The Insider - June 2012

1. 18 Hyde Gardens
Eastbourne BN21 4PT East Sussex
01323 431 200 eastbourne@plummer-parsons.co.uk
INSIDER
<<Company File Name>>
JUNE
2012
<<PDF Description 3>>
Welcome to your June
newsletter. This month,
we weigh up the benefits and
pitfalls of employing contractor
staff for your business. Elsewhere,
we look at how advisory fuel rates www.plummer-parsons.co.uk
work and what important records you
need to obtain when reclaiming VAT.
Cons
Meanwhile, with recent figures showing firm insolvencies
were on the up in the first quarter of 2012, we outline žžCost - it could cost your business more to hire a short
a short business health check to minimise the risk of term contractor than recruit a new employee.
insolvency. Finally, in Your Money, could you be in line for an žžIn house skills – outsourcing doesn’t let your own in
early refund – or bill - from the taxman? house staff learn or acquire new skills
žž xisting employee resentment – permanent staff may
E
Contractor vs. permanent staff - the pros begrudge contractors being paid more for doing similar
and cons. work.
žžWork ethic – some contractors may not appreciate
The number of temporary agency contractors has risen
your personal business culture, lack motivation or
sharply in recent years, with over a quarter of a million
commitment.
contractors now working in the UK; the majority of whom
work in the private sector. Businesses may stand to gain from žžTax implications – contractors or subcontractors have
using contractors to carry out short term work, or when different tax implications and it’s important to know your
specialist skills on specific projects are required, however, responsibilities. It is important to discuss this with us.
it’s important to weigh up your options before taking on a
contractor. We can help with management and tax
responsibility regarding contractors. Please
Pros contact us to find out more.
žžFlexibility - you can hire a contractor as and when your
business needs fluctuate Company car advisory fuel rates and
žžSpecialist skills – one off jobs which require specific reclaiming VAT
expertise can be solved through contracting HMRC first published advisory fuel rates in 2002, allowing
žžFast turnaround – contractors can start at short notice businesses to reimburse employees for work related travel, or
and work for short periods of time, even if larger when employees are required to repay the cost of fuel used
numbers are required for private travel, in company cars.
žžLess admin – you normally have no PAYE or national HMRC allows businesses to reclaim the VAT element on fuel
insurance requirements for contractors. Temporary – mileage allowances, as long as they are close to its own set
easy to obtain temporary cover for staff who are away. fuel mileage rates. The rates reflect average fuel costs at
the time they are set and are reviewed four times during the
tax year - please contact us for the most up to date rates.
Employers may continue to use either the previous or new
current rates for one month after the date of change.

2. Businesses wanting to reclaim VAT on mileage must retain the žžA growing amount of work-in-progress which is not billed
following records: on time
žžThe distance (mileage) travelled, and whether the journey žžA shrinking/reducing bank balance
was business or private.
žžLittle control over, or knowledge about, costs
žžThe vehicles engine size in cc
žžRising stock levels but static sales
žžThe rate of mileage allowance.
žžBeing involved in contract disputes
žžThe amount of input tax claimed.
žžLate payments (more than a month) to HMRC.
We can help with reclaiming VAT. Please
In many instances, these problems can be rectified, but early
contact us.
intervention is paramount. This could include an immediate
cash management plan and a recovery plan, both of which
will build confidence with stakeholders such as banks and
Business health check – minimising the suppliers who need to be reassured you are taking appropriate
risk of insolvency measures.
Figures from the Insolvency Service last month indicated Of course, best practice would be to implement preventative
that the number of company insolvencies increased in the measures from the outset. This could include creating
first quarter of 2012, with more than 4,000 firm liquidations. a business plan, regular account audits, professional
Despite the number of personal insolvencies decreasing, it is management reviews, performance projections and cash flow
claimed that most business insolvencies occur as a result of forecasts and closing monitoring costs as well as sales. These
management missing key indicators. are all aspects in which we can assist.
Impending problems which could lead to insolvency include:
žžBusinesses taking longer than six weeks to collect We can help you minimise the risk against
payment from debtors business insolvency. Please contact us to see
how we can help.
žžIncreasing credit to, and working with, key debtors
Your money
These errors may have occurred if your circumstances have
Are you in line to receive an early tax changed during the past tax year; if you have changed
refund - or bill - from HMRC? employment, had gaps of unemployment or multiple jobs
or pensions which affect your tax free allowance, and if
HMRC’s annual automatic review, or ‘reconciliation process’, you have received benefits in kind through your employer
which calculates whether individuals have paid the correct which may have changed.
amount of tax through its Pay As You Earn (PAYE) service is
now underway, nearly two months earlier than usual; leaving Those who have paid too much or too little tax will be
millions in anticipation for a tax rebate, or a nasty surprise for contacted by HMRC via post from May through to October
those who may owe the tax man. 2012. Automatic repayment will be made to those who
have overpaid, while HMRC will usually automatically
HMRC estimates that around 3.5 million taxpayers may have recover any underpayments through the PAYE system in
over-paid tax and could potentially be in-line to receive an instalments over the coming year.
average rebate of £379. Alternatively, around 1.6 million
individuals may have underpaid tax and will owe an average
of £537 to the tax man. June’s Money Facts
Current bank rate 0.5%
Quantitative Easing £325 billion
Scheme
Current inflation 3%
www.plummer-parsons.co.uk