Profit and loss for the year (with previous year comparatives)

• Click on Reports, then Company and Financial, then Profit and Loss Previous year comparison
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Balance sheet (with comparatives)

• Click on Reports, then Company and Financial, then UK Balance Sheet Previous year comparison
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Trial balance

• Click on Reports, then Accountant and Taxes, then Trial Balance
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Detailed nominal transaction list

• Click on Reports, then Accountant and Taxes, then Transaction detail by account
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Summary aged debt

• Click on Reports, then Customers and receivables, then A/R Aging summary
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Summary aged credit

• Click on Reports, then Suppliers and payables, then A/P Aging summary
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

This is based on a version of Quickbooks 2010 and there may be small differences to earlier versions.  This article is only for general information and there may be other conditions which apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”

• Make sure all purchase and sales invoices are entered
• Update your bank reconciliation to the year end and make sure cash balances are correct
• Look at your debtors to see if there are any bad debts and write them off or inform your accountant
• If you have stock complete a stocktake
• This is not all inclusive and your accountant should be able to advise you of specific requirements

If you provide adequate details when entering data your accountant should only need the following information

• Profit and loss for the year (with previous year comparatives if possible)
• Balance sheet (with comparatives)
• Trial balance
• Detailed nominal transaction list
• Summary aged debt
• Summary aged credit

Details of how to save the reports are provided in separate blog posts for Quickbooks and Sage.

Other details you may need to provide

• Wages records
• Stock count
• VAT records

With these details it should be possible to efficiently complete your annual accounts.   This article is only for general information and there may be other factors which apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”

iQ driven to #autotweetup by Scott Brownlee

may be more appropriate, depending on the use it may be free or a low cost benefit.  However if you are looking for a regular family car the benefit is worked out based on list price and CO2 emissions:

• List price is the manufacturers list price and should include cost of any extras, not normally the price you pay for the vehicle
• CO2 emission figure is the number quoted on the registration document, beware of using calculators on price guide sites as these may not be correct (as in example below).  This is translated into a percentage (annually increasing by 1%) which is multiplied by the list price to work out the benefit charge
• Fuel benefit is charged at the same percentage rate on a fixed sum of £18.8k

So if you are looking for a regular sporty family car eg Aug 2010 Vauxhall Insignia CDTi Sri 130 the benefits are as calculated as follows:

• Car benefit – CO2 emissions of 154g/km translate into a 21% rate to which 3% is added for diesel cars.  Based on a list price of £23,395 the benefit is £5381
• Fuel benefit is £18,800 X 24%, £4512
• The cost to the employee as a basic and higher rate taxpayer is £1978 and £3957 respectively
• It is only worth taking private fuel if driving more than 12000/6000 miles pa as a 40%/20% taxpayer (based on £6/gallon and 40mpg)

LFA at 7 Hotel Diner #autotweetup

At the #Autotweetup at the 7 Hotel Diner there were cars from both ends of the spectrum, a Lexus LFA and Toyota iQ, and for comparison purposes the benefits on these would be:

Lexus, list price £330k, emissions 379g/km, so 35%:

• Car benefit – £115,000, fuel benefit £6,580
• Cost to employee as 40% taxpayer £48,632

Toyota iQ 1.3VVTi, list price £12,976, emissions 113 g/km, so 10%

• Car benefit – £1,298, fuel benefit £1,880
• Cost to employee as 20%/40% taxpayer £635/£1,271

There are many choices to be made and the most important issue to consider is what is the car needed for, opening up different opportunities.  This article is only for general information and there may be other conditions which apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”

• A young couple recently set up a company and providing they can restrict their earnings to £30k pa between they will not have to make any student loan repayments.  They are no doubt hoping that the business will grow so that they will have to be avoiding higher thresholds in the future.
• A recently retired but still working sole trader may benefit from incorporating as by restricting  salary and dividends to £24k they may be able to retain the “age allowance” which could be lost by staying as a sole trader with profits over that amount
• A client wanting to take on a part time staff member for a few hours per week can ensure they qualify for basic state benefits by paying them more than £102pw (£5,304 pa) providing they work enough hours.

While always trying to save clients tax there is no tax free ticket, the old adage “if you earn it you need to pay it” always applies.  Some of the thresholds are shown below which demonstrate the range of income levels which need to be considered day by day:

£5,304                   Pay level at which NI contributions are recognised

£7,072                   Employers start paying NI

£7225                    Employees and self employed start paying NI

£7,475                   Personal tax allowance for individuals

£9,940                   Personal allowance for people aged 64-74

£10,600                Annual exempt amount for Capital Gains tax

£15,000                 Repayment of student loan begins

£24,000                Income limit for age related personal allowances

£35,000                Amount which can be earned paying basic rate tax

£42.5k                   Employees and self employed NI contribution rate reduced

£100,000              Personal allowance starts to get lost

£150,000              50% tax band applies

£325,000              Inheritance tax threshold

This article is only for general information and there may be other conditions which apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”

Does my project qualify for R&D Tax credits?

1. The project can only qualify if there is
   • not a “readily deducible” solution
   • there is “uncertainty” that it can be completed
   • it will need to be “worked on” for the solution to be reached
   • Under self assessment it is up to the taxpayer to decide whether the project qualifies so there should be a clear paper trail should you wish to claim
   • The advice from the HMRC R&D helpline was to see if there were people in the field and get their opinion on whether
   1. there is a solution available commercially
   2. if so, if there is any doubt that it can be done
   3. provided the research can be

What can I claim R&D tax credits for and how do I claim?

1. Any internal revenue expenditure associated with the project
2. If you use subcontractors you can only claim 65% of their costs for tax credit purposes.  This means you will only get 130% tax relief
3. Relief for capital expenditure should be claimed via the usual capital allowances regime
4. R&D tax credits can only be claimed against corporation tax so are only available to limited companies and Plc’s
5. The relief is claimed either by the corporation tax return or separate letter if that has already been submitted
6. You should be able to prove that the project is R&D and keep detailed summary of expenses

This article is only a summary of the main issues to consider and there may be other conditions which apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”

HMRC spam repayment claim email

A client of mine received an email directing him to a website which as you can see looks pretty realistic at first sight.  He was only forewarned by some spelling and grammatical errors in the original email.

To summarise HMRC do not communicate by email and if you are in any doubt ignore it, and at the very least speak to your adviser.

Hacked twitter account

I am usually quite careful of opening links on emails and generally ignore or delete any joke emails that do the rounds.  I was however caught out over the weekend when I got a direct message from an old friend asking if I was in “a picture”, as it was someone I trusted I opened the link and the problems started.  I then spent quite some time amending passwords and links, aswell as apologising to various people who had spotted it as spam.

The moral of this is to be extremely careful of clicking on any linksonline, make sure you have secure passwords which should be changed frequently, and finally ensure you have an up to date backup preferably on and off site.

This article is based on personal experiences and may not apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

You may have heard about HMRC targeting people carrying on a business on Ebay, or bootsales.  HMRC are always keen to collect additional tax and there is quite alot of case law on the subject.  These come under the heading of badges of trade, and like many decisions this is based on the balance of evidence so each of the points will have an impact on the end result.

Profit seeking motive

Is the ultimate objective to make a profit?  This largely relates to whether the transaction is primarily for personal use or to generate a profit to live on.

Number of transactions

An occasional foray into Ebay or Boot sales although making a little profit does not necessarily indicate a trade, however regular listings or attendances will be stronger evidence of trade, and this is probably the main area that HMRC will be targeting on.

Changes to the asset

If some goods are purchased and changed to make them more marketable for sale this once again is an indicator of a trade.  This could for example be cleaning, polishing or mending some goods as it is this process which generates the profit.

Time between purchase and sale

If the goods being sold have been in the back of the garage or loft for several years and the reason for the activity is to clear them out this is not deemed as a trade, but a speculative purchase at a boot sale which is sold the following week would be a strong indicator of trade.

These are a summary of the main criteria which may be of relevance to Boot Sale sellers and Ebayers but are not exclusive.  HMRC have stated they are going to target this area and they have the resources to do so in order to raise additional taxes.

For more detail including the relevant case law there is a good ACCA article on Badges of Trade.  The details above are only a summary of the main criteria, so seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

What is the core business?

It is so easy to describe your business within its sector as accountants, builders, cleaners for example  but this does not describe what you do.  It is only by being more specific that you can become more focussed not only in your marketing activity but also in the process by which you actually do the work.  Let us consider the builder as an example and the type of work they carry out:

• Commercial (as opposed to residential)
• Public sector (not private sector)
• Fit out (rather than new build)

If they deviated into a domestic new build a new skill set would be required and while they may be able to do the work the disciplines and working practices are different.  Suddenly the efficiencies are lost and this will impact on both profitability and ultimately cashflow.

This may be an extreme but it is worth looking at new ventures and seeing whether they are complimentary to current activity or running along a separate track altogether.  In summary my advice would be to:

• Differentiate your business
• Become a niche – you are not the same as the others
• Concentrate on that core activity

The advice above may not apply to your circumstances, so seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

Demonstrate the sponsorship is wholly and exclusively for the purposes of the trade

• Show how it will benefit the company
• Ensure there is no private benefit

The purpose of sponsorship should be backed up by evidence

• Where did you hear about the opportunity from? An independent source is better.
• Why did you choose this option?
• Keep copies of correspondence showing the decision process
• Demonstrate how sponsorship will put the company in front of the intended audience
• Show how sponsorship can be exploited in local media
• Make sure sponsorship is mentioned on your website
• Even better if there are backlinks from the sponsored person/event website
• Make the most of these opportunities by branded clothing and banners

Show that it is a commercial decision

• Cannot be relative or close friend
• That you are not necessarily paying full amount sought, there may be a variety of small and big givers
• Geographical closeness – for a Kent based business, sponsoship in Scotland is unlikely to be beneficial
• Have you considered other options?
• If you are sponsoring a novice sportsman rather than an established one, you may want to associae your company with a rising star

It may not be allowable if

• Any capital element – eg purchase of a car, although other allowances may be available
• Any element of entertaining (in the usual way for business expenses)

In summary, provided you can demonstrate it is armslength and can extract some advertising from the local media and on your website (“proud to be supporting”) then this should be wholly allowable.  From a commercial perspective you may also set requirements for number of events attended, or duration of an event in order for you to continue the support.

The full details are in: http://www.hmrc.gov.uk/manuals/bimmanual/BIM42565.htm

The advice above is based on our understanding of HMRC guidelines and may not apply to your circumstances, so seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

• Growth is slower than expected but only by a small amount but the future forecasted increases are still expected
• Inflation will hold at around 4-5% this year but then fall to 2.5% next year then the Bank of England target of 2% in the following year

The starting point for the areas which will affect us all was the statement that UK taxes are too complicated and 42 taxes and reliefs are being abolished and there is going to be a consultation on merging the Income Tax and National Insurance which will reduce bureaucracy for employers and HMRC in administration.  Then onto the actual details:

• Main corporation tax rate will reduce by 2% from April then 1% per annum until it reaches 23% (small companies rate reduction from 21% to 20% from April has already been announced)
• The banker bashing continues as banks will not benefit from this but be subjected to an increase in the bank levy to counteract this!
• To aid the construction industry, encourage jobs and reduce costs of planning, the planning rules will be simplified, the general rule will be planning “will” be granted

Entrepreneurs, business and 50% tax

• Entrepreneurs lifetime relief on gains to be increased from £5-10m
• New and small businesses (less than 10 employees) will be exempt from regulation for three years – further details will follow
• Enterprise Investment Scheme rate of income tax relief to increase from 20-30%
• 50% tax rate is temporary, HMRC have been asked to find out how much this measure actually raises

Property, R&D and Enterprise Zones

• HMRC also looking at tax avoidance on high value properties – both of these measures are looking at making sure all members of society contribute to the tax take.
• £250m commitment to first time buyers of new build property funded from the bank levy, should help 10,000 people
• To encourage R&D, the tax credit will rise to 200% for small businesses from April
• 21 New Enterprise zones will be created in England, 11 were announced and 10 more to follow in the summer.  Following my meeting with Gravesham BC this morning they are hoping Thames Gateway will be one of them

Individuals, charities and motorists

• For pensioners the state pension increase will have an automatic mechanism for annual increases rather than relying on inflation as at present.  Also there will be a simplified state pension system offering a £140pw basic pension
• For charities gift aid claims will be simplified from 2013 to make it easier for them to claim the relief they are due
• To encourage a giving society if you leave more than 10% of your estate to charity your rate of IHT will be reduced by 10% (ie 40-36%)
• For families – council tax has been frozen across the country and child tax credit will increase.
• The already announced £1000 increase in personal tax allowance will offset the increase in NI for lower earners announced by the Labour government.  For 2012/13 the allowance will increase by £630 to a little over £8k and this will not push more people into higher rate tax.
• Smokers and drinkers – Tobacco duties will increase as previously announced and there will be no changes to alcohol duty increases to those previously announced

Motorists and fuel

• Motorists – vehicle excise duty will increase by inflation for cars but frozen for HGVs
• Approved mileage allowance increases to 45p from 40p per mile and also applies to volunteers for charities, this is the first change since 2002!
• The fuel duty increase which was planned for 1 April has been removed and there will be  a 1p reduction from 6pm today funded by a fair fuel stabiliser levied on the petroleum industry
• The full HMRC Overview of Tax Legislation and Rates can be found at http://www.hmrc.gov.uk/budget2011/overview.pdf

The summary above is based on our understanding of the Budget and you should seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”