Budgeting for the tax bill and Interest on early payment of tax

How to save for the tax bill ?


1.0 Budgeting

A usual question is how to budget for the tax bill at the end of the year.

HMRC has helpfully created a calculator (Link) which can estimate the amount of money an individual should save to pay their tax bill.

2.0 Saving mechanism

Now the question arises how to save this money.

2.1 Self-Assessment (Income tax) – No interest is paid for early payment. So in case an individual client wishes to save for their tax bill it is advisable to save in a bank where they can earn some interest before tax is due.

2.2 Corporation tax – Yes, interest is paid for early payment but the earliest date HMRC will pay interest from 6 months and 13 days after the start of your accounting period. So again it is advisable to save in a bank account. Though, in practice I have rarely seen Company director’s saving for tax. Businessmen usually have more projects than funds available!

Source:

For Corporation tax

HMRC to be preferential Creditor

How are funds distributed among creditors in a restaurant insolvency ?

From 6 April 2020 HMRC will become preferential Creditor in UK insolvencies.

UK treasury has written an easy to read paper on this matter. Explaining the effects of this change and showing hierarchy of distribution of funds in insolvency.

It shows that unsecured creditors like suppliers usually recover 4% of their dues.

I think it’s a good move by the government to secure taxes for the public good.

Restaurant suppliers should make note and negotiate better credit terms.

Restaurants – Full Bookkeeping Package

Comprehensive accounting fee for restaurant

Details of our full bookkeeping package:

1 – Full bookkeeping service

2 – Payroll including tronc

3 – HR file maintenance

4 – Annual Accounts and company tax return.

 

Detail given below:

Daily

  • Sales Flash – to monitor sales of the restaurant.
  • Bank Flash – to monitor movement of funds in the bank account

Weekly

  • Document collection from the restaurant.
  • Sales ledger reconciliation – card and cash.

Monthly

  • Management accounts
  • Monitoring Gross profit ratio and Payroll cost.
  • Supplier management – Purchase ledger reconciliations and payment list.
  • Payroll including tronc

Quarterly

  • VAT Returns

Annual

  • Submission of Annual Accounts to Companies House; and
  • Company tax return to HMRC

 

Ongoing tasks

  • HR File maintenance
  • Staff training for better operation management
  • KPI analysis
  • Cash flow management
  • Liaison with HMRC and Banks, if required.
  • Internal control like monitoring Utility bill and Insurance costs.

 

Why choose us ?

Click here to see our client presentation – NHA – About us

 

 

 

 

 

 

Head winds – restaurant sector is facing

Current turmoil in restaurant trade and what to do about it.

  • Currency:
  1. Brexit vote has weakened the sterling resulting in higher cost of food and drinks.
  • Wages:
  1. Living wage has resulted in wages increasing faster than inflation and even faster than restaurants can increase their own prices.
  2. Many new entrants in the market have resulted in pushing wages higher.
  • Property
  1. Private equity players rushed in this sector in the last few years and offered higher rents resulting in pushing everyone’s rent up.
  2. Higher rents resulted in higher Business rates.
  • Online
  1. New service model like Deliveroo have emerged which increased competition and take a share of profits.
  • Competition
  1. Supply has expended ahead of demand – there are too many restaurants.
  2. So many choices have reduced the frequency of customer visits.

 

What to do?

Everyone tells me the problems but what are the solutions?

  • Very tight control of costs:

There are three main areas where costs can be controlled.

  1. Wage cost – reduce staff through natural turnover. Staff members also have a learning curve and longer one has been in a job better they can do it.
  2. Cost of goods – chefs should be encouraged to always look for new suppliers and go to the source of food directly like farms.
  3. Overheads – Every cost to be analysed and ways thought to reduce it.

 

  • Think and encourage everyone in the business to think
  1. How to evolve and improve the offering – quality, cost, presentation etc.
  2. Increase lunch trade by shorter menus.
  3. Food coming out quicker from the kitchen.
  4. Lighter food which is easy to digest.
  5. Improving beverage sales as they take less wage cost to prepare.
  6. Staff idea board can help. Management does not have monopoly on ideas.

 

Conclusion:

Things are going to get worse before they get better. Tighten your belts and better the product and sit tight to weather the storm.

Good Luck!

Laws for websites in UK

Recently one of my clients asked me about rules and regulations for a website in the UK.

 

I thought it was easy just be truthful about what product and services you sell.

 

But client asked me to check this out for him and to my surprise there are a host of rules and regulations governing e-commerce business.

 

Being an accountant I am no expert on this matter but main items that i found I thought should share with others:

 

1- As customers will be buying service via a website, rules in the link below apply:

It gives detailed information about what customers have to be informed before and after an order.

https://www.gov.uk/online-and-distance-selling-for-businesses/overview

2- Law on Computer Cookies

In simple terms, we must ask consent before installing cookies on their computers.

The link also gives an example and detailed information about this cookie consent.

http://ec.europa.eu/ipg/basics/legal/cookies/index_en.htm

 

3- Advertising rules:

These rules give information about telephone and direct marketing.

https://www.gov.uk/marketing-advertising-law/overview

Main important rules I see among them is telephone marketing and display of price.

 

4 – Data protection:

Organisation which handle personal data need to register , fee is £35 per year.

ico.org.uk

 

I think if a start-ups starts complying with all these rules on day one, it may make the whole project unviable. But every organisation should knows its responsibilities and must have a time bound compliance program as the business grows.