Top Tips For "Instant" Success
It is starting to feel like this is the “year of the instant”: Instant filing, instant data and instant response. As workdays and nights continue to blur as we give instant replies to clients on the iPad or Blackberry, we could at least in the past rely on HMRC to be a stickler for traditional correspondence. Not anymore. With Real Time Information (RTI) introduced for PAYE, even HMRC have got in on the instant act. Then there are the start-up founders and CEOs as well as seasoned business owners who now rightly expect instant access to their financial data and KPIs. Perhaps the spoof Amazon YouTube clip of “yesterday shipping” is not too far off! (See here)
With all this in mind below are some tips that will help you plan for dealing with this year’s instant demands:
1. Historic data = business decisions on lagging information: According to Napoleon “war is 90% information” and he attributed much of his military success to having the right information at the right time. We find business owners frustrated about having to continually ask their internal finance team for key numbers and not having the right information to make decisions whether it be on sales, debtors, bank balances or cost spend. Indeed even monthly management reporting can often only see results that occurred 2-3 weeks previous. This is too late, and in today's environment, even more so. Business dashboards and live management accounting have allowed business owners to have a direct link to their live accounting data, filtered to report their KPIs and presented in rich graphics and widgets. I co-ordinated the design and implementation of our businesses internal dashboard which consequentially revolutionised our business knowledge and decision making. This led to us creating a separate company which develops and installs dashboards to existing and new clients.
2. Fail to prepare, prepare to fail: Real Time Information (RTI) which sees employers reporting PAYE payments to HMRC in real time rather than at the end of the tax year, came into force on Saturday 6th April. Various studies show that a significant number of employers who control payroll internally do not fully understand, or are simply not ready for this reporting and we have been asked to advise a number of businesses on the processes involved. If you are unsure about the impact of RTI on your payroll processes we suggest you promptly speak with an accountant or advisor.
3. Make good use of tax incentives – the government sees start-ups, especially in the tech sector, as our new manufacturing industry and it is simply falling over itself to offer tax incentives, tax breaks and even cash back in many cases. These incentives can instantly make a start up more attractive; whether it be to investors through SEIS and EIS relief, employees utilising EMI options or the bank with R&D tax credit cash refunds. One current client of ours has used EMI share options to both attract and reward key product team members and we are also in the process of obtaining an £1 million R&D tax credit claim that will give rise to cash-back in the region of £180K. This will certainly made the banks and investors instantly happy!
4. GAARgantuan impact – The 2013 Finance Bill announced the General Anti-Abuse Rule (GAAR) which will take effect once it has received Royal assent in July. The GAAR will apply to tax arrangements which are “abusive” and defined as “any arrangement which, viewed objectively, has the obtaining of a tax advantage as its main purpose or one of its main purposes”. In the last couple of weeks HMRC have given example guidance with most standard areas of taxation covered. Due to the current ground swell of opinion and politicising of many tax-planning related issues in the press there has been a resultant blurring of the lines between tax avoidance and tax evasion. We will wait to see how heavily and far reaching HMRC use the GAAR, though with various commentators stating the GAAR will cause confusion and chaos this is one piece of legislation HMRC may not want to not implement instantly. If you are unsure about how the GAAR may affect you it is advisable to discuss with a qualified advisor.
Steven Sandford, Partner at DGIT LLP
Davis Grant LLP, incorporating DGIT, are accountants, tax and business advisors based in East London. Our expert team, now including specialisms in the tech and digital sector on top of traditional business, are ready to discuss any of the above with you, and more. Please contact Steven Sandford, Neil Driver, Jay Gandesha or Barry Chernofff on 020 8477 0000. Or see us at www.davisgrant.co.uk, LinkedIn and Twitter.