HMRC has issued a warning to taxpayers (not a scam)

HMRC has issued a warning to taxpayers that they may receive an official text confirming that their tax refund is being processed

This is not a scam, HMRC stressed, and is merely a notification that HMRC is processing the tax refund and when payment can be expected.

The notification has been issued on HMRC’s scam guidance page to alert taxpayers that these texts are not a scam and are only a confirmation text.

The texts require no further action, unlike spammers, which send messages asking recipients to click and pay a fee to get a fictitious refund, for example.

In the update, HMRC confirmed: ‘HMRC may send you a text message if you request a self assessment tax refund. The text message will confirm:

·         that your tax refund is being processed

·         when you can expect to get it.’

Importantly, HMRC stressed: ‘The text message will not ask you for personal or financial information, or provide any links to websites.’

Taxpayers should always claim tax refunds directly with HMRC and have no need to use third party tax claim agents to handle this. These agents charge up to 40% in commission on the amount of the tax refund, which would be paid in full by HMRC if the claim was made direct.

If you have an agent dealing with PAYE or Self Assessment queries, good news is coming your way.

HMRC has announced a brand new escalation service for unresolved queries — perfect for when the Agent Dedicated Line or Webchat just aren’t cutting it.

📞 HMRC promises a response within 48 hours, updates every 5 working days, and aims to resolve within 20 working days.

🙌 A great step towards more support for agents doing the heavy lifting in tax season!

We recognise the valuable role that agents play in the smooth running of the tax system. We are constantly listening to your feedback and looking for ways of improving our service.

Yesterday, James Murray, Exchequer Secretary to the Treasury (XST), announced at the Institute of Chartered Accountants in England and Wales – Chartered Institute of Taxation (ICAEW – CIOT) conference that we’d be introducing a new service for agents on 31 March 2025, to help escalate and resolve PAYE and Self Assessment queries.

What the service will offer

The new service will focus on PAYE and Self Assessment queries that our Agent Dedicated Line or Agent Webchat haven’t resolved.

Before you can use the service you must have:

• Checked ‘Where’s my Reply’ tool, with at least 20 working days having passed from the reply date given by the tool, and
• Tried at least twice to resolve the query by contacting the Agent Dedicated Line or Agent Webchat

How to contact the service

You can contact the service by emailing our dedicated mailbox, which can be found on GOV.UK from 31 March 2025.

In response, we’ll:

• Contact you within 48 hours to acknowledge the query
• Provide an update every 5 working days by telephony
• Aim to resolve your query within 20 working days, or make an action plan if we can’t

How you can help

To help us resolve queries within the set time frame, please:

• Provide all relevant information and documentation that we ask for to help us resolve the query
• Respond promptly if we ask for clarification, or more information
• Don’t chase a query before the 20 working days have passed
• Don’t use this service to chase repayments, chase postal delays, or queries relating to Making Tax Digital

Your feedback is important to us

We’ll review and improve the new service regularly to make sure we’re meeting agents’ needs. So it’s important you give us your feedback once we’ve resolved a query.

We’re grateful for the continued support of agent representative bodies, in helping to shape our services to meet the needs of their members. Once the service is in place, we’ll look at expanding it beyond PAYE and Self Assessment queries.

Yours faithfully
HM Revenue and Customs

Are you charging enough for your products or services to allow you to provide a service you are proud of and that allows you to not become a busy fool?  Are you confident that you are charging the correct price for your goods or services?

The Pricing Mindset

We can often feel pushed into under-pricing our goods and services, and in doing so, undervaluing them and ourselves.  But we need to remember that this is our business, and we decide what we charge.

Of course, our customers and clients make their decisions based on what they see, hear, and perceive about our goods or services. So, how can we effectively articulate the value of what we offer in a way that encourages potential buyers to choose us?

And remember, if we don’t charge enough, then we:

1. Can’t do a job we are proud of as there won’t be enough time to do so.
2. We will end up cutting corners, using substandard ingredients, or quality control.
3. If we have a team, we may not be able to afford the right people with the skills and experience to do the job we want them to do, or train them to do so.

We do not want to end up working more hours for less pay, sacrificing family time, or missing out on hobbies and self-care.  This just destroys your joy, and eventually, your business.

Why do people pay more for some things, and not for others?

People buy for many reasons other than price.  Price is a factor (most of the time, for most people) but it’s only one.

Most people didn’t start their business because of profit or money, but they still need to make a profit to pay their bills.  Most people will pay more than they initially intended for something they really want and believe is worth it.

Things we buy are worth more if:

We believe it is – for one of the reasons above, or something else.

It’s scarce – supply and demand dictate that we can increase our prices if we don’t have competition or the thing we are selling is in short supply.  If you really want it, you will pay more if you have no viable alternative.

It’s convenient – it’s right here, right now, just where I am, and I don’t want to go searching elsewhere.

It’s comfortable – fit and comfort are really important.

Someone else said it was – the first purchase of your goods or services is often based on perception, so if other people are saying it’s worth it, then you may also believe that it is.

We believe it is – for one of the reasons above, or something else.

It feels right – there is an element of balance, when it comes to pricing.  If something looks too good to be true, then it probably is.  So, our price, product and proposition must all be in balance to get the sale.

Charging “More”

If you want to charge more than others in the market you trade in- more than your competitors, then you are going to need to persuade buyers in this marketplace that your “More” is worth “More.”

Your “More” is the thing that sets you apart, the unique ingredient, the design, the quality, then the thing that your customers see is being worth “More.”  This is often called your Unique Selling Point.

It’s important to do your research into why your customers or clients buy from you and why they come back for repeat purchases, or stay with you if you’re a service provider.  You need to use these reasons to persuade new customers that they too would value your proposition.

Not only will knowing why people buy from you help your sales pitch, but it should be used in all your marketing.

If you highlight the most important feature, function, or service that your potential buyer is looking for, they are MUCH less likely to focus on the price.  This makes them more likely to pay “more”!

Testing

How do you know if you should increase your prices?  How do you know if putting up your prices will positively impact your profit?  By doing it and measuring the results!

Warning Signs

There are some warning signs that you might not have noticed that indicate you should put up your prices.

Some of these are:

1. You win every deal on price! 
   Have you ever told someone how much it was going to cost, and they said “yes” really quickly?  This is a sign that they thought you were going to say it would cost more, meaning you could have charged more!  A lost opportunity to make the profit you deserve!

• Realistically, not everyone can afford everything.  You should expect some people to say that they can’t afford your prices.  For example:
• Lots of people who would love to buy a BMW, but buy a lower priced brand, it’s what they can afford and that’s ok. 

• Similarly, some people would like to buy a new car, but may settle for an older model because of budget constraints. 

People make choices about how they spend their money.  Let’s face it, you can only spend it once!

What we want, is enough people to believe that your product or service is worth the price you quote, for you to make the profit you need.

1. Your order book is full! 
   If you operated an order book system and you have no more availability for some time, then you should put your prices up. 

Fewer people may say yes, but that’s fine- you are already turning people away.  The jobs you do take on will pay more, meaning you can either earn more profit or work fewer hours and regain some quality of life, balance, self-care, and family time!

•  When did you last put us your prices? 
  If this was more than a year ago, it’s time to raise your prices!  Everything has gone up in that time.

People don’t respond well to big price hikes so waiting five years between increases won’t go down well… You’ll have to raise them eventually, so why not do it now?

By setting an expectation of small, regular price increases (e.g. annually), your returning customers will anticipate it, making the adjustment easier and less of a hard sell.

Imagine if you could make a small increase in price that has little or no impact on how many you sell.  It would go straight to the bottom line…

Pricing Strategies – using the psychology of pricing to increase your revenue

• Upselling – increasing the average value of a sale
  
  
  • Selling a higher value model
  • Selling more frequently
  • Selling additional products or services while the customer is buying

• Offers – only to be used on your terms
  
  
  • If you are relaunching and want to offload old packaging or products
  • If you have certain days, times of the year, or periods during the day when business is slow
  • Never do a BOGOFF (Buy One Get One Free) – always get at least something for the additional item you are selling
  • Bulk discounts; These can be useful, but ensure you are set up to provide products or services in this way

Bundle Pricing

Airlines are the gold standard for bundle pricing.  When they advertise the price of a flight, you’re essentially just paying for a seat.  They then charge extra for:

• Certain seats – (e.g. near the doors)Extra leg roomPre-booking seats, to sit togetherBoarding priority (who gets on and off first)BaggageFood and drinkInsuranceParking

• Hire cars
• And more…
  

• Insurance Companies operate similarly.  They provide a basic price on comparison sites, and you can add extra, such as:No claims protection

• Business use

• Additional drivers

• Breakdown cover

• Legal cover

Mid-Tier Pricing
This strategy is everywhere once you know what to look for, and it’s a fantastic tool.  If you start with the gold-standard offer, and get a negative reaction, you can reduce the package to silver, or bronze.

• Having a higher, middle, and lower-tier pricing allows people to say yes while sticking to their budget
• • You win more sales, AND
• • Sometimes you’ll sell the top tier package.
  • The middle tier will generally outsell the other two

• Value Pricing
  
  This involves working out the value of what you’re selling and pricing it base on its value, NOT the cost of producing it.  To do this effectively, you must research what your customers truly value.
  • Speed of delivery, paying extra for next-day delivery is common, but think about other services.  For instance, getting accounts done quickly for a mortgage application or having computers repaired urgently to minimise downtimeGift wrapping:  Adding convenience for customers.Meeting location:  If your time is precious, charge extra for meetings held in your office instead of traveling elsewhere
  • Who delivers the service: A named senior person may justify a higher price compared to a competent team member

Scope Creep

This is where service providers can avoid losing a lot of money by not doing free work.

Do you ever have a client say, “Can you just,” or “whilst you are there,” or “it will only take you a minute”?  Well, those phrases can be very costly to service providers!

You may, of course, choose to just help out, “just this once” and not charge, and that is entirely up to you, this is your business and your customer relationship.  However, I would advise tempering this with a response along the lines of:

“Of course, I can help.  Our normal charge for this service would be £XX.  However, on this one occasion I will do it free of charge, as you are a valued customer of ours.  If you do need more of these services in the future, I will have to charge the next time.”

We are rarely just selling time.  As service providers, we are often selling a combination of time, experience, and possibly training or qualifications.  Additionally, we may be looking to recover the cost of software that helps the process or expensive equipment required to do the job.  It is important to remember this and avoid devaluing what we do.

Examples of scope creep:

• You are fitting a new kitchen for a customer, and they ask for a couple of double sockets to be fitted that were not part of the original order.
• Your client has agreed to meetings at your location, but is now pushed for time and wants you to travel to them instead.
• Your client is doing their own VAT return but has run out of time and wonders if you can “just sort it” for them, as it will “only take you a minute.”
• The website you are designing is now on its 8th revision.

A process to reduce and possibly eliminate scope creep

1. Set expectations, from the outset.
   1. Agree upfront, in writing, what is included and what is not included in the price you have quoted.
   1. If additional work is requested, send over an additional proposal or quote covering the extra fee, and ensure they sign to confirm their agreement.

Benefits:

1. This ensures you get paid for the extra work
   1. It stops clients from expecting loads of extras for free
   1. It establishes that additional work is acceptable, but not free

When do you charge?

As soon as possible, especially in a difficult economic climate, make sure payments are secured.  If a client goes under owing you money, they could take you down with them.

When do you charge?

As soon as possible, especially in a difficult economic climate, make sure payments are secured.  If a client goes under owing you money, they could take you down with them.

Suggested Payment Terms
 

• When they take the goods away they:

You wouldn’t expect to take your shopping from Tesco without paying first, so why should this be different?

• On acceptance of the proposal:

Clients shouldn’t place an order without the ability to pay!  However, if this is a new relationship, they may want assurance that you will provide the goods or services to the agreed quality and timeline.  In this case, consider:  

• A deposit on acceptance.
  
  
• For recurring services:
  Use direct debit.  This allows for varying amounts each month, and you’ll be notified by the provider if any payments fail.
  
  

Remember:

If they don’t pay, its either a gift or theft.  Always be prepared to take legal action if necessary.  Keep proof and evidence of all agreements and transactions to support your claim.

This is your business, so you decide on what prices and terms are fair to you.  If your customers also find these terms fair, you’ve struck a winning balance.

Owning a business – an introduction to what you need to know 

Owning a business comes with much responsibility and red tape.  We covered all this in a recent webinar program. This information is an insight into what these are, and how you can best deal with them to avoid getting into trouble.  Read through our helpful content which is aimed mainly at the owners of Limited Companies, but much of the content is relevant to other business formats too.

You may have three different roles in your business.  A Director, a shareholder, and an employee.  Your rights and duties will depend on which of these roles you have.

Directors Duties – this can be a highly complicated area, so I would always recommend seeking professional advice on anything you are unsure of.  A high-level summary of directors’ duties is listed below.

Directors – there must be at least one Director in each Limited Company in the UK.  Often there are two or more and these make up the Board of Directors.  This Board of Directors will make strategic and operational decisions for the company as well as ensuring it meets its statutory obligations.  Decisions are often made at board meetings, so as a director, you may be required to attend and participate in board meetings.

The board may delegate certain powers to individual directors.

The general duties of Directors are covered by the Companies Act 2006

1. Act within powers.

• On incorporation (the act of creating a limited company) the company would have to supply articles and memorandum of association.
• The memorandum says who the initial shareholders are, amongst other things
  

1. Most small businesses would take “off the shelf” standard articles and memorandum of association which will have the standard legal responsibilities of all companies in them, plus state that the purpose of the company is to trade.  However, yours may say something different and if it does, it’s important to know what this is, and then act within those rules.

• Some companies like Community Interest Companies (CIC’s), must state their specific purpose in their articles.

2. Promote the success of the company – often known as the section 172 duty

• Acting in good faith
• Generally considered to mean increasing the value of the company in the long term

3. Exercise independent judgement – make your own decisions

4. Exercise reasonable care, skill, and diligence – that of a reasonably diligent person expected to carry out your role in the company

5. Avoid conflicts of interest – to avoid exploitation, property, information,n or opportunity.  You must consider:

• • Multiple directorships
  • Advisory positionsMaking personal use of information or opportunities
  • Connected persons – especially spouses and family members

6. Not accept benefits from third parties given because you are a director

7. Declare any interests in proposed or existing transactions or arrangements

Other duties

• Under common law, there is a duty of confidentiality
• Directors are responsible for the health and safety of the company’s employees and all the associated legislation
• There is also an obligation to the environment, competition, and anti-corruption legislation

Insolvency

Directors should seek advice as soon as possible if the company is experiencing financial difficulties, otherwise, they could become personally liable.  This is a hugely complex area, so you should always seek advice.

As well as your other duties, as a director you have a duty to your creditors.  The directors may need to contribute financially if:

• They should have known that there was no reasonable prospect of avoiding liquidation
• They didn’t take every step available to minimise the potential loss to creditors

If, as well as the above, there is deemed to have been a degree of dishonesty too, then the director may also face criminal proceeding

Accounting, bookkeeping and Tax

When you incorporate a Limited Company of any kind, Companies House will inform HMRC that you have done so, and you will receive a letter from HMRC, posted to your companies registered office, providing you with a company Unique Tax Reference number (UTR) and informing you that you are now liable for corporation Tax.

The company directors have a responsibility to ensure that the corporation tax return is submitted on time and that any tax owed, is paid.  In most cases, the company director will hire an accountant to prepare the tax return, but the responsibility remains with the directors.  Responsibilities include:

I. Record Keeping

a. You must keep accurate records

b. You must provide evidence associated with your records

• Bank statements
• Receipts
• Invoices
• Leases and other documentary evidence of liabilities
• Mileage logs
• Any apportionment methods used

c. You must take reasonable care that these records are correctly accounted for

d. You can do your own bookkeeping

However, you need to be aware that if you make a mistake, HMRC can charge penalties for any tax owed and interest. You are expected to use the services of a competent professional to advise you, so that everything is accounted for correctly.

e. Software

Most businesses now use software for their bookkeeping. It is not yet a legal requirement for all taxes but will be as Making Tax Digital (MTD) rolls out. You may want to use bookkeeping software now so that you are:

• Ready for MTD
• Less likely to make mistakes
• Able to take advantage of all the functionality of bookkeeping software to run your business

f. VAT Registration

If your sales of taxable supplies exceed £90k, you must:

• Register for VAT and charge VAT at the correct rate on everything you sell
• Reclaim VAT on business-related expenses (with a valid VAT receipt)
• Accurately account for VAT in bookkeeping software, as VAT must be filed digitally under MTD rules

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II. Deadlines – Important for Limited Companies

There are many deadlines a limited company must meet. Below are the main ones for Companies House and HMRC.

⚠️ Failing to meet deadlines may result in financial penalties, some of which can be significant.

a. Companies House Deadlines

i. Accounts Filing

• Must be filed within 9 months of the year-end (unless the accounting period is different from 12 months).
• If filing abridged or micro-entity accounts, only a limited amount of information must be provided.
• Even if your company has never traded, you must file dormant company accounts.

ii. Confirmation Statement

• You must file at least once a year, even if no company details have changed.
• £34 fee to file online.

iii. Changes to Company Information

• Most changes to company records at Companies House should be made within 14 days of the change.

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HMRC

• Tax Return and Company Accounts – 12 months from the year-end Payment of Corporation Tax – 9 months and 1 day after the year-end VAT returns – one calendar month and 7 days after your VAT accounting period.  The deadline for paying any VAT due is the same date.PAYE – Under RTI you must submit your PAYE information on the day your employees are paid.  The payments under PAYE are due by the 22^nd of the next tax month if you pay monthly Self-assessment – if you are paid dividends, or in some other circumstances, you will need to submit a self-assessment tax return and pay any tax due by the 31^st January of the tax year that ended on the 5^th April of the previous year.  You may also have to make a payment on account both at the end of January and the end of July.

Money Earned in the business

Whilst you may own 100% of the business, the money in the business’s bank account isn’t the same as your own.  If the business is a Limited Company, or one of the other company structures registered on companies House, it is a different legal entity to you, and the money in its business bank account belongs to that legal entity. You must:

• Ensure you have a separate bank account or bank accounts for the business.  This is a legal requirement for Limited Companies.
• Before you take any money out of the business bank account for your personal use consider:
  • Is the business still able to meet all financial liabilities after you make the withdrawal
  • What legal route are you using to make the withdrawal?
  • Is the method you are using to make the extraction tax efficient?

As a business owner, you have 4 different cash extraction methods available to you.

1. Payroll – you can be on the payroll of the business, receiving net pay, just the same as any other employee.  You would need to report these payroll transactions to HMRC in line with RTI legislation
2. Expenses – if you have personally paid for things that are business expenses, then you can reimburse these expenses.  This includes business-related mileage in your own vehicle
3. Dividends – issued from post-tax profits, these are taxable and are entered onto your self-assessment tax return to be assessed for tax along with all other earnings in that tax year.
4. Directors Loans – When starting up a business.  The owners often put in some cash to get the business off the ground.  This sits in an account called the Directors Loan Account.  Withdrawals from this account do not impact tax unless the account goes overdrawn.  If a Directors Loan Account becomes overdrawn, the company may have to pay an additional tax (s455 tax) and the director may need to submit a P11D which will result in a personal tax liability.

Employing People

Employing people comes with a whole raft of responsibilities.  It is advisable to employ the services of an HR (human resources) specialist if you are unsure about your responsibilities as an employer, as the rules in this area are complex and constantly changing.  A summary of some of your responsibilities is below.

1. Employees have a legal right to an employment contract. This protects you as well as your employees, so you should ensure it covers all the necessary clauses. You need to be aware that a contract of employment can also be influenced by other factors, including:
   • The job advertisement
   • The interview
   • The job description
   • Custom and practice

2. Working Time Directive – rules on how many hours someone can work per week

3. National Minimum Wage (NMW) – you must pay at least the NMW

4. Holidays – different rules for casual workers and those on regular contracted hours.  But every full-time employee is entitled to time off with pay for the equivalent of 5.6 weeks per year.

5. Pension Regulations – you must automatically enrol certain employees into a pension scheme and contribute into that pension scheme on the employee’s behalf.

a. You must pay any pension deductions from employees plus your employers’ contributions over to your pension provider

6. Eligibility to work in the UK – you must check each employee’s eligibility to work in the UK and keep records of this for inspection.

7. Payroll – you must register as an employer with HMRC and then run a payroll each pay period, providing information to HMRC each time.

1. You must make deductions for tax and national insurance from employees pay according to normal payroll rules and pay these deductions over to HMRC by the 22^nd of the following month.
2. You must pay employers’ national insurance and pay that over to HMRC by the 22^nd of the following month
3. You must pay statutory sick pay and statutory maternity/paternity pay in certain circumstances.
   
4. Employees must be given a payslip for each pay period detailing what they have been paid and any deductions from this pay.

8. If you employ anyone, the business must have employers’ liability insurance

Insurances etc

It is advisable to discuss the nature of your business with an insurance broker who can fully appraise the risks associated with it and recommend the necessary insurance policies.

• Professional indemnity insurance – you may be required to produce your certificate before you can do any work for another business.  But it is advisable to have this to protect your business either way.  Most professional bodies will also require this before they will provide a practicing certificate
• Public Liability insurance – protects against accidental injury and property damage from customers, visitors, etc
• Employers Liability insurance, as mentioned above, is a legal requirement if you employ anyone
• Buildings and contents insurance – if you have business premises and equipment.  If you are in rented or leased premises, you should check your lease/rental agreements as to what insurances you need to provide.
• Directors and Officers insurance – in case a claim is made against the company’s directors or officers
• Relevant life insurance – for certain personnel in crucial business roles
• Shareholder insurance – in case a shareholder dies and the beneficiary of their Will needs to be paid for the value of their shares to allow the business to continue trading.

Owning a business, depending on the type of business you own, comes with lots of responsibilities, rules, and deadlines.  It is worth using the services of experts who can guide and support you.

 

Bookkeeping for Business Owners

Business owners often handle their own bookkeeping when they first start, as they are time-rich but money-poor.  However, bookkeeping isn’t a skill you acquire simply by registering a business.  Earning a bookkeeping qualification takes on average three years to complete.  But with a robust process, great software, a little training, and someone to call when you’re unsure, it is possible to do this well, even as a novice.

A Legal requirement

Record keeping is a legal requirement.  HMRC can request to see your records at any time by opening an enquiry or investigation, and you are obliged to provide evidence(records) associated with the tax returns you have submitted.  You must keep these records for six years, plus the current year.

Having a robust bookkeeping system ensures you have all the records HMRC is likely to request, making any visit much shorter and less stressful.

If you use bookkeeping software in the way I will outline in this document, you are also far less likely to make mistakes that HMRC could identify during an enquiry.

How has Bookkeeping Evolved?

The pace of change in the way bookkeeping is done has been rapid in recent years, with an almost technological revolution taking place.

I remember my Dad sitting at the kitchen table doing his books, with a simplex D ledger book in front of him, handwriting the entries and totalling each page with a calculator.  Those were the days when you gave the kitchen a wide berth, as my Dad was always frustrated.  Receipts had been lost along the way, and his use of the calculator wasn’t great either.  Bookkeeping wasn’t his skill set, and he was doing his best with the tools he had available.

Ledger books were still in use, albeit less widely when I left University and started my graduate training.  The ones I used then had dozens of columns for all of the nominal codes (categories of expense) and the calculator I used came with a till roll, so I could check what I had keyed.

I remember being classed as a revolutionary when I moved these ledgers onto a spreadsheet.  This was a big change.  The spreadsheet could perform calculations using formulas, and as long as the formulas were correct, the sums were accurate, and the process took much less time.  This was a significant step forward.  Plus, no handwriting was required, a major bonus for me!  

In those days, computer-based bookkeeping systems existed, but they were primarily for large businesses with significant budgets.  Soon, desktop systems became available, with Sage Line 50 leading the way for small businesses.  This software came on a floppy disc that arrived in the post, and you installed it onto the computer of whoever was managing the bookkeeping. 

This was a big step forward.  However, there were drawbacks. Many businesses avoided purchasing newer versions, so as the functionality improved over the years, most people stuck with the original version they had bought.  Another issue arose when passing the data to an accountant, you were essentially stuck until they had finished with it.

Then came cloud accounting software.  Initially, it gained traction slowly, but over the past ten years, it has experienced rapid growth that took many by surprise. 

So, what has made could accounting/bookkeeping software so popular?

Why use Bookkeeping Software? Error reduction
Using software significantly reduces the likelihood of errors compared to manual methods or even spreadsheets.  The software performs all calculations for you and uses artificial intelligence to guide you through the process

Powerful functionality:

• Receipt Capture –This is either built into the bookkeeping software or integrated directly with another software or app. When used correctly, receipt capture will:
  • Massively reduce the number of lost receipts
  • Save time, as the in-built technology reads information on receipts and saves significant manual entry.
  • Eliminate the need for physical filing.
  • Make receipts easy to find if your accountant or HMRC needs to review them, or even if you need to check back on something.
    
    
• Bank Feeds – You can securely link your bank account with the bookkeeping software.  The link is read-only, ensuring no one has access to your money, only transaction details are visible.
  • Transactions are updated overnight, or even more frequently if required.Saves time by eliminating manual entry of bank data.
  • Artificial intelligence (AI) recognises previously posted transactions and matches them with bank data, saving a significant amount of time.

• Links to other software – if you use other software in your business.   Such as a point-of-sale device, industry-specific invoicing software, or software for taking online payments, these can often be linked to your bookkeeping software.
  
  
• Reporting – You can use the powerful reporting functionality to provide you with a wealth of useful management information, such as:
  • Who do you owe?
  • Who owes you?
  • How are you performing?

Cloud-Based benefits
There are even more advantages when your software is cloud-based, including.

• Subscription-based

Cloud-based bookkeeping software operates on a subscription basis, meaning you pay monthly.  This is easier for cash flow, as no large upfront purchase is required. You always have access to the latest version since updates happen in the cloud continuously.  Additionally, the software provider backs up your data, ensuring it is stored safely in case you lose of break your laptop.

• Access from anywhere

As long as you have an internet connection, you can access the software on any device.  You might use it on your laptop in the office, on an iPad, or even on your phone while out and about.  Most providers offer access through an app in addition to the full browser version, making it extremely convenient.

• Live, real-time information

There’s no need to hand over information to your Accountant at the end of the year.  You can provide them with user access, allowing them to log in from anywhere.  This means they can be working on your year-end whilst you continue as normal.

It also enables them to offer real-time support. If you are struggling with a transaction, they can see the same screens as you can and guide you through the process.

• User access

You can grant customised access to team members, allowing you to delegate aspects of bookkeeping to your team while maintaining control.

A World Class Bookkeeping Process Flow

Just because the process flow I am going to describe is world-class, doesn’t mean it’s hard to follow.  We simply need to establish some processes, stick to them, and use the right tools for the job.

Some ground rules, before we start.  You will need:

• Software – ideally, this should be cloud-based.
  • Link up all business-specific bank accounts to the software.
  • Integrate any third-party software that connects it
• Do bookkeeping regularly.  Ideally, at least weekly.  If you leave it for months, it will:
  • Become daunting, making it harder to start.
  • Result in lost receipts and forgotten spending details.
• Users – Plan who will handle each task and give them appropriate access to the software.
• Training – Everyone performs better with training on a new tool, no matter what it is.

Step One – Money In

Sales, Revenues, and Income refer to the money we charge for the things we sell, whether goods or services.

When selling goods, or services, income is recognised when it is no longer refundable (we are not considering faulty goods or disputes here).  However, it is important to understand this when accounting for deposits.  From an accounting perspective, the date the invoice is raised becomes the tax point, unless payment is received before the invoice is issued.

Grants received are also considered income, as is any profit on the sale of assets.

We need all our sales invoices recorded in our bookkeeping software.

• These can be directly created in the software and sent to the client from there.
• Converted from estimates or quotes within the software.
• Received from third-party integrated software.
• Imported from third-party software data.

Important Notes:

1. No changes to sales invoices: Once a sales invoice has been created and sent to a customer or client, it must not be altered.
–    If the amount needs increasing, raise a further invoice.

–    If the amount needs reducing, raise a credit note.

2. Invoice numbers: Invoice numbers should be sequential, with no gaps.  HMRC does not allow gaps in invoice numbering.

Step Two – Money Out

How do we account for tax-deductible expenditures?

Receipts – Wherever possible, ask for and keep receipts.  Use receipt capture to save an image of the receipt in your software and replicate the information as a transaction. Whilst OCR Technology helps reduce manual data entry, you must still check the data before saving it.

If you are VAT-registered, you can only reclaim VAT on a valid VAT receipt. A valid VAT receipt should include:

The VAT registration number of the business.

And ideally,

• The VAT amount and rate clearly split out.

Sometimes, you may need to download receipts from the provider’s website, for example:
–           Amazon
–           Subscription services
–           Mobile phone contracts

Lost Receipts
If a receipt is lost, you may sometimes use supplementary information such as a bank statement or credit card receipt.  However, if you are VAT-registered and looking to reclaim VAT, only a valid VAT receipt will suffice.

Step three – Banking

Always use dedicated bank accounts for your business, and link to your bookkeeping software.  This removes the need for manual data entry of banking transactions.

Artificial Intelligence (AI) built into bookkeeping software can identify and match bookkeeping transactions (e.g., invoices or receipts) to bank entries. To do this, the software looks for a like-for-like match.  However, if you pay multiple supplier invoices with one payment, the AI will not automatically find the match.

Most software allows you to use something called Rules to allocate banking entries to the correct accounts.  this can save a lot of time, but it is essential to set these rules up correctly from the start.  Misuse of rules can lead to duplication of entries amongst other issues.

The goal is to allocate all bank entries to transactions and then reconcile the bank account.  Reconciliation simply means ensuring that all entries are correctly allocated with nothing left unaccounted for, duplicated, or misallocated.

Once these three steps are complete, we should have up-to-date, accurate business records that can help you run your business and make informed decisions.

It is crucial to process transactions correctly from the outset to:

–           Avoid additional accounting fees, as correcting bookkeeping errors can be time-consuming. 

–           Ensure you submit accurate information to HMRC and pay the correct amount of tax.

Remember: The better the quality of information when it goes in, the better the quality of information when it comes out!

VAT Basics          

VAT and bookkeeping are inextricably linked.  If you are VAT-registered, you need to set up your bookkeeping software with your VAT number and scheme.  This will also require you to input the VAT rate and amount on each transaction into your software.

VAT Registration  

–           You must register for VAT if your vatable sales/turnover exceeds £90,000 in the last 365 days (or since your business started if less than a year ago).

–           You must only charge VAT once you have received your VAT registration number, and this number must be quoted on all of your sales invoices. 

–           Be aware that it can take a month or more for your VAT registration number to arrive.

Pre-registration VAT reclaim

This is generally done as a journal entry dated at the point of VAT registration.  You can claim the VAT on:

–           Goods: Up to 4 years before registration, provided they are still in the business at the date of registration.

–           Services: Up to 6 months before registration.

VAT Schemes

There are multiple VAT schemes to choose from.  Some are industry-specific, while others are available only to smaller businesses.  It’s worth checking which scheme works best for you, as it could save you a significant amount of money. Accrual Scheme – This is the most commonly used VAT accounting method.  VAT is calculated based on the dates of invoices raised (sales) and receipts

received (purchases) during the VAT return period.

Cash Scheme – This option is generally preferable if you have customers or clients who are slow payers.  VAT is calculated based on the dates payments are made (for purchase) and the dates deposits are received (for sales).

Quarterly Scheme – This is the default for small businesses.  HMRC assigns the VAT quarter upon registration, but this can be changed.  It’s good practice to align the VAT quarters with your financial year, so you have four full quarters within a tax year.

• Monthly Scheme – large companies are required to file monthly VAT returns, but small businesses can opt for this too.  Businesses impacted by the VAT reverse charge for CIS often choose monthly returns because regular VAT reclaims improve their cash flow.

• Flat Rate Scheme – This scheme aims to simplify the VAT process for small businesses.  While it doesn’t always reduce workload, it can save money, so it’s worth checking.
• You can join the scheme if your predicted turnover for the next year is less than £150,000. 
• A 1% discount applies in the first year of VAT registration.

• Other schemes – There are various other schemes tailored to specific industries or types of supplies.

Making Tax Digital for VAT

This has been a legal requirement for a while now.  It requires all VAT returns to be filed digitally via bookkeeping software.  You (or your accountant) must complete the registration process for Making Tax Digital (MTD).  Filing returns is straightforward once your data is up to date, and all transactions have been correctly entered into your software.

Training

I highly recommend that you look into some training in using the bookkeeping software you have chosen before you start, or at least early in the process, as this will save you a lot of time and money in the long run.  Most software providers provide free resources on their websites.

HMRC is stepping up its efforts to tackle unpaid taxes with significant new measures. The tax authority is reportedly recruiting 5,000 additional investigators and rolling out advanced data analysis tools powered by artificial intelligence to identify tax discrepancies.

What’s Changing in HMRC Investigations?

HMRC has enhanced its strategies to ensure tax compliance by expanding its data sources and increasing scrutiny. Here’s what they’re focusing on:

• Browsing the internet and social media platforms to identify unreported income.
• Collecting data from the DVLA, Land Registry, Companies House, online selling platforms, banks, and credit card records.
• Using their expanded powers to request more detailed information from individuals and businesses.

These efforts aim to crack down on areas of unpaid taxes, including rental income, online sales, and even breeding animals. HMRC has already sent out waves of voluntary disclosure letters targeting these activities. For example, if you’ve sold a litter of puppies or rented out property—even occasionally—you may need to report this income on your tax return.

What Should You Do Next?

If you’re unsure about your tax reporting obligations or whether your activities require disclosure, now is the time to seek expert advice. Failing to report could lead to penalties or an HMRC investigation.

Don’t wait until HMRC contacts you—reach out to us today to ensure your tax affairs are in order.

Why Choose Us?

• Expert guidance on HMRC tax compliance.
• Assistance with voluntary disclosures to avoid penalties.
• Peace of mind knowing your tax returns are accurate and complete.

Contact us now to protect yourself from unexpected investigations and penalties.
📧 Email: hello@businessworksuk.co.uk
🌐 Website: www.businessworksuk.co.uk
📞 Phone: 0113 286 4486
📍 Location: Garforth, Leeds, LS25 1EQ

You’ve probably heard us say, “We help businesses like yours grow.” But what does that actually mean?

Recent research shows that accountants play a vital role in helping SME businesses thrive. By improving financial management practices and helping businesses understand their numbers, we enable substantial time savings, smarter decision-making, and sustainable growth.

Our clients rely on us when making critical business decisions, such as:

• Hiring employees
• Relocating to new premises
• Investing significantly in their business
• Applying for loans or government support

But it’s not just about the big decisions. We’re also here for the day-to-day guidance that keeps your business running smoothly. With an accountant on your team, you’ll never face tough decisions alone.

Beyond the numbers, we empower our clients with financial confidence. By ensuring your financials and regulatory obligations are in order, we help eliminate the risks of penalties and errors. This not only supports your business but also alleviates the mental burden of financial stress.

Let us help your business thrive. Check out our upcoming events and resources to learn more about how we can support your success. https://www.businessworksuk.co.uk/training-events/

With this budget dominating the news and social media, you’ve likely heard about the significant changes that were announced. But what do these changes mean for your business, and how can we assist you in navigating them?

We’ve summarised the key tax changes below, but if you’d like a more in-depth understanding, Jo is available to guide you through it all in an upcoming workshop or webinar. Secure your free spot, and if you’re already an existing client, please use code BWClient using this link.

Workshop & Webinar Dates:

• Tuesday, 12th November at 4 pm – Webinar
• Friday, 15th November at 12 pm – ‘Lunch and Learn’ in our office

Supporting Employers with Payroll Adjustments

If you employ staff, you may wonder how the changes to the National Minimum Wage (NMW) and Employer’s National Insurance (NI) will impact your payroll. We’re here to help! Contact us, and we’ll recalculate your October figures using the new rules, helping you anticipate any impact on your expenses.

In December, we’ll also offer focused Workshops and Webinars on employment obligations to clarify your responsibilities and make planning easier. You can book using the same link above.

Key Budget Changes to Note

National Insurance Contributions (NIC)

• Threshold Adjustment: The earnings threshold for employers’ Class 1 contributions drops from £9,100 to £5,000.
• Rate Increase: Employers’ NIC rate rises from 13.8% to 15% starting 6th April 2025.
• Employment Allowance Increase: Eligible employers will see an increase from £5,000 to £10,500.

Capital Gains Tax (CGT)

• Rate Changes: Effective immediately:
  • Basic Rate: Increased from 10% to 18%
  • Higher Rate: Increased from 20% to 24%
• Timing for Lower Rates: Disposals made before 30th October 2024 will still be taxed at the previous, lower rate.
• Annual Exempt Amount: This remains at £3,000 for 2025/2026.

Inheritance Tax (IHT)

• Frozen Bands: No changes in rates or allowances; bands are now frozen until 5th April 2030.

Pension Death Benefits

• New Inclusion: From 6th April 2027, unused pension funds and death benefits will be included in a person’s estate for IHT.
• Reporting Obligation: Pension scheme administrators will be responsible for reporting and paying any inheritance tax on these benefits.

VAT

• Thresholds Remain Unchanged: As of 1st April 2025:
  • Registration threshold: £90,000
  • Deregistration threshold: £88,000
• Private School Fees: From 1st January 2025, VAT will apply to private school fees at the standard rate.

Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA)

• Expansion for Landlords & Sole Traders: MTD will extend to those with incomes over £20,000 by the end of this parliament.
  • April 2026: Applies to incomes over £50,000
  • April 2027: Applies to incomes over £30,000

Furnished Holiday Lettings (FHL)

• Tax Treatment Changes: Legislation will end the specific tax treatment for FHL properties.
• Effective Dates: These changes begin on or after:
  • 6th April 2025 for Income Tax and CGT
  • 1st April 2025 for Corporation Tax

Van vs. Car Classification

• Updated Classification: From 6th April 2025, most double cab pick-ups will no longer qualify as vans for benefit charges.
• Transitional Provisions: Employers with existing vehicles can retain van classification until disposal or until 5th April 2029, whichever comes first.

If this all sounds too complicated, then we’re committed to helping you understand and adapt to these changes seamlessly. Our workshops and webinars are designed to provide clarity and actionable insights, so don’t hesitate to join us.

💼 HMRC Update: Big Changes for Side Hustlers & Puppy Breeders

March 2025 – An important update announced this week by the government – and it affects anyone earning extra cash from side hustles, including things like puppy breeding, reselling, freelancing, and more.

From 2029, the threshold for reporting income on a self-assessment tax return will rise from £1,000 to £3,000. This change is expected to benefit around 300,000 taxpayers, with an estimated 90,000 no longer needing to report their trading income to HMRC.

The new rules will apply to various activities, including selling items on platforms like Vinted and eBay, as well as creating online content. A new online form will also be introduced to simplify the declaration of cash earnings up to £3,000 for self-employed work.


The original article
HMRC sent out letters to millions of people who they believed did not declare income from breeding and selling puppies. These would have come as quite a shock if you received one out of the blue, and some of the language used in the letters was meant to worry you.

HMRC has changed legislation so that selling platforms must provide them with information about who is selling on their platforms. However, this is only one source of information they have used. This information is in the public domain, so even before the change in legislation, the evidence is out there.

Registrations with the Kennel Club and social media are good sources of public information. There are even rumours that information could also be coming from pet insurers and the RSPCA.

If you have received a letter, HMRC is suggesting you file a voluntary disclosure. They won’t give a time scale of how far to go back. In the UK, the tax system is self-assessment, so they expect you to provide all the information for as long as you have been receiving income, in this case from breeding puppies.

If you regularly breed puppies, you should file a self-assessment tax return, as this is likely to be classed as a trade.

What information do you need to supply to HMRC?

• All the money you received for the pups/kittens
• All the costs you incurred, including vet bills, mating fees, microchipping, injections, etc.

However, if you had a one-off litter, you could argue that this isn’t a trade at all. If you didn’t receive more than £1,000 in total for the pups in that tax year, you wouldn’t need to declare the income.

What if you’ve missed previous declarations?

Unfortunately, the bad news doesn’t end there either. If you receive a letter and make a voluntary disclosure, the likelihood is that the taxable income you then declare is from a previous tax year, meaning you should have already declared this income. As a result, you are likely to incur penalties (fines for not declaring the income) and interest on any tax not paid. If you have been breeding for several years, this could add up.

These rules are not just for the sale of puppies but cover any kind of income—from breeding to rental properties, to selling on eBay, to name a few.

Some big changes in information for Limited Companies held by Companies House came in this year (2024). These include the address you can have as your registered office, and the new requirement for a valid email address to facilitate communications

Information directly from HMRC :

New rules for registered office addresses

From 4 March 2024, there will be new rules for registered office addresses which mean companies must have an ‘appropriate address’ as their registered office at all times. An appropriate address is one where:

• Any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company

• Any documents sent to that address can be recorded by an acknowledgment of delivery

These changes mean you will not be able to use a PO Box as your registered office address from 4 March 2024. You can still use a third-party agent’s address if they meet the conditions for an appropriate address.

If you’re currently using a PO Box as your registered office address, you’ll need to change it by 4 March 2024. You can change your company’s registered office address online, using your company’s authentication code.

Companies that do not have an appropriate registered office address could be struck off the register. When we identify an inappropriate registered office address, we’ll change it to a default address held at Companies House. The company must then provide an appropriate address, with evidence of a link to that address, within 28 days. If we do not receive this evidence, we’ll start the process to strike the company off the register.

Registered email address

From 4 March 2024, there’ll be a new requirement for all companies to give a registered email address to Companies House. This email address will not be published on the public register.

From 4 March 2024, new companies will need to give a registered email address when they incorporate. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from 5 March 2024. Our online services will prompt you to supply a registered email address when you file your next eligible confirmation statement.

We’ll use this email address to communicate with you about your company, so you must choose an appropriate email address. You can register the same email address for more than one company.

You’ll be able to change your registered email address through our new ‘update a registered email address’ service. You’ll need to be signed in and authenticated to do this.

Companies will have a duty to maintain an appropriate registered email address, in the same way as their registered office address. Any company that does not do this will be committing an offense.