Beware the boss!

Company bosses are increasingly committing more fraud. In a global survey, KPMG discovered that those on the ‘top floor’ commit over a quarter of fraud (an increase from 11% in 2007 to 26% in 2011). KPMG’s Richard Powell explained that corporate fraudsters are typically male and 36 to 45 years old (41%). Interestingly, the survey also discovered that in the UK and even higher proportion of fraudsters have worked for their employer for more than 10 years (57%).

Source: PQ Magazine

HMRC to introduce Internet Spy

The Taxman will use ‘web robot’ to look for any businesses that are not registered. This wil enable them to fine any businesses that have failed to register within the timescale.

What should you do to avoid being penalised?

Most businesses have a website these days. HMRC has recognised this and they now intend to use a specialist search programs which will crawl through millions of web pages. They will also be able to extract information such as names, addresses and much more. This information will then be compared with HMRC’s records of registered traders.

Some newly formed companies and sole traders are at risk if they haven’t registered within the time limits and HMRC has announced financial penalties.

HMRC will integrate this initiative with the existing program called Connect which will then enable them to compare the data with individual tax records. There is of course the potential for unwarranted allegations. Our advise is do not ignore these, as sometimes a simple question can turn into a very expensive investigation. Make sure you reply promptly providing the necessary information.

Which is better: company car or new mileage allowances?

This year’s budget has seen the first increase of mileage rates in 9 years. Since 06 April 2011, the rates of tax and national insurance free Annual Mileage Allowance Payments (AMAPs) are:

45p per mile for the first 10,000 business miles

25p per mile for all subsequent miles

As an employer the important question is how paying the new AMAPs compares with the cost of buying company car. The difficulty of course is that you can calculate the number of miles precisely, however you can only estimate depreciation and running cost, such as repairs and servicing. The comparison can prove a bit tricky here.

To make your comparison as accurate as possible, you can use a free service provided by ‘’What car?’’ projecting car value rates specific to the make and model of current vehicles.

In summary, unless your employee travels 20,000 miles per year on business, you will be better off paying the mileage rates. However, if you do not buy brand new cars or your payments to the employees are over and above the above mileage rates, there is a possibility that providing a company car might be a cheaper option.

How to get the most from Capital Gains Tax exemption for 2010-11

2010-11 tax year is divided into two for Capital Gains Tax (CGT) purposes. All gains made before 22 June 2010 are taxed at 18%, and all gains made after this date are taxed at 28% (if you are a higher rate taxpayer). There is also a 10% ER (enterpreneurs’ relief) when you sale your business.

If you made capital gains before and after 22 June 2010 it is very important to allocate your annual exemption to the right gain.

Good news! – You can choose to allocate your annual exemption to either gains. This is also applicable to losses. Best, if you have gains from after 22 June, deduct your annual exemption, then take off any capital losses. Should there be any annual exemption left over, allocate it against the gains made before 23 June.

Let’s see how this works in practice following an example scenario:

John sold his business in August 2010, realising a gain of £200.000. For that, he sold not only his business, but also his premises which he had previously been renting out. £100.000 was for the property and another £100.000 was for the business.

The gain on the property must be calculated for the whole period of ownership first. In this example John owned the property for 20 years, and only 10 of those years he was using the property in his business. Therefore 10/20 of 50.000 is taxed at 10%, remainder being taxed at 28%.

Solution: John should deduct his annual exemption from the non ER part, and then apportion it. John now saved more than £2000 in tax.