Business group calls for superfast broadband to ‘revitalise rural firms’

The Federation of Small Businesses (FSB) is calling on the Government to give rural firms access to superfast broadband by 2015, in a bid to revitalise the rural economy.

According to the FSB’s latest survey, six in ten rural firms are suffering as a result of slow broadband speeds.

63% of small firms in rural areas reported that they were not satisfied with their broadband connection speed. This compared with 48% of businesses in urban areas.

Although the Government has announced the launch of 10 ‘super-connected’ cities by 2015, the FSB believes that this will serve to further widen the digital divide, particularly as many rural businesses in isolated areas are reliant on the internet.

John Walker, FSB National Chairman, said, ‘These figures show that many rural firms are still unable to access basic broadband to run their business effectively. It shouldn’t matter where a business is located. With the technology we have today all firms should be able to trade overseas, throughout the UK, and from town to village’.

If Tax Matters To You, YOU Matter To Us.

If you would like to talk to us about any accountancy needs, please contact us on +44 (0)20 8861 7575, or visit our website at www.lawrencegrant.co.uk

Consumers are being ‘misled by supermarket discounts’

Customers are being misled by supermarket discounts, multi-buy offers and other sales tactics, according to the consumer watchdog Which?.

In a new report, Which? claims shoppers are frequently being duped into believing that they are getting a better deal than they actually are.

The organisation analysed more than 700,000 prices and found that in some cases ‘discounts’ ran for much longer than the original price.

It also found that some supermarkets inflate the old price in order to make the new, lower price appear a better deal than it actually is.

Which? used data gleaned from the independent grocery shopping website MySupermarket.co.uk from 31 January 2011 to 1 February 2012.

‘At a time when household budgets are squeezed and food bills are going up, many people are on the lookout for a bargain,’ said Which? executive director Richard Lloyd.

‘It is unacceptable that shoppers are confused into thinking they are getting a good deal when that might not be the case.’

However, both Tesco and Asda said the pricing anomalies were errors.

‘We change millions of price labels in store and online each week and we sometimes make mistakes, for which we apologise,’ said Tesco. ‘We make every effort to ensure we act in accordance with government guidelines on price promotions.’

Asda said: ‘We are only human, and occasionally we make mistakes. By and large our systems and procedures ensure those instances are kept to an absolute minimum, but when we do get it wrong, we put our hands up to say sorry, and put things right as quickly as possible’.

If Tax Matters To You, YOU Matter To Us.

If you would like to talk to us about any accountancy needs, please contact us on +44 (0)20 8861 7575, or visit our website at www.lawrencegrant.co.uk

US accountancy students to visit UK accountancy to learn from our expertise

We are delighted to announce that the Kent State University in Ohio, America, will be coming to London during May, and as part of their fact finding trip, will be visiting our offices in Harrow, Middlesex on 24^th May for a seminar to give the students an in-depth understanding of how accountancy practices operate within the UK, in direct comparison to tax systems in the United States.

 Alan Rajah, Partner at Lawrence Grant, Chartered Accountants, was contacted directly by the University, because of his firm’s long standing association with the Geneva Group International (GGI) – the world’s leading and fastest-growing mulit-disciplinary network of international tax consultants, accountants and solicitors.

 Kent State University, which supports around 1,000 students from around 100 countries, is one of the largest regional campuses in the country, with a tradition of students studying accountancy. With many students into their third or fourth year of studies, the visit to our firm, and the presentation they will receive, has been tailored to help and support the students as they look to set up practices of their very own, in the next couple of years.

 Alan Rajah says: “We are really looking forward to meeting the students to give them a really interesting insight into how accountancy practices operate within the UK, and feel this is an excellent opportunity to outline our International expertise of the UK’s tax system, and in particular, how it differs from their own.

As many of them will go on to set up their own practice, they will have the added advantage of being able to impart this knowledge when speaking to US companies, which we hope in turn, will encourage multi-lateral business trading opportunities here in the UK and across Europe. We wish them all very successful futures.”

For further information, or request an interview with Alan Rajah or obtain images of the students’ visit, please contact Paul Atkinson, Marketing Manager at Lawrence Grant on +44 (0)20 8861 7575

Single 30% income tax rate needed to boost economic growth

Introducing a single 30% income tax rate would help to boost the UK’s ailing economy, according to a report by economists and company directors.

The report, published by the 2020 Tax Commission, also calls for the abolition of national insurance and stamp duty, and for the basic personal allowance to be raised to £10,000.

It suggests that these measures would result in a tax cut of £3,400 for a two-earner household with an income of £28,000, and could lead to an 8.4% increase in UK GDP after 15 years.

The Commission, which was established by the TaxPayers’ Alliance and the Institute of Directors (IoD), aims to address the complexity of the UK tax system.

The lobbyists also propose limiting taxation as a whole to a third of national income, and limiting spending to the same level. However, this would mean extending cuts in public expenditure to 2020.

Chairman of the Commission and editor of the City AM newspaper, Allister Heath, said; ‘It is time for Britain to make a vital choice between tweaking the status quo and letting our economy continue to be crippled by complex and punitive taxes, and drastically changing course with a radical but realistic plan for a tax system fit for the 21st century.

‘The 2020 Tax Commission has set out that plan and would ensure that income is taxed once at a single, much more reasonable rate. It could create the conditions to establish the UK as a global trading hub, generating renewed prosperity for all those who live and work here.’

Meanwhile Graeme Leach, director of policy at the IoD, commented; ‘This is a radical and practical plan for reforming our tax system to make it fairer and better for the economy’.

‘Fiddling with the system causes more complexity and has little benefit to growth – this proposal would put a rocket under economic confidence’.

Good News: Employers are ‘more confident about hiring’ despite economic gloom

Business groups have given mixed reactions to the latest labour market data from the Office for National Statistics, which suggests that employment rose by 105,000 in the three months to March, with unemployment falling by 45,000 on the previous quarter.

The Confederation of British Industry (CBI) gave a positive response to the news, arguing that the figures show employers are feeling more confident about hiring despite the gloomy economic outlook.

The organisation also welcomed news of a fall in the number of young people out of work, but expressed concerns over the increase in long-term unemployment.

Katja Hall, Chief Policy Director at the CBI, said, ‘While it is encouraging that people are finding work, the increase in long-term unemployment is a concern. These figures emphasise the need to ensure that the work programme delivers and stops people drifting into inactivity’.

Meanwhile, the British Chambers of Commerce (BCC) described the figures as ‘encouraging’ but warned that many challenges remain.

David Kern, BCC Chief Economist, said, ‘Youth unemployment, though down, remains above one million which is a jobless rate for young people of more than 20%. The number of people working part-time because they could not find a full-time job has risen further to a new record high’.

‘The combined effect of the situation in the eurozone and the Government’s austerity measures will likely cause future job losses over the next year. Measures like real de-regulation, and the creation of a business bank to help improve access to finance, will boost confidence and encourage firms to invest and create jobs and growth’, he added.

Experts highlight the ‘serious flaws’ in the child benefit changes

Government plans to reduce child benefit for families where an individual earns more than £50,000 have come under fire from a leading accountancy body.

Child benefit is currently paid to all families with children under 16 years of age (or in some cases up to 20 years of age), at a rate of £20.30 a week for the first child, and £13.40 a week for any subsequent children.

However, the Government has stated that those on low incomes should not be subsidising those on higher incomes, and plans to reduce the benefit for higher earners were confirmed in the 2012 Budget.

The changes mean that from January 2013 the benefit will be gradually withdrawn where one parent’s income exceeds £50,000, being eroded entirely where income reaches £60,000 or more.

At this point an individual will either need to stop claiming child benefit, or alternatively declare receipt of the benefit in a self assessment tax return, in which case HM Revenue & Customs will tax them by an equivalent amount.

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that the measures undermine the principle of individual taxation, by making it necessary to claw back from one person a benefit that is paid to another person, and by expecting couples to disclose to each other their level of income and whether they are claiming the benefit.

Critics have also highlighted the fact that the move goes against the principle of a universal child benefit, which is paid to all families regardless of circumstance.

A further loophole was highlighted in the run-up to the Budget, with experts warning that while a single parent earning £50,000 or more would lose the benefit, a family with two parents who each earn just under £50,000 would retain it.

The ICAEW has written to MPs and the Treasury, outlining the problems that it perceives to be inherent in the plans.

Employers call for rise in minimum wage for apprentices

The national minimum wage (NMW) for apprentices should be increased in order to improve the image of internships amongst young people, employers have said.

In the latest Labour Market Outlook survey from the Chartered Institute of Personnel and Development (CIPD), the majority of employers suggested that the apprentice NMW should be almost doubled to £5.00 an hour.

Under the current regulations, apprentices under 19 or 19 and over in the first year of their apprenticeship, are entitled to a minimum hourly rate of £2.60. This is due to rise to £2.65 from 1 October 2012.

However, the CIPD claims that increasing the apprentice NMW would make apprenticeships a more attractive option for school leavers.

‘It may be that employers are concerned that the apprenticeship rate doesn’t look as good in comparison with the youth development rate [for workers aged 18 to 20] or the 16 to 17-year-old rate,’ said the CIPD’s reward adviser, Charles Cotton.

‘People coming out of school could see the rate that is attached to apprenticeships as indicative that the scheme is of low value and of low importance.’

He continued; ‘I think many organisations in our sample are trying to improve the image and status of apprenticeships. They’re promoting them as a gateway for people to improve skills and knowledge, improve pay and potentially lead them into management roles.’

A significant number of employers also felt the NMW for individuals aged 16 and 17 should be increased by £1.22 to £4.90 an hour, while the rate for those aged 18 – 20 should be raised to £5.20.

Three million taxpayers will ‘receive early tax refunds’

Up to 3.5 million taxpayers are set to receive tax refunds from HM Revenue & Customs (HMRC), as the annual reconciliation of PAYE for 2011/12 begins.

The process, which is taking place two months earlier than last year, will see individuals who have paid too much tax receiving average repayment of £379.

However, around 1.6 million people will be informed that they have underpaid their tax, and will need to make up an average £537 each. The sum owing will normally be collected in instalments through the PAYE system.

While around 85% of individuals pay the correct amount of tax under PAYE, changes in personal circumstances during the year, such as changes to benefits in kind, moving jobs, or having gaps between periods of employment, mean that the remaining 15% pay too little or too much tax.

Stephen Banyard of HMRC said, ‘We are pleased that we are able to start this process more quickly than in previous years, giving money back to those we owe and delivering certainty to those with something to pay’.

The introduction of the new Real Time Information (RTI) system will require employers and pension providers to tell HMRC about PAYE payments as they are made, rather than at the end of the year, meaning that more people should pay the correct amount of tax.

However, some organisations have expressed concerns that smaller businesses could encounter problems with implementing the new filing requirements under RTI, due to a lack of resources and technical knowledge.

If we can help you with any tax and financial planning needs, including ensuring that your PAYE code is correct, please do contact us for further assistance.

The Bribery Act – We assess what your business needs to know

Effective from 1 July 2011, the Bribery Act 2010 means that businesses need to ensure that they have adequate procedures in place to prevent acts of bribery and, should the worst happen, protect themselves in a legal dispute.

While the Act will affect some firms more than others, all organisations should review their existing policies and take action if required – failure to do so could result in a substantial fine or even imprisonment.

What is the Bribery Act?

Introduced towards the end of the last Parliament, the Bribery Act 2010 replaces the existing anti-corruption statute and common law. It covers bribery which takes place in the UK and overseas, by employees and third parties employed by the organisation.

The Act outlines four offences of bribery and introduces a new corporate offence of bribery. It also makes it easier to prosecute offenders. In summary, it provides:

• a general offence of active bribery, which prohibits giving someone a financial or other advantage to induce them to perform their duty improperly
• a general offence of passive bribery, which prohibits requesting, receiving or accepting a bribe
• an offence of bribing a foreign public official in order to win business, keep business or gain a business advantage for the organisation
• an offence relating to failure by a business to prevent a person associated with it from committing the above offences on its behalf in order to win business, keep business or gain a business advantage for the organisation

According to the Act, a person is guilty of bribery ‘if he offers or gives a financial or other incentive to someone with the intention of getting that person or a third-party to perform a function or activity improperly or as a reward for an improper act’. He or she is also guilty if they know or believe that the offer or payment itself constitutes an improper performance of a relevant function or activity.

This factsheet provides a general overview. If you would like more detail, the Ministry of Justice (MoJ) has released comprehensive guidance on the Act, including advice for businesses on the new offence of corporate bribery. Copies can be found in the ‘Guidance’ section on the MoJ website: www.justice.gov.uk.

Some key terms

Relevant commercial organisation - The MoJ guidance defines a ‘relevant commercial organisation’ as a body or partnership incorporated or formed in the UK irrespective of where it carries on a business. It may also be an incorporated body or partnership which carries on a business or part of a business in the UK irrespective of the place of incorporation or formation.

Persons associated - The Act provides a partial definition of an ‘associated person’ which includes an employee, agent or subsidiary but the definition would also extend to a joint venture partner.

Improper performance - ‘Improper performance’ covers any act or omission that breaches an expectation that a person will act in good faith or impartially, or is in a position of trust and fails to do so. It is determined through an objective test based on what a ‘reasonable person’ in the UK would expect in relation to the relevant activity.

The penalties

Those found guilty of an offence face significant penalties. From 1 July the maximum penalty for bribery rises from seven to 10 years imprisonment and/ or an unlimited fine. Disqualification from acting as a director for a substantial period of time may also arise in some cases.

Corporate hospitality

One of the areas of concern highlighted by businesses relates to the provision and receipt of corporate hospitality, promotional and other such business expenditure. Under the strict rules of the Act, it would appear that these activities may constitute bribery offences.

The MoJ has attempted to clarify this issue, stating that it is not the intention of the Act to criminalise bona fide, proportionate and reasonable hospitality and promotional expenditure ‘which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations’. For example, it will still be acceptable to take a client for a meal at a nearby restaurant, but disproportionately lavish gifts may be considered an offence under the new Act.

Facilitation payments

A ‘facilitation payment’ refers to the practice of paying a small sum of money to a public official (or other person) for performing routine functions which they were obligated to perform in any case.

Despite many objections, these payments are classified as bribes under the Act and are therefore illegal.

Defending your business

Adequate procedures and proportionate risk

An organisation will have a full defence against the corporate offence if it can show that it had ‘adequate procedures’ in place to prevent an act of bribery. The Act does not define the meaning of ‘adequate procedures’ and it is therefore open to interpretation. It is here that businesses will need to consult the MoJ guidance on the matter.

The guidance requires procedures to be proportionate to the organisation’s bribery risks. What counts as ‘adequate’ will therefore depend on the bribery risks faced by a business and its nature, size and complexity. The risk is likely to be increased if you operate overseas. For instance, a large organisation employing 500 people with a number of overseas outlets will need to make more provisions than a self-employed plumber.

However, the MoJ guidance does recognise that the Act is not there to impose the ‘full force’ of criminal law upon well run businesses for an isolated incident of bribery. It also states that ‘a small or medium-sized business which faces minimal bribery risks will require relatively minimal procedures to mitigate those risks’.

What do you need to do?

The MoJ guidance identifies the following six guiding principles for businesses wishing to prevent bribery from being committed on their behalf:

• Proportionate procedures
• Top-level commitment to ensuring the company is unified in preventing bribery
• Undertaking occasional risk assessments
• Applying due diligence procedures
• Communication and training
• Monitoring and review.

With these principles in mind, you will find a number of tips below designed to help your business prepare for the new bribery regulations.

1. Assess the risk

As a first step, you should review the current activities of your business and identify any particular areas where there is a risk of bribery being committed on behalf of your business. Some of the factors that you may want to consider include:

• Is yours a small, medium or large-sized business? Are you part of a group?
• Does the firm have complex operations?
• What sector does the business operate in and does this heighten the risk?
• Does the business operate outside of the UK? If so, which countries and are bribery and corruption known to be commonplace in any of these countries?
• Do you make use of agents?
• Could the type and levels of corporate gifts, hospitality or promotional expenditure be considered to be disproportionate to the size of the business, its market and its needs?

2. Review the strength of your existing anti-bribery procedures

Assess the strength of your existing bribery measures and, where an element of risk has been identified, determine whether further action needs to be taken. Even where you consider that your business is low risk, it is advisable to put in place some minimum procedures. As best practice, assign a senior member of the team to take responsibility for any action required. 

3. Update key policies

Update the business’s key policies to demonstrate to staff and the key people who do business with you that you do not tolerate bribery within your business. This may involve reviewing the company’s handbook and ethics/conduct codes, as well as updating whistleblowing, disciplinary and grievance policies.

Ensure that new recruits are briefed on the company’s anti-bribery procedures and remember to update polices on an on-going basis. You may need to adapt your procedures as the business develops in the future.

4. Do you need to undertake any due diligence procedures?

How much do you know about the people who represent you in business i.e. overseas agents, employees and subordinates? Are they genuine? You might want to carry out additional checks on such persons to ensure that they are honest and can be trusted to work for you without bribing on your behalf.

5. Don’t forget training and communication

Training should initially address key staff such as senior employees and those working in sales – it is vital that such persons are made aware of the corporate responsibility to prevent bribery. As a minimum, training should cover: what constitutes bribery; the areas of risk for the business; the potential corporate and individual liability; and the relevant policies and procedures.

You should also consider how you will brief staff and associated third parties (i.e. consultants, agency staff and contractors) on the firm’s anti-bribery policies and procedures.

Please note, the information contained in this factsheet is intended as a summary only. For more detailed advice you should consult the guidance issued by the Ministry of Justice – available at www.justice.gov.uk.

Which Money Round up of the latest money deals

This week (2nd May), Which Magazine has tracked down the best savings and cash Isas, as well as the leading credit card and loans’ deals which are currently on the market.

In addition, if  we can help you or your business with any tax advice  or any other accountancy needs, please call us on 020 8861 7575 or visit our website: http://www.lawrencegrant.co.uk/index.htm

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