Stay safe online

The Xero Website had a good article about being safe online to protect yourself, your customers and employees.

The three things we can all do are:

• Have a good password strategy
• Be aware of phishing emails
• Keep anti-malware up-to-date
• Keep your operating system and application software patched and up-to-date

A good password strategy means:

• Not sharing a password (even with friends)
• Always using complex passwords
• Changing passwords at least once a month
• Use different passwords for different applications
• A complex password is a long password made up of numbers, letters and special characters ($,#,%,&, etc). The longer your password the better because it is harder to guess.

A phishing email looks like it comes from a trusted source and tries to trick you into providing passwords and other important data. Look out for:

• Incorrect spelling or grammar
• Different URLs
• Requests for personal information
• The email calls for urgent action.
• The email says sounds too good to be true
• The email doesn’t use your name

We hope this helps you stay safe online.

Do one in three business need to change strategy?

All businesses should take time to think about the big picture – this is called Strategic Planning.

At Sackmans we recommend you do a full strategic plan every five years because things change so quickly. If you have not done one for a while, now could be a good time.

According to a study by researchers at Oxford University and Deloitte, just over a third of current jobs in the UK are at high risk of computerisation over the following 20 years.

The researchers based the work on nine key skills required to perform it; social perceptiveness, negotiation, persuasion, assisting and caring for others, originality, fine arts, finger dexterity, manual dexterity and the need to work in a cramped work space.

This is bad news for employees, but especially for business owners.

If you are under 45 years old and you plan on earning money for 20+ years (or want to sell up as part of your retirement) you may need to radically change your business strategy and diversify.

The BBC has created an online application to help you see if you are likely to be affected. To use it click here.

No gain mean no pain

Married couples and civil partners can reduce Capital Gains Tax (CGT) by making use of a special rule which allows them to transfer assets between them at a value that means there is no gain or loss for tax purposes.

This rule can be used with assets help in one person’s name or for assets held in joint names.

An example would be Simon and Jane who are married. Simon bought a painting for £1,000 which is now worth £10,000 that he wants to sell. But, he is a higher rate tax payer and has already used is CGT allowance so would pay 28% tax on £9,000.

But, if he transfers the painting to Jane (who is a lower rate tax payer), she can sell it and not pay any tax because the gain is below her CGT allowance. She will be treated as buying the painting on the same date and at the same price that Simon did.

If in the following year, Simon wanted to sell a house he owned with a gain of £33,000, he could transfer 33% and use Jane’s CGT allowance. Or, he could transfer 66% and use both their allowance and her lower rates of tax.

Make sure you use the no gain rule if want to sell assets which have a CGT liability.

Common VAT Traps

Here are some VAT traps to be aware of:

Avoiding VAT registration by business splitting
There are rules to prevent people avoiding VAT registration by splitting sales between different people.

It’s important to keep in mind that a “business” is not registered for VAT -a person is. The person can be an individual, partnership or company. The classic example is a pub where the pub with accommodation – the husband’s name and the accommodation is in the wife’s name.

If you have more than one business that you treat separately fro VAT be careful.

Not applying to use VAT flat rate scheme
Unlike other VAT schemes like Cash Accounting, you need to get the permission of the tax office to use the Flat VAT Rate Scheme.

It’s important you get their agreement to use the scheme because applications cannot be back-dated. This could cost you thousands of pounds.

Reclaiming VAT on parking meters
You need a valid VAT invoice to reclaim VAT and on-street parking meters are not subject to VAT so there will not be a VAT number on the receipt.

This maybe a very small thing but if the tax office spots this it could encourage them to look closer at your business and assume there are other errors, like not declaring all your income.

Note – all parking tickets should be checked carefully as council parking generally does not have VAT.

Claiming VAT on business entertaining
VAT is not recoverable on any entertaining – that includes lunches with clients unless they are overseas customers.

However, you can claim the VAT on your annual party if it is below £150 per head. And, you can have two parties at £75 a head.

Failing to repay VAT on unpaid invoices
If a business has not paid a supplier bill for over six months (and they originally reclaimed the VAT under the accruals basis) they need to repay the VAT to the tax office.