Vince Cable, government business secretary and doctor of economics, last week had to pay a £500 tax penalty for the late payment of up to £25,000 of VAT.

The fine relates to the delayed payment of earnings for his media work and speaking engagements for the 2009-10 tax year. Although the fine and outstanding payments have now been paid without dispute, it goes to show just how complicated personal tax planning is – when somebody with such as astute knowledge of finance and economics can’t get their VAT payments right!

With such a complicated tax system that can result in hefty fines for mispayment of tax, if is vitally important for businesses and anyone responsible for their own tax payments to seek professional accounting guidance.

As the leading tax accountants in Liverpool, ERC Accountants provide a fantastic service in submitting and minimising tax payments and can assist with income tax, capital gains tax, inheritance tax and non-domiciliary taxes. By ensuring the completion and filing of all relevant forms, providing advice on what payments are due and when, as well as advice regarding trusts and estates; ERC Accountants can ensure that unlike Mr Cable, all your VAT and taxes will be in order, so that you don’t have to pay more than you need to!
If only Vince Cable had known to come to ERC…

 HM Revenue & Customs (HMRC) is piloting telephone ‘education’ for owners of new businesses. This involves calling the ‘customer’ and offering “…to talk them through some of the main things they need to know as a new business and to signpost them to the available help online”.

The calls will not involve discussions of the individual’s tax affairs. HMRC advisers making the calls will be using a call list, rather than using ‘live’ systems.

It is difficult to be critical of an initiative which is supposedly designed to support business taxpayers in complying with their tax obligations. I just wonder if this is the most efficient use of HMRC resources.

The owners of new businesses will invariably be frantically busy trying to make their new enterprises a success, or at least earn them a living. An unannounced call (I am assuming that calls will not be arranged in advance) from HMRC is hardly likely to be a welcome diversion in most cases. The business person will probably not be in the ideal state of mind be ‘educated’ by HMRC in this way, so the efficacy of the approach must be called into question.

In addition many taxpayers have a certain fear and trepidation about HMRC contact. Some may even be suspicious about HMRC’s motives, and wonder if they are being targeted for HMRC scrutiny.

If HMRC wants to use the telephone as a medium to contacting taxpayers, why not open a helpline, available out of business hours and at weekends, and to publicise this facility as a free and convenient resource for new business owners?

Perhaps it is two cheers for this new HMRC initiative, instead of the usual three cheers.

Thanks

Richard

Small UK software developers, amongst others, are missing out on a tax break designed to encourage research and development, according to experts.

Companies in the sector are failing to make the most of all the relief available to them, usually because they do not appreciate how much activity can be classified as research and development or “they have unfounded fears about red tape”.

Currently 8,350 firms across all industry sectors claim the relief. The vast majority are SMEs, but they account for only 25 percent of the available pot which totals £1 billion per annum. The lion’s share of the relief is currently consumed by larger firms which can claim approximately 8 percent tax benefit for every £1 spent on R&D.

Experts have stated “small businesses across the UK can save up to an additional 26 percent in tax for every £1 spent on R&D. From April next year this benefit will rise to up to 31.25 percent. The critical test for HMRC is the question of whether a company is advancing knowledge in the sector and is engaged in activity which involves genuine technical uncertainty. Software development of any type has the potential to qualify.”

However other examples of possible claims are for creating new or more efficient procedures, new security or encryption techniques, new search engines or new operating systems or languages can qualify. Technology business areas commonly attracting claims include SaaS, cloud computing, media games, other online systems or CRM.

The tax break is not just limited to product development either. It can also encompass developing more efficient processes to drive cost savings, reduce waste or to overcome the technical challenges created by compliance or regulatory issues. And the R&D work does not need to be successful to qualify.

ERC has already dealt with R&D tax claims that are commonly worth over £50,000 claimed back from HM Revenue & Customs. If you think you may qualify then please let us know.

Thanks

Richard