior tax expert believes the Chancellor missed a golden opportunity to introduce a new tax band for people on middle incomes when he delivered his recent Budget.

According to Stephen Herring from BDO, the tax changes announced by George Osborne were unimaginative. The government is increasing the personal tax allowance by more than £1,000 next year, and to pay for it, it is lowering the threshold for the 40p tax band from £42,475 to £41,450.

Herring believes that the government continues to ignore the middle income group and should have introduced a 25% or 30% tax band in order to restore some measure of fairness to the tax system. He went on to say that the coalition needs to be more imaginative in future budgets if we are to have a fair income tax system across the entire income spectrum.

The Institute of Fiscal Studies recently estimated that the Chancellor’s decision to lower the 40% threshold will mean at least one million additional taxpayers will be caught in the higher income tax band.

Some people will be quick to argue that adding another tax band would add further complexity to a system that is supposed to be being simplified. Balancing the books, whether in government or business, is never an easy thing to do and the introduction of a 25%/30% band could well lead to more tax avoidance as people think up ways to avoid it being caught in it!

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Do online accountants’ clients need more help to grow?

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.

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BDO says average single business fraud is £4.5 million

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.

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What sort of budget would suit online accountants?

A number of leading organisations are calling on George Osborne to deliver a budget that supports small businesses such as contractor accountants.

Recent research from BDO found that business leaders in the UK want the coalition to speed up its plans for simplification of the tax system and concentrate on helping entrepreneurs, rather than big multinationals, in the budget.

66% of business leaders think the coalition should accelerate its plan to reform the business taxation system and make it fit the needs of all UK firms.

Respondents to the survey were also asked what measures the chancellor should take to reduce the deficit. 50% favoured more public spending cuts but very few thought the solution was to increase taxes such as income tax or VAT.

However, when the economic situation improves, 41% of business leaders believe a cut in personal taxation should be prioritised. 35% said further measures should be taken to reduce the deficit and only 6% thought a cut in corporation tax was a priority.

Stephen Herring, a senior tax partner at BDO, said the results highlight that there is an urgent need for business tax reforms to drive business growth across all sectors.

The REC has written to George Osborne asking him to make sure the Budget really is a ‘Budget for Jobs’. The letter builds on the themes of the REC manifesto to remove the barriers that are prohibiting growth and deliver opportunities and jobs.

In particular the REC suggests avoiding any increase in business taxes, implementing an NI holiday for SMEs that hire young people and scrapping the National Insurance increase. The Confederation also calls on the government to do all it can to smooth the AWR implementation and promote flexible working.

The ICAEW says the chancellor should concentrate on long-term growth plans rather than quick-fix solutions. In order to achieve this, he should develop a simpler taxation system, a better approach to supporting enterprise and a highly-skilled, socially mobile workforce.

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