The Enactment of Extra-Statutory Concessions Order 2012, passed on Monday afternoon by the House of Commons First Delegated Legislation Committee, gives legislative effect to six extra-statutory concessions (ESCs), including ESC C16, which deals with the tax treatment of distributions to shareholders when a small company is dissolved.

The CIOT and the Institute of Chartered Accountants of England and Wales had written jointly to Exchequer Secretary David Gauke, the Labour Treasury team and other members of the committee considering the legislation asking them to withdraw or reject the legislation to allow it to be amended. Although some of the concerns of the two bodies were referred to during debate, the committee passed the proposal without a vote after just 20 minutes of discussion.

Andrew Gotch, chairman of the CIOT’s Owner Managed Business Sub-Committee, said:

“It is extremely disappointing that the Government has chosen not to listen to the concerns of the tax profession and small business and have pushed this measure through.

“Currently ESC C16 provides a simple, straightforward and inexpensive way for a company to be wound up at the end of its life without the need for a formal liquidation, but with the same tax consequences as if it had been liquidated. However, the Government has brought this concession into law in a way that is far more restrictive, limiting it to companies whose total distributions come to no more than £25,000.

“The effect of this will be to impose significant additional financial and administrative burdens on small and medium-sized businesses, directly contrary to the Government’s stated policy in this area.”

From 1 April 2012, all VAT-registered businesses must send their VAT returns online and pay their VAT electronically. Currently, only newly-registered businesses, and those with turnovers of more than £100,000, have to file and pay their VAT online.

The new rules will cover VAT returns filed for accounting periods beginning on or after 1 April 2012.

To file your VAT return online, you’ll need to register for HMRC’s VAT Online Service – visit www.online.hmrc.gov.uk and click “Register” under the “New user” section. Then follow the instructions.

Affected businesses will also need to set up their preferred electronic payment method. Visit www.hmrc.gov.uk/payinghmrc/vat.htm for more information on the various options.

Long term sickness absence does not affect the smallest of businesses frequently, but when it does it has a big impact and the costs can be high. The FSB’s ‘Voice of Small Business’ survey panel shows that on average small businesses only experience 2.4 days sickness absence per employee each year – much lower than the national average 7.7 days per employee – 25 per cent said that they experienced no sickness absence at all and 81 per cent said that they were not at all affected by long-term sickness absence.

However, in the last 12 months sickness absence cost firms on average £1,500, but for nine per cent it cost more than £5,000. So it is important that the Government does more to help with the costs of sickness absence in the smallest firms.

Currently, some small businesses can feel confused by the Percentage Threshold Scheme – the current system used to calculate how much SSP an employer can claim back. This means that many small businesses either have to spend time doing difficult calculations or they have to spend money on buying in help.

With 40 per cent of small business employers claiming that dealing with holiday entitlement and sickness absence was one of the most difficult aspects of employment law, the FSB believes that recovery needs to be simplified so micro firms can reclaim all SSP costs more easily to stop them from being hampered at such a difficult time.

The FSB is calling on the Government to introduce a small employer’s relief for all firms with an annual National Insurance Contributions bill of less than £45,000 to recover SSP. This relief would be like that used for reclaiming statutory maternity pay and would use the same calculations. As a result, it would ease the administrative burden, as well as helping businesses manage sickness absence better.

Small firms care about their staff and want to invest in their health where they can. However, Government must understand the pressures small firms are under, and that this is one pressure among many. This needs to be recognised within the soon to be published independent review into sickness absence.

It will also need to recognise that small firms are not able to cope with an increase in the burden of responsibility or an increase in regulation, but that by better supporting small businesses, they could be able to improve the way that they manage sickness absence.

The Government should look at improving the way the Fit Note is used by making it electronic and increasing the training that GPs are given on how to use it.

Small businesses also need better access to free occupational health advice either through GPs or via the national occupational health phone line to make this issue easier to manage.

John Walker, national chairman, Federation of Small Businesses, said:

“Small firms act like a tight knit family and value the contribution their staff bring to the business. And research shows that staff in smaller firms are more often committed and loyal. But sickness absence is one of the most complex pieces of employment law they have to deal with. It can also be costly with small businesses paying around £1,500 over the past 12months. The Government must provide a small employers relief for statutory sick pay in the same way they do for statutory maternity pay so those small businesses that experience a member of staff on long-term sickness absence, are not hampered and are given the support they need.”

The new campaign focuses on individuals and businesses trading above the VAT registration threshold – a turnover of £73,000 – but who have not registered. Target sectors include: construction, business services, hair and beauty, hotels and catering, retail distribution, recreational services, motor vehicle distribution and repair, sanitary and domestic services, agriculture and horticulture, property and road haulage.

Under the terms of the VAT Initiative, those who have not registered to pay VAT can come forward any time up to 30 September to tell HMRC that they want to take part. If they make a full disclosure, most will face a low penalty rate of 10 per cent on VAT that has been paid late.

After 30 September, using information pulled together from different sources, HMRC will investigate those who have failed to come forward. Substantial penalties and even criminal prosecution could follow.

Mike Wells, HMRC’s director of risk and intelligence, said: “Most people do register for, and pay, the correct amount of VAT. This isn’t about honest taxpayers, who have nothing to fear from any of our campaigns.

“But we are committed to ensuring tax is paid so that the maximum is available for public services used by everyone.

“I therefore urge people who have not registered their businesses for VAT to get in touch with HMRC and get their tax affairs in order simply, and on the best terms available.”

To use the VAT Initiative, people and businesses must:

* Register with HMRC by 30 September to “notify” that they plan to make a voluntary VAT disclosure; and

* Tell HMRC about VAT due and make arrangements to pay it, as well as any penalties due, by 31 December.

How to let HMRC know of the intention to make a tax disclosure:

* Online by completing a notification form at www.hmrc.gov.uk/ris/vat/ or

* Ring HMRC on 0845 600 5217, where a dedicated team is available to give information and advice.

Those coming forward are invited to also disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100 per cent charged to those who fall outside the opportunity.

“Simpler Reporting for Smaller Businesses’ sets out ideas to reduce the amount of reporting micro-entities would be required to undertake. This could benefit around 5 million businesses and result in considerable cost savings in relation to the preparation of their accounts.

The paper proposes easing corporate reporting procedures so that micro-entities are only required to file a simplified Trading Statement (in place of the current Profit and Loss account), a simplified Statement of Position and a simplified Annual Return.

The paper also proposes developing an integrated software package to help small businesses prepare financial information. This could allow managers to gain a better understanding of the trends in their businesses’ performance and help them plan for the future.

The minister responsible for corporate governance, Edward Davey said: “Reducing unnecessary regulatory burdens on the smallest businesses can give them the freedom to innovate and grow – which ultimately benefits the entire economy and is absolutely central to the Coalition’s vision for Britain. A new deregulation from EU rules targeted at micro businesses means we now have a chance to deliver these benefits.

“The financial reporting regime must also serve the users of the information published by companies – whether they are customers, banks or government agencies. So we look forward to receiving responses to our proposals from a broad range of interested parties in the coming months”.

But there are no guarantees of success. A significant number of new ventures never reach their second birthday, and failure can affect your personal finances significantly.

So you need to do some homework before you risk your money. Here, we give you ten top tips to get on the right track from the start.

1. Focus on your product

Whatever your business, you need to make sure you really know what you’re doing. Who else is in the market? If there’s plenty of competition, what are you doing to make your business stand out? If you’ve found a niche – either a product that doesn’t exist, or a service not available locally – think about why nobody else is doing it. There may be a good reason for it not being available.

2. What kind of company are you?

“Deciding on what type of company you set up as is key,” says a spokesperson for the Federation of Small Businesses. “It affects the kind of finance you get to work with, the roles and responsibilities of the owners and your tax status.” For start-ups, there are effectively three main options – a sole trader, a limited partnership or a limited company. Each has its own benefits and disadvantages, and it’s well-worth doing some research on each to see what is best for you.

3. Which bank?

Despite the current economic turmoil, banks are still keen for business from start-ups, and many offer a range of incentives. While the benefits of free banking for a year or cheap initial overdrafts may seem vital, it’s more important to look at the long-term value, so compare the fees and charges once your deal period ends before you take the plunge.

4. Other financial services

No matter which bank you end up with, you don’t have to take all the products you need with it. If you need a small business insurance quote or a loan rate, compare the prices of the whole market to get the best deal.

5. Check your liabilities

As a business owner, you have responsibilities to your customers, your employees and your suppliers. If you fail in those responsibilities, you could be held liable for any injuries or damage that result. Make sure you have liability insurance in place to cover yourself against any claims.

6. Take advice

You can’t be an instant expert in all areas of running your business, so don’t be afraid to ask for help. Professional groups, such as your bank, will be able to give you information and advice on some areas, but it never hurts to canvas friends and family for their tips.

7. Don’t ignore the paperwork

There are legal implications for businesses that don’t keep up with their administration, but a disorganised approach to your paperwork means that you will miss opportunities and fail to spot any potential obstacles ahead.

8. Know the law

All businesses are subject to certain laws, and there will also be rules and regulations specific to what you do. Make sure you keep within the rules – the penalties can be huge and your reputation may never recover.

9. Get the marketing right

Understand where your potential customers are and build up a strategy to attract them – they’re unlikely to come to you. “The best strategies are usually the simplest, so when setting your marketing strategy make it achievable and ensure it fits within your budget,” says Julia Payne, co-founder of The Edge Business Club.

10 Don’t give up!

There will be obstacles and you’ll have good and bad days, but building up a new business is always going to be hard work and the biggest successes tend to come from the businesspeople who try the hardest.

Based on this unsatisfactory level of compliance with the Regulatory Reform (Fire Safety) Order 2005, Fire and Rescue Services have issued businesses with 34,500 informal notifications, 3,200 enforcement notices, 442 prohibition notices and 84 alterations notices.

And fire authorities prosecuted 43 per cent more organisations last year for failing to comply with any part of the order.

Andrew Couch, health and safety consultant for ARMS, said: “Though fire service audits increased 20 per cent last year and the number of enforcement notices has fallen, satisfactory compliance rates have remained virtually unchanged in the past two years³.

“As the figures show, this is not going unnoticed by the authorities and is leading to enforcement action. And an increased level of audit activity focusing more on higher risk premises such as care homes, hotels and hospitals will bring more and more firms under the spotlight.”

Successful prosecutions can lead to significant fines. Last November, the high street fashion chain, New Look was fined £400,000 for fire safety breaches at a London branch*.

To help small businesses comply with legislation, ARMS has launched a service in which its risk assessors will conduct fire assessments on a firm’s behalf, producing formal documentation, identifying fire risks and providing evidence that the requirements of the RRO have been fulfilled.

If shortfalls are identified, risk assessors will advise businesses on how fire risks can be improved. This will include details of relevant preferred supplier solutions at competitive prices.

Couch continues: “Often businesses tell us that they either don’t have the time, don’t know where to begin when it comes to fire safety, or they need additional support and advice from someone who knows what they are talking about.

“But failing in the basic responsibilities of completing fire risk assessments means that firms are not only breaking the law but also not managing the hazards on their premises.

“The use of risk assessors to conduct health and safety consultations is a cost effective way to bring in the necessary expertise to ensure fire safety. It can be a useful business strategy until businesses are in a position to appoint their own suitably qualified employee to conduct fire assessments.”

The risk assessment will include a fire safety policy, which identifies fire risks such as combustible or flammable materials and incorporates procedures for evacuation, as well as making recommendations to improve fire risks.

John Wright

Ahead of the Conservative Party Conference in Manchester, the FSB outlined its proposals for creating and saving more than 300,000 jobs, and called for a moratorium on all new business regulations and a rapid simplification of confusing bureaucracy.

A survey of FSB members showed that nearly one in three businesses (27 per cent) that wanted to expand said they were too scared to do so, because they were put off by complicated regulation. Of those businesses planning to downsize or close, 50 per cent said their decision was strongly influenced by the regulatory burdens they faced.

According to the Government’s own figures, 60 per cent of businesses listed regulation as an obstacle to success. Based on these statistics, the FSB estimates that removing these regulatory obstacles could create more than 258,000 new jobs and save more than 55,500 from being lost.

In a new policy paper entitled Regulatory Reform – a route to economic recovery, the FSB is proposing an overhaul of the UK’s regulatory structures, calling for:

• A moratorium on business regulation: to boost the chances of job creation, the Government must halt all new regulation during the recession and for the first 18 months after recovery.
• Accelerated simplification of current laws: employers are currently confused and put off by maternity and paternity law; discrimination law; and health and safety legislation. All of these must be immediately simplified.

John Wright, national chairman, Federation of Small Businesses, said: “We cannot and must not underestimate the burden that unnecessary regulation puts on small businesses. Around half of all firms planning to close or downsize were influenced in that decision by the heavy impact of regulation.

“However, we know that small firms want to employ more staff and the Government should be making it easier for them to do so, especially as we pull ourselves out of recession and into recovery.

“The FSB is urging the Government to give the UK’s regulatory environment a strategic overhaul, to provide it with what will amount to a second economic stimulus, to boost growth and employment.”

From October 1st, the rules are changing for all UK limited companies. The Companies Act 2006 comes into force on that date, replacing the old 1985 Act. Here are the key issues businesses need to be aware of:

Directors’ addresses

Every director will have a service address and a usual residential address. The service address for each directorship will be publicly available, while the residential address will only be made available to public authorities and credit reference agencies. Unless you change the service address, your current residential address will automatically be listed under both categories.

Alternative address for registers

There will be changes to the arrangements for inspecting a company’s registers. These registers may be held at the registered office address or at a single alternative inspection location (SAIL). You must notify us if you set up a SAIL address or if the SAIL address is moved, and you may only have one SAIL address for a company at a time. Once the SAIL address is set up, you can move some or all registers to the SAIL address by notifying Companies House. The simplest way to register this address will be via the WebFiling service from October.

Easier to set up a company

A number of changes have been made to make it easier to set up a company. There are also changes to company articles for new companies. They will include the company’s objects, liabilities and assets – all of which were previously in the memorandum.

Notification of articles changes

You must send any amendments to the company’s articles to Companies House within 15 days. Otherwise you could be liable to a criminal offence and a civil penalty of £200.

UK wide company registry

Northern Ireland company registry will be integrating with Companies House.

Forms

All Companies House forms will change from 1st October 2009.
The new forms include:

• Companies Act 2006 information requirements
• new numbers
• additional guidance notes
• details of any fee (if applicable)

The new forms must be used for all company events that take place on or after 1st October 2009. If you use an old form it will be rejected.

Company events which take place before 1st October must be submitted on 1985 Act forms.

Fees

To cover the cost of running the register, Companies House charges fees for the filing of certain forms such as the annual return, change of name, mortgage and voluntary dissolution. Please remember to send the fee in with a paper form otherwise Companies House will be unable to accept it.

Protecting your company from hijack

From 1st October, the Registrar’s Protected Online Filing (PROOF) scheme will operate under the framework of the Act (section 1070).

PROOF customers are protected from unauthorised changes to their company details. They agree with the Registrar that they will only file certain documents electronically. If a fraudster tries to ‘hijack’ their company by filing a piece of paper, this will be rejected. The Registrar urges all companies to sign up to PROOF. It can now easily be done via the WebFiling service using the company’s authentication code (you no longer need the written consent of each director).

Important tips for companies to make the transition to the new Act a smooth one:

• Try to complete any business with Companies House under the 1985 Act well before the end of September.
• Make sure that you are ready to file electronically in October. If you use WebFiling, this will be easy – the menu screens will guide you through what you have to do.
• Get your company signed up for Protected Online Filing (PROOF).
• Watch out for the new rules in the Act on inconsistent filings. Keep your company’s record up to date and consistent with what we already have on the public record.
• File on time to avoid a penalty. You have one month less to file your accounts. If your company normally files its accounts on 31 January, remember that the deadline this year will be 31 December – nine months after the end of the year as opposed to ten.
• You must send any amendments to the company’s articles to Companies House within 15 days. Otherwise you could be liable to a criminal offence and a civil penalty of £200.