The Government recently named over 200 companies for failing to pay the national minimum wage (NMW).

The list includes firms of all sizes and various sectors. Some notable brands include WH Smith, Argos, and Marks & Spencer.

Those named were found to have failed to pay their workers almost £5 million and were told to reimburse more than 63,000 workers, and together pay £7 million in fines to HM Revenue & Customs (HMRC).

Common breaches

The most common breaches appear to be either unintentional or have already been resolved.

Two-fifths (39 per cent) of the firms were on the list for deducting pay from workers’ wages and failing to pay workers correctly for their working time. Another 21 per cent were on the list for paying the incorrect apprenticeship rate.

In previous years, other high-profile names such as Pret A Manger, John Lewis, and The Body Shop have also appeared on the Government’s list as a result of minimum wage underpayments.

The biggest violations at the time included:

• 37 per cent of the firms failing to correctly deduct pay from wages for things such as uniforms and expenses
• 29 per cent failing to pay working time, such as mandatory training, trial shifts, and travel time
• 16 per cent failing to pay apprentices the correct rate.

Additional factors

In addition to the above, there are several other factors that contribute to companies failing to pay the NMW.

This includes companies incorrectly classifying their workers, and registering them as self-employed instead of employees, which can lead to underpayment.

Salary sacrifice schemes can also lead to NMW violations. HMRC considers post-sacrifice pay as what counts for NMW.

If an employee sacrifices part of their salary for benefits, such as childcare or a cycle-to-work scheme, the employer must look at their pay after deductions to ensure it still meets the NMW.

Some companies fail to pay workers for the time spent travelling between jobs, which is a common reason for not meeting the legal minimum wage.

Deducting money from pay for things like uniforms, tools, or other employee benefits schemes can also reduce take-home pay and lead to NMW violations.

There are also instances when employers fail to pay for overtime, meaning workers are not paid for all the time they have worked.

Additionally, some companies fail to correctly update workers’ pay to the correct rate of NMW or NLW due to annual rate rises or significant birthdays when their rate changes.

Unintentional errors

Most of the major brands have claimed that the errors were unintentional. For instance, WH Smith misinterpreted rules around uniforms, having asked staff to wear specific-coloured trousers, skirts, and shoes without reimbursing them for it.

Marks & Spencer pointed to an unintentional technical issue from four years ago that resulted in a pay dispute for temporary employees.

Sainsbury’s, which owns Argos, was informed that a payroll error that was discovered in 2018 had affected some Argos store colleagues and drivers and dated back to 2012, before Sainsbury’s acquired Argos.

How to avoid similar mistakes

The majority of the time, employers do not know they are violating the NMW since they are not keeping adequate records.

It is important for employers to understand how statutory wage regulations apply to their workers.

Time spent on call at the workplace, travelling for work, or attending work-related conferences and training courses all count as working time for the regulations; however, some employers fail to include this time when calculating wages.

Employers also need to have the proper systems in place to raise staff members’ wages as they age, but failing to do so could result in employers finding themselves on the receiving end of an employment tribunal claim and receiving substantial penalties.

If you would like assistance to ensure your business is keeping up to date with NMW, please contact us today. 

The High-Income Child Benefit Charge (HICBC) is a tax that affects households where at least one person with parental responsibility has a taxable income exceeding £50,000.

This charge applies regardless of who in the household receives the child benefit, and it is payable by the household’s highest earner.

The highest earner may have to pay back some or all of the child benefit received during each tax year.

The current scenario

The HICBC has been a source of confusion for taxpayers since its introduction in 2013.

Under the current rules, the highest earner in a household affected by the HICBC must register for Self-Assessment and submit tax returns every year to pay the charge.

This requirement can be perplexing for people with otherwise simple, straightforward tax affairs via PAYE, who may be unaware that they need to file a separate personal tax return because of the HICBC.

Proposed changes

The Government, recognising the complexities of the current system, has announced plans to simplify the process for customers liable to the HICBC.

The proposed changes, as outlined in a recent legislation day documentation, include deducting the HICBC directly from salaries via the PAYE system.

This move aims to eliminate the need for those affected by the HICBC to register for Self-Assessment, thereby reducing administrative burdens for taxpayers and HMRC alike.

However, the specifics of how this new system would work in practice or the notification process for taxpayers are yet to be disclosed.

Advice for handling the HICBC

While further details on the proposed changes are still to come to light, it is crucial for taxpayers to understand their obligations under the current system.

If you, your partner, or anyone else in your household, earns over £50,000 and you are receiving child benefit, the highest earner will be liable for the HICBC.

You must, therefore, continue to register for Self-Assessment and submit a tax return each year to pay the charge.

The proposed changes to the HICBC system aim to simplify the process for taxpayers.

However, until these changes are implemented, it is essential to understand your current obligations and seek professional advice if needed.

If you are unsure about your tax obligations or how to handle the HICBC please contact us today. 

Accountants are often seen as guardians of tax and compliance. However, their expertise extends far beyond these areas.

They can act as problem solvers, assisting with a range of tasks that can set the stage for a smooth and profitable business operation. Here are eight ways your accountant can help your business flourish:

Assisting with business formation

Launching a new business is never straightforward, and there can be bumps in the road that may not become apparent until it is too late.

The structure of your business, whether it is a sole trader, partnership, or company, comes with unique tax obligations, paperwork, and, potentially, personal liabilities.

An accountant can guide you in choosing the most suitable structure for your business, potentially saving you significant time and money.

Guiding business acquisitions or sales

If you are considering selling your business or acquiring a new one, consulting with your accountant should be your first step.

Accountants can assist with business valuations, develop exit strategies, and compile the necessary financial reports and documents to ensure you make informed decisions.

They can also help minimise costs and protect you from entering into deals that will not benefit you in the long run.

Improving cash flow

Inadequate cash flow management is a common cause of business failure. Your accountant can help by conducting a comprehensive business analysis, rebalancing your budget and debts, optimising your cash flow, and building cash flow forecasts.

By helping you understand your financial obligations and adjusting the way funds are used in the business, you can avoid disrupting relationships with suppliers and staff, ensuring your business operates as smoothly as possible.

Streamlining business operations

Decisions that may seem straightforward can become critical when they involve financial considerations.

Accountants can assist with decisions such as whether to buy or lease equipment, where to rent office space, and how to evaluate supplier terms and conditions.

They can help price your products to maximise profit and reach a broader customer base. Accountants can also identify underperforming areas in the business and suggest potential expansion opportunities.

Implementing cloud software

Your accountant can help automate many of your business’s monthly bookkeeping tasks and establish an invoicing system that provides a clear overview of paid and unpaid invoices using the latest cloud accounting packages.

This intelligent software, such as Xero, Sage or QuickBooks, can even send reminder emails to clients about unpaid invoices, saving you time and helping you stay on top of your finances.

Networking

Effective accountants build relationships with other successful businesses. If you are seeking suppliers or investors, your accountant may be able to connect you with the right people.

Securing funding

At some point in the life of a successful business, additional financing may be necessary.

Whether it is securing a loan to navigate challenging times or attracting investors for essential expansion, obtaining this funding will require well-structured and clear financials.

Your accountant can help you structure your investment proposals and loan applications in a way that appeals to investors, showcasing your business and increasing the likelihood of your funding efforts succeeding.

Managing inventory

Daily inventory management can be challenging. However, your financial records can provide your accountant with valuable insights into your stock room operations.

Your accountant can analyse trends over time and suggest necessary changes to ensure peak operational efficiency.

The role of an accountant can extend far beyond just assisting with taxes.

By helping you in every aspect of your business, your accountant can help you sidestep various challenges and contribute to the creation of a successful, efficient, and streamlined business.

If you would like to know more about how we can help your business flourish, please contact us today. 

Introduced in 2014, Employee Ownership Trusts (EOTs) provide an attractive alternative to traditional business succession strategies, offering a series of unique benefits to businesses, their employees, and the wider economy.

Employee engagement and productivity

One of the most immediate benefits of EOTs is their positive impact on employee engagement and productivity.

As beneficiaries of the trust, employees have a direct, vested interest in the success of the business.

They become not just workers, but also part-owners, which nurtures a stronger commitment to the company’s objectives.

Studies suggest that companies with engaged employees perform better on multiple measures, including reduced absenteeism, increased productivity and higher customer satisfaction rates.

Financial incentives

From a financial perspective, EOTs also offer significant benefits. For business owners looking to sell, the sale of a controlling interest (more than 50 per cent) of the business to an EOT is free from Capital Gains Tax (CGT), providing a cost-effective route for succession planning.

The employees, as beneficiaries of the EOT, also gain the opportunity to receive tax-free bonuses, up to a capped limit per annum.

These incentives can result in substantial tax advantages for both the selling owners and the employee beneficiaries.

Stability and longevity

EOTs promote business stability and longevity, particularly in the context of succession planning.

In contrast to a traditional sale of a business, where future directions may be uncertain, a sale to an EOT ensures that the business continues in a manner consistent with its established values and goals.

The employees, many of whom may have dedicated significant portions of their careers to the business, are naturally invested in its continued success.

This can reduce business disruption during the transition phase and enhance long-term business prospects.

Economic resilience

On a macro level, businesses owned by EOTs contribute to the resilience of the economy. Research has shown that employee-owned businesses are less likely to fail during economic downturns.

This resilience stems from their focus on long-term sustainability over short-term profits.

Additionally, they are more likely to retain employees during tough economic times, providing stability at a company and community level.

Societal impact

Finally, EOTs can foster a sense of social responsibility and collective welfare.

Businesses owned by their employees are often more invested in their local communities, contributing positively to societal welfare.

EOTs offer a robust alternative to traditional business structures and should be considered as part of a business’s succession or exit planning.

These trusts are likely to play an increasingly significant role in shaping a more inclusive, resilient, and sustainable business environment. If you would like advice on EOTs, please speak to us.

In the second quarter of 2023, overpayments on pension tax in the UK reached £56 million.

This was an increase of nearly £8 million from the first quarter of the year, according to HM Revenue & Customs (HMRC).

This figure is almost double the £33.7 million collected in the same period the previous year.

During this quarter, approximately 16,000 reclaim forms were processed, with an average reclaim amounting to £3,551. This is the second-highest figure since the introduction of pension freedoms in 2015.

Over the past eight years, people aged 55 and over who have been overtaxed on their early pension withdrawals have reclaimed almost £1.1 billion.

The need for taxpayers to reclaim overpayments has arisen because people withdrawing from their pension pots early have typically been charged emergency tax, usually significantly above the amount that is ultimately owed.

The figures suggest that an increasing number of over-55s are using their pension freedoms, with some commentators suggesting that this is a result of the cost-of-living crisis.

The HMRC data also revealed a decrease in the number of transfers into qualified recognised overseas pension schemes (Qrops), falling from 3,900 in 2021 to 2022 to 3,250 in 2022 to 2023.

Despite this, the total value of these transfers increased from £517 million to £680 million over the same period.

If you are concerned that you may have paid too much tax on pension withdrawals in the past, please get in touch.

As of 8 August 2023, all Research and Development (R&D) Tax Credit claims require the submission of an online Additional Information Form (AIF) providing supplementary project details.

The form must be completed prior to the submission of the company tax return. If the form is not submitted, the R&D claim will not be incorporated into the company tax return (CT600).

The form can be completed by a representative of the company or an agent, but it must include information about the senior internal R&D contact who is responsible for the claim, as well as any agent involved in the claim process.

HM Revenue & Customs (HMRC) has expressed concerns about the behaviour of some agents in relation to R&D.

The requirement for details about the agent and a senior responsible individual is designed to foster transparency in the claim process and ensure that R&D compliance is supervised at a high level within organisations.

The form applies both to ongoing projects and accounting periods that have already concluded.

Companies must capture all necessary information, and they may need to adjust their internal systems to collect this information efficiently.

The form also demands details about qualifying expenditure, encompassing qualifying indirect activities and specifics about the R&D projects undertaken.

Companies with a large number of projects can provide information about a selection of the projects, but this must include at least three projects that account for a minimum of 50 per cent of the qualifying R&D expenditure.

Details must also be provided of advancements in technology, the technological baseline, the technological uncertainties, and the strategies used to overcome them.

There are concerns among some advisers that current reports may not meet the new requirements, particularly if the projects are similar and relate to the same technological uncertainties.

Allocating costs between projects may also pose challenges, potentially leading to increased administrative costs for businesses that comply with the new rules.

Unsure of how these changes affect you and your claims, now and in the future? Speak to our experienced team today.

Robert Coe and Ian Wilder opened the doors to Wilder Coe, Chartered Accountants Monday, 23 October 1972. To mark 50 years in business, Wilder Coe welcomed clients old and new on Wednesday, 12 July, to continue its year of celebrations with a summer drinks reception.   

Having kicked off the festivities back in October 2022 with a 50th-anniversary half-marathon fundraiser and a “50th birthday bash” in our London office for our team, we wanted to acknowledge and appreciate clients and contacts who have stood by our side over the past five decades.  

Against the backdrop of one of the last remaining ancient Livery halls within the City of London walls, the ‘sumptuous’ Stationers Hall also celebrated a significant milestone of 350 years this year.   

Cricket is a great obsession for Chairman  Jitendra Pattani. As the firm celebrates this significant golden anniversary milestone, he acknowledged his passion for the sport and the company he captained for five years. 

“For Wilder Coe to reach 50 not out so far in our innings is a significant milestone, but we have plenty of runs left […] I am confident the century will be achievable; we will not lose sight of the client-centric approach which has served us so well in reaching the first 50.” 

Bee-Lean Chew and Robert Bradman took over the reins of Managing Partner jointly in January 2023. Together, their address celebrated the longevity of bonds and new business relationships in their infancy.   

“After beginning a partnership with ETL Global in 2020, it is an honour to have CEO Dr Christian Gorny and Jane Evans fly over from Germany to celebrate with us, alongside our ETL UK colleagues Sara and Peter Brassington.” 

“We are grateful for the trust each of our clients continues to put in the firm, and we look forward to maintaining our family values and working together for many more years to come.” 

Retired founding partner, Robert Coe, attended the event alongside many senior team members and former colleagues, each of whom has played an integral part in Wilder Coe’s success over the past fifty years.  

 To thank Robert Coe for his ongoing support, wise counsel, and continued guidance in the business he created fifty years ago, he was gifted an engraved crystal decanter by Bee and invited to mark this special anniversary with a ceremonious cake cutting. 

Amongst the magnificent history of the venue and its hidden oasis, drinks and canapes were flying whilst guests were blown away by mingling contemporary street magician, Ifty and, Ivo the caricaturist.   

It is a privilege to have formed strong bonds with many individuals and business owners. Many guests appreciated meeting the team again after many years on virtual calls!  

Jitendra remarks, “The next phase is about consolidating the strong relationships we have built and developing new ones without losing sight of the family atmosphere we have created with our clients and team members.”  

Achieving this golden milestone yields the perfect opportunity for Wilder Coe to concentrate on the future. We are focusing on growing the next generation of professionals whilst expanding services to help more clients on their financial journey.  

Do you want to speak with our advisors about your business objectives or personal fiscal goals? Contact us to arrange a free consultation. 

Office for National Statistics (ONS) data revealed that the Consumer Price Index (CPI) – the official measure of inflation – only fell to 8.7 per cent in the 12 months to May 2023.

While the rate of inflation is not as high compared to previous months, where it peaked at 10.4 per cent in February, many economists had predicted a significantly lower rate of inflation.

As inflation is falling at a slower rate, the Bank of England (BoE) has attempted to curb this by increasing the base interest rate further to five per cent.

High inflation and the ever-increasing base rate are having a significant impact on many businesses in a number of different ways including:

Increased costs

Higher prices and costs are feeding the current rate of inflation. As the cost of raw materials, labour, and operational expenses rise, businesses are squeezing their profit margins.

While larger businesses may have the capacity to deal with these increased costs, small and medium-sized enterprises (SMEs), often operating on tighter budgets can find this situation particularly challenging.

Some businesses facing increased costs are mitigating this by raising the prices of their products or services.

This move needs to be handled carefully, however, as if prices are increased too much then it could drive customers away and cause a loss in revenue, while also feeding into inflation.

Equally, SMEs need to explore how they can drive existing costs down where possible by reviewing arrangements with suppliers and service providers.

Difficulty borrowing

Interest rate increases naturally mean that taking out loans will be more costly for businesses looking to borrow and will also affect any existing loans that are not on a fixed rate.

Increased interest rates can be a significant worry for businesses carrying a substantial amount of variable-rate debt, as higher interest rates ultimately mean higher borrowing costs.

While the current five per cent base rate is the highest it has been since 2008, economists predict that interest rates could peak at six per cent by the end of 2023 – something businesses should consider as they plan their budgets for the next 12 months.

The higher rates of interest have also affected access to finance, as lenders adjust their approach to lending due to concerns about businesses servicing their debts. Many are, therefore, applying more stringent credit and affordability checks.

HMRC debts 

Tax debts to HM Revenue & Customs (HMRC) track the BoE base rate. In its simplest form, this means that the rate of interest for the late payment of taxes is calculated as the base rate plus 2.5 per cent.

The rate of interest paid by HMRC on the overpayment of tax is also calculated as the base rate minus one.

There are various other rates of interest charged by HMRC, which can be found here. As the rate of interest increases, so does the cost of late tax payments.

Although inflation rates are currently higher than predicted, the BoE has stated that the increase in interest rates will see the inflation rates fall in the coming months, as they attempt to push it down to the two per cent national target.

If you are a business owner who would like assistance navigating the current economic climate, please contact our expert team today.

The tax gap in the UK – the difference between the amount of tax owed and the amount that has been paid – remains wider than anticipated due to SMEs, according to HM Revenue & Customs (HMRC).

The tax authority’s figures for 2021/22 show that small and medium-sized enterprises (SMEs) contribute significantly to the national tax gap, with 56 per cent (£20.2 billion) of the total gap (£36 billion) accounted for by underpayments or non-payments by these businesses.

HMRC attributes much of this gap to careless errors made by SMEs, which is why ensuring compliance can help to narrow this gap and prevent SMEs from being hit by easily avoidable tax penalties and investigations.

Understanding tax obligations

Businesses need to have expert knowledge of the different taxes they are liable for. These include Corporation Tax, VAT, Income Tax and National Insurance Contributions via PAYE.

According to HMRC, Corporation Tax, Income Tax, National Insurance Contributions and Capital Gains Tax together account for 65 per cent of the total tax gap.

Organisation and meeting deadlines

SMEs need to remain organised and keep meticulous records of all financial transactions. A lack of sufficient care was responsible for almost a third (30 per cent) of all underpayments of tax.

It seems an obvious observation but ensuring that all tax returns and payments are submitted by the relevant deadlines will mean SMEs avoid penalties for late submission.

Delays in payment or submission can also increase the chances of errors as a last-minute rush often leads to carelessness.

Stay up to date with tax laws and changes

Tax laws are subject to change and being unfamiliar with any updates could lead to errors in your tax reporting that result in penalties, fines and investigations.

SMEs should ensure that they are up to date with the latest changes in tax laws, rates, and deadlines.

Maintain good communication with HMRC

If SMEs do find themselves to be in a position where they’re unable to pay their taxes on time, they should reach out to HMRC and explain the situation. They might be able to offer a payment plan or provide other solutions.

With HMRC intensifying its focus on non-compliance by small businesses, SMEs must pay close attention to their tax obligations.

If you are an SME business owner and would like assistance with your tax obligations, our expert team of tax professionals are here to help.

The number of individuals participating in the UK’s ‘hidden economy’ is increasing according to recent research.

A surge in additional income streams, from moonlighting to online trading, has led to millions of taxpayers failing to declare additional earnings to HM Revenue & Customs (HMRC).

HMRC’s latest figures highlight the extent of this issue. They showed that an estimated 8.8 per cent of the UK adult population – equivalent to nearly six million individuals – are involved in the hidden economy. This figure has nearly doubled since 2016.

While most of this undeclared tax is considered low-level, with only 1.1 per cent estimated to have earned over £5,000 of undeclared income, this group alone represents a significant £3.36 billion of tax-free earnings.

Participants in the hidden economy include those who supplement their taxed income with cash work (moonlighters), accounting for 65 per cent of the total and those who do not declare any earnings at all, which represent 35 per cent. Some businesses also contribute to this problem by failing to register for VAT.

While it is clear that some of these activities are deliberate and knowingly entered into, HMRC’s survey suggests that there is also a distinct lack of knowledge about tax obligations.

As an example, 28 per cent of those surveyed believed that if they were already paying tax, they did not need to inform HMRC about any additional forms of income as long as this did not place them into a higher tax band.

For those with more than one source of income, it is vital to declare all earnings to HMRC, regardless of whether this means being pushed into the next tax band or not.

This includes casual work, selling goods or services, rental income, and trading on platforms such as eBay.

Consequences of non-declaration

Non-declaration of additional income can carry significant implications for those involved.

These penalties vary in severity and those found guilty can face anything from a hefty fine to a prison sentence. Individuals need to ensure that they declare any additional income.

How to declare additional income

To declare additional income to HMRC, individuals can use the Self-Assessment tax return system.

This system requires taxpayers to report their income for each tax year, which runs from 6 April one year to 5 April the next, by 31 January of the following year.

If individuals have only recently started earning additional income, they must notify HMRC by 5 October following the end of the tax year in which they began to receive the additional income in order to register for Self-Assessment.

If you are worried that you may have earned additional income and have not declared this to HMRC, our expert tax advisors are on hand to assist.

In times of economic uncertainty, businesses should have a clear plan to ensure that they can navigate any potential financial pitfalls.

One of the best ways businesses can do this is with the use of management accounts.

What are management accounts?

Management accounts are financial reports that contain information vital to your business, such as your profits and losses, a balance sheet, and a cash flow forecast.

Unlike statutory accounts which are produced annually, management accounts are produced on a monthly or quarterly basis.

This frequent reporting allows for up-to-date financial insights, enabling businesses to constantly respond to changes in the market environment in a proactive manner.

How can they help?

Management accounts can provide businesses with the financial data needed to make necessary adjustments in real-time.

It enables business owners to make strategic decisions based on concrete information rather than guesswork, which can help when investing, seeking finance or making a business more resilient during difficult times.

By focusing on detailed cost analysis, management accounts can also drive operational efficiency, a critical aspect during uncertain times.

They offer key insights into cost structures, making it possible to identify inefficiencies and areas of waste that can be targeted for cost reduction. This can ultimately lead to improved profit margins, better cash flow management, and increased financial resilience.

Although primarily designed for internal use, management accounts can also strengthen communication with key stakeholders.

If you would like more information about management accounts and how we can help you use them to strengthen your company’s financial outlook, please contact us today.

New research from wealth management firm Evelyn Partners has revealed that the majority of business owners with companies that earn more than £5 million annually are preparing for an exit.

With 65 per cent of UK business owners contemplating the sale of their company, and almost half intending to do so within the next year, the reasons behind these accelerated plans vary.

The primary motivator seems to be the looming General Election within the next 15 months, which has instilled concerns about a potential change in Government and consequential alterations to taxation. This political uncertainty has prompted a quarter of business owners to fast forward their exit plans.

Another significant reason for considering the sale of a business is the difficulty of accessing long-term capital and investment. Increasingly strict conditions for financing have pushed one in four to contemplate selling.

The complications surrounding post-Brexit trade arrangements and the effects of high inflation have also pushed many business owners to sell.

With inflation driving up the cost of labour, energy, and materials, about 23 per cent of business owners have chosen to sell their businesses for this reason.

Personal finance challenges also factor into this trend, as business owners look to liquidate the equity in their businesses.

However, about 36 per cent have chosen to delay their exit plans in hopes of obtaining a better price for their business.

The preferred exit strategy for these businesses is selling to private equity. In fact, 20 per cent of business owners are looking to sell to private equity, with 11 per cent of them aiming to sell a minority stake, while nine per cent are planning to sell a majority stake.

Employee ownership trusts are also gaining popularity, with 18 per cent of business owners considering this route.

Are you a business owner who has considered an exit strategy? Please contact us today to find out how we can assist you.