The charity collapsed in December leaving a reported 50 charities bereft of  outsourced services ranging from payroll and bookeeping to full finance function. 

Other reports talk of  another 150 charity clients without payroll services and there are also worrying reports about potentially unhealthy connections between one of the non-executive directors of Charity Business and one of its largest former clients. 

We at Westbury, with considerable expertise in the charity sector and with several of our team acting as Trustees for a number of charities, were well aware of Charity Business and indeed some of our charity clients had used their services.  We are in a position to pick up the pieces and are happy to lend a hand, in whatever form it takes, to former CB clients.  We offer fully outsourced payroll to hundreds of organisations and can also offer day-to-day bookkeeping, management reporting, VAT, and full statutory annual accounting . 

Whatever the charity’s needs the team at Westbury have the expertise and capacity to help. 

So if there are charities out there floundering, they should call Keith Graham on 020 7553 7122 or e-mail keithg@westbury.co.uk.

Ever since it came into being the Financial Services Authority, and indeed the Financial Services Act have proved to be a huge bureaucratic constraint on business.  Instead of really getting to grips with and concerning themselves with regulating the things that matter in our economy, the bureaucrats at the FSA concentrated on bringing in regulation (have a read of the Financial Services Act – I am not sure what language it is in but it certainly is not English!) which served to put many smaller financial advisers out of business.  Meanwhile, the banks ran riot.   Turner blamed light-handed regulation for a lot of our economic woes.  But in truth it is more a case of – as usual in this country - well-meaning but misguided legislation which uses a sledgehammer to crack a nut and which hits the easy target – the smaller business- whilst not really addressing the important issues.

Requests for refunds will continue to be dealt with by the member state of refund, in accordance with whose rules the repayment will be computed.  The repayment will be made directly to the business under the new system, which is an electronic one, with specified timescales and interest payable if these are not met.

The electronic claims will be completed and submitted via the competent authorities in the member state in which the claimant is established (the member state of establishment).  The applicant must be a taxable person established in a member state other than the member state of refund and must meet the following conditions:  

• The applicant must not be registered, liable or eligible to be registered in the member state from which they are claiming the refund.
• The applicant must have no fixed establishment, seat of economic activity, place of business or other residence there.
• During the refund period the applicant must not, in general terms, have supplied any goods or services in the member state of refund (there are exceptions).

Basic registration checks will be carried out by the member state of establishment before the application is forwarded electronically to the member state from which the refund is being claimed.  The member state of establishment will not forward the application to the member state of refund where during the period of refund any of the following apply: 

• The applicant is not a taxable person for VAT purposes.
• The applicant makes only exempt supplies.
• The applicant is covered by the exemption for small enterprises.
• The applicant is operating the flat–rate scheme for farmers.

Westbury Accountants & Business Advisors.  For more news, views and opinion, visit http://www.westbury.co.uk/.

Late tax returns

HMRC will still charge a penalty of £100 if a return is late and we may still appeal against the penalty if we have a reasonable excuse.

At the moment the amount of this penalty is ‘capped’ so the penalty can’t be more than the amount of tax unpaid at 31 January. This capping applies to tax returns for individuals, trust and registered pension schemes tax returns. It doesn’t apply to late partnership tax returns.

When the new penalties are introduced, no penalties will be capped so the full penalty of £100 will always be due if a tax return is late.  If the 2010/2011 tax return is excessively late, the following penalties can also be charged:

• Over three months late – a daily penalty of £10 per day for the next 90 days 
• Over six months late – an additional £300 or five per cent of the tax due if this is higher
• Over twelve months late – a further £300 or a further five per cent of the tax due if this is higher

Late payment

The first two late payment penalties will be similar to existing penalties, so from January 2012 HMRC will charge the following penalties if tax is paid late:

• a 5 per cent penalty on tax unpaid on 31 January, if still unpaid 30 days later
• a second 5 per cent penalty, on tax unpaid on 31 January, if still unpaid six months later

In addition there will be a third 5 per cent penalty, if you haven’t paid tax due on 31 January twelve months later. This will apply from January 2012.

The above penalties are in addition to charging interest from the date the tax was due until payment is received.

Unfortunately, the rules have been drafted in response to a perceived abuse of the tax system which does not necessarily exist in reality.  Not only are they widely regarded as unfair in principle, they are often extremely difficult for HMRC to enforce in practice.  An organization called the Professional Contractors Group (now just PCG) was set up in 1999 specifically to oppose its implementation and since then has represented its members in 1,494 cases, of which HMRC have won just 8.  This, coupled with the consequent low revenue yield, has led to considerable criticism and the new Office for Tax Simplification is currently conducting a wide-ranging review of the taxation of small businesses, including IR35.  However, even if the rules are to be repealed, and it is by no means certain that they are, it would certainly be foolish to disregard them in the interim, particularly with HMRC apparently on the warpath.

What is essential in any IR35 case is to determine whether or not a freelance worker, working for a client through an intermediary, would be treated as an employee of that client were it not for the insertion of the intermediary in the contractual arrangements between the parties.  This requires a thorough review of the contracts to determine the circumstances of each particular case and, in the absence of any statutory definitions of employment, the application of a considerable body of case law.  This is a notoriously grey area of taxation and has created considerable uncertainty for many small businesses and professional advice should be sought if there is thought to be any exposure to HMRC attack.  The IR35 rules are draconian in nature and make very little allowance for commercial reality and their potential impact on a business is not to be underestimated.  Please call your contact partner if you have any concerns with these issues.

 It was therefore very interesting to hear a fund manager on Radio 4 yesterday (11th January 2011) bizarrely comparing bankers and their bonuses to professional footballers.  The implication was that bankers, particularly those at the top of their profession, are just as important as the equivalent football player.  The Times leader article of the same date, actually takes the same argument, but aggressively rebuts it.   The leader argues that the amount top professional footballers get paid is justified by virtue of the uniqueness of their special talent and suggests that bankers are undeserving by comparison. 

The Times leader goes further and, as with much of the media, questions the whole issue of the appropriateness of bankers receiving bonuses whilst so many millions of people around the country are facing difficult times. 

The government, having shouted from the rooftops as to how it was going to “bash the banks” (which culminated with David Cameron appearing on the Andrew Marr show last Sunday reinforcing this view), have performed a staggering, but largely predictable U-turn and effectively given in on the whole issue.  

Whatever the reason, bankers are going to get their bonuses. Even the RBS, where we, the British public own almost 90% of the shares, staff are going to receive eye-watering sums, albeit by a mixture of cash and shares. 

Explaining the morality and the equity of this whole issue to the man in the street is difficult.  He understands why premiership footballers earn so much money, and he also understands how short their career is and how quickly they can fall out of favour.  What he can’t understand is how the very same banks, who apparently got us into this financial mess, should be paying their employees so much money, whilst the rest of us are still victims of the mess they created. 

The cynics amongst us, and I have to admit to being one, never expected anything other than the situation we have reached. This government was very unlikely to stand up to the banks and it is not clear what, in reality, they could have done, although some restraint could have been imposed. 

In truth, the heading of this post suggests a close thing.  In reality, the bankers have bashed us all by a considerably greater margin.

1.         They have abandoned their enterprise Czar and

2.         They have a small business economic forum that manages to meet for a whole hour and a half in October and then releases no further information about its activities and refuses to release the minutes.

3.         Furthermore, and as worrying, they have a small business economic forum that has virtually no representatives from small business, yet the agenda for the meeting talks about “agreement of terms of reference and agenda suggestions for the next meeting and for ongoing work programmes”.

The millions of small businesses up and down the land must be absolutely ecstatic and excited to know that a small business forum, set up in their name, with representatives with no knowledge of small business, is establishing terms of reference and agreeing an action plan and of course not telling anyone what the hell’s going on.

I have now received a 4-page reply from the Director of Enterprise at the Business Innovation & Skills Department explaining why the minutes cannot be released to me.

This is a government who have made it clear that they are committed to supporting the small business community yet here are some of the reasons given as to why the minutes of this meeting cannot be released:-

• “….releasing this information would break that confidence and discourage companies from speaking to government in the future….” 
• “…..disclosure of the information to the public would constitute an actionable breach of confidence….” 
• “…. It believes would be likely to prejudice commercial interest….  Entrepreneurs and businesses speak freely at the forum about their business experience…” 
• “…. my assessment that full disclosure of the minutes of the meeting would be likely to damage company’s commercial positions…..  I consider that the public interest in the disclosure is outweighed by the necessity to protect the commercial interest of 3^rd parties and therefore the information should be withheld….” 

They did agree very kindly (!) to let me see the agenda of the meeting which by all accounts only lasted for an hour and a half.  Of this hour and a half, 10 minutes were allocated for welcome and introductions, (I believe there were more than 20 people present), 10 minutes were allowed for a short update on the comprehensive spending review, 5 minutes allowed for any other business and 10 minutes for information relating to the next meeting and future work programmes.

There was also a whole 10 minutes to cover the terms of reference for the forum.

The main section of the meeting covered 20 minutes for a finance green paper which was entitled “An update on the priorities identified and work on the government response”.  (whatever does that mean) and 25 minutes on a presentation of the BBA task force recommendations and discussion of member’s initial views? 

So this is the new level of transparency that we are able to expect.  An agenda that seems to cover nothing and written in ministerial code resulting in meeting minutes that are secret.

Lord Sugar looking unimpressed

Since it started in 2005, I’ve been a committed viewer of The Apprentice. Critics argue that the programme has somewhat lost its way in recent years, that the ‘candidates’ are there for the media exposure rather than the job itself. When I think about who I would have hired out of this year’s candidates I tend to agree.

Anyone who watched this year’s series will have cringed as much as I did when Joanna Riley failed to name the companies owned by Lord Sugar, let alone explain the nature of his business. Her ignorance was exposed during the interviews episode: a highly grueling, highly entertaining stage of the process, accordingly saved for the climactic semi-final. I don’t know of many organizations that would leave it to the penultimate stage of a lengthy application process to clarify a candidate’s knowledge of their business. Then again, there’s no business like show-business. With fifteen minutes of fame guaranteed, are any of them genuinely interested in the job they’re applying for?

To be fair, I was impressed by both finalists in this year’s series. With his monotone voice and dull delivery, it would be difficult to accuse Chris Bates of entering the process with hopes of being the next big TV personality. Unlike Stuart Baggs, he never made big claims about what he could achieve, but spoke frankly when confronted in the boardroom. Like Jamie Lester, he demonstrated some excellent business decisions, but avoided countering these with business blunders. Likewise, Stella English outshone her opponents. Her management skills stood out in the second episode, where she effortlessly led a team of egotistical men to success, and she continued to impress throughout.

Of the two, Stella would also have been my winner – her consistency, determination, and business experience far outweighed Chris’ reliance on his academic record. Where Joanna failed at the interview stage, Stella emphasized that she was there for the job alone.  Stella joins Lord Sugar’s organization as the only current employee recruited via The Apprentice. None of the previous winners remain, most having left to pursue other careers, some even in TV.

For all its scripted lines and careful editing, I maintain that The Apprentice makes great television. Whether it’s an effective method of recruiting committed employees remains to be seen.