Autumn Newsletter

RAFFINGERS STUART NEWSLETTER AUTUMN 2014

SMALL DETAILS

BIG DIFFERENCE

Alexander Ash & Co Joins Raffingers Stuart

Finance to Start or Grow Your Business

HMRC get Heavy with Those Using Tax Avoidance Schemes

We are pleased to announce our recent merger.

Are you struggling to raise the finance you need to grow your business?

It is understood that 43,000 payment notices will be issued by HMRC.

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Contents

Welcome and Partners

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Special Feature RTI Update: Reprieve for Small Firms

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Have you Claimed Your R&D Tax Credits?

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Alexander Ash & Co Joins Raffingers Stuart

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Finance to Start or Grow Your Business

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Employee Spotlight

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Choosing a Tax-Efficient Accounting Date

06

Client’s Story Media Spaces

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HMRC get Heavy with Those Using Tax Avoidance Schemes

08

Autumn 2014 Event Calendar

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Auto Enrolment Update: The Generational Split

09

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PP SMALL DETAILS BIG DIFFERENCE

Partner’s Perspective Surviving a Tax Enquiry in an “Unfair” Age

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Welcome to our AUTUMN Newsletter Welcome to the autumn edition of our quarterly newsletter. We cannot believe how quickly the last quarter has gone.

In this edition we bring you the fantastic news of our recent merger with Alexander Ash & Co. We therefore welcome our new Partner, Paul Dell, and the rest of his team to Raffingers Stuart.

Raffingers Stuart Partners

Gary Inglis Managing Partner gary.inglis@raffingers-stuart.co.uk

Andrew Coney Partner

In addition to this announcement, this edition brings you the latest RTI update, news of HMRC’s crack down on tax avoidance schemes, news of our latest events and advice on finance to help start or grow your business.

andrew.coney@raffingers-stuart.co.uk

We also have our ever popular Client Story, by Media Spaces, and our Partner’s Perspective, which this month puts Barry Soraff in the spotlight.

lee.manning@raffingers-stuart.co.uk

We hope you enjoy reading our newsletters. If you would like to be featured in our next client story, or have any suggestions for topics that you would like to see discussed in the next edition, please get in touch.

The Partners at Raffingers Stuart

Lee Manning Partner

2 Adam Moody Partner adam.moody@raffingers-stuart.co.uk

Suda Ratnam Partner suda.ratnam@raffingers-stuart.co.uk

Barry Soraff Partner barry.soraff@raffingers-stuart.co.uk

Paul Dell Partner paul.dell@raffingers-stuart.co.uk

RAFFINGERS STUART NEWSLETTER AUTUMN 2014

RTI Update: Reprieve for Small Firms SPECIAL FEATURE

Companies with fewer than 50 employees have been given an extra five months to comply with real time information (RTI) regulations.

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HM Revenue and Customs (HMRC) confirmed that companies with less than 50 employees now have until 6 March 2015 to get used to RTI. Therefore, they will not have to pay any fines for late PAYE submissions until this date.

This means that small employers who are still finding it difficult to report PAYE information on or before the date they pay their employees will have more time to adapt their systems and processes to meet the new regulations.

However, there is no such leeway for companies with 50 or more employees, who from the 6 October 2014 face fines for not submitting PAYE information in real time.

So far, 95% of PAYE schemes are already making returns in real time, resulting in the director-general for personal tax to state RTI is ‘working well’.

SMALL DETAILS BIG DIFFERENCE

RTI IN A NUTSHELL HMRC introduced RTI in April 2013 for all employers running payroll. It essentially means that employers now have to report tax and NI deductions (PAYE) to the tax man in real time.

To ensure all companies were given the best opportunity to adapt to the new scheme, HMRC staggered out the RTI process as well as the fines involved for late submissions.

Consequently, companies now face interest penalties on payments not made by the due date. In addition, with regards to inaccurate returns, if HMRC discovers careless or deliberate errors they may charge penalties based on the behaviour that led to the error and the amount of potential lost revenue for that return. Therefore, it is important payroll systems have been set up correctly to avoid these fines.

For help and advice concerning payroll or RTI, please contact Suda Ratnam at: suda.ratnam@raffingers-stuart.co.uk

Have you Claimed Your R&D Tax Credits?

Many businesses are still missing out.

Research and Development (R&D) tax credits were created by HM Revenue & Customs (HMRC) in 2000 to encourage greater investment in innovation.

Since these tax credits have been introduced the Government has continued to make them more generous. Even in March this year, the Chancellor announced that there will be more financial help for loss making SMEs and start-ups though R&D tax relief. Consequently, the rate of the cash credit payable to SMEs conducting qualifying R&D activities increased from 11% to 14.5%, as of April 2014.

To claim the R&D tax relief, businesses must carry out projects that aim to achieve an increase in the overall knowledge or capability in a particular field of science or technology. Businesses must also be able to prove that the outcome of a project is uncertain from the start; they cannot receive tax relief for projects that already have a known outcome. The project must also be related to the company’s trade.

Therefore, the R&D tax credit can apply to many business sectors that are undertaking projects to develop innovative products or processes. It does not solely apply to the manufacturing or technology sectors, which is the most common perception surrounding these credits.

The tax relief is here to encourage innovation by large companies, SMEs and start-ups, and despite the huge uptake in claims, being over 13,000 claims in 2012/13; it is still thought that a lot of companies are missing out.

If you are unsure whether your company potentially qualifies for R&D, or if you would like further information please contact Paul Dell at: paul.dell@raffingers-stuart.co.uk

Alexander Ash & Co Joins Raffingers Stuart We are delighted to announce that on 15 September 2014, we merged with Alexander Ash & Co. We continue to be known as Raffingers Stuart.

The merger saw Alexander Ash & Co move into our headquarters in Essex. Paul Dell of Alexander Ash & Co joins us as a partner, bringing the total number of partners at the firm to seven, and expands our experienced accounts, tax, business advisory and corporate finance teams.

Paul Dell joined Alexander Ash & Co as a trainee in 1986 and became a partner in 1994. Paul was instrumental in building their philosophy of providing the best possible service, exceeding clients’ expectations and proactively identifying opportunities and solutions for all clients. We are delighted that Paul has joined us as a partner, and look forward to working with him and the rest of his team.

For all of our existing clients, we would like to take this opportunity to reassure you that the merger will have no negative impact upon the service you receive from us.

If anything, with the merger, we hope to build on our success to provide even more value added services to our clients, as well as reach and support new businesses in the UK. We are always looking at new ways to improve the quality and variety of services we offer to our clients, with the new expertise this merger brings, the future is looking very bright.

For further information, please contact Gary Inglis at: gary.inglis@raffingers-stuart.co.uk

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Finance to Start or Grow Your Business Are you struggling to raise the finance you need to grow your business from the bank?

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The small business loan market is restricted and banks still experience many challenges in helping small businesses with loan finance.

Therefore, there is a significant untapped demand for businesses to invest. However, many small business owners either do not have the assets in the background or are, understandably, unwilling to offer them to banks for investment in their business, as these are often personal assets such as their home.

Despite the UK economy recently improving, many small businesses are still struggling to access finance from mainstream sources, such as banks.

GLE oneLondon is a leading CDFI, which provides loans and supports businesses across the UK with free advice to unlock their economic potential and grow. In 2014 and 2015, GLE oneLondon has over £15m of loan funding available

for small businesses that are both starting up and growing. This funding is dedicated to businesses having difficulty raising finance from conventional commercial sources.

In June and July 2014 alone, GLE has lent over £2m to SMEs, helping create or protect nearly 750 jobs. One of those businesses was Theatre Tots Ltd, based in Lewisham, referred to GLE after an unsuccessful application with their bank. Theatre Tots Ltd provides drama sessions, workshops and shows for small children. GLE oneLondon provided £15,000 for the publishing of book apps, investment in merchandise and website development. Laura James, managing director says: “Discovering GLE was a turning point in our business development.

From the first phone call Emma [one of GLE’s Finance Specialists] was reassuring, professional and attentive.

It was so refreshing after a long and frustrating experience with our bank. The application process is very thorough and provided a brilliant

For more information or to apply Speak to Tehmina Mirza T. 0845 603 2820 or 07738858427

SMALL DETAILS BIG DIFFERENCE

opportunity to really look at your business position and the direction you are going in. Being a small business can be a lonely role and it is invaluable to have the time and professional input that GLE gave.

The final stage interview was again an invaluable experience. It was structured in a way that was very useful, lots of insightful questions asked. I walked away thinking even if I didn’t get it, the whole process had been well worth the time invested.

It’s not just about securing a loan, it’s about the advice and support along the way.”

Visit www.glebusinessloans.co.uk or www.glestartup.co.uk Email businessloans@gle.co.uk or sulenquiries@gle.co.uk

Choosing a Tax-Efficient Accounting Date

Employee Spotlight In this slot we like to introduce you to a valued member of our team, allowing you to put a face to a name. This quarter it is our Audit and Accounts Semi-Senior, Mira Patel.

Name: Mira Patel Nicknames: After giving all of the guys upstairs female names, I now get called Mirry or all sorts of other Male names!

DOB: 4 August 1989 Career history: I graduated with a degree in Accounting and Finance in 2010 from Leicester.

After working in retail for two years, I finally joined Raffingers Stuart in 2012 taking my first step into the finance world and have been here ever since. After following my career path, I am now entering my last set of exams to be ACCA qualified and have achieved two years of great experience at RS. The light at the end of the tunnel is getting closer!

Interests: Destinations, holiday planning, sun, heat, cocktails….I think you get the point, I love travelling! Once one holiday has finished, I usually start to plan the next. I’m an individual who enjoys going out and socialising with friends and family.

As an early bird, I aim to be in the gym at 6:30am at least four times a week. This usually perks me up for the day.

Partners Report: Mira is progressing at a great pace and is a valued member of our accounts team.

She enjoys organising our team events even though she needs work on her table tennis and golf skills, although she did make up for it on our cocktail making social where she proved herself to be an expert.

Companies House automatically sets the date in which a company’s first accounts are due. Therefore, from this point, it is common for companies to stick rigidly to this annual accounting date. However, changing your year-end date and being more flexible with it can save you tax and improve your cash flow.

Unlike an incorporated company, limited companies have their tax calculated over a 12 month period. Consequently, many companies think their accounting period should also be 12 months. This is not the case; subject to certain conditions, it is possible for you to shorten your year-end by as much as you like or extend it to a maximum of 18 months.

Changing the length of your accounting period in this way can push back your corporation tax (CT) payment date, which can be a huge benefit to new and start-up companies that get off to a slow start and need a little more time to establish themselves and increase their profits.

CT is always applied to the same amount of profits, which means you can change your accounting date as often as you like. For example, after your first trading period you can analyse your financial trends and change your accounting period accordingly - where profit is falling you can extend the accounting period, and vice versa where profit is rising - ensuring your company’s cash flow is kept strong.

To change your accounting date there are set procedures for you to follow; however, HMRC do not need to be told until you submit your company’s CT return.

For help and advice with changing your accounting date, please contact Adam Moody at: adam.moody@raffingers-stuart.co.uk

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Media Spaces Millie Cortizo set up Media Spaces five years ago with the ambition of creating films that were beautiful and had heart. Today, Media Spaces is a storyteller for charities, individuals and large organisations, such as Transport for London and the NHS. “It’s brilliant to be a little part of many businesses and organisations. From stroke, cancer and spinal injuries, to trains, farms and data companies – each and every day is about telling that company or organisation’s story in a new and engaging way.”

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Millie believes that not every business realises it, but every organisation has a story to tell; people love stories about people, especially on film.

In fact, over the next five years, storytelling is going to be the no.1 skill in business.

Millie has built up an impressive client list, which has led to her recently spending late nights in deep tunnels

on the Underground, producing films that bring to life TFL’s improvement plans.

The film hopes to help raise over a million pounds when it is played at an appeal dinner next month.

It is Millie’s aim to produce content that is engaging and refreshing.

Her real skill is getting the best out of people on film – having spent the last five years interviewing and crying along with inspirational stroke survivors; celebrating Life After Stroke and raising the Association’s profile.

But Millie’s biggest success to date is a personal project that started as an idea and developed into a six part series for Sky TV. Millie and her friend Lauren Pushkin followed new parents through those first few months of parenthood to expose the expectations versus the reality of becoming parents for the first time. It was based on their own experiences and “Nine Months Later” was commissioned, produced and released in July this year, capturing the hearts and the minds of the nation. The series will be returning to the screens as far away as Australia. Something they are very proud of.

This year also saw Millie’s team in Moldova for World Jewish Relief; producing an appeal film highlighting children’s dreams and aspirations, set against a backdrop of devastating poverty in Europe’s poorest country.

The future? Millie and Lauren have seven new TV ideas in development and Millie plans to continue to grow Media Spaces, being inspired to help others grow their businesses with the power of film.

W: www.media-spaces.com E: millie@media-spaces.com Twitter: @media_spaces Facebook: media-spaces

SMALL DETAILS BIG DIFFERENCE

HMRC get Heavy with Those Using Tax Avoidance Schemes Anyone with an open enquiry (or appeal) concerning a tax avoidance scheme may be issued with follower notices and accelerated payment notices under new legislation in Finance Act 2014. It is understood that 43,000 payment notices will be issued by HM Revenue & Customs (HMRC) (33,000 to individuals and 10,000 to corporates) and will cover about £7.1 billion of disputed tax. The vast majority of the notices will be issued over the course of 2014/15 and 2015/16.

By issuing a follower notice, HMRC are seeking to bring the enquiry to an end by requiring the taxpayer to make the necessary “corrective” amendments to his return (and pay the disputed tax) or face a penalty of 50% of the tax in dispute. Taxpayers will therefore have to consider matters carefully before deciding whether or not to capitulate and press on with litigation. If this applies to you, please contact us straight away to consider what action to take.

Some lawyers have suggested that it may be possible to challenge a follower notice or an accelerated payment notice by way of an application for judicial review, to restrain HMRC from exceeding or abusing their powers under Article 6 European Court of Human Rights (right to a fair trial).

However, experience shows that a significant number of taxpayers in the current environment do not wish to experience the hassle, expense and potential stress of litigation involving HMRC, and will choose to settle by making the necessary amendments to their return, effectively bringing the enquiry to an end.

To find out if you are at risk, contact Andrew Coney at: andrew.coney@raffingers-stuart.co.uk

Autumn 2014 Event Calendar We are pleased to announce the following events that we will be hosting this Autumn. To find out more or to attend, please email: lauren.aston@raffingers-stuart.co.uk.

Film Screening and Networking Where: Venue to be announced shortly When: November 2014 Our film screening and networking event will bring together like minded investors across London and Essex to discuss the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS).

Following a screening of Sunny Day Media’s new production The Hoarder, a psychological thriller starring Mischa Barton and Robert Knepper. There will be presentations concerning EIS and SEIS as well as a Q&A session.

The evening will culminate with drinks, canapés and networking, giving you the opportunity to speak oneon-one with any of our presenters.

What is the recruitment industry saying?

Where: HSBC Global Headquarters, Canary Wharf When: Tuesday 4 November 2014 In partnership with HSBC, we will be bringing together recruitment professionals to discuss the industry as it stands today.

Presentations will be held by Liz Banks, REC, and Ricky Martin, director of Hyper recruitment limited and The Apprentice 2012 Winner. Following the presentations there will be drinks, canapés and networking, where our Partners and HSBC will be on hand to answer any questions you may have.

The results from our recruitment benchmarking survey will also be announced and a copy of which can be collected on the night.

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Auto Enrolment Update The Generational Split NEST recently published their latest statistics concerning the participation in auto enrolment.

The results show that younger workers have the highest participation in automatic enrolment and are therefore leading the way on pension saving.

With 95% of younger workers staying in their pension schemes it is evident that the policy is working, especially when considering that prior to the new workplace pension rules 25% of this group declared an intention to opt out.

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However, whilst auto enrolment seems to be working well with younger workers, 28% of those aged 60 and over are opting out. This means 1 in 4 older workers are opting out, compared to 1 in 20 of younger workers, clearly showing that a generational split is beginning to occur.

If these trends were to continue and a quarter of workers aged 60 and over opt out, over a five year period they could collectively be turning down around ÂŁ140 million, which they could have received in employer contributions and tax relief.

These new figures are surprising when considering the new pension freedoms, which include allowing those aged 55 or over to withdraw a lump sum from their pension pot. It was thought that these new rules would incentivise people to contribute and stay in pension schemes.

4.5 m

workers automatically enrolled

5%

of workers under 30 years old who have opted out

28%

of workers aged 60 and over who have opted out

Those opting out are missing out on a significant amount of extra money that they can take as a lump sum when they are ready to retire, or use it to secure an income in retirement, or both.

Auto enrolment is now a reality for all businesses and will see employers automatically enrolling all of their employees into a workplace pension scheme over the next few years.

There are serious financial implications for any employers who do not comply.

SMALL DETAILS BIG DIFFERENCE

For further information, contact Lee Manning at: lee.manning@raffingers-stuart.co.uk

many taxpayers prepared to do that!

to hide” - why wouldn’t you just go along with the request?

partner’s perspective

Surviving a Tax Enquiry in an “Unfair” Age It’s been a few years now since HMRC changed the way it handled tax enquiries. The new procedures were trumpeted as a way of improving communication between taxpayers and HMRC. Looking back now however, this laudable goal appears to have been sacrificed, which is evident when considering exactly how the “new” procedures operate.

After the taxpayer has been issued with a notice that he or she is to be the subject of an enquiry, the initial information requests start to arrive by letter - the first bone of contention.

Too often these days, the HMRC officer will request information that they have a questionable right to receive. Where taxpayers are not properly advised they would most likely supply this information without a second thought.

Assuming there is an adviser around, the first dilemma becomes whether or not to supply information that you don’t believe the officer is entitled to.

Particularly where you have “nothing

There are several reasons why that might be dangerous. Firstly, there is a point of principle to establish – that the enquiry should be limited to those areas that are within the proper scope. Secondly, allowing HMRC to ride roughshod over their own rules will only encourage them to continue to do so throughout the enquiry.

So, on the basis that you may be advised to reject an overzealous information request, what happens then? Under the new procedure, the HMRC officer will issue a notice to comply. That notice will have statutory force and will give the taxpayer 30 days to comply or appeal. An appeal however would involve an expensive hearing before a tribunal, and so to avoid that, the new procedures allow for an independent HMRC officer to review the case.

This concept of a second officer review was adopted from the procedures used by the former Customs & Excise, when carrying out VAT enquiries. At that time the review was carried out in a scrupulously fair and transparent manner.

Unfortunately, it is my experience that the review has since de-generated into a simple rubber stamp of the original officer’s view.

This leaves taxpayers in the invidious position of either complying with a request they believe is unreasonable or attending a costly tribunal hearing, with no guarantee of success and no right to recover fees. It is hard to envisage, nor have I come across,

So, having supplied the information and answering any further questions that have arisen, the officer will close the enquiry or issue an assessment for tax they believe is due.

And where the question of that tax being due is contentious, taxpayers are then faced with the same process – independent reviews that are really rubber stamps followed by expensive tribunal hearings. In effect, tax payers are increasingly making commercial decisions not to fight questionable tax assessments because the cost of doing so is higher than simply paying up!

So what can you do about this? First and foremost is to make sure you are getting the best advice, and if you are already a Raffingers Stuart client then it goes without saying that you are.

Secondly, you should consider tax investigation fee protection insurance.

Most advisers, including us, offer this service. It essentially means you will not always have to make strictly commercial decisions about accepting unfair settlements.

Finally, when filing tax returns, it is a good idea to get advice about how you can minimise your exposure to tax enquiries. It is increasingly less likely that HMRC select taxpayers for enquiry at random, and whilst you cannot guarantee avoiding selection, there are definitely ways to reduce and manage your risk.

Barry Soraff Partner barry.soraff@raffingers-stuart.co.uk

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