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By ManKing Associates Accountants, Jan 4 2016 05:42AM

Let me start by wishing you a very happy new year ahead.

We are now in the season of resolutions; eat well, exercise more, pick up a hobby, visit friends and family more, join a gym, change jobs, change careers, secure promotion, learn a trade, be more religious, and the list goes on and on.

However, some decide to embark on the journey into the “unknown”. Time to actively pursue those dreams that have been “cooking for years” and start a business. The question is: where do you start? As an accountant, I am inclined to say the starting point is an accountant, but let’s go back in time into 2015.

2015 was a record breaking year for business start-ups and the trend is expected to continue in 2016. According to the Telegraph, 600,000 new businesses started in 2015 compared to 330,000 in 2014.


The main drivers of this surge are;

• Decrease in start-up cost

• Increase in sources of finance

• Low cost employment


The cost of starting a new business is estimated to have fallen by a factor of ten in the last decade as result of new technologies that improve communication and automation of processes. The year also witnessed a steady growth in sources of funding such as peer-to-peer lending, crowd funding, invoice finance, and council grants. Even the central government is getting into the lending mix with the creation of the British Business Bank –owned by the government but run independently – for channelling more funds into small businesses and start-ups directly.

The expansion of the apprentice programme also enables businesses employ labour at significantly lower cost. Business can employ apprentice for as little as £3.30 per hour with some councils offering full financial support in the first year to businesses taking on apprentices.


Today, the first step in starting a business is “the individual”. It tends to involve putting pen to paper, noting why you are starting your business, what you want to achieve, how you will reach your goal and how you will know the target has been achieved. Once these questions are answered (or at least partially answered), the next step is to discus with an accountant/business adviser.

Here are some reasons why seeing an accountant should be one of the priorities on the “to-do list”?


1. Assist you with the business plan which you may or may not require to secure funding but will be beneficial to use as a “barometer” to measure projected performance against actual performance.

2. Find out about funding sources/grants for your business

3. Provide guidance on the first steps into self-employment (e.g. deciding to register as self-employed or limited company)

4. Advice on tax obligations and reliefs

5. Provide good tips on record keeping and bookkeeping.

6. And more.


Experience show that some clients who start a business, attempt to manage the accounting and bookkeeping (to keep cost down) but get stuck along the line later or it becomes a complex burden as the business grows. Some fail to separate business transactions from private transactions get entangled, whilst some actually thought they did not need to pay any tax on the income.

To sum it up, an accountant, can provide invaluable advice for your business and prevent you from getting into potential serious finance/tax hole in the future. In addition, they are usually flexible in the sense that they can provide as little or as much support as you want.


We are running free workshop for business start-up this January in partnership with Bassetlaw Council. If you’d like to find out more and join us, please click on the link below for more details.


Link: https://www.eventbrite.co.uk/e/new-start-business-workshop-tickets-20193639720


For the Stats lovers:

• In 2015, 18% of entrepreneurs were female

• 80% increase in the number of female entrepreneurs

• 18k and 13k new companies registered in Birmingham and Manchester respectively in 2014 with London having 184k new businesses registered

• Cambridge has the highest start-up survival rate of 47%

• Bristol is the Best place to start a business according to the Start-up City Index 2015

• The Biggest peer-to-peer lenders in the UK are Zopa, Ratesetter and Funding Circle

• According to Ofcom figures, Bristol has the highest average broadband speed of 33.8 M/bits

• Oxford has the lowest crime rate of 30.71 per 1000 people


By ManKing Associates Accountants, Nov 26 2015 08:59PM

As the tax return season goes into full swing, here are the 8th, 9th and 10th most ridiculous reasons why people filed their tax returns late (according to the HMRC).

8. I live in a camper van in a supermarket

9. My girlfriend is pregnant

10. I was in Australia


The rest of the top ten are to come later in this article.


I have had this conversation “why you may need to submit a self-assessment tax return” with a number of people, and the most common response had been “I don’t have to file a tax return because I am not self-employed and I am on a PAYE”. Unfortunately, that response is somewhat inaccurate as anyone can be required to file a tax return irrespective of your employment type. Indeed, filing a tax return can be advantageous (this is discussed later) but the simple reason why we file tax returns to the HMRC is to declare all taxable income, relevant expense and pay the tax due on the profits.

Taxable income include:

• Permanent employment income

• Income from contracts

• Self-employment income

• Job seekers allowance and other taxable state benefits

• Dividends

• Capital gains from sale of taxable assets

• Pension

• Buy-to-let income

• Foreign investment income

• Interest from savings accounts and/or bonds

• Income from other taxable assets.


The average person has other sources of income besides his/her main income from employment. In many cases, these income are non-taxable (e.g. interest from ISA) or have been taxed at source (e.g. interest from bank savings account).

Income from a buy-to-let property is taxable and should be declared on a tax return. Failure to declare can result in the HMRC sending a demand notice to pay tax owed with daily interest applied to the outstanding amount. Penalties may be applied for each year the income wasn’t declared.

A person with undeclared buy-to-let income may say “the likelihood of being caught out is low as the revenue are more concerned with high net worth individuals and celebrities”, but I came across the case of a gentleman who had a couple of buy-to-let properties and failed to declare income from the properties. The HMRC picked up on this, he was fined for each year he failed to declare the income and asked to file a return for each year. Daily interest was also applied to the unpaid taxes.

Currently, there is an amnesty running for landlords with previously undisclosed rental income, to get there tax affairs in order. If you have undisclosed lettings income and you would like assistance in getting the best possible terms with the HMRC, call me today on 07962383173.


On a lighter note, filing a return can be beneficial. Before proceeding, here are the 5th 6th and 7th ridiculous excuses for filing tax returns late.

5. Barack Obama is in charge of my finances

6. I’ve been busy looking after a flock of escaped parrots and some fox cubs

7. A work colleague borrowed my tax return, to photocopy it, and didn’t give it back


One of our clients engaged in full-time employment, started a weekend mobile hair dressing business to provide additional income. The expenses incurred in line with the new business exceeded the income, which resulted in a loss. This loss was offset against tax paid through PAYE, and it enabled the client to receive a tax refund for the year.

A higher rate taxpayer on PAYE can benefit from a reduced taxation liability if he/she gives to a charity and/or makes contribution to a private pension. For example, John is a higher rate taxpayer on PAYE earning £60,000 a year and wants to makes £2,500 contribution to a personal pension plan and another £2,500 gift to a charity. Because pensions are allowable expense before arriving at the taxable income amount, the pension provider will reclaim £500 – the amount of income tax already paid by John on the contribution to his pension – from the government. John only needs to pay £2,000 into his personal pension plan, giving him a total of £2500 invested in the fund. He can then move £2,500 of his income into the basic rate band from the higher rate band which would save him £500 on his tax bill.

Since John is also giving £2,500 to a charity, he can move a further £2,500 of his income that was taxed 40% into the 20% tax bracket saving him an additional £500. At the end of the year, John may be eligible for a tax refund of up to £1,000.

For those in full time employment who also engage in self-employed work e.g. painting and decorating at weekends, the following cost could be offset against income on your tax return:

• Mileage or fuel cost incurred (e.g. cost of petrol to the client’s premises where you are decorating)

• Mobile phone cost

• Use of home

• Tools, equipment and materials used (e.g. paints, paint brush, overalls)

• Ink, stamps, envelopes ( and other stationery)

• Promotion and advert cost (e.g. cost of advertising on gumtree)

• Professional fees (e.g. cost of employing your accountant to prepare and file your returns)

• Training cost (e.g. cost of evening classes in painting and decorating etc.)


As the self-assessment deadline approaches, ask yourself the question: “Do I need to file a tax return?” if you need to file your returns or are unsure whether you need to file, contact me on 07962383173 to arrange a free chat about this or email office@manking.co.uk




Here are the top 4 most ridiculous excuses given to the HMRC for filing a late tax return.


1. My pet dog ate my tax return…and all the reminders.

2. I was up a mountain in Wales, and couldn’t find a post box or get an internet signal.

3. I fell in with the wrong crowd.

4. I’ve been travelling the world, trying to escape from a foreign intelligence agency.


Source: http://www.telegraph.co.uk/finance/personalfinance/tax/11325809/HMRC-unveils-the-10-worst-excuses-for-late-tax-returns.html


By ManKing Associates Accountants, Nov 14 2015 04:05PM

There is a drive by the government to crack down on tax evasion and the black economy. As you may have seen recently in the news, the government is employing various measures to boost tax receipts and reduce expenditure. Some of the measures announced include “google tax”, measures to tackle complex offshore tax evasion and avoidance, cuts to welfare spending and shrinkage of the black economy via the introduction of the Employment Intermediary Reporting Requirement.

.

On the 6 of April 2015, the HMRC introduced the Employment Intermediaries Reporting Requirement (EIRR) that compels intermediaries such as agencies to send details of all contractors (self-employed workers) who are not on the company’s PAYE scheme. The information required include: personal details of all contractors, a record of jobs done up to 3 years in the past and a quarterly schedule of the jobs that the contractor has undertaken (including payments directly to their bank accounts).


If you are a contractor or self-employed, or you know of one who needs assistance in get their tax affairs in order, contact us today.

An intermediary is any person who makes arrangements for an individual to work for a third party or be paid by the intermediary for work done for a third party. Source: HMRC


Time line:

September 2014: First draft of EIRR published, consultation on draft opens.

October 2014: Update on EIRR guidance.

February 2015: Consultation period closed

March 2015: Update to EIRR based on response during consultation period

6 April 2015: EIRR is effective. Employment intermediaries must use the HMRC template to send information about workers where they don't operate Pay As You Earn.

July 2015: New guidelines for agents published.


Contact us for more information.



By ManKing Associates Accountants, Nov 14 2015 03:22PM

Recent media coverage of the demise of Kids Company has prompted the need to revisit governance, accountability and finance management of charities. The primary focus of commentary has been on the need for the government to be more cautious in giving to charities with more focus needed on trustees understanding their roles and responsibilities to the charity and the general public as whole.

Trustees possess overall control of a charity and must ensure the entity does what it was set up for. Their remit includes overseeing operational and financial activities. In accordance with guidance set out by the Charity Commission, their main responsibilities include;


• Ensuring the charity carries out its purpose for the public benefit

• Comply with the charity’s governing documents and the law

• Act in the charity’s best interest

• Manage the charity’s resources responsibly

• Act with reasonable care and skill

• Ensure the charity is accountable



These responsibilities are not always known to trustees for various reasons. This could be as a result of insufficient (or indeed lack of) training for trustees, or the absence of trustee desire to develop. The decision to become a trustee should be given careful consideration. In accepting an engagement to become a trustee, one must exercise reasonable care and act in the best interest of the charity (rather than self-interest as it is the case on some occasions).


The roles of Kids Company’s trustees have been discussed at length recently and will probably pop up a few more times in the coming weeks. Trustees should possess a sound understanding of their responsibilities in the supervision of operations and finance of their charity.


Finance is an integral part of a charity’s existence due to the significant reliance on donations from the public and the relevant reporting requirements governing charity accounting. Other sources of funding include loan financing and equity, contracts, trading, grants, gifts and donations from corporate entities. Each source has specific governance issues relating to it.


Gifts and donations generally come from individuals (e.g. fundraising appeal, regular giving, or given as a legacy). Unless they have been given in response to a particular appeal or specific instructions have been attached to the giving by the giver, there is generally considerable freedom on how the money is spent.

Grants are usually given by public sectors or charitable trusts and foundations. They tend to come with conditions attached e.g. a particular outcome must be achieved, reporting requirements on the use of money and/or unspent monies must be returned.

Although debt and equity are more commonly associated with the private sector, some charities utilise them as source of funding.


A good understanding and application of governance requirements attached to each source of funding provides a good foundation for attaining sustainability. The charity also requires good stewardship, adequate controls, accountability, solid finance management and compliance with regulatory requirements that govern charity accounting and finance.


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