Business Matters McCabe Ford Williams Newsletter | Summer 2017
WWW.MFW.CO.UK
Welcome to our summer 2017 issue. In this edition we announce the news of a new partner and the launch of two new mobile responsive websites www.mfw.co.uk and www.kentinsolvency.co.uk (please turn to page 01 for more details).
TAX MATTERS An update on Making Tax Digital. Page 03
We also feature an update on Making Tax Digital together with details of the new Tax-Free Childcare Scheme. Cyber security has featured a lot in the press this year and so we recently visited Kent Police’s new Cyber Crime Unit to find out how businesses can best protect themselves from online scams. We hope you enjoy reading this issue.
COOK FABRICATIONS LIMITED How we helped with a Management buy-out. Page 05
CYBER SECURITY How to protect your business from cyber-crime. Page 07
MFW MAIDSTONE Our Maidstone office has a new home. John Shipley and the team at Cook Fabrications Limited. See client profile page 05.
Page 09
MFW NEWS
Introducing our new websites Our new websites have been launched to provide an even better browsing experience and are filled with helpful information and news. Here’s an insight to both websites and what you can expect to find: www.mfw.co.uk Our Updates area is the place to visit for all the latest business news and MFW blogs covering a wealth of information which we believe you will find helpful. This covers Budget commentary, the latest in tax and accountancy news and other topical information. Do keep a look out for our latest posts. The Resources area of our website is where you can download useful forms and factsheets on a wide range of tax and accounting issues. You can also find links to our social media channels LinkedIn, Twitter, Facebook and Google+. As a result of launching a fully mobile responsive website we have decided to terminate our mobile APP. If you were a subscriber to our APP please rest assured that our new MFW site offers all the information you enjoyed on our APP plus much more.
01
Business Matters Summer 2017
www.mfw.co.uk
MFW Insolvency & Corporate Recovery website www.kentinsolvency.co.uk
MFW NEWS
On the kentinsolvency.co.uk site you will find information on our insolvency and corporate recovery services together with a host of useful documents and links to further information.
MFW appoint new partner
Leigh Jones FCCA Partner, Herne Bay.
We are delighted to announce that in April this year Leigh Jones achieved partner status. Leigh has been with the firm since 2004 when he joined as a trainee before qualifying as a Chartered Certified Accountant in 2009. Leigh has worked in the Maidstone and Cranbrook offices before moving as an Associate to our Herne Bay office last year.
Leigh says of his promotion,
To contact a member of the mfw Insolvency & Corporate Recovery team please call Amanda Ireland or Alison Collier on 01795 433655 or email insolvency@mfw.co.uk.
Since starting as a trainee with the firm in 2004, I have had the privilege of working alongside many partners and senior staff who have taught me a lot as an accountant and individual. Always being open to learning, I would like to think I have taken a lot of their knowledge and advice on board and am now in a position to take that forward to assist both clients and staff progressing through the firm
We hope you enjoy browsing our websites.
www.mfw.co.uk
Business Matters Summer 2017
02
TAX MATTERS
Making Tax Digital – An Update In our autumn 2016 newsletter we promised to keep you up to date with developments regarding Making Tax Digital (MTD). Nine months later some clarity has been provided but elements of mystery still remain. Here’s what we know to date. To recap, MTD requires nearly all businesses, including rental businesses, to maintain digital accounting records and to update HMRC with business results on at least a quarterly basis. Initially, it was announced that the digital records would need to be kept on accounting software which is capable of linking to HMRC. A concession has now been made to allow the use of spreadsheets as a form of digital record keeping but they must still be used in conjunction with some form of accounting software in order to make the quarterly updates.
03
Business Matters Summer 2017
At the moment, MTD is due to start on 6 April 2018 with a phased introduction as follows: • 6 April 2018 for unincorporated businesses and landlords with total turnover (not profits) over the VAT registration limit, which is currently £85,000, for income tax purposes only. • 6 April 2019 for unincorporated businesses and landlords with total turnover above £10,000 for income tax purposes (the one-year delay was announced in the Spring Budget this year). • 6 April 2019 for all businesses registered for VAT, both incorporated and unincorporated, for VAT purposes. • 6 April 2020 for all incorporated businesses for corporation tax purposes and partnerships with turnover in excess of £10 million. Unincorporated businesses and landlords with turnovers below £10,000 are not required to comply with the MTD regime but can do so if they wish. The actual MTD start date for each business will be determined by its accounting date. For businesses in the first category above with an accounts year-end date of 5 April, the MTD rules will apply from 6 April 2018, as the commencement date is the start of the first accounting period falling on or after the phased introduction date. Therefore, a VAT registered business with an accounting date of 31 December will not be obliged to comply until 1 January 2019. A change of accounting date may be worthwhile for those wishing to delay joining MTD until the latest possible date.
www.mfw.co.uk
The submission deadline for the returns is one month after the end of each quarter for the quarterly submissions, the earlier of 10 months after the accounts year end or the next 31 January for the end of period statements and 31 January following the end of the tax year for the final declaration, as with Self-Assessment returns. There will be penalties imposed for late submissions but the penalty regime is still under consultation. It would appear that the accountancy world has resigned itself to the fact that MTD is going to happen but there are still question marks over the ‘when’ and ‘for whom’. Following the announcement of the snap election, the MTD legislation was dropped from the Finance Bill in April rather than being rushed through. It is anticipated that there may still be enough time for it to be enacted by April next year but, due to the short notice, there are appeals for MTD to be delayed for at least a year, if not two. There are also objections to including businesses and landlords with income under the VAT threshold due to the additional costs involved whereas it is more likely that VAT registered businesses will already have access to the appropriate software and be more accustomed to making quarterly reports.
www.mfw.co.uk
It is possible that the political turmoil following the General Election could put MTD on the back-burner and the delay many are requesting could be granted. However, MTD is on the horizon and should not be ignored. We want to ensure that all of our clients are ready for the changes coming and would like to offer our services to assist with the preparations and compliance. We will also continue to keep you updated with any developments made. For further help in understanding MTD please contact your local MFW office.
Author Angela Anderson ATT Tax Manager, Sittingbourne.
Self-employed? Paying for childcare? Read on…… On 21 April 2017, the Government introduced a Tax-Free Childcare scheme which will be gradually rolled out over the rest of the year. The scheme will be available for both employees and self-employed individuals with children up to the age of twelve (or 17 if disabled). For every 80p paid into your account the Government will pay in 20p, hence the name ‘tax-free’. This is a major change from Employer-Supported Childcare which has only benefited employees working for employers who offered a scheme in the past. For further details please read our full article on mfw.co.uk or speak to your usual MFW contact.
Business Matters Summer 2017
04
TAX MATTERS
Under Self-Assessment, individuals are required to make one return per year for income tax purposes, covering all businesses and rental income, and normally four quarterly VAT returns when applicable. Under MTD, we understand that four quarterly reports will be required for each trading and rental business, an end of period statement for each business to adjust the information previously provided and a final declaration, which incorporates any other income for the tax year, similar to the current annual tax return. For VAT registered businesses, they will still need to submit their quarterly returns using the current online method but VAT information should form part of the MTD quarterly submissions from 2019. That can amount to many returns!
COOK FABRICATIONS LIMITED
Management Buy Out success for Cook Fabrications Limited In the spring of 2014 Eric Cook, a long-standing client of MFW Dover, approached partner John Shipley to discuss his retirement plans. Eric and John have a long business relationship going back to 1996, when MFW took over the accountancy and tax affairs of Cook Fabrications Limited, an engineering company founded by Eric in Hawkinge, near Folkestone back in 1986.
L-R: Richard Solley, John Shipley, Eric Cook, David Levett and Simon Heath
05
Business Matters Summer 2017
The company has much expertise in the provision of structural steelwork for a wide range of industries in the public and private sector in the South East, and produces steel fabrication work to customer specifications and drawings. As well as structural steel services, Cook Fabrications has the expertise and resources to manufacture, assemble and install an extensive range of metalwork, from one-off architectural features to staircases and balustrades. The company operates from a purpose built 35,000 square feet manufacturing facility that houses a broad range of processing equipment, from guillotines, plasma profiling machines and a Kaltenbach Drill and Cut Line machine. By 2014 the company had been trading very successfully for many years and had built up a substantial client base, an excellent reputation and employed over 40 skilled local workers. However, the success involved Eric working long hours in the business and he felt that he needed to step down somewhat and let the younger generation take over. An outright sale to a third-party acquirer might have been the answer but Eric was determined to give his management team at Cooks the chance to own and run the business as their own and preserve the local jobs for the loyal workforce. After a few meetings to discuss Eric’s plans John started to work on the numbers, look at the tax strategy and commenced designing two schemes that were presented to Eric for his input. Eric, in turn, had identified three key members of his management team who were in principle prepared to provide risk capital into a new venture company to acquire the Cooks business in exchange for an equity stake. After a few weeks, the likely value of all the assets being acquired was firmed up, along with the expected cash injections by the new management team. The business premises were owned by Eric personally and a fair rent was established by the parties. But how would the new venture company fund the assets being acquired?
www.mfw.co.uk
Eric also wanted to retain an equity stake in the new venture company and eventually settled upon a 25% equity stake along with a 25% stake for each of the new management team, all of whom would also be directors. This would give Eric a “say” in the running of the new business and would give the new company stable management and expertise going forwards. John explained that if the new company prospered, Eric would do well as a substantial shareholder and that the new company could, in theory, repay its secured loan sooner than expected. However, in April 2014 John was diagnosed with a serious illness that required him to take nine months away from MFW to recover. The momentum needed to be kept going and Ian Pascall, John’s fellow partner in Dover stepped in to hold many meetings with Eric and his new team and liaise with the corporate lawyer to produce the necessary legal contracts underpinning the transfer of trade. Contracts were signed in March 2015 and the new venture company commenced trading. A swap of company names was also arranged at Companies House so that the new company acquired the company name from the “old” business. Two years in, the deal has been a great success. Eric has been able to reduce his weekly workload and the new team, incentivised by their equity stake has taken up the reins. The first two years have also been very profitable for the new venture and trading expectations have been well exceeded. The future is very bright for Cook Fabrications and the local skilled jobs have been secured. Eric still retains an equity stake in the new company and this can be realised in the future in a tax efficient way when the time is right.
www.mfw.co.uk
Management buy-outs and Management buy-ins Management buy-outs/buy-ins can be complex transactions. Our experienced teams can help provide all the support and advice you need throughout this process. Our services include: • Review the feasibility of the buy-out • Assist in preparing a business plan and financial forecasts • Value the business • Negotiate with the vendor on your behalf • Provide you with personal and corporate tax advice • Co-ordinate the work of other professionals We have excellent relationships with banks, financial institutions, lawyers and other corporate finance professionals and can provide the professional advice you will need. For more help and information call your local MFW office.
John Shipley FCA Partner, Dover.
Business Matters Summer 2017
06
COOK FABRICATIONS LIMITED
John suggested that Eric consider a secured loan agreement with his trading company to repay the loan over a term, convenient for Eric and his retirement plans, with a commercial rate of interest attaching.
CYBER SECURITY
Remit Run by a taskforce of specially trained detectives and civilian protect officers the unit proactively identifies and investigates digital crimes, and disrupt responsible offenders by making arrests, seizing equipment and prosecuting those responsible. Officers will also gather intelligence about methods used and will work to stay up to date with the latest threats, viruses and scams. The unit will shortly be launching its ‘Protect and Connect’ campaign designed to raise awareness of a number of key cyber-related crimes and will be running free courses designed to help small businesses get to grips with the basics. You can contact Aimee on 01622 654322 for more information or to book a free Cyber Basic Review.
Cyber security update Are you protected from online fraud? As we are all too aware cyber-crime has been widely reported in the news this year in the form of various ransomware attacks. We recently met Aimee Payne, Protect Officer of the newly formed Kent Police Cyber Crime Unit to find out more about how businesses can best protect themselves from online scams.
Kent Police Cyber Crime Unit – new help for businesses Between April to September 2016, more than 8000 cases of cyber fraud were reported in Kent, resulting in losses of £12 million, 63% of these losses affected businesses. In a bid to tackle this rise in computer and online fraud Kent Police have launched a new Cyber Crime Unit modelled on one which is already operational in Essex. The team is spearheaded by Detective Inspector Lee Morton and overseen by Detective Chief Inspector Morgan Cronin.
07
Business Matters Summer 2017
Ransomware – what you need to know Ransomware is a type of malicious software (or malware) which encrypts all files, normally via a worm or virus, which then rapidly spreads across computer networks. Fraudsters demand money (a ransom) to lift this encryption before giving you back access to your valuable files and data. There are a number of ways in which ransomware can affect your files but the most common of these is through clicking on a link from a fraudulent email. Ransomware can also infect your devices if you plug in an infected USB or memory stick, DVD, or other peripheral, so you need to consider how these items are employed within your business and build this into your IT security policy, if you have not already done so. The first step for any computer is to install good quality security software. However, as fraudsters are constantly changing their viruses, systems can often struggle to stay up to date. The Serious Crime Directorate (SCD) have issued the following advice on how to prevent a ransomware attack:
www.mfw.co.uk
• Use robust antivirus software and ensure that this is up to date. • Remember that no computer is immune and any account can be compromised! NEVER open attachments in emails if you are not 100% sure that the source is known and trustworthy. If in doubt, check first! • Cyber criminals are clever. They are quite capable of sending fake emails that look like genuine notifications. Examples include fake emails from banks, HMRC, the police and so forth. As a rule, never log onto your online banking site or any other site via an email link in case these are fake links.
• You may also find help on www.nomoreransom.org a site launched in 2016 by a collaboration between the Dutch National Police, Europol, Intel Security and Kaspersky Lab. • If in doubt, seek professional advice as soon as possible.
Small businesses are most vulnerable It is estimated that almost a third of UK businesses do not have a cyber-policy in place. Smaller businesses in particular need to take heed as they are often the most vulnerable to attack.
• Enable the ‘show file extensions’ option in Windows settings on your computer to help identify potential malicious files. Steer away from file extensions such as ‘.exe’, ‘.vbs’ and ‘.scr’ for example.
To help the government has launched, with the help of, leading experts, the Cyber Essentials website https://www.cyberaware.gov.uk/cyberessentials/ The site contains a host of information about protecting your business, how to conduct an audit (to find out where any weaknesses to your systems lie) and other help and advice. You can also download the following summary. https://www.cyberaware.gov.uk/cyberessentials/files/ scheme-summary.pdf
What to do immediately after a ransomware attack.
Other useful information
• If you discover an unknown process on your computer/device, disconnect it immediately from the internet or network connection, as this will prevent the infection from spreading. Most experts agree that you should not pay the ransom, as there are risks of exacerbating the crime, that ultimately there is no guarantee your files will even be released and, that you could even become a repeat target! • Call Action Fraud, the UK’s national fraud and cybercrime reporting centre, on 0300 123 2040. The hotline is open 24 hours a day, 7 days a week. • To detect and remove ransomware and other malicious software run a full system scan with an appropriate and up to date security solution. www.mfw.co.uk
The Little Book of Cyber Crimes Action Fraud website www.actionfraudpolice.uk
Did you know? A 7-character password comprised of upper and lower case letters only can be cracked instantly. However, a 10-character password comprised of numbers, upper and lower case letters and symbols can take up to 928 years to break! Therefore, our final tip is to choose your password wisely, don’t keep the same password for all your sites and remember to always update passwords regularly.
Business Matters Summer 2017
08
CYBER SECURITY
• Have a recovery system in place and always, always back-up your files. The SCD recommend having two back-up copies, one stored in the cloud, and a second physical back up which you should disconnect and store separately.
MFW TAXNEWS SNIPPETS
Moving with the times – A new home for our Maidstone office Jackie McHugh (Jackie Joyce) Our Maidstone team recently moved to new modern offices at 89 High Street, Maidstone. This will make our Maidstone office more accessible for clients and is an easy walk from Maidstone Town Centre and main railways stations. Heading up the team at Maidstone is partner Emma Andrews. Emma said of the move, “We are really excited about the move to our new offices and have designed the layout to be open and welcoming to reflect the service we provide to our clients. We look forward to showing both old and new clients around the premises”. You can find more details about our Maidstone office and a location map here https://mfw. co.uk/contact/maidstone/
1958 – 2017
It is with great sadness that we announce the passing of our colleague Jackie McHugh who died on Wednesday 14 June after losing her brave battle with cancer. Jackie, who was due to celebrate her 40th anniversary of starting at MFW Dover had been fighting the dreadful disease for more than nine years. During her employment Jackie filled various roles including accounts, payroll, company secretarial and all manner of business administration duties. Jackie will be remembered for her smile and positive attitude to life even through all the difficulties she faced with her health. Jackie leaves behind her husband Chris and daughter Karina. Jackie will be sadly missed.
09
Business Matters Summer 2017
www.mfw.co.uk
SPOTLIGHT ON
Spotlight On: Emma Andrews, FCA, Partner - Maidstone. If you had not become an accountant, what other career would you have pursued? At school, I studied criminal law at ‘A’ level. At that time, I would have loved to have been a Criminal Law Barrister. However, believe it or not, I was quite shy back then and did not have the confidence to stand up in a crowded courtroom. Who has inspired you most in life? My sister inspires me. She lost her eight-year-old son and thereafter faced difficulties conceiving again. Just over a year ago, she gave birth to another son who was born with Down’s Syndrome. At every stage of her parenting life, my sister has faced difficulties bravely and with determination and strength. She never complains. What are your favourite hobbies or pastimes? I enjoy socialising and all forms of sports. I am a West Ham supporter and also enjoy watching rugby. In fact, I used to play rugby as a teenager. However, these days and as a mother of two young children, I find that ‘my’ leisure time is now largely spent in soft play centres and children’s play parks. Do you have a favourite film? I love comedies in general. A funny film helps me to switch off and relax.
Who is your favourite author? I do not have a favourite author, instead I read anything that is recommended for me on my Kindle. As a child, however, I collected Enid Blyton books. At one time, I had over 500 of her books and each one was well read and much loved. What is your favourite time of year? For me this is summertime as everyone is always happier when the sun is shining and the end of January filing deadlines are an age away! Finally, what would you have told your 18-year-old self? The same thing as I tell myself today – worry less, everything will work out OK in the end
www.mfw.co.uk
Business Matters Summer 2017
10
89 King Street, Maidstone, ME14 1BG
mfw.co.uk
kentinsolvency.co.uk (01795) 433655
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.