Martin Spittle of Colston Bush updated members on business issues

 Carry back of losses

A reminder that unincorporated businesses trading before the self assessment rules introduced in 1997 may have overlap relief available which can augment possible loss relief if the year end of the business is changed to a date nearer to 5^th April 2009 or 2010. 

Capital Allowances

The new temporary First Year Allowance of 40% applying to qualifying expenditure in the 12 months from 1^st April 2009 for Companies or 6^th April 2009 for unincorporated businesses is not expected to benefit 96% of businesses.  This relief is after Annual Investment Allowance of 100% of qualifying expenditure up to £50,000. 

 VAT 

Forfeited deposits do not represent the supply of goods or services and are not therefore subject to Output Tax.  There will be anti forstalling provisions to ensure advantage is not taken of the change of VAT to 17.5% on 1^st January 2010. 

Penalty Regime 

The increased penalties introduced in the Finance Act 2007 came into effect in April.  Particular care should be taken to ensure accountancy staff do not incorrectly analyse business and personal expenditure because of inadequate information.  The Inland Revenue Manual gives this as an example of concealed inaccuracy which could lead to a penalty of 70% or more of the tax involved. 

 Employment Matters 

Equal Treatment Framework Directive gives protection from unfair treatment of an employee arising out of association with a disabled person. 

Redundancy payments may not be appropriate if suitable alternative employment has been offered.  If suitable alternative employment is available but not offered to an employee the result could be a claim for unfair dismissal.  Appropriate legal advice should be sought when considering matters of redundancy. 

An employee’s right to request once in any 12 month period flexible working arrangements as a parent of a child up to 6 years is from 6^th April 2009 extended to parents of children aged 16 and under.  Details of the grounds for turning down such a request and further information is given on the government website  

Business Rates Deferral Scheme

Some information is available but it is not expected the local authorities will issue details until July.   An example was given of business premises with a rateable value of £26,000.  The rates payable would be about £12,000 and of a 5% increase of £600 60% could be deferred.  Half of the deferred £360 would be payable 2010 – 11 and half 2011 – 12.  The example can be applied pro-rata to higher and lower rateable values to assess the sort of potential sum involved.

HM Revenue & Customs

 Online video guides for new and small businesses are intended to provide an overview of a range of tax issues.