Welcome to the January 2012 Newsletter from Connolly Accountants Ltd

The Government has set out its vision to reform the UK's corporate culture by encouraging greater employee ownership. Earlier this month, the Deputy Prime Minister, Nick Clegg, revealed that companies could be given tax incentives to offer shares to their employees as part of the Government's plans to build a so-called 'John Lewis economy'.

Meanwhile, HMRC has confirmed that it will be reviewing its Business Records Checks programme, following concerns over the scheme's impact on small businesses. Under the initiative, the taxman has the ability to levy fines of up to £3,000 where a firm is found to have 'inadequate' records.

Government unveils 'John Lewis' plan for the economy

Firms could soon benefit from tax breaks and cuts to red tape under Government plans to promote employee ownership.

Speaking to an audience in the City, the Deputy Prime Minister, Nick Clegg said he wanted to get the concept of employee ownership 'into the bloodstream' of the British economy and urged firms to follow the business approach used by the department store John Lewis.

The retail chain is owned by its employees and its profits are distributed equally between staff members, regardless of their position.

One proposal under consideration by the Government is a 'right to request' rule, which would give staff an automatic opportunity to ask their employer for shares.

The Chief Secretary to the Treasury, Danny Alexander, is also thought to be '[looking] at the tax arrangements for employee-owned firms'.

The Government hopes the plans will boost productivity and 'unlock growth', whilst encouraging 'responsible capitalism'.

At an event hosted by the City of London Corporation and Centre Forum think tank, the Deputy PM said: 'We don't believe our problem is too much capitalism - we think it's that too few people have capital.'

'We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like. And what many people don't realise about employee ownership is that it is a hugely underused tool in unlocking growth.'

He continued: 'Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better. Lower absenteeism. Less staff turnover. Lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies.'

However, the Shadow Business Secretary, Chuka Umunna, argued that the Coalition Government was following in Labour's footsteps. 'Despite having first scorned Labour's initiative, David Cameron now claims he has become a convert to the cause,' he said.

'The question for both him and Nick Clegg is whether they have the courage or the conviction to make the change that is needed.'

Meanwhile Charlie Mayfied, chairman of the John Lewis Partnership, welcomed the proposals, but warned that employee ownership should not be viewed as a 'silver bullet to the economy's ills'.


Business Records Checks programme 'under review'

HMRC is to carry out a review of its Business Records Checks programme after the initiative was criticised by business groups and MPs.

Under the scheme, HMRC officers are conducting checks on the adequacy of the records kept by SMEs, with the aim of improving standards of record-keeping and reducing the amount of unpaid tax. Where a firm is found to have 'inadequate' records, the taxman has the ability to levy fines of up to £3,000.

The programme was set to continue in 2012/13, with a further 20,000 checks planned across the UK. However, HMRC has now confirmed that it will undertake a strategic review of the project, to examine whether the current approach represents the best way of achieving its policy objectives.

'HMRC recognises that the launch of the business records checks pilots has caused considerable concern to the tax profession, and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage,' said a spokesperson.

'In the light of these concerns, HMRC will undertake a strategic review of the project, in consultation with the professional and representative bodies.'

The move is likely to be welcomed by the Federation of Small Businesses (FSB), which had voiced concerns over the programme.

Prior to the decision, the FSB chairman, John Walker, said: 'Despite the worsening economy, HMRC is launching this scheme regardless of the consequences.

'We have spoken to HMRC and expressed our concerns about this a number of times. But as far as they and ministers are concerned it is a policy aim to make this happen. There is a huge difference between the rhetoric of the Government about helping small businesses and what it is doing in reality.'

We can help with your business record-keeping requirements - please contact us for further assistance.


ESSENTIAL TAX DATES AND DEADLINES

Don't forget, from 1 February individuals will be liable to a £100 penalty where the 2011 Tax Return has not been filed online. Additional penalties may apply for further delay.

2 March Last day to pay any balance of 2010/11 tax and Class 4 NICs to avoid an automatic 5% late payment penalty.

31 March End of Corporation Tax financial year.
End of CT61 quarterly period.
Filing date for Corporation Tax Return Form CT600 for period ended 31 March 2011.

For more key tax dates and deadlines visit our 2011/12 Tax Calendar.

QUOTE OF THE MONTH

'The Government needs to quickly put in place the actions that it has promised. Small firms have heard what the Government has to say but are still waiting to see implementation'.

The National Chairman of the Federation of Small Businesses, John Walker, calls on the Government to focus on implementing measures announced in the Autumn Statement


WEBSITE OF THE MONTH

www.ukti.gov.uk/britishbusinessclub/home.html

Aimed at helping British businesses capitalise on the networking opportunities available around the London 2012 Olympics and other major sporting events


ON OUR WEBSITE

Hot topic: The 5 April Year End - plan to save tax now!
With the Year End approaching, now is the ideal time to plan to minimise your tax liability. Read our guide here

Making the most of your finances
For information and tips designed to help you make the most of your finances, visit the Your Money section of our website.

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