Welcome to the July 2012 Newsletter from Connolly Accountants Ltd

As the crisis over inter-bank interest rate fixing hit the headlines, news of a separate interest rate related scandal began to reach the small business world this month, in the form of the mis-selling of thousands of Interest Rate Swap Agreements.

The products, designed to protect firms taking out loans from future spikes in interest rates, were found to have been mis-sold on a number of counts, with the result that many SMEs have faced expensive, and sometimes ruinous, penalties to the tune of millions of pounds.

Meanwhile, HM Revenue & Customs has unveiled its latest tranche of tax taskforces, which will target specific industries and locations across the UK in a bid to recoup millions of pounds in unpaid tax.


Interesting times? Interest rate swap agreements 'have cost SMEs millions'

The Financial Services Authority (FSA) has reported 'serious failings' relating to the sale of 'interest rate swap agreements' (IRSAs), which were designed to protect businesses taking out loans, in the event of sudden spikes in interest rates.

According to the FSA, the mis-selling of the complex interest rate hedges has had a severe impact on a large number of those SMEs that took out the cover.

Evidence has emerged which suggests that many firms were forced to take out IRSAs as a condition of being granted a loan.

Additional problems identified include a failure to provide clarity regarding the cost of stopping a product, a failure to check whether a customer understood the risk, and the sale of products based on the personal rewards reaped, rather than a customer's needs.

The Federation of Small Businesses (FSB) has warned that thousands of companies have already gone bust as a result of interest rates falling to historic lows, with IRSA payments and penalties often reaching excessive levels, and in some cases amounting to millions of pounds.

The business group has called for a moratorium on interest rate swap repayments, together with a thorough review of how the market should operate, and the level of protection offered to small firms.

The FSA has announced that four of the UK's main high street banks will be forced to provide compensation to small businesses affected by the mis-selling.

Martin Wheatley of the FSA commented, 'For many small businesses this has been a difficult and distressing experience with many people's livelihoods affected'.


Revenue unveils latest tranche of tax taskforces

HM Revenue & Customs (HMRC) has launched its latest tranche of taskforces in an attempt to recoup millions of pounds in unpaid tax.

The taskforces will target specific industries and locations in the UK, including hair and beauty businesses in Northern Ireland, pubs and nightclubs in Scotland and the motor trade in South Wales, South West, Yorkshire, Nottingham and the North East.

Restaurants in South Wales and the South West will also be included in the crackdown.

Some 30 new taskforces are being launched throughout 2012/13. Previous targets have included taxi drivers, street market traders and buy-to-let landlords.

Meanwhile, HMRC said it expects to collect more than £50m as a result of the 12 taskforces launched in 2011/12.

Commenting, HMRC's Director General Enforcement and Compliance, Mike Eland, said: 'Everyone needs to pay the taxes they owe in full - these new taskforces will help us crack down on the minority who have chosen to break the rules'.

HMRC is also offering taxpayers who have failed to submit their self assessment tax returns for the 2009/10 tax year or earlier the chance to bring their tax affairs up to date.

Individuals who register with HMRC to take part in the campaign, and who submit their overdue returns and pay any outstanding tax by 2 October 2012, could avoid paying a penalty of up to 100% of the tax owed.

The initiative is principally aimed at higher rate taxpayers, but is also open to any individuals who have neglected to submit a self assessment tax return.

After 2 October, HMRC will begin to pursue outstanding returns and unpaid tax, with higher penalties for those who have failed to come forward.

The initiative is the latest in a number of campaigns by HMRC which have targeted specific groups of individuals, together with the recent extension of the Liechtenstein Disclosure Facility to 2016.

We can advise on all your tax planning needs - please contact us for information that is tailored to your individual circumstances.


ESSENTIAL TAX DATES AND DEADLINES

2 August
Submission date of P46 (Car) for quarter to 5 July.

31 August
Annual adjustment for VAT partial exemption calculations (May VAT year end).

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

QUOTE OF THE MONTH

'Small firms are the lifeblood of the economy and these sharp practices carried out by the big banks need to be stopped right away.'

John Walker, National Chairman of the Federation of Small Businesses, commenting on the mis-selling of interest rate swap agreements.


WEBSITE OF THE MONTH

www.london2012.com

The official website of the London 2012 Olympic Games


ON OUR WEBSITE

Expert advice on managing your business
Our website contains essential advice and information on managing your business. Visit the Your Business area of our website for more details.

2012/13 Tax Strategies
And for a wealth of financial planning tips and strategies, visit our 2012/13 Tax Strategies Guide.

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