Today, Vaultium warn SME owners could risk heavy fines as well as disruption, if they fail to keep adequate records for tax purposes under the latest HMRC proposal.

Under a new proposed HMRC inspection regime, as many as 50,000 UK small businesses may not be keeping records in line with HMRC requirements. If, when an inspection takes place, records cannot be produced, firms risk a fine of up to £3,000. Other regulators are also taking a hard line as Record Management becomes central to meeting increasingly complex compliance obligations.

To this end, Vaultium is launching a new, easy to use online Records Management extension, in response to a growing number of requests from organisations wanting more cost effective and robust recording systems to support compliance and record retention requirements.

Traditionally the preserve of larger organisations or heavily regulated industries, Records Management has been somewhat of a mystery to SMEs. But times are changing, with organisations of all types and sizes, increasingly required to manage their business records.

Retaining the right records and disposing of those that legislation and regulation say you must, is a time consuming and onerous task. Software solutions to this problem have traditionally been too expensive, difficult to implement, require specialist knowledge to deploy and operate and often do not deliver the benefits or outcomes sought.

May Ladd, CEO and founder of Vaultium comments “Traditional Records Management systems were overly complex and really only understood by experienced librarians and professional records managers. Businesses rejected changes brought on by records management practices, resulting in poor uptake and inconsistencies. Few understood the terminology, found the change management too overwhelming and simply couldn’t find the time to store, classify and tag information in the appropriate way.

“While Records Management provides great discipline, it should be easy to use, available to all and be integrated in to the day to day routine, without the need to change ways of working or require a great deal of training. Vaultium’s online Records Management extension is more than capable of supporting a whole raft of compliance and regulation needs. In conjunction with our private-cloud based solution, firms now have it within their power to implement an affordable and effective Records Management strategy.

“We are all becoming more mobile and working from numerous locations, we want to have instant, anywhere and anytime access. We also need to share our information in a secure manner with partners and third party organisations more frequently. This has implications, for example, under the Data Protection Act, where we often using many data processors, some of whom may be overseas, we have to have the right controls in place to limit access and retain a record of who did what, and when, including when information has been securely destroyed, disciplines that Records Management addresses.”

Vaultium’s new ultra-easy-to-use, affordable online Records Management extension is capable of supporting some of the worlds most sophisticated compliance regimes and provides functionality normally only found in much more expensive and complex systems, such as:

• Comprehensive audit histories and version control
• Store any kind file, instantly searchable content and metadata
• Ultra -secure, including ISO27001 support
• UK Data Protection compliant
• Manage long term records, archives and backup
• Tag vital records to help with disaster recovery and prevent important files from being deleted by accident
• Create and track retention and disposal schedules

Established in 2002, Vaultium set out to provide online document, content and file management, accessible securely online via any internet browser.

Vaultium online Records Management is available as an extension to Vaultium’s Business Package – more details are available at the Vaultium website.

The trouble is, that’s the last thing you should do. Despite continuing Government promises to simplify the tax system, most people still find sorting out their tax complicated and confusing. And what’s true for individuals is just as true for businesses.

That’s why taking some specialist tax advice is such a good idea. According to recent studies, both individuals and companies in the UK are overpaying their tax – in simple terms, giving money to the Government that they don’t need to.

Some people think they don’t need tax advice because they already have an accountant. The trouble is not all accountants are tax specialists, especially the one-man bands. Even for the small, local firms, keeping up with the ever changing complexities of the tax system is a difficult and time-consuming job.

So what can a good tax adviser do for you? Jim Smith, senior taxation partner at PKF accountants and business advisers said, “The list is almost endless. Obviously businesses and individuals are our starting point. Some people think you need to be wealthy, or be a multi-million pound business to benefit from tax advice. Nothing could be further from the truth.”

Smith pointed out that increasingly PKF were helping clients with international tax, as well as advising on employment tax and inheritance tax. “Despite the threshold for inheritance tax going up,” he said, “There’s still clear evidence that the beneficiaries of estates are paying more tax than they need to.”

Another area where PKF are doing an increasing amount of work is with VAT – and the increase to 20% in the New Year is bound to bring accounting and tax problems for business.

Jim Smith finished off with a warning. “Remember,” he said, “the Revenue now has increased powers to levy fines and penalties if you get your tax wrong or if you miss deadlines. So a good tax adviser can save you time and money – and a lot of heartache.”

The Consequences Of Increased Taxes

Whether your business focuses on affiliate programs or not, you’ve probably used the Internet to advertise. If you were taxed more, you’d probably have to cut back on some of this advertising and marketing. Many business owners invest a good portion of their own income in their business. With less income, most of these business owners would be forced to cut back on some of their marketing. Since marketing is one of the things that gives businesses a competitive edge, some of these businesses would inevitably falter or fail. Jobs would be lost. Is Obama aware of this? Of course. Perhaps garnering votes from Americans making less than $250,000 is more important to his administration than stimulating the economy. Perhaps this is a cynical view, but some would argue that it is a realistic one. How else can you explain taking away money from those who add jobs to the American economy?

Sub titled The Cost to British Business of Complying with the UK Tax System, the authors claim that tax related red tape costs UK business £20 billion a year.

The book reveals that the UK has the longest tax code in the developed world, running to 8,300 pages of primary legislation compared with 1,700 in Germany and 1,300 in France.

The report also reveals that the average Finance Act in the 2000’s has been three times as long as the average Finance Act in the 1980’s – a damningindictment of New Labour’s record on red tape. The UK is one of only 3 out of 43 most advanced economies where the cost of tax collection is not falling.

It is suggested that the impact on small businesses is particularly devestating, with the costs of tax collection bearingaround sixteen times more heavily on the smallest business than on the largest.

The authors consider that this acts as an impediment to competetion and to the expansion of employment among small firms.

The report calls for a radical reform of the tax system and the book contains examples of how this could be achieved. Examples of this would be:

• Definitions and procedures should be consistent across all taxes
• Taxable and accounting profits should be aligned
• Special tax reliefs on company investment should be abolished
• Investments returns that are disguised as capital gains should be taxed in the same way that income is taxed
• Taxes generating minimal revenue with high compliance costs (eg inheritance tax) should be scrapped

The report further argues for the abolition of the annual Finance Act to reduce the political pressure on Chancellors to complicate further the tax sysyem with headline – grabbing measures in eacj Budget.

Director General of the IEA, Mark Littlewood comments:

“Often debate focuses on the overall level of taxation, but this report clearly shows that merely complying with tax laws is an enormous burden on the British business. Not only do we need to slash tax, we need to simplify it to allow enterprise ro thrive.”

The publication Taxation and Red Tape is available in PDF format here.

Darling said that the government would scrap taxes on electric company cars for the next five years and announced 100% first year capital allowances for businesses using electric vans.

Company cars account for around 1.1million of the vehicles on the UK roads, only around fifty of those are electric and the new proposals will encourage businesses to look at the options available.

Companies currently pay National Insurance contributions and employees pay income tax based on the cost of the car and the CO2 emissions, electric cars attract a 9% tax while fossil fuelled vehicles range from 10 to 35%.

Darling also announced extra funding for low carbon industries, pledging an investment of £160 million across a range of low carbon public and private projects through existing schemes — along with 90 million pounds earmarked for green European infrastructure schemes.

He also said the government would double its commitment to carbon capture and storage, by supporting four new projects with technology that captures CO2 and stores it underground.

Darling also outlined plans to introduce a scheme to replace 125,000 old and inefficient central heating boilers in homes across the UK with a cash back scheme similar in principle to the car scrappage scheme.

Furnished Holiday Lettings

Two radical changes to the taxation of income and gains arising on the letting of furnished holiday lets property have been published today.

1. Properties owned by UK tax payers situated in the European Economic Area can now qualify. Previously only properties situated in the UK qualified; and

2. From 6 April 2010 the Furnished Holiday Lettings rules are to be repealed!

Both of the changes have come about due to compliance issues with EEA legislation.

All client’s who own and let properties within the EEA, including the UK, may benefit from a strategic review of their present property tax planning due to these changes. It is vital that the narrow window of opportunity occasioned by this change be fully exploited.

Business Payment Support Service (BPSS)

If you call the BPSS to ask for time to pay tax you may owe, please take account of the following extension of the circumstances HMRC will now consider.

If you are likely to make a trading loss in the current year, when these losses are determined you can generally claim for the loss to be carried back and set off against your previous year’s profits. Obviously you would need to wait until the current years accounts are completed and a formal loss relief claim is made.

In recognition of this right to set off losses, BPSS advisers how now been instructed to take reasonable estimates of these losses into account when they agree to deferred payment of your previous year’s tax.

Further extension of carry back of loss relief

This further extension to loss relief’s already available will enable both incorporated and unincorporated to carry back current losses, that were previously restricted to set off against the preceding year’s profits only, to the previous 3 years profits. The following bullet points summarise the main points:

• The relief is now available for two years. For limited companies, trading losses in an accounting period ending between 24 November 2008 to 23 November 2010. For unincorporated business losses agreed for a trading period that forms the basis period for 2008-09 and 2009-10.
• HMRC will make repayments occasioned by claims for the new relief on or after Budget Day 2009.
• The amount of the loss that can be carried back one year is still unlimited. Any carry back to the earlier two years will be limited to £50,000. The £50,000 limit is an annual limit.
• Losses will be applied to the latest of the three years first.
• As this is an extension to existing loss relief legislation, the current relief’s are still available.

Corporation Tax Rates

The small companies rate from 1 April 2009 is unchanged at 21 %.

Temporary First Year Capital Allowances

Since 1 April 2008 (corporation tax) and 6 April 2008 (income tax) businesses that invest up to £50,000 on certain plant and equipment can write off the entire amount against their taxable profits.

Any excess expenditure, over the £50,000 limit, is added to the pool of unrelieved expenditure and has qualified for a writing down allowance of 20%.

Today the Chancellor has announced that to encourage investment he will create a temporary first year allowance of 40% which will be applied to the excess over the £50,000 limit.

The new 40% allowance will be available for just one year, from 1 April 2009 (corporation tax) and 6 April 2009 (income tax) and will apply to assets which would be added to the main capital allowance pool except for cars and assets used for leasing.

VAT Rate Change

As expected the standard rate of VAT will be increased to 17.5% on 1 January 2010.

With effect from 1st May 2009, the thresholds for registration and deregistration are increased to £68,000 and £66,000 respectively.