David Porthouse & Co

Carlisle Accountants

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81 Larch Drive, Carlisle CA3 9FJ

CIS Returns to 5 February 2017

 
Construction Industry Scheme returns for the period from 6 January to 5 February 2017 should be submitted online by 19 February. This includes NIL returns.

It is too easy to forget the need to submit a NIL return when no payments to subcontractors have been made. If you engage a local accountant to do your CIS returns, then this will be taken care of. In our case we keep a diary and do a batch of work at about the same time each month. We aim to be the accountant Carlisle businesses will turn to for a range of advice and services.

A New Legal Challenge

 
The Government is likely to meet a new legal challenge, this time over membership of the European Economic Area. The challenge is something to be welcomed on two points.

Firstly the 2016 Referendum was essentially about sovereignty. A majority of 52% have decided what we knew anyway, that the British Parliament is sovereign, and that no British Parliament can bind its successor. This leaves Parliament free to enter into any number of international agreements, and the EEA is one such agreement to the extent that it does not attenuate sovereignty. EEA membership is therefore a matter for Parliament.

Secondly let’s just waste time with lots of litigation. It gives the Government an excuse to procrastinate, and time is likely to be on our side. While the value of the pound remains artificially depressed, it is European exporters to us who will be struggling. Eventually they will see sense, and it will become easier to negotiate.

What we will have in the long run after Brexit is a 1:1 correspondence between currency zone and political zone. Everybody should find that their zone is much easier to manage. Let’s wish the other zone the best of luck and stop threatening each other. There are any number of things on which we can co-operate, which is always a matter for Parliament.

A Company which has missed the 31 January 2017 Deadline

 
If your company had a deadline of 31 January 2017 for the submission of its accounts to Companies House, and this deadline has been missed, then you still have something to play for, and you should contact a Carlisle accountant such as David Porthouse and Co at once. You will incur a penalty of £150, but this penalty rises to £375 after 28 February 2017 if you still haven’t submitted your accounts. These penalties are £300 and £750 if you miss the deadline two years’ running. We can readily prepare and submit your accounts within the month if you contact us now.

The Cheque Run about 25 January 2017

 
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.

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.

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.

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.