MFW Autumn Newsletter 2016

Business Matters McCabe Ford Williams Newsletter | Autumn 2016

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Welcome to the Autumn 2016 edition of Business Matters Welcome to our autumn newsletter where it is back to school and back to business after the summer holidays.

In this issue partner Emma Andrews has some advice for businesses following the EU Referendum decision and how to plan for post ‘Brexit’ (see page 01).

AUTO ENROLMENT As we head towards a busy time for staging dates we advise #DontIgnoreIt Page 03

We also catch up with HMRC’s plans to make tax digital, as far as they have been declared to date, and there is also a timely reminder on auto enrolment as we approach a very busy time for staging dates.

We hope you enjoy this issue.

MAKING TAX DIGITAL How HMRC plans to digitalise the UK’s tax system.

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CLOUD ACCOUNTING How cloud accounting solutions could help with tax digitalisation.

Page 09 We find out what’s cooking at Wheelers Oyster Bar (page 5)

BREXIT

I believe that it is a good time for businesses to take stock and try to mitigate the uncertainty. They should tighten credit control, and stick to or prepare new budgets. It may be prudent at this point in time to revisit and reconsider any decisions that will not have an immediate positive impact on profitability. The economy has taken a hit and this will ultimately mean lower economic growth in the short term. Businesses, therefore, need to make sure that their finances are as recession-proof as possible.

Brexit’ - What happens now?

Following the surprise Brexit vote to leave the European Union, the U.K. economy suffered a “dramatic downturn” in July after contracting at its fastest pace since the financial crisis, according to research firm Markit.

“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early 2009” Chris Williamson, chief economist at Markit, said in a statement.

“The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit’” he added.

The service sector, which drives the British economy, took a particularly hard hit, coming in at an 88-month low. This research suggests that we are heading for a recession again.

It will take approximately two years for the UK to leave the EU once Article 50 has been invoked and until we are much further along in the process of negotiating our exit from the EU; uncertainty will be a constant feature for UK businesses regardless of size.

For some, ‘Brexit’ may create an opportunity. If the current immigration policy changes to a more restrictive intake of migrant workers, those possessing skills that are in high demand could see an increase in employment opportunities. However, the ‘flip-side’ to this is that for businesses requiring those skills, the cost of employing these workers could be higher. During periods of uncertainty, businesses tend to opt for flexibility and this will be good news for freelancers and contractors.

The potential positive effects of ‘Brexit’ are that interest rates have been reduced, and inflation may start to drift up as a result of the pound devaluing. Only time will tell how this historic decision will impact on businesses in the longer term.

Characteristically, entrepreneurs tend to be opportunistic, and with change comes that opportunity.

We now ‘just have to get on with it’, and plan to minimise the initial volatility whilst hoping that there will be opportunities which arise as a result of this change in the years to come.

Whatever position the market is in it is always advisable to plan ahead. At McCabe Ford Williams we can help you to do this by providing a review of your business and advise on how best to develop your business to ensure that it can cope with whatever challenges it may face.

Author Emma Andrews, FCA Partner – Maidstone office

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Business Matters Autumn 2016

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The WDF has been introduced by HMRC to ensure that individuals who do not pay outstanding taxes from offshore investments and accounts will face tougher penalties. Individuals should be aware that penalties could now be as much as three times the amount of tax they initially try to evade. In addition, individuals may also face much stricter criminal proceedings.

Over 100 countries have committed to exchanging information under the Organisation for Economic Co-operation and Development Common Reporting Standard (CRS) in order to ‘increase international tax transparency’.

From 30 September 2018, new sanctions under Requirement to Correct will be introduced that reflect HMRC’s toughening approach. You will still be able to make a disclosure after that date, but new terms will not be as good as those which are currently available.

The WDF will affect any unpaid tax or omitted tax relating to any of the following: • income arising from a source in a territory outside the UK; • assets situated or held in a territory outside the UK; • activities carried on wholly or mainly in a territory outside the UK. To make a disclosure you will need to register on the GOV.UK website www.gov.uk/government/ publications/hm-revenue-and-customs-disclosureservice. Further information about the WDF can be viewed here www.gov.uk/guidance/worldwidedisclosure-facility-make-a-disclosure.

Alternatively, contact your local MFW office who will be pleased to offer further guidance.

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MFW wish a fond farewell to the Official Receiver The partners and staff of the firm wish Andrew Stanley of Medway Official Receivers a very long and happy retirement.

Andrew joined the Insolvency Service as an examiner in 1979 when the office was located on Star Hill, Rochester. He has overseen many significant changes during his time with the service such as the introduction of bankrupts receiving an automatic discharge in less than twelve months, a vast difference to the pre 1986 days when after five years into their bankruptcy a debtor could apply to court for his discharge. Back then a member of the Official Receiver’s staff would visit the home of every single bankrupt and trading premises of each company, which is a far cry from now when sometimes interviews are conducted over the phone.

Andrews’ time with the service has not been without incident including one time when he arrived at a bankrupt’s house, to be confronted by the debtor with a gun!

We are sorry to see Andrew go but wish him all the best for the future when he will hopefully get to spend more time with his wife Jane and daughters Lauren and Tara.

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WDF

HMRC launch Worldwide Disclosure Facility (WDF)

AUTO ENROLMENT

Auto Enrolment - #DontIgnoreIt! Automatic enrolment (AE) has been rolling out for the last four years starting with the largest companies.

However, large employers including national companies, such as the likes of Tesco and Sainsbury’s, who employ 1,000s of employees, have had their human resources teams to rely on as their staging date loomed.

The real concern now is for the small and micro employers most of which do not have the luxury of an in-house professional to guide them. With fines and the possibility of legal implications for those that do not meet their obligations, how will they fulfil their responsibilities?

Start sooner than you think The Pensions Regulator recommends 12 months and 120 working hours for an average employer to prepare for their duties under AE. It is of key importance that businesses therefore recognise the significance of their staging date and begin planning sooner, rather than later.

Operation overload?

This becomes increasingly important as greater numbers of businesses approach their staging date.

It has been recognised that where critical volumes of companies are staging by early 2017, with over 100,000 businesses staging every quarter currently, the financial services sector will become saturated with demand for support. To put this into perspective, the numbers of businesses expecting to stage during the September to December quarter will jump to 215,000!

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Implications for non-compliance can be considerable.

In the last quarter The Pensions Regulator used its regulatory powers 4,489 times. This can include fines of £400 for not complying with employer duties but this is only the beginning! For example, Swindon Town Football Company Limited (STFC) received fines totalling £22,900 after it failed to put eligible workers into a pension scheme or comply with other workplace pension duties (source: The Pensions Regulator).

Executive director for AE Charles Counsell said: “While the vast majority of employers are complying with the law, some small employers are still risking fines by failing to understand how it affects them.” He urged employers to therefore check the Pension Regulator’s website and to take time to read correspondence.

There are resources and organisations out there to help businesses prepare in a timely and cost-effective manner. Employers are encouraged to be proactive in their planning or neglect their AE obligations at their peril.

As The Pension Regulator and their mascot Workie have campaigned on our television screen, #DontIgnoreIt!

Author Daniel Lamba, LLB Accounts Manager

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Because we chose to involve McCabe Ford Williams, together with a Pensions Adviser, which they had recommended to us at an early stage, I am pleased to say that there were no big challenges or obstacles to face.

How has McCabe Ford Williams been able to help you?

Auto enrolment staging as experienced by a client

McCabe Ford Williams also process our payroll, which now also includes the calculation of pension contributions. This process has gone very smoothly.

Sittingbourne client Paul Churcher, MD of C-Mech Services Ltd (C-Mech) talks to us about his AE experience.

What recommendations would you give to other businesses that are facing their staging date?

About C-Mech Since 1974 C-Mech have been installing and providing repair and maintenance services for industrial doors and loading bay equipment, including dock levellers and high speed doors. Additionally, they combine the knowledge and experience which they have gained over the last 42 years to provide innovative solutions for common H&S, energy conservation, pest control and operational issues to companies such as Amazon, Ocado, XPO Logistics, Eddie Stobart, DHL, Berry Gardens, Cummins, Shepherd Neame, Fowler Welch and many more.

Liam McHugh, partner at our Sittingbourne office, together with his team run the C-Mech payroll. This has involved helping Paul to implement AE. Services provided include calculating pension contributions, advising C-Mech personnel and making all necessary submissions to the Pensions Regulator.

Here’s what Paul had to say...

How did you find out about AE? I had heard a little about it via news stories, the FSB and speaking with some of our clients and, of course, I was updated by McCabe Ford Williams.

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Don’t bury you head in the sand and hope it goes away, it won’t. Much better to take advice at an early stage and make plans in advance.

How have McCabe Ford Williams been able to help?

From the early stages with providing advice through to implementation McCabe Ford Williams have made this process very easy and far less complicated than it could have been.

Summary As you can see from the above the impact of AE on C-Mech has been minimalised by planning early. Getting advice both from an accountant and a qualified pensions adviser will also help to make the staging of your own AE much less challenging.

Outsourcing your payroll and AE function could well be a route you would like to investigate but whatever help you require call your local MFW office (www.mfw.co.uk/contact/) who will be pleased to find the right solution for you.

For more information download our AE guide here http://downloads.ts-rc.co.uk/ard/getdocument. asp?ID=734978&AID=2313&SID=10&FID=43355&LD ID=762377

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AUTO ENROLMENT

What have been the biggest challenges you have faced with the introduction of this new legislation?

CLIENT PROFILE

Client Profile: Wheelers Oyster Bar, Whitstable

Their world is your oyster At the time of writing this article Wheelers Oyster Bar (Wheelers) was undergoing a refurbishment programme, a massive undertaking considering Wheelers is a listed building located in a conservation area. However, the team have rallied through these works to keep the Wheelers seafood bar open and despite everything they have continued to satisfy regulars by serving a delicious tapas menu at intervals throughout the day until normal service can return.

Challenge – reducing the impact of change Arguably, the biggest challenge must be in attempting any change to this restaurant, the oldest one in the town, and in ensuring a seamless blend of old and new.

For this is not any restaurant, this is the iconic and much loved Wheelers which has been delighting visitors since Richard Leggy Wheeler first opened its doors in 1856.

The restaurant has a legion of loyal customers who love both the Wheelers’ menu and the unique ambience and cosy charm you find once you step inside.

Regulars should, however, not fear these changes as behind them are two people for whom this little gem of a restaurant could not mean more.

Wheelers is owned by Delia Fitt who grew up in the restaurant originally owned and run by her parents and which she later inherited and has been running ever since.

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Business Matters Autumn 2016

Mark Stubbs working his magic.

Working with Delia is Head Chef Mark Stubbs, a former top London chef who has appeared on TV programmes such as Good Food Live, The Hairy Bikers and Britain’s Best Dish. Mark shares Delia’s passion for fine food but this is not surprising considering he has been working in the business for over 24 years. He is determined that under his helmsmanship Wheelers will continue to flourish for another 160 years.

What’s changing?

A new state of the art kitchen is being built which will occupy a space about four times the size of the previous one and above this the building has been extended by two stories to house a new office, dry stockroom and shower/changing facilities for the staff.

Whilst these are massive changes to the building and for the team to get acclimatised to, Mark is determined that the restaurant’s visitors will see no changes food wise. Always preferring quality over quantity, Mark and his chefs will continue to serve a seasonal fresh menu of 6 starters, 6 mains and 6 desserts. Produce is always sourced locally, wherever possible, to ensure that the food is at its best.

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Whitstable, home of the oyster CLIENT PROFILE

Mark is however also keen to add something new to the restaurant to delight Wheelers customers and is currently working on ideas to turn Delia’s old book room into something extra special. One idea he has it to add a champagne and oyster bar serving Wheelers branded champagne as an homage to the restaurant’s origins.

Working with MFW Wheelers Oyster Bar is a client of Michael Whittaker, partner at our Herne Bay office. He comments that whilst McCabe Ford Williams may only be half the age of Wheelers, records actually show that the firm has acted for Delia and her family for over 50 of these years, a landmark in itself. Currently, Michael and his team look after most of the administration including maintaining their accounts, completing VAT returns and running the restaurant’s payroll; as well as discussing the financing of these improvements. This enables Delia and Mark to spend their time doing what they excel at, developing and running a successful restaurant.

Cooking up a storm Mark is equally passionate about passing on his skills and training to others. As well as carrying out regular training in the restaurant, Mark has previously tutored at the highly respected East Kent College in Broadstairs.

Mark also runs Wheelers’ Shoreline Cookery School where complete novices, or those with a culinary interest, can learn new skills including how to select, fillet and cook fish. The course has proved to be extremely popular with people attending from far and wide, including one client who flew in from Israel especially to take part.

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Mark with Michael Whittaker

Bon appétit Having previously contributed with Delia on the award winning Oyster Seekers book, written by the late Mandy Bruce, Mark is now considering writing one looking at behind the scenes at Wheelers. This will include how he and his team coped with running a kitchen during the renovation works and will also no doubt feature a range of delicious Wheelers recipes so even if you can’t get to Whitstable for the cookery course you can have a go at creating these dishes at home.

However, if you’d rather sit back and let someone else do all the work, and why not, then a visit to Wheelers comes highly recommended. For further details visit the Wheelers website www.wheelersoysterbar.com or call the team on 01227 273311

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MAKING TAX DIGITAL

Making tax digital In the March 2015 Budget the then Chancellor, George Osborne, announced that annual tax returns will be phased out by 2020. Before you all start cheering, we would like to tell you a little bit about their replacements.

Unfortunately, we can only tell you ‘a little bit’ at the moment, as the six consultation documents regarding the proposed changes were only issued on 15 August 2016. The consultation period will end on 7 November 2016 and the final changes should be announced early next year with full details of how the new system will work in practice.

Moving with the times Technology is moving on at a pace, with the vast majority of the UK population now having access to the internet, whether it be via computers, tablets or smartphones. HMRC want to harness the advances in technology for their benefit and, allegedly, for the taxpayer by moving over to a digital tax system.

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Business Matters Autumn 2016

The issue of the consultation documents was delayed due to the Panama Papers scandal and the UK voting to leave the EU earlier this year. However, here is a brief summary of the likely major changes, although the expected implementation dates may not be adhered to due to these delays: • Personal Tax Accounts (PTAs) are now available for many taxpayers and can be set up at www.gov.uk/ personal-tax-account. Taxpayers are able to check their PAYE codes, prepare and submit their tax returns and check and manage their Tax Credits, amongst other things. HMRC are trying to encourage all taxpayers to set up their PTAs as this will eventually be the central hub for managing their tax affairs.

• Online billing will be introduced in the first half of 2017.

HMRC will be able to prepare tax calculations for those with more basic tax affairs based on information they hold, which should result in the removal of some taxpayers from Self Assessment. The calculations would be available through the individuals’ PTAs for checking and then they would pay what they owe.

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• The most significant change, digital record-keeping and reporting of income and expenses at least quarterly, is due to be phased in from April 2018 starting with those whose primary source of income is from an unincorporated, non-VAT registered business or lettings. It has been announced that businesses and landlords with annual turnover of less than £10,000 will not be obliged to make quarterly reports but can do if they so wish. Next to follow from April 2019 are unincorporated VAT registered businesses with companies finally being included from April 2020.

We have been assured that quarterly reporting will not be tantamount to submitting four tax returns per year but will just involve the uploading of summaries of income and expenditure totals from business and lettings at least quarterly to HMRC. The thinking behind this is that people running businesses will have a better idea of their tax positions, in real-time, and will be able to budget more efficiently in order to settle their liabilities.

Payment dates HMRC are currently not planning to change the payment dates of tax under Self Assessment, or for Corporation Tax, but will provide the facility for voluntary Pay As You Go (PAYG) payments to be made electronically. HMRC believe that if real-time income and tax details are known, individuals and businesses will want to make payments of tax before the due dates to assist with budgeting. The payments will be allocated to the first liabilities arising but interest and penalties will still be charged if the full amounts are not settled by

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their due dates. A change to the payment frequencies would seem to be the next logical step once everyone is on board with digital reporting.

It is also proposed that there will be changes to the reporting requirements for smaller businesses, with more being brought into the scope of cash accounting in order to simplify the information they need to provide.

Larger businesses will still have to report under UK GAAP, accounting for accruals and prepayments.

Uploading data With regard to the uploading of income and expenditure details each quarter, HMRC will expect taxpayers to use either an app or software in order to do so. Information contained in spread sheets, such as Excel, which have been perfectly suitable for some businesses in the past, will not be an acceptable format.

HMRC will ensure that free apps are made available but these are likely to only cater for smaller businesses.

Those with more complex accountancy requirements may need to look to commercially available bookkeeping software, if it is not being used already, in order to comply with the new regulations.

Author Angela Anderson, ATT Tax Manager, Sittingbourne

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MAKING TAX DIGITAL

• Later in 2017, the PTAs will be able to show taxpayers an overview of all of their tax liabilities in one place, including income tax, National Insurance, VAT and student loans for individuals and corporation tax and VAT for companies, which will also have their own digital accounts.

CLOUD ACCOUNTING

Cloud accounting Cloud accounting Businesses that are already thinking digitally and that want real-time access to profit figures, tax projections and cash flow forecasts have been progressively migrating from the traditional office based computer software to online ‘cloud accounting’.

The cloud is a platform which makes data and software accessible online, anytime, anywhere and from any device with an internet connection. The computer hard drive is no longer the central hub.

There are several quite important advantages of cloud accounting: Ease of access - Financial data can be accessed from anywhere worldwide, at any time. All you need is an internet connection. The ability to take care of your bookkeeping on the go means that business owners are not stuck in one location. They can spend more time travelling, gaining new clients and taking care of other

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important business matters, without having to be in the office. Staff (with the necessary permissions) can also easily access data wherever they are. Smartphone and tablet apps will provide information on the move.

Price - Cloud accounting can be much cheaper than other accounting software. Firstly, there is no need to pay upfront for a desktop accounting package as with cloud accounting you pay monthly. Secondly, unlike buying an accounting software package, it requires absolutely no updates as these are automatically included in the price and done on a regular basis.

There are no on going costs for upgrades or maintenance.

Real time financial information – Research carried out by one cloud accounting platform at the end of 2015 found that 65 per cent of British small business blamed financial issues, such as cash flow visibility and access to capital, as a reason for failure. When it is used properly, cloud accounting will give businesses up-to-date and current financial information. This helps business owners to respond to business change in a timely manner.

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Cloud-based accounting platforms have been working closely with the government and it’s “Digital Strategy”.

Businesses using these platforms will be able to link their accounting data to a digital tax account, rather than running each separately and the information required

by HMRC will be readily available.

How can MFW help?

Individuals have been able to submit their own tax returns online for a number of years but many still choose an accountant or other tax professional to assist due to the complex nature of the UK tax system.

Here at MFW, we appreciate that not all of our clients will want to deal with the regular uploading of information to HMRC due to lack of time, confidence or necessary equipment. We would like to offer reassurance that we will continue to provide our services in order to ensure compliance with the new regulations and will offer different levels of assistance to accommodate our clients’ requirements.

We have detailed knowledge of cloud accounting and the different platforms available, which means that we are well placed to advise our clients on the most beneficial for their needs. We work closely with these providers in ‘Partner’ programmes in order to offer the most relevant advice and bookkeeping package to our clients.

We will keep you up to date with progress made by HMRC regarding the implementation of the changes to the tax system via our website mfw.co.uk, future newsletters and direct mail but please contact your MFW branch should you have any queries or concerns regarding the points raised in this issue or if you would like further information or assistance with accounting packages.

Author Emma Andrews, FCA Partner – Maidstone office

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Nick Coulter 1955 - 2016

We are sorry to announce the passing of Nick Coulter, formerly of our Sittingbourne office who died unexpectedly at home on 4th August 2016. He was 61.

Nick joined the firm in 1995 having previously worked for Cork Gully. He worked in the insolvency department where he headed up the corporate insolvency department for twenty two years and dealt mainly with company liquidations.

He was a popular, valued member of staff who left the firm in 2007 to work nearer to his home in Tonbridge.

He leaves his wife Sarah and children Charlotte and Andrew.

He will be sadly missed.

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This publication is intended for general guidance only. Every case is dependent on its particular facts and circumstances, and whilst it is believed that the content is accurate, the material should not be taken or relied upon as giving specific advice on any particular matter. Neither McCabe Ford Williams (the firm), its partners or employees accept any responsibility for any loss or damage (including but not limited to loss of profit or anticipated profit, damage to reputation or goodwill, loss of business, damages, costs, expenses or tax liabilities) caused or occasioned to any person acting or omitting to act in reliance upon the information contained in this publication. Any person wishing to obtain specific advice on any particular matter should contact a partner of the firm directly, and advice can be provided on a case by case basis.