Charities praise change on building VAT

Charities have praised HM Revenue & Customs for cancelling a proposed rule change that would see them pay VAT on big building projects.

A new interpretation of VAT rules would have seen charities liable for significant extra costs in many building schemes.

HMRC wanted to change the rules for Design and Build contracts, which would mean charities having to pay VAT on fees for architects and other design professionals even where they formed part of a wider ‘composite’ supply of services in the course of construction on which VAT would not normally be paid.

See link for further information - and if you would like any further advice on this, or any subject pertinet to Charities or Academy status schools please contact me on 0845 27 66 555 or email me at emma.murray@nicholsonsca.co.uk

http://www.accountancymagazine.com/croner/jsp/Editorial.do?channelId=-305535&contentId=1927823&ito=newswire&Failed_Reason=No+BVCookie+present+to+retrieve+the+session.&Failed_Page=%2fjsp%2fEditorial.do&BV_UseBVCookie=No

Countdown to the Rugby World Cup

Following the warm up games on Saturday, I for one am looking forward to the start of the Rugby World Cup in September!

However, as with all popular sporting events, there is always the issue of maintaining productivity and keeping team members engaged during this exciting sporting event.

Guidance on the Business Link website says that with the event kicking off on 9 September 2011, employers may be wondering how to manage an increase in annual leave requests, sickness absence and poor performance.

Acas also points out that ‘staying flexible’ will help to maintain productivity and keep employees engaged.  And it’s at times like this that I celebrate the fact that Nicholsons operate a ‘Flexitime’ system.  After going through the initial consultation period, our system was relatively easy to integrate into the business and in my opinion the benefits of operating such a system are endless – employee morale increased almost overnight!

If anyone out there is interested in hearing how ‘flexitime’ can prove to be a win-win for both employee and employer, just give Jeannine a call on 01522 815144.

Looking forward to some sun........

Love it or hate it the tangible benefits of networking have been extolled the world over.  So I am looking forward to attending the Lincolnshire Chamber Networking BBQ on Thursday 18 August 2011 at The Lincoln Hotel between 12-2.

There are normally over 70 local businesses to network with and the relaxed and friendly atmosphere means you have the opportunity to chat to people informally and make some great contacts!

Nicholsons are sponsoring the event for the 6^th year running – so you will get to hear a bit more from us, and if you aren’t a Chamber member, don’t worry, I have secured all our clients and friends a discount of over 40% - as you can come at the member rate of only £17.50.

If you’re interested in hearing more, or booking a place, simply contact my colleague Jeannine on 01522 815144 or email her at jeannine.thornley@nicholsonsca.co.uk - and she will pass your details on to ensure you get the correct discounted rate.

I look forward to seeing you there!

Competition is fierce in the rental market

A couple of weeks ago a friend of mine decided to rent his house out, privately, and even I was surprised at the speed in which he got a tenant.  Having advertised the property in the local paper, by close of play that very same day, the house was rented, with the full deposit already produced!

So it’s with interest that I read the research commissioned by flat-sharing website EasyRoomate, which indicates that an average of four tenants are competing for each room available to rent in the UK. In some places, this figure is more than 13.

The demand for rental properties is being blamed on the reluctance of lenders to grant mortgages to first-time buyers.

The research follows the publication of figures from the Council of Mortgage Lenders (CML) showing 15,900 loans were granted to first-time buyers in May 2011 – a 2.5 per cent drop from last year’s figure and well below figures from 2006 and 2007 when the housing market peaked.

According to the CML, first-time buyers are now borrowing an average of 80 per cent of a property’s value, with just three per cent taking an interest-only mortgage to help them get a foot on the property ladder, compared to 30 per cent before 2008.

Analysts say that while lending levels in general are slowly heading in the right direction, first-time buyers are still experiencing difficulty obtaining a mortgage.

In my opinion, this ‘rental boom’ is set to continue as a reluctance to lend, coupled with an understandable nervousness around borrowing, means property sales will remain slow for the foreseeable future.

BT launch new website as an alternative to JustGiving

Having been involved with a number of fundraising activities for charity, it is with interest that I read Telecoms operator BT has launched its own online giving service, with the promise that 100% of every donation will go to its intended charity.

BT, which is going up against long established companies such as JustGiving with its MyDonate project, says it will not charge charities or donors subscription or set up fees, or any commission.  Instead, it will absorb the cost of running the website as a key part of its corporate charitable programme, with the only charges being handling fees levied by credit and debit card companies, as well as PayPal.

Charities are able to receive Gift Aid from UK taxpayers who donate through the website.  The site also enables fund-raisers to customise their own pages to reflect the event they are organising or taking part in.

BT has worked with charities such as Cancer Research UK and the NSPCC to develop MyDonate, which is designed to be inclusive to all UK registered charities and increase the number of donations made online.

In my opinion this is great news for all UK based charities as I for one like to know how much of my donation is actually getting to the charity, and what it was used for.

Go green or you can’t rent your property

Landlords who do not refurbish energy-inefficient properties could find themselves prevented from renting them out, according to proposals which form part of the Government’s Energy Bill.

In a proposed amendment to the bill, landlords would be prevented from renting out homes that came under the two worst bands of energy efficiency – F and G.

If the bill goes through, landlords of the estimated 680,000 rented homes in the UK which fall under those two bands will have until 2018 to refurbish them or they will be forced to take them off the market.

This figure accounts for about a fifth of the total private rented properties.

From 2016, landlords will also be unable to refuse any ‘reasonable’ request to make energy efficient improvements to their properties.

These improvements can be financed through loans taken out under the Government’s ‘green deal’ scheme, where the loan is paid off in instalments on the property’s energy bills. The Government’s Department of Energy and Climate Change says the costs of the loan should be outweighed by the savings as less energy is used.

Governors role changes as schools take Academy status

As more and more schools look to achieve Academy status, time should be taken to explain to the Governors the fundamental change to their role.  The role of Governor will be more like a Trustee or a Non-executive Director of a Company – and with that comes a certain amount of additional responsibility.  Although the financial liability of the individual Governors may be limited, the strategic responsibilities and overall governance of the School will most certainly increase.

In a nutshell, it is the duty of the Governor to promote the success of the Academy – therefore each Governor needs to have in mind the long term consequences of the decisions made, interests of the employees, impact on community and environment and the desirability to maintain a reputation for high business standards.  As you will see, in most cases, this covers a much wider corporate responsibility than before.

A Non-executive director (NED, also NXD) or outside director is a member of the Board of Directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way.

Strategy: Challenge and contribute to the development of strategy.

Performance: Scrutinise the performance of management in meeting agreed goals and objectives and monitoring,

Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.

People: Non-executive directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, senior management and in succession planning.

They are not involved in the day-to-day running of business but monitor the executive activity and contribute to the development of strategy.

If you would like further clarification around the roles and responsibilities of a Governor / Non-executive Director then please do not hesitate to contact my colleague Jeannine on 0845 27 66 555.  At Nicholsons we are committed to ensuring the longevity and success of the education sector in the Lincolnshire area.

The exchange rate gamble

Lincolnshire is one of the most rural counties in the UK, so it was with interest that I read a recent report from specialist currency broker Currencies.co.uk which claimed that many farmers are not protecting themselves properly against foreign exchange movements, leaving themselves vulnerable to significant financial losses.

It claimed that thousands of farmers are potentially gambling with foreign exchange rates by failing to keep an eye on the market.

It cites an example of a farmer converting a subsidy of 100,000 euros into sterling in December 2010 and receiving £86,210. However, if they had not kept an eye on the market and instead completed the transaction less than two weeks later, they would have received £82,990 due to a 3.75 per cent drop in the exchange rate.

Few farmers have any formal hedging strategy in place to manage their foreign exchange risk.

There is also a discrepancy between the exchange rates offered by high street banks and specialist foreign currency providers – sometimes up to four per cent, which is clearly a significant difference.

So as the pound continues to fluctuate against the Euro, and an ever increasing number of businesses look to open up new area’s to market, this is a warning to be heeded by us all!

The noose tightens!

It appears that we are in the midst of a big crack-down on tax evaders by HMRC. There is currently a wave of inspections taking place into the restaurant trade in the London area, with inspections due to spread north. There is an “amnesty” in place at the moment for those in the plumbing and heating trade, giving them the opportunity to volunteer any previously undeclared income, and penalties will be kept to a minimum; any undeclared income subsequently discovered by HMRC will attract much larger penalties. Random records checks have commenced, somewhat earlier than advertised, across the country, and businesses are being advised of their record-keeping deficiencies by inspectors, which are being seen by some commentators as “fishing trips” to allow other inspectors to follow up on deficiencies discovered which could have led to undeclared income. The rules on “disguised remuneration” were tightened up in the last Budget, with further tightening to follow.

The resources of HMRC are clearly being diverted to enquiry work, but this has led to a huge level of dissatisfaction over the level of service provided to individuals and their agents. The anectodal evidence from clients who try and obtain answers from HMRC is worrying. In my own experience, locating the right person to talk to is difficult, but has been made easier since we obtained the phone number of a direct helpline for agents. The HMRC electronic systems appear to work extremely well for sending returns, payments and data, but the “human” side seems to be lacking. I realise that HMRC are battling with the most complex tax system in the world, and they have my sympathy.

The purpose of writing this is to point out that clearly HMRC are moving away from providing front-line support for business and tax-payers and devoting more of their limited (and reducing) resources into enquiry work for which they can charge lucrative penalties. This will make it even more of a concern for businesses to be sure they have complied with all the many and varied tax rules. You have been warned!

Musings on the Budget

The dust is still settling on the Budget for Growth, and more details are still being released about where the Enterprise Zones will be. This is an interesting but not original concept. I would have thought the whole country should be an Enterprise Zone!

One interesting point relating to red tape is the announcement that all new businesses with under 10 employees will not be subject to any new legislation over the next 3 years. This should encourage new enterprises, who will at least have some breathing space to understand the current complex business legislation before having more rules and laws thrust on them. Let’s hope that some of these have been simplified within this 3 year period.

There has been some confusion over the reduction in the rate of Corporation Tax. All the headlines have concentrated on the 2% reduction this year (from 1^st April 2011), but this only applies to Companies paying the higher 28% rate of Corporation Tax. Most Companies pay the lower 21% rate, and many thought this reduction also applied to them, but this is not the case. The Corporation Tax rate for “smaller companies” will only reduce from 21% to 20%.

There have been no measures introduced to make the tax regime neutral between companies and sole traders/partnerships, so no doubt there will still be murmurings from Government that tax is being avoided by incorporating. By merging Income Tax with National Insurance Contributions, this may equalise out the tax rates over time, but a consultation is only just beginning, so a final outcome, with all the wrinkles ironed out, will be some way off. Now this really would save business a lot of time and money in administration if it can be made to work.

The increase in the Personal Allowance by £1,000 from 6^th April 2011 will mean an annual tax saving of £200 for all individuals earning more than this, unless they are higher rate taxpayers.  This saving will however be eroded by the 1% increase in employees NI contributions from the same date!

The Chancellor has his hands firmly tied to the goal of deficit reduction, and could do little more than propose a neutral Budget, without scaring the financial markets. This he has done, and we all hope that short-term pain will bring long term gain.