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Making Tax Digital

Making Tax Digital

Have you heard of HMRC’s Making Tax Digital (MTD) project?

Starting in April 2019 all VAT Registered businesses will be compelled to submit their VAT Returns through approved software as HMRC will switch off the VAT submission section of their website in order to ensure that they can capture more business information and a full audit trail of the data behind the VAT Return.

A year later will see all Limited Companies and Sole Traders with a turnover in excess of £10,000 per annum having to make quarterly profit returns to HMRC.

This is now a great time to get involved with this project and to use it as a launch pad for improving the information that you have available to help you to run your business and achieve your goals.

React Accountancy have all the tools and experience that you need to help you on this journey and our mission is to help our clients grow, become more efficient, more profitable and more successful.

Don’t worry about the changes that are coming – we are happy to offer you a free consultation to fully explain MTD and the opportunities that it represents.

Get in touch – we love to talk & love it even more when we’re helping businesses to thrive!


Summer Budget 2015 – New rules for Landlords

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Mortgage Interest Relief:

Under current arrangements, interest paid on a loan or mortgage used to purchase a property which is let can be deducted from the rental income from the letting before calculating any income tax due. The Government is to change this longstanding rule and replace it with an income tax deduction at the basic rate (20%) on the interest paid.

As this is a major change for landlords the change will be phased in from 2017/18 with the amount of the tax deduction from rents reducing and the amount of basic rate tax relief given increasing. In the transition years landlords will be able to claim:

  • 2017/18 – 75% of the interest against rents, basic rate tax relief on 25% of the interest
  • 2018/19 – 50% of the interest against rents, basic rate tax relief on 50% of the interest
  • 2019/20 – 25% of the interest against rents, basic rate tax relief on 75% of the interest
  • 2020/21 – only basic rate relief will be given on the interest

Wear & tear allowance:

Existing arrangements for furnished lettings allow a fixed annual deduction for wear & tear on soft furnishings and moveable furniture of 10% of the rents – this is to end from April 2016. From 2016/17 onwards, landlords will instead claim only for expenses actually incurred during the year.

Rent a room scheme:

The annual tax free amount that landlords can receive from letting a room in their own home is to increase from £4,250 to £7,500 from April 2016 onwards.

Overall affect:

Individuals letting a number of properties may to see an overall reduction in the tax relief they obtain on the financing element of their letting business. The Government’s stated intention is to “make the tax system fairer” however, it is perhaps inevitable that higher financing costs will be passed on by landlords to their tenants through higher rents. As regards the changes to the wear & tear allowance, additional record-keeping will be necessary in future years to ensure that all replaced items can be claimed.

Contact us for more details


Every cloud has a silver lining

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I was sad to hear of the demise of the company that I worked for before setting up React Accountancy four years ago. Up until a management buyout at the end of 2011 the company had been successful and an enlightened employer with an easy going approach and very high staff morale – in my career of 25 years at that time Turney Wylde Construction were the best employer that I had worked for.

So it is sad to see that the business failed under different management and particularly sad for the many long-serving employees, subcontractors and suppliers who have lost out.

However, shortly after the company went into Administration I was contacted by Sandra who reported to me at Turney Wylde and she asked politely whether I would mind providing her with a Reference. I replied that I would be more than happy to do so due to the respect I have for her work but, as React Accountancy is expanding, perhaps we should talk about whether she could join our staff.

So, the loss of Turney Wylde has turned out to be React Accountancy’s gain & Sandra Lockey joins the company officially on 10th August.

Welcome aboard Sandra!


The Week in Review: Christmas Parties

Wine at Christmas

Monday.

Time for work.

After filling your face with Weetabix and adorning your work clothes, you step outside and close the front door behind you. Hot wisps hang in the air after every breath. You walk over to your car, which lies victim to the frost that slowly covered it during the winter night, and hear ice crunching beneath your boots. The morning is silent, except for the odd chirp of a robin that has chosen to brave the winter season.

‘Tis the season to be jolly, but also ‘tis the season to frantically charge around overcrowded shops the weekend before Christmas Day, snaking between equally distressed people whose arms are flailing about in an attempt to grab whatever remains on the bare shelves. Instead of subjecting yourself to that kind of torture, why not spend the last few days of the working year with your colleagues and arrange a staff Christmas event?

‘But that’s also torture,’ I hear some of you say. Fair enough. However, unbeknownst to some, HMRC will actually relieve some of the tax you incur as part of the cost of the event if you fulfil certain conditions. In English, this means cheaper drinks and a wilder night, as you can recoup some of the costs of the event that you may not be able to remember because you had one tipple too many. Convinced yet? If so, read on. If not, keep reading anyway; the alternative is to return to work with your colleagues that you don’t like, and I’m sure you wouldn’t want to do that.

So let’s begin. There are certain criteria that you must meet in order to make a successful claim. HMRC are a little pedantic when it comes to these criteria, but they are by no means strict.

First of all, you cannot simply hold an event that employees happen to turn up to. This is because, in the eyes of HMRC, business entertainment (on which you cannot receive tax relief) is not the same as employee entertainment (on which you can receive tax relief). Therefore, you must class your event as employee entertainment; when an employer provides entertainment for the benefit of their employees, they do so wholly for business purposes.

For some odd reason, HMRC also have an issue with providing business entertainment events for directors, partners of a business or sole proprietors, and don’t allow you to claim tax back on events that only include these types of people. However, where directors and partners of a business attend staff events together with other employees, HMRC allow you to claim tax back. Weird, but true.

Finally, it is fine to allow non-employees to attend the event as well, but you can only claim back tax on costs incurred by your employees.

And that’s not all! If you were convinced that every shred of generosity had been sapped from our government in recent years, and are shocked at what you’ve read above, then what’s coming will absolutely blow your socks off.

There are particular benefits available if you class your event as an annual party that is available to all employees. If the employer provides one annual event for employees, and the cost of the event per head does not exceed £150, you won’t have to pay any tax. (The cost of the event includes VAT and the cost of transport and overnight accommodation, if these are provided to enable employees to attend. In order to arrive at the cost per head, divide the total cost of the event by the total number of people, including non-employees, who attend).

That’s basically all that you need to know. There’s a lot to take in here and a few fancy words have been thrown about, so I’ll summarise it for you below:

  • Basic business entertainment must be classed as employee entertainment, where an employer provides entertainment to an employee for the benefit of the business, in order to receive tax relief.
  • Events that include only directors, partners or sole proprietors are not part of the basic scheme.
  • Events that include both employees and directors, partners of a business or sole proprietors are part of the basic scheme.
  • Non-employees attending events are not part of the basic scheme.
  • Events classed as annual parties do not incur tax if the cost of the event per head does not exceed £150. This cost per head includes everyone attending the party.
  • If you have any queries, feel free to contact REACT.

Hopefully this clears things up for those who find themselves at some business party somewhere and are unsure whether they can slap another drink onto business expenses. Follow the guidelines above, and HMRC won’t charge tax on your food and drink at your next event. Merry Christmas indeed!

The Week in Review is written by Mitch, our apprentice. Stay tuned to hear more about his adventures here at REACT.


The Week in Review: Interview with Doug Ackerman

This blog is a follow-on from last week, where we discussed the importance of customer service. If you missed it, be sure to check it out here. This week we interviewed Doug Ackerman, of CustomerSure, about the product he is involved with and why it is such a useful tool for businesses.

Hi Doug, thanks for taking the call. First things first, what is CustomerSure?
No problem. CustomerSure is an easy and effective customer service app that enables companies to prove their dedication to customer service by finding and fixing every problem their customers experience. It does this by enabling businesses to easily collect feedback, act upon it, and publish stunning reviews on their website.

And what was the reason behind developing the product?
Guy Letts previously ran a department tasked with improving revenue. He soon found that the best way to achieve this was by increasing customer retention rates by improving customer service.

After trying everything suggested in customer service books, he hit upon the simple idea of reaching out to customers systematically at a time that was most relevant to them. By asking for customers’ feedback to check they were satisfied, Guy was able to find and fix problems, meaning the department was able to keep many more hard-won customers.

Guy wanted to be able to help more businesses implement this system – he then left to set up and develop CustomerSure.

That’s brilliant, because we’re strong believers in customer service. What does CustomerSure do that makes it worth using?
Without customers, there is no business, so it is important to keep them happy. CustomerSure provides a variety of ways to collect feedback at a time that’s relevant to the customer. For example, after you’ve received an invoice, to check that you’re happy with the service.

By asking at a time that’s suitable for the customer, you’ll get a much better response rate, customers will be able to provide you with much more accurate and useful information, and you’ll be inside the window of opportunity to fix any issues which crop up. Your customers will also know that you care about them, that you want to make sure they’re happy with your business. This builds trust between your company and your customers.

CustomerSure also enables you to quickly pinpoint any recurring issues, so you know where you might need to improve.

And what is the biggest challenge facing businesses when it comes to reacting to customer feedback?
Good question. For many businesses, before using CustomerSure, the biggest challenge they face is in systematically handling feedback. Making sure that it’s made use of. Not stuck away in some long-forgotten drawer or computer folder.

There’s little point in asking customers for their feedback unless you’re set up to respond. Once you are set up to respond, with a system like ours, the biggest roadblock to responding to feedback is removed. It’s then just a case of making it part of your business as usual, which happens quite naturally.

Just one last question before I let you go, Doug. What is the main thing you would like readers to take away?
Customer feedback is vital to business success, but your customers won’t necessarily always come forward when they have a concern. They are more likely to suffer in silence. And you’ll never have the opportunity to fix the situation before they leave. Businesses must take the proactive step and actually ask for feedback.

If you focus on what your customers are after, and deliver what they want, it’ll make you stand out.

Thanks very much for your time, Doug. We appreciate it.
No problem at all.

The Week in Review is written by Mitch, our apprentice. Stay tuned to hear more about his adventures here at REACT, or head over to CustomerSure’s blog to garner useful tips on keeping customers happy.


The Week in Review: The Importance of Customer Service

The Week in Review: The Importance of Customer Service

In today’s world, customers demand more. Whichever business sector you look at, certain standards have been set by corporate giants that small businesses perhaps feel obliged to adhere to. In fast food chains, you can buy exactly the same burger in Newcastle as you can in London. In retail superstores, the look and feel of the hundreds of shops under the same brand name are identical. Branching out to the Internet, almost every modern software company out there has that funky scrolling page of features with a 30-day free trial resting conveniently at the bottom. For small businesses, this can be daunting because you have to be sure that your service matches up to these expectations. If it doesn’t, chances are you may receive a few complaints here and there.

Whether you’re a sole trader or a small limited company with only a couple of employees, it’s easy to become distracted in the daily running of a business. Managing sales, social media, expenses, employees and accounts all at the same time, in order to meet customer expectations, can be a daunting task and may lead to neglect of other areas of a business. However, one area which I believe should not suffer under any circumstances is customer service, and here’s why:

Customers are the lifeblood of your business.

At the end of the day, your customers are the ones who provide the money that pays your wages, your administration costs and your overheads. Without customers funding your operations, there’d be nothing to sell to them and your business would implode. Surely keeping your customers happy should be the most important task on your list?

One way to keep customers happy is to stick to your word – an easy way to do this is to under-promise and over-deliver. For example, promise a delivery within three working days but deliver the next day. The customer is pleasantly surprised at how fast the service was and will likely use you again. Deadlines are something else that shouldn’t be taken lightly and this holds especially true when it comes to accounting; HMRC can issue fines and penalties for documents that aren’t filed on time so keeping track of these is of utmost importance. Shameless plug, but us lot at REACT will make sure this doesn’t happen to you. And if you have no idea what these documents are then give us a call. The number is right there at the bottom of this page.

At REACT, we’re dedicated to keeping our clients happy and you should be too, because happy customers bring obvious benefits to your business. Not only will they be more inclined to buy from you again, but they may tell their friends and family about your services, too. Unhappy customers, on the other hand, are no less vocal about their opinions and if someone is unhappy, they won’t be afraid to pipe up about it. This is nothing to worry about if they contact your customer service team directly, as the problem can be rectified and the happy relationship between business and customer restored. However, one platform that can be a nightmare for businesses is social media. Without trying to be a scaremonger, one negative comment can spiral out of your control into a viral storm and the reputation of your business can be ruined with a single tweet. As a result, customers could be lost, meaning less money for you. A fantastic example of social media support done well, however, is local water company Northumbrian Water. They have a whole Twitter page dedicated to customer complaints or queries. In one case, a customer couldn’t contact the company by phone so posted on Twitter instead, and within half an hour a service van was outside their door. This painted a positive picture of Northumbrian Water, and they managed to turn around a complaint into a success story that people can see. Complaints are not a bad thing if dealt with correctly.

What’s the best way to deal with complaints, you ask? In short, taking a more personal approach goes a long way. No one wants to talk to a machine because it’s like talking to a brick wall, so make sure there’s a real person on the other end of the phone to talk to the customer. Additionally, telling someone their complaint will be taken on board and actually acted upon not only improves your business, but is arguably the most important thing to consider when dealing with a complaint. After all, everybody likes to be listened to.

Next week we will be talking to Doug Ackerman, a Communications Manager at CustomerSure. In the meantime, be sure to check out their blog here. It is full of information about keeping customers happy, from the experts themselves.

The Week in Review is written by Mitch, our apprentice. Stay tuned to hear more about his adventures here at REACT.