But the local tax office said...

Quite often we meet people who have been doing their own accounts and tax returns and have finally decided the job is too big for them. We've written before about the problems posed by the do-it-yourself tax return approach, but this week we met someone with another twist to the tale.

A couple were running a guest house in sunny North Devon. Various issues with their previous submissions came up as we talked.

One was especially interesting.

The problem

"I record each guest breakfast as costing £10. I don't keep track of what they actually cost. I don't have to."

"Why not?"

"Keeping all those receipts seemed a lot of work, so I spoke to someone at the Barnstaple tax office. He asked me how much I thought the breakfasts cost. I said 'ten pounds' and he said 'put that down then'. It must be okay. The tax man said so."

It's tempting to accept this reasoning. Tempting, but wrong.

Why it's a problem

There are lots of Tax Tribunal cases where people have followed the advice offered by someone from their local tax office, only to find that when HMRC enquired into their tax return that they did not agree with the advice that had been offered. Take the case of Louise Stones.

It's easy to see that in an example like this, HMRC would not simply accept a round sum of £10 per person for breakfast. It's hard to see how such a charge could be justified.

The worst case scenario

So what would happen if HMRC successfully challenged this figure?

As well as having to pay the tax due (plus interest), the tax payer could end up with penalties of up to 70% of the tax at stake.

The level of penalty charged would depend on how negligent you thought to be and how deliberate the error was.

The solution

Keep a record of what advice you were offered and by whom. It might not stop you having to pay the extra tax if HMRC disagrees, but showing you acted on the advice of one of their officers could show the error wasn't negligent or deliberate and reduce the potential penalties to zero.

Or, use a qualified accountant. We like to offer our clients the certainty that we’ve taken all the steps we can to reduce their tax liability –  and the amount we advise them is all the tax they will now have to pay.

Wouldn't that be better?

Pay Less Tax - Summer 2013

It may be grey and wet outside, but you can find the Summer 2013 edition of our Pay Less Tax newsletter on our website.

This edition has lots of interesting ideas that should be relevant to your business. Some of them are ones that we’ve been discussing a lot with businesses lately, including whether a business should trade as a limited company, what’s the most tax efficient remuneration for company directors, and whether the VAT Flat Rate Scheme could help your business keep a little more from its gross income.

Other issues looked at this time include making use of your Annual Exemption for Capital Gains Tax.

Why not check it out?

The dangers of doing it yourself

Here at Accountancy Edge we often find that people who have completed their own tax return could have paid significantly less tax if they had professional advice. However, we also find people who have paid significantly less tax than was actually due.

So why is this a problem?

If HM Revenue enquires into such a tax return and finds that additional tax is due, not only does the tax become payable with interest, but penalties of up to 70% of the tax at stake can be charged.

So doing your own tax return to save a few hundred pounds could easily end up costing you far more.

That's we advise every tax payer in the self-assessment system to seek appropriate professional advice. At least then you can be happy that you've paid the right amount in tax.

Grandparents giving their children £3,000 a year for everyday expenses?

The Daily Telegraph has an article in claiming that grandparents are on average giving £3,000 a year to their children to meet their every day living expenses.

Said "everyday" living expenses include weddings, new cars and mortgages.

Undoubtedly many people do benefit from financial help from their parents or grandparents. However, the figure quoted here as the average makes me think something else is going on.

It could well be that these are well off grandparents who are reducing their estate's liability to Inheritance Tax  Everyone has an annual gift exemption worth £3,000. In other words, a gift of £3,000 per year can be made and reduce the taxable value of the estate.

Is this just a coincidence, or has the survey's author JP Morgan asked their question mainly to the more well-heeled?


Accountancy Edge are Chartered Accountants based in Bideford, North Devon. They help business owners earn more, keep more and enjoy their businesses more.

HMRC task force coming after South West businesses

HM Revenue & Customs has increasingly focused on investigations as a way of raising the tax take. To do this, they've launched a series of task forces, which each target a different trade sector somewhere in the country.

Now it's Devon and Cornwall's turn.

So what does this mean?

Well, they'll be looking at seasonal and cash based businesses to try and see whether they've been declaring all of their income to find out if there's income tax or VAT to pay.

They can know more about your business than you think. For example, the fish and chip shop that doesn't declare all of its sales could easily give itself away if its purchases seem high for its sales. After all, if you say you only sold ten meals, why would you buy ingredients for five hundred?

The important thing here is that they are not doing this at random. With the task force approach they are using targeted, intelligence-lead strategies that should minimise the impact on those with clear consciences. There are also lots of products out there that can cover the costs of dealing with an enquiry (we offer one).

Our tax system is so generous anyway that there is a lot that can be done to keep bills low with nothing more than a bit of forethought and planning - and a good accountant.

Taxing times and false economies

I often meet people who complete their own tax returns. Usually they think that they're saving themselves money.

After all, why pay someone to do something you can do yourself?

There are a few good reasons actually!

One person I know did their own tax return last year. It was their first one. Getting together all the information and filling it in online took them three days. Yes, three days.

Now imagine what else they could have done with that time. That could have been three days in which they earned more money, or even had a well deserved break.

There's more than that. Even after all that time, they still don't really know whether they got their tax return right. They don't know the latest legislation or the reliefs and allowances that are available. They may well have paid too much tax as a result.

So this person has lost time that could have been used more productively, is worried that they might have got their tax return wrong anyway, and may be actually out of pocket. And they did this to save money!

Crazy, isn't it?

That's why we think people should use firms like Accountancy Edge to take care of their tax affairs. We'll free up your time so you can spend it on your business. You will also sleep better at night knowing that your tax return has been done correctly by a professional. So why not contact us today?

Reducing the Income Tax you have to pay on 31 July

If you're in the Self Assessment tax system, then you usually pay tax on two key dates: the 31st of January and the 31st of July each year.

The next HM Revenue & Customs payment deadline is approaching, for the second payment on account for the year-ended 5 April 2013, which is due by 31st July 2013.

As payments on account are estimated based on the previous years figures, it is possible to apply to have these reduced should the tax liability have fallen.

However, in order to do this accurately you have to know what the actual liability is.

There is still time to prepare the return and accounts before the deadline for making your payment on account, and if profits have reduced then a reduction in the payment on account could bring welcome relief.

Even if the payment cannot be reduced, it does not increase – so the advantage is that people know their tax liabilities well in advance and can plan for them without worrying about an unexpected tax bill.

If you know anyone who has a payment on account due this July, but thinks it may be too high, please do put them in touch Accountancy Edge.

Shouldn't special offers be... special?

Thursday is North Devon Journal day. As usual I had a quick shufti at the business section to see if there was anything interesting.

This week there was a blurb from another firm of accountants.

They had a new offering. A "Golden Hour".

What was it? A free initial consultation with one of their partners.

Well, that doesn't sound very special to me. A quick look on most accountants' websites shows that nearly every one offers this to prospective clients.

That's not special. That's not extraordinary. It's ordinary. And it sounds worryingly like a "golden shower". Not good.

If you are looking for a consultation with an ICAEW Chartered Accountant, you can find one using the search facility on the Business Advice Service site.

At Accountancy Edge, we think a special offer should be more than the opportunity to have someone try and sell you their services for an hour. What do you think?

Starting up in business as a sole trader

We've put the first of a series of blogs for people looking at starting a new business up on Accountancy Edge.

One important decision every new business has to make before it starts trading is "what sort of trading entity will be used?"

You could be a sole trader, a partnership, a limited company or a Limited Liability Partnership (LLP).

Each one has its own unique features that may or may not suit it to your circumstances. So it's important to get it right.

Our first post looks at the pros and cons of being a sole trader.

International business expert speaks in Bideford

Accountancy Edge has been featured in the latest edition of the North Devon Journal.

They've been speaking to entrepreneur turned philanthropist Paul Dunn, the Chairman and co-founder of Buy 1 Give 1 (aka B1G1).

Paul recently visited Bideford as part of his tour of the UK. He spoke to business people about how they could develop a better sense of connection with their customers.

Why not check out what he has to say?

Pay Less Tax

The latest edition of Accountancy Edge's newsletter, Pay Less Tax is available for download on our website.

This issue is looking at lots of issues that are topical from the 2013 Budget that could help you and your business pay less tax.

Why not check it out?

Connect: really switching on YOUR business

On 22 April a world class business speaker is coming to Bideford.

Known as The Wizard of Wow, Paul will be explaining in depth just how you can develop moments of connection with your customers, and really make them go "WOW!"

This is a rare chance to hear a speaker as inspirational as Paul in North Devon.

If you're interested in coming along, please check out the programme and reserve your ticket.

Places are strictly limited and when they're gone, they're gone.

Steve Pipe, Accountancy Age Entrepreneur of the Year, has this to say about Paul's talk:

“Paul Dunn is the best speaker I have ever seen. His ideas and presentations transform the results of hundreds of UK businesses, including my own.  So if you want better results, you simply must go to this seminar.” 

Accountancy Edge is sponsoring this event, so we can give you a whole £90 off the ticket price. So for just £47, you can spend the morning finding out how to switch on your business.

We're also offering a cast iron guarantee: if you don't think the session is worthwhile, we'll refund your ticket cost right there and then.

So there's no downside and a lot of upside.

We really want to see you there, so order your ticket today!

Own your own company? What should you pay yourself in 2013/2014?

One reason that people trade through a limited company is that it's tax efficient.

If you're a basic rate tax payer (i.e. earn less than £41,450 a year), then you can trade through a limited company and pay no Income Tax or National Insurance (although your company would still pay Corporation Tax).

Company office holders like directors and the Company Secretary are covered by the National Minimum Wage Act, so they can structure their salaries and dividends in order to minimise their personal tax liabilities.

They can also get the benefits of National Insurance without actually paying any if they get their salary right!

Check out our blog to see what the optimum salary dividend split is in 2013/2014.

Budget 2013

I missed most of yesterday's Budget because I was driving back across Exmoor from seeing a prospective client, and preferred to listen to something else instead on the journey!

There weren't many surprises, although the cut in beer duty was welcome. Obviously it would be more welcome if I thought that most pubs would pass it on to their customers!

For small businesses, we thought the key points were the Employer's National Insurance grace amount of £2,000 coming in from 2014 and uplift of the VAT registration threshold to £79,000.

For the man on the street, it was scrapping the fuel and beet duty increases that probably brought the most joy! 

For those of you who are interested in the detail and how it might affect you, our Budget Report is now available for download.

If there are any points you want to discuss, then please get in touch with us here at Accountancy Edge..

Pay Less Tax

The latest edition of our Pay Less Tax newsletter is available to download on our website.

It looks at a rang of topical issue that may be of interest.

These include the curtailing of unlimited tax reliefs. Some of these, such caps on loss relief are very relevant to people who have a loss making trade, and use these losses to reduce or reclaim tax incurred on other income sources.

There's something on the increase in the Capital Gains Tax annual exempt amount.

The current hot topic of Real Time Information also gets a mention.

Check it out. One of this topics might apply to you. If it does, contact Accountancy Edge today.

Use of Cloud Accounting Software by Small Businesses

The results of Izzbox's cloud accounting survey are in, and they make interesting reading.

Cloud accounting users were overwhelmingly happy with their choice, while people who had considered the cloud, but rejected it as an option, were predominantly concerned by security issues.

At Accountancy Edge we work with clients using several cloud accounting packages, but predominately Xero and Freeagent.  In our opinion, the software is as secure as your password.

We'll be providing some exclusive content to the Izzbox blog answering common questions about the cloud. So keep them peeled!

But that's silly!

Do you ever read an article or advertorial by someone in the same business as you and think, "but that's just silly!"?

I know we do at Accountancy Edge.

Just this morning I chanced upon an article by an accountant in the March 2013 issue of The Link Magazine. In it they were talking about year-end tax planning opportunities in a not entirely accurate way. But I can let that slide, as it got some of the ideas across.

Bringing required capital expenditure forward into the current tax year to accelerate your tax relief is sensible tax planning. As is paying a pension contribution to take advantage of higher rate relief.

That wasn't all though. There was also a case study.

In it, their client was in danger of paying the 50% tax rate, so they were advised to go on holiday in March rather than do any billable work.

Apparently this meant they could have their holiday in the sun... and save tax too!

But that's silly.

Yes, not working so you don't earn any money in March may keep you under the higher rate tax threshold. But it would also mean you don't earn anything. The tax man my not get his 50%, but you don't get your 50% either.

So just how does that make anyone better off?

Even if you could do the work later, that takes up time that stops you taking on other jobs. That way madness lies!

If you run a business, then you need to be ready for Real Time Information

Our recent blog posts about the impact of Real Time Information on your business's payroll have been featured on the ICAEW Business Advice Service blog. Why not check them out?

If you have a payroll, this will affect your business and you need to get ready NOW.

Pay Less Tax

The latest edition of our newsletter, Pay Less Tax, is available to download on our website.

This issue looks at planning opportunities created by the yo-yoing limit for Annual Investment Allowance, changes to the CGH and IHT thresholds, and a lot of other stuff too!

Why not check it out?

Cloud Accounting Survey

Do you use a cloud accounting solution? Maybe you use Xero, or Freeagent, or something else. If you do, could you spare a minute to answer this survey on accounting in the cloud?

We want to find out how you find the cloud experience and whether you have any issues or concerns with the solution you're using. Then maybe we can make your experience better.

At Accountancy Edge we support a range of cloud accounting solutions, including Xero and Freeagent.

Are you ready for Real Time Information?

Does your business run a payroll? If it does, then you need to get ready for the biggest change to payroll since PAYE began... and that was back in 1944!

Real Time Information starts on 6 April 2013 and it's not optional. If you run a payroll then need to get on top of this now.

We've gathered together some frequently asked questions about RTI. For your reading pleasure, here are our answers!

Updated:

And here are some more!

Small firm, BIG giving, HUGE impact

We've already said a little about how Accountancy Edge exists to make its clients' lives better, and believes that businesses have the power to change lives.

One way we do that is by linking the transactions that make our business a success and our clients' businesses successes, with acts of giving through Buy1 Give1. That way each time we hit our targets and help our clients hit their targets, we do something extra to make the world a little bit better.

Recently we made our 100th act of giving through B1G1. 

Here's what B1G1's Chairman and co-founder Paul Dunn had to say about us:

"James Hellyer runs a small (yet insanely great) accounting firm in a delightful area of the UK — North Devon.

"He calls his firm Accountancy Edge. You’ll see why when you visit his site.

"And now James is the second accounting firm in the world to sail past a staggering 100 givings — and what makes that even more interesting is that he only joined B1G1 on 26 July 2012.

"So how did he get to 100? Simple: he gives every working day. And together with his team they spread their giving over multiple projects too.

"As you'll see in a while, the acknowledgement he got from B1G1 on the day he passed 100 givings was entirely appropriate..."

Find out more here.

Buy 1 Give 1

At Accountancy Edge we believe in an inclusive society. When we help our clients succeed, and they help us succeed, this creates a responsibility to help people who are less fortunate than ourselves.

We believe that businesses have the power to change lives. That's why we've become lifetime business partners with Buy1 Give1. Using their giving platform, we have linked the transactions that matter in our business to acts of giving all over the world.

This means that each time we help one of our clients, they help us make someone who is less fortunate enjoy a better life. It might be giving a child in Africa access to clean water, or providing a family in South America with a sustainable income, or something else altogether.

So as we succeed and our clients, the wider world becomes a little bit better too.

The best part of it is, to make this happen, all you have to do is work with us.

Here are just a few things our clients have helped us do:

Ask An Accountant

Do you have a question that you need to ask an accountant?

You might bethinking of starting a business, worried about making a mistake on your tax return, or need to make decisions about your business expenditure before 5 April.

We can help.

It’s as easy as 1-2-3.

1) Visit Accountants in Bideford.

2) Ask your question and complete the contact form.

3) We’ll get right back to you!

So why not ask your question now?

Getting your business ready for Real Time Information

Real Time Information (RTI)  is the biggest change to payroll in the UK since PAYE was introduced in 1944!

It starts in April 2013, so now might be a good time to get your business ready.

But just what is RTI and what do business owners need to do?

About Us!

Welcome to Accountancy Edge!

I'm going to tell you a little bit about us: what we do, why we exist and how we're different to other accounting firms.

We're ICAEW Chartered Accountants. This means we provide high quality accountancy, taxation and business advisory services to businesses and organisations, as well as helping them meet their regulatory requirements.

Our reputation is built on providing a higher quality service.

We work with a range of sole traders, partnerships, limited companies and charities.

In today's complicated business landscape, we're determined to use our knowledge to help our clients improve their bottom line and the amount they take home.

This means our clients can focus on running their businesses. This brings them peace of mind and ultimately helps them sleep better at night.

And that's why we're in business: at Accountancy Edge, we want to make our clients' lives better.

To show that we're not just accountants, we also go that step further and try and make the wider world a bit better. Each time someone lets us help their business, they also help us make someone on the other side of the world have a better life.

Take a look at what our clients have helped us achieve: