It’s tough financing business growth right now. Where, traditionally, the bank would be your first port of call, today it is a source proving increasingly difficult to obtain assistance from.

The good news is that Clark Howes can help.

We can connect your business to a wide range of private equity houses and venture capital funds that can offer funding options over and above a traditional bank loan.

Alternatively, if you are considering a flotation to raise funds and increase your company profile, we have the necessary experience to help you and guide you through the listing process.

Let’s look at the two options in some more detail.

Private equity investors are generally looking for potentially high-growth, unquoted companies. Theirs’ is a hands-on approach, aiming to provide the finance and guidance necessary to help the owners fully realise the business’s potential.

Not all investors are looking for the same types of businesses and similarly not all will be appropriate to your company’s needs. This is why it is important that you choose an adviser with access to a wide pool of investors: at Clark Howes, we only put you in touch with people with the experience and capabilities to benefit you in the long-term.

Another financing option would be to list on a public market. This can be a good way to provide not only access to finance but also to promote your company in the process.

There are a number of important benefits of using a listing over private equity to raise funds – perhaps you want to realise some of the value you have built up in your business, or maybe you want the possibility of raising additional capital in the future through further offerings to fund takeovers or other expansion?

The Alternative Investment Market (AIM) is widely recognised as the most successful growth market in the world but for smaller companies there is the option of listing on PLUS Markets Group (PLUS), a move which is often seen as a stepping-stone to AIM.

Two major incentives for floating on AIM or PLUS are the reduced costs over a full listing and the far more flexible regulatory frameworks in place.

Although many of the costs of listing your company on a recognised exchange should be covered by the funds you seek to raise, it does remain a complicated process.

At Clark Howes, we understand that a successful flotation always rests on effective and timely communication between advisers – that’s why we provide a fully tailored approach to ensure that we are focused on your needs and timescales.

Through close liaison with our Business Assurance and Tax teams we identify, in advance, any potential issues to ensure that the listing process is not subject to any ‘eleventh hour’ hold-ups.

Whatever your funding needs and preferences we are always happy to meet up and discuss on a no-cost basis until you decide you would like to move forward.

Incidentally, when undertaking a fundraising for a client, the majority of the cost will be based on a ‘success’ fee, which does take some of the worry out of the process and demonstrates our commitment to you.

Your Clark Howes’ Audit Director has a wealth of experience gained from many years working in London, advising companies on their best route to market.

If you feel you would benefit from his advice, please contact:

edwardp@clarkhowes.com

If you are unsure that your coding notice is correct and would like some further guidance please do get in touch.

Good news for many

The majority of taxpayers will see an increase in their tax code as the personal allowance for those under 65 increases from £7,475 to £8,105.

Those individuals with simple tax affairs (just one employer with no reliefs or benefits or tax underpayments brought forward) will generally not receive a coding notice. Their current coding of 747L will be automatically uplifted to 810L following general instructions to employers.

Although the personal allowance is increasing, the point at which taxpayers start to pay the higher rate of 40% tax on their taxable income is decreasing (from £35,000 to £34,370). This means that basic or higher rate taxpayer will generally benefit from the same tax saving of £126.

The withdrawal of the personal allowance for those with income over £100,000 income limit applies for 2012/13. The reduction in the personal allowance is by £1 for every £2 of adjusted net income above the income limit. Adjusted net income for these purposes is broadly all income after adjustment for pension payments, charitable giving and relief for losses. Individuals with adjusted net income of at least £116,210 will not be entitled to a personal allowance for 2012/13.

Internet links: HMRC news HMRC guidance on tax codes

Exemptions from doing your VAT online

Businesses may not have to comply with the requirement if:

• they are subject to an insolvency procedure – but if the business is subject to an approved Voluntary Arrangement, administration or trust deed, an online submission may be made

• HMRC is satisfied that the business is run by practising members of a religious society, whose beliefs prevent them from using computers.

If you believe either of these exemptions apply then it is important to confirm the position with HMRC and not assume that the exemption applies.

Paying your VAT electronically

Businesses which submit their VAT Returns online, must also pay any VAT due electronically. This generally gives businesses up to seven extra calendar days to submit their return and pay their VAT. There are some exceptions to this rule, for example businesses which file annual returns and make payments on account.

HMRC advise:

‘The extended due date will be shown on your online return and you must ensure that cleared funds reach HMRC’s bank account by this date. If your payment clears later than this, you may be liable to a surcharge for late payment’.

‘There are various ways to pay including by Direct Debit, online and telephone banking. You can also pay by cheque at a bank or building society using a Bank Giro paying-in slip which can be obtained from HMRC. Since some of these methods can take a little time to set up, you should choose which method you want to use, and set it up, well in advance of the filing and payment deadline’.

If you would like any help with your VAT return please do get in touch.

Internet links: HMRC VAT online guidance VAT online helpsheet

HMRC have also advised that:

‘The SA deadline remains midnight on 31 January. But HMRC will treat all returns that come in by midnight on 2 February as though they were submitted by 31 January. No customer will have to pay interest on payments due on 31 January that are paid on 1 or 2 February.’

Acting Director General Personal Tax, Stephen Banyard, said:

‘We’ve always been very clear that we want the returns – not the penalties. For that reason, we don’t want anyone who can’t get through for help and advice on 31 January to be disadvantaged in any way.’

Internet link: HMRC press

Changes to the Annual Investment Allowance (AIA)

The main change is to reduce the maximum AIA from its current level of £100,000 to £25,000 for expenditure incurred on or after 6 April 2012 (1 April 2012 for companies).

As the accounting periods of many businesses will span these start dates, a pro rata calculation of their maximum entitlement will be required. Where a business has an accounting period that spans the 1 or 6 April 2012, the maximum allowance for that period is the sum of:

• the maximum AIA entitlement based on the previous £100,000 annual cap for the portion of the accounting period falling before the 1 or 6 April 2012; and

• the maximum AIA entitlement based on the new £25,000 cap for the portion of the accounting period falling on or after the 1 or 6 April 2012.

However, a restriction is set so that, for expenditure incurred in the part of the accounting period falling on or after 1 or 6 April 2012, the maximum entitlement is given only by reference to the second bullet point above.

This does not affect the business’s maximum AIA for the accounting period as a whole but rather the amount of expenditure after the relevant start date that may be covered by the AIA.

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Example 1

A business makes up its accounts to 30 September annually. For the year to 30 September 2012, the limit is calculated as follows:

October 2011 – March 2012             6/12 x £100,000 =     £50,000

April – September 2012                     6/12 x £25,000    =     £12,500

Total                                                                                      £62,500

If, in the six months to March 2012, the business spends £60,000 on purchases of machinery, it will all qualify for AIA as it is below the total available AIA of £62,500.

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Example 2

For the six months to 30 September 2012, the limit on expenditure qualifying for the AIA is £12,500.

If the business spends £60,000 in the six months to September 2012, only £12,500 will qualify for AIA.

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Timing

Obviously, the timing of expenditure may be critical, particularly in light of the rather strange ‘£12,500 rule’ in the example above. Consideration should be given to ensuring that expenditure is incurred before the 1 or 6 April 2012, as the date that expenditure is incurred usually triggers the entitlement to capital allowances.

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Traps for the unwary

Two points are worth noting in relation to the trigger point for capital allowances.

Firstly, the normal rule is that expenditure is incurred on the date on which the obligation to pay becomes unconditional. The contract for purchase will be evidence of when this arises. So if the contract specifies that payment is required within 30 days of delivery, the obligation to pay arises on the date of delivery.

However, if there is a gap of more than four months between the date on which the obligation to pay becomes unconditional (eg delivery) and the date on which payment is required to be made, the expenditure is not treated as incurred until the date on which payment is required to be made. This could, for example, apply to interest-free credit arrangements.

Secondly, a special rule applies to hire purchase agreements. Usually all of the capital expenditure incurred under a hire purchase contract is treated as incurred up front. However, if the asset is not brought into use by the end of the accounting period, any capital expenditure not incurred at the end of that period is deferred until the asset is actually brought into use.

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Changes to writing down allowances (WDAs)

For accounting periods commencing on or after 6 April 2012 (1 April 2012 for companies), the rates of WDAs per annum on expenditure not relieved by other allowances is reduced as follows:

• from 20% to 18% on expenditure allocated to the main pool; and
• from 10% to 8% on expenditure allocated to the special rate pool.

Transitional rules apply for accounting periods which span 1 or 6 April 2012. The broad effect of the rules is to give a rate for the transitional period between 20% and 18% (or 10% and 8%).

This change affects all the main rates which apply to plant and machinery, including cars.

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What to do

As you can see, the changes are not positive for businesses but, with a bit of careful planning, the rules for capital allowances can be maximised. If you would like to discuss these changes in more detail, please get in touch.

The rules will come into effect from April 2012.

As part of this process the maximum amount that can be coded out will be increased from £2,000 and £3,000

FA 2009 widened the scope that HMRC have for coding debts out. HMRC will be able to use the coding out procedures to collect ‘relevant debts’ through the PAYE system.

Relevant debts are:

- A sum payable by the payee to the Commissioners under or by virtue of an enactment, other than an excluded debt; and

- A sum payable to the payee to the commissioners under a contract settlement.

An ‘excluded debt’ includes tax credit debts. If HMRC propose collecting a tax credit debt through the PAYE code, the claimant has to be given the opportunity to object to that action.

Draft HMRC guidance indicates that this action will be taken where the debt remains unpaid six months after the due date.

]]> http://www.clarkhowes.com/2011/12/20/hmrcs-new-power-in-recovering-of-debts-via-paye/feed/ 0 http://www.clarkhowes.com/2011/12/20/christmas-charity-donations/ http://www.clarkhowes.com/2011/12/20/christmas-charity-donations/#comments Tue, 20 Dec 2011 11:46:58 +0000 clarkhowes http://www.clarkhowes.com/?p=3660 Continue reading →]]> Following the Clark Howes tradition, this year we have selected five charities to give donations to instead of sending Christmas cards.

This is an opportunity for staff to help and thank a charity that may have had an impact on their lives over the past year. The chosen charities for 2011 are:

Willen Hospice

Help for Heroes

The Stroke Association

Oxford University Hospitals NHS Trust

Twin to Twin Transfusion Syndrome Foundation

‘If you are going abroad to do Christmas shopping, or buying goods online from non-EU countries, you need to know how much you can buy before you have to pay import duty or VAT.’

‘We know many people like to go abroad at this time to buy their Christmas gifts, or buy online from non-EU countries, and think that the ‘cheaper’ price they see is always the price they finally pay. HMRC is keen to remind the general public how much they can actually bring back from abroad or buy from an online overseas seller without having to pay import duty or VAT.’

‘You don’t want to be faced with unexpected extra charges, when you thought you had found a bargain.’

HMRC advise that:

• Arriving in the UK by commercial sea or air transport from a non-EU country, you can bring in up to £390 worth of goods for personal use without paying customs duty or VAT (excluding tobacco and alcohol, which have separate allowances, and fuel). Detailed information on the non-EU limits can be found at http://www.hmrc.gov.uk/customs/arriving/arrivingnoneu.htm
• Should you buy goods over the internet or by mail order from outside the EU, you will have to pay VAT if the value of the package is over £15.
• If the goods are over £135 in value, customs duty may also be due, although this will depend on what they are and where they have been sent from. Where, however, the actual amount of duty due is less than £9, this will not be charged.
• If someone sends you a gift from outside the EU, import VAT will only be due if the package is valued at over £40. To qualify as a gift, the item must be sent from one private individual to another, with no money changing hands.
• Please note that excise duty is always due on all alcohol and tobacco products purchased online or by mail order.
• The spirits or tobacco products, there are no limits on the amounts of duty and tax paid goods you can bring back personally from another EU country, as long as they are for your own use.

Internet link: Press release

A great deal has been accomplished in the last four months including a launch event at Blenheim Palace with David Cameron as guest speaker.  A further event was held at Cornbury Park and a partnership agreement set up with Oxford United Football Club (OUFC).  To date, we have assisted 4 local companies with business loans and will soon be announcing further funding agreements.

Fredericks Oxfordshire has not just appeared or happened by accident.  It is the result of a lot of hard work and determination by a group of committed people.   Significant funding and excellent support for the project has been gained from many Oxfordshire organisations.  We are delighted that so many local businesses have taken the decision to support Fredericks Oxfordshire. The economic downturn has affected people across the County and together with our supporters; we work hard to help people access funding and advice to help them discover their potential.

Fredericks Oxfordshire isn’t just about lending money; it is about helping local businesses succeed. The success of this project has been a great team effort and is a splendid example of what can be achieved by working together and being committed to making things happen.

The message is simple finance + social purpose = positive impact. For those interested in investing in or applying to Fredericks should contact Tim King on 01865 893383.

But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?

Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.

If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.

Internet link: HMRC guidance