How often should you re-evaluate your goals? Posted 10/02/2018 by Jessica Bown & filed under Career. Where do you want to be this time next year? Whether the answer is chairing a board meeting or sailing around the world, setting goals is a great way to get on in life. But while it’s crucial to stay the distance if you want to achieve your dreams, it’s also important to review your aims and ambitions as your priorities change. At 18, for example, your main aim may be to start the process to become qualified in your chosen profession. At 30, you may want to become your own boss, or buy your own home. And at 50, your overriding preoccupation may well be having enough savings to enjoy a comfortable early retirement (or buy that sailboat). So how often should you take a step back and re-evaluate your progress to make sure you are on track to hit those key life goals? Here, we ask successful individuals for their advice on when to reconsider your objectives – and offer some top tips on how to achieve them. An annual check up For a lot of people, the start of a new year is an obvious time to think about the things they want to accomplish. Self-employed personal trainer Lucy Locke uses this approach in both her career and her personal life. “I like to do my re-evaluating at the start of each year, with an emphasis on what I want to change,” she said. “I put plans in place using timescales and action points to help me stay motivated and focused throughout the coming year.” Rufus Sanders, who runs a chain of shoe shops, also reviews his business goals on a yearly basis. “As a small business owner, there’s so much going on that you have little time to evaluate anything really,” he said. “However, doing the annual report is a good opportunity to review the last year; I find it helpful to get an idea of the bigger picture.” A new age Many of us formulate an idea of where we would like to be by a certain age. So if you reach that age and are still nowhere near achieving some of the goals you had in mind, it’s probably a good time to take another look at them. “Hitting big birthdays always seems to me a natural time to reconsider your options,” said Nicola Barber, head of public relations at a big agricultural company. Setting new goals doesn’t have to involve dramatic change, though. It could just be doing something that will help you to enjoy life more, such as joining a local club or starting a new activity. “When I hit 40, for example, I decided to start dancing again and it has made me more relaxed at work and a lot happier in general.” Doing the annual report is a good opportunity to review the last year A change in circumstances Major life events such as having children or being made redundant will often have a profound effect on your goals. So it is sensible to sit down and re-evaluate them when your circumstances change. This is particularly true when the change in question is not one you sought, as setting new goals can be a great way to start to see the positives. Losing your job, for example, could be the push you need to set up your own business or train in a different career. When Mathew Ward, now an editor at a large media company, was made redundant in 1996, he decided to go freelance – a choice that worked out extremely well for him. “I loved the freelance lifestyle so much I stayed self-employed for 18 years, during which time I was able to see both my daughters grow up while contributing to most national newspapers and writing several books,” Ward said. “Having to re-evaluate my goals made me a much happier person all round.” Successful goal setting: 4 top tips Work out what you want Working towards the wrong goals is a waste of time. So ask yourself a few pertinent questions to make sure you are on the right path. For example: Has anything changed that might require me to revise my goals? What does my progress tell me about how achievable my targets are? Be realistic Setting unrealistic goals is a sure way to fail. So consider what you can achieve given your existing circumstances. “If a career change is unrealistic due to your financial responsibilities, why not try telling your employer you are open to new challenges and experiences and seeing what happens?” Barber said. Think long (and short) term Think ahead to where you’d like to be in say 15 or 20 years. Then think about the progress you will need to make over the next 12 months to be on track to accomplish this long-term goal. Breaking a big ambition into smaller milestones will make it easier to achieve. Be true to yourself We often feel pressured into setting ourselves goals such as earning a certain amount or owning an attractive home. But there’s no point chasing other people’s dreams. So scrap any goals that are based on what other people expect of you rather than what you want yourself.
Contract law and wallpaper – part 1 Posted 10/01/2018 by Gill Myers & filed under Foundation Certificate, Students. I have recently employed the services of a painter and decorator with the view to decorating a number of rooms in my house. The first room was completed whilst I was away on holiday and included a wallpapered feature wall. After a fabulous holiday but long journey home, I was spurred on by the thought of seeing the newly decorated room but unfortunately all was not as expected. The wallpaper was upside down. When something like that happens your thoughts immediately turn to questions such as; how did it happen, how can it can be sorted, who is responsible and who will bear the extra costs involved? This is when having some knowledge and understanding about contract law is really useful. Firstly, we need to be clear about the agreement that is in place and whether it constitutes a valid contract, in other words, is it legally enforceable by the courts. In order for a contract to be valid it has to meet five requirements: Agreement Consideration Intention to create legal relations Capacity Legality Agreement This is reached by the offerer making and communicating an offer, (a definite and unequivocal statement of willingness to be bound by specific terms without further negotiation) to the offeree and the offeree receiving and accepting the offer. Offer + Acceptance = Agreement However, in order for both elements to be binding they must be communicated between the parties. Communication can be ‘express’ in other words, verbal or written, or it can be ‘implied’ which means inferred through the conduct of the parties. Offer – in my case, the decorator (offerer) rang me (offeree) and made an express offer to decorate rooms within the house for a specified fee. On the phone he told me that the fee included wallpapering but that the wallpaper needed to be supplied by me, so specific terms were stated. I told him I would consider the offer and ring him back. Therefore, we were at the stage where the offer had been made and communicated but an agreement was not reached as the acceptance element was not in place. Termination – at this point the decorator could of ‘revoked’ the offer, as long as he communicated that to me, because I hadn’t accepted the offer or made any payments. As it was I ‘rejected’ the offer and made a ‘counter offer’ as I decided one of the rooms included in the original offer did not actually need decorating after all. * Counter offers – a counter offer is an offer made in response to a previous offer if the original one is unacceptable or needs changing. It is effectively the technical term for bargaining. Unlimited counter offers can be made until one is accepted. The important issue to note about counter offers is that each one overrides the previous offer, which can then no longer be accepted as it doesn’t exist or have any legal standing. Acceptance – when I rang the decorator with the counter offer, he told me the amended price which in effect became a new offer, which I then verbally accepted. Only at this point had the requirement of agreement been met. Before we move onto the next legal requirement we need to deal with the issue of how an ‘invitation to treat’ is different to an ‘offer’. Part of the agreement was that I would supply the wallpaper and I had found the perfect product online (a cow parsley print in grey tones, in case you are wondering). Advertised prices are generally accepted as invitations to treat instead of offers. This means that the seller is not making an offer for the buyer to accept but is instead inviting the buyer to make an offer (of the advertised amount) that they will accept, usually at the point of processing the payment. Consideration This is the second requirement and means that both parties have agreed to provide something of value to the other. In order for consideration to exist, one of the following criteria needs to be satisfied: Sufficient – must have some value, usually monetary, but it doesn’t have to be the true value. Legal – the exchange cannot be illegal. Executed – consideration is carried out at the time the contract is made. Executory – promises are made to fulfil consideration in the future. Timely – consideration must not be past, it can be exchanged when the contract is made (executed) or at a later date (executory). In my case consideration satisfies more than one of the above as it is sufficient, I gain a decorated room and the decorator gains the fee, it is legal and will be paid for once the job is complete so the payment is executory. Intention to create legal relations Now there is acceptance and consideration a simple contract exists. This is often enough for a successful transaction to take place, however, it does not automatically become a contract that is legally enforceable. If something goes wrong and one of the parties wishes the courts to enforce the terms of the agreement then they must show that there had been an intention by both parties to create legal relations. As employing a decorator is a commercial transaction, it would generally be assumed that relations were intended. Capacity and legality These are the final two requirements and basically mean that a contract cannot be legally enforced if it is illegal or made with someone who does not have sufficient abilities to do so. There are three groups of people considered to have limited capacities to enter contracts so would not be bound by an agreement: Under 18’s Those of unsound mind Anyone under the influence of alcohol or drugs So, having looked at each of the five requirements, I think we can ascertain that my contract with the decorator is valid, as capacity and legality are both fulfilled as well. If I was trying to form a contract for something illegal then the contract would be void. If one of my children had been trying to form the contract then it would have been voidable because as minors they cannot be bound by contracts. * The offer could have also been terminated through it ‘lapsing’ if either of us had died or a specified/reasonable period of time has passed before it was accepted. Browse the full range of AAT study support resources here
Generation Z : changing the accountancy world Posted 09/28/2018 by Georgina Fuller & filed under Run your business. By 2020, Generation Z (those born between 1995-2010) will make up 25% of the workforce. They are, reportedly, more entrepreneurial, emphatic and tech savvy than their millennial predecessors, and they value authenticity and collaboration over working individually. How employers can tap into their entrepreneurial spirit So how can employers get the best out of them and what can they bring to the finance and accountancy sector? Zoe Whitman, founder of But the Books accountancy and bookkeeping firm, says Gen Z are more empowered than previous generations. “When I worked with some Gen Z interns earlier this year I was impressed by their enthusiasm and desire for improvement. It’s hard to decide whether that’s a Gen Z thing or just due to being new to the workplace, but they had ideas and weren’t afraid to say so,” she notes. Whitman, a millennial, thinks that older generations can learn from their younger peers. “I don’t remember feeling that empowered to speak up so early in my career so maybe there is a difference in attitude between Gen Z and the millennial generation, which means they can bring their ideas to the table and let us learn from the way they see the world.” Gen Z’ers are also ‘digital natives’ (rather than ‘digital immigrants’) and will, no doubt, be at the forefront of tech changes in the financial sector. “Gen Z have been brought up with technology and what is second nature to them, we millennials and Gen X’ers may feel a little less sure of,” Whitman notes. “Accountancy systems have changed so much since my early career and there are new apps and add-ons coming through every day.” Reviving accountancy and finance Julian Hall, founder of Ultra Education, which teaches entrepreneurship to young people in schools and workshops, says Gen Z will bring a fresh, dynamic way of thinking to the accountancy and finance world. “Transparency, relevance, simplicity and flexibility is something the finance sector could do with an extra helping of and Gen Z has an abundance of these skills,” he notes. Hall predicts that they will also shake-up the traditional 9-5, process driven working culture which is still ingrained in many large firms. “Gen Z think very differently from millennials; their expectation of the world around them is far more connected, they have a wider moral compass at a younger age and no longer follow the rules for the sake of it,” he says. “They bring new ways of approaching problems into the workplace and new ways of approaching work/life balance. Some of the newer ideas around productivity come naturally to them (like shorter, more frequent working habits) and are more accepting of the types of new ideas which the workplace desperately needs.” Setting boundaries However, While Gen Z may be more entrepreneurial and creative, employers will still need to set clear boundaries. “There’s a fine balancing act between giving Gen Z’s the freedom which allows them to be creative and reining them in to make sure the job gets done,” says Whitman. “I’d be looking to set a clear brief and firm boundaries but give Gen Z the freedom to get on with things within those limits.” Autonomy is, says Hall, key to managing the next generation effectively. “The persona of a ‘boss’ is socially regarded as an archaic was of dealing with staff,” he notes. “Being part of a ‘flat’ team or having partners working towards a common outcome is an approach Gen Z responds more favourably to. However, they still need guidance and moral support.” Less process more action Whitman says smaller businesses may find it easier to work with and manage the next generation as they may be less process driven than their larger competitors. “I was talking to interns who were excited to implement task management tools which are the norm for small businesses but which are very difficult to get around the strict software approval processes that large organisations need to go through. I don’t see smaller organisations having the same kinds of issues so in that respect I think they’re much more ready for Gen Z,” she notes. Andrew Dark, co-founder of Custom Plant branding and printwear specialist, says Gen Z still have a great deal to learn and may struggle to adjust to traditional working structures. “In my experience they find it hard to adjust to working life,” he comments. “I find that most Gen Z’ers don’t necessarily know what they want to do with their life yet, and are still trying to find their place in the world. This means it’s sometimes difficult to get them to understand they need to put in some hard graft before the opportunities open up to them.”
The complications of VAT when three parties are involved Posted 09/27/2018 by Marianne Curphey & filed under Tax. Business transactions involving three parties can be complicated due to issues around who is supplying whom with a product or service. We look at the complications involved and how to deal with this when advising clients. Any transactions involving a number of different parties can be complicated from a VAT view point. Often the main issue is determining who is doing what and supplying whom from a VAT view point. The most common examples are where there is a principal making a supply to an end customer and an agent acting between the two parties. Tamara Habberley, a senior consultant at The VAT People, a specialist consultancy that provides advice and guidance to businesses relating to all aspects of VAT, regularly offers guidance to accountants relating to VAT. She has over 25 years’ experience in the industry, having previously worked for HMRC. She says that in a three-way VAT situation it is possible either to have: A disclosed agency arrangement with the principal accounting for VAT on the sale to the end customer and the agent only accounting for VAT on its agent fee, or An undisclosed agency arrangement where the customer believes it is purchasing goods or services from the agent. In this case there is a deemed supply between the agent and principal each time the agent makes a sale and the agent owes VAT on the total value of any VATable sales of goods/services to the end customer and not just on its agent’s fee. When it comes to determining VAT, the nature of the supply and consideration are important. This is because a service could be supplied for no consideration. When VAT arises “It is a basic rule of VAT that anything done for a consideration is a supply,” Tamara Habberley says. Consideration can be monetary such as cash, BACS payment etc or non-monetary – where the party receiving the supply will do something in return for it. If what is supplied in return for the consideration is a tangible item – e.g. something you can physically touch, it is a supply of goods. If it isn’t a supply of goods then it defaults to being a supply of services. This means that where anyone supplies something in return for a consideration VAT will be due. This is unless the supply is one that is zero rated or exempt from VAT. She says this causes a lot of confusion and sometimes businesses may miss the fact that VAT is due. For example, take the case of a supply that occurs between two parties. One of the parties has agreed to do something in return for the other party agreeing to do something else, such as management services being supplied within a corporate group in return for writing off of a directors loan, a business agreeing to not trade in an area in return for payment, claiming VAT on fuel and charging an employee for the private fuel that they use. These are all examples of supplies and consideration. What’s more, businesses can also create a VAT liability when not receiving any payment. She says this is due to rules that create what is termed a deemed supply. The most common example occurs where a business has incurred and recovered VAT on goods or services that it then gives away for free. This can create a VAT charge on the gift or deemed supply of the asset. When goods and services are subsidised The other issue is that organisations may be providing goods and services free of charge, most commonly subsidised by a grant. This will usually be classed as a non-business activity and potentially prevent the organisation from recovering VAT on costs associated with the non-business activity. “This point is often missed,” she says. “Many organisations that have charitable and non business activities assume that they can simply VAT register to recover VAT on their costs, but this is not always the case.” An organisation can only VAT register and recover VAT if they make VATable supplies, and the VAT that they seek to recover is incurred for the purposes of making VATable supplies. Issues that arise when a trader is acting as a principal or an agent It is quite common for businesses to assume that if they term themselves an agent they only have to account for VAT on their agent’s fee. Tamara Habberley says that in fact agents need to review their agreements, terms and conditions to ensure that in reality and contractually they are acting as a disclosed agent. If not they are at risk of an assessment for VAT. When acting as a self-employed trader Potential complications may arise for self-employed traders, particularly those involved in supply and fit of household goods or furnishings, she says. “They may be involved with another business that advertises products, arranges appointments, fulfils customer orders and collecting payments. It is common for the trader to believe that the other business is the principle and they as an agent have no VAT liability as VAT is “taken care of” by the other business.” This is not necessarily the case. In such business relationships, when the contract terms between agent and principal are examined, the trade person is the principal making the supply to the end customer. This means they are usually liable to account for VAT on the total sales made if these exceed the VAT registration threshold. When the nature of the supply between the various parties changes When the nature of the supply changes, the VAT accounting may also change. “It is always sensible to review any changes to supplies or the VAT treatment of new supplies to ensure that any VAT implications are correctly understood,” she says. Selling goods and services via the internet An often overlooked area of VAT is ecommerce. “The main issue for many businesses is that the rise of the internet has allowed small businesses to trade from people’s front rooms,” she says. “These businesses may supply goods or services via the internet to customers throughout the world. This creates a number of complex VAT issues.” Businesses selling e services to end consumers in other EC member states will have an immediate liability to register and account for VAT in the other EC country or alternatively to sign up to account for VAT via a system called VATMoss. There is no minimum threshold for registration in the other member states. Those selling goods to end consumers in other EC countries will have a liability to register for VAT in other EC countries if they exceed the distances sales thresholds in the other EC country, or if they have goods that are warehoused in and sold in another EC country. “These points are often misunderstood and can result in what should have been profit from sales being lost as VAT to another tax authority,” she explains. “A business should always take advice in advance if planning to sell to customers in other EC member states.” When specialist advice can help The VAT People have helped a number of clients with complication VAT issues. Agent or principal? One client was contacted by HMRC on the basis that they were the principal making a supply of services to the end customer and owed VAT on all payments collected rather than on its agent’s fee. “In fact we were able to prove that it was a disclosed agent simply taking bookings and collecting payments from the customer for the principal,” she says. “It had correctly accounted for VAT on the charge it made for administrative services and not on the total fee paid by the end customer to the principal and collected by the agent. HMRC therefore withdrew a threatened assessment for VAT.” Grant funding: A grant funded charity recovered all the VAT on costs that it used for non-business purposes resulting in an £87,000 VAT assessment. The VAT People became involved and established that the charity had paid VAT to HMRC out of its grant funding and as a result it gained a refund of £270,000 VAT. Ecommerce: A client sold goods via an online platform from his front room, and was not aware that the business had breached the distance sales threshold in a number of member states so continued to account for UK VAT on all of its sales. An HMRC VAT inspector advised the client that UK VAT was due. One of the member states started VAT debt recovery proceedings for VAT due under the distance sales rules using HMRC as its collection agent. The client was unable to pay as it had already paid UK VAT on the same sales to HMRC. The VAT People recovered over £800,000 VAT from HMRC that the client has used to pay the VAT due in the other member state.
When is the right time to find a business partner? Posted 09/26/2018 by Iwona Tokc-Wilde & filed under Run your business. Going it alone will certainly give you full control of your business, but two heads are often better than one, provided you team up with the right person. When Natasha Penny started her accounts and bookkeeping service Busy Books six years ago, teaming up with someone else wasn’t an option: “I was very head strong in what I wanted to achieve and how I wanted to run my business.” Flying solo Penny, who incorporated her practice and now employs several staff, admits there are both pros and cons to being the only one in charge: “There’s no one else to answer to, and everyone knows where they stand with just one boss. Customers also know who to turn to at the top for queries and customer service issues. On the other hand, you are always the one ultimately responsible if and when things go wrong.” There is no one to share the load with, either. “It’s difficult at times to take a holiday or be sick, although it gets easier once a team and a practice manager are in place,” Penny says. Like Penny, the vast majority of practitioners start out as ‘solo’ practitioners (sole practitioners with no staff), and then perhaps become ‘sole’ practitioners (sole practitioners with staff). And just like Penny, many choose a limited company structure for their business, becoming its sole director. Teaming up As your business grows, partnering up with another accountant or bookkeeper may be the next step up. Rob Ellis runs Welch & Ellis Accountants with his fellow director and shareholder, Ken Welch. Ellis says: “Financial clout is perhaps one of the most tangible upsides of joining forces, with the potential for economies of scale, greater borrowing capacity and the tax savings to be realised from income splitting. Somewhat less tangible, yet equally as important, is the fact two heads are often better than one.” While Ellis and Welch incorporated their practice, the general partnership model (under the Partnership Act 1890) is still a popular choice among smaller accountants, perhaps due to the perceived ease of admin. “The principle advantage of a general partnership is that all accounts and information relating to the partnership is private and does not need to be filed or disclosed to any public registry,” says Zulon Begum, partner at partnership law advisory firm CM Murray. All you need to do is choose a name, choose a “nominated partner” and register the partnership with HM Revenue and Customs. Choose the wrong partner, and you might find yourself kissing your business goodbye When partnerships go wrong But general partnerships can potentially cause big problems. If there’s no written partnership agreement, the default provisions of the Partnership Act 1890 apply. So, partners are entitled to an equal share of the profits, no matter how much time or effort they have put into the running of the business. They cannot be expelled by other partners, either. And if a partner decides to leave (or if they die), the partnership must be dissolved and assets must be distributed equally, often at great financial and emotional expense. Three years ago, friends Andy Steed* and Tony West* left their respective employers to start their own bookkeeping business. “Two years in and Tony stopped pulling his weight, we argued a lot and soon working together became impossible so we decided to part company,” says Steed. “The ‘divorce’ was long and messy because there was no formal partnership agreement in place.” Protect your position “Partnership disputes can turn into a major distraction for the business, but it’s possible to minimise their likelihood and effect if you put in place a properly drafted partnership agreement,” says Begum. “This should set out in detail the rights and obligations of the partners (including rights on retirement / exit) and include a robust arbitration clause to be activated in the event of a dispute. Also, you should always seek legal advice when entering into a partnership agreement.” Another issue is that a general partnership is not a separate legal entity. Begum says: “The partners must enter into contracts in their own names and they have joint and several liability for all the debts and liabilities of the partnership.” Their personal assets are at risk and the liability is unlimited. From the risk management point of view, a corporate structure such as a limited company or a limited liability partnership (LLP) generally works better because, if anything goes wrong, the damage is typically contained in the corporate entity. Going limited can also be more tax efficient, ensures continuity and helps avoid potential disputes between ‘partners’. ‘We decided on a limited company primarily for tax reasons and the ability for more tax planning,” Ellis says. He adds: “The shareholders’ agreement details what would happen on sale of the business, or if the other one wanted to sell out, and salaries and dividend policy are pre-agreed, too.” Choose the right partner Natasha Penny isn’t sure she could team up with someone else having run the business alone for so long: “To me, it’s my baby.” However, she adds: “That said, I can recognise that others can bring new, fresh qualities to the business. So if I were to do this, it would have to be someone I could work very closely with, and a constant and strong communicator. Like with employing, I’d choose someone with my gut and heart who would feel right and who would have similar values, ethos and vision for the business.” Ellis agrees the decision is essentially an issue of recruitment. “Find the right partner, someone committed, reliable and who compliments what you bring to the table and the benefits are myriad. Choose the wrong partner, and you might find yourself kissing your business goodbye.” (*names changed)
Optional remuneration, salary sacrifice and the tax implications Posted 09/25/2018 by Julie Hodgskin & filed under Pensions and payroll. Over recent years the Government has become concerned at the proliferation of salary sacrifice schemes. This is because employers could choose whether or not to offer such benefits, so they were not available to all taxpayers the tax savings were greater for higher and additional rate tax payers, which seemed to give them an unfair advantage and penalise lower earners the schemes could not be taken up by low paid earners if it took the earner below the minimum wage limits lower paid earners could find that they are taken below the lower earning limit (LEL), the amount below which the earner is not eligible for statutory benefits. The government was also no doubt concerned about the amount of revenue lost to the public sector coffers by such schemes. Next stage Once the Government had consulted it enacted the changes in The Finance Act 2017. The legislation, though complex had two main changes. Benefits provided through optional remuneration arrangements would be subject to income tax and Class 1A employer’s national insurance contributions (NICs) The benefit would be valued at the higher of the salary foregone or the cash equivalent, if there was one, as set out in the benefits code HMRC then published guidance that introduced the term ‘optional remuneration arrangement’ (OpRA) and outlined the two types of optional remuneration. Type A is identified as where the employee gives up the right (or future right) to an amount of taxable salary in return for a benefit. This is the salary sacrifice arrangement. Type B is identified as the employee agreeing to receive a benefit rather than an amount of earnings. Where there is a cash allowance option for a benefit then the benefit would be a Type B arrangement. If however, the employee chose to take the cash option then the tax and NICs would be calculated on the cash amount, regardless of whether the cash amount was greater or smaller than the value of the benefit. All this is very interesting, if not confusing, but what does it mean for the busy agent or bookkeeper? What do they need to know and do? Quite simply OpRA rules apply to all benefits unless they are an excluded exemption benefit or a special case exemption benefit. These types of benefits will continue to be free of tax and NICs. Excluded exemption benefits are: Pensions contributions and advice provided by the employer Employer supported childcare (vouchers) and workplace nurseries Cycle to work scheme Ultra-low emission vehicles (ULEVs) Special case exemption benefits cover trivial benefits, subsidised meals, paid or reimbursed expenses and recommended medical treatment. Anything other than the above is more than likely to be subject to tax and employer’s Class 1A NICs. Transitional provisions For pre-exiting arrangements, the Government has allowed the tax and NICs advantages to remain as below: cars, vans, accommodation and school fees retain their tax and NICs free status until April 2021 tax and NICs free status changes if the contract ends, is renewed or modified. If however, the contract is ended for reasons beyond the control of the parties involved, then the tax and NICs advantages remain. Employers can still provide benefits through salary sacrifice and other similar arrangements. The only difference is that the benefits, for the most part, lose their tax and NICs advantages and would have to be reported so that the tax and Class 1A NICs due could be accounted for. Reporting benefits Though many employers still report the benefits given on a P11D and P11D(b), there is an increasing number who are reporting via payrolling. From April 2018 benefits affected by the OpRA changes can be processed through the payroll and therefore reported in real time without having to also report on a P11D and P11D(b) (as in the previous tax year). This is in many ways more convenient for employer and employee alike as it not only means that the employer avoids the paperwork and back tracking associated with reporting benefits retrospectively, but also avoids the employee receiving a tax demand for benefits received in a previous tax year. NIC savings Though much of the tax and NICs benefits have gone, there is still a NICs saving for the employee. It also avoids tax code changes for, or tax demands to, employees for benefits received in previous tax year. For the employer, though there may no longer be any real NICs advantage to offering benefits, they do add to the overall value and competitiveness of the remuneration package; an advantage in the competitive world of recruiting and retaining talented staff.
Responsible business: how can companies restore trust from their suppliers? Posted 09/25/2018 by Adam Williamson & filed under AAT news. The collapse of Carillion in January 2018 left around 20,000 UK staff working in public sector jobs reliant on the Government for continued wages, while thousands more in the private sector were not afforded the same protection and cut loose after 48 hours. But the impact of the construction firm’s liquidation was far wider-ranging, with debts totalling more than £4bn being written off in the light of the company’s insolvency. This included financial damage incurred by up to 30,000 small businesses. Carillion’s collapse was one of the more high profile recent examples of the knock-on chaos that one firm’s failure can cause to suppliers. Though it was signed up to the Government’s Prompt Payment Code, which requires firms to undertake to pay suppliers within a 60 day maximum and preferably within 30, Carillion was often making smaller firms wait for 120 days or more for their money, according to BEIS committee chair Rachel Reeves MP. The collapse, in part, contributed to public confidence in UK business reputations falling 9% over the past year, a hefty fall which led to the CBI call on businesses to “focus on what matters – being good for their employees, customers, communities, investors and suppliers.” But will smaller suppliers, especially those hit by Carillion, trust the supply chain system again? And if so, how? It’s easy to suggest that current regulation may not be tight enough and allow larger firms to exploit others. AAT is a signatory member of the Prompt Payment Code, for example, but we recognise that the code is a pledge for good practice, rather than anything enshrined by law or penalties for non-compliance. However, should the system need stricter governance, or should fairness and good practice be allowed to operate freely? And within this, how can accountants ensure that not only are their own businesses operating responsibly, but as they take on more of a strategic consultancy role over the coming years, that the businesses they advise are showing best practice in this area as well? AAT is hosting an event in October where we aim to discuss how being responsible can help businesses succeed throughout the supply chain and to the benefit of the whole economy. Stakeholders from the likes of the Organisation of Responsible Business, Business in the Community and Opinium Research will be joining us, and we will be sharing resulting thoughts and recommendations – which we hope will benefit accountants and small businesses alike – following the event. We hope to have a few of our members in attendance to offer their thoughts as well. AAT is hosting a breakfast roundtable on the theme of responsible business at its Barbican offices between 8.30-10am on Thursday 11 October. Attendees include representatives from the Organisation of Responsible Business and the Federation of Small Businesses. Spaces are very limited, but if you are interested in taking part and finding out more, we would love to speak with you further (on a first come, first serve basis). Please email [email protected] for further details.
Improving your online business presence Posted 09/24/2018 by Marianne Curphey & filed under Run your business. What can small business and self-employed accountants/bookkeepers do to improve their presence online? We look at what an online presence actually consists of, how many social platforms are realistic to manage, and how much of it can be done for free. Maximising your online opportunities Half of all online purchases are now made via mobile phone, according to figures published by eMarketer at the end of last year. We now use our tablets and mobile devices to shop, work, catch up on news, communicate with friends and track our health and fitness. “A website is now the core of everyone’s digital footprint,” says David Harris, managing director of One2create Ltd, and a marketing expert with 27 years of experience who advises companies from start-ups to FTSE 250 companies. “You might not be an ecommerce site, but your online presence is still a core part of your business,” he explains. “As an accountant, people might drive past your shop window and then look up your details online before they contact you.” As a consequence, you need a website that works on all types of devices. “It needs to be fit for mobiles and tablets, and with imagery that fits the content and resonates with the demographic of your customers. Being found in Google search should be the foundation of your marketing strategy.” With accountancy, you will need to create a “brochure” website – with calls to action for the prospective client to make contact by phone or email. You’ll also need biographies of the key members of your team, some backstory about you and your business, and interesting details that are unique about you. “People buy from people, and your website can set out what makes you different from the competition,” he says. “Research has shown that the majority of users will look at the “About Us” pages and also look at your social media presence. It’s about building trust.” He also believes that being active on social media is an important part of your marketing activity. “LinkedIn is very business orientated. Twitter is a very good business platform and people can reach you and start a dialogue with your brand.” Making content key Liam Bateman, Managing Director and founder of The Think Tank, is a trained Chartered Accountant and has worked in the marketing for more than 25 years with a variety of leading brands such as Kodak, British Midland, Nespresso, Formica. He says that being found in a Google search is very important and that there are ways to make your site more visible. “Fresh content on your web pages helps with the search – it needs to be relevant to and right for the audience. Google likes to see links into your website from different places. That includes Google Plus and your Google Business account, which should have all your business information including a map, opening times and updates.” A strong profile on LinkedIn is important when dealing with a business customer and you can post content there with links back to your website. Key words will help optimise the chances of your website being found by search engines, and that includes the tags and titles you give to the pictures on your website as well as the written content. Joining online directories will also mean links come back to your website. If you are looking for local business opportunities, then you can post content that picks up on issues that are current in your local area or county, as well as wider issues around the Budget or legislative changes. Make sure that you add fresh content regularly – posts don’t have to be too long and around 200 words might be enough to get your thoughts across. Twitter is a very good business platform and people can reach you and start a dialogue with your brand Communicating your message Carol Mann, co-founder of We Get Digital, a leading digital agency helping small businesses with their websites and on-line promotion, says that accountants and bookkeepers need a call to action and the right message “above the fold” – that is, on the top half of the screen. “Try to keep your writing succinct,” she says. “It’s about having a single message for each page. The structure of your website needs to be really clear so that people get the answer they need quickly and decide you are the right person to solve their problems. Think about your demographic and what would appeal to them.” David O’Keefe, digital account director from Fat Media says good content includes: Key messages – what you are trying to say or sell. Tone of voice – have a style, which reflects your brand e.g. corporate style or more friendly and informal. Engaging – content needs to be interesting to your audience, otherwise you won’t get their buy in, and ultimately readers won’t convert to customers. “As a minimum I’d recommend writing a blog each week, this allows you to rank in more “long tail searches” and shows Google your site is active, really contributing to those all important domain rankings,” he says. As for social media sites, you need a specific goal for your social activity, which contributes to your wider marketing activity. “You should also only use the channels that are relevant for your sector and target clients,” he says. “For example if you are an accountancy practice, there’s no benefit from being on channels like Instagram, firstly it’s consumer focussed and secondly you probably won’t have any nice image content to share! LinkedIn however could be key for your business.” His tops tips for social are: Use tools such as Hootsuite or Buffer to schedule posts, it saves a lot of time. Be active, try and post at least five times a week. Get invovled in conversations that are trending, with Twitter for example look for relevant hashtags. Connect, like and follow key influencers in your sector to help boost your own following. Crate engaging content e.g. polls, questions, competitions to boost your own channel’s popularity. “A solid strategy combined with little bit of time a week dedicated to your website, content and communication channels, will pay dividends in the long run,” he says. Planning your marketing strategy Mollie Powles, Marketing Manager at Browser Media, says there are three key aspects to a successful online presence: Audience: Who are you marketing your product to and what are you providing this audience with? Where does your audience congregate (digitally and physically) and where do you need to be marketing in order to reach the greatest number of potential consumers? Budget: What budget can you afford to dedicate to your marketing efforts? Remember that this is not just initial budget, but the maintenance of your website and digital activity. Competitors: Do your competitor analysis. If a marketing technique is working for them, then it’s likely to work for you too. Equally, learn from their mistakes, it’ll save you the time of making the same mistake but more importantly for a smaller business, it’ll save you marketing funds that could be put to better use. “A blog is the perfect way to showcase several areas of your business in one place so the secret to a successful blog is variety of content,” she says. “Create informative, high-value content on products or industry aspects to demonstrate your knowledge in your field. Opinion-based blog posts will highlight the values and internal culture behind your brand.” It’s also important to optimise your blog content to ensure you are appearing at the top of your audience’s web searches. Conduct some research into the types of keywords and phrases your target consumers are using to search online and make sure you are including this terminology in your blog posts. “The great thing about having a blog is that it feeds beautifully into other areas of your marketing strategy,” she explains. “For example, you’ll have material to link back to on social media, which will encourage traffic to your website too.” Make sure you’ve done your homework on your audience’s social media habits; if your market research indicates your target audience engages most with Facebook, then focusing on Twitter is going to be a futile exercise. Finding time to manage your presence online One of the more intimidating aspects of online marketing is the potential time involved in keeping up with social media. Liam Bateman says that one way to tackle this is to use your mobile to check and update social channels on mobile phone on the way to work or in the evening, finding ways to fit it in so that it doesn’t become too onerous. “Just don’t update at 10pm when you are heading back from the pub – in social media terms that is the worst thing you can do,” he says. You can use scheduling tools such as Hubspot, which enable you to send out posts over the coming weeks in order for you to manage your social media presence most effectively. David Harris says you should work on the 80/20 principle of 80% entertainment, information or value added content, and 20% sales, so that people are listening to what you say. “We plan monthly in advance and look at the calendar and see if there are any soft content opportunities,” he says. “There are a lot of scheduling tools such as Buffer and Hootsuite, which are free.” Increasing leads and turnover Carol Mann says that the web creates great opportunities for SMEs because it is a level playing field. “A solo entrepreneur can compete for business with a large organisation. It doesn’t matter whether you have two people or 200 people if you can solve the problem for the client,” she says. “Small companies have the advantage that you will be dealing with he owner who has the skills and expertise, rather than a junior account manager and you can get as a good a service from a reputable small company as you can from a big one.” Another way to build trust is to pull in Google reviews onto your site, as readers know these can’t be faked. You can also add video testimonials. “These could be shot at an exhibition or conference. They don’t have to be professionally done because a good, candid video above the fold can be an excellent form of marketing.” If you do receive a poor review, don’t panic. Dealing with that person with tact and diplomacy can turn them into a advocate of your business if you apologise profusely and deal with them as you would like to be dealt. Great customer service when things go wrong can turn a complaint into one of your biggest fans.
How accountancy can open doors to alternative careers Posted 09/21/2018 by Lucy Tobin & filed under Career, Students. Studying accountancy many would have gritted their teeth at a friend or relative joking about them being a ‘boring bean-counter’, or speculating about a future career as a slave to a spreadsheet, clutching a calculator in a back office somewhere. There’s one easy comeback – the average salary for an accountant in the UK is £62,042 a year, according to Accountancy Age magazine, and that’s enough to silence most. But apart from the financial factor, accountancy qualifications can also lead to a huge range of careers – not just the office roles you’d expect. Almost one in four FTSE 100 CEOs in a huge range of sectors and firms are qualified Chartered Accountants, according to research by recruiter Robert Half. Here, high-profile people who started off in accountancy and now enjoy stellar professional success show how good a grounding the professional training is for a wide range of careers: Famous accounting students Barry Hearn is the larger-than-life sports promoter who changed the face of British snooker, luring swathes of the nation to tune into Sheffield’s Crucible Theatre – before then moving into transport boxing, and darts, and becoming chair of Leyton Orient FC. But before all that, Hearn qualified as a chartered accountant in 1970, explaining “my mother told me to aim for accountancy when I was 11. She was cleaning houses for a chap who owned a lot of local newspapers and he said to her in passing, “Tell your son to be a chartered accountant; I’ve never seen a poor one.” And it stuck.’” Denise Coates doesn’t seek out fame like many of her fellow CEOs – few outside the gambling world will even have heard of her. But the boss of online bookmaker Bet365 is one of the UK’s most successful self-made businesswomen – and best paid, too, with a £217 million pay day in 2017 alone. And her training? That was accountancy, which Coates studied whilst working in her family’s Midlands betting shops. As co-founder of High Street giant Carphone Warehouse, David Ross is the billionaire who helped put mobile phones in millions of Britons’ pockets. The entrepreneur started at Carphone in 1991 – just months after leaving his role at Arthur Anderson, where he had qualified as a Chartered Accountant. Transport giant Stagecoach is trialling driverless buses to run on the UK’s roads – but the company itself is driven by Scottish businessman Sir Brian Souter, who studied accountancy and economics at university. Souter was almost expelled from school but said “changing my timetable from maths to include economics and accounts was one of the best things I’ve ever done.” He studied chartered accountancy at Glasgow’s Strathclyde University, working at the same time as a bus conductor to pay his way, then kept that job to earn extra cash despite getting a job at Arthur Andersen – despite the firm banning moonlighting. Eventually he quit and bought two coaches for school runs. Souter’s Stagecoach today moves three million passengers on buses, trains and coaches around the world. You don’t associate accountants with great jokes – unless they’re the butt of them. But stand-up comedian Eddie Izzard – who’s now almost as famous for his epic marathons as for his surreal monologues – started out in accountancy. OK, so he didn’t make it very far – Izzard told The Guardian that he was booted off his accountancy course for failing his exams, and when he asked to do resits, his request was rejected. It could have all been so different.. Iran-born billionaire Farhad Moshiri came to the UK to study at UCL – and then trained as an accountant and worked at firms including Ernst & Young and Deloitte. He then met Russian billionaire Alisher Usmanov in the early 90s, became his financial advisor and his minority partner in commodity projects and profited from the flotation of Russian telecoms company Megafon. Moshiri is now worth more than $1.7 billion. Realms of unaudited figures might look scary – but not as terrifying as the average John Grisham legal thriller. But the career of the US author of The Firm, A Time to Kill and more than 30 other books could have been so different: he majored in accounting at Mississippi State University before going on to study law. Stephen Lansdown and Peter Hargreaves both worked as accountants before starting a financial services business (put their surnames together and you’ll get which one) in a spare bedroom of Hargreaves’ Bristol cottage in 1981. Hargreaves became an articled clerk at a firm of chartered accountants in Blackburn in 1965, with his pay standing at £3.25 a week. “It was a pittance,” he told the Sunday Times. “I used to hitchhike to and from work. After I qualified I worked for Peat Marwick Mitchell just for a year. They sacked me – I didn’t fit.” He’s since said that was the best thing that could have happened to him; that start-up he co-launched is now Hargreaves Lansdown, the investment platform used by more than one million customers to invest almost £90 billion.
Awards profile: from AAT to chartered accountant to Finance Director Posted 09/20/2018 by Georgina Fuller & filed under Inspiring stories, Students. Hayley Lavens FMAAT, Finance Director at Nova recruitment firm, won the AAT Professional Member of the Year award in June of this year, at AAT’s Annual Conference. Her boss, who was in a taxi in St Albans at the time, promptly turned back around and hotfooted it back to the awards ceremony to congratulate her, and buy her a bottle of champagne. “My boss said it was one the proudest moments in his career,” says Lavens. “I’m very lucky to be surrounded by such supportive people. I don’t think I would have entered the awards without them or my fiancé cheering me on.” Lavens, who started out as an administrator, never even thought she would work in finance. “I didn’t get on well with maths at school, although I ended up doing well in my GCSE’s I found it very hard work to get to grips with it so I thought, ‘well numbers aren’t for me.’ How wrong I was!” she says. The start of her career Lavens decided university wasn’t something for her so she started a legal secretarial diploma then applied for a job in the local paper at a recruitment company. “It was nerve-wracking applying for my first ‘proper’ job but I got offered the position and started a month later as an administrator. I loved the people I worked with, recruitment is such a buzzing environment,” she says. She began helping out with timesheets and before long she was assisting the company secretary. “I was doing various bits and bobs on Sage and it all clicked and I realised I really liked this part of the job,” she says. She took over the timesheets and freelance worker management and then, when the company secretary went on maternity leave, she started paying wages and took over responsibility for keeping the company’s finances in order. “But I was curious, what else could I be doing – cue AAT!” she says. “My initial goal was just to get my AAT membership, but I loved studying and somehow believed that it would be my golden ticket to greater things.” My boss said it was one the proudest moments in his career Making her mark By the time Lavens started studying AAT’s Professional Diploma, she had a plan in place and hoped that the qualification would lead her to qualifying as a chartered accountant with the ACCA and then become a finance director. “I was doing so much more for the company by then, each week I would come back from college and apply something new and it was a great feeling,” she says. “It was great to also have started CPD and be networking with other people, I was in awe of those I would see at the events and think – I can’t wait to be as knowledgeable, skilled and professional as them.” To be made Finance Director was, says Lavens, a dream come true. “There were times when I thought, oh that will never be me and sometimes I am still wondering how I got here – then I remember that I put in a lot of hard work, studying and pure determination,” she notes. One of the things she enjoys most about her current role is the variety and scope it gives her. “I don’t have one area of finance that I focus on, I have a whole view and I enjoy the challenges that come with it,” she says. “I do everything from preparing year end accounts to cashflow management, budget planning and credit control. I love helping a business drive towards its goals and being able to assist when times are hard. I really feel like a valued member of the business.” Juggling life It wasn’t always easy juggling family and other commitments though. “The hardest part for me was studying and working and juggling my personal life,” Lavens says. “I gave up numerous weekends to study and probably drove my partner and close family mad with the stress I was under, but they knew I wanted to do well and I had unconditional support.” She has finally achieved a better work-life balance. “I don’t work weekends and I do work late but it is not too often. But my head never leaves the office, it is a by-product of being dedicated to my role and the business but I would rather that than not wanting to care about it at all,” she says. The importance of keeping things in perspective And what would Lavens advise other finance professionals who want to progress their careers? She is a big fan of networking events. “Speak to people, network and engage,” she says. “You will learn lots from this, more than you would from looking at social media or joining online networking groups.” But you also have to keep things into perspective, Lavens says. “You have to prioritise – sometimes work is urgent but you have to remember what you are working for and make sure you spend time with your family, it gives you the drive to take on the challenges,” she notes. “And always surround yourself with those who want you to succeed.”