Welcome to the January 2015 Newsletter from McEwan Wallace Limited
Barely had the dust settled on Chancellor George Osborne's 2014 Autumn Statement Speech than a debate erupted over the likely need for significant spending cuts in the coming years. The consequent publication of Finance Bill 2015 also paved the way for the introduction of the controversial new tax on diverted profits, dubbed the 'Google tax'. Meanwhile, small business groups have welcomed the somewhat happier news of a new set of proposals aimed at tackling late payment.
We would like to wish all of our customers Season's Greetings and our best wishes for a happy and prosperous New Year.
Autumn Statement sparks debate over 'colossal' cuts and diverted profits
Following the recent 2014 Autumn Statement, the Institute for Fiscal Studies (IFS) has confronted Chancellor George Osborne regarding the need for deep cuts in public spending in the years to come.
An initial statement from the IFS warned of a 'fundamental re-imagining of the state', which Mr Osborne rebuked as 'totally hyperbolic'.
Trades Union Congress (TUC) Regional Secretary, Beth Farhat, said: 'Britain faces a profound challenge to reverse the tide of rising inequality and build a new economy that delivers fairness for working people'.
Shadow Chancellor, Ed Balls, said: 'Over two years he's revised up borrowing by £12.5bn... this means the chancellor will have borrowed in this parliament £219bn more than he planned in 2010.
'He promised to make people better off. Working people are worse off. He promised we were all in this together. Then he cut taxes for millionaires'.
Meanwhile, the Office for Budget Responsibility (OBR) confirmed that the proposed cuts would see the state reduced to its smallest size relative to GDP for 80 years. The OBR also stated that only 40% of planned cuts will have been made by the general election in 2015.
The Government has now published draft tax legislation to implement its 2014 Budget and Autumn Statement policies, in the form of Finance Bill 2015. The legislation paves the way for further anti-avoidance measures, via the introduction of a new tax on the diverted profits of large multinational enterprises, dubbed the 'Google tax'.
The new Diverted Profits Tax will target multinational enterprises with business activities in the UK who use tax planning techniques to divert profits from the UK. The tax will be applied using a rate of 25% from 1 April 2015 and is expected to raise £1.4bn over the course of the next five years.
However, the move has sparked criticism from business groups. Commenting on the new measures, John Cridland, director-general of the Confederation of British Industry, said: 'International tax rules are in urgent need of updating but there is already an OECD process underway to do this. It is unfortunate that the UK has decided to go it alone with a Diverted Profits Tax outside this process, which will be a real concern for global businesses.
'The legislation will be complex to apply, and if other countries follow suit businesses will have a patchwork of uncoordinated unilateral rules to navigate, which risks undermining the whole OECD approach.'
A consultation on the draft legislation will run until 4 February 2015.
New proposals to tackle late payment culture
New proposals obliging large and listed companies to publish detailed information about their payment practices and performance were recently unveiled by the Business Minister Matthew Hancock.
The proposed changes, published in a consultation paper 'Duty to Report on Payment Practices and Policies', are designed to make it easier for small businesses to compare the payment practices of different companies, including their average payment time and the proportion of invoices that are paid beyond terms.
Business Minister Matthew Hancock said: 'Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms' cashflow. We know that small businesses are often reluctant to risk losing business by using the redress measures we've put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance.
'The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers'.
The consultation paper proposes that companies report on the following metrics: the proportion of invoices paid beyond terms; the proportion of invoices paid within 30 days; the proportion of invoices paid over 30, 60 and 120 days; and the average time taken to pay invoices. It will close on 13 January 2015.
The Institute of Credit Management has welcomed the proposals, with Chief Executive Philip King saying: 'I applaud the measures in the Small Business Bill to drive change by allowing more visibility of how businesses behave in paying their suppliers. Small businesses need to make better informed decisions before entering into commercial relationships and this measure will be invaluable in helping them enter into such relationships with their eyes wide open'.
Late payment can have a significant impact on small businesses. We can help with all aspects of financial management, including improving cashflow - please contact us for further assistance.
ESSENTIAL TAX DATES FOR JANUARY
1 January
Due date for payment of Corporation Tax for period ended 31 March 2014.
14 January
Due date for income tax for the CT61 quarter to 31 December 2014.
19/22 January
Quarter 3 2014/15 PAYE remittance due.
31 January
First self assessment payment on account for 2014/15.
Capital gains tax payment for 2013/14.
Balancing payment - 2013/14 income tax/Class 4 NICs.
Last day to renew 2014/15 tax credits.
First payment due date for 2014/15 Class 2 NICs.
Deadline for amending 2013 Tax Return.
Last day to file the 2014 Tax Return online without incurring penalties.
Liability to 5% penalty on any tax unpaid for 2012/13.
QUOTE OF THE MONTH
'We all know he's changed the way he styles his hair but he can't brush away the facts.'
Shadow Chancellor Ed Balls referring to Chancellor George Osborne at the Autumn Statement
WEBSITE OF THE MONTH
www.startupbritain.org
An online hub for small business news and tips. Run by entrepreneurs, for entrepreneurs.
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