Archive for March, 2013

Is £154,000 small?

Wednesday, March 20th, 2013

With effect from 6th April 2013 a small business will be able to account for its profits on a cash basis. No need to account for stock, debtors or creditors. No need to make distinction between purchase of assets (capital expenditure) and running costs. Simple? Of course not. Misleading? Of course.
The scheme purports to make life easier for small businesses – reducing red tape. It does nothing of the sort. It isn’t simplification. It’s another set of rules that has to be studied and understood. It’s an alternative that requires understanding of both systems in order to establish which is the best in any particular circumstance – and it might be different one year to the next. If people are not willing to understand and comply with one set of rules, what makes Government think that another set of rules will be understood and complied with any better? It simply creates confusion and almost provides an excuse for getting it wrong.
Is it good for business or the businessman? It is certainly no basis on which to judge the performance or profitability of the business. It is no way to encourage a small businessman to properly understand accounts or to help develop the business. Is it not better to encourage the keeping of proper records, to draw up accounts correctly and better understand the concept of profit? Isn’t that also fairer? Most employees, whatever their income, have no option but to be taxed on their true earnings.
It might be possible to justify a cash basis for a very small, part-time business, generating turnover of, perhaps, £10-20,000 a year. But the Government is intent on applying it to businesses with turnover up to £154,000. It does no one any favours. It’s the lazy approach to discipline – at a time when more, not less, discipline and compliance is required.

It’s a Budget – but not as we know it.

Wednesday, March 20th, 2013

Budget day used to be (quite) exciting – working out how much better/worse off we were going to be in a few weeks’ time. We can now work out how much better/worse off we will be in 2014/15 – that’s no fun.
When Chancellors find it impossible to forecast income and growth for the following year, why do they choose to set tax rates two years ahead?
We now have trouble trying to remember if the £10000 personal allowance is for next year or the year after. Next year all employers will save £2000 in National Insurance costs – but that’s not really next year, it’s the next year – until after 5th April 2013 when it will be next year. Clear enough isn’t it?

Between a rock(star) and a hard place.

Wednesday, March 20th, 2013

When you hear the name Osborne, do you instantly think Ozzie or George? Perhaps today, Budget Day, (as opposed to Chris Evans’ Budgie Day) it’s more likely to be George.
Most of us have difficulty managing our own budgets – deciding on priorities for gym membership, mobile phone contracts, eating out, holidays (whatever they are), and the various other expenses making up the domestic budget – juggling the interests of family members. Difficult, even when you have a good idea about your income. George has to guess what his income is going to be and then decide how to spend it with everybody and his dog trying to tell him what’s best. – That’s a hard place to be.