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Newsletter - September 2007In this edition:
SME banking controls 'set to be lifted' The level of interest on the savings accounts of small and medium-sized enterprises ( SMEs ) could be set to fall, following a provisional decision by the Competition Commission to lift temporary price controls on banking services. Since 2003, the UK 's four largest banks have had to offer firms an interest rate of a minimum of 2.5% below the base rate, or free money transmission services, or both. The measure formed part of a strategy to make the process of banking easier and more transparent for SMEs . However, the Competition Commission believes that the situation has now improved, with the banks becoming more competitive and SMEs more likely to switch providers if they are unhappy with the service they are receiving. The banks will still have to publicise changes in their charges, and a prohibition will still apply to making the supply of SME banking services conditional on taking up other services, such as loans. The Competition Commission is making a number of recommendations to the Office of Fair Trading, which include actively monitoring the banks' behaviour following the lifting of the price controls. The deadline for responses to the Competition Commission's consultation is 28 September. Think tank calls for November bank holiday The Institute for Public Policy Research (IPPR) has called on the Government to introduce an additional bank holiday in November. According to the organisation, the extra day would give the nation an opportunity to build a national identity, and to recognise Britain 's 'national heroes'. Kate Stanley of the IPPR said, 'Awarding civic honours on a single national day would be a national 'thank you' for the many thousands of citizens who go out of their way to help others'. The proposals follow previous suggestions to introduce a new 'community day' in October. However, business representatives have dismissed the idea, with the Confederation of British Industry (CBI) arguing that it was not necessary to create a new bank holiday in order to celebrate our national heroes, and that doing so could prove costly for the economy. Neil Carberry of the CBI said, 'Statutory holiday entitlement is being increased from 20 to 28 days over the next two years, which will be a big improvement for many workers but comes at a substantial cost to firms. Offering staff an extra bank holiday would cost the economy up to six billion pounds on top'. One in four people 'have no savings' Britain is not a nation of savers, according to a recent study. The research, conducted by the Post Office, suggested that one in four people do not put by any money in the form of savings, while the majority of those who do save will spend the money on a holiday. Of those who fail to save any money, just over 25% said that they could not afford to do so, as a result of debt. A third of people do have some savings, but do not put by money on a regular basis; and a fifth of those questioned said that they spend all of their money. Meanwhile, a separate study has suggested that a quarter of consumers have continued to increase their borrowing in the last three months, and around two million people are worried that they will not be able to pay off their debts. According to MoneyExpert.com, while 40% of respondents were not concerned about their debts, 7% are extremely worried about their financial situation. Sean Gardner of MoneyExpert.com said, 'Anyone who is very concerned about their ability to keep on top of their debts is heading for serious trouble if they do not take action now'. We can help with all your financial planning needs – contact us for further assistance.
The Federation of Small Businesses (FSB) has called on HM Revenue & Customs (HMRC) to issue the tax-free payments which were promised to those small businesses with less than 50 employees that filed their annual 2006/07 PAYE returns online. The incentive scheme was introduced in 2004, with the aim of encouraging small firms to file their returns online before e-filing becomes compulsory in 2010. However, HMRC has warned that it has experienced some delays as a result of the large number of firms requesting payment by cheque, and that it could take until December for firms to receive their payments. Around 130,000 businesses are understood to be waiting for their £150 payments. Bill Knox of the FSB said, 'The Government quite rightly disapproves of late payment of both tax demands and monies between businesses. HMRC, as an arm of the Government, should set an example and pay within 30 days'. Minimum wage laws see first criminal prosecution The owner of a children's nursery has been fined £3,000, in the first national minimum wage criminal prosecution. The owner of the nursery was found to have obstructed HM Revenue & Customs (HMRC) in its attempts to access staff records, in order to establish whether nursery workers were receiving the minimum wage. Andy Millican of HMRC said, 'This prosecution sends a clear message to employers that HMRC will actively pursue those we suspect of flouting the national minimum wage law. If employers obstruct us and refuse to comply with the law, they could receive a fine and a criminal record'. The current adult minimum wage rate is £5.35 an hour, and this rate is set to increase to £5.52 on 1 October 2007. Meanwhile, the development rate for workers aged 18-21 will rise from £4.45 to £4.60 an hour, and the rate for 16-17 year olds will increase from £3.30 to £3.40. 'Touch and pay' card hits the High Street A new payment system has now come into force which allows consumers to use a card to pay for goods costing under £10, without using a PIN number. The ' PayPass ' system has been launched in London , ahead of a nationwide rollout. The aim of the scheme is to reduce queues, and provide a more convenient way of paying for goods of small value. The system works by touching a card on a reader. The payment is then automatically debited from the individual's bank account, or added to their credit card. Some security concerns have been raised in relation to the scheme, with critics worried that a card can be used for up to five consecutive transactions before a PIN number is requested. However, Oliver Steeley of Mastercard said, 'We're simply responding to consumer need for speed and convenience, especially at busy times of day. You can't stand in the way of progress.' Small firms 'hit by credit crisis' Small businesses in the UK are under threat as a result of the credit crisis, according to a new report from the Federation of Small Businesses (FSB). The business group warned that poor liquidity in the markets means that small firms are finding it difficult to borrow the funds they need to survive, and those who have managed to obtain loans are paying interest of 10-11%. The FSB has warned that the crisis could also have an effect on expansion plans, with many start-ups unable to begin employing additional members of staff. Mike Cherry of the FSB said, 'We have still got a huge fallout from June and July's flooding and this on top is going to make it extraordinarily difficult. It is the last thing small businesses need'. The British Chambers of Commerce (BCC) has echoed the FSB's concerns. David Frost, BCC director-general, said, 'The concern to date is that large companies are going to find it harder and more expensive to borrow. If the big business is finding it more difficult to borrow, then clearly, investment decisions they make will be either slowed down or cut back. That will undoubtedly have an impact on smaller companies'. Tour operators lose Air Passenger Duty case An attempt by the Federation of Tour Operators (FTO) to challenge the legality of Air Passenger Duty has failed in the High Court. An increase in the rate of duty levied on air travel was announced in the 2006 Pre-Budget Report, and came into effect on 1 February 2007. Under the scheme, the rate for those travelling within the European Economic Area and certain other European countries increased from £5 to £10 in the lowest class, and from £10 to £20 in other classes. For other destinations, the rate increased from £20 to £40 in the lowest class, and from £40 to £80 in other classes. However, the tax proved unpopular with tour operators, who argued that they had been faced with a £50m bill that they could not pass on to their customers, and that those passengers who had already booked their tickets before the announcement was made should have been exempted from the tax. Although expressing some sympathy regarding the issue of existing bookings, Judge Stanley Burnton said that Air Passenger Duty was a 'proportional measure' aimed at cutting environmental damage from aircraft emissions. HIPS come into force for three-bedroom homes Homeowners in England and Wales who are looking to sell their properties must now use a Home Information Pack (HIP) if their house has three or more bedrooms. The scheme was first introduced in August, for those properties with four or more bedrooms, following a series of initial delays. The packs include energy performance certificates ( EPCs ), which grade properties in relation to their energy efficiency. The aim of the scheme was to speed up the process of buying a house. However, many estate agents and surveyors have opposed the packs. According to the Royal Institution of Chartered Surveyors ( Rics ), there has been a significant fall in the number of properties with four or more bedrooms which have been put on the market, since the introduction of the packs. However, supporters of the scheme report that the introduction has gone smoothly. Pre-Budget Report 'could target gas guzzlers' The new Chancellor of the Exchequer, Alistair Darling, could be set to target so-called 'gas-guzzling' vehicles in the forthcoming Pre-Budget Report, according to recent reports. A leaked Treasury paper suggests that the most polluting vehicles could be subject to a £2,000 purchase tax, as well as higher road tax. Meanwhile, the most fuel-efficient vehicles could be eligible for a £2,000 rebate. The plans share a number of similarities with recent Conservative proposals on the environment. The Treasury has declined to comment on the issue. The Chancellor is due to deliver the 2007 Pre-Budget Report in October. New single penalty regime for incorrect tax returns A new single penalty regime is coming into force for incorrect tax returns in 2009, which will cover returns for income tax, corporation tax, PAYE, national insurance contributions and VAT. The new system is intended to help standardise and simplify the existing penalty regime across the different forms of tax, and will consider the following key factors:
There will be four different categories of 'inaccuracy', with penalties set on an increasing scale. No penalties will be applied for genuine 'mistakes', while moderate penalties will apply to those circumstances where a taxpayer is deemed not to have taken reasonable care. Higher penalties will exist for deliberate inaccuracies, and there will be still higher penalties for deliberate inaccuracies with concealment. 'Suspended' penalties will also be introduced for the first time for 'careless' errors, allowing HM Revenue & Customers (HMRC) to delay the penalty for up to two years, after which it can be either cancelled or enforced. We can help with all your tax and financial planning needs – contact us for further advice and assistance. Small businesses urged to claim rate relief The Forum of Private Business (FPB) is calling on small firms to submit their applications for Small Business Rate Relief (SBRR) for 2006/07, ahead of the forthcoming 30 September deadline. Under the scheme, payment reductions of up to 50% are available, on a sliding scale, to small businesses which occupy single properties with a rateable value below £15,000 (£21,500 in London), or those occupying multiple properties which each have a rateable value below £2,200, where the total value is less than the above threshold. Applications must be submitted to the relevant local authority within six months of the end of the financial year to which it relates, so applications for the 2006/07 financial year must be submitted by 30 September 2007. Philip Moody of the FPB said, 'Many business owners will be unaware of this deadline. It does not apply to everyone, but they need to check their rates to see if they are eligible, and get their applications in if they are'. Inheritance tax to hit '135 more homes a day' New research has suggested that the number of households coming within the inheritance tax (IHT) threshold will increase by more than 135 a day, over the next year. According to the Halifax , the next 12 months will see 50,000 additional properties exceeding the threshold at which the tax becomes payable. IHT is currently payable at 40% on the proportion of an estate which is valued in excess of £300,000. The threshold is rising to £312,000 in April 2008. However, the Halifax has said that even if house prices were to grow at a slower rate of 5% over the next year, many more homeowners would still become liable to pay the tax. The warning follows recent reports that HM Revenue & Customs (HMRC) is planning to crack down on gifts which are made shortly before the death of an individual, including jewellery and paintings, property and business assets. We can help you to minimise your tax liabilities – contact us for more information. Brown pledges a Britain 'of all the talents' Gordon Brown has made his first address as Prime Minister and party leader to the Labour Party conference. Focusing for the main part on the issues of crime, education and the health service, Brown pledged to reform GP services by improving surgery opening hours and making it easier for workers to have access to a doctor near their place of work. The Prime Minister also highlighted global economic competition as a key issue, pledging to 'unlock all the talents of all the people', and to maintain a stable economy. 'Everything we build, we build on a strong foundation of economic stability… and it is because of the strength of the British economy that we are able to steer a path of low inflation, low interest rates and stable growth', he said. Ahead of the speech, the British Chambers of Commerce (BCC) had urged the Government to set out a 'vision for business'. The speech received a mixed reaction, with the Conservatives criticising the announcement that there would be no referendum on the new EU treaty. Meanwhile, the TUC welcomed what it described as a 'commitment to social justice and opportunity'. Taxman homes in on offshore accounts HM Revenue & Customs (HMRC) is widening its search for individuals who have undisclosed offshore accounts. Following the closure of its Offshore Disclosure Facility in June, HMRC announced that it would be following up on the details of many thousands of individuals who have undeclared offshore accounts with the five main High Street banks. HMRC is now pursuing an additional 170 financial management institutions for details of their customers' offshore accounts. Those customers who did make a disclosure under the 'tax amnesty' have until 26 November to make their payments. Meanwhile, those who did not make a disclosure could face fines of up to 100% of their backdated taxes, and in some cases prosecution. We can advise you on your tax and financial planning needs – contact us for assistance. |
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