VAT – Happy New Year
VAT returns to 17.5% on 1st January 2010 so will the hostelry you are frequenting on New Year’s Eve suddenly increase their prices at midnight? The answer is “No”.
As a concession HMRC are allowing pubs, hotels and other establishments which are open at midnight to continue accounting for VAT at the 15% rate until 6.00am on New Year’s day.
If you need more information on the changes, contact us.
VAT Flat Rate changes January 2010
Many people seem to be assuming that when the VAT rate reverts to 17.5% on 1st January 2010, the VAT Flat Rates will also revert back to their pre December 2008 rates. HMRC have said this is not the case and a number of changes to the rates. An announcement will be made during December, probably at the time of the pre budget review.
The Flat Rate Scheme is supposed to be revenue neutral. Essentially winners and losers should cancel each other out. It was felt that for some trades the rates were a little generous so the opportunity will be taken to bring those in line.
For cash businesses, such as shops, the Flat Rate Scheme will remain pretty straightforward but for businesses which issue invoices and operate the Flat Rate scheme life could be a little more complicated, particularly if they also use cash accounting for VAT.
We aren’t great fans of the Flat Rate Scheme. It was helpful when most businesses used a book to record their transactions but bookkeeping software makes it so much easier to calculate VAT and there isn’t often any substantial advantage in using the Flat Rate Scheme.
Microsoft Office Accounting – goodbye
Microsoft Office Accounting, launched a couple of years ago with great promises, has ceased to be distributed by Microsoft. Whilst never a leader, MOA did have a fairly large user base. Mamut are taking over support in the UK but this may only be for a short period while they try to persuade users to switch to their bookkeeping software.
Users have to make a choice of continuing with Office Accounting and hoping that Mamut support will be sufficient for their needs or switching to some other software. There’s a lot out there, ranging from “cloud” applications such as KashFlow, Liquid Accounts, Liberty Accounts, FreeAgent etc to more traditional software such as Quickbooks and Sage.
Maybe the demise of MOA is the time to properly and fully review your bookkeeping needs and requirements. We have experience of many of the offerings either directly or via clients which use them and can help you arrive at an informed choice. Why not contact us?
HMRC extended powers to inspect
Recent massive extensions to HMRC’s powers means that businesses need to be much more aware of dangers they run by not keeping accurate and up to date records.
Emphasis is very much on business records. HMRC now have the power to enter premises and inspect records if “the inspection is reasonably required for the purpose of checking that person’s tax position.” That pretty well means that they can turn up if they want to and insist on seeing your records which includes invoices, bills, bank statements etc.
HMRC have said that all such compliance checks will be undertaken for a reason – so, if they appear on your doorstep, they think they have a reason to be there. They have a right to inspect records, which you must show them, but you do not have to answer any questions. If they do turn up, let them in, be polite – and ring your accountant straightaway.
Often accountants do not even know what transactions are taking place until well after the event. In view of the new powers, it is prudent to keep your accountant informed of anything you are considering doing which is even slightly out of the ordinary. We also suggest that you undertake a review of current practices to make them fully compliant.
November 2009 Tax newsletter
Our November 2009 Newsletter was published a couple of weeks ago and I forgot to post a link to it.
You can sign up to have the newsletter delivered to you by email. It’s free and we won’t bombard you with loads of unwanted rubbish.
