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Business News In Brief

CHANGES TO SELF ASSESSMENT DEADLINES

HMRC have announced that the filing deadline for taxpayers sending paper self assessment tax returns will be brought forward to 31st October 2008. All returns submitted in this way will have their tax liability calculated for them. Taxpayers choosing to submit their returns online will still have until 31st January 2009, with their tax liability being calculated for them automatically.

TAXMAN NETS 35% MORE FROM TAX ENQUIRIES

The coffers at HMRC have been bolstered by an additional £107m as a result of a 35% increase in takings from investigations into business self-assessments. The total amount  raised from personal and business tax enquiries for the year has risen from £5.6bn to £9.1bn. This increase has been a result in improvements to their risk profiling system which has enabled them to target tax avoidance and evasion more effectively.

SMES & THE CREDIT CRUNCH

UK banks are showing increasing reluctance to lend ‘less significant’ sums to smaller businesses as a result of  the current turmoil in the US and UK economies. Bank managers are now considering small business funding as if it were personal secured lending and as such it is important that SME owners look closely at cashflow and funding options (such as HP, Leasing and the Small Loans Guarantee Scheme for new businesses) to avoid unnecessary personal exposure.

BAD TIME TO BORROW FOR SMALL FIRMS

Severe difficulties in the US Sub-prime lending market are impacting UK lenders, who are now less willing to take on risky debts.  Average lending rates have risen to between 10 and 11%, which is 2% points higher than the rates offered before the credit crisis. At this time, it is important that businesses facing liquidity problems, address the issues facing their working capital and ensure close attention is paid to cashflow.

BUDGET HIGHLIGHTS 2007—KEY  CHANGES

· The basic rate of income tax will be reduced from 22% to 20%. This is accompanied by the removal of the 10% starting rate.

· The Threshold for higher rate tax will increase from £34,600 to £43,000 in 2009.

· Corporation Tax will be reduced from 30% to 28%, however the rate for small companies will be increased in three stages to reach 22% in 2009.

A QUICK GUIDE TO CIS ADMINISTRATION

The penalties for making an error on your monthly CIS return could be as much as £3000. So it’s worth getting it right first time! The most common issue is deciding whether an individual is a subcontractor or an employee. Remember, it is the responsibility of the contractor to pay over missing tax and PAYE if an employee is mistakenly treated as a subcontractor. Finally, the revenue can look back over 6 years to check for errors.