Originally written by Timothy Adler on Small Business
Small business are currently chasing more than £50bn of late payments, according to research.
Digital banking platform Tide revealed that the average UK SME is chasing five outstanding invoices at any one time, using up an astonishing 1.5 hours a day, with an average of £8,500 being owed.
If you are self-employed and working alone, you have an average of four outstanding invoices at any one time, amounting to almost £1,000.
And businesses with anything between 10 and 50 employees have an average of eight invoices outstanding, racking up £13,000 being owed on average.
Businesses in London have the toughest time in terms of late payments, with SMEs in the capital having an average of seven invoices outstanding, spending over two hours a day chasing.
London is closely followed by Scotland, with businesses there having an average of six unpaid invoices, eating up an hour and a quarter each day chasing.
The South West has the easiest time of it, with businesses there waiting on just three invoices to be paid.
Getting worse
The late payments crisis appears to be getting worse with a quarter of SMEs reporting things are worse than a year ago. Although the government pledged to clamp
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Freelancers call government 6-week review into IR35 ‘an insult’
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Freelancers have called the government’s six-week review into IR35 tax changes “an insult” and claim HMRC is intent on bulldozing its controversial reforms come what may.
HMRC wants to bring thousands of freelance contractors who are effectively full-time employees within PAYE to tackle what the taxman sees is “disguised employment”. Responsibility for assessing the tax status of self-employed contractors is due to shift from the contractor to the company that hires them.
IR35 legislation, which has been heavily criticised by tax experts and business as being poorly conceived, badly implemented by HMRC and could reduce a worker’s net income by up to 25 per cent, is set to roll out on 6 April 2020.
>See also: Over half of self-employed don’t even know what IR35 is
However, the Federation of Small Businesses says that big corporations say they’ll pull the plug on contractors if IR35 goes ahead unchanged.
Today (Jan 7) the government launched its review into off-payroll working rules, gathering evidence from affected individuals and businesses, which it says will be completed by mid-February.
Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA), said: “This seems to be another meaningless review from a government who
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Over half of self-employed don’t even know what IR35 is
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Over half of the self-employed in Britain don’t know what IR35 is, despite being the people being most affected by it, according to research.
HMRC wants to bring thousands of freelance contractors who are effectively full-time employees within PAYE, in an effort to tackle what the taxman sees is “disguised employment”. Responsibility for assessing the tax status of self-employed contractors is due to shift from the contractor to the company that hires them.
The legislation, which has been heavily criticised by tax experts and business as being poorly conceived, badly implemented by HMRC and could reduce a worker’s net income by up to 25 per cent, is set to roll out in April 2020.
Accounting software provider FreeAgent surveyed 2,000 self-employed workers about small business taxation.
>See also: Small businesses call for HMRC to delay IR35 tax change
IR35 review
The Conservatives, Labour, the Liberal Democrats and Scottish National Party (SNP) have all pledged to review IR35 – although only the Lib Dems and SNP explicitly committed to a review in their manifesto.
Shadow small business minister Bill Esterson went further, announcing Labour would scrap IR35 being extended to the private sector before backtracking.
At the weekend, Chancellor Sajid Javid confirmed
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Ex-small business commissioner blames Whitehall for pushing him out
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Paul Uppal, the ex-small business commissioner, has blamed Whitehall for pushing him out of a role which, he says, is under-resourced and ignored by government.
Uppal, who was appointed late payment watchdog in 2016, has told The Times that his office was met with “radio silence” from civil servants and ministers over his approach to the job and that his budget was too small to tackle the “huge task” of getting big companies to pay small businesses on time.
>See also: Small Business Commissioner Q&A: Paul Uppal talks about late payments
The former late payment tzar left in October after a disagreement over an alleged conflict of interest related to an unpaid, interim advisory role in another government-backed small business scheme.
Uppal expressed his “shock” and “hurt” at how the Department of Business, Energy and Industrial Strategy handled the issue.
Chancellor Sajid Javid said last week that a successor to Uppal would be found quickly and that the role would be given more teeth.
>See also: How to tackle late payments to your small business
Uppal says that his successor would need more financial and strategic support from government. His last face-to-face meeting with a Whitehall official was back in
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Accountants alarmed by schoolboy howler in Labour manifesto for SMEs
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Accountants have raised their eyebrows at an unforced schoolboy howler in Labour’s manifesto, which the party has hurriedly gone in and fixed.
Labour has announced plans to increase corporation tax to 26 per cent for businesses, compared with today’s rate of 19 per cent.
Within this, Labour originally proposed that small businesses would pay corporation tax at a lower rate of 21pc if their turnover is over £300,000.
If kept in, this would have created an anomaly where a small business making a tiny profit on turnover of £300,000 would pay corporation tax, while a competitor making a fat profit on much lower turnover would escape tax.
However, after realising they had muddled up turnover and profit, Labour has since published a revised document outlining its plan to reintroduce a small profits rate for firms with profits greater than £300,000.
>See also: Sajid Javid warns Labour will extend inheritance tax to family businesses
Robert Salter, director at Blick Rothenberg, the accounting and tax advisory company, told The Times: “One must worry whether the initial communication in this regard indicates a potential lack of awareness about businesses and the difference between turnover and profit.”
Tim Walford-Fitzgerald, a tax partner at the
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Sajid Javid warns Labour will extend inheritance tax to family businesses
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Chancellor Sajid Javid has warned that Labour plans to stop sons and daughters from inheriting family businesses by charging them inheritance tax.
Currently, family businesses are exempt from 40 per cent inheritance tax when a business is handed down to a family member following the death of the owner.
Labour plans to increase personal inheritance tax; currently, parents can leave property worth up to £325,000 before inheritance tax kicks in.
Sajid Javid said: “Labour has said they’re against the principle of inheritance, that’s why they’re changing inheritance tax for individuals, that’s why they’ve cut the allowance. They have also said they’re going to review taxes – and when they use code words like review, that’s the tax that’s they’re most certainly going to hit.”
>See also: Labour pledges to scrap IR35 rollout to business … and then backtracks
Javid was speaking at a hustings organised by the Federation of Small Businesses (FSB) this week, alongside shadow chancellor John McDonnell and Liberal Democrats deputy leader Ed Davey.
McDonnell, putting his head in his hands, shook his head and repeated, “We’re not.”
However, McDonnell, giving his usual avuncular performance, was frank about Britain needing to pay for investment in infrastructure and society
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Labour pledges to scrap IR35 rollout to business … and then backtracks
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Bill Esterson, the shadow small business minister, spoke out of turn this week when he pledged Labour would stop the rollout of IR35 tax changes to business.
Speaking on Monday night, Esterson pledged at a small business hustings in the City of London that Labour would scrap IR35 being extended to the private sector, despite there being nothing about it in Labour’s manifesto.
“We absolutely can’t see it rolled out into the private sector the way things are at the moment,” Esterson told the hustings.
“It should never have been implemented in one go.”
Asked later to confirm if it was Labour Party policy to review IR35 and not rollout changes out to the private sector in April 2020, he tweeted: “absolutely”.
>See also: Labour small business minister: ‘Boris just says whatever pops into his head’
However, that tweet was subsequently deleted:
Esterson told Small Business that Labour policy was now to review IR35 changes before they come into effect.
IR35 will draw sole traders and freelance contractors into the tractor beam of IR35, which HMRC sees at tax avoidance when freelance contractors are effectively permanent.
Liberal Democrat deputy leader Sir Ed Davey was the big winner at the City hustings, organised
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Sajid Javid cools talk of raising national insurance threshold to £12,500
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Chancellor Sajid Javid has managed expectations about the Government lifting the national insurance threshold to £12,500 if it wins the election.
Blindsided by a question from a factory worker in Teeside as to whether tax cuts were for the rich, an apparently stung Boris Johnson blurted out that his government would be “cutting national insurance up to £12,000”.
Johnson said: “If you look at what we’re doing, and what I said in the last few days, we’re going to be cutting national insurance up to £12,000, making sure we cut business rates for small businesses, we are cutting tax for working people.”
>See also: Boris Johnson offers small firms nearly £500m worth of tax cuts
However, Javid told Sky News that the plan to raise the NI payment threshold to £12,500 is an “ambition” which will “not necessarily” be reached in the next parliament.
NICs are taken from workers’ salaries and used to fund the NHS, benefits and the state pension. Workers are charged 12pc on earnings between £8,628 and £50,000.
If re-elected the Conservatives would definitely raise the threshold for millions of small business workers for them to only start NI at £9,500 next year, compared with £8,632
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Claiming mobile phone expenses as part of your business
by Adam Wayland • • 0 Comments
Originally written by Adam Wayland on Small Business
You do not say whether the business in question is a limited company or a sole trader or partnership. It makes a difference.
If the business is not a limited company only the business proportion can be claimed, so you will have to keep a record of business calls to justify a claim if the Revenue challenges your figures.
A typical solution for the sole trader wanting to claim mobile phone expenses is to take three to four months’ worth of bills, analyse the calls, and then work out the ratio of personal versus business related. You can then apply this ratio as a percentage of your phone bills for the rest of the year. You may find it useful to review the ratio on an annual basis.
If you are VAT registered, you need to include the VAT only on the business portion of your calls.
For Limited companies, everything depends on the type of mobile phone contract
If the mobile phone (or sim card) is registered in a company name, all the costs can be claimed. The main proviso is that ‘personal use’ must be ‘reasonable and not excessive’. The hardware (the phone itself) counts
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6 top tips to prepare for IR35 tax changes – Small Business checklist
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Nearly three-quarters of businesses are completely unaware of IR35 tax changes coming into effect this April.
From April 2020, company employers will have to decide whether freelance contractors are truly freelance or whether they are on open-ended contracts, saving employers money but which HMRC sees as tax and national insurance avoidance.
HMRC wants to crack down on freelance contractors with full-time positions in businesses, which it sees as abusing the system.
>See also: How to wind up your personal service company ahead of IR35 legislation
Seventy-one per cent of businesses surveyed by consultancy Sullivan & Stanley are unaware of the IR35 changes coming into effect on April 6 2020.
More than half of businesses surveyed (54pc) say they haven’t received enough information and 52pc say it’s contradictory or confusing.
Fewer than four in 10 firms (37pc) say they’ll have a strategy in place to cope with IR35 by the time changes kick in.
One fifth say they expect to be ready up to three months after IR35 is enforced, 32pc say four to six months after the change date, and nearly one in 10 (9pc) think it will take them anything between seven to 11 months beyond April 2020 to