Tax Tips and More | Winter 2018/19

Tax Tips and More Winter 2018/19

What to Watch out for in 2019

Personal Finance Jamboree

How to Grow Your Business

Discover what the key changes are in 2019, what you need to be weary of and what you can capitalise on.

Including Brexit, Making Tax Digital and AIA changes.

From our experience in the last 12 months these are the most common and important aspects that individuals should be reviewing to manage their personal finances effectively.

What does business growth mean to you? (Increase turnover by X%?

Expand your offices?) Once you have a focus, leveraging these seven steps will help you achieve your goals.

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Contents

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2

Welcome and Partners

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Special Feature What to Watch out for in 2019

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Making Tax Digital Latest

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Business Insights: “It’s not a business, it’s a calling”

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Personal Finance Jamboree

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Theatre Tax Relief

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Xero Add-On ReceiptBank

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How to Grow Your Business

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Upcoming Events

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Raffingers Foundation Masquerade Ball 2019

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Employee Spotlight

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Watch out for Fake Emails

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“Who needs an accountant?”

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Welcome to our WINTER Newsletter Happy New Year and welcome to the latest edition of our quarterly newsletter.

2019 is going to be quite a year for UK businesses.

Brexit has caused much uncertainty. Before Christmas, from speaking to our clients, it did appear that some SMEs were holding off investing until the impact of Brexit was clear. Whether this continues into the first quarter of the year, we will have to wait and see.

We also have Making Tax Digital less than three months away, affecting VAT registered businesses with a turnover above £85,000. Both of these changes, amongst others, are discussed in this quarter’s Special Feature on page 4.

This quarter we are also pleased to bring you the first in our Business Insights series, where we catch up with our clients to reveal the secret behind their success and advice they would offer to other businesses. This quarter we catch up with Coleman Douglas Pearls see page 6.

We also bring you the latest news and advice to ensure you get the most out of your personal finances (page 8) and business (page 12) this year.

All that is left is for us to wish you a successful and prosperous 2019. For advice on any of the topics discussed, please contact one of us.

To contribute to our next newsletter, contact: lauren.kelly@raffingers.co.uk.

The Partners at Raffingers

Raffingers Partners

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

Andrew Coney Partner andrew.coney@raffingers.co.uk

Lee Manning Partner lee.manning@raffingers.co.uk

Adam Moody Partner adam.moody@raffingers.co.uk

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

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

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

Roy Butcher Partner roy.butcher@raffingers.co.uk

Neill Staff Partner neill.staff@raffingers.co.uk

Your Business Our Passion

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SPECIAL FEATURE

What to Watch out for in 2019 What are the key changes in 2019, what do you need to be weary of and what can you capitalise on?

After April 2019 these rates will be frozen and will only increase with inflation.

Brexit

VAT Reverse Charge for Construction Services

At 11pm on Friday 29 March, Britain will leave the EU. It is important that you begin considering (if you haven’t already) the impact Brexit could have on your business.

From 1 October 2019, a VAT reverse charge will apply to supplies of construction services, meaning that 100,000 to 150,000 businesses in the construction and building sectors will have to change their accounting systems.

Indeed, Brexit will bring more challenges than opportunities, most significantly with talent. You need to consider if Brexit will affect the talent not only within your business at a senior and junior level, but also within your suppliers’ organisations. Could it push prices up within your supply chain?

If you trade with the EU, you also need to review your suppliers and consider whether you can secure more efficient trade deals with countries outside of the EU. Although implications of Brexit are as of yet unknown, you should be reviewing the potential impact on your business and how you can mitigate your risk when the time comes.

Making Tax Digital (MTD) With less than three months to go, if you are a VAT registered business with a turnover above £85,000, you should now have systems in place to make you compliant.

HMRC acknowledges that the impact on the industry is potentially significant. HMRC also notes that some businesses may suffer a loss of cash flow where VAT is no longer charged.

To prepare for these changes, construction businesses should review supplies made to and received from other VAT registered contractors to establish whether these will be affected. They should also consider the adaptions that will need to be made to their accounting systems and consider the impact on cash flow that it can cause.

Annual Investment Allowance (AIA) From January 2019, the AIA will increase to £1million from £200,000 for two years. The AIA is available for most plant and equipment purchases.

Entrepreneur’s Relief (ER)

From April 2019, affected businesses will need to keep digital records and use software to submit their VAT returns (the digital gateway will be switched off).

ER reduces the rate of Capital Gains Tax on disposals of certain business assets from 20% to 10%. The Government has announced two changes:

You can choose to continue to use spreadsheets. However, these must meet digital requirements and be API enabled or have bridging software to make them compatible.

1. An increase in the holding period. Individuals will need to hold the assets or shares for at least two years, as opposed to twelve months, before they can claim ER 2. For disposals of shares on or after 29 October 2018, the individual must now meet two extra tests: They must be beneficially entitled to at least 5% of the company’s distributable profits (i.e. any dividends declared); and have a right to at least 5% of the net assets of the company available to equity holders on a winding up

Indeed, HMRC has delayed MTD, but only for VAT registered businesses with complex requirements and only by six months (see page 5 to find out more).

Personal Taxation and Wages The increases to the personal allowance and the higher rate threshold are coming in to force a year earlier than planned. From April 2019: • Personal Allowance rising to £12,500 • Higher-rate threshold rising to £50,000 • National Living Wage rising to £8.21 per hour

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In light of these changes, it is recommended that no decisions are made on disposals before reviewing existing arrangements to see if they meet the new conditions.

For advice on any of the changes mentioned, contact Neill Staff at neill.staff@raffingers.co.uk.

Making Tax Digital Latest Making Tax Digital Delayed?

HMRC has listened to stakeholders and their concern over whether some businesses will be able to comply with Making Tax Digital (MTD) by April 2019. HMRC has taken on board these concerns and delayed MTD until 1 October 2019 for VATregistered businesses with complex requirements.

This gives these businesses more time to prepare.

So, what does HMRC mean by VAT-registered businesses with more complex requirements?

MTD delayed until 1 October 2019 for VAT-registered businesses with complex requirements.

HMRC has confirmed that MTD will be deferred by 6 months for:

• Trusts • ‘Not-for-Profit’ organisations that are not set up as a company • VAT divisions and VAT groups • Public sector entities required to provide additional information on their VAT return • Local authorities • Public corporations • Traders based overseas • Those required to make payments on account and annual accounting scheme users HMRC expects that the deferral will only apply to around 3.5% of those affected from April 2019.

HMRC Contacting Xero Users HMRC has been contacting Xero users to remind them of their Making Tax Digital (MTD) obligations.

If you are a Xero user, you should have received a letter from HMRC. The letter reminds businesses that from 1 April 2019, those VAT registered and with an annual taxable turnover above £85,000 will need to comply with MTD and the new VAT reporting requirements.

For those that are affected, the letter asks you to speak to your accountant about signing up for MTD. For clients of Raffingers, where we file your VAT return, we have already set up the MTD account and are in the process of testing the platform. Our clients can therefore be rest

assured that at this time, no further action is required.

This should be the same for most businesses, where their accountant files their VAT return. However, you should check with them first.

For those that file their own VAT return, either through Xero or through the gateway, you will need to follow the instructions in the letter to sign up for MTD. Since 16 October, HMRC has been piloting its new VAT service and we are aware that Xero is currently in the process of beta testing its new VAT return for MTD connection too. This will be made available to Xero customers shortly.

For support with Making Tax Digital and making your business compliant, contact Lee Manning 020 3146 1604 | lee.manning@raffingers.co.uk Your Business Our Passion

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BUSINESS INSIGHTS

“It’s not a business, it’s a calling.”

Raffingers’ clients never cease to amaze with their endless ambition, abundant motivation and incredible talent. This is especially true of Chrissie Douglas, founder and owner of Coleman Douglas Pearls.

We recently caught up with Chrissie after Coleman Douglas Pearls was awarded the title of Independent Retailer of the Year at the Kensington and Chelsea Business Awards 2018. This achievement is just one of the many accolades Chrissie has achieved over the years and we were keen to know what the secret was behind Chrissie’s success.

“It’s all down to loving what you do”, she says. It might sound simple, but this is what truly motivates Chrissie and is evident as soon as you start speaking to her. For Chrissie, “it is not a business, it’s a calling.”

Although, admittedly, it did take Chrissie some time to find her calling. Chrissie’s path into jewellery design, specifically pearls, was not straight forward or conventional. Chrissie’s early career saw her as a tour leader in Cambodia, Vietnam and Burma. Her passion for art and travel then took her to Hong Kong where she began designing clothes and furniture – a far cry from jewellery design.

So, how did Chrissie eventually become known as the lady that “paints with pearls”?

In 1989 Chrissie took some time out to start a family, and it was during this time that she was visited by her dear friend, Teresa Coleman. Teresa knew Chrissie was a designer, and although not a jewellery designer at this point, she spotted a talent. Teresa visited Chrissie with several pearls and asked her to design a piece of jewellery with them. That was the start and Chrissie has never looked back – you may even recognise Teresa’s influence in the company name…

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Kensington and Chelsea Business Awards 2018

Chrissie immediately recognised the potential for pearls, “the 80s and 90s was an era of minimal jewellery and I could see that pearls would really make a statement on the catwalk”. And that’s where Chrissie began, she started Coleman Douglas Pearls in her kitchen, with a six-month-old, creating jewellery with Pearls that would enhance catwalk looks.

“the 80s and 90s was an era of minimal jewellery and I could see that pearls would really make a statement on the catwalk.”

Then Chrissie got her big break. In 1994, Chrissie was approached by a client who asked her to supply the jewellery for a charity catwalk show. Chrissie immediately said yes, and it was at this ‘little’ charity show that Chrissie was discovered by Lucia Van der Post and crowned ‘Pearl Queen’ in the Financial Times. Since

then, there has been no going back.

Chrissie’s business has gone from strength to strength, she has completely transformed pearls – moving away from traditional pearls that you might associate to your grandmother to designs that incorporate leather, wood, lava rock, shells and even leather in the form of barbed wire.

“never stop learning, never think you know it all, because you don’t.”

Chrissie is now acknowledged as a leading authority in the field of pearls; her designs are on exhibition at the Earth Treasury and she was a named designer for “Iridesse founded by Tiffany & Co”.

Not only this, but Chrissie acknowledges herself that she learns from her apprentices too. One prime example of this is social media; technology and marketing are moving so fast that Chrissie is learning from her apprentices, just as much as they are learning from her.

If you think Chrissie is now going to sit back and take it easy, you’d be wrong. Chrissie is currently preparing to scale her business, “there are only so many hours in the day, I need more people so that I can step back and manage the business”. To achieve this ambition Chrissie needs skilled employees, which she plans to achieve through the training of apprentices, “from working with apprentices and training them to become masters in what they do, I can build a sustainable and skilled workforce.”

Therefore, when asked what advice Chrissie would give to business owners, it is no surprise that her first piece of advice is to, “never stop learning, never think you know it all, because you don’t.” Taking a collaborative approach and always being open to learning new things ensures you and your business keep developing.

This is fantastic advice and a true indication of how Chrissie has achieved her own success. Chrissie also tells business owners to be persistent, “you have to just keep going no matter what”, be passionate, “the reality is that you’re a long time working so it is really important you are passionate about what you do, customers and clients will pick up on this.” And finally, create something clients really need, “whether it’s a product or an experience make sure you tell a story and create something that people buy in to.”

In pearls Chrissie has found something she is made for and is extremely good at. Chrissie loves making people feel good and beautiful about themselves. To Chrissie, it is not just jewellery, but “pearl armour”, she is inspiring women, helping them to become more confident and set no limits to what they can achieve.

Kensington and Chelsea Business Awards 2018

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Personal Finance Jamboree These are the most common aspects that individuals should be reviewing to manage their personal finances effectively. We recommend you review each area to ensure you are getting the most out of your money.

Life Assurance Many people have life assurance policies in place to protect their loved ones in the event of death. This could be to cover a mortgage amount on the main residence, an amount to cover other financial liabilities or just a lump sum to provide for loved ones in the event of the unthinkable happening.

One very important point with life assurance policies is that they need to be written in trust. This ensures that the life company can pay out policy proceeds on death without the need for Probate etc. and also ensures that the value of the policy does not form part of the estate and potentially liable to Inheritance tax (IHT), which could reduce the policy proceeds by 40%.

With more and more people buying life assurance online based on the cheapest quote from some comparison site, it is easy to overlook the need to place the policy in trust.

Make sure you check any policies you have and make sure they are written in trust.

If you are a business owner, consider relevant life policies rather than individual life policies as your company can pay the premiums and there are no Benefit in Kind charges that apply. Advice is needed for such policies (usually via an Independent Financial Adviser).

Pension Nomination forms Most Personal Pension Plans operate under what is known as a Master Trust (of the pension provider) and this keeps the plan outside of the clutches of HMRC from an Inheritance Tax point of view.

any policy proceeds are to be paid – this can be a longwinded process at a time when dependents may be in urgent need of cash.

We have also had cases where the ex-spouse is still the nominated beneficiary on a pension policy despite the couple having divorced many, many years earlier!

Take some time to check your pension policies to ensure the nominated beneficiaries are in place and that they represent your current wishes.

Wills We are constantly nagging clients about this – please make sure you have an up-to-date, valid Will in place.

State Pension entitlement There have been many changes to the state pension entitlement over the past ten years as successive Governments battle to work out ways to make them affordable in the many years to come.

The basic state pension is set at £164 per week for the 2018-19 fiscal year. To qualify for the full basic state pension, an individual must have 35 “qualifying years” during their working life. Those individuals that have less than 35 qualifying years (subject to a minimum of ten years) get a scaled down basic pension entitlement.

Qualifying years are built up through the payment (or crediting) of national insurance contributions.

Employees need earnings of at least £116 per week for 2018-19 (and this usually increases slightly each year) to make a qualifying year. These are class 1 contributions.

Self-employed individuals must pay class 2 contributions to build up their entitlement of qualifying years – these are currently paid at the rate of £2.95 per week where the annual earnings (profit) exceed the small earnings threshold of £6,205 for 2018-19.

One thing often overlooked or not regularly updated is the Nomination Form within the Pension Plan that tells the Pension Trustees who your nominated beneficiaries are in the event of death.

A full year of contributions has to be made to make the year qualifying. If there is a gap in any particular year or indeed any years missing, voluntary contributions can be made to make up the gap – these voluntary contributions currently cost £14.65 per week.

If there is no nominated beneficiary within the Plan the Pension Trustees have to make the decision as to whom

We recommend you check your own NI record to ensure you have the correct number of qualifying years.

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This can be done online at the gov.uk website – this will give you an idea of your state pension amount – a forecast can also be requested by post by submitting a form BR19. HMRC (and formerly the DWP) do make mistakes in NI records so it is better to get it checked out well before you reach state pension age.

Investment Bonds

If W had assigned the bond to H (as he is a basic rate taxpayer) prior to encashment and H encashes the bond, the tax would be:

• • • •

Total CEG - £100,000 Tax payable @ 20% - £20,000 Notional tax credit – 20% - (£20,000) Tax due on encashment - £Nil

We refer to investment bonds here that are managed by investment houses or insurance companies.

A saving of £20,000 by just applying some simple planning steps.

With investment bonds, it is the encashment or partial surrender of such Bond Investments that extreme care needs to be taken to avoid significant potential tax charges. It is therefore imperative that proper advice is sought BEFORE any encashment or partial surrender of the bond is actioned.

A tax case has highlighted another issue with regards to partial surrenders. An unrepresented taxpayer unwittingly ticked the wrong box on the form supplied by the life assurance company, which has significant tax consequences – as Mr Joost Lobler (in the recent case) found out. When a partial surrender is taken from the bond there are two ways this can be done: -

The Bond is usually written in a number of “segments” – this can assist with any planning around encashment or partial surrender.

Firstly, the policy segments are assignable between husband and wife. So, if the investment is in the name of one spouse and encashment is being planned, consider whether the other spouse is a lower rate taxpayer and if so, assign the policy to the other spouse before encashment or partial surrender.

As an example - W took out an investment bond 10 years ago for £100,000. No withdrawals have been taken out and W is now looking to cash in the entire investment which is now worth £200,000. W is a higher rate tax payer earning £50,000 per annum; H (her spouse) is basic rate taxpayer earning £20,000 per annum.

If W encashes the whole investment, the chargeable event gain triggers £100,000 (proceeds less original cost). As the bond has been in place for 10 years, the top sliced gain is £10,000. This is added to W’s income to ascertain the tax rate that she will pay on the gain. As she is already a higher rate taxpayer, the applicable tax rate will be 40%. The tax on the Chargeable Event Gain (CEG) will therefore be:

• • • •

Total CEG - £100,000 Tax payable @ 40% - £40,000 Notional tax credit – 20% - (£20,000) Tax due on encashment - £20,000

• Cashing in a number of whole policy segments – no tax • Cashing in a slice of the whole investment – significant tax In Mr Lobler’s case £560,000 tax on £66,000 profit!

That is a tax rate of just over 800%. Mr Lobler appealed against the injustice and although the First Tier Tribunal upheld HMRCs’ view on the grounds that Mr Lobler could have taken financial advice before making any withdrawal, thankfully common sense prevailed at the Upper Tribunal on the grounds that the charge was “wholly disproportionate” to the gain made.

The lesson here is to make sure that proper tax or financial advice is taken before encashing or surrendering any bond investment to ensure that you do not fall into any of these traps.

And if you have enchased an investment bond (wholly or partially) in recent years which triggered a significant tax charge and you would like a review, get in touch.

Paul Dell 020 3146 1606 paul.dell@raffingers.co.uk

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Theatre Tax Relief Creative industry corporation tax reliefs are a suite of seven tax relief schemes that allow qualifying companies to claim an enhanced tax deduction, or in some circumstances claim a repayable tax credit when calculating their taxable profits.

Theatre Tax Relief (TTR) is part of this suite of tax reliefs for creative industries introduced by the Government to encourage and promote growth in areas, such as the performing arts where the UK potentially has a competitive advantage.

The seven reliefs consist of: • • • • • • •

Film Tax Relief (FTR) Animated Tax Relief (ATR) High-end Television Tax Relief (HTR) Children’s Television Tax Relief (CTR) Video Games Tax Relief (VGTR) Theatre Tax Relief (TTR) Orchestra Tax Relief (OTR)

They work a bit like R&D tax credits, by increasing the amount of allowable expenditure against your taxable profits.

TTR is one of the lesser-known forms of government financial aid available, but the scheme should be a key consideration for a range of businesses, not just those traditionally associated with theatre.

Any company staging a live performance where the performers play a role can make a claim based on expenditure incurred in producing and closing the event.

production companies so as to reduce their tax liability.

In cases where the production company is loss-making, losses relating to the production can be boosted and surrendered in return for a cash tax credit.

Essentially, for every £100 spent on producing a theatrical production, an amount of £180 of relief could be obtained. Therefore, the effective net production cost for a profitable company would only be £64 per £100 spent.

If the company was loss making for the period, then they may be able to surrender all or part of the loss and claim a repayable tax credit from HMRC. The surrendered amount is the lower of: • The unrelieved trading loss; and • 80% of the core production expenditure • The repayment is 20% (25% for touring productions) of the surrendered loss

Who can benefit from Theatre Tax Relief?

Companies will qualify for Theatre Tax Relief if they: • Are a theatre production company; and • Produce a qualifying theatrical production; and • Intend at the outset that a high proportion of the live performances are to be given to paying members of the general public or for educational purposes; and • At least 25% of the core expenditure incurred in producing the production is incurred within the (European Economic Area) EEA.

What is Theatre Tax Relief?

The TTR scheme is designed to benefit both profitable and loss-making companies, as well as those who may be able to claim an exemption from corporation tax.

It works by reducing the amount of taxable profits for

Roy Butcher 020 3146 1607 roy.butcher@raffingers.co.uk

The TTR scheme is designed to benefit both profitable and loss-making companies.

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ReceiptBank

XERO ADD-ON

Save time and money

One Xero add-on that demonstrates all of the advantages of moving to the cloud is ReceiptBank, an add-on that has enabled us to save our clients time through more straightforward and realtime accounting.

Receipt Bank is a bookkeeping tool that will help us save you time and money.

The key feature of Receipt Bank is its simplicity, allowing you to easily get receipts and invoices into Xero. You can take a picture using the Receipt Bank mobile app, send an email to your unique Receipt Bank email address or link it straight up to your PayPal account; never will you have to worry about losing a receipt again.

You can also use Receipt Bank to better manage your own and employee expenses.

Depending on the level of service you want from Raffingers you can oversee the whole process, and become more efficient at doing your own bookkeeping, or you can take a picture and leave the magic up to us; giving you a real time bookkeeping service and an up-to-date financial picture in Xero.

This not only saves you time, but gives you the opportunity to stop working in your business and start working on your business: we know you didn’t go into business to do bookkeeping.

Clients using Receipt Bank, as part of our cloud offering, are already benefitting from a more accurate and reliable set of accounts, enabling us to give more targeted and proactive business advice.

To find out more or to see how Receipt Bank can be used in your business, please contact Lee Manning at lee.manning@raffingers.co.uk.

Receipt Bank is a bookkeeping tool that will help save you time and money.

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How to Grow Your Business What does business growth mean to you? (Increase turnover by X%? Expand your offices? Hire more employees to release some of your time?) Once you have a focus, leveraging these seven steps will help you achieve your goals.

1. There are only four ways to grow any business • Increase the number of customers (of the type you want to have) • Suggestion: Use referral systems to bring quality customers in to your business • Increase the number of repeat customers • Suggestion: Create special offers to encourage customers to come back • Increase your average sale value • Suggestion: Package goods/ services together; • Consider what other goods/ services could be supplied to your customers • Increase the effectiveness of each process or system within the business • Systemise to make your processes more efficient and watch your expenses 2. What gets measured gets managed Measure all your key performance indicators (KPI’s). Not all of these are financial, and, in many cases, the nonfinancial measurements are just as important.

Some examples of KPI’s might be: • Conversion rates – incoming calls to sales; meetings to quotes; quotes to sales; • Net Promoter Score • Team happiness scores And the usual financial ones: • • • •

Turnover by month and YTD Gross margins by month and YTD Cash balances Debtor days (how long your customers take to pay)

Once you start to measure these, you can manage trends and set targets. Make sure you measure the right KPIs; you do not want to report on too many and lose focus.

3. Build a unique differentiator • What differentiates you from others? Build your brand around this and ensure your team is consistently spreading the message • People buy the differences they perceive between businesses

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4. Understand customers’ key frustrations…

Surveying customers or just asking customers what they think can give you invaluable insights into why they buy, which you can use to focus your business plan and grow your business.

Some examples of key frustrations would be: • Goods or services not delivered on time • Not returning calls • Not issuing quotes in a timely manner • Mistakes on orders If you can turn around any of these key frustrations into positives, it can only help the business. For example: • “If we fail to deliver on time, we will send you a voucher for a meal on us” • “If we fail to return your call within X hours, we will discount the cost of our service by 10%” 5. Focus on the lifetime value of customers • Approach existing customers with new products and services • Do not focus on the upfront cost and appreciate the value of customers that keep coming back 6. Do not just cut the price!

• • • • •

Value add to products rather than discount Create packages 2 for 1 sales to clear old stock Closed door sales Discount for “future” purchases – “buy again within 30 days and receive X% off”

7. Lower the barriers to doing business What barriers affect customers buying from you?

• • • •

Rigid payment systems Distance from you Opening hours Ease of contact

And then remove the barriers to grow your business: • Payment systems – make it easy for customers to pay – offer alternatives: - cash / card / apple pay / website etc • Extended opening hours – late nights on certain days of the week, pop up shops • Free delivery offers For support on how to grow your business, contact Andrew Coney at andrew.coney@raffingers.co.uk

Upcoming Events February 2019 Making Business Digital with Barclays 10am-12pm | 26 February 2019 | Barclays, Canary Wharf Join us for an informal business networking event and seminar on Making Tax Digital and Making Business Digital with Barclays on Tuesday 26 February.

Digital is becoming more and more important and relevant in business. We are running this event, in partnership with Barclays, to give you an overview of the changes to TAX reporting starting in 2019 and to share how some businesses are using digital to grow and make efficiencies. Our Partner and Making Tax Digital expert, Lee Manning, will discuss Making tax Digital and preparing your business for these changes, alongside Barclays’ Digital Engagement Manager.

At the event there will be plenty of opportunity to discuss and ask questions on either of the topics.

We hope you can join us.

Places are limited and are first come first served. To confirm your place, RSVP to Lauren Kelly at lauren.kelly@raffingers.co.uk.

Raffingers Foundation Masquerade Ball 2019 ‘Find a mask and wear it well...so your true identity none can tell’ We are excited to be hosting our Charity Ball for the third year running, which this year will be a Masquerade. We really hope you can join us.

Enjoy a three-course meal, dancing entertainment in an elegant setting.

and

Event Details • Date: Saturday 2 November 2019 • Venue: Woolston Manor, Abridge Road, Chigwell, Essex IG7 6BX • Time: 6:30pm - 11:30pm Tickets Tickets are £60 per person, or, tables of 10 are available for £580.

If you are unable to make it but would like to support our Charity Ball, we have advertising opportunities in our brochure available from £100 and are also in need of raffle and auction prizes.

To purchase tickets or support our Charity Ball contact lauren.kelly@raffingers.co.uk.

All money raised for Raffingers Foundation goes to:

• Research projects conducted by Pancreatic Cancer Research Fund and Ovarian Cancer Action • Families affected by pancreatic or ovarian cancer and experiencing financial difficulties.

Funds are available to help with costs, such as private counselling

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EMPLOYEE SPOTLIGHT

BLOG

Ingrid N. Beya Digital Marketing Executive 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 Digital Marketing Executive, Ingrid N. Beya.

Name: Ingrid N. Beya Email: ingrid.beya@raffingers.co.uk Career: I obtained an International Business degree from the University of Hull in 2014. One of my favourite modules was marketing and I really enjoyed creating strategic plans and researching trends, hence why I decided to make it a career.

After graduation I worked in sales and marketing for a security company in Canary Wharf, did some freelance work with SMEs, presented marketing workshops and eventually found my way to Raffingers in 2017. I would say my current role as a Digital Marketing Executive is fun, I get to be creative and I love the autonomy that I have over my work. To become better at my role, I’m studying a Digital Diploma in Professional Marketing with the CIM and hope to graduate in 2019.

Interests: I am extremely passionate about my home country, D.R. Congo, and have fundraised for causes including education for children, healthcare and activists that have been wrongly imprisoned. In October I was also fortunate enough to be a speaker during ‘Congo week’ where I discussed how entrepreneurship can help with sustainability.

I’m a firm believer in doing activities outside your comfort zone for personal growth; this has led me to climbing (and nearly falling down!) Ben Nevis, travelling abroad alone, participating in a pageant and public speaking.

Partners Report: You will often find Ingrid gazing at one of the Partners on her computer screen, but fear not, she is simply editing Raffingers’ videos. Since starting at Raffingers Ingrid has taken on responsibility for raising the profile of Raffingers online and has done an incredible job - just check out our social media platforms. Ingrid is an integral part of the team at Raffingers and we are lucky to have her.

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Watch out for Fake Emails

By Lee Manning Fake emails are still a major problem for business owners, bookkeepers and accountants.

With so much awareness now on fake emails, I naively thought that people being duped by spam emails was a thing of the past. However, a recent article on Facebook highlighted the severity of the problem.

The conversation started on Facebook… “OMG I have just paid £25k on behalf of a client and just found out it was a fictitious company….”

It is common for accountants to make payments on behalf of their clients. In this instance the accountant in question received an email, which looked genuine, requesting payment. The scammers found the accountants’ email address from their website (which was not too difficult).

The accountant made the payment and is obviously now mortified that it was a fake email.

What concerned me the most about this story was that it was not an isolated incident. From reviewing the comments on the post, it appears that many other accountants and businesses have also been duped.

Do not be a victim of fake emails It is increasingly important that you and your team are aware of the severity of spam emails and can easily spot them: Questions to ask: • Is it from a genuine email address?

• Does it have many spelling and grammatical mistakes?

• Does it ask for personal information?

• Does the branding look legitimate?

• Is the linked website or any hyperlinks legitimate? (often if you hover over the hyperlink the address that appears is different from the address that appears in the email) I also advise, especially regarding payments, if it is over a certain amount that you update your internal processes to get the payment authorised by two people.

Tax From the Trenches | Neill Staff

“Who needs an accountant?”

When dealing with HMRC, particularly in enquiry cases, it is an absolute must to have a tax accountant in your corner.

The background to the case I wish to discuss started five years ago when HMRC showed an interest in one of our clients. The company in question had a workforce of around 1,000 people, the majority of which were engaged on a contract of services and charged their costs through a limited service company. At the point when we acquired the client, this practice had been in place for many years and, unfortunately, many of the contractors had been less than diligent in filing company accounts and self-assessment tax returns. HMRC believed there to be significant tax leakage and a major status issue and commenced an enquiry. The case was eventually settled for around £100,000 with an agreement that most of the contractors would be dealt with under PAYE going forward. As part of their fact finding, HMRC registered some of the individual contractors and their companies for investigation.

As well as acting for our client, we were also appointed to act for the contractors that had enquiries.

Unfortunately, the accountant who initially prepared a lot of the contractor’s service company accounts hadn’t done a particularly good job, so in addition to asking the usual status questions, HMRC also asked about some of the expenses that had been claimed. When the main company case was settled HMRC started looking to reactivate the smaller contractor enquiry cases.

Our meeting with HMRC All was progressing nicely as we discussed the merits of some of the expenses claimed in the accounts when I raised the subject of earlier years. I suggested that the client would be amenable to a one-year deal. To assess over four years and up to six years HMRC must establish that a person was careless. Anything over six years and up to 20 years they must establish a deliberate behaviour.

In my view, the client was not guilty of careless behaviour.

The circumstances of this case are that our client went to an accountant when he first started working for our client in 2007. The accountant advised him to set up a limited company and told him he would prepare the company accounts and personal tax return. Therefore, our client put his faith in the accountant to prepare the accounts and tax returns each year. He asked the accountant what he needed to keep in terms of receipts and invoices and was told he needn’t worry. Accounts were duly prepared

each year with, what must be said, questionable expenses. However, our client had complete faith in the accountant and signed the accounts. HMRC will always make the point that reliance on the accountant is not a reasonable excuse, but these arguments are generally connected to the quite separate argument as to whether a penalty should be charged.

The company accounts that are subject to enquiry are for the year to June 2014. To raise an assessment for the year to June 2013, HMRC would need to show the client had been careless. For any earlier years they would need to establish a deliberate behaviour. The Inspectors listened to my explanation and then promptly told me they considered this was a case of deliberate behaviour and they intended assessing all the way back to 2007!

At this point I advised the Inspectors that there would be no question of us agreeing to anything like seven years and that we would appeal the assessments and ask for the Inspector’s decision to be independently reviewed.

I also doubted that the reviewing officer at HMRC Solicitors Office would agree that this was a deliberate behaviour.

The issue of behaviour and earlier year assessments was discussed at length over several hours and eventually the Inspector conceded it was unlikely they would succeed at tribunal with assessments for the earlier years. It did seem to me that they had come to the meeting fully expecting to leave with an agreement for seven years tax interest and penalties and they looked a little deflated.

Why you need a tax accountant…

It strikes me that if an unrepresented taxpayer were in the meeting, HMRC would have walked all over them and they would have left the meeting facing assessments that were unwarranted and unjustified. Some tax is payable without a doubt, and HMRC are fully entitled to seek a reasonable recovery for the year of enquiry, but it is the job of the tax accountant to make sure that the tax laws are applied fairly and even-handedly when it comes to assessments and penalties. I doubt that an unrepresented taxpayer would have been able to detract the Inspectors from their blinkered view.

By, Neill Staff 020 3146 1605 neill.staff@raffingers.co.uk

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