What is RTI?
Real Time Information, or RTI, is a new system that’s being introduced by HMRC to improve the operation of Pay as You Earn (PAYE). PAYE information will be collected more regularly and more efficiently when employers submit their regular payroll submissions.
RTI is one of the biggest changes to PAYE since it was introduced in 1944, and will ensure PAYE keeps pace with modern working patterns.
Under the HMRC RTI system, employers would be required to send data about PAYE, NIC and student loans every time they pay their employees, rather than with their end-of-year tax return.It’s important to start preparing now for RTI. Although RTI will be a highly-automated process, with reporting to HMRC embedded into an employer or pension provider’s payroll software, you need to think about what RTI means for your organisation, how you run your payroll and your business processes.
How will it affect your business?
Instead of sending information once a year at Payroll Year End, you’ll need to submit information electronically to HMRC for PAYE, NIC and student loans etc. every time you pay your employees.
Furthermore, only one in ten of the 1,100 businesses that SAGE software surveyed recognised the positive impact RTI can have on their organisation, with nearly half (43%) feeling that the changes will increase rather than lessen administrative burden. If you need help with RTI and need to understand the impact that it will have on your business call us on 01925 756970 .
Further information can be found on the HMRC webpage http://www.hmrc.gov.uk/rti/employerfaqs.htm
Just to let you know a little bit about my company. I have been a Chartered Accountant for nearly 15 years and spent most of them in industry. I have had a varied career as an auditor, buying and selling businesses and latterly advising small businesses on all things accountancy related. Feel free to pick up the phone to talk to me personally – whether you want a refreshingly honest, straight talking accountant or advice on buying or selling a business. I’m also the Treasurer for a local sports club too, if you need help at yours.
Everyone is aware of the difficult times that we are in and there are likely to be more difficult times still to come. How does this affect you as the owner of a security business? Perhaps you are approaching retirement or you and your partner want to move in different directions, and want/need to sell now. Or you may be thinking of buying. Is this a good time to act?
There are many reasons why acquisitions are made:- to grow more quickly than is possible organically, to expand geographically, to broaden your service/product offering or to gain efficiencies by going further up or down the delivery chain.
Over the last 10 years, I have spent a considerable amount of time valuing, buying and selling security businesses at one of the largest security firms in the country. There have been times when valuations were quite high but in the last few years the focus has become keener and valuations have fallen. So how do you make sure your business is attractive enough to purchasers? If you are considering purchasing, how can you separate the good companies from the not so good?
There are many issues surrounding a business sale, and each business has its’ own unique story. There are however, crucial areas that can make a difference to a valuation and the success or failure of an acquisition.
How diverse is the customer base? If you are dependent upon a long standing relationship with one customer to generate a large proportion of sales and there is no written contract to tie that customer to you for more than say 3 months, then you are leaving any buyer with a big question mark. If that customer is there because the owners are great friends and they have played golf together for years, then what is going to happen when the business is taken over. As a seller, you should look to tie the relationship down contractually for as long as possible or accept that this is going to be an issue that will come out during due diligence, when the buyer looks through your records. Acting in advance to mitigate this, prior to sale, will strengthen the buyers’ position.
Is your customer base of good enough quality? Ensure that you have chased the late payers and have price increases been put through regularly ? Are you losing more customers than you are gaining every year? If you can spend some time marketing and growing the customer base it will be worthwhile.
This is a difficult area for both buyers and sellers and there isn’t a one size fits all approach. The attitiude the buyer has will largely depend on their intentions post acquisition. If they are buying to grow their customer base, then they may well have enough staff themselves and redundancies will take place. From a buyers perspective, key sales people are always important; how to integrate them successfully into a new business requires a delicate approach. Senior engineers are always important for keeping customers’ happy and this personal contact can sometimes get overlooked as a critical factor on the acquisition.
A notoriously difficult one! Too many times deals are jeopardised by gossip about who is buying who. The buyers’ staff find out prior to the deal completing and then the sellers’ staff get to know, the seller is rightfully angry about this as it can be unsettling for their staff. When it does happen, I have found that the best approach is to discuss it with staff openly, and try to reassure them as much as possible. Outright denial usually fuels further suspicion. Once the deal has completed then there are the legal procedures to go through in notifying staff and transferring them across to a new company. As important as this, is open communication. The workplace is bound to change and successfully managing that change can make a large difference to the value of the deal 12 months down the line.
Communication with customers has to be thought through carefully. The larger customers need to be handled with a considerable amount more care than the smaller ones. Again, this is a key area which needs to be planned in advance of the deal completing. After the champagne corks pop and the deal is signed, the work must continue to ensure that the deal generates the required return.
If this is the first time that you have sold or bought a business then it will probably be more time consuming and stressful than you would have imagined. However, there are ways to minimise the stress but these require careful planning to try and prevent expensive mistakes further down the line. You may be asking at the end of reading this, why do it? Money deposited in the bank doesn’t even cover inflation, so if you can access finance ( a whole other article!) and are already running a successful business, what are you waiting for?
Your party must be:
- Open to all employees
- An annual event
- Cost less than £150 per head
If you meet the above criteria then there is no benefit in kind on the Christmas Party and it is allowable for tax.
- The £150 includes VAT
- If the cost is £151 then all of it is taxed as a benefit in kind!
- This is not a licence to put a flat rate of £150 through your accounts
- You can have more than one event but the £150 is reduced proportionately
- Like all business costs you must have a receipt
- The event must be for all employees and not just directors – except where the director is the only employee
The £150 limit is for each employee so no family or friends allowed. However if you are a Director and therefore an employee of your own company then you can have a Christmas meal courtesy of the company.
Check out HMRC’s website for more detailed information on social functions and Christmas parties at http://www.hmrc.gov.uk/paye/exb/a-z/s/social-functions.htm