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Inoff the Red

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About Inoff the Red

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    Senior Member, Raffle Sponsor 2013

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  1. Sending your debtors an invoice for the interest on late payment of a commercial debt often acts as a prod to get paid. https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt You can legitimately charge interest at 8% over the BofE base rate for the period after the debt should have been paid. There are online calculators where you enter the amount of the debt and date it should have been paid. It will then calculate the interest due and also give the future daily interest cost. The debtor may not pay the invoice for interest but it may persuade them to bring your invoice to the top of the pile. Unfortunately, many organisations will wait until people press for payment before they settle. It is well worth sending monthly statements so they don't think you have forgotten about it. When companies get the message that you will press for payment then you will tend to get paid according to your terms.
  2. Inoff the Red

    Massive school boy screw up

    I suggest making contact with those regular customers and explain communication issue and apologise for the apparent discourtesy of not returning the call, at least then they may call again with future work instead of thinking you may have retired/got too big for them.
  3. Inoff the Red

    Company House Registration

    A limited company is a separate legal entity and is owned by the shareholders. How many shares a company issues and the nominal value of those shares is open to the company. You only need issue 1 share with a nominal value of £1 if you wish. The thing to recognise is that share capital is effectively tied into the company. There are ways of getting the money invested in the shares back but it is more complicated than putting money into the business by way of directors/shareholders loan. You could issue 1 share with a nominal value of £0.01 but anyone seeing the company's accounts may not be impressed. Companies bought off the shelf used to have an initial share capital of 100 shares of £1 each, but the number and nominal share value is up to you. If you are transferring your sole trader business into a limited company you need to think about the value of the business and its assets that you are transferring into the company. Another consideration if married, is whether you allocate shares to your other half which could be tax advantageous especially if they are not working. You should seek the advice of an accountant because switching from sole trader to operating through a limited company involves numerous changes, new bank account, new CIS registration, paye registration if you have employees, etc etc
  4. I'm not sure what "paye at equivalent cost to business" means. PAYE is not a cost to the business it is a deduction from an employees gross earnings which is then paid over to HMRC so the cost to the business is nil.
  5. Inoff the Red

    Capital introduced - advice

    The real protection of trading through a limited company rather than as a sole trader/partnership is that if you make a mistake on a job and a tree drops on someones house any claim would be against the limited company and not against you personally. With regards to VAT, at present the UK has the highest VAT registration limit (£85k) in the EU where the limit is significantly lower (Germany €10,000, France €12,000). This is perceived to give UK businesses an unfair advantage (dubious)while simultaneously depriving the EU of VAT revenue (probably the main reason for future change). In the event that Brexit is thwarted or we are tied into the EU, then brace yourself for the VAT registration limit to come down to levels consistent with other EU countries.
  6. Inoff the Red

    Capital introduced - advice

    Obviously if your company is a bit wobbly then you wouldn't put money in, but then if that was the case you probably wouldn't get a lease anyway....at least not without a PG that puts you in the same place regarding potential loss.
  7. Inoff the Red

    Capital introduced - advice

    Well, I could have an interesting debate with that accountant about his view of the tax efficiency of leasing rather than buying with own resources. Was he getting a commission from the finance company for introductions? If there is no other option than leasing is a way of getting stuff but don't forget that the leasing companies factor their costs and profit into the lease payments so there is a cost compared with using own funds.
  8. Inoff the Red

    Capital introduced - advice

    A few comments:- 1. I don't wish to appear to be pedantic but repayment of a debt is a cash flow issue NOT a profit and loss account issue. This means that the repayment of the directors loan (in your example) would be from profits which would have been subject to corporation tax or from a bank loan or overdraft. The impact of AIA on the tax is a separate issue but to suggest that the repayment of a company debt before taking earnings in excess of the personal allowance as part of a tax planning exercise is misleading . It is worth noting that the effects of introducing a loan into a limited company is the same as using personal funds to buy business assets as a sole trader/partnership. Those loans can be repaid whenever the respective business cash flow allows. Repayment of a loan is not income for the purposes of tax. 2. One needs to be careful about claiming a proportion of domestic costs as a business expense. At present any profit on the sale of your principle residence escapes capital gains tax. If you are in the habit of claiming a percentage of household costs based on a room being designated as an office and work out percentage of floor area etc and claiming a portion of council tax, mortgage interest etc, then you run the risk of having that part of your residence being classed as business premises when sold and that percentage of the gain could be deemed to be subject to capital gains tax. It is safer to make a round sum claim for "use of home as office" based on the HMRC flat rate for utilities (which depends on the number of hours at home :- up to 50 hours per month claim £10 per month 51 to 100 hours per month claim £18 per month 100 hours plus per month claim £26 per month. The above does not cover telephone and internet costs, the business element of which can be claimed. You can claim more if you can justify it but I do not recommend specifying part of your home as an office and claiming mortgage interest, council tax, property repairs, new carpets etc. 3. VAT The ability to go back a few years to recover vat on assets relates to assets purchased that are still in use within the business. The issue to bear in mind however is how those purchases were treated when originally purchased. If the full cost, including associated vat was claimed under the AIA scheme then if the vat is subsequently reclaimed then I suspect that capital allowance claims may need to be revisited because the effective cost of the asset would have reduced (by the amount of VAT subsequently claimed). This could reduce the net benefit of the vat reclaim.
  9. Inoff the Red

    Capital introduced - advice

    I suggest getting your numbers together (and I mean summarised in a meaningful way, not just fill a carrier bag full of invoices and receipts) and then going to see the chap that will be doing your books from April and ask for his advice in preparing your 2018 tax return. It should not cost you much and he will need the info for when he starts doing your accounts anyway. It is dangerous giving advice on one aspect of a business without knowing the full picture. ,
  10. Inoff the Red

    Tax return

    Interesting. Making Tax Digital for VAT goes live in April 2019 but I understand that MTD for income tax will not go live until April 2020 at the earliest. Have you volunteered to be one of the guinea pigs that trials it early? I was a little confused by your comment that you have set up your first payment on account for July 2019. The first payment on account is usually made on 31 January 2019 (together with any underpayment in respect of the 2018 tax year) with the second payment on account being made in July.
  11. Inoff the Red

    Making the news today....

    It is becoming increasingly apparent that Appeaser Theresa has been planning this surrender from the start.
  12. Inoff the Red

    selling grounds / garden contracts

    Subcontracting would be one option and subject to the subbie doing the job properly so there is no reputational risk and it was done on a pay when paid basis would control finances. Defaulting on a contract (depending on the terms of that contract) opens the risk of claim for breach so I would be a bit nervous about that.
  13. Actually, if the employees employment is scheduled to last a month or more then you are obliged to provide a written statement of employment particulars. See here:- https://www.gov.uk/employment-contracts-and-conditions/written-statement-of-employment-particulars Employing someone without having a contract of employment is a huge risk because of the almost inevitable uncertainty over terms covering, for example, holiday entitlement, sick pay, hours, duties and responsibilities, overtime, expenses etc etc etc.
  14. Inoff the Red

    selling grounds / garden contracts

    Can you actually sell the contracts without the clients consent? Is there anything in the contract that allows its sale or novation to a third party without the clients consent?
  15. Inoff the Red

    Arb consulting advice

    Dredik, I cannot comment on the technical stuff you need for your work but your experience of work "waves" is common with many small businesses and start ups. When looking at your workload what can help is to view it in terms of a pipeline. When you start up the pipeline is empty and you work hard to get to get some jobs in and breath a sigh of relief when they do as you can see some paying work in your pipeline. There is then a temptation to ease off working to fill the pipeline as focus shifts to working on the jobs and, as a consequence, the pipeline dries up and you experience the wave you described. The solution is not to stop on your marketing/work getting activities and to allocate time , even when busy, to trying to fill the pipeline. It is easier said than done but it does get easier as you become established and your client base expands and your reputation develops. Good luck with it

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