Welcome to the May 2012 Newsletter from Connolly Accountants Ltd

This year's Queen's Speech provoked mixed reactions from business groups, with many arguing that the measures do not go far enough to boost economic growth.

While welcoming the confirmation of plans to reform employment tribunals, organisations expressed concern over proposals to allow new parents to 'share' blocks of maternity leave, warning that this will increase the regulatory burden for many businesses.

Also under the spotlight this month was HM Revenue & Customs' new 'IR35' tests. The series of questions and corresponding scoring system aims to help determine employment status in situations where an individual supplies services through an intermediary company, rather than being directly employed by their client.

However, the tests have come under fire from some business representatives, who have cast doubt over the 'large variations' between the scores allocated to particular questions, arguing that the Revenue has missed a 'key opportunity' to provide clarity over the legislation.

For the latest tax and financial planning tips, visit our 2012/13 Tax Strategies Guide

Business groups voice concerns over Queen's Speech measures

Business groups have expressed concerns over the legislation contained in the recent Queen's Speech, with many arguing that the measures do not go far enough to boost economic growth.

Opening the new Parliament, the Queen announced the Government's first priority was to 'reduce the deficit and restore economic stability'.

The Speech outlined a total of 19 pieces of legislation, ranging from enterprise and regulatory reform, to measures aimed at supporting children and families. It also confirmed the Government's plans to implement banking reform, along with the Groceries Code Adjudicator Bill.

The measures prompted criticism from some business leaders, with John Longworth, Director General of the British Chambers of Commerce (BCC) suggesting that the Speech 'could have been bolder'.

While it welcomed some of the Government's proposals, such as the reform of employment tribunals, the BCC raised concerns over plans to impose new legislative requirements on businesses.

'On balance, business will welcome some of the Government's proposed legislative measures, but express serious reservations about others. Positive steps such as reform to employment tribunals and red tape reductions could be undermined by complex new burdens around shared parental leave, for example,' said Longworth.

'Ministers could have been bolder by including legislation to establish a British business bank, to further simplify dismissal rules, and to progress the construction of our high-speed rail network,' he added.

The Children and Families Bill could see new parents given the right to 'share' blocks of parental leave, by allowing women to transfer some of their maternity leave entitlement to the baby's father.

However, the Forum of Private Business (FPB) echoed the BCC's concerns over the new entitlement, warning that it will add to the 'burden' on employers.

FPB Senior Policy Advisor, Phil McCabe, said: 'Perhaps the most concerning aspect of today's Queen's Speech for many small business owners is the plan to shake-up maternity leave by letting mums or dads mix and match time off with the new arrival. Nice concept in theory, but the paperwork and organisation will frankly not be welcomed by most business owners.

'While flexible working is good for some businesses, firms should not be compelled into providing it if it doesn't suit,' he added.

However, the lobby group did welcome plans to introduce an independent adjudicator to ensure supermarkets deal fairly and lawfully with suppliers, stating that the move would 'go some way to rebalancing the relationship'.


New Revenue employment tests come under fire

HM Revenue & Customs (HMRC) recently unveiled a new series of tests which are designed to help determine the employment status of workers, where individuals supply their services through an intermediary company.

The intermediaries legislation, commonly known as 'IR35', is intended to prevent individuals from using such companies to supply services rather than being directly employed by their clients, in a bid to reduce the tax and national insurance bill.

The new tests take the form of a series of questions and example scenarios, complete with a scoring system, and include such questions as:

  • Does your business own or rent premises which are separate from your home and the end client's premises?
  • Do you need professional indemnity insurance?; and
  • Does your business engage any workers who bring in at least 25% of your annual turnover?

Other areas covered include: previous PAYE, business plans, advertising, efficiency, client risk, repair at own expense, billing, and substitution.

HMRC takes a risk-based approach to IR35, using a set of 'risk bands' to gauge how likely it is that it will need to check whether IR35 applies to you. However, it should be noted that the tests take into account the business as a whole, rather than giving a definitive answer as to whether an individual is caught by the IR35 rules in relation to a particular engagement.

Small business representatives have criticised the tests, arguing that they do not take into account key issues that were brought to the Treasury Forum, and expressing concern that the Revenue has missed the chance to bring 'clarity, transparency and fairness' in dealing with IR35.

HMRC has stated that the legislation is not 'set in stone' and could change in response to feedback.

The full legislation can be viewed here: http://www.hmrc.gov.uk/ir35/guidance.pdf.

We can help with your business and tax planning needs. Please contact us for further advice and assistance.


ESSENTIAL TAX DATES AND DEADLINES

30 June
End of CT61 quarterly period.
Annual adjustment for VAT partial exemption calculations (March VAT year end).

6 July
Deadline for submission of Form 42 (transactions in shares and securities).
Deadline for submission of EMI40 (EMI Annual Return).
File Taxed Award Scheme Returns, file P11Ds, P11D(b)s  and P9Ds.
Issue copies of P11Ds or P9Ds to employees.

For more key tax dates and deadlines visit our 2012/13 Tax Calendar.

QUOTE OF THE MONTH

'This is not a growth strategy, it is the worst attack on our employment rights in a generation.'

Len McCluskey, Unite general secretary, commenting on the release of the controversial Beecroft report on employment law.


WEBSITE OF THE MONTH

http://makeitingreatbritain.bis.gov.uk

Government campaign designed to promote manufacturing in the UK.


ON OUR WEBSITE

2012/13 Tax Strategies
For a host of financial planning tips and strategies, visit our 2012/13 Tax Strategies Guide.

The latest Tax Rates and Allowances
Our website also contains the latest up-to-date Tax Rates and Allowances for 2012/13.

Single 30% income tax rate 'needed to boost economic growth'
Introducing a single 30% income tax rate would help to boost the UK’s ailing economy, according to a report by economists and company directors.
Click here for the full story

More than one in five 'has no retirement savings'
More than a fifth of individuals have failed to put by any funds for their retirement, a new study has warned.
Click here for the full story

Late payment culture 'adding to small business woes'
Small businesses are continuing to feel the pain of the UK’s late payment culture, with the average small firm having £45,000 worth of unpaid invoices at the end of 2011.
Click here for the full story

Cash machines set to encourage charitable giving
Individuals will soon be able to make charitable donations when using a cash machine, under new plans to encourage philanthropic giving.
Click here for the full story

Small employers 'could face problems' implementing Real Time Information
Small employers who lack technical resources could struggle to implement the new filing requirements under RTI, a new study warns.
Click here for the full story