All posts by Richard Hallsworth

Will the Chancellor consider OTS calls for changes to VAT registration threshold?

On the 7 November the Office for Tax Simplification (OTS) issued a report on VAT. The report suggested 23 steps that could be taken to make VAT simpler.

 The detail of the report can be found here.

https://www.gov.uk/government/publications/ots-report-on-routes-to-simplification-for-vat-is-published

Whilst these reports get highlighted in the accountancy press it’s unusual for them to be discussed more widely. It has been suggested however, that one recommendation might have been paving the way for an announcement in this tomorrows budget.

Chapter One discusses the benefits of reducing the VAT registration threshold, currently £85,000. This is one of the highest in the world and £65,000 higher than the EU where it is around £20,000. Apart from the c. £1.5bn a reduction might raise for the Treasury it is suggested that the current limit stifles growth.

“…there is clear evidence from academic analysis of HMRC data and from submissions to this review that the high level of the threshold is having a distortionary impact on business growth and activity”

This is because of the belief that small business owners choose to stay below the registration threshold partly to avoid the admin burden that registration causes but also to remain price competitive against others who are not registered. In my experience most of the unregistered small businesses will be the last in the chain, consumer facing. We’re talking of trades, independent retailers, health & beauty and other small consumer services.

Reducing the threshold would therefore either reduce the profits of small businesses that need to register or increase prices for consumers.

I can’t disagree with the conclusion drawn by the OTS as I’ve had conversations with clients about the pros and cons of breaching the threshold. A lower threshold would reduce these conversations and might encourage some business owners grow. It would however add an extra worry and administrative burden for many business owners.

There’s another factor that might encourage the Chancellor to consider reducing the limit. With VAT registered businesses reporting into the Making Tax Digital (MTD) programme from 2019 it would mean an accelerated implementation for many businesses.

It might be a huge amount of hot air but there are some interesting debates to be had and the Chancellor might just start them off on Tomorrow… we will see!


What is a days pay?

I was recently asked the question … “How do I calculate a days pay?”

Apparently an employee had used up their holiday entitlement but had then been offered the opportunity of going to a Test match at the Oval for the day. The employee had asked for this day to be counted as “unpaid leave” and the employer had no objections to this but was confused as to how to calculate a day’s pay.

My immediate thought was to do a simple calculation;

52 weeks in the year multiplied by 5 days per week gives 260 working days, therefore one day of unpaid leave is simply 1/260 x annual salary.

However, before I answered the query I thought it best to do some research, and I found that this calculation was used in Hartley v King Edward V1 College 2017; in this case it was a deduction from pay following a one-day strike.

The Court of Appeal had also used the same 1/260 approach as I had, but I found that the employees involved had appealed this method to the Supreme Court.

The Supreme Court overturned this calculation and held that, in the absence of any express contractual wording to the contrary, the correct rate of deduction is 1/365th of the employee’s annual salary. It also stated that this 1/365th approach does not apply where an employee on an annual contract has a set hourly rate rather than a fixed salary.

For more information about human resources or to discuss a particular employee issue please contact Andrew Tomlinson on 01522 815100.

Head of Human Resource at Nicholsons Chartered Accountants Lincoln HR


Make XERO your library for all finance related files and documents

Since XEROCON 2017 in early Autumn I have been spending a lot of time thinking about “frictionless finance”. How do we use technology to do finance related activities; better, faster and more accurately?

There is a lot of scope to add apps and set your systems and procedures up in an integrated way that will help with this but there are ways that you can work too that will also help you save time.

For me one of the best features in XERO is the ability to store an image of a purchase invoice or other documents actually with the transactional details. Not revolutionary but if used a real time saver. How often do you need to go and look for a purchase invoice, either because you want the supplier details or want to know how much “that” cost?

One question I often get asked when talking to clients about this is “Don’t  I need to keep paper copies for the taxman?” The simple answer to this is no. In the VAT section of the .gov website under record keeping guidance says:

“You can keep VAT records on paper, electronically or as part of a software programme. Records must be accurate, complete and readable.”

https://www.gov.uk/vat-record-keeping

So it seems logical that if you can copy documents and files to transactions and make them available when you need them, then why wouldn’t you?

XERO enables you to attach files to lots of different kinds of transactions such as; invoices, quotes, manual journals, accounts in your chart of accounts and stock items. You can even send attached files to customers with their invoices and you can attach the same file to many transactions.

Files or documents can be uploaded from your computer or other shared location or stored in the file library in XERO. To do this click on the little file icon next to the inbox icon on the header bar.

You can then create folders just as you would on your computer and manage your documents.

Another neat feature allows you to email documents to your file library.  You are allocated a unique email address and can create a V Card to store in your email address list. You could also share the V Card with colleagues making the process of getting emails to XERO; better, faster and more accurate!

For more information about files visit the XERO help centre by clicking on the image below.

If you want to learn more about XERO and how it can help your business please contact either myself or colleague Stephanie Smith on 01522 81 51100.


ATOL protected – what does it mean?

With the collapse of Monarch Airlines the risk of travelling with ATOL protection is very much at the forefront of everyone’s minds. But what does this in fact mean?

Anybody selling qualifying flights or holidays must be ATOL bonded to enable them to trade and sell such products. Annually the Civil Aviation Authority require such businesses to submit their renewal paperwork, and then 2 documents must be reviewed and approved by a qualified Reporting Accountant under the ATOL scheme. 

What does this mean though? There are new financial tests in place that the business must pass to enable them to renew their licence. In many cases Directors and Shareholders are being asked to invest heavily into their company by way of cash injection, confirmation of them leaving funds within the business, or converting their loan accounts into share capital so as to tie it up in the company. This is causing some real headaches for the smaller operators.

The reporting accountant is responsible for ensuring that the systems operated by tour operators are robust enough to capture all the necessary bonded bookings and ensuring that they pay the correct levy over.  The ATOL levy of £2.50 per passenger is what has now enabled thousands of Monarch passengers to claim back their money directly from the Civil Aviation Authority.

The Authorities are relying on the registered accountants to provide them with the assurances as to the accuracy of these operators’ data.

Always be aware of whether your flight is ATOL bonded for your own protection in the event of airline failure. For more information on the scheme visit the CAA website

Nicholsons are registered with ATOL to undertake reporting accountant work. If you require advice around ATOL reporting please contact me on 01522 815100.

 


Audit Manager appointed at Nicholsons

The Directors at Nicholsons are pleased to announce the promotion of Rebecca Betts to Audit Manager. Rebecca is based at the firm’s Lincoln office and is a member of the Audit and Accounts team.

After finishing her GCSE’s, Rebecca attended Lincoln College three days a week to do her AAT exams whilst also working for the NHS on the administration bank for 2 days a week. During this time she completed her AAT levels two and three.

Upon joining Nicholsons in April 2008, she continued with her training and completed her AAT level four before moving up to the next level. Rebecca took her first ACCA exam in December 2014 and took her final exam in March 2017 becoming a fully qualified accountant. Rebecca’s area of expertise is audit, academies and charities although she also has experience in working on accountants and personal tax work.

Commenting on her new role Rebecca said “I am pleased with my promotion and that my work has been recognised. Although I will still take an active role within the accounts team, my time will be prioritised towards helping us meet our auditing deadlines and client expectations.”

Rebecca will work alongside Directors Emma Murray and Jo Brown in managing the audit assignments.

Emma Murray, Head of the Audit and Accounts department, said “We are very pleased to have appointed Rebecca as Audit Manager. The team have helped and supported her over the time she has been with the firm, giving her to opportunity to develop the skills, experience and knowledge she needed to help achieve her goals. All the directors recognise the importance of developing and retaining our employees and our aim is to provide our clients with a consistent and recommendable service, which we are sure Rebecca will continue to do.”

Away from the office Rebecca likes to go travelling as well as shopping and socialising. If you would like to contact Rebecca call 01522 815100 or email Rebecca.betts@nicholsonsca.co.uk.

 


XERO launches new expenses feature?

One of the new features announced at XEROCON was a new expenses tool. It sounded pretty cool, so I was excited to be accepted on to the limited roll out to give it a go.

Luckily I had my London trip receipts to process, perfect. So jumping straight into it I opened the new XERO expenses app and selected the “+” button. By sizing up the receipt in the frame the app highlights it in blue, takes a picture and asks you to confirm you want to submit it.

As I was logged into XERO I selected the new expenses tab under accounts. The expenses screen already showed the items I had submitted with a note saying “processing”. A few minutes later I got a notification on my phone to say one of my expenses needed further info. When I opened it the details were missing of the account that it needed posting to. It was pretty easy to correct, and to add a label. Labels are a sub description. We post all travel costs to one account. The labels tool will help monitor the split between; taxi’s, rail etc. They are customisable too, which is great.

Now in XERO they can be reviewed, approved and paid.

This new feature really does look good. I processed around 15 invoices in 3-4 minutes and that was opening the app for the first time and checking what they looked like in XERO.

I’m confident that XERO expenses will be pretty easy to roll out across the business and with the ability to add other people’s expenses there shouldn’t be too much resistance. Once in we can approve & process them quickly and efficiently.

I’m also sure that I’ll capture more of my expenses as I’ll snap and submit, there and then. I can’t wait to try it next week when I meet my tech networking group.

Richard Hallsworth Lincoln Accountant and Business Adviser LinkedIn

 

 

 

 


LCFC – the season so far…

It has been a season of much anticipation, with the recent release of the DVD ‘Impossible Is Just An Opinion’ Lincoln City’s unbelievable achievements are still fresh in the minds of the fans.

Whilst the team at Nicholsons’ welcomed popular goalkeeper Paul Farman to the office with the National League trophy; the sale of season tickets were almost reaching 6,000. Team Nicholsons’ look forward to the season, ready to attend both home and away games.

New players arrived for the start of the season including former Peterborough ‘player of the season’ Michael Bostwick and the former loanee, Harry Anderson. Defender, Sean Raggett, was sold to Norwich and has been loaned back to Lincoln City until January. Hopefully the loss of a number of last years’ players, including Captain Alan Power and two goal Macclesfield hero Terry Hawkridge, will not hinder the team. The player’s pre-season warm up included a sponsored warm weather trip to Portugal and a game against Benfica.

The fixtures were out and the first match back in the Football league was a trip to Wycombe. With a hard fought 2-2 draw followed by a narrow 2-1 defeat at Rotherham set the team up for their first home match against Morecambe – despite chances aplenty, it finished 1-1. This was followed by a disappointing loss at Exeter, a home win against Carlisle, was a must – the 4-1 result was followed by another good performance against Luton (0-0). With 2 away games – Stevenage 1-0 down with 10 men and half an hour to play, the mighty imps turned it around winning 2-1 and with a 1-0 victory over Forest Green on Tuesday they were up to 5th.

Three local derbies followed, firstly a disappointing 1-0 home loss to Mansfield. Closely followed by a 4-1 away defeat to Notts County, a result that didn’t do Cowley’s team justice, as they were the stronger side until Billy Knott was controversially sent off at 0-0 after half an hour. This game was watched by over 4,000 imps fans, an unbelievable figure considering the average home gate was only around 2,500 2 years ago!

A 2-1 home win v Barnet and a 0-0 away Lincolnshire derby draw against Grimsby put the team in a mid-table position – a pretty good start to life in the football league having played a number of the more favourable teams.