Welcome to the September 2013 Newsletter from Connolly Accountants Ltd

Businesses may be charged for the late payment of bills to their suppliers, the Government has announced. Plans are being considered to tackle the growing 'late payment culture', which is having an adverse impact on the cash flow of many small businesses.

Meanwhile, higher earners who continued to receive Child Benefit in 2012/13 are being reminded that they need to register for self assessment by 5 October in order to avoid a penalty. The High Income Child Benefit Charge came into force earlier this year and applies to individuals with income in excess of £50,000.


Businesses 'could face fines' for late payment

Businesses that fail to pay their suppliers on time could incur a penalty under plans reportedly being considered by Business Secretary Vince Cable.
 
With small businesses owed more than £30 billion in outstanding payments, the Government is investigating a number of options to tackle what it describes as an 'unfair' late payment culture. The proposed scheme is modelled on a system currently used in Sweden.

Introducing a late payment levy on companies that do not pay their suppliers within 30 days is one idea being discussed. At present, some small firms are forced to wait up to 180 days for payment, while others face even longer delays.

Other proposals under review include initiatives targeted at specific sectors such as construction, where the issue of late payment is believed to be particularly prevalent.

A Government spokesman said, 'Vince Cable is concerned about companies struggling because others aren't settling bills on time. This has an unfair effect on them growing their businesses. He's looking at what can be done by Government to help'.

It is thought that less than half of Britain's biggest companies have signed up to the Prompt Payment Code, a voluntary agreement designed to encourage and promote best practice between organisations and their suppliers. Larger companies are characteristically more likely to pay their bills late, and as previous initiatives have failed, the Government is considering harsher procedures to try to tackle the problem.

Philip King, chief executive of the Institute of Credit Management, commented that 'treating suppliers fairly deserves more focus'.

A recent study by the Forum of Private Business (FPB) has revealed the extent to which late payments can adversely affect businesses. 35% of the small firms questioned said they had seen a reduction in profits, while 16% reported a noticeable reduction in turnover as a response to late payment or bad debts.

Please contact us if overdue payment is becoming an issue for your business. We would be delighted to assist you.


Higher earners urged to register for self assessment to avoid Child Benefit penalty

Individuals with higher incomes are being reminded to register for self assessment by 5 October if they wish to continue receiving Child Benefit.

Earlier this year, HM Revenue & Customs (HMRC) introduced a new High Income Child Benefit Charge (HICBC) in a bid to claw back the benefit from individuals with incomes in excess of £50,000.

Under the changes, where a person in receipt of Child Benefit or his or her partner has adjusted net income of between £50,000 and £60,000, the HICBC is levied at 1% of the benefit for every £100 by which income exceeds £50,000.

Once adjusted net income reaches £60,000 the charge is equal to the full amount of Child Benefit received for the tax year. Where it is certain that the charge will bite, claimants can elect not to receive their Child Benefit.

More than 390,000 parents with higher incomes have already opted out of receiving Child Benefit following the introduction of the HICBC. Those who did so before 7 January 2013 do not need to take any further action.

However, parents on higher incomes who continued to receive Child Benefit in 2012/13 will need to register for self assessment by 5 October 2013 (unless they have already done so) and complete a tax return. Individuals who fail to register with HMRC may incur a penalty.

HMRC is now writing to around two million higher rate taxpayers who it believes are affected by the new rules.

Commenting, Lin Homer, chief executive of HMRC, said: 'HMRC is committed to helping people pay the right amount of tax. If you have had certain changes to your income in the last year, including those affected by the changes to Child Benefit, you have until 5 October to register for self assessment'.

For more information on the changes to child benefit, and for advice tailored to you and your family, please do not hesitate to contact us.


ESSENTIAL TAX DATES FOR SEPTEMBER

30 September
End of CT61 quarterly period.
Last day for UK businesses to reclaim EC VAT chargeable in 2012.


QUOTE OF THE MONTH

'Recent FSB research shows 7% of our members pay more in business rates than rent, so the Government must act to help those still struggling by cancelling the inflationary increase planned for next year.'

Mike Cherry, National Policy Chairman of the Federation of Small Businesses (FSB), urges the Government to take action on business rates.


WEBSITE OF THE MONTH

www.gov.uk/browse/benefits/child

Find out about the changes in Child Benefit and how they might affect you.


ON OUR WEBSITE

Reducing your tax liability
For the latest strategies for reducing your tax liability, visit the Tax Strategies section of our website.

The latest Hot Topics
Our latest addition considers the winners and losers of the new flat-rate state pension system.

Revenue urges charities to sign up to new online service
HMRC is urging those charities which have claimed Gift Aid in the last three years to sign up for the new Charities Online service.
Click here for the full story

CBI raises economic growth forecast for 2013
The Confederation of British Industry (CBI) has raised its economic growth forecast for 2013 from 1% to 1.2%, amid signs of mounting confidence amongst UK businesses.
Click here for the full story

Seven-day bank switching service to launch next month
Bank customers will be able to switch current accounts within seven days from next month, the Payments Council has confirmed.
Click here for the full story

90% of employees staying in auto-enrolment pension scheme, says DWP
Nine out of ten employees automatically enrolled into a workplace pension are choosing to remain in the scheme, latest figures suggest.
Click here for the full story

Committee calls for corporation tax review
The Treasury should carry out a review of the corporation tax system to ensure that multinational companies pay their 'fair share' of tax, according to a parliamentary committee.
Click here for the full story