Starting up in Business

Starting up in Business

Starting your own business can be a rewarding venture, whether driven by the desire for independence, or the pursuit of financial rewards. However, it comes with its own set of challenges.

In this blog, we share our guidance on some of the factors that need to be considered before entering the world of entrepreneurship to alleviate any concerns that you may have.

The Business Plan

A solid business plan is vital for success and securing finance. Your plan should cover:

  • Business description
  • Product/service details
  • Market analysis
  • Operational plan
  • Capital requirements
  • Projected financial results
Business Structure

Choose the right structure for your business: 

  • Sole Trader: Simple to set up with no legal distinction between personal and business affairs.
  • Partnership: Like a sole trader, but with more than one person. A written agreement is advisable. Consider a Limited Liability Partnership (LLP) for some legal separation.
  • Company: It offers a separation of business and personal affairs but involves more legal regulations.

If you would like more information for deciding on a business structure, take a look at our ‘Trading Options’ blog which takes you through each option in detail. 

Legal and Administrative Requirements

Business Stationery: Ensure compliance with legal requirements for business stationery. This can be both paper and electronic, depending on the type of business structure.

Books and Records: Maintain detailed records of all financial transactions, either manually or through computerised systems. Fiander Tovell specialises in maintaining detailed records of all your financial transactions. You can view our outsourced bookkeeping services here, where we let you focus on core business while knowing your financial records are in good hands.

Accounts: Prepare accurate accounts for HMRC and comply with electronic submission requirements (iXBRL) if forming a company. We provide businesses with comprehensive support, from initial set up to ongoing management and submission of financial statements which can be viewed here.

Taxation

Considering the taxation implications is a crucial aspect of business, especially in the beginning. The main three are as follows:

Tax on Profits (Corporation Tax or Income Tax): Varies by business structure; taxable profit differs from accounting profit due to disallowed expenses and timing of allowances.

National Insurance (NI): Rates differ for sole traders and company directors; using dividends can mitigate NI in a company.

Value Added Tax (VAT): Register for VAT if sales exceed the threshold and comply with Making Tax Digital requirements.

Fiander Tovell can advise companies on each of these taxes and more, throughout your business’ journey. We provide tailored guidance and support to ensure compliance and optimise tax efficiency at every stage.

Employing Staff

Every business is different, with each requiring a unique plan tailored for success. However, most businesses need to employ staff at some stage. Here is a breakdown of what hiring employees requires:

  • Registering with HMRC and managing PAYE for income tax, NI, and student loan deductions. 
  • Compliance with Real Time Information reporting. 
  • Automatic enrolment of eligible employees in a pension scheme, either occupational or through NEST. 
  • Adherence to employment laws. 

Our inhouse payroll team, FTPay, can manage the registration of staff and give guidance throughout the process, ensuring accurate and timely processing of all payments and deductions. We handle the registration of new employees with HMRC, ensure compliance with Real Time Information reporting, and manage your pension scheme enrolments.  

 With Fiander Tovell, you can be confident that all aspects of payroll and employee compliance are expertly managed, allowing you to focus on growing your business. Why not look at our Payroll animation here, summarising FTPay’s service. 

Premises and Insurance

There are many pitfalls to be avoided in choosing a property. Consideration should be given to the following:

  • Purpose and/or suitability 
  • Legal regulations 
  • Local by-laws 
  • Access restrictions 

Ensure comprehensive insurance coverage, including business vehicles, employer’s liability, public liability, consequential loss, business assets, Keyman, and bad debt insurance. 

Professional Assistance

Tailoring your strategy to fit your specific circumstances and aspirations is crucial. Professional advice can help you navigate potential pitfalls and increase your chances of success. Services such as bookkeeping, management accounts, VAT returns, and payroll preparation are available to support your business from the outset.

 

If you would like to discuss these services or have any questions about starting up a business, please contact our Commercial Client Director, Fabrice Legris, at fabrice.legris@fiandertovell.co.uk

Does your company pension scheme need an audit?

Does your company pension scheme need an audit?

Is it time for your company pension scheme to be audited? It’s not the first thing to come to mind when operating a business, however in the UK, a pension scheme audit is a yearly requirement. It is vital for ensuring the effective management and compliance of your company’s pension scheme.

Trustees are required to meet regulatory standards set by The Pensions Regulator (TPR) and UK financial reporting standards, and an audit helps confirm the accuracy of financial statements, maintaining the scheme’s integrity and avoiding legal issues.

Some company schemes are exempt, however, which includes small pension schemes and executive pension plans. If these apply to your business, you typically won’t require an audit.

With that said, it may be time to consider an audit if you have not already done so. Let us explain the process and the benefits your business can reap.

Why choose Fiander Tovell to audit a company pension scheme? 

Fiander Tovell offers an independent assessment of your scheme’s financial health, providing trustees with clear, actionable insights. Our expertise ensures potential risks are identified and addressed proactively, enhancing transparency and building trust among members regarding the scheme’s stability and reliability. 

With Fiander Tovell, you’re not just meeting legal obligations but also leveraging a crucial tool for good governance, risk management, and strategic planning. Our team ensures your pension scheme effectively meets commitments to employees, setting a foundation for long-term success.  

How do they work?  

A pension scheme audit is a structured process performed to verify the accuracy and compliance of a pension scheme’s financial statements with relevant accounting standards and regulations.

Initially, we plan the audit by understanding your pension scheme’s nature, operational complexity, financial environment, and regulatory framework. This involves gathering all pertinent financial records, such as investment reports, contribution records, and benefit payments, which are essential for verifying financial transactions and balances. We also evaluate the scheme’s internal controls to ensure they effectively prevent and detect errors and fraud. 

During the audit, we will test various transactions and balances, including contributions, benefit payments, and investment valuations. For defined benefit schemes, this involves collaborating with actuaries to assess the assumptions and methods used in actuarial valuations, ensuring that the scheme’s liabilities are accurately reported. We also check compliance with relevant regulations, including those set by The Pensions Regulator.  

Upon completing the audit, we will prepare a report outlining our findings and any identified issues or discrepancies, which is then presented to your pension scheme’s trustees and may be included in the scheme’s annual report to its members. This process ensures the integrity and transparency of your pension scheme’s operations and financial reporting, safeguarding the interests of your members. 

Outcome  

The audit process is operated as set out above in order to allow the auditor to issue the audit report and to gather the appropriate supporting evidence for the opinion expressed therein. As with company audits, there are various types of opinion that can be given on a set of pension scheme accounts including unqualified (generally termed “clean”) and qualified.” 

Beyond the financial and compliance aspects, the audit can offer valuable insights into your scheme’s operational efficiency and governance practices. Identifying weaknesses and making operational recommendations helps you enhance the scheme’s effectiveness, ensuring long-term security for your members.  

The audit outcomes guide your future decisions and actions, providing critical information to you, your members, and other stakeholders about the scheme’s financial health and compliance status. 

Get in touch  

Our specialist team of experienced auditors are on hand to help your company with minimal disruption. If you would like to discuss our auditing services, please get in contact with our Head of Corporate, Adam Buse, at adam.buse@fiandertovell.co.uk  

Legal working in the UK

Legal working in the UK

Navigating the strict legal requirements, you face as an employer can be a lengthy and unforgiving process. The UK imposes strict legal requirements on employers to ensure that they hire individuals who are legally entitled to work here.  

Non-compliance can result in severe penalties, including fines up to £20,000 per illegal worker and potential imprisonment for knowingly hiring illegal workers. Additionally, businesses can be temporarily or permanently closed for repeated offences. 

However, fear not, as we delve into the specifics to keep you out of the watchful eye of government regulatory bodies.  

Documentation Requirements

To comply with the law, employers must verify and retain certified copies of specific documents from either List A or List B: 

List A (No further checks needed): 

  • British or EEA passport/ID card 
  • Home Office registration certificates or permanent residence cards 
  • Biometric Residence Permits indicating indefinite leave to remain 

List B (Follow-up checks needed): 

  • Current passport with work endorsements 
  • Biometric Residence Permits for temporary stay 
  • Home Office-issued immigration status documents 

For List B documents, follow-up checks are required when the documents eventually expire. 

Points-Based System 

The points-based system assesses non-EEA nationals based on their skills and job offers: 

  • Tier 1: Highly skilled workers (e.g., doctors, scientists) – no job offer required. 
  • Tier 2: Skilled workers with job offers in high-demand sectors. 
  • Tier 3: Low-skilled workers (currently suspended). 
  • Tier 4: Students. 
  • Tier 5: Temporary workers (e.g., musicians, youth mobility). 

Employers must hold a sponsor licence to hire under Tiers 2 and 5, involving a fee and compliance with specific duties. 

Sponsorship and Compliance 

Employers sponsoring Tier 2 workers must apply for a sponsor licence (£1,476 for large businesses, £536 for small businesses/charities). They must issue certificates of sponsorship and adhere to ongoing compliance requirements, including maintaining HR systems and reporting absences to UK Visas and Immigration (UKVI). 

Identity Cards and Transitional Measures 

Foreign nationals from outside the EEA and Switzerland are issued identity cards or passport stickers. Post-Brexit, EEA nationals may need to prove their right to work, which was after the transition period ending 31 December 2020. 

Verification and Ongoing Checks 

Employers must verify that documents are legitimate and match the individual. This includes: 

  • checking photos 
  • dates of birth 
  • document expiration dates.  

Follow-up checks are necessary for temporary visas and applications in progress. 

To avoid discrimination, employers should uniformly ask all potential employees to provide original documents proving their right to work in the UK.  

How can we help? 

By following our guidelines, employers can ensure compliance with UK immigration laws and avoid severe penalties. Additionally, a more detailed breakdown of all requirements can be found here 

If you would like to discuss any concerns or have any questions We will be more than happy to provide you with assistance or any additional information required. Please get in touch with our Commercial Client Director, Fabrice Legris, at fabrice.legris@fiandertovell.co.uk  

Changes to FRS102 from FRED82: What does it mean for your business?

Changes to FRS102 from FRED82: What does it mean for your business?

On 27 March 2024, the final version of the amendments to FRS102 were published by the FRC to implement the proposals in their Financial Reporting Exposure Draft 82 (FRED82). 

What was in FRED 82?  

The main goal of FRED 82 is to align FRS 102 with international standards, specifically IFRS 15 and IFRS 16, focusing on revenue from contracts and lease accounting.  

The now implemented final version of the standard is effective for periods starting after 1st January 2026. It’s expected that this will apply to December 2026 year-ends onwards, although some shorter periods may also be caught.  

But what do these changes mean for your reporting obligations?  

Changes to revenue recognition 

FRS102 will adopt a slightly simplified version of the 5-step revenue recognition model from IFRS15. This could change the timing of when revenue can be recognised. 

Changes to lease accounting  

Lease accounting is how we account for any lease transactions you enter into. The new standard sets out that all leases will be included on your business’ balance sheet. At the moment, future operating lease commitments are only disclosed in the notes to the financial statements, but going forward we will be required to recognise liability, right-of-use assets, and profit and loss impact on the balance sheet.   

Preparing for implementation 

As we anticipate the implementation of the revised standard, we want to help you to understand the potential impact on your business, and how we can best manage this change together. Understanding the proposed changes, conducting an impact assessment, and updating accounting systems are crucial steps.    

With the support of our advisers, you’ll be able to navigate this transition smoothly, ensuring compliance and minimising stress. In the build up, we will help you to stay informed and proactive, empowering you to adopt the new standards seamlessly, maintaining efficient business-as-usual processes.   

There is still plenty of time until the changes come into effect, and we will be able to offer the tools and assistance you need to navigate the change as it’s required.  

However, if you have any immediate queries, please contact our Head of Corporate, Adam Buse at Adambuse@fiandertovell.co.uk for more information.   

General Election: Tax Advice

General Election: Tax Advice

As the general election is just around the corner, the battle lines are being drawn with taxes at the forefront of the debate. Both the Conservative and Labour parties are unveiling their tax strategies, aiming to sway voters before 4th July.  

With the two set to battle it out until the very end, let’s break down how each party plans to tackle the taxes for individuals and businesses.  

Overall Fiscal Approach 

The Institute for Fiscal Studies (IFS) suggests that the next government faces tough choices: implementing spending cuts, raising taxes beyond current levels, or increasing borrowing, which would conflict with promises to stabilise debt as a share of national income. These options highlight the difficult fiscal realities the UK will face post-election. 

Both parties claim that they will not be increasing taxes, but it’s hard to see how this can be reconciled with their spending plans. The probable explanation is that both parties are hoping for the economy to grow, and relying on the resulting revenue to finance spending. 

It may also be that they are talking only about tax as it applies to normal people – PAYE, National Insurance, and VAT – and that more niche taxes, like Inheritance Tax, Capital Gains Tax, and indirect taxes, are still fair game.  

Either way, specific areas within the main taxes may also be targeted, especially where they relate to unpopular taxpayers like banks, oil companies, and landlords. 

Income Tax and National Insurance 

Both the Conservatives and Labour have pledged not to increase income tax or National Insurance rates. However, by keeping income tax thresholds frozen until 2028, as both parties are proposing, they effectively increase the tax burden due to pay inflation, leading to higher taxes for many as salaries rise. 

The Conservatives have gone further on National Insurance, and are proposing to get rid of it altogether. This appears to refer only to employee contributions, and to cutting them for the self-employed, so NI would still be an issue for employers.  This would be a significant change to the overall shape of the tax system, and would cost large sums, so is likely to be done later in a Conservative Parliament rather than earlier.  

Other parties are suggesting some tax rises, and the degree of support for those parties may influence the new Government’s view on how willing voters are to accept additional taxes later in the Parliament.  

Non-Dom Tax 

The government announced changes to non-UK domiciled individuals’ tax rules in the 2024 Spring Budget, set to take effect from April 2025. These changes mean that individuals who are tax residents in the UK for more than four years would pay UK tax on foreign income and gains. However, the reforms are uncertain due to the election.  

Labour doesn’t oppose the plan – they had been calling for something similar, after all – but they aim to close perceived loopholes, including removing transitional rules that allow non-doms to pay UK tax on only 50% of their foreign income in the 2025/26 tax year and preventing non-doms from sheltering offshore assets from inheritance tax (IHT) by transferring them to excluded property trusts. 

Inheritance Tax (IHT) 

Both parties have given little indication of changes to IHT. Chancellor Jeremy Hunt has described IHT as “profoundly anti-Conservative,” suggesting potential reform under a Conservative government. Labour leader Sir Keir Starmer, however, opposes reducing or abolishing IHT. IHT doesn’t raise much tax revenue, and significant changes to IHT are unlikely, but on the other hand it is a high-profile tax so Labour may look to do something eye-catching – ‘abolishing unfair reliefs’, perhaps – even if the revenue raised is small. 

Business Taxes 

Labour plans to cap corporation tax at 25% and publish a roadmap for business taxation during the next parliament. The Conservatives aim to support businesses by keeping taxes low. However, details will be crucial, as changes to existing reliefs could impact the overall tax burden on businesses – particularly large businesses in unpopular sectors, with potential windfall taxes on banks and oil companies. 

Pensions 

The Conservatives promise a ‘Triple Lock Plus,’ increasing the tax-free pension allowance by the higher of 2.5%, average earnings, or inflation. Labour supports the state pension triple lock but won’t match the Conservatives’ additional pledge. The status of pensions as inheritance tax-efficient vehicles could change, depending on future reforms. 

Capital Gains Tax (CGT) 

Both parties have ruled out increasing CGT rates. However, as with IHT, this is a relatively high-profile tax despite the small amounts collected, so existing reliefs may be targeted to raise a little revenue and to satisfy voters. 

A concern for many entrepreneurs is Business Asset Disposal Relief, which halves the tax payable on the first £1m of gains when selling a business.  The relief was cut from £10m a few years ago, and it seems unlikely that it will be cut further, as that would look too much like an attack on small business.  If any changes are made, they are unlikely to take effect before the post-election Budget, and would probably be no earlier than April 2025. 

There has been a suggestion recently that CGT rates should be increased to match income tax.  A recent Treasury review of the options for CGT gave some support to the proposal, but only if indexation was reintroduced to ensure that the tax only falls on gains in excess of inflation. This would reduce the impact of higher rates significantly for long-term investments, and in many cases actually reduce the tax charge, and so even if the new Government were to adopt it (perhaps saying ‘we’re not increasing CGT rates, we’re just redefining gains as income’) the impact on investors may not be significant. 

VAT 

Neither party plans to raise VAT. However, Labour intends to end tax breaks for private schools, making them subject to VAT and business rates. 

VAT is a complex tax that is ripe for simplification, but that is a herculean task that no party is likely to want to take on soon.  There may however be some tinkering with higher-profile items, either to reduce the tax (as the Conservatives did with sanitary products) or increase it (as above) in order to make political points. 

Avoidance and administration 

Tax avoidance is a priority for every party, with predicted recoveries of £5bn to £7bn from cracking down on it.  Interestingly, HMRC’s figures for the Tax Gap suggest that this is the whole amount lost through avoidance and evasion, with most of it lost to error, mistakes, or inability to pay.  Politicians seem to be either very confident in HMRC’s ability to make the system watertight, pessimistic about the accuracy of the Tax Gap calculations, or perhaps – and this is only a possibility – a little confused about what the numbers mean. 

HMRC are more focused on the ‘error and mistake’ elements of the Tax Gap than politicians seem to be, and so the new Government will almost certainly be presented with proposals for new programmes to digitalise and automate the tax system.   

Increased activity in these areas could have short-term costs and disruption for businesses and individuals, but if HMRC can get the resources to improve its systems and to make life easier and more certain for taxpayers, the medium to long term prospects could be greatly improved. 

Concluding Statement  

Both parties currently avoid commitment to direct tax rate increases, instead relying on fiscal drag and potential adjustments to reliefs to increase tax revenue. This approach allows them to maintain headline commitments while subtly increasing the overall tax burden. As policies may evolve, particularly with pending manifestos, staying informed will help you navigate and prepare for potential changes in the tax landscape. 

Please don’t hesitate to get in touch with your dedicated Adviser if you have any queries about the information above or regarding the General Election.