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February 2017

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To February 2017’s Tax Tips & MYOB News –   our specialist newsletter for businesses using MYOB and AccountEdge who also want to keep  up-to-date with key legislation and tax changes.

A little bit of training from time to time can give your business the edge.  Here is a useful video from Acclivity:

Producing Year End Reports (You Tube).

February 2017
· Keeping Your Currency Rates Up to Date
· Implementation of Making Tax Digital
· Quickbooks Fails to Save the Day
· Coming soon: tax-free childcare
· February questions and answers
· February key tax dates
Keeping your Currency Rates Up to Date
Implementation of Making Tax Digital
The rate of sterling continues to fluctuate against other currencies.

Therefore if you use multicurrency for your business, it is important to keep your currency rates up to date in AccountEdge/ MYOB.  Look at lists\ Currencies.  Enter the pence for each unit of the foreign currency you buy or sell in. 

The rates are currently : 
  • 78.913p USD
  • 85.062p Euro
  • 60.600p Canada
  • 0.698p Japan
  • 1.170p India

You can get up to date currencies from the XE Currency Convertor and just read the bottom line for sterling prices.

‘Making Tax Digital’ is an HMRC plan, supposedly to provide ‘a transformed tax system and the end of the tax return’ by 2020. After a series of consultations the first pilot scheme is set to run from April 2017 to April 2018 with full implementation by 2020.
The current plans, include:
  • The smallest businesses with a turnover of £10,000 or under will be exempt from the changes
  • Taxpayers and businesses will send in summaries of their income and expenditure at least four times a year.
  • More taxpayers will be able to use the cash basis of accounting.
You may already be aware of the introduction of   the new Personal tax Account online.  Meanwhile PAYE information on Government Gateway accounts is not being updated regularly by HMRC pending further changes.

We will keep you updated on the changes that will affect you. Meanwhile if you are concerned about the implications of Making Tax Digital for your business just and we’ll get back to you with the latest information.
Quickbooks Fails to Save the Day
I am rapidly falling out of love with Quickbooks (QB) Online.

A business managed to convince themselves that they were doing fine.  Then suddenly they are insolvent. The context is this:

1. Using a remote bookkeeper the client sets up a QB online account. 
2. They invoice their sales off to their clients. 
3. They import their bank transactions from their bank account.  They book the receipts as cash sales.
4. when some of the transactions appear to be missing they then import the bank transactions again. 

The result is that they have now recorded some of the sales three times.  As a result the company books accounts look great.  The bank doesn’t reconcile …. but  the bookkeeper thinks they have done an excellent job making sure that all the transactions are in the software.  Nobody notices inside the company that the bank value is wrong.

The cash starts to run out.  Partly as a result of my involvement the company realises that it is insolvent,  it decides to appoint an Insolvency Practioner and wind up. The customers, staff and HMRC all lose money. 

The software is the key problem here.  It managed to convince the bookkeeper that they were recording things in line with the bank.  In fact, the business was about to go insolvent.  Matters came to a head too late to react.

Handling software like this requires great care.  The HMRC’s Making Tax Digital plan will make the use of online software more or less compulsory.  It will give business owners a false impression that it is easy to do their books.  Some will do as this business did, over declare their profits and pay too much tax.  It will ruin those business leaders that think, like the HMRC, that declaring tax is a mechanical process based simply on a downloaded bank statement and online software that they do not properly understand. 
Coming soon: tax-free childcare top
February questions and answers top
Plans for the introduction of a new scheme called ‘tax-free childcare’ were initially announced way back in the 2013 Budget. The original proposals have since been amended and the scheme is now set to be implemented during 2017. Broadly, the new scheme, which aims to help working parents with the cost of childcare, will replace the current system of employer-supported childcare (ESC) which is offered by less than 5% of employers and used by around 450,000 families.

Parents will be able to open an online voucher account with a voucher provider and have their payments topped up by the government. For every 80 pence that families pay in, the government will put in 20 pence, up to the annual limit on costs for each child of £2,000 (£4,000 for disabled children). Parents will then be able to use the vouchers for any Ofsted-regulated childcare in England and the equivalent bodies in Wales, Scotland and Northern Ireland.Read More
Q. Due to unforeseen circumstances I have recently had to sell my house and down-size to a smaller property. I sold the house for £20,000 less than I paid for it. Can I offset this loss against income from my business and reduce my income tax liability for this year? Answer

Q. I have some spare cash earning virtually no interest in the bank and I have decided that I would like to buy a flat for my daughter, who is currently just 16. Am I correct in thinking that she cannot own the property until she is 18? Is there an alternative for ownership? What are the tax implications surrounding this proposal? Answer

Q. I have been trading for several years. I am not currently registered for VAT but think my income is getting close to the VAT registration threshold. What items can I exclude from my ‘taxable turnover’ calculation? Answer
February key tax dates top
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/2/2017

28 – First 5% penalty surcharge on any 2015/16 outstanding tax due on 31 January 2017 still unpaid

– Talk to us about year end and pre-budget planning
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Clearbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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