Magazine in TheKnow 20 Summer - Chartered Accountants and ... · Emma is one of our trainee...

Summer2013KnowThein

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TheKnowin Magazine Welcome

Guest Editor – Andy BeeforthOBEWriting this article gives me an opportunity to say thank you to one of the friendliest and smartest group of people I work with in Cumbria. I run the Cumbria Community Foundation which is a local grant making trust. Our deputy chairman is Dodd & Co partner Ian Brown, who has been involved with the Foundation since its very earliest days.

The Foundation exists to address localneed and we work with our donors tomake their money have most impact on their chosen cause or interest. Many people know the Foundation forits disaster appeals, raising millions inresponse to foot & mouth and flooding.But we have also built endowed fundsin excess of £8m and manage over 70different grant making funds on behalfof families, businesses and otherorganisations. Ian Brown is a memberof our grants committee which this year gave out over £2m in grants tolocal charities and people in need. Like all good charities we try to keepour costs down. Dodd & Co help byproviding meeting rooms and operatingour payroll. They’re one of the 150businesses that are members of theFoundation. They also advise us whenwe’re promoting the tax benefits ofcharitable giving. This year we’ve raised

£250K through the Community Firstendowment challenge which has seenover 8 new grant making funds createdby local people. Community Firstprovides a 50% uplift to every donationand is available until March 2015. We worked with Ian many years ago in his role as trustee of the estate of a local farmer who had chosen to leave a significant sum to charity. Some of the money was used to create the George Kipling Funds at the Foundation which makes grantsevery year in support of projectshelping children and older people.I know Dodd & Co have clients all overthe country and beyond but the firm’shome is Cumbria. Cumbria is veryspecial, not just because of thebeautiful countryside but because ofthe people who live and work here.Dodd & Co are at the heart of ourcommunities, raising funds and as

volunteers and working as trustees inmany local organisations. I often attendthe County Young Farmers AGM andenjoy the young farmers’ banter withtheir county treasurer Rob Wharton.Several of the staff have completed our own Jennings Rivers Ride Thank you Dodd & Co – your supportmakes a real difference to the CumbriaCommunity Foundation and the peoplewe serve. To find out more about the CommunityFoundation, Community First, how toaccess our grants, how to set up afund, become a member or take part in the Jennings Rivers Ride visitwww.cumbriafoundation.org.

Rising Star

Emma is one of our trainee chartered accountants and iscurrently studying towards her ACA qualification. Emmajoined Dodd & Co in 2011 after completing an accounting & finance degree at The University of Leeds, gaining a firstclass honours degree no less! Since joining Dodd & Co,Emma has been gaining experience in all aspects of thepractice, including preparing accounts for businesses of awide range of shapes and sizes. She has also been puttingher corporate accountancy training to good use in a range ofstatutory audit work which often takes her out of the officeand into other fast paced business environments. Sheparticularly enjoys getting to know clients and understandingtheir business, so she can help them get to grips with theirfinances using regular management account information.

When she isn’t studying Emma is often found running as shehas committed to 10 (yes 10!!!) half marathons this year inmemory of her friend’s mum, Alison Donald, who sadly losther battle with cancer 10 years ago. The group of 6 runnershas a target sponsorship for Eden Valley Hospice of £5,000.Donations can be made atwww.justgiving.com/Alisons10yearanniversary

Emma is also chair of the Cumberland Chartered AccountantsStudent Society (CCASS) and organises regular events forchartered students around the county.

Contents

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KnowhowtoimpressMeet Emma...

This newsletter is designed as an informative guide for clients and theiradvisors. The articles cannot deal with any particular point in depthand they should not be used as a substitute for full professional advice.Accordingly, no responsibility for any loss or damage can be acceptedby Dodd & Co Limited as a result of any person or organisation actingupon material contained in this newsletter.

Dodd & Co Page

2Guest Editor

4-7Business

8-10Tax

12-15Healthcare

18-19Dodd Rescue

20-21Professional Practices

22-25Farming

26-27Leisure

28-29Construction

30-31Charities

34Dodd Murray Limited

32Social Media

33www.dodddaccountants.co.uk

35About Us

36Sports

Data Protection PolicyIn the future Dodd & Co Limited or Dodd Murray Ltd may contact you by mail,telephone, e-mail, fax or other means for marketing purposes. If you do not wish toreceive further information on products / services, please write to: Data Controller,Dodd & Co Limited, Clint Mill, Cornmarket, Penrith, Cumbria, CA11 7HW.

@DoddAccountants

TheKnowin Magazine Contents

DoddAccountants

17Protection

11Know How To Specialise

16Vets

The growth of internet banking has meant that bank statements can now be downloaded from theinternet instead of having to keep all the paper copies. Whilst this may fill you with horror and images of fraudsters, banks are now a lot more aware of fraud and internet scams and are constantly developingtheir systems to minimise this risk.

Increasingly we are starting to see that banks are stopping automaticallysending out monthly copies of bankstatements (particularly for loanaccounts and savings accounts wherepeople still have them!) This meanswhen we receive the information for theyear end, time is then spent having tochase the bank for copies (which are

reproduced, often at a cost to you).We will therefore be asking all of ourclients who are signed up to internetbanking to download their statementsand send them to us as a CSV file infuture to help save time and speed up the process.

In an effort to rebuild relationshipsbetween accountants, clients andbankers, more and more banks arestarting to offer a link for the accountantto access online statements for theirclients. This is something that we arelooking to sign up for where possible,so again don’t be surprised to receive a request from us to have access toyour records. Don’t worry we wont be able to access anything other than the statements.

As we move further down the road towards a paperless society, with everything being done online on your tablet or phone, more and more information is available on the internet.

In the current financial climate, more and more businesses are looking to streamline their accounting function to help them save money and to ensure that they are on top of their own finances. This, together with the continuing technology boom has led to big changes in the way people keep their records.

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TheKnowin Magazine Business

Are we movingto a paperlesssociety??

5TheKnowin Magazine Business

As a result, a number of new packages are coming

to market which are operatedvia cloud accounting. While thisbrings pictures of angels withharps to mind what it actuallymeans in reality is an alternativeto a computerised accountingsystem. These traditionally store all of your accountinginformation on your ownmachine or server via a software package that you have purchased (and updateannually). However with acloud system you would pay a monthly subscription for thecloud package with supportand your information will bestored on a remote servercontrolled by the developer.

Clients have asked us about the risks attached to relying on cloud accounting, and the mainthings to ensure are that you have good internet security to screen against viruses and strong passwordsto help prevent hacking. Of course the more established cloud accountingproviders recognise that this is an areaof concern for many small businessesand have invested huge amounts oftime and money into ensuring that the security built into their sites is assophisticated as possible and in themajority of cases far more advancedthan your own security.

The systems are developed to be logical and easy to use, withoutsome of the more advanced features of a traditional system, meaning that

the time requirements are reduced as well as the annual cost. Thesepackages typically cost around £15-20 for the monthly subscription.

Your friendly accountant (us) can alsolog in to your cloud to see how you’regetting on, which means that instantadvice can be given throughout theyear to help your business develop.

We have looked at a number of these packages recently and would be pleased to advise you on the bestpackage for your business. For moreinformation please call Claire Phillips on 01228 530913.

As we supposedly become more technologically minded, a growing number of small business are looking to move

away from the traditional paper method of using cash books,but without the upfront expense and time requirements invested in a traditional accounts package.

It’s all on a cloudsomewhere…

These traditional packages tend to require a solid knowledge of accounting, they take time to operate,and can cost an excessive amount given the number of transactions to be input and the informationrequired by the business owner.


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TheKnowin Magazine Business

These cloud packages don’t suiteveryone and while there are a number of small businesses out there that don’t want to sit and write up their cash book manually anymore,they don’t feel confident enough, orsimply don’t want to have to inputeverything into a proper accountingpackage. So we have devised a

number of Excel packages that replacethese manual systems and which canbe tailored to your specific business.These include a basic balancedcashbook, through to a balancedcashbook including VAT returnsummaries and a basic income andexpenditure account to enable you totrack your profitability.

If you are interested in having your ownExcel spreadsheets, please speak toyour usual Dodd & Co contact. If youdon’t have one, please call ClairePhillips on 01228 530913 or [email protected]

Keeping it simple

So your cloud package or Excelspreadsheet is up to date, your friendly accountant has given you the advice that you need and kept up to date with your results, seasonssales, ups (and downs) and the yearend is looming…..fear, dread, like a trip to the dentist. But what if you’vehad all the pain as you have gone along – your accountant was there foryou while you rejoiced/suffered? Theyear end is then really just an exercisefor the tax man and the “signing off”.You already know that you have doneyour tax planning, bought the van thatyou needed, and ensured minimum tax or maximum profit!

How long does it take the accountant to turn it around? Well we have a 6week turnaround deadline at Dodds,which kicks in when the books arrive at our office. We can do that ifeverything comes in at the same time!

If your books have been completed on cloud as you’ve gone along wewould hope to beat this time. If you’reinterested in cloud accounting pleaselet us know and we’ll be in touch tomake it happen. You can contact us via phone, email, facebook or evensend us a tweet.

Right hereright now

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7TheKnowin Magazine Business 7

www.doddaccountants.co.ukFollow Us For Updates: twitter.com/@DoddAccountants

Ever wondered what’s available outthere to help businesses grow? Well,wonder no more. As well as financepackages for West Cumbrianbusinesses for capital and innovativeideas, there is now also the BusinessGrowth Hub scheme and the GrowthAccelerator scheme available furtherafield.

If you feel your business is growing andyou need some help with some things,now is the time to get it! As newlylaunched schemes, these government

initiatives want to help us grow.There may be some time needed,and maybe even a bit of

investment from businessesthemselves, but lets not look a gifthorse in the mouth, so to speak. If youhave any queries on these schemes,please call Alison Johnston on 01228530913 to find out more.

And don’t forget the new Innovuslaunch on research and technologicalbusiness start ups too – West Cumbriaoffers skills training and facilities as wellas help with business support so if youare eligible why not get involved! We fully support Innovus and the start up business launch!

Help from the big boys

Dodds realise how importantbookkeepers are to small businesses,that’s why we’ve set up a bookkeepers’“drop in” day once in a while, to keep intouch with things such as what’s thelatest cloud package, where are the thebest and worst broadband signals, andswapping tips and even clientopportunities. All bookkeepers areinvited. We feel it’s important that wedispel the myth of what accountants aredoing and what bookkeepers can do tohelp the accountants and vice versa.We have had some laughs and some

real revelations about whatbookkeepers feel about accountants!

We think the important message thathas come out of this is that we all havethe same goal in mind – to do a goodjob and to look after our clients. Afterall, it is the clients who pay us, judgewhether our service is better than theyexpect, and ultimately worth paying for!

We are often asked by our clients who have maybe done the booksthemselves for a number of years to pass on the name of a good

bookkeeper and we are even thinkingof starting our own mini bookkeepingschool.

We believe that if businesses haveaccess to a well qualified financeperson available at the premises tobounce ideas off on a regular basis,then their businesses will grow andprosper. That’s not to say they won’tneed their accountants’ advice as theywould usually(!) – it’s just that they mayfind it of benefit to swap some thoughtson a daily basis with someone qualified!

Bookkeepersunite

So will this new GAAR spell thedeath knell for tax planning in theUK?

The short answer is no. Whilst there isno doubt that this new rule will certainlymake tax planning more difficult in thefuture (and should bring an end tocertain artificial tax schemes), there will continue to be a wide range ofopportunities for individuals andbusinesses to take tax planning actionand legally mitigate their tax liabilities.

So what type of tax planning will thenew GAAR catch?

One of the inherent difficulties with any new tax legislation is that it will take several years (and probably anumber of tax cases that are argued in the courts) before it is clear whichside of the fence any specific taxplanning action falls. Statutory taxreliefs such as EIS (and the new SEIS)will certainly be fine, but will traditionaltax planning actions such as limitedcompany structures involving theextraction of profits by way of “small”salaries and “large” dividends still beOK in the future? Possibly not - therehas been a relatively recent tax case in New Zealand (which also has aGAAR) which does give some cause for concern.

New Zealand experience

The tax case of Penny and Hooper vCIR involved the incorporation ofbusinesses by two orthopaedicsurgeons and the subsequent payment of “large” dividends and“small” salaries was held to fall withinthe ambit of the New Zealand GAAR.The New Zealand GAAR is differentlyworded from the UK GAAR, but it doeshighlight the uncertainty that the newGAAR will inevitably cause in the nextfew years before there is clarity onwhere the “line in the sand” has been drawn.

We will closely monitor the introductionof the new GAAR during 2013 and keepour clients updated on developmentsand highlight any action that may berequired.

On a lighter note…..

The comedian Jimmy Carr has said thatwith the benefit of hindsight he wouldn’tenter into very aggressive tax planningaction such as the artificial tax scheme“K2”.

This may be partly because he nowknows what it is like to be on thereceiving end of jokes from comedians- when the news broke last year hefaced a barrage of jokes from fellow

panelists when hefilmed an episode of his8 out of 10 Cats show forChannel 4. Team captainSean Lock told him: “Weall like to put a bit of moneyaway for a rainy day, don’twe? But I think you’re moreprepared than Noah!”

Against this backdrop, the government has reacted by introducing a so called GAAR – a GeneralAnti Avoidance (or Abuse) Rule. HMRC will start using this new weapon in its armoury from July2013, once the current Finance Bill receives royal assent.

Whether it has been individuals such as Jimmy Carr, or large multinationals such as Starbucks, tax planninghas received unprecedented media coverage during the last 12 months.

End of taxplanning?

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TheKnowin Magazine Tax

TheKnowin Magazine Tax 9


The comedian Jimmy Carrhas said that with thebenefit of hindsight hewouldn’t enter into veryaggressive tax planningaction such as the artificialtax scheme “K2”.

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Another feature of the complex UK tax system is that child benefit is nowwithdrawn to the extent that incomeexceeds £50,000 and this is done on a tapered basis, which again gives rise to a marginal tax rate which ismuch higher than the top rate of 45%.The actual tax rate will depend upon the number of children – the graphshows the position for a family withthree children, which gives rise to aneffective tax rate of 65% (family with twochildren has a tax rate of 57% and a family with one child has a tax rate of 50%).

Naturally with very high tax rates suchas these, taxpayers would be wise tolook closely at how they own incomeproducing assets amongst their family(e.g. rental property, bank deposits and investments, shares in familycompanies) and also consider actionsuch as pension contributions.

If you would like to discuss tax planning in more detail, please do nothesitate to speak to your usual Dodd &Co contact or ring Dean Johnston on01228 530913 (or [email protected])

The graph below shows the marginal rates of income tax for each £1 of taxable income that will be earned in the 2013-14 tax year. As can be seen, the highest marginal tax rate is 60% and applies to the £19,000 of incomeearned above £100,000. This 60% tax rate arises because as well as each £1 of income (above £100,000) beingtaxed at 40%, the personal allowance of £9,440 starts to be withdrawn (at a rate of £1 for each £2 of taxableincome earned).

65%

The reduction in the top rate of income tax from 50% to 45% (from 6 April 2013onwards) has been widely publicised, but what is less well known is that thecomplexities of the UK tax system have given rise to a much higher tax rate of 60%, which is actually payable by individuals who have less taxable income than those who are paying the 45% top rate!

If you think payingincome tax at the toprate of 45% is harsh,please read on….

TheKnowin Magazine Tax


Marginal Tax Rate

Taxa

ble

Inco

me

£150,000

45%

£118,880

40%

£100,000

60%

£60,000

40%

£50,00065%

£41,45040%

£9,440

20%

£00%

TheKnowin Magazine Know How 11


Part of the Rescue and Recovery SIG isJackie Kirsopp. The aim of this group isto provide support for professionalsworking within the restructuring industryby providing resources and an annualconference to highlight and provideguidance on legislation and key issues.

Robert Wharton is part of the Farmingand Rural Business SIG. Robert hasbeen chairman of this group for 2 yearsand has been involved for around 13years. The group aims to improve theaccountancy and tax advice given tofarmers throughout the country byensuring all accountants acting forfarmers are aware of all the specialistrules you need to be aware of whenworking within this sector.

Claire Hebdige is a member of theHealthcare SIG which seeks to offersupport and advice to charteredaccountants working with clients in allareas of the sector including doctors,dentists, pharmacists and care homes.As well as attending regular groupmeetings, Claire is a regular presenter

at seminars teaching other accountantsabout the healthcare issues of the day.

Alison Johnston, one of our partners,was a founding member of theSolicitors Special Interest Group. The group was formed to ensure that all accountants acting for Solicitorswere up to date on all changes takingplace within the legal profession.Annual conferences are held to makesure that all relevant topics such asJackson reforms affecting PI forms,and changes to Legal Aid, as well as

the new SRA regulations are discussedand understood by legal sectorspecialist accountants.

Two of our partners, Martin Ward andJeanette Brown, also contribute toinstitute affairs. Having just steppeddown from being a member of both the Auditing Practices Board and theFinancial Reporting Council, Martin has been recently appointed to theDisciplinary Committee. During histenure of membership of APB and FRC,Martin was the only practising member

from a firm outside the Big 4 and wasselected to advise on matters relating to SME’s. Jeanette Brown, havingserved 6 years on the InsolvencyLicensing Committee, switched tomembership of the InvestigationCommittee which deals with assessingserious complaints against members ofthe chartered accountancy profession.Jeanette will also take over as presidentof the Northern Society of CharteredAccountants in June 2013. As part ofher presidential year, Jeanette will hosta professional dinner to be held at theCivic Centre in Newcastle upon Tyne on 10 October 2013 which she hopeswill be the premier business event ofthe year and a superb opportunity fornetworking across all sectors. If you are interested in attending the event,further details can be found atwww.icaew.com/northern or bycontacting Marie Rice on 0191 300 0532.

Dodd & Co are committed to deliveringhigh quality, expert advice – and ourbrand “know how” says it all.

The Dodd & Co team are known for their specialist skills in various industriesand their involvement in selected SpecialInterest Groups (“SIG”) for the Institute of Chartered Accountants proves this.

to specialise

Alison Johnston, Robert Wharton, Jackie Kirsopp and Claire Hebdige have all been selected as committee members for SIGs that meetfrequently in London to discuss all the major financial issues affecting their subject areas.

Knowhow tospecialise

Responsibility for funding employersuperannuation costs for GP locums hasbeen transferred from primary careorganisations (PCOs) such as the nowabandoned PCTs, or Health Boards. Thelocums themselves will be responsible formaking the payment of both the employer’sand employee’s superannuation paymentsto the NHS Pensions Agency.

To enable this to take place, ex-PCO fundingis being transferred to GP practices, by wayof a 1.12% increase on the GMS price perweighted patient. This gives an increase toevery practice of £0.72 per weighted patient.

This eliminates the grey area of long termlocums and puts the onus firmly on practicesto manage their locum budgets.

Based on a weighted list size of 6,500, thiswill provide a practice with £4,680 towards

their locum employersuperannuation cost. Thistranslates to locum fees for theyear of approximately £37,143,so practices which pay morethan this each year to locumswho are members of thepension scheme will lose outfrom the change.

England

There was a contract upliftof 1.32%. The DDRBoriginally recommended a2.29% increase in contractpayments, which allowedfor a 3.4% increase in payfor practice staff. The DHindicated this would be atodds with public sectorpay policy, which capspay rises at 1%. Thefinal contract upliftallows for a 1%increase in practice

staff pay. The uplift was

achieved by increasing global sumpayments from 1 April onwards.

MPIG is being scrapped and taken frompractices over a 7 year period, starting from1 April 2014. The £120 million currentlybeing used for MPIG will be released intoglobal sum. This will be phased in over thesame time period and result in an increase inglobal sum of approximately 6.3% by theend of the period.

MPIG is still paid to a very large number ofpractices and figures from the NHSInformation Centre report that MPIGpayments totalled £117m in 2011/12.

Changes are being made to QOF to increaseindicator targets and reduce times to deliverthem. Most indicators will now need to bedelivered within a 12 month period ratherthan the current 15 month window.

Organisational QOF domains have beenscrapped. The £164m released from this willbe used to fund 4 new DESs coveringdementia case-finding, patient risk profilingto reduce hospital admissions, monitoringpatients with long term conditions and givingpatients on line access to GP services.

There will also be new rotavirus and shinglesvaccination programmes allocated a budgetof £10m.

Scotland

Scottish GPs have been awarded a 1.32%uplift in global sum, the lowest uplift in theUK. MPIG is not going to be removed justyet. A review is taking place to examine the

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TheKnowin Magazine Healthcare

One change that affects all English and Welsh practices is changes to Locum employer superannuation.

The Department of Health (DH) proposed changes to GP contracts for2013/14 in 2013. As a result each country has negotiated a separate dealfor its GMS contract holders and there is no longer one UK contract. Weoutline some of the differences below.

Goodbye NHS,Hello RHS –the Regional Health Service

13TheKnowin Magazine Healthcare


variations in practice funding and what theimpact would be on services.

QOF changes will affect some more than others. Increasing the thresholds for some QOF indicators, and bringing innew indicators with relatively high upperthresholds will make practices work harder to maintain QOF income. Scottishthresholds are not to be set above 90% and exception reporting will help make it possible for practices to maintain QOF income.

The organisational domain is also being scrapped. No new DESs are beingintroduced, instead the points are beingredistributed between the global sum, a new public health domain, a new medicinesmanagement domain and some will remainfor patient experience.

Wales

There was a global sum contract uplift of1.5%. As with England this allows for a 1%increase in practice staff pay. The additional0.5% is to cover increases in expenses.

MPIG is being continued, but discussionsare to continue about equitable funding.

The new English DESs are not beingintroduced, although there will be a newmental illness DES.

Changes to QOF are very similar to thosein England, the main differences beingthere will be a more lenient method tocalculate thresholds; some of theorganisation domain remains; some newindicators are being introduced; and theperiod for delivering indicators will not bereduced, so remains at 15 months.

What does the future hold?

It would appear that 2013/14 will be aperiod of relative calm for Scottish GMScontract holders, with the bulk of thechanges hitting England and Wales.What happens if we look further into thefuture? We have to ask, are Scotland andWales delaying the inevitable in deferringa decision on MPIG?

Changes of this nature don’t make iteasy for practices to plan for the futureand can create uncertainty. Just theopposite is needed, especially at atime when wider reform of the HealthService will potentially createopportunity to expand services.

Responsibility for fundingemployer superannuationcosts for GP locums hasbeen transferred fromprimary care organisations(PCOs) such as the nowabandoned PCTs, or HealthBoards.

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Clearing the NHSpensionsfog

Dentist: I've heard about the new £50kpension limits. My total superannuation billlast year was £8,500, so I've got nothing toworry about, right?

Heidi: Wrong. It's got nothing to do with whatyou pay into the scheme. It's all about your"deemed increase in pension" also known asyour DIP.

Dentist: What on earth is my DIP?

Heidi: It's a fairly convoluted calculation, but invery broad terms, you look at your expectedpension at the beginning of the year and compareit to your expected pension at the end of the year.You then look at the difference between them, andmultiply that figure by 19 if you are an old schememember, or multiply it by 16 if you're in the newscheme.

Dentist: Hmmm. I may need to think about that one fora while! Can you do me some calculations?

Heidi: We can do you some estimates if you have arelatively recent pension forecast. The pensions agencywill automatically issue a statement to everyone whohas gone over their £50k limit, but not until aroundOctober 2013.

Dentist: How do I get an up to date pension forecast?

Heidi: Go on the pensions agency website to thefollowing address:

https://www.nhspa.gov.uk/PDWeb/contact/contact_us.cfm

You’ll need your employing authority code, nationalinsurance number and scheme reference number.

Dentist: What happens if I go over the £50k limit?

Heidi: You pay a tax charge on the excess of your DIPover £50k. If the tax charge is over £2,000 the pensionsagency may be able to pay this for you, however thedetails of how this will work have yet to be finalised.

Dentist: Does this rule replace the "Lifetime Allowance of £1.5 million" rule?

Heidi: No that stays and it's something entirely different!Broadly this will affect anyone who has accrued apension of more than £65K, although the lifetimeallowance is reducing to £1.25million in April 2014.

Dentist: The government keeps talking about "pension simplification". When is this coming in?

Heidi: This is it!

Dentist: !!!!!!!!

As with most things surrounding the NHS pension scheme the rules are prettyconfusing! I've been asked a lot of questions about this over recent months andin an attempt to "simplify" what it's all about, here is how a typical conversation might go.

Heidi Marshall sums up the rules regarding thepension scheme contribution limit of £50,000,which will reduce to £40,000 in April 2014.

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15TheKnowin Magazine Healthcare


It’s that time of year again, when dentists in England and Wales need to declare their annual pensionable income on the practice’s annualreconciliation report. This sounds a lot simpler than it actually is and we often get queries from clients with regards to how to calculate thefigures for the return.

Maximise yourNHS pension –

It is important that the form is completed correctly, as these are the figures used to calculate your future pension.

Following the discovery by the pensionsagency that over 3,000 dental associates haveunderstated pensionable pay, all performerswill now need to confirm the figures on thereturn. This is good news for associates, whopreviously never had access to the annualreconciliation reports submitted by theirprincipals.

The correct procedure for completing theannual reconciliation report is:

1) Calculate the maximum pensionableearnings ceiling. This is 43.9% of the contractvalue.

2) Identify any performers who are notmembers of the pension scheme, such as:

a. Dentists who are already receiving their NHS pension

b. Dentist who have opted out of the pension scheme

c. Dentists who have incorporated and cannot pension their earnings

3) Deduct the net NHS pay of the performersidentified in point 2 above, from the maximumpensionable earnings figure.

4) Deduct the net NHS pay of performers

who are members of the NHS pensionscheme from the maximum pensionableearnings figures.

5) The balance remaining representsthe principal’s pensionable earnings,as follows:

a. As a sole trader the whole of the balance

b. As a partnership the balance can be allocated between the partners as agreed

c. If your contract is held within a company, your pensionable earnings are restricted to the lower of the balance remaining or the salary and dividends you have been paid during the year.

The guidance notes on how tocomplete the form are now muchmore detailed and give examples ofassociates’ net NHS pay. To download the guidance visit:http://www.nhsbsa.nhs.uk/

Due to the changes this year, theannual reconciliation report deadlinehas been extended from 31 May to 30 June.

producing an accurateAnnual Reconciliation Report

Follow Us For Updates: twitter.com/@Heidi__Marshall

16


Do mixed practices benefit from the best ofboth small and large animal practices or arethey hindered by the worst of each?

Dodd & Co’s benchmarking data shows thatsmall animal practices have higher overallgross margins as a result of better marginson drugs. In fact, their gross margins aresome 22% higher than those of large animalpractices!

Large animal practices on the other handbenefit from much lower wage costs whichare a staggering 40% less than those of theirsmall animal counterparts.

So where do mixed practices fall in thesekey areas? It might not surprise you to findthat their gross margin falls almost exactlyhalf way between that of the small and largeanimal practices. What emerges as the keyfactor is the level of wages which is still on apar with that found in small animal practices.

So where does this leave the industry?

The economics suggest more specialisedlarge and small animal practices. Pressure

on incomes in mixed practices makes themharder to sell to the next generation of vetsand succession becomes the key stumblingblock. Why be a partner in a business if youcould earn as much as an employee withfewer headaches?

Is it time that some mixed practices lookedat how they are organised and whether there is a better option?

This is putting pressure on margins, in fact many mixed practices are starting to find that profits don’t exceed salary levels for some of their senior vets.

Vets are facing pressures from all sorts of angles at present, whether that be reducing margins on drugs due to online sourcing by customers, or consolidators pushing cheaper services.

Mixedpractice

– utopiaor hell


17


Whether life cover or a policy that pays out if a director or key person is diagnosedwith a serious illness it is vital that not onlysuitable cover is arranged but that astructure is in place to ensure that any policy proceeds are paid to the beneficiaries promptly.

The use of trusts and other mechanismssuch as “cross option agreements” can help.In the event of the death of a director, thesurviving business owners can potentiallybuy back their former director`s shares andtheir beneficiary could opt to sell them backto the company without loss of BusinessProperty Relief.

What can the impacts be?

•Loss of earnings if orders are not completed

•The loss of expertise could lead to reduced orders in the future,

•The costs of recruiting a replacement director or specialist employee

•Creditors could become nervous

•The bank may call in lines of credit and loans. How will these be paid for?

A £100,000 life policy for a male mid 40`s for 20 years costs approximately £18 amonth and with critical illness added £72 per month, for a non-smoker.

It is possible for some policies to be paid for through the business to maximise tax efficiency.

Most of the banks have now closed theirfinancial adviser teams down and due tochanges in the IFA sector there are far fewerIndependent Financial Advisers in the UK.

Dodd Murray Limited is an IFA firm focusedon personal levels of advice. Please eithercontact us direct on 01228 522258 or viaDodd & Co if you would like our help.

We will provide an initial half hourconsultation at our own cost and if you would then like us to act on your behalf we can agree a suitable basis of remuneration.

You can then decide how to mitigate these risks and hopefully reduce any effect to manageable levels.

It is both prudent and sensible to review what risks could have an impacton your business, family and staff in the event of death or the diagnosis of a serious illness.

Protect yourbusiness

TheKnowin Magazine Protection

...we answered

18 TheKnowin Magazine Dodd Rescue

What does “being in

administration” mean?Administration is a legal procedure

designed to help rescue companies

that have become insolvent. An

insolvency practitioner is appointed

to run the business to ensure that

certain legally defined objectives

are met. The main ideas behind

administration include allowing the

company to continue to trade and

saving jobs. Also, if a company

perhaps has a “good” part (ie a

profitable part) and a loss making

part, then the administration

procedure can be used to save

the good part.

asked...You

But what is a “pre-pack”? Are these legal?Basically yes they are legal. A “pre-pack” is where the insolventcompany’s assets are sold veryshortly after the administrator isappointed. They’ve received lots ofbad press, as it is often the formerdirectors of the company who buythe assets back and immediatelystart to trade the day after the oldcompany goes under. Howeverbehind the scenes, the process isnot as simple as it may sound as it is very tightly regulated by theInsolvency Service and otherregulators. Anyone thinking

this is an easy process needs to think again and make sure

they are properly advised by reputable insolvencyprofessionals such as Dodd Rescue.

Know

howwe

can

he


19


Fancy a BIMBO?

If you or your business are in any sort of financial difficulty & need ‘real life’ rescue or recovery advice, call:

0800 954 0520

Follow Dodd Rescue For Updates: twitter.com/@DoddRescue

TheKnowin Magazine Dodd Rescue

What is a zombie company?

The definition of a zombie companyis applied to any business that isonly just surviving. That is, it can pay its current bills and minimumrepayments on its loans, but isneither making any significant profitnor making any in-roads into itsoverall debt. Generally, businessesin this category only manage tocover interest charges on theirborrowings. The worry for thezombies is what happens when

interest rates do (eventually) start torise. Also there is a view that saysthat zombies are in effect tying upassets that could be “recycled” into start-up businesses with thepotential to grow. It’s also why there has been a general decline in formal insolvency appointmentsdespite the economic downturn –fewer businesses are going bust and they are hanging on, but notreally achieving anything.

An MBO (Management Buy-Out) or an MBI (Management Buy-In)basically involves a purchase of theshares in, or assets of, a companyby its (or another) managementteam with the aid of finance fromexternal funders (often a venturecapitalist).

MBOs/MBIs can often be very highprofile businesses being sold formany millions, but can also be usedfor the change of ownership within asmall owner managed business,where the owner wishes to retire but

there are no obvious trade playersto purchase the business. The key isto have a strong management teameither within the current business, orwho wish to buy-in to the business,that can persuade the funders thatthey can grow the business andrepay the borrowings that they willtake on board to buy the business.

What is avoluntaryarrangement– is it true Ican write offmy debts?

A voluntary arrangement can apply to

individuals, partnerships and companies.

It’s a formal insolvency procedure, governed

ultimately by the courts. Basically, you come

to an agreement with your creditors that in

return for them not taking insolvency

proceedings against you, you will pay them

so many pence in the pound in full and final

settlement of their debt. Creditors with

security ie secured bank loans, hire

purchases and mortgages etc are excluded

from voluntary arrangements and therefore

no, it’s not true that debts can be written off

or avoided. Also it’s worth noting that the

Office of Fair Trading has recently cracked

down on companies that advertise saying

that debts will be written off. 75% of your

(unsecured) creditors have to agree to any

proposals made before the arrangement can

go ahead.

anelp

We are told that banks now no longer seethem as safe bets for increased overdrafts and loans. This is not good news for PersonalInjury firms who are facing cuts and inevitableredundancies following the recent new ruleson fixed costs.

We are seeing more attempts at mergerswhen we know that these only work if there is new blood in at least one of the firms. There is very little point in merging with a firm where all the partners wish to retire.

And now, following the interventions in topfirms, we are asked by the SRA to prepare andadapt a contingency plan, and perhaps moreimportantly, to understand the market.

What types of things should we be planning?It is suggested that it is the responsibility of theCOFAs to ask detailed questions. These mightbe to assess the current policy on distributingprofit to partners in light of the firm’s currentposition or they might want to assess if there isenough capital in the business to support thefirm’s current work and financial commitments.

There was much discussion regarding this at the recent National Solicitors AnnualConference of the Institute of CharteredAccountants in England and Wales.

Most importantly though, and something that cannot be emphasised enough is the relationship in a firm between cases opened, fees expected, work in progress time lags,bills issued, andultimate

recovery (Cash Flow). If fees are decreasingon a monthly basis, and costs are staying thesame, the knock-on effect of this can take afew months to materialise. The cash flow canbe still looking reasonable for a few months asthe old work continues to flow through and bepaid. It is only when the new work is notthere to be billed, and therefore paid,that the real effect comes to light.And this is when the panic sets in.

Some solicitors are ahead ofthe game on this one. Keepingnote of the cases opened eachweek, as well as the likely feenote and time of the job areimperative in the current climate. Having this“built in” to a simple cash flow forecast (excelwill do – only one page is needed) giving thesolicitor the information needed to plan for theups and downs in the business. The fact thatthe cash flow “crisis” may be spotted a fewmonths ahead of when it will actually happengives a bit more breathing space to plan what the business needs to do.

For help on the simple Excel sheetplease contact Alison Johnsonon 01228 530913.

Solicitors are blamed for having outdated structures and increasing bank debts, as well as no succession planningand little appetite for “selling” their services.

With so much talk about ABS structures, changes to PI firms followingJackson, the impact of the legal aid changes, firms in crisis talks, not tomention renewing of professional indemnity insurance, solicitors might be forgiven for just taking a moment or two to wonder what it is they should really be tackling first.

Better, faster,cheaper

20 TheKnowin Magazine Professional Practices


21

Survey results on a more regional scale will be available shortly – please contact us if you would like a copy of the latest results.

Finally, the structuring and future of the“business” seems to be the in thing todiscuss at present. Should solicitors go for the ABS model, which will make it easierto be more “business like” and adapt a more“sales” orientated firm? Surprisingly, thesurveys reveal that 57% of practices are still operating under partnership or soletrader structure, while only 27% have thelimited liability structure. With corporation

tax rates falling considerably for thelarger companies, huge savings

are to be made on limitedstructures. Solicitors may

feel more obliged toexplore these

avenues, which may prove to be a muchneeded significant cost cutting measure and life saver during the coming months and years.

For further details relating to any of thesetopics above, please contact AlisonJohnston on 01228 530913 or [email protected]

Perhaps unsurprisingly the employment costs within the surveys show that figures have remained fairly stable. If we compare this with the increased fee income, then this is perhaps easily sustainable. However if we have experienced a reduction in fees over the last few months, then increasing salaries and expectations based on a positive fee increase will most definitely knock the “balance” within firms quite considerably.

Recent national surveys for 2012 showed that the trendwas still to show an increased fee income, an increase oninterest received and an increase in profitability, explainedby a continued control over spending. In addition, practiceswere fairly positive on fee predictions for 2013. So thequestion that must be asked is, how and why has opinionchanged so much in such a short space of time?

On the up?


TheKnowin Magazine Professional Practices

22

www.doddaccountants.co.uk Follow Rob Hitch For Updates: twitter.com/@Rob__Hitch

Inheritance taxruling a blowfor holiday home owners

The late Mrs Pawson owned a 25% share of 'Fairhaven' a large bungalow on the Suffolk coast. Her daughters, who owned the remaining share of the property and who were the executors of her will made a claim to BusinessProperty Relief (BPR) from inheritance tax following her death. HMRC refused the claim so Mrs Pawson's executorstook the case to the First Tier Tax Tribunal.

At this hearing, held in November 2011, theexecutors of Mrs Pawson demonstratedservices being provided with the holiday let.These included advertising for and securingtenants, cleaning between lets, provision ofbed Iinen, provision of telephone and televisionalong with maintaining the garden byemploying a gardener - services commonlyprovided by most holiday cottage owners.

At this hearing the tribunal found that the holiday letting could be taken to be a business and not simply the exploitation of an interest in property. To many observers this was a surprising decision given there was only one holiday unit and minimal services were provided.

Needless to say HMRC disagreed and soughtleave to appeal on various grounds but wereonly allowed to appeal on a point of law, being;

'It (the tribunal) formulated and applied the

wrong test in assessing whether the propertywas held wholly or mainly as an investment.'

HMRC appealed to the Upper Tier Tribunalwhich in January announced its decision. Thistime the tribunal came down firmly inagreement with HMRC and decided that theproperty was in fact an investment business,therefore denying the availability of BPR andbringing the value of Fairhaven into the late Mrs Pawson's estate.

Who will this affect?

Owners of single holiday cottages, andpossibly owners of several separate units.Those who run sites with more than oneproperty are less likely to be bound by thisruling but HMRC may seek to extend therestriction of BPR further.

What action should be taken?

The ruling only affects the inheritance tax status

of holiday cottages. Capital gains tax reliefs are still protected, but owners ofproperties should consider the following;

1. Review wills to ensure assets not attracting BPR are dealt with promptly.

2. Consider switching borrowings to holiday properties.

3. Review ownership to see whether BPR can be secured in other ways.

4. Keep detailed records of the work involved with running the holiday cottage.

Some owners with other trading businesses may be able to secure inheritance tax relief by transferring ownership to their trading business. Obviously there will be capital gains tax and particularly VAT implications of this.

So where are holiday cottage owners left after the recent successfulappeal by HMRC in the Pawson case?

TheKnowin Magazine Farming

23

www.doddaccountants.co.ukwww.doddaccountants.co.uk

HMRC appealed to the Upper Tier Tribunal whichin January announced its decision. This time thetribunal came down firmly in agreement withHMRC and decided that the property was in factan investment business, therefore denying theavailability of BPR and bringing the value ofFairhaven into the late Mrs Pawson's estate.


But also announced by the chancellor was a raft of anti avoidance measures.Two items that haven't received many headlines may have a significantimpact upon the affairs of farmers.

Budgetannouncements

24

IHT Changes

The first is the introduction of legislation toprevent the claiming of IHT relief on someloans. Whilst this appears a sensible approach, a closer reading of the proposed ruleshttp://www.hmrc.gov.uk/budget2013/tiin-2006.pdf shows that this will also have animpact on those with loans to buy assets that qualify for IHT reliefs such as AgriculturalProperty Relief (APR) and Business PropertyRelief (BPR).

It seems that HMRC are looking to set anyloans against the asset for which they weretaken. This differs from the current legislationthat sets loans against the assets that they are secured against.

In recent years this has led to many farmerswith debt to secure their loans on property thatdoesn't qualify for IHT reliefs. So whilst a farmermight borrow money to buy land they wouldsecure the loan against a let house or valuablefarmhouse to reduce the value of anychargeable assets on death.

The proposed legislation suggests that this treatment will no longer be appropriate,exposing many assets to IHT. No doubt HMRC will be looking at the purpose for which loans are taken out rather than what they are secured on.

Partnership profit shares

The other issue raised was the announcement of consultation into the sharing of profits in partnerships.

In recent years partnerships, in which you can share profits as partners agree, haveproved very flexible for families minimising their tax burden. Whether this has been byallocating profits to a corporate partner or an elderly partner to avoid national insurance,significant tax savings have been achieved.

This has been even more evident with tax credits as young families have beenallocated restricted profits in order to claim tax credits and elderly/company partners haveshared profits and paid reduced rates of tax.

This is particularly prevalent in familybusinesses owned by several generations,which farming businesses almost always are.

We will await the consultation document with interest as it might provide one of the biggestchanges to the taxation of farm businesses formany years. Coupled with the IHT changesannounced we can't help feeling that this wasn'tthe best budget for farmers.

Update - Loans to Participators

The anti avoidance introduced for loans toparticipators might also have a big impact on corporate partners, not just in the farming world.

As a firm we have alwaystaken a cautious viewof corporate partners but some people haveintroduced them to partnerships, and allocatedthem all the profits. Over time the companycapital account in the partnership increaseswith the individuals capital accounts reducingand sooner or later becoming overdrawn.

New legislation will treat these overdrawncapital accounts as an overdrawn director’sloan, giving rise to a 25% S455 tax charge. This should be repayable but already there is speculation that this repayment might endgiving rise to a permanent tax charge.

www.doddaccountants.co.uk Follow Rob Hitch For Updates: twitter.com/@Rob__Hitch


The fallout from George Osborne's budget seems to be mostly favourable. Headline cuts to corporation tax and the raising of the personal allowance to £10,000 next year have won plaudits, not to mention the CUT in beer duty!

However at the time of reading this we hope that the bitter cold winds are a distant memory.

Spring is here,finally!!

25

www.doddaccountants.co.ukxxxxxxxxxxxxxxxxxxx: See page xx www.doddaccountants.co.uk


Let’s look forward to a good summer!

Dodd & Co will be out in force again atthe local shows and for your diary thedates are: -

Cumberland Show, Carlisle Racecourse– 8 June 2013

Penrith Show, Brougham Hall Farm,Penrith – 27 July 2013

We look forward to seeing you andenjoying a craic and our hospitality.Robert Wharton will be very busy onCumberland Show day as Robert is thenew Vice-Chair of the show. We wishRobert all the best in his role and if youdo manage to catch him on show day fora chat, well done!

Our involvement in local shows does notstop there. We sponsor all the other localshows and will be in attendance walkingaround and presenting prizes.

The farming team will be busy on thesporting front again this summer. You willfind the team taking part in all manner ofthings from: -

•Rob Hitch cycling around the county

•Andrew Barnes burning up the fairways on a golf course near you

•Lynne Hume brandishing her badminton racquet

•Andrew Sims running up and down fells

•Robert Wharton venturing back into the wrestling ring!!

On the work front the team arebusier than ever. In the period afterFebruary, which coincides with taxbill headaches, the team have beenbusy signing up new clients. Thesehave come from the local area butalso as far afield as Cheshire, SWScotland and Co Durham!

We are always busy on the speaking andlecturing front. With the changes incapital allowances, RTI, pensions, taxcredits and CAP reform we always like tokeep our clients and the wider audiencewell informed.

So wherever you find yourself thissummer Dodd & Co know how will beout in force!

Follow Rob Hitch For Updates: twitter.com/@Rob__Hitch

At the time of writing we are still waiting for some spring-like weatherwhich will enable lambs to flourish and the grass to grow. The sights ofbare fields and more seriously large snowdrifts and buried sheep havenot been welcomed by the farming world.

Smokedsalmon for the guests,

26


porridge for the owners?

For larger hotels where the owners live off site, this is not usually anissue, as all expenditure is generally separated. Where the owners live on site however there will always be an element of own use of food, drink, telephone, rates, water, electric, gas, insurance, mortgage interest etc.

A question that arises every year is how to accountfor private usage in hotels and guesthouses.

TheKnowin Magazine Leisure

Arriving at this element is the difficult part,as each and every hotel and guesthouse isrun differently depending on many factors;

•Who lives on the premises?

•Are some or all consumables purchasedand recorded separately?

•How much food is consumed on thepremises in comparison to eating out?

•How many rooms are used privately incomparison to those used for guests?

•How many rooms are used for both guestsand private?

From 2013/2014 the Cumbria WorkingTogether Group of HMRC has agreed inprinciple rates of £2,407 for adults and£1,365 for children under 14, as areasonable value for own use of food, heatand light, rates and water, telephone andinternet and insurance. This does notinclude motor costs, eating out, alcohol,tobacco, repairs, and mortgage interestwhich always need separate consideration.

Use of these figures is entirely voluntary. If adifferent basis is adopted, then it is importantto have records to support an alternativecalculation or method of adjustment.

The provision of accommodation (if free or subsidised) is usually classed as a benefitin kind and as such employers providingaccommodation should ensure that this isreported to HMRC on form P11d and that tax and national insurance (NI) is paid on it.

In certain circumstances staffaccommodation can be exempt from tax. This includes situations where theaccommodation is necessary for the proper performance of the job, or where it is customary for living accommodation to be provided and the accommodationenables employees to perform their duties better. This is often the case whereemployees (i.e. duty managers) live withinthe hotel premises. Where employees live offsite (i.e. in a house near the hotel) then theaccommodation is usually subject to tax and NI.

Another important factor in determining if tax and NI is payable is whether or not theemployee has a choice between a highersalary or accommodation. If they have thischoice then how this is documented withintheir contract of employment and whether or not the sacrifice is permanent or can beamended are all important elements.

Even if the accommodation is proven to be exempt, the story doesn’t stop there, as only the accommodation element isexempt. Any other bills paid such as heating,lighting and other running costs are not an automatic part of the exemptionand may need to be looked at separately.

Many employers who do offer staffaccommodation are aware that the provisionof accommodation can count towards theminimum wage. The current daily rate that

can count towards the minimum wagecalculations is capped at £4.82 per day.

The tax and NI rules are complicated and no business wants to fall foul of them. If operated incorrectly and no tax and NIliability is declared via the P11d process then the penalties can be hefty. HMRC are able to review and recover tax for thecurrent year and the previous four tax years, which could be significant.

If you are worried about this area, or areconsidering offering staff accommodation in the future, please ask us to give you adetailed review of the current legislation and how it would apply to your business.

Many hotels provide staff accommodation as this can be a very costeffective way of having staff close to work. It can also be a strongmotivational benefit to employees who don’t need to find additionalaccommodation in the local area, allowing high quality staff to traveland relocate easily.

Live in /live out?

27

It is still an area that is often fraught with confusion, and it is possible to fall foul of the complex regulations if care is not taken.

TheKnowin Magazine Leisure


A kick startfor theindustry? help to buy initiative

28 TheKnowin Magazine Construction

Equity Loan

Available for 3 years from 1 April 2013, theequity loan initiative is available for peoplelooking to purchase a newly constructedhome, and is available to both first timebuyers and home movers. Under thisinitiative, the government will lend thepurchaser up to 20% of the property value(maximum home value of £600,000), with thepurchaser requiring only a 5% deposit. Thisequity loan, which is interest free for 5 years,can be repaid at any time or when theproperty is sold.

Mortgage Guarantee

The mortgage guarantee initiative is

available from January 2014 and will also runfor 3 years. It is aimed at increasing theavailability of mortgages for people withsmall deposits and is available for both newand existing properties. The government willprovide lenders with the option to purchasea guarantee on high loan to valuemortgages.

Purchasers will still be required to have atleast a 5% deposit, with the governmentguaranteeing up to 20% of the mortgage, upto a value of £120,000 (i.e. maximumproperty value £600,000).

Darren Moynan commented, “There havebeen concerns raised that the Help to BuyInitiative may increase house prices

and create a ‘housing bubble’. Although time will tell whether this is the case, I believe it is a step in the right direction to help kick start ourconstruction sector. The increase in new home sales should not only help house builders, but also help generate more work for sub-contractors. Likewise,people buying existing homes are likely tocarry out some improvements.”

For more information on the Help to BuyScheme, please contact either DarrenMoynan or Brett Bennett on 01228 530913.


At the recent budget the government announced the Help to Buy Scheme in the hope it will kick start the housing market, and thus the construction industry.

With significant deposits still required in order to obtain a mortgage, the scheme is designed to help those with small deposits purchase a home. There are two parts to the scheme:

To qualify to claim the relief, your businessmust be a company, but the types ofbusiness that are likely to qualify are housebuilders, property developers and propertyinvestors.

In addition to the 150% tax uplift, if a loss isgenerated by making the claim, then the losscan be surrendered to the Revenue and atax credit obtained representing 16% of theloss. A decision as to whether this is to be

claimed or not is usually fundamentallydriven by cash flow requirements of yourcompany, as future tax relief will be at ahigher rate compared to the 16% tax creditthat your company receives at the time theloss is surrendered.

For land to be regarded as contaminated,there must be substances either on, orunder the ground that could or are causingharm, or there is a possibility of harm being

caused by them. Such commonly foundexamples of contamination are arsenic,radon and asbestos.

So if your company has developedpreviously contaminated land, or acquiredand refurbished a property where asbestoshad to be removed, you may be able toclaim remediation relief on the costsincurred.

A relief not tobe forgotten - landremediation

29


With the introduction of the Help to Buy Scheme from the 2013 Budget, we all wait for what will hopefully be the spark to reignite the construction industry, from what has been a very slow and painful few years.

Therefore, with the main focus of the scheme being driven towards new builds, and the government’s continuedcommitment towards brownfield regeneration, this means that companies who incur qualifying expenditure onland remediation will be entitled to claim relief on up to 150% of their qualifying expenditure.

TheKnowin Magazine Construction

HMRC have now made it easier to make giftaid repayment claims, following feedbackfrom charities that the process was toocomplicated. There are now three optionsthat charities can use to make theirrepayment claim:

1. The new ‘Charities Online’ service

2. Directly from the charity’s own software

3. New style paper forms

The 'Charities Online' service was launchedon 22 April 2013. Charities will need toregister for the service and complete theonline claim form with an attached schedulespreadsheet. Claims will be processed fasterand there are also built in checks so that anymistakes are filtered out before the claim ismade. HMRC aim to process claims withinfifteen working days, which is faster than the

current turnaround.

There is now also the option for largercharities to submit gift aid claims directlyfrom their own software. Sage, for example,are updating their software for charities thisyear to allow gift aid claims to be madedirectly to HMRC.

Smaller charities that do not have access tothe internet do not need to panic. Paperforms will still be available in a new format.For those charities wishing to continue usingthe paper forms, they must be ordered fromthe HMRC Charities Helpline – photocopieswill not be accepted.

There will be a transitional period betweenthe old and the new system and HMRC willaccept the old style paper forms until 30September 2013.

Other changes have also been made to the gift aid rules. For those charities that hold sponsored events as a method offundraising, it is no longer necessary to list every individual who has sponsored the person taking part (which is whatcurrently happens in cases where there are fewer than ten donors). The donationscan now all be listed as one entry under the name of the participant. This will saveadministration time when it comes to making the gift aid claim.

It is still to be seen whether there are any problems with this new online service. HMRC anticipate that initially there may be some disruption to the gift aid repayment process. However, in theory, this service should make life a lot easier for many charities.

Gift aid goes online

30

Gift aid smalldonations scheme


The Gift Aid small donations schemewas also being introduced in April2013. It will enable charities to claim atop up payment on cash donations of£20 or less without the need to collectgift aid declarations (up to a limit of£5,000 per annum). This couldpotentially result in £1,250 extra incomefor the charity.

To benefit from this, charities mustadhere to the ‘matching rule’ – every£10 of donations claimed under theSmall Donations Scheme must bematched with £1 of donations claimed

under gift aid in the same tax year. This scheme will be particularly useful for charities that receive income from collection boxes, bucket collections and collections during religious services.

To discuss the new gift aid optionscontact Joanne Thomlinson on 01228 530913 or [email protected]

TheKnowin Magazine Charities

31

For many years charity trustees had a choice: run their charity as a limited company and limit theirpersonal liability, or operate as a trust or association and avoid company rules and regulations but lose the security of limited liability.

Now a third choice is available -TheCharitable Incorporated Organisation(CIO). A CIO gives trustees the securityof limiting their personal liability for thecharity’s debts and obligations, butavoids the hassle of regulation byCompanies House.

A CIO will be still be regulated, but byThe Charity Commission or the Office

of the Scottish Charity Regulator.Accounts and annual returns will stillhave to be filed with them each year.

One of the biggest attractions of a CIO could be for very small charities.The Charity Commission will notnormally register a charity until itsincome exceeds £5,000. This can be frustrating for charities which want a charity number for fundraising, or tohelp the process of registering for giftaid. However, the rules are different forCIOs, and the Charity Commission willhave to accept a registration application from a potential CIO regardless its income.

It is still very early days for the CIO and it is difficult to know howinstitutions like banks will accept them. It is possible that a CIO could find it more difficult to borrow against its property than a charitable company,but this is still to be seen.

To discuss whether a CIO could work for you contact Faye Armstrong on 01228 530913 or email [email protected]

CIOs: protectingtrustees


Knowhow tomake adonation

The Gift Aid Small DonationsScheme is also being introduced inApril 2013. It will enable charitiesto claim a top up payment on cashdonations of £20 or less withoutthe need to collect gift aiddeclarations (up to a limit of£5,000 per annum). This couldpotentially result in £1,250 extraincome for the charity.

TheKnowin Magazine Charities

32


TheKnowin Magazine Social Media

AAAARGH!!!

Michelle Masters, founder of #cumbriahourhas helped us devise these top Twitter tips.She says ‘Twitter opens the door forbusinesses to interact and it can break downthe barriers for when you first meet. Peoplecan be frightened with these sorts of thingsbut something like #cumbriahour is a greatplace for people to get started.”

Top tips for Twitter

1. Choose an appropriate Twitter name - Onethat makes you easy to find when searchedand doesn’t take up too many of the 140characters. This way when others want to‘retweet’ you or mention you in a tweet there isstill enough room for the actual message.

2. Complete your profile – Get rid of the ‘egg’image straight away and upload a picture.This instantly makes your profile more realand relatable and adds a sense of trust. Havea concise catchy bio and make sure youmention your relevant keywords for yourindustry and area, essential for SEOpurposes.

3. Get involved – Retweet people, mentionothers, reply to tweets, join the debate – makeconversation and begin to build relationships.

4. Use links – Shorten them first via Bit.ly orsomething similar and use them to directpeople to your product, website, usefulinformation etc.

5. Be careful – Twitter should be fun butremember once it is there; it’s there for the

world to see. If it is a business Twitter accountremember that views and opinions are thenassociated with the business so consider anybrand guidelines and potential customers first.It might be worth remembering that age oldsaying of “If you’ve got nothing nice to say….”

6. #cumbriahour – We’ve all heard about it, but what actually is it? It’s a free twitternetworking event on a Monday night between7- 8pm. It allows Cumbrian businesses tointeract with each other directly and withhundreds of businesses getting involved each week there are plenty of new businessopportunities to be had. Simply tweet with the hashtag #cumbriahour and get involved.There are similar “hours” all over the countryso if you’re not Cumbria based there may wellbe one in your county that you can getinvolved with.

It’s one of those things many of us just want to ignore but it is becomingmore and more important within a business context. Social media is notlikely to be a passing fad, it may not be Twitter and Facebook in 5 years’time but it will be social media of some sort. Having a social presenceonline is really important in the current market and can often add apersonality to a business. Obviously it is going to have greater relevance for some businesses more than others but the more places youcan be the more visible your business/ brand will be. You must consider where your new customers are now –sitting at home waiting for a letter to drop through their letterbox, or are they online?

Who mentioned social media?

33Magazine dodddaccountants.co.ukTheKnowin

The new site is jam packed with useful information and will be regularly updated with news stories, changes to taxes and any other relevant information that mayaffect your business - so make sure

you keep checking it. Another new bityou may have noticed is our brand new‘Meet the Team’ pages featuring all 120of our Dodd & Co staff. We recognisethat it is important to be able to put aface to the person behind a phone call

or email and we hope this has alsomanaged to add a bit of personality too.If you haven’t seen them yet make sureyou have a look – they certainly gave usa laugh or two!

We have just launched our brand new website!

Our new website


We have a brand newiPad mini up for grabsand entering couldn’t be easier! Either like our facebook page or follow uson twitter @doddaccountants to be in witha chance of winning! Do both and youhave two chances to win - simple!Everyone who ‘likes’ or ‘follows’ DoddAccountants (including those who alreadydo), by 31 August 2013 will automaticallybe entered into a draw for the prize. Winnerto be announced in September.

Win aniPad Mini

This is where the payments to a lender cover the interest due and no more. The balance outstanding will only be repaid if either ongoing additional repayments are made, or the capital is repaid another way.

Interest onlymortgages

Next year the UK will take steps towards preventing another credit crunchby creating new laws that come in to force from April 2014. These includemaking lenders responsible for assessing the affordability of their lending,but also specific guidelines on interest only mortgages.

Often this has meant that a “repaymentvehicle” was arranged alongside amortgage. We all remember endowmentpolicies. Currently ISAs and pension plansare the typical repayment vehicles but“sale of theproperty”

became more common in the UK.

The new rules call the sale of the propertya potentially “speculative” option, which isalready causing lenders to rethink theirlending criteria when it comes to interestonly mortgages.

Lenders will insist that you have aspecific repayment strategy

in place that can beevidenced. Interest

only mortgages will no longer be acheaper option.

They will become lesscommonplace whichis not good news foreither the consumer

or advisers. Thereare situations

where they are the most suitablemortgage option.

There will also be an impact on those who have an interest only mortgagealready. Lenders have been told tocontact these borrowers to verify whatrepayment strategy has been put in place.If there is no plan they may well convertthe mortgage on to a repayment basisover the remaining years of the mortgageterm, increasing the monthly cost.

Anyone who has a “pure” interest only mortgage or is considering a new mortgage on this basis needs to seek advice from a suitably qualifiedfinancial adviser.

If you would like to discuss any aspects of the above please contact Ian Watterson 01228 522258, for independent

mortgage advice.

34


TheKnowin Magazine Dodd Murray

a dying breed?

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TheKnowin Magazine About Us

If children were to follow in their parents’ footsteps thefuture of accountancy would be safe! A bit of a baby boomhas hit Dodd & Co this past year with a total of eleven“Doddies” celebrating the safe arrival of a new addition totheir families with a further three arrivals imminent!

Diddiedoddies

The AAT (Association of Accounting Technicians)qualification forms a key part of the apprenticeshipprogramme along with functional skills in English,numeracy and IT. Completion of the programme can lead to other training opportunities including the ACCA and ACA professional qualifications.

We aim to recruit a minimum of two accountancyapprentices each year. At the moment we have 9apprentices at varying stages in their training. In addition we have a business and administration apprentice who will complete her Level 3 diploma in business and administration at the same time as working full time in our support department.

Apprenticeships may be big news at themoment but they’re not new to Dodd &Co. Our apprenticeship programme islong established and a great success. In fact our newest partner, HeidiMarshall, started out as an apprenticewith Dodd & Co back in 1999!!

Dodd & Coapprentices

If you know anyone who is numerate, self motivated, withexcellent interpersonal and teamwork skills and a genuineinterest in accounts, Nicky, who looks after recruitment forthe firm would be pleased to hear from them and can becontacted at [email protected].

Dodd & Co are always on the look out forenthusiastic new talent to support thefirm’s continuing growth and development.

Know how to grow

I am pleased to report WE DID IT! Once again we have baked cakes, eatencakes (we are especially good at that!), dressed in red for Red Nose Day,dressed in jeans for Genes Day, run, walked and cycled but perhaps the mostimpressive achievement of the year was Zoe Parry’s sponsored silence insupport of Children in Need!

In the last edition of “In the Know” we reported that weset ourselves the challenge to raise more than £2,500 for charity in 2012!

Know how to fund raise

• One of the highlights was the bucking bronco at the Cumberland Show. Rumour has it that Rob Hitch lasted a total 3 seconds before succumbing to the bronco’s charms.• The Rotary tiger boat race challenge on Derwent water proved a bit more of a challenge with the Doddie team coming nowhere near the top of the score board - hats looked good though lads and lasses (evidence can be seen in our 2013 calendar).• Rather more successful is Emma Forrester who is half way through the 10 half marathons she is doing for Eden Valley Hospice. Well done to Emma – keep it up! To help Emma along the way Louise Soones will join her on the Great North Run and Cumbrian Run stages. • Call it a mid-life crisis, or just his competitive edge never leaving him, Robert Wharton is busy training for a triathlon. The running and cycling isn’t concerning Robert, it is the near freezing temperatures in Derwentwater that are! • The fab footballers from QEGS in Penrith have just returned from playing a tournament in Holland which they won. Carol Tindal’s son Mark and the other lads were last seen partying hard in Amsterdam – the less said here the better!• The boys from Abbeytown under 10s have had a good season with 9 wins under their

belt. With obviously a talented manager at the helm will one of the premiership teams make a bid for him? We wish them luck next year.• The Doddie cricket team was in somewhat of a crisis last season. They even had to have a girl in the team (when we say girl, perhaps more mature woman may fit). So if there are any budding cricketers out there who can prove some connection to Doddies, please get in touch! Good luck to the cricketers this summer and let's pray for sunnier days! Dean Johnston’s big money transfer to Stainton should get a few tongues wagging.• Well done to Wigton Rugby lads who won promotion and were unbeaten in 26 league games - as sponsors and long term supporters we are delighted and look forward to next season! And looking forward to the new calendar Moff!• Congratulations to Penrith Rugby Union Club who finished mid-table after some challenging games this season. The Dodd & Co sponsors game was a thriller at 42 points each. A season of what could have been but well done to our own James Hogg and James Thornton (Lloyds TSB) who are very much mainstays of the team. • The Dodd’s six a side football team had another successful year. The team is having a break this summer due to other commitments and in the eventuality that it doesn’t return Darren Moynan can

retire from management happy in the knowledge he left the game at the top!• Good luck to North Lakes School in Penrith whose netball team are aiming high in their forthcoming tournament.• Carol and Debs got lost on the Cycle The Solway charity bike ride and actually did 120K instead of the intended 100! Well done to the rest of the team who made it home for teatime!• Robert’s wrestling days “may be” over but look out for his sons’ names in the Cumberland News pages over the summer months. Good luck Mark and Connor. • A great job by the Wigton under 10 lads hockey team who went all the way to the North of England IN2 hockey competition at Leeds! Alison’s son George features as a star player and is managed by the other George in her life. • On the racehorse front (popular among a few at Dodd & Co) we look forward to seeing Janice Veitch’s thoroughbred on the racecourse. Reared from a foal let’s hope it can win some races.If you'd like to share any of your kids, or yourown sporting achievements with us, we'dlove to hear from you - join us on Facebookor Twitter!

Know How To Get Involved In Sport

If you cast your mind back to last year’s “In the Know” back page we recapped the manyachievements down the years from the staff at Dodd & Co. We have Carlisle United footballers,World champion wrestlers, gymnasts, swimmers, runners, the list is endless. We could no doubtproduce a new list for this year.

However why do that when the last year has been a good year for the sporting clients, staff, kids and supporters of Dodd & Co. Here is just to name but a few in no particular order: -

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TheKnowin Magazine Sport Knowhowforsport

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