Interesting News

News Bulletins

October 2011 - E-NEWS

Please browse through this month’s articles using the links below and contact us if any issues or questions arise.

• Keeping on top of your debtors
• Three-fold increase in tax scam emails
• New stand-alone business angel seed investment scheme (BASIS)
• Company car changes
• Advisory fuel rates for company cars

Keeping on top of your debtors

When businesses run into cash flow difficulties, delaying payments to suppliers can become a problem. Make sure you keep on top of your debtors and your cashflow by implementing a debt collection policy.

An example of a typical debt collection policy:

If your terms state that payment must be received 30 days after invoicing, you should:

• Invoice at the earliest opportunity, stating the payment terms clearly on the invoice
• 15 days after invoicing, telephone the customer. Thank them for their business and ask if they are satisfied with your work or product
• if no payment has been received after 30 days, send a reminder and call the customer to inform them that you are initiating collection efforts.
• Telephone the customer every two or three days. Slow paying debtors rely on the negligence of their creditors. Continual calling will let them know you are aware of the debt and show them that you are willing to take action.
• If there is a query or payment problem, arrange a new settlement date by telephone. Confirm this date in writing and state clearly that if payment is not made by this date, the matter will be referred to either:
• A debt collection agency
• A firm of solicitors, or
• The county court small claims department
• If the debt is still due after this, keep your word and take action.

Top of page

Three-fold increase in tax scam emails

HM Revenue and Customs say the number of scam “phishing” emails has increased by more than 300% over the past year.
The figure comes in the lights of HMRC’s warning about the scam emails which aim to steal individuals’ bank account details.
The scam messages inform the recipient that they are due a tax rebate and provide a link to a replica of the HMRC website. Visitors are then asked to enter their credit card details which are used to attempt to take funds from their accounts.
According to HMRC, almost 24,000 “phishing” emails were sent in August this year, a three-fold increase from 2010.
The agency is currently shutting down 100 scam websites a month.
Joan Wood, Director of HMRC Online and Digital, said: “We only ever contact customers who are due a tax refund in writing by post. We currently don’t use telephone calls, emails or external companies in these circumstances. If anyone receives an email claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.

“The increase in reports is partly due to improved awareness of this scam. However, I have no doubt that more of these “phishing” emails are in general circulation than ever before.
“HMRC will do everything possible to ensure those receiving this email know what steps to take to protect their information, and we are working closely with other law enforcement agencies to target the criminals behind this serious crime and see them brought to justice.”
LINK -Reports to HMRC of fraudulent emails soar

Top of page

New stand-alone business angel seed investment scheme (BASIS)

Building on the new tax breaks covered in last month’s Tax E-News, there is an exciting new opportunity which is scheduled to start next tax year.

BASIS is based on the existing Enterprise Investment Scheme (EIS) but is more narrowly targeted at the seed level and to business angels.

The possible structure is up for consultation, but there are plenty of valuable tax breaks associated with an investment under BASIS, and it should also be a useful additional source of new finance. It is likely to involve the following:

1. More flexibility around the use of debt instruments, whereas EIS covers subscriptions for shares only.
2. Rather than based on company size, number of employees and gross assets, as with EIS, the new scheme may enable a more accurate target for investor and company by way of identifying characteristics of an angel investor and seed-stage company.
3. BASIS relief could be available only where the company is in pre-trading stage and intending to use the funds raised to develop business concepts. There may also be a restriction in the definition of a business angel entitled to the new relief as that may require that person to have invested in at least 4 seed stage companies, so as to demonstrate valuable experience and at the same time have a record of previous EIS investment.

At this stage it is well worth flagging this up for you to consider in detail when the exact rules are known which is not the case yet – for example we do not yet know the rate of tax relief under BASIS but this likely to be more than the 30% applying to an EIS investment given that BASIS has a higher risk profile. We will be pleased to discuss this with you as a prospective investor or where you have a business idea you wish to develop and need to look at all possible sources of finance.

Top of page

Company car changes

The income tax charge on the valuable benefit of having a company car available for your private use is often changed, so as to encourage car makers and drivers to lower CO2 emissions. Plenty of notice is usually given of each change, given that naturally it is not realistic to expect anyone to be able to change the company car without a good deal of lead time.

Here is what is happening over the next few tax years, and don’t forget that diesel cars face a 3% supplement on the tax charge which is not planned to change.

• The level of CO2 emissions qualifying for the basic minimum income tax charge of 15% of the car’s list price is currently 125 g/km for 2011/12 and there is a special lower charge of 10% of list price where CO2 emissions do not exceed 120 g/km. All that changes from 2012/13 with a new emissions scale starting at 10% for 76 to 99 g/km, rising by 1% per 5g/km to the usual maximum of 35%. So in 2012/13 if you have a company car with CO2 emissions of 120 to 124 g/km you will face a tax charge on 15% of list price instead of 10%. That’s a 50% increase in your tax bill!
• From 2013/14 the taxable benefit % increases by 1% for a car with CO2 emissions of at least 95 g/km, but at the moment the plan is to keep the top tax charge on 35% of list price. The latter applies where CO2 emissions are at least 220 g/km, so essentially the 1% hike covers cars of between 95 and 219 g/km.

All this means it is essential to review your company car – whether as user or provider- and we are ready to advise you fully of the position in your circumstances or those of your employer, plus how to minimise the tax charge over the next few years.

Top of page

Advisory fuel rates for company cars

Published guidelines are issued by HMRC. The stated aim is to save time for all concerned by setting out figures which they reckon can be used in the majority of cases

They are only advisory, and can apply where the employer reimburses the employee for fuel for business travel in a company car or where the employer requires the employee to repay the cost of fuel for private travel in a company car.

They used to be reviewed every 6 months, but more frequently at HMRC’s consideration if fuel prices fluctuated by 5% from the current rate and that was likely to be sustained. However, that arrangement has changed and the rate per mile is simply reviewed four times a year instead – on 1 March, 1 June, 1 September and 1 December. The rates from 1 September 2011 are as follows, and although they are basically the same as applied from 1 June there is a subtle (and somewhat sneaky) change to diesel powered cars as the advisory rate has been reduced where the engine size is between 1,401 cc and 1,600 cc.

engine size	fuel cost per mile
	petrol	diesel	LPG
to 1,400 cc	15p		11p
to 1,600 cc		12p
1,401 to 2,000 cc	18p		13p
1,601 to 2,000 cc		15p
Over 2,000 cc	26p	18p	18p

Top of page