If you’re in deep water…
A recent report by corporate rescue and restructuring specialists Begbies Traynor suggests that some “140,000” UK businesses were showing “real signs of financial distress” at the end of 2009. Their prediction is that with the VAT increase at the start of this year, and the likelihood of further tax rises and spending cuts after the election, things can only get worse. One of the key times for the brown stuff to hit the fan is predicted to come in the third quarter of 2010 when HMRC’s “Business Payment Support Scheme” is due to end.
For those not aware of the scheme, it has been running since late 2008, and was intended to help alleviate the effects of the credit crunch by effectively allowing businesses to make staggered repayments of taxes [including PAYE, NIC, VAT, Corporation Tax, etc] in accordance with an agreed repayment timetable drawn up for each business in agreement with HMRC. The scheme was extended in the 2009 Budget, and has helped many businesses to manage their cash flow during a period when banks were not willing or able to extend credit. Of course, the scheme does still require the business to be fundamentally viable – even if that business expects to make short-term losses.
According to HMRC they can usually give an initial response to applicants in about ten minutes, so if your main problem at the moment is in meeting imminent tax payments it may be worth calling the “Business Payment Support Line” on 0845 302 1435. They operate 8.00 am till 8.00 pm Monday through Friday, and 8.00 am till 4.oo pm on Saturdays and Sundays.
Fraud “costs UK £30 Billion per year”.
Did you know that there was such a thing as the “National Fraud Authority” [NFA]? Apparently this quango was only established as part of the Attorney General’s Office in October 2008, but has already managed to deliver a report in which it is claimed that some £30 Billion a year is ‘lost’ through fraud in the UK. Of this some 58% is in the public sector [including tax frauds]; 31% in the private sector, and the remaining 11% against individuals.
The Public sector is said to lose some £15.2 billion in tax fraud, while in the private sector insurance-related fraud ran at over £2.0 billion, mortgage fraud at £1.0 billion, and ‘plastic cards, online banking and cheque’ fraud at some £0.8 billion. If that looks small-fry compared to the over sectors, remember we’re talking billions here – so that’s £800,000,000 in payment fraud; they estimate that debit and credit card fraud as 0.1% of total transactions. It may seem like eons since “Chip & Pin” became compulsory [although it was only four years ago – 14th February 2006!] but at that time weren’t we all assured that it would virtually eliminate plastic card fraud, at least at a physical point of sale?
Unfortunately the NFA, while several times congratulating themselves in their report on having discovered a supposedly more realistic level of national fraud, seem to have rather less to say about how to combat it…
Inflation at 2.9% in December’09.
According to the Office for National Statistics price inflation jumped to an annual rate of 2.9% in December – the largest increase in nine months – using the “CPI” measure. The traditional “RPI” increase was 2.4%. The statistics are blamed on a variety of factors dating back to December 2008, such as the then-reduction in VAT to 15%, heavy retail discounting, and a significant fall in oil prices at that time. Naturally, as those factors weren’t repeated in December 2009 [oil prices in particular have risen sharply in recent months] the annual comparison produces a large ‘jump’. The only oddity in this explanation is that ‘core CPI’ – which excludes the effects of food, energy, tobacco and alcohol – apparently also rose by 2.8% on the year; all of which suggests that some price pressures just couldn’t be held down any longer, overall economic recession notwithstanding.
Tax still matters if you close your business.
This is an industry with more than it’s fair share of operator ‘churn’ – particularly in the commission-operated sector of petrol retailing; true, many operators leave one network only to reappear some months later in another, but as far business regulations are concerned, the end of one trading stint does activate all sorts of requirements. Quite apart from the need to advise various departments within HMRC that you have ceased trading, many departing operators don’t realise that their liability for PAYE/NIC deductions ‘crystallises’ as soon as they cease trading: all outstanding deductions have to be paid within fourteen days of the end of the last tax month in which they traded. Hence if you cease on 28th February, all outstanding PAYE/NIC balances become payable by 19th March. In theory of course this is the ‘standard’ payment-due date for PAYE in any case, but in reality many small employers have a habit of being perpetually several months in arrears with their PAYE payments, and while HMRC would never officially admit to turning a blind eye to this state of affairs, most accountants dealing with small employers are used to seeing fairly large balances of outstanding tax on their clients’ balance sheets! However, anyone in that position who knows that they’re likely to be ceasing trade in the near future should bear in mind that any spirit of tolerance tends to evaporate pretty quickly once trade has stopped, and interest and penalties start accruing on overdue deductions as soon as they’re past the due date. That may not come to a lot if you’re only one or two months behind with payments, but those traders who habitually work three, four or even more months in arrears are likely to be hit with a very large bill indeed once they cease trading.
