Recent Developments in Business and Taxation

Welcome to Our Roundup of the Latest Business News for Our Clients. Please get in touch with us to discuss how these updates impact your business. We are here to assist you!

Procurement – Can the Principles Work for Smaller Businesses?

The government recently released a press statement commending its procurement department on its 10th anniversary for saving taxpayers £3.8 billion last year.

More giant corporations often boast dedicated purchasing departments to manage acquiring supplies, services, and other business necessities. Specialisation in this area facilitates finding or negotiating the best deals for purchases, potentially saving businesses significant sums.

While businesses of all sizes welcome savings, smaller enterprises may need more resources to maintain a specialised purchasing function. Can businesses without a dedicated purchasing department still reap the benefits of procurement? We believe they can, and here’s how:

Embrace Technology

Procurement software and online platforms are available to streamline purchasing processes. Investigate how you can utilise them in your business. Many affordable solutions cater to small businesses, offering vendor management, purchase order creation, and expense tracking features. These tools can automate repetitive tasks and provide insights into spending patterns.

Centralise Purchasing Authority

Assign a specific individual or team within your business to oversee purchasing. This enables you to establish clear guidelines for purchase procedures and introduce controls to ensure purchases align with predetermined policies. Centralising purchasing reduces duplicate purchases and facilitates negotiation with suppliers, as a single point of contact can build a relationship with them.

Foster Supplier Relationships

Despite lacking the leverage of large-scale purchasing volumes, small businesses can negotiate favourable terms, discounts, or flexible payment arrangements with suppliers. Consider inviting a supplier to lunch or acknowledging anniversaries with small gestures like sending flowers. Building long-term relationships may lead to preferential treatment or access to exclusive deals.

Implement Cost-effective Sourcing Strategies

Explore alternatives for sourcing purchases beyond traditional suppliers. Local businesses, online marketplaces, or group purchasing organisations might offer more competitive pricing and a comprehensive range of products or services. Collaborating with other businesses to meet minimum order quantities can result in lower prices, or joining a cooperative buying network may provide additional benefits.

Invest in Employee Training

Equip your employees with the skills and knowledge to make informed purchasing decisions. Training sessions or workshops on procurement best practices, budget management, and supplier evaluation are available, some at low or no cost.

Monitor and Improve

Measure performance to identify areas for improvement and track progress. Monitoring cost savings and supplier performance can highlight areas for further optimisation. Regularly reviewing procurement processes enables you to identify opportunities for enhancement and additional savings.

In conclusion, smaller businesses may need more resources for a dedicated purchasing department, but they can still benefit significantly from applying procurement principles. Doing so can provide a competitive edge and contribute to ongoing growth and success.

If you need assistance in identifying potential cost savings in your business’ purchasing, please don’t hesitate to BOOK A FREE MEETING. We’re here to help.

Inflation Falls in March

According to the latest figures released by the Office for National Statistics, the Consumer Prices Index (CPI) increased by 3.2% in the 12 months to March 2024, down from 3.4% in February.

The primary reason for this change was that food prices rose less than they did a year ago. The costs of meat, crumpets, and chocolate biscuits all declined, as did furniture and household goods.

However, offsetting these declines, motor fuels have risen over the past year compared to falling prices a year ago.

While the inflation rate has decreased, it remains positive, indicating that prices are still rising, albeit slightly slower.

A declining inflation rate does offer some positive news for businesses. It could imply reduced pressure on costs and profit margins. As the cost of living becomes more manageable, consumers’ purchasing power may increase, stimulating demand.

The Bank of England will monitor the CPI closely to inform its decision on interest rates. While there is still some way to go to reach the 2% target, the latest data is encouraging, suggesting that we may see a reduction in the base rate sooner rather than later.

See more at the Office for National Statistics

New Service to Manage Import Duties and VAT Accounts

HM Revenue and Customs (HMRC) has released guidance on a new online service to assist businesses with import duties and VAT accounts.

If you or your business are engaged in importing goods into England, Scotland, Wales, and Northern Ireland, you can utilise the new service to:

• Obtain your import VAT statements and certificates
• Administer your payment accounts
• Manage or view authorities

This new service aims to consolidate all necessary information into one accessible platform.

To access the service, you’ll need a Government Gateway user ID and password, and you must be subscribed to the Customs Declaration service.

If you require assistance registering with HMRC or VAT, don’t hesitate to BOOK A FREE MEETING!

Lump Sum Death Benefit Charge – What Do You Need to Tell HMRC?

HM Revenue and Customs (HMRC) has released new guidance aimed at helping legal representatives understand what information they must provide to HMRC to calculate the lump sum death benefit charge.

When an individual passes away, and their estate includes certain financial products such as pensions or life insurance, any lump sum death benefit received by beneficiaries may be subject to inheritance tax.

If a lump sum death benefit charge applies to the payout, it could impact the estate’s overall value and potentially affect the inheritance tax liability. Therefore, it is crucial to report this information accurately to HMRC to ensure that the overall tax paid is correct.

The new guidance outlines legal representatives’ actions and the information they must furnish to HMRC.

If you require assistance with Inheritance Tax or wish to explore potential planning measures to mitigate Inheritance Tax on your estate, please don’t hesitate to BOOK A FREE CONSULTATION. We are here to assist you.

For complete guidance, please visit How to Tell HMRC About a Lump Sum Death Benefit Charge

Don’t Get Caught Out by Tax Avoidance

HM Revenue and Customs (HMRC) have launched a campaign aimed at helping individuals steer clear of tax avoidance schemes. This initiative is especially pertinent for contractors, agency workers, or those operating through an umbrella company.

Tax avoidance schemes are designed to exploit loopholes in the tax system in a manner not intended by legislation. Typically, they involve contrived transactions aimed solely at artificially reducing an individual’s tax liability. It’s distinct from legitimate tax planning.

Falling prey to a tax avoidance scheme can prove costly. Users often face hefty interest charges, penalties, and taxes owed. Moreover, they may have already paid fees to the scheme’s promoter.

Therefore, it’s prudent to review your working arrangements and contracts to ensure you’re not inadvertently entangled in a scheme that could lead to significant tax liabilities in the future. This caution applies whether you’re classified as self-employed or employed.

Warning signs include discrepancies between the amount deposited into your bank account and the figure on your payslip or receipt of untaxed payments labelled as loans or capital advances.

Exercise caution if a scheme is touted as ‘HMRC approved’, as HMRC does not endorse such schemes.

HMRC offers a risk checker tool to assess whether your employment arrangements pose a risk of tax avoidance. You can access it here: Check If You Are at Risk of Tax Avoidance.

We are expert tax advisers and can assist you with legitimate tax planning. However, please be assured that we do not promote tax avoidance schemes. If you suspect you’ve been trapped by a tax avoidance scheme and seek advice, please don’t hesitate to contact us.

For more information, please visit HMRC Tax Avoidance Campaign.

Updated VAT Road Fuel Scale Charges from 1 May 2024

Starting from 1 May 2024, there will be updates to the VAT road fuel scale charges. These new rates should be applied from the beginning of the next VAT accounting period that commences on or after 1 May. For instance, if your upcoming VAT quarter begins on 1 June, you will implement the new rates for that quarter.

VAT road fuel scale charges offer a simplified approach to calculating and managing VAT for VAT-registered businesses that purchase road fuel for both business and private use. Instead of individually tracking each fuel purchase, businesses utilise fixed charges based on the type of vehicle and its CO2 emissions. These fixed charges serve as an estimation of the VAT on private usage.

If your business solely pays for fuel used for business purposes or reimburses business mileage to employees, you are not required to use the VAT road fuel scale charges.

The vehicle’s CO2 emissions figure can typically be found in the vehicle logbook or UK approval certificate. Alternatively, you can verify this figure by using the online tool: Get Vehicle Information from DVLA.

For older vehicles without a CO2 emissions figure, the CO2 band must be determined based on the engine size.

You can find the new scale charges and instructions on calculating the charge for a vehicle on HMRC’s website at the following link. Please get in touch with us if you need assistance with rate calculations or are unsure whether to incorporate these charges on your VAT return. We’re here to assist you.

HMRC VAT Road Fuel Scale Charges from 1 May 2024 to 30 April 2025

Employment Law Changes in April

On 6 April 2024, new employment laws that impact all businesses came into effect. Here’s a concise overview of the changes:

Flexible Working:

• Employees now have the right to request flexible working from their first day of employment.
• Previously limited to one request in 12 months, employees can now make two requests.
• Employers must respond to a request within two months and provide an explanation and consultation if it’s refused.

Carer’s Leave:

• Previously, employees who were carers had no leave rights. Now, they are entitled to unpaid leave from day one of employment.

Pregnancy and Family Leave:

• Enhanced protection in redundancy processes is now available to employees on maternity, shared parental, or adoption leave. Employers must offer a suitable alternative vacancy, known as MAPLE protection, where available.
• This protection now extends from when an employee informs their employer of their pregnancy.
• MAPLE protection generally spans 18 months after the birth of the child, with conditions for those who took shared parental leave without maternity or adoption leave.

Paternity Leave:

• There’s increased flexibility in how and when paternity leave is taken.
• It can now be taken at any time in the first year of the child’s life, and the weeks can be split and taken at different times.

For more information, visit: New Changes to Employment Law

Labour Party Publishes Plan to Close the Tax Gap

The Labour Party has unveiled its strategy to address the tax gap—the disparity between tax owed and tax paid—which is estimated at £36 billion.

The plan primarily aims to bolster tax compliance, with Labour anticipating an additional £5 billion in annual revenue through their proposed measures. They project that £1 spent on compliance activities will yield £9 in revenue, thus estimating an annual investment of £555 million to achieve the £5 billion target.

Key elements of the plan include:

• An additional 5,000 personnel will increase staffing at HM Revenue & Customs (HMRC).
• Directing additional resources towards businesses with greater complexity and return.
• Allocating “blockbuster” funding to pivotal criminal cases to enhance deterrence.
• Enhancing customer service at HMRC.
• Investing in digitisation and technology.

The plan also identifies areas where legislative changes may be necessary to combat tax non-compliance. These could involve regulating the tax advice market and mandating that a broader range of tax schemes be reported to HMRC.

For further insights into the proposals, please refer to Labour’s Plan to Close the Tax Gap.