Tax Tips and More: Winter 2016/17 Edition

Tax Tips and More Winter 2016/17

ÂŁ221 Christmas Jumper Day 2016

Autumn Statement 2016: What you Need to Know

All Change for the VAT Flat Rate Scheme

Making Tax Digital: Opportunity or Threat?

The Autumn Statement has significant implications for your business and your personal finances.

As of 1 April 2017 there will be a new 16.5% VAT FRS for businesses with limited costs.

Lee Manning shares his opinion on Making Tax Digital and what businesses should expect from their accountant going forward.

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Contents

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Welcome and Partners

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Special Feature Autumn Statement 2016: What You Need to Know

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All Change for the VAT Flat Rate Scheme

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Do you Have a Real Estate Debt Strategy to Help You Achieve Optimum Financing?

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The Big Pension vs NISA Conundrum

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What is Cloud Accounting, and What is the Big Deal?

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Xero Add-On Introducing AutoEntry

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Raffingers Upcoming Events

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Beware of Fraudulent Emails “From HMRC”

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Raffingers Foundation

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R&D Tax Credits: £47,000 Saved in Corporation Tax

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Marriage Allowance Explained

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Employee Spotlight

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Making Tax Digital: Opportunity or Threat?

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Have you Considered Invoice Finance Yet?

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Welcome to our WINTER Newsletter We hope that you have all had an amazing New Year and are ready to take on 2017?

With the number of consultations currently under review and the impending new tax year, 2017 is definitely going to be a year of change.

We have Making Tax Digital, which has been given the green light and will be going ahead in April 2018. The new reporting requirements will begin with sole traders and buy-to-let landlords first, but it is important everyone is aware of their new obligations.

Lee Manning delves deeper into this legislation to show you what you can expect from your accountant in light of these changes in his article on page 14.

We also have all of the announcements made at the Autumn Statement, many of which will come into force as of April 2017. These include changes to salary sacrifice benefits and the new VAT Flat Rate scheme, which will impact low cost traders.

Finally, we are pleased to welcome contributions from Bradbury Hamilton, who provide guidance on whether you should be investing in your pension or a New Individuals Savings Account, see page 8 and Haymarket Properties, who provide insight into real estate debt strategies, see page 6.

We now look forward to another great year ahead, helping our clients to achieve their goals and get the most out of their finances.

We always welcome contributions. If you would like to contribute to our next edition, please get in touch.

The Partners at Raffingers

Raffingers Partners

Gary Inglis Managing Partner gary@raffingers.co.uk

Andrew Coney Partner andrew@raffingers.co.uk

Lee Manning Partner lee@raffingers.co.uk

Adam Moody Partner adam@raffingers.co.uk

Suda Ratnam Partner suda@raffingers.co.uk

Barry Soraff Partner barry@raffingers.co.uk

Paul Dell Partner paul@raffingers.co.uk

Raffingers Upcoming Events Page 10

Autumn Statement 2016: What You Need to Know SPECIAL FEATURE

November 2016 saw Philip Hammond deliver his first (and last) Autumn Statement as chancellor.

In an attempt to simplify the tax system, the Chancellor announced that 2016 will be the last of the Autumn Statements. This means following the Spring 2017 Budget and Finance Bill, Budgets will be delivered in the autumn, with the first one taking place in autumn 2017. Here is what else you need to know:

Employment 2.1 National Living Wage and National Minimum Wage Rates From April 2017, the National Living Wage (NLW) will increase by 4.2%, from £7.20 to £7.50.

As previously announced the following rates will also apply from April 2017: • £7.05 - the main rate for workers aged 21 to 24 years old (old rate: £6.95) • £5.60 - the rate for workers aged 18 to 20 years old (old rate: £5.55) • £4.05 - the rate for workers aged 16 to 17 years old (old rate: £4.00) • £3.50 - the rate for apprentices (old rate £3.40) 2.2 Class 1 With affect from April 2017, both employer and employee Class 1 National Insurance Contributions (NIC) will become chargeable on earnings above £157 per week.

2.3 Salary Sacrifice This was a great way to incentivise and reward employees because of the tax and class 1 NIC savings.

However, with effect from April 2017, the salary sacrifice scheme will only be available on pensions, childcare, cycle to work and ultra-low emission cars.

Any schemes in place before April 2017 can continue to run until April 2018.

2.4 Termination Payments The Autumn Statement confirmed that with effect

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from April 2018, any payment over £30,000 will be subject to income tax and employer Class 1 NICs. The tax will only be applied at basic rate and only where the employee does not work their notice. These changes are being monitored by the government.

2.5 ‘Off-Payroll Working Rules’ Those caught within the ‘IR35 legislation’ and working within the public sector will no longer be entitled to the 5% tax free allowance. This was given to take into account the administration burden.

The responsibility to ensure that a worker is paying the correct amount of tax and national insurance will now fall on the body paying the worker’s company. This is an area that the government is still reviewing.

2.6 Employee Shareholders Shares Any arrangements entered into from December 2016 will no longer benefit from the first £2,000 worth of shares being exempt from income tax and the first £50,000 worth of shares being exempt from capital gains tax on disposal.

Arrangements entered into before December 2016 will continue to benefit from the exemptions (within the set limits).

Individuals 3.1 Personal Allowance The personal allowance currently is £11,000, rising to £11,500 from April 2017. This will increase to £12,500 by the end of parliament. Thereafter, personal allowances will increase in line with the consumer price index.

3.2 Pensions and Savings The government is continuing to support savers by increasing the ISA limit to £20,000 (from £15,240) in April 2017.

In addition, the starting rate for savings will remain at its current level of £5,000 for 2017/18.

All Change for the VAT Flat Rate Scheme The VAT Flat Rate Scheme (FRS) was designed to make VAT reporting less complicated for smaller businesses. However, at the Autumn Statement the government declared a new 16.5% VAT FRS for businesses with limited costs, which will commence on 1 April 2017.

Investment to Raise Productivity A new National Productivity Investment Fund will add £23billion in high-value investment from 2017/18 to 2021/22. This investment will be targeted at areas that are critical for productivity: housing; research and development (R&D); and economic infrastructure.

R&D got an additional mention with the government declaring that they will look at ways to build on the ‘above the line’ R&D tax credit to make the UK an even more competitive place to do R&D.

Insurance Premium Tax The tax on insurers will increase by 2% to 12% from June 2017.

Non-Domiciled Individuals Currently, non-domiciled individuals have a yearly choice on the tax treatment for income tax. A nondomiciled person can either pay tax on an arising basis (worldwide income and gains) or a remittance basis.

If the remittance basis election is made, a charge may be levied where they have been resident in the UK for over seven years.

With effect from April 2017, a person will be deemed UK domiciled if they have been resident in the UK for 15 of the past 20 years. These individuals will be taxed on an arising basis and not have the choice of the remittance basis. These changes will apply to income tax, capital gains tax and inheritance tax.

Non-Resident Companies Consultation is to be released in Spring 2017 to review the tax regime of non-resident companies that receive taxable income from the UK. In the spirit of making tax equal, it is the intention to bring the non-resident companies into the corporation tax regime.

Gary Inglis 020 8551 7200 gary@raffingers.co.uk

Currently, a business is classified as a low cost trader if its VAT inclusive expenditure on goods is: • Less than 2% of their total expenditure; OR • Greater than 2% but less than £1,000 per annum; Businesses must be aware that the amounts spent on goods cannot include: • Food and drink • Capital expenditure • Vehicles This begs the question as to what is a “good” under the new rules. The Autumn Statement included certain exclusions but did not clarify the exact definition. The best we can do at the moment is to refer to the definition of goods in the VAT legislation (section 4.4 of VAT Notice 700), which is ‘anything tangible’ (a moveable item). So if you purchase a software licence online, this is classified as a service.

However, if you go into Currys and purchase a software licence in a box, that is a tangible good.

One further point to remember is that water, gas and electricity are classified as goods for VAT purposes.

Going forward, all businesses, current and prospective users, will be required to complete a test to determine their eligibility. This is particularly bad news for many industries, such as estate agents who currently use a rate of 12%, or consultants who currently use a rate of 14%. Though, what is more frustrating about the imminent terms is that the 16.5% standard flat rate of the gross turnover is really equivalent to 19.8% of net, meaning that there is no real saving when compared to the standard VAT accounting model.

Recommendations Any users or prospective users of the VAT FRS are likely to be affected. All businesses should be aware of the changes and I urge you to speak to us as soon as possible to evaluate if the VAT FRS is still the most cost effective option for your business.

For advice on the best solution for your business, contact Andrew Coney at andrew@ raffingers.co.uk.

Your Business Our Passion

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Do you Have a Real Estate Debt Strategy to Help you Achieve Optimum Financing?

It is unusual in the current market place to acquire or hold commercial real estate assets without third party debt financing. In most cases, third party finance is required to either fund an acquisition or develop or redevelop a property in both the commercial and residential sector, as well as refinancing into a market that most likely has changed considerably since the initial loan was agreed. Primarily, most people will turn to their local bank, where good working relationships have already been established.

This element of trust is obviously not to be underrated, but is it the best way to finance your new asset?

The overriding question of most businesses in the real estate sector is this: how much money am I able to borrow? For every additional £1 that can be borrowed, £1 less of the owner’s equity needs to be invested.

However, given the lessons learnt in the aftermath of the recent credit crisis and the new regulations that came into force as a direct result of this, the additional question that should be asked is: how can I protect myself if things don’t go exactly according to plan?

The majority of lenders do not want to have the aggravation of looking after your property. Apart from it being time consuming, they do not generally have the necessary expertise. However, if it means that they can assert control and subsequently recover their loan more quickly and efficiently, they will do it, whilst also protecting themselves by ensuring that the cost of any default is picked up by the borrower.

In these scenarios, it becomes clear that by adding up the penalties, the additional interest and any costs on a default, then the value of the original equity will reduce at an alarming rate. In this case, a measure of protection should be agreed upon upfront in order

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For every additional £1 that can be borrowed, £1 less of the owner’s equity needs to be invested. to include such eventualities as, having to extend the terms of a loan for longer than initially expected, a buffer on any banking covenant tests such as Loan to Value (LTV) or Interest Cover Tests (ICR) and the ability to cure any default within a respectable time frame.

Another key question to be asked when considering “the right financing”, is with regard to the intention of the business – would it be to hold as an investment, to develop and sell or to develop and hold? Bearing in mind that the initial intention may not always be the most practical after a period of ownership, for example, a borrower requiring debt for a “construction phase” (whereby funding will be drawn from a committed fund which has been made available) may require some headroom if it later transpires that the real estate is more suited to an “operational phase” (where the project has no construction risk). In most situations, the borrower would typically sell the property — with no operational phase in the debt financing. However, in some circumstances, it may be possible to include a situation where the existing loan can automatically transfer into an operational or investment facility.

By leaving it too late to shop around, there will be reduced choice, higher pricing and in the worst cases, no funding available at all.

So who is in the market to lend against real estate assets? Well it is very dependent on the type of loan that is required. There are different lenders who will lend on tenanted and let commercial property as against development property. The different lenders will also be interested in whether the assets are commercial or residential and again on where the property is located. Generally, those businesses with some track record in the sector stand a significantly better chance of gaining finance (on whatever terms) than someone new to the sector. Another differentiator is the size of the loan required and the length of time for which it is required. For example, a loan to pay the VAT on an acquisition is usually easier and quicker to obtain than a loan on a complex residential redevelopment.

Having said that, there are a significant number of lenders to choose from. These are not necessarily traditional banks, but also specialist debt funds, insurance companies and private companies or individuals. For new customers the process can often be lengthy, the lender will want to conduct due diligence on both the sponsor and the asset itself, as

well as perform all the usual “Know Your Customer” checks, so it is always worth staring conversations early. If, after all this, funding is then refused, the groundwork is done, at no extra cost and may well be useful at a future date. The same holds true for businesses looking to refinance their current debt positions. By leaving it too late to shop around, there will be reduced choice, higher pricing and in the worst cases, no funding available at all.

Although pricing is important, it should not be the only consideration. A good lender also needs to be judged on their flexibility, their reporting requirements, and their ability to provide a good working relationship.

A lender offering a good price, but causing stress and problems in other areas, may make dealing with that lender unpalatable.

Through relationships with dozens of domestic lending sources, it is possible to get connected with a competitive set of lenders to get the best possible pricing and deal structure for your investments—no matter the asset or property type. The Principals at Haymarket properties have personally either led or been significantly involved with the arrangement of real estate debt loans in excess of £4billion over the last 15 years. These loans range from large loans on single let properties in central London to complex developments in major and minor UK and European cities.

If you are not sure about whether your current debt arrangements (either existing or proposed) are the right fit for your organisation, Haymarket Properties Limited are offering a free consultation service to Raffingers’ clients to discuss your individual requirements. Contact lauren@raffingers.co.uk to arrange your free consultation.

Your Business Our Passion

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The Big Pension vs NISA Conundrum

What is Cloud Accounting, and What is the Big Deal?

The end of the tax year will soon be upon us and the big question is, should you be adding money to a pension or a New Individual Savings Account (NISA)? Prior to Pension Freedoms, which allowed greater access to pensions, the answer depended on how much flexibility was needed when withdrawing the money. If you need access before age 55, we recommend NISA, but if you need access post 55 the answer is, more often than not, pension.

So what is the big deal about doing business on the cloud and why is it beneficial for businesses to embrace this technology?

This is simply because of the tax relief that is applied to pension contributions on the way in and the tax free access that is available to some of the fund on the way out. If we take someone aged 53, looking to retire at age 63 with a salary of £60,000. The kids have finished full time education giving them more disposable income and they can now afford a monthly reduction in take home pay of £500 a month. For a higher rate tax payer, £6,000 to be added to a NISA will be paid from income which has been taxed. For the same reduction in pay, due to tax relief, you would end up with a £10,000 pension contribution. Over 10 years this results in contributions of £100,000 in the pension or £60,000 in a NISA. We have assumed that there is no fund growth, but when this person reaches retirement they would like to take income of £6,000 net per year. If they take it from their NISA, they would need to take £6,000, tax free, each year. If we assume that they remain a higher rate tax payer when they retire, which one in seven pensioners do, a higher rate tax payer would need to take £8,572 per year from a pension to meet the £6,000 net income requirement. This would include 25% tax free cash being taken with each payment.

After 10 years, if we assume that there is still no investment growth, the NISA would have no money left. A higher rate tax payer would still have £14,280 remaining in their pension fund.

For further financial advice our partners, Bradbury Hamilton are available. Visit www.bradburyhamilton.co.uk or call Sheriar Bradbury on 020 7220 7274.

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Many software applications run through the cloud without you really noticing it, with the main benefits being: • • • •

No need to download the software Upgrades carried out automatically Software accessed from any device, at any time More flexibility and the option to use add-ons to improve your processes and efficiencies

Take one of our clients who was using a desktop bookkeeping system - timesheets were manually completed, expenses were completed on a spreadsheet by the salesmen and purchase invoices manually entered. With cloud technology all of these admin tasks have been taken away: • Timesheets are now completed using Tsheets where the employees use their mobile phone to record the hours they work • Expenses are now recorded by simply taking a picture of the receipt • All purchase invoices are now either scanned when received in the post or forwarded to an email address where the software reads all of the information contained in the invoice and inputs it into Xero (without any manual data entry) • The CRM software is fully integrated, meaning that all of the company’s client’s data is kept in one place and there is no need to keep multiple databases In addition to the above benefits, cloud accounting gives you a new way to see your financial information, which is real time, up-to-date and in a graphical format. There is also the ability to prepare financial forecasts to include ‘what if’ analysis to see what the impact is on the business if certain actions are taken.

This is all very relevant for all businesses of all sizes as the introduction of Making Tax Digital (MTD) from April 2018 will force a lot of SME businesses to adopt cloud systems into their way of working.

For further information on cloud software and how it can benefit you, contact our Cloud expert, Lee Manning at lee@raffingers.co.uk.

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Introducing AutoEntry

XERO ADD-ON

a solution by OCREX

AutoEntry helps you become more productive.

It is an intelligent cloud-based solution, which eliminates bookkeeping data entry so you will never again have to type up invoices or receipts.

AutoEntry captures and analyses scanned and photographed invoices, receipts, bank and card statements. There is also a very intuitive and easy to use mobile app available for both Android and Apple devices to capture bills and expenses, such as receipts, on the go.

AutoEntry captures all the relevant details from your receipts and supplier invoices and inputs them directly into your bookkeeping software. It then captures tax summaries by default and if requested, full line item details including description, quantity and unit price. AutoEntry also remembers how you categorise your expenses such as the relevant supplier account, nominal account and tax code. It will even match invoices to purchase orders for some of its integrated bookkeeping solutions.

Your Data is in Good Hands AutoEntry employs best practice security policies including SSL encryption across the platform to keep your private information, private.

Seamless Integration

AutoEntry integrates seamlessly with Xero, QuickBooks, Sage and Kashflow, amongst others, and

Start your free trial today! www.autoentry.com

can generally provide a manual integration to other accounting packages via CSV or Excel.

AutoEntry is the smart choice for businesses looking to keep pace with today’s digital revolution and say goodbye to long hours of paperwork.

AutoEntry is available for download on Apple and Android devices. Installation takes less than 15 minutes.

For more information, contact: Tom Port, UK Sales Manager: tom.port@ocrex.com | +4420 3 393 3058.

Pricing

Your Business Our Passion

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Raffingers Upcoming Events Fancy Some Free Cash for Your Business?

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March 2017

To attend any of our events contact lauren@raffingers. co.uk.

Where: WeWork, 1 Primrose Street, London, EC2A 2EX When: 6pm-7pm Did you know thousands of companies are eligible to claim money back from HMRC and aren’t doing so?

This money is available through the R&D Tax Credit Scheme and despite what you might think; it’s not just for tech companies.... In the last year alone, we’ve managed to claim money back for businesses in design, recruitment and the arts. You could be leaving serious money on the table if you don’t check it out for yourself!

To find out if you can claim, join us on 1 March at 6:30pm at WeWork, Spitalfields.

Lunch and Learn: Simplifying Your Finances

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March 2017

Where: WeWork, 1 Primrose Street, London, EC2A 2EX When: 1pm-2pm Have you heard about HMRC’s Making Tax Digital (MTD)?

MTD will require all businesses to keep their financial records digitally and submit these to HMRC quarterly. But, it is not all bad news. It will also allow you to use cloud accounting software to transform your business.

With everything in one place, you can view your financial figures whenever you want, spot trends in your data and forecast for your year ahead. For the first time ever you will have complete visibility and control over your finances.

Join us on 29 March to see how you can benefit.

Join us at our first Charity Ball and help us raise awareness and much needed funds for Pancreatic Cancer Research Fund and Ovarian Cancer Action.

Tickets: £75 per person, or, tables of 10 are available for £700 (includes three course dinner and live band).

We are also looking for sponsors and donations: If you would like to donate an item for our auction or purchase an advert in our Charity Ball Brochure (prices start from £50), contact lauren@raffingers.co.uk.

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Beware of Fraudulent Emails “From HMRC” In the last few months many of our clients have been the subject of scam emails, supposedly from HM Revenue & Customs (HMRC) declaring that they are eligible for a tax refund. These phishing emails ask for confidential information, such as a full address, postcode and specific figures. If you have an email and are unsure whether it is from HMRC, then do not open it, and if you already have, then do not click on any of the links or attachments.

Due to the frequency of these emails and the number of people that are falling victim, it is important that you are vigilant.

How to Tell if an Email is Fraudulent Spelling and Grammar: Often fraudulent emails will be full of spelling and grammatical mistakes. If this is the case, then the email is not from HMRC.

Urgent Action Required: HMRC will never in an email ask for a reply or the links to be completed immediately or in a short time frame.

For example, ‘you only have three days to reply’ or ‘urgent action required.’

Common Greeting: An email from HMRC will greet you with the name you provided to them when you signed up. If the email greets you with ‘Dear customer’ then you know that it is fraudulent. HMRC will always start an email with your full name.

Attachments: Be wary of emails that contain attachments. These attachments could contain a virus which is designed to steal your personal information.

If you have received an email from HMRC and are unsure of its authenticity, contact:

Asking for Personal Information: HMRC will never email you to: • Notify you of a tax rebate • Offer you a repayment • Ask you for personal or confidential information, such as your full address, postcode, unique taxpayer code or your bank account details

Suda Ratnam 020 8418 2681 suda@raffingers.co.uk

Raffingers Foundation Thank you to everyone that has supported us in 2016, helping us to raise a massive £3,520 for Pancreatic Cancer Research Fund and Ovarian Cancer Action.

Our latest fundraising attempt saw our team put on a cake sale in our local offices, raising £221.

£3,520 Raised so far

To get involved or to donate, visit: www.raffingers.co.uk/community.

Your Business Our Passion

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R&D Tax Credits: £47,000 Saved in Corporation Tax CLIENT NEWS

Background Total Security Installations (TSI) Limited is a highly successful company that specialises in the manufacturing, design, installation and maintenance of security projects including safes, vaults, alarm systems and security screens.

The company has a high level of expertise in both physical and electronic security solutions and is a renowned industry specialist in fitting out new sites or upgrading existing systems. To find out more about TSI Limited, visit www.tsisecurity.co.uk.

Research and Development TSI has a development background. It had previously developed its own safe and vault technology to produce an anti “hold-up” solution, designed to protect against the threat of robberies within the retail area whilst still allowing users to have individual access. The company director contacted us to discuss recent innovations and key developments connected to its Prosync development programme.

The company had set out to design a new safelock that sent live information back to a central location where activity could be both monitored and controlled. In particular, the research and development (R&D) activity included the development of a locking system so that applications could be retro fitted to existing mechanisms, and the design of an alarm detection via the locking device to identify if the safe is either under attack or being removed.

Work under the Prosync programme also

For a free assessment to see if your business qualifies for R&D, contact our Senior Tax Manager and R&D specialist, Neill Staff: neill@raffingers.co.uk 020 8418 2671

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included the development of a reporting platform from where all safe alarms across sites are monitored, and the technical issues involved in developing secure information transmission over the 2G/3G mobile network without the need for the involvement of client networks or IT departments.

Work carried out in the Prosync programme was established as being a qualifying R&D activity because the R&D work represented an advance in the field of technology where no existing alternative was available. The majority of the qualifying costs related to the company employees who spent some or most of their time working on the R&D project, however, we were also able to claim for the cost of materials that were used in the R&D process

The Result A claim was submitted to HM Revenue & Customs (HMRC) which resulted in the company saving corporation tax of just under £47,000 and receiving a tax credit repayment of just under £5,000.

Marriage Allowance Explained The marriage allowance lets you transfer £1,100 of your personal allowance to your husband, wife or civil partner if they earn more money than you. This will reduce the tax that they pay by up to £220 each year.

Who is Eligible?

In order to be considered for the allowance, you must meet the following conditions: • Be married or in a civil partnership • Ensure that the party transferring their personal allowance has an income under £11,000 • Ensure the party receiving the transfer is a basic rate tax payer and has an annual income between £11,001 and £43,000 How it Works The spouse that earns less than £11,000 can transfer their unused personal allowance to their partner – up to a maximum of £1,100. This means their spouse’s tax free allowance can then be increased. If the full

Save £220 amount (£1,100) is transferred, the spouse will receive a tax-free allowance of £12,100, saving the couple £220 (20%).

How to Apply You can apply for the marriage allowance online at gov.uk.

If you are eligible for the marriage allowance in the 2016 to 2017 tax year, you can backdate your claim to 6 April 2016 and reduce the tax paid by up to £432.

For further information or advice, please contact: Andrew Coney andrew@raffingers.co.uk

Employee Spotlight

In this slot we introduce you to a valued member of our team, allowing you to put a face to a name.

This quarter we speak to our Cloud Accounting Assistant, Daniel Stopp.

for Harlow Cricket Club and also play Sunday League Football for Risden Wood FC.

Name: Daniel Stopp Email: daniel@raffingers.co.uk

When I am not working or playing sport, I like to spend time with my girlfriend in Sweden. I am also learning the Swedish language.

Career: After completing my A-Levels I worked for a telecommunications company for a year. I then moved to my first accountancy practice where I worked for two and a half years. It was here that I developed a passion for cloud accounting. I then joined Raffingers in June 2016 as a Cloud Accounting Assistant.

I am currently studying towards AAT Level 4 and plan to move on to ACCA once I have finished.

Interests: I play league cricket as an opening batsman

I am also an Arsenal fan and try to go to as many home games as possible.

Partners Report: Dan joined us back in June last year and I do not know what we would do without him. Dan has taken on his own portfolio of clients with ease and has been an instrumental part of the cloud team and the enablement process. Dan has great knowledge of cloud accounting and with his eagerness to learn and his great attitude to work, we know he is a great asset to the team.

Your Business Our Passion

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Making Tax Digital: Opportunity or Threat?

BLOG

Blog by Lee Manning, Partner

HM Revenue & Customs (HMRC) has confirmed that it will be going ahead with Making Tax Digital (MTD) from April 2018. Sole traders and buy-to-let landlords will be the first to be affected, with a major pilot to be launched this April.

MTD will use cloud software to submit quarterly information to HMRC, which will mean all businesses will need to have their bookkeeping records on a cloud bookkeeping package. As these packages are becoming more intelligent, the traditional bookkeeping services will more than likely be automated and businesses will be looking to their accountant for help to implement the systems and provide the necessary training.

When MTD was first announced, many accountants were worried as it appeared their core compliance driven service was going to be significantly reduced.

However, I personally saw it as a huge opportunity to be able to, at last, provide businesses with proactive advice to help them succeed at a cost that is reasonable. As the cost for dealing with the day to day bookkeeping will reduce, businesses will be able to afford to pay for more valuable services, such as help with their pricing strategy, a review of their internal systems and efficiency improvement suggestions using the latest technology. In addition, MTD will enable accountants to finally deliver up to the minute financial information, financial forecasts to show where improvements can be made in the future, a complete financial review to ensure the business owner is planning for retirement, help with estate planning and finally be a virtual finance director for businesses no matter how small they are.

I’m sure MTD will come with its own challenges, but in the long run business owners will benefit as long as their accountant has evolved their service offerings, and are experienced enough to provide the advice that business owners expect from its trusted advisor.

For further information about MTD and migrating to a cloud bookkeeping package contact:

Lee Manning 020 8418 2662 lee@raffingers.co.uk

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Making Tax Digital is a government initiative that sets out a vision for ‘a transformed tax system and the end of the tax return’ by 2020. The aim of the initiative is to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.

Making Tax Digital is a huge opportunity to be able to, at last, provide businesses with proactive advice to help them succeed at a cost that is reasonable.

- Lee Manning, Partner

Have you Considered Invoice Finance Yet? Many small businesses are still struggling to access suitable funding to support their plans for future growth and development. It is especially tough for businesses who are experiencing increased trade; who do have that capacity to take on new contracts, but have to turn away work because they cannot afford to offer suitable credit terms.

There is a continued trend in the business climate that many large enterprises are happy to work with small and medium sized companies, but only on their terms.

This essentially means that SME’s have to sometimes wait up to 90 days for payment. Clearly this can place an incredible strain on their essential working capital requirements.

Slow Payers and Cash Flow Management When customers are on longer credit terms, it means that unless careful cash management is in place, small companies can risk not being able to replenish stock, cover core operating costs or even meet their key payroll commitments.

Small companies have to ask key questions if they face a potential large sale that requires longer terms: • Do they take the order and risk working capital issues?

• Do they turn away the order and risk losing future business?

It is a fundamental problem for a lot of small businesses, but there is an alternative funding option available: Invoice Financing This type of finance is ideal for small businesses, especially those that may not have access to credit through more traditional forms, such as Banks. This is because unlike a bank loan, which involves a variety

of credit checks on your business, with invoice finance it is the strength and spread of your customers that is of primary importance.

Being able to release funds against a large percentage of your committed sales at an early stage, means the release of vital cash to free up working capital resources. This mean you are then in a better position to take on those new orders, and to ultimately grow your business.

In simple terms, it can be viewed as an overdraft facility secured against your debtors’ ledger. As long as simple checks confirm your ability to service the finance facility, the funds can be released on average within 2-3 working days.

Most new lenders in the market now will only tie you in to a 30-day rolling contract and will also not restrict the lending facility against concentrated debt.

In Summary Invoice financing can be used to extract liquidity currently tied up in outstanding customer invoices, but also staged applications, SAAS, maintenance and other licensing contracts. Releasing that cash injection earlier for working capital management.

This area of lending has become much more competitive, creating an affordable and flexible way of financing for your business.

If you require any advice, whether you are just looking to start up, or are a current business owner, contact: Roy Butcher 0208 418 2673 roy@raffingers.co.uk

Your Business Our Passion

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