Category Archives: Accountancy & Accounts

Accountancy & Accounts, Business Advice, Finance and Banking

How Do I Reclaim VAT?

Value-added tax or VAT is an extra charge on most services in the UK. It is primarily 20% of the total transaction amount on the majority of things. The good news is that you can reclaim VAT if you’re also a VAT-registered business.

The process of reclaiming VAT may seem time-consuming and exhausting. However, accountants in Balham and other parts of the UK can help ease the process.

If you want to understand how to reclaim VAT, you’re in the right place. Here’s what you must know.

Can All Businesses Reclaim VAT?

Before understanding the process of reclaiming VAT, you must know the eligibility requirements. The primary prerequisite for this process is that you must be a VAT-registered business. Every company with a turnover of more than £85,000 is required to register itself.

If you don’t have such a high turnover, it is not necessary to register yourself. However, you will also not be able to reclaim VAT if you do not do this. So whether your turnover is low or high, it is advisable to register your business with the appropriate authority.

How Do I Reclaim VAT?

The process of reclaiming VAT can be confusing if you have not hired experienced accountants in Balham. A key thing to understand is that you must submit a VAT return every three months to reclaim the funds. The request must be made to the HMRC.

You must also have proof documents for the claim process to go smoothly. This means you must show the VAT you have collected for your business. It is also necessary to give proof of the VAT you have paid for the goods.

So you must give valid VAT invoice receipts to the HMRC to show the tax you have collected. You must also present a retailer receipt to give proof of the VAT you have paid on purchased goods and services.

You may also be able to reclaim the tax if you have some other proof instead of the receipts. A bank statement may also be helpful in this case.

What Happens After Submitting The Request?

Once you submit a VAT return, the HMRC will review the proof receipts to understand the amount you have paid and collected. If the former figure is higher than the collection sum, you will get a refund from the HMRC.

This means that you can only get a refund if the figure is negative. If your collected VAT is greater than the paid amount, you will have to pay the difference to the HMRC. So you will not get a refund if the difference is positive.

Final Words

This is everything you need to know about reclaiming VAT. The process may seem simple to you because all you have to do is submit some receipts. However, that is not true.

The refund can be hard to receive if you also provide receipts for items that are ineligible for VAT. You can only reclaim the funds for taxable supplies. This is why it is essential to hire accountants in Balham to help your business get a refund without much hassle.

 

Accountancy & Accounts, Business Advice, FInance, Finance and Banking

7 Easy Ways to Keep Your Small Business’s Finances in Order

Finance: it’s the aspect of running a company that many small business owners dread the most. However, there’s no getting away from it! Keeping your business’s finances in order is critical for your company to operate successfully while helping you make more informed decisions about both its present and its future. So, rather than getting overwhelmed and slipping into bad financial habits, follow these seven top strategies to handle the task with greater ease.

 

1. Educate Yourself

If the world of finance confuses you and you don’t understand the jargon, the first step is to educate yourself. You don’t need to become an expert, but having a solid foundation will make it much easier to keep your business’s finances in check and make educated choices about loans, tax deductions and other key matters.

Try signing up for an online course, reading some expert blogs online, or getting a selection of books from either a local library or bookshop – you can even buy and rent ebooks these days if that’s more convenient for you. In any case, acquiring knowledge may be tough at first, but before long, you’ll start to get the hang of it – then, dealing with your company’s finances will be far smoother.

 

2. Up Your Organisation Skills

Keeping your business’s finances in order requires a good level of organisation. If this is a skill you struggle with, now is the time to work on it. You need to make sure that you stay on top of factors such as invoicing, billing and loan repayments while also ensuring you are thinking ahead by predicting future revenue and expenditure.

Try making a detailed to-do list every day and ensuring you always get the highest priority tasks completed first. It’s also wise to avoid the temptation to multitask, as this almost always results in lower productivity.

 

3. Use Professional Apps and Software

As a small business owner, it’s tempting to try and handle all of the financial tasks for your business by yourself. However, by doing so, you might be making your life more difficult than necessary. These days, there’s a wealth of professional software out there to help you stay on top of your business’s finances with ease. This is particularly useful when dealing with very strict parts of tax legislation.

As an example, you can now get software assisting with on going R&D tracking for tax relief that makes submitting claims much easier and more efficient – with no compromise on quality. Making use of a professional company’s knowledge and resources in complicated areas like this is almost always more cost-efficient and can save you a lot of work while simultaneously avoiding errors.

 

4. Set Aside Regular Time Every Week for the Task

If you find dealing with company finances tricky, it can be tempting to put off the work until the deadline is looming; however, this is a huge mistake. Instead, pencil a time slot into your diary every week to tackle money matters. You’ll find you become more familiar with your business’s finances and have time to deal with unexpected issues without getting overwhelmed by the task.

5. Plan Ahead

Having a forward-looking perspective can pay off big time when it comes down to keeping on top of professional money matters. Thinking about where you want to be in one, three, five and ten years’ time can help you make more prudent financial decisions now, for example, in terms of choosing what to invest your money in or how to budget.

 

6. Keep Personal and Business Finances Separate

One top tip that makes it significantly easier to sort out your professional money matters is this: always keep your personal and business finances separate. Only use your company credit card for business purchases and expenditures, and open a new bank account for your firm that you only use for work.

Keeping personal and company money separate in this way will make tracking your spending a much simpler endeavour – something you’re sure to appreciate when it’s time to do your accounting and taxes. Not only that, you should find it simpler to monitor key financial performance indicators such as profit, turnover and expenses. In turn, this approach helps you plan better for the future.

 

7. Consider Automated Bills

Automation is a fantastic way to make certain financial tasks easier, an excellent example being regular bills such as your internet or office utilities like water and electricity. Rather than having to deal with these manually every month or quarter, you can set up an automatic payment from your work bank account or credit card. That way, you’ll save time, plus you’ll avoid the risk of being charged for a late payment if you miss the deadline one month because you’re swamped with other tasks.

Accountancy & Accounts, Finance and Banking, News

ACCA and Innovate Finance forge new collaboration

ACCA (the Association of Chartered Certified Accountants) and Innovate Finance, the industry body that represents the UK FinTech sector, reach agreement to connect their networks and collaborate on knowledge sharing, policy and insights.

 

The collaboration between ACCA and Innovate Finance will bring together their natural synergies and will provide a platform for UK FinTech leaders to share information about their products and services with UK and international stakeholders, including those within ACCA’s community.

ACCA is building an international online community of its members directly connected to Fintech to build a greater awareness of FinTech and drive the involvement of accountancy and finance professionals in this sector.

Innovate Finance is the industry body representing the global UK FinTech community. Their membership ranges from seed stage start-ups to high growth FinTechs, global financial institutions to investors, and from professional services firms to international FinTech hubs. By bringing together and connecting the most forward-thinking participants in financial services, Innovate Finance is helping create a global financial services sector that is more transparent, more sustainable and more inclusive.

 

Lloyd Powell, Head of ACCA Cymru/Wales, says: ‘Fintech builds sustainable economies, with a powerful reputation for propelling innovation. Accountancy and finance professionals are increasingly working in Fintech or using its many applications. And so this new agreement with Innovate Finance will help our global members stay ahead of the Fintech curve. We’re delighted that our two communities are connecting to learn from and leverage each other’s expertise.’

 

Janine Hirt, CEO of Innovate Finance, comments: ‘We are delighted to collaborate with ACCA and advance our conversation on innovation and sustainability. The UK boasts a world-leading FinTech sector seen by peers as the global benchmark for innovation and transformation in financial services. As an ecosystem, it is crucial that we continue setting global standards on sustainability and ESG, financial inclusion and financial wellness. Partnerships like this one with ACCA will facilitate this forward momentum and progress. We will also be discussing these important issues at our ‘FinTech as a Force For Good’ summit in October.’

 

The agreement follows research from ACCA and its strategic alliance partner Chartered Accountants ANZ, Fintech state-of-play: opportunities for finance professionals, which shows that accountancy and finance professionals are needed ‘more than ever’ to enable maximum value from Fintech while keeping it safe and inclusive.

The report can be downloaded here: https://www.accaglobal.com/uk/en/professional-insights/technology/fintech-state-of-play.html

Accountancy & Accounts

How the Budget announcements in March are affecting businesses now

If you are a business owner, you will likely have been waiting for the Spring 2022 Budget delivered by Chancellor of the Exchequer Rishi Sunak on 23 March.

With inflation rising and the impact of the pandemic still being felt, many business owners were hoping for some help. Let us look at how the Budget announcements are impacting on businesses three months on.

 

National Insurance

The Chancellor announced that the National Insurance threshold would be £12,570, which means it has been raised by £3,000. Effective from July 2022, this should give 30 million people an additional £330.

However, for business owners who also manage the company, there was a rise of 1.25 percentage points in the National Insurance contributions. Because this applies to both employer and employee, business owners and managers will see a double increase of 2.5 percentage points.

It is uncertain if the new £12,570 National Insurance threshold applies to self-employed people, as this was only mentioned as impacting the employed.

If you are unsure how these changes will impact your business, click through to find out more about how accountants in Ipswich can help you.

 

Fuel duty

For those who run vehicles as part of their business, the 5p per litre fuel duty cut will offer some relief against the rising cost of fuel. It is the biggest cut in fuel tax in history, but will only save an average of £3.30 per tank of fuel.

Those businesses that operate a fleet of vehicles will still be feeling the strain of rising costs. Perhaps considering outsourcing their fleet might save money in the long run.

 

Employment tax

Small businesses are allowed to reduce their National Insurance contributions each year under Employment Allowance Relief. In the Spring 2022 budget, this was increased from £4,000 to £5,000, giving tax cuts to 500,000 small businesses.

 

Business rates

The retail, leisure and hospitality sectors were told that there will be a 50% cut in business rates, which came into effect on April 1st 2022. This cut is capped at £110,000 per business.

In the Budget, the chancellor also mentioned that business rates would be re-evaluated in 2023 and would be based on rental values from 2021. This will hopefully see many companies in these sectors get a reduction in their bills which is greatly needed.

 

Reaction

Although many companies, especially small businesses welcomed the cuts, many were hoping that the Chancellor would go further. Some had hoped that the 12.5% VAT rate for hospitality businesses would remain – but unfortunately it returned to 20% in April 2022. There was however fresh hope on business rates as Retail, hospitality and leisure relief replaced the retail discount on 1 April 2022.  Eligible business can now receive 50%off your business rates bills for the 2022 to 2023 tax year (1 April 2022 to 31 March 2023) – up to a total value of £110,000 per business.

 

Conclusion

Although much has been done to try and help businesses continue after a difficult couple of years, there were some that hoped more would be done to prevent companies from closing and jobs being lost. It remains to be seen what measures will be applied in the next Budget statement and if businesses will get the help they need in a challenging climate with costs rising fast.

 

 

Accountancy & Accounts, News

Failure to prepare for change will see accountants lose more than just sleep

Only one in ten accountants are confident they can ensure their business grows its value over the next five years, according to new research from IRIS Software Group.  

This comes as legislative burden including Making Tax Digital (MTD) tops the list of things giving accountants sleepless nights, with more than two in five (over 40%) rating it number one. Concerns over hiring and retaining the right talent (25%) and how to best cope with advancing technology (14%) were also high on the list of factors causing accountants stress.  

Yet worryingly, only 25% of respondents felt they have the right technology and tools to support clients with the transition to MTD. Further, nearly two-thirds (59%) of accountancy leaders still do not have answers for how they are going to manage multiple deadlines and workflows within their own practice to support MTD.  

Despite clients finally seeing accountants as trusted business advisors post-pandemic, nearly all (85%) accountants surveyed are unaware how long it would take them to react to changes in their clients’ financial performance. And the overwhelming majority (89%) are also unsure if they could spot opportunities for their clients to grow or pivot their business.  

“It’s plain to see the stress accountants are facing. While there are a myriad of innovative digital tools and services that reduce the admin burden of onboarding clients, tracking job stages, dealing with workflows and handling client approvals and communications, it’s becoming more and more clear that some accountants appear somewhat reticent to adopt them. Where this is true, this sluggish appetite for change is beginning to have a negative impact across their firms, up and down the country. 

“Now is the time to take advantage of automation and real-time access to data, so accountants can create better economies of scale. Crucially, this gives them the time to do what they are truly valued for,” commented Jim Scott, Managing Director of Accountancy, IRIS Software Group. 

The report also found only a third (38%) of firms have a clear understanding of whether their software is being used to its full potential. Further, over three quarters (76%) of firms are unaware of how long it would take them to respond to client demands for additional services or extra work.  

Scott continues, “Digital tools enable a practice to be nimble and give accountants a lens into the clients’ business, further helping them to provide much-needed counsel. Technology will never be able to replace the insight and guidance an accountant can, but with good data, software tools will spot patterns and help accountants advise their clients and grow their own firms.” 

Accountancy & Accounts, Accounts and Accountancy, News, Pensions

‘Pensions are a long-term investment and have time to recover’ Quantum Advisory addresses ICAEW members after global financial markets react to Russian invasion of Ukraine

Experts from pension and investment specialists Quantum Advisory addressed members of the Institute of Chartered Accountants in England and Wales (ICAEW) on the turbulent global investment market and the knock-on effects on UK pensions schemes.

Partner and Actuary, Stuart Price and Senior Investment Consultant and Actuary, Kara Newcombe headlined the free hour-long virtual session which saw Kara focus on how the global financial markets reacted to the Russian invasion of Ukraine and views as to what could happen in the coming months with the ongoing conflict, soaring inflation, and continuing Covid-19 infections. The surge in commodity prices, supply chain disruption and the increase in inflation and gilt yields were also discussed. Stuart covered the increase in gilt yields and the positive impact this is having on defined benefit (DB) pension schemes, and highlighted the advantages of companies implementing salary sacrifice schemes following the rise in National Insurance contributions.

Speaking about the impact of financial markets on UK pensions over the 12 months to 30 April, Stuart said: “Government gilt yields and corporate bond yields are steadily increasing and in the long term, which we are interested in for determining pensions, this looks set to continue. For DB scheme employers, this is very good news as funding levels should improve along with pension obligations on company balance sheets and there’s the possibility of a reduction of employer contributions in the future too.

“For defined contribution (DC) schemes, as pensions are generally a long-term investment, the volatile global markets shouldn’t have too much impact on those in their 20s, 30s, 40s or even 50s, as we often see peaks and troughs and there is time for markets to recover. The current situation could even be a good time to put more money into your DC pension as there may be investment opportunities to take advantage of. The time for concern is when nearing retirement, but for many in this situation there are mechanisms in place to protect them against falls in investment markets.

“With government and corporate bond yields increasing, annuity rates are improving so we could see more people selecting the annuity route at retirement to provide them with an income from their DC pension going forward.

“The key to everything, is employers communicating what is going on to their employees. They need to keep communications simple and provide reassurance and signpost helpful places to get more information. One thing I would say, especially with the recent National Insurance increase, if not already done so, employers should seriously consider a salary sacrifice arrangement for employee pension contributions which means employees and employers make savings on the amount of national insurance that they pay.”

Kara Newcombe

Speaking about current world events and the repercussions of these, Kara said: “The events in Ukraine have had a dramatic impact with far reaching economic consequences and the situation is currently showing no signs of improvement.

“Inflation reached 7% in March and is set to hit 10% by end of this year which has seen the Bank of England (BoE) tighten its monetary policy and shift its focus from supporting growth to controlling inflation. Subsequently, it has begun a new gradual program of quantitative tightening where it will no longer reinvest the proceeds of government bonds when they mature. The BoE will only start selling its remaining gilts when the base rate rises further, depending on economic conditions at the time. Markets are expecting the BoE to be more aggressive with rate rises and there are suggestions of a possible interest rate increase to at least 2% by the end of the year.

“There are some positive points to report with nationwide Covid restrictions lifted and the economy fully opening up which should provide further support to consumer spending and economic growth. The employment rate has also shown signs of recovery. Concerns over the reliability of Russian energy supplies will put further pressure on European governments to transition away from imported fossil fuels and towards domestically-generated renewables over the longer-term.

“Looking ahead, we remain positive on developed equities, as company balance sheets and earnings remain strong and this asset class will be the most sensitive to any form of long-term economic recovery. We also see opportunities in emerging market equities, however, they have tremendous exposure to the ongoing war in Ukraine. The long-term outlook is difficult to assess given the unprecedented situation, so unfortunately, for now, it is a case of watch and wait.”

Quantum Advisory is an independent financial services consultancy that provides solution-based pension and employee benefit services to employers, scheme trustees and members with a focus on tailored and practical advice and support from experienced professionals. For more information, visit www.quantumadvisory.co.uk