Every year many of us decide to set a New Year’s resolution. Perhaps it is losing weight, going vegetarian or putting extra money away in your savings.

Of course, inevitably, life can get in the way and it is easy to lose track of the promises you set yourself.

However, if there is one goal, we would all like to achieve, it is for our businesses to flourish and thrive.

That is why we believe it is important to set some New Year’s resolutions for your organisation that builds resilience and helps you grow.

Here are our eight New Year’s resolutions for businesses to follow:

Look for new funding

It has, admittedly, got more challenging for businesses to find the finance they need to grow, but if you are planning to invest or you need some additional funding to tide you over next year you must consider your options.

Although many of the Government-backed schemes are now closed, the Recovery Loan Scheme has been extended into next year, offering much-needed support to SMEs.

The British Business Bank is also helping to manage many regional schemes for small businesses so it is worth taking a look at its website here.

If you can’t secure funding from traditional lenders, such as banks, have you considered alternative finance, such as peer-to-peer lending or crowdfunding?

Improve cash flow

Cash flow is the lifeblood of your business. Without good cash flow, many companies fail. If you are continually worrying about cash flow then you need to take action to improve it.

This could include strengthening or automating your credit control systems or finding ways to boost sales or reduce costs so that more money is flowing into your company or less is leaving respectively.

Review costs

The nation is experiencing a cost crisis driven by many factors, including price inflation on many goods and materials, energy costs and skills shortages.

These are beyond the power of our national leaders, let alone you as a business owner, but that doesn’t mean you should do nothing.

Despite how challenging it may seem, there is often a way to reduce costs. This could include switching suppliers, finding savings by reducing or cutting unprofitable activities or recovering some of your costs through tax reliefs.

Get a better picture of financial health

It is very difficult to plan for the year ahead or react to changes in the market without having a clear picture of your organisation’s financial health.

Without the right data and information, how can you expect to make effective decisions?

Thankfully, there has perhaps never been a greater opportunity to learn more about your business through regular management accounts, supported by the latest cloud accounting technology – which can feed you information in real-time.

Retain and reward

Although we have spoken about cutting costs, the one area of your organisation where investment may be key, at least temporarily, is your workforce.

The UK, and much of the world, is experiencing labour shortages in certain sectors following the impact of the pandemic.

This crisis has led many people to reassess their life, including where they work and their goals.

With a million job vacancies in the UK, those who are dissatisfied with their current career are making a switch, so you need to think about how you can boost pay, provide benefits and change your work environment to secure the top talent.

Revitalise your business plan

When was the last time you properly reviewed your business plan? If you haven’t done it in a while, or you made temporary changes to it during COVID-19, you need to revisit it to make sure your goals and current strategies are aligned.

It is worth taking some time to review your operation as a whole and ask yourself what is profitable, what supports cash flow and where are your weaknesses.

This should help you formulate a new business plan for the next 12 months – but make sure you continue to review this and act upon your findings.

Cut your tax bill

Do you or your business pay too much tax? Many taxpayers often pay more than they need to because they do not make full use of the reliefs, allowances and tax saving opportunities available to them.

Every year we surprise our clients by helping them find ways to reduce their liabilities, often saving them and their business thousands of pounds.

This need not be a complex process if you seek the support of your accountant or tax adviser, who can review your activities, taxable income and investments to create a plan that reduces the tax paid.

Ask for more help

Perhaps the most essential advice we can offer is to ask for help. You aren’t alone and there are always people who can assist and support you.

A small investment at the start of 2022 in professional advice, could open up new opportunities to save time and money while reducing the stress and strain of running a business.

Campaigners are angry over the fact that more and more people will be drawn into paying Inheritance Tax (IHT), after a big rise in receipts.

They are angry that Chancellor Rishi Sunak has frozen the IHT nil rate band and residence nil rate band at £325,000 and £175,000, respectively, until 2026, while the value of homes has rocketed – potentially drawing more people into paying this tax.

Estates that exceed these allowances face paying 40 per cent IHT on anything above these amounts.

Given this freeze and rising house prices, it should come as no surprise that the latest IHT receipts totalled £3.6 billion between April and October this year, up from £3 billion in the same period last year.

What is IHT?

IHT is a tax on the estate (the property, money and assets) of someone who’s died. There’s normally no IHT to pay if:

• The value of your estate is below the £325,000 tax-free nil rate band allowance.
• You give away your main home to your children (including adopted, foster or stepchildren) or grandchildren, as the additional residence nil rate band increases your overall allowance to £500,000.

Any unused allowance can be passed to your partner after your death, if you are married or in a civil partnership. This could mean that a couple could pass on as much as £1 million tax-free if they make full use of the allowances on offer.

What are the rates for IHT?

The standard IHT rate is 40 per cent and it’s only charged on the part of your estate that’s above the threshold.

So, if your estate is worth £500,000 and your tax-free threshold is £325,000. The IHT charged will be 40 per cent of £175,000 (£500,000 minus £325,000).

The estate can pay IHT at a reduced rate of 36 per cent on some assets if you leave 10 per cent or more of the ‘net value’ to charity in your will.

Are there any ways to save on IHT?

You can give up to £3,000 per year per person to a beneficiary without it being subject to tax after death.

If you haven’t previously given a gift in the preceding tax year then you can backdate it and make a gift of £6,000 in a single tax year.

Any gifts over this amount you give to beneficiaries while you’re alive may be taxed after your death, depending on when the gift was made.

Under the seven years rule, a ‘taper relief’ is applied that might mean the IHT charged on the gift is less than 40 per cent on a sliding scale.

Other reliefs, such as Business Relief, allow some assets to be passed on free of IHT or with a reduced bill, while trusts can help to pass on wealth tax-free.

Link: Inheritance tax climbs again – fury as more bereaved families dragged into ‘horrid tax’

For busy small businesses, a PAYE Settlement Agreement (PSA) offers a simpler alternative to pay your employees.

It allows you to make one annual payment to cover all the tax and National Insurance due on minor, irregular or impracticable expenses or benefits for your workforce.

According to HM Revenue & Customs (HMRC), if you get a PSA for these items, you will not need to:

• Put them through your payroll to work out tax and National Insurance
• Include them in your end-of-year P11D forms
• Pay Class 1A National Insurance on them at the end of the tax year (you pay Class 1B National Insurance as part of your PSA instead).

Why go for a PSA?

The scheme may allow you to cut back on paperwork and administration if you are forever totting up minor taxable expenses, such as employee entertainment, birthday presents, or incentive awards.

You will no longer have to put these expenses through your employee’s payroll, pay Class 1A NICs on them (you’ll pay Class 1B NICs through your PSA), or include these expenses in forms P9D and P11D.

The expenses categories of the settlement agreement include:

Minor expenses

These could be birthday presents, health club memberships, expenses deemed to be personal yet incidental, or even a present, flowers, or a voucher should an employee fall ill.

Irregular expenses

These could include:

• Relocation expenses over £8,000 (these are tax-free below £8,000)
• The cost of attending overseas conferences
• Use of a company holiday flat.

Impracticable expenses or benefits

These are expenses are things that are difficult to place a value on, or divide up between individual employees, but could include:

• Staff entertainment that is not exempt from tax or National Insurance Contributions
• Shared cars
• Personal care expenses, for example, hairdressing.

How to apply

You will need to contact HMRC, with a description of expenses you believe are covered.

Once they’ve agreed on what can be included, they’ll send you two draft copies of form P626. Sign and return both copies. HMRC will authorise your request and send back a form – this is your PSA.

You’ll need to report anything that cannot be included separately using form P11D. You do not need to send a P11D if you’re paying employees’ expenses and benefits through your payroll.

Use form PSA1 to help you calculate the overall amount you’ll need to pay, otherwise, HMRC will calculate the amount and you will be charged more if this happens.

Send to HMRC as soon as possible after the end of the tax year. They’ll get in touch with you before 19 October following the tax year that the PSA covers to confirm the total tax and National Insurance you need to pay.

You’ll need to give an agent a signed letter of authority to make a PSA on your behalf if they do not have the authorisation to do so.

Self-Assessment taxpayers have been warned to be on their guard against fraudsters trying to steal their information.

Over the last year, HM Revenue & Customs (HMRC) received nearly 900,000 reports from the public about suspicious HMRC contact, which included phone calls, texts or emails.

More than 100,000 of these were phone scams, while over 620,000 reports from the public were about bogus tax rebates.

HMRC is issuing reminder emails and SMS texts to Self-Assessment taxpayers about the 31 January deadline and is warning people to not be taken in by malicious emails, phone calls or texts, thinking that these are genuine HMRC communications referring to their tax return.

Some of the most common techniques fraudsters use include phoning taxpayers offering a fake tax refund.

They are also pretending to be HMRC by texting or emailing a link that will take customers to a false web page, with a similar appearance to the HMRC official page, where their bank details and money will be stolen.

Fraudsters are also known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

What to look out for

It could be a scam if calls, emails and text messages, are:

• Unexpected
• Offering a refund, tax rebate or grant
• Asking for personal information like bank details
• Threatening in their nature
• Telling you to transfer money.

More than four million genuine emails and SMS are being issued to Self-Assessment taxpayers pointing them to guidance and support.

The communication will prompt them to think about how they intend to pay their tax bill and to seek support if they are unable to pay in full by the deadline at the end of January. Taxpayers should consult their accountant for advice on this.

Always be on your guard

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Never let yourself be rushed. If someone contacts you saying they’re from HMRC, wanting you to urgently transfer money or give personal information, be on your guard.

“HMRC will also never ring up threatening arrest. Only criminals do that.

“Scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing, so if you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.”

People can report suspicious phone calls using a form on GOV.UK; customers can also forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.

HMRC has a dedicated team working on cyber and phone crimes using state of the art technology to counter misleading and malicious communication.

Anyone who is in doubt about whether a website is genuine should visit GOV.UK for more information about Self-Assessment and use the free signposted tax return forms.

Link: HMRC warns customers about Self-Assessment tricksters

Well according to a recent Employment Appeals Tribunal (EAT), yes, they should.

In this latest case, a taxi driver in Watford was employed by a firm, which dictated that as part of his conditions of employment he was required to provide a vehicle and uniform, both of which were rented from a company associated with his employer.

Rental costs

In the case of Augustine v Data Cars Ltd, Mr Augustine was employed as a taxi driver by Data Cars.

But at the end of his employment, he brought a variety of claims to the employment tribunal, including that he had not been paid the NMW.

When making remuneration calculations, there are certain allowances and expenses which are deductible.

Mr Augustine argued the cost of the car rental and the purchase of the uniform should be deducted from his total remuneration.

Successful appeal

The initial employment tribunal disagreed, concluding the payments did not need to be considered for the purposes of calculating NMW, on the basis that both payments were optional and not a condition of employment.

Mr Augustine successfully appealed, with both payments found to be deductions for the purposes of calculating his NMW.

The EAT allowed the claimant’s appeal and pointed out that the correct test was whether the expenditure was incurred “in connection with” the employment and that both the rental payments and uniform costs satisfied that test.

This case highlights the complexities involved with calculating pay for NMW purposes and the potential pitfalls of getting your calculations wrong.

Careful calculations

Employers risk a penalty and being ‘named and shamed’ publicly by HMRC if they fall foul of the NMW regulations, even if the mistakes may have been made quite innocently.

Many employers are caught out because of their uniform policies. NMW regulation 12 and 13 provide that any deductions made by an employer for the cost of uniform provided or for the cost of uniform to be purchased (whether from the employer directly, a third party generally or by the worker directly) does not reduce worker pay below the minimum wage in the relevant pay period.

The same principle also applies to tools which workers are required to provide or that they are provided with for the purposes of their work.

It does not matter that the uniform or tool can also be used for the worker’s benefit. What matters is that wearing the item or having the tool is a requirement of their employment. Any additional uniforms or tools bought by the worker are not counted for NMW purposes.

A common issue, as in this case, is that many employers do not appreciate that unbranded items of clothing, which were required to be worn at work such as white t-shirt, black trousers or flat black shoes, are also considered to be ‘uniform’ by HMRC when assessing whether NMW had been complied with.

This kind of area can be a minefield for employers, but basically, when calculating hourly pay you must divide total pay by the number of hours worked.

Remember, the National Living Wage increases to £9.50 from £8.91, while the National Minimum Wage for 21- and 22-year-olds rises to £9.18 from £8.36 from next April.

Link: Mr W Augustine v Data Cars Ltd: EA-2020-000383-AT(previously UKEAT/0254/20/AT)

Cost-saving will be key for many businesses struggling to get back up to speed after the pandemic.

Many small and medium-sized enterprises (SMEs) were hit hard and now face higher inflation, skills shortages and rising wages.

The Bank of England says the inflation figure could even hit four per cent by December. So, cutting costs can help get thousands of UK firms through these challenging times.

There are many options for businesses to cut costs, including:

Review your suppliers

Make sure you are getting the best value for money. Get a minimum of three quotes for your supplies, particularly in areas like communication, where there are often better deals to be had.

You should also give existing suppliers the chance to review their prices.

Your business is important to them, but don’t be afraid to walk away for a better deal.

Innovate

Sometimes you need to spend a little to save a lot. If you are operating on older systems or software, it may make sense to upgrade now so that you are more efficient as a business.

An example of this is digital invoicing and bill payments. These techniques could help to reduce administration costs and postage, while also helping you to avoid piles of paperwork – saving you time and money.

Many of the latest cloud accounting platforms allow you to digitise these processes, while also offering you many other benefits, including the option to go paperless.

Assess your workspaces

The requirements for your business premises may have changed during the last year, especially if many of your staff have moved to hybrid or remote working.

Assess whether your current commercial property still meets your needs or whether there could be cheaper alternatives elsewhere.

If you have moved entirely to remote working, you could do away with business premises altogether.

Go second-hand

Quite often refurbished equipment can perform just as well as new and allow for considerable savings. This does not just apply to office furniture.

Properly refurbished computer equipment can also result in big savings as can equipment like copiers.

Be aware, some capital allowance tax schemes won’t allow claims made on second-hand machinery or equipment.

Use an accountant

It may seem obvious, but using our expertise could help you cut your costs considerably.

We can look through your books and spot cost-saving opportunities that you may have missed and make a detailed analysis of the day-to-day running costs of your business.

We can also help you find reliefs and allowances that help you reduce the costs you already have by offsetting them against tax.

If you are struggling with a cost crisis, act now. Cash flow issues are one of the most common reasons for business failure.

Many small and medium-sized enterprises (SMEs) were hit hardest at the beginning of the pandemic.

They had access to support, like the Bounce Back Loan, which was easier to access and had lower interest rates, but those only helped during the short term.

Now a growing number of SMEs are struggling with debt. The latest Bank of England Credit Conditions Survey shows that the majority of banks (44 per cent) reported an increase in loan defaults by small companies in the third quarter of this year.

This is twice the levels seen during the height of the pandemic.

There are options for businesses that have got into a debt spiral, including:

Deal with priority debts first, including:

• Business rates
• Utility bills
• Mortgage and rent payments
• Outstanding tax payments
• Payments to strategic suppliers
• Bank loans
• Any form of borrowing with a personal guarantee

Consolidate or refinance loans

It may make sense to consolidate several loans into a single payment or refinance an existing loan.

With inflation increasing, businesses should take advantage of the historically low interest rates that currently exist.

You should seek independent advice before doing anything around consolidating or refinancing loans.

Tackle late-paying customers

Late payments are the bane of most small businesses. Despite Government efforts to tackle this issue, it continues to be a problem for many.

Challenging customers about their debts can be difficult. However, businesses should strengthen their credit control processes so they are paid on time.

Focus on cash flow

Cash flow is the lifeblood of your business and there are some simple measures you can put in place to help keep it healthy.

For example:

• Improve your process for chasing up debtors
• Agree on payment terms in advance
• Lease rather than buy equipment or vehicles
• Review and reduce business costs.

Boost your revenue

As well as cutting costs, you can also tackle a cash flow crisis and pay off your debts by improving your turnover.

This can be achieved by:

• Increasing leads to attract more customers
• Raising your prices
• Finding more ways to cross-sell or upsell your services or products
• Engage your staff and seek their input. They may well have ideas that are well worth putting into action.

Managing your income and cash flow can be challenging so seeking professional advice and insights could pay dividends.

Avoid debt in favour of other forms of finance

You could explore the following:

• Liquidating assets – Creditors may gain more than if a business is wound-up.
• Look for new investors – Can you generate income through the sale of shares? Have you considered the tax-efficient Enterprise Investment Scheme?
• Peer-to-peer lending or equity crowdfunding – These alternative forms of finance are great for businesses that can’t obtain traditional finance.
• Invoice financing – If you have a large number of late payments, you could finance the invoices and get paid sooner.
• Borrowing from friends or family – Beware, this can put a strain on relationships.

Make sure you’re getting fair treatment from lenders

You’re entitled to be treated fairly by your bank or building society.

The Lending Standards Board operates as an independent body (albeit one funded by its registered financial firms), with an independent board made up of non-executive directors.

Link: Small business loan defaults rise substantially

If you have to submit a Self-Assessment tax return to HM Revenue & Customs (HMRC), you only have a few weeks left to submit it online.

The clock is ticking on the 31 January 2022 online tax return deadline – miss it, and you could face fines.

The 2020/21 tax return covers earnings and payments during the pandemic, including any taxable grants or payments from COVID-19 support schemes up to 5 April 2021.

To help you get your return in on time, here is some advice:

Don’t leave it until the last minute

You’re more likely to make mistakes or miss out important information if you leave it too late.

Anecdotal evidence also suggests that tax returns submitted just before the deadline are more likely to be subject to HMRC enquiries and investigations.

Save time, be prepared

When the tax year ends on 5 April, you can start getting prepared for submitting your tax return right away. If you collect information throughout the year and stay on top of your bookkeeping, you’ll save valuable time when it comes to filling in your tax return. Plus, if you do need to get in touch with HMRC, you’ll avoid the last-minute rush in January.

Organisation is key

Make sure all of your paperwork and details are prepared ahead of time, including:

• Unique Taxpayer Reference (UTR) number (you need to register for one if you’ve not completed a Self-Assessment tax return before)
• National Insurance number
• Details of all your income; for example, if you also have rental income or have earned bank/building society interest, or have received dividend payments
• Records of relevant business expenses.

File online

If you are still using a paper return now is a great time to switch. Registering to file online makes it easier to upload all the information that HMRC needs from you. You don’t need to do it all in one go – simply save your form and fill it in when you have the time.

Keep track of income and expenses

Keep accurate records of income and what you’ve claimed as business expenses throughout the tax year so that you’re ready to go, including:

• Bank statements
• Chequebooks and paying-in slips
• Credit card statements
• Sales invoices/till rolls
• Job quotes or estimates
• Purchase invoices and expense receipts
• Payroll records
• VAT records.

This information will make completing your return much easier.

Sick of paper records? Have you considered cloud accounting?

Taking your record-keeping online could help to cut back on the paperwork you have to retain and automate many bookkeeping processes.

Budget in advance

Once you’ve submitted your return, you can manage any surprises within your tax bill by budgeting in advance and getting ahead if you need to make any payments on account.

Get help

If you don’t fancy going it alone, why not hand the hard work to us. Every year we produce hundreds of tax returns for clients.

If you need help, don’t delay. Get your Self-Assessment information over to us today.

UK businesses have had plenty to cope with over the last 20 months or so. Hammered by COVID-19, hit by a skills shortage and coping with sometimes patchy supply chains.

So, it’s even more important that they have robust measures in place to tackle fraud.

Fraud is simply the intent or the act of misrepresentation – scammers lying about themselves or their actions and services – to cause a gain or loss.

Due diligence, internet controls and risk management can often be overlooked and seem expensive or hard work.

However, according to the Metropolitan Police, this perception often leaves SMEs particularly vulnerable to fraud. With many owners and managers unaware of the risks their businesses face.

Fraud can come from anywhere, including:

• Staff members
• Customers
• Suppliers
• Third parties, unconnected to the business.

To assist businesses, here are some tips to prevent business fraud:

Be sceptical

If it sounds too good to be true, it probably is. Thoroughly question all deals, opportunities, documents, transactions and information.

Have a thorough understanding of your business, including:

• How it operates
• The staff you employ
• The products and services it provides
• Your target market and your business
• Your legal and regulatory obligations.

Know your customers and suppliers

When you understand who you do business with, you can spot any business requests or transactions that look fraudulent.

Conduct due diligence, such as checking the customer or supplier details you have on file, as well as online searches.

Identify your vulnerabilities

Imagine how a fraudster might target your business and test the systems you already use to reduce risk. Make sure you and your staff know those systems and regularly review them.

Train your team

Fraudsters will try to target your team, often trying to obtain information via email, phone calls or even in person.

You should train them to spot the signs of fraud and teach them to be cautious of unexpected emails or calls, especially those that purport to be from banks or public agencies, such as HMRC.

Develop a strategy and talk about fraud

Create a fraud prevention and detection strategy for your business. It should detail controls and procedures. Talk about fraud with your staff, suppliers and other contacts.

Take extra care against cyber attacks

With increasing threats from cybercrime, protect your business technology against attacks.

Make sure you back up your systems in case they go wrong or are attacked.

Invest in programmes and services that help to deter or prevent fraudsters from committing fraud.

Understand how money leaves your business, including:

• Methods of payment
• Who has the authority to make those payments?
• Who checks payments are legitimate?

Secure and protect your property

This includes laptops, computers, smartphones and intellectual property.

Factor in business insurance to cover these items if they’re compromised or stolen.

Develop an action plan

Consider when you might need professional or legal advice.

While prevention is better than cure, you and your business need to prepare for the worst. Having an action plan in place will help limit your losses to fraud.

Always report fraud and get help

Action Fraud is the UK’s national fraud and cybercrime reporting centre or you can also report fraud to the police.

If you receive suspicious communications from HMRC or other public agencies make sure you report them as well. HMRC has a dedicated fraud service found here.

The Help to Grow campaign was first announced in the Spring Budget earlier this year but received yet another mention in the Autumn Budget as the Government ramps up support for smaller businesses.

It has been designed to help more than 100,000 SMEs access management training and advice on innovations that are focused on boosting productivity.

Within the latest Budget, the Chancellor committed an extra £196 million in 2024/25 for the Help to Grow Schemes.

What is Help to Grow: Management?

This part of the initiative has already been launched in more than 20 business schools across the UK. It is offering thousands of businesses the opportunity to access an industry-led curriculum, one-to-one mentoring, and alumni network backed by Government funding. Its goal is to provide better training to business owners and their management teams.

What is Help to Grow: Digital?

This will provide SMEs with impartial, high-quality advice on how to use productivity-enhancing software that can benefit their business.

From December, SMEs will be able to access support through the online platform and vouchers to help them with the costs of adopting new software, including cloud accounting systems and support.

What other support is being offered alongside these programmes?

The Help to Grow Scheme is part of a larger campaign that included the launch of the British Business Bank (BBB).

The BBB has already had £484 million invested into it by the Government and the Autumn Budget confirmed a further £1.4 billion of investment in future.

The BBB’s primary goal is to help “businesses thrive and address regional finance gaps”, it wants to make sure that small and medium-sized enterprises (SMEs) can access the finance they need to thrive.

Funding initiatives from the BBB include the Start-Up Loans Scheme, the Regional Angels Programme and the expanding Regional Funds.

How can businesses access the support on offer?

If businesses are interested in using either the BBB’s loans or the Help to Grow Schemes, they should speak with their advisers first to make sure that the funding and support meet their goals.

They can also visit the following sites for more information.

• Help to Grow
• British Business Bank

Link: Autumn Budget 2021