It is quite common to invoice a customer with terms of “30 days or net monthly account”. Small customers will be expected to pay within 30 days, while large customers will be expected to pay at the end of the month following the month of the invoice, so an invoice sent in December 2016 would be settled by 31 January 2017. Large companies do it this way because they may receive several invoices from a supplier, and will want to settle all of them with one payment when they do their computerised cheque run. It would therefore be a good idea for the supplier to have sent a statement at the start of January listing all outstanding invoices. Typically the cheque run would be about the 25th of January. If you give credit and have debts to collect, then you might like to have a discussion with us. Most accountants are also general business advisors as well.
Archives for January 2017
Tax Needs to be Paid by 2 March 2017.
If you need to submit a tax return by 31 January 2017, then you need a Unique Taxpayer Reference in order to do this. This is a 10 digit number in the format 12345 67890. It takes a week to 10 days to get a UTR issued, and if you have done nothing yet, then you are unlikely to make the deadline. The penalty is 100 pounds.
Basically the 100 pounds is now a writeoff. The next deadline to seriously worry about is 2 March 2017, when an additional charge of 5% of any income tax still outstanding will be levied. There is enough time between now and then to get you registered for Self Assessment, get the tax return filed and the tax liability paid. We can do it all-electronically at our end, and we can do it quickly because we aim to be the local accountants Carlisle businesses can turn to when something needs to be done in a hurry.
Value Added Tax deadline on 7 February 2017
Value Added Tax returns for the quarter ended 31 December 2016 are due to be submitted by 7 February 2017, and any payment which is due should be made electronically by the same date.
Single Market and Customs Union
What’s the difference between a Single Market and a Customs Union? Goods imported into this country pay an additional tax known as a tariff. A Customs Union is where two countries agree to charge a single rate of tariff against imports from any third country. A Single Market is where two countries agree not to charge tariffs on imports from each other.
It is possible to have a Customs Union without a Single Market. Two countries can have a common external tariff, but also charge each other, presumably at a lower rate than the external tariff, since otherwise exporters would just send goods to a tariff-free area in a third country before importing to the other country. Such tariff-free areas do exist.
A Single Market without a Customs Union would mean importers bringing in goods through the country with the lower external tariff, whence no income for one of the countries. This is not likely to endure.
At the moment, a tariff needs to be paid by many businesses if they want, for example, to move goods from Stanwix to Kingstown. It is called Value Added Tax, its original rate was 8%, and it has risen to 20% without appearing in any manifesto at a General Election. This tariff was introduced when we joined the European Union and its existence and history are good reasons to vote to leave it. At the time we joined, the European Union was known as the Common Market, but really it has always been more of an anti-market thanks to VAT.
Companies with a 30 April 2016 year end
How Much Bargaining Power do we have?
The Governor of the Bank of England, Mark Carney, tells us that Brexit risks are now lower. He also tells us that other European countries may lose more than us from a hard Brexit.
Well, Mr Carney doesn’t have to be believed, but it is an obvious question to ask how much bargaining power do we really have? Europe sells more to us than we do to them, and it is normally the seller who needs to make the adjustments in the event of any dispute, the customer being always right. Of course, European politicians may well just shoot themselves in the foot for the sake of ideology, but maybe Theresa May’s apparent procrastination over Brexit is after all very clever. Maybe all those court cases in the offing, which threaten to delay matters, are being started by friends of the British Government, just looking at matters objectively. It would be nice to know.
A National Maximum Wage ?
Jeremy Corbyn suggests that we have a National Maximum Wage. How would this work? Say my income is a mixture of salary, director’s fees, dividends from several companies, loan interest, royalties from patents, royalties from book sales, rental income and anything else we can think of. How exactly would Mr Corbyn cap my salary?
One obvious way would be to tax supposed surplus income at 100%, and this is possibly the only way. One may anticipate a number of emigrations, with people exercising their Magna Carta right to leave the country, or to “vote with their feet” as the East Germans used to say. There are many other English-speaking countries in this world, including much of Scandinavia, the Netherlands and Belgium in practice. We are not at war with anybody, and European citizenship may still be available for a fee. If Mr Corbyn is hoping to be the next Prime Minister, perhaps he could spell out now what he expects to happen.
I can declare more than one interest here. A tax band of 100% is likely to lead to rich pickings for accountants advising their clients how to avoid it. My own software may be a source of income in the future. I would have wanted to stay here in the UK and take the hit on tax, but tax at 100% marginal rate, combined with one other Labour Government policy that I object to, would induce me to emigrate. Let’s just remember that the last Labour Government invaded another country without declaring war, so they are quite capable of anything.
Employer Payment Summary by 19 January 2017
Sometimes when you are an employer, you might have happened to have made no wage or salary payments at all for a PAYE month such as the month from 6 December 2016 to 5 January 2017, in which case you must submit electronically an Employer Payment Summary as a NIL return by 19 January. This is too easy to overlook.
If you engage a local accountant and business adviser or a payroll bureau to do your wages, then this will be taken care of. In our case we keep a diary and do a batch of payrolls at about the same time each month. Our payroll files are bright yellow like the P30BC booklet so we do not overlook them.
Third Quarter PAYE and CIS Payments by 19 January 2017
Employers must make Third Quarter payments of PAYE and NICs by 19 January 2017 if settled by cheque. If you pay electronically, then you have until 22 January to make the payment. Tax retained under the Construction Industry Scheme must also be paid by the same date.
Who Benefits from Brexit Delay?
This is a simple question. If we procrastinate over Brexit, who benefits? Does our bargaining power in anticipated negotiations increase or decrease? They sell more to us than we do to them (apparently) so procrastination may favour us. Is that why European politicians want us to get on with it?
There will be any number of legal challenges to Brexit, which will inevitably slow things up. Is that good or bad for Britain when we finally leave? It is quite possible that pro-Europeans haven’t actually got their act together. Try to obstruct Brexit, and the main victims will be German industry, not us. Talk down the value of the pound, and it is them who will suffer for it.
Is this perfidious Albion yet again? Is our government sagacious in its apparent inactivity, or merely incompetent? We accountants are taught to think in terms of bargaining power, and will ask this sort of question. Watch this space!