The government’s position on this, despite being controversial, seems pretty clear: it wants to cap the tax relief on those individuals who give large of sums of money to charities.

With around £1.4bn given to charities by major donors each year, the Charities Aid Foundation (CAF) and the National Council for Voluntary Organisations (NCVO) say they fear that the cap on tax relief – which would mean that anyone claiming tax relief of more than £50,000 will be limited to 25 per cent of their annual income or £50,000, whichever is greater – will lead to philanthropists giving millions of pounds less to charity per annum.

CAF figures show that 45 per cent of the total amount given to charity in 2009/10 was from 7 per cent of all donors – and most of these are higher rate taxpayers that would be affected by the new cap.

What’s more, CAF says that fewer than one in four people back the Government over its decision to cap tax relief on charitable donations, according to a new poll.

The ComRes survey of 2,000 members of the public, commissioned by CAF found only 24 per cent of people disagreed when asked whether the Government should reconsider its proposal to cap tax relief for charitable donations, given the concerns raised by charities.

The tax cap affects large and small organisations across the charitable sector because philanthropists often use major donations to endow foundations which channel grants to a plethora of small charities.

Charities are calling for urgent action, to prevent philanthropists from being discouraged from giving.

The government is currently playing its cards very close to its chest and, despite a backbench revolt, may well try and push through the plans as soon as possible to raise much-needed Treasure funds.

With this is mind, those individuals and companies who give regular large sums of money to charities would do well to seek advice as to the best way forward should the plans come into action. Nobody wants to stop giving to charities, after all.

Currently individuals can offset their entire income against income tax reliefs, and as a result may pay no income tax at all. It was announced in the Budget 2012 that from 6 April 2013 there will be limits to the amount of income tax relief individuals can claim.

This cap will apply only to reliefs which are currently unlimited. This cap will be set at 25% of income (or £50,000, whichever is greater).

HMRC propose to issue a consultation document on the detail of the policy, including the implications for philanthropic giving, in the summer. We will keep you informed of developments.

Currently the rules are complex as if food is hot because it has just been cooked, such as freshly baked pies or roasted chicken, these items may in certain circumstances be zero rated for VAT purposes.

We will let you know the outcome of the consultation

If you would like to read more about the new system please follow the link below. If you would like help with payroll matters please do get in touch.

Internet link: HMRC FAQs

Anyone whose return is more than three months late will be charged a further £10 penalty for each day it remains outstanding, up to a maximum of 90 days. This penalty is in addition to the £100 late filing penalty they have already received.

HMRC are advising that if an individual receives a late filing penalty but does not think that they need to complete a return, they should call HMRC on 0845 900 0444. Alternatively contact us so that we can help, as it may be possible to cancel the penalty if HMRC agree that the return is not due.

Where employers do not file their annual return by 19 May they incur a penalty of £100 per 50 (or fewer) employees for every month (or part month) that their return is late.

HMRC have been criticised for failing to make employers aware that they were incurring penalties on a timely basis. In a change to procedure HMRC will now issue employers, who they believe have yet to make a return, with an ‘Employer Annual Return Reminder’ from the end of April.

From the end of May HMRC will issue ‘P35 Interim Penalty Letters’ to relevant employers.

If you are unsure whether you need to complete a return this year please do get in touch.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

HMRC have issued some guidance as to common errors on the forms in the latest Employer Bulletin. These include the following:

• Not ticking the director box if the employee is a director
• Not including a description or abbreviation where amounts are included in box A, B, L, M or N of the form
• Leaving the cash equivalent box empty
• Failing to report the full gross value of the benefit where it is provided for mixed business and private use
• Not reporting a fuel benefit where one is due.

Correct completion of forms P11D can be a complex issue. If you would like any help with the forms P11D or the calculation of the associated Class 1A National Insurance liability please get in touch.

So, now that one less option is available to businesses looking for support, where do business owners go for that essential piece of personal advice?

Participants of the UK Business Barometer (UKBB) and UK Business Adviser Barometer (UKBAB), run by The University of Nottingham Institute forEnterpriseand Innovation (UNIEI), posed that very question, asking businesses to whom they would turn to first when the need for advice arose?

I’m pleased to say that accountants came out top! Just over one-quarter (28 per cent) of respondents use an accountant, one-fifth go to colleagues (21 per cent), smaller proportions use business advisers/consultants (15 per cent) and trade organizations (8 per cent). Just over one-tenth reported that they used nobody in particular (12 per cent).

This is a great example of how the private sector can fill the void left by the cuts to the public sector, and I’m pleased to be part of a community that is so well trusted by SMEs.

We’ve certainly seen an upturn in small, growing businesses looking for advice and help since the public sector went through its reorganisation. And whilst there’s no doubt that Business Link and their ilk have their place, they can’t replace hands-on knowledge. After all, accountancy firms are businesses too; we know the challenges owner managers face on a day-to-day basis.

So, next time you need chat, just pick up the phone.

Advice and guidance for small businesses to help them make sure they are paid on time and can seek redress if they are not is part of the Finance Fitness campaign, which sees government and businesses working together to help SMEs.

The Government is encouraging SMEs to:

• Proactively agree payment terms before delivering orders.
• Sign-up to the Government’s Prompt Payment Code, run by the Institute for Credit Management (ICM) and representing an estimated 60 per cent of supply chain value in theUK.
• Raise complaints over late payment from Code signatories and use legislation already in place to help companies pursue late payers.
• Use electronic invoicing where possible, automating process and adding instant transfer of the invoice and instant verification from the customer that the invoice has been received.

Get Paid!, a new guide for small businesses which contains tips and advice from both suppliers and customers, has been published by the ACCA. It contains valuable lessons from small businesses such as advice on invoicing and developing a well-defined credit policy.

We at Coalesco welcome these moves, and would encourage every business to sign up to the Prompt Payment Code.  Naming and shaming persistent late payers is vital if our SME community is to thrive, and will ensure good corporate governance from those larger companies upon whom so much rests. They have been warned! 

Late payment is a persistent problem forUK businesses and can result in serious cash flow problems, falling profits and ultimately affect the liquidity of a business.

However, nowadays, businesses have the ability to charge interest on overdue debts. Many businesses, will be unaware of a piece of legislation which was introduced back in 1998 called The Late Payment of Commercial Debts (Interest) Act 1998 (“LPCDI”) and it was introduced because many businesses, especially smaller companies, had experienced problems when their customers delayed payment for long periods. However, under the LPCDI, all businesses, regardless of their size, can now claim interest on overdue debts. The interest on late payment is the Bank base rate, plus 8% per year. So at present this is equivalent to 8.50% per year.

Depending on the age of the debt and the movement in base rate, the rate may vary.  A claim for “reasonable” compensation can also be obtained from the debtor for collection costs (in addition to Court fees if you sue and win).You are entitled (but not obliged) to claim compensation from the debtor for debt recovery costs of between £40 and £100 depending on the size of the debt. Many businesses are reluctant to use the LPCDI and demand interest on overdue invoices for fear of upsetting their customers and jeopardising future business.

Businesses that take out an NLGS loan will receive a discount of 1% compared to the interest rate that they would otherwise have received from that bank outside the scheme.