HM Revenue & Customs (HMRC) has announced an extension of its Business Records Checks programme.

Business Records Checks were piloted earlier this year in eight key areas, and involve checks on the adequacy of small and medium-sized enterprises’ business records.

The pilots found that around 44 per cent of businesses visited had issues with their record-keeping, while around 12 per cent of those visited had seriously inadequate records.

HMRC will be now be extending this activity from mid-September to cover a number of key areas across the UK. As part of this, the number of full-time staff employed on the programme will rise from 30 to 120.

HMRC plans to complete up to 12,000 Business Records Checks by the end of the current financial year, with 20,000 provisionally planned for 2012/13. HMRC is increasing the number of visits, so it can refine the process, before final decisions on a national roll-out are taken in the New Year.

Initially, HMRC will only levy a record-keeping penalty in the most extreme cases of poor record-keeping. In the longer-term, HMRC intends to issue penalties of up to £3,000 for serious inadequacies in record-keeping. HMRC will issue guidance on this, and make a further announcement on when it will happen, in due course.

HMRC’s Director of Local Compliance, Richard Summersgill, said:

“Good record-keeping helps businesses pay the right amount of tax at the right time, thereby potentially avoiding interest and penalties.

“Adequate records give businesses a clear idea of their trading position and profitability, allowing them to make business decisions and adjustments to ensure survival and success. And where a check has shown a business keeps adequate records, it gives HMRC a greater degree of assurance as to the likely accuracy of its tax returns.

“Ultimately, this is about supporting businesses and reducing the tax gap.”

For further information on record-keeping, visit www.hmrc.gov.uk/record-keeping

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Late payment legislation designed to help prevent late payment of invoices and unfair payment terms will be introduced a year early, a Government minister has revealed.

During a Commons debate at Whitehall last week, business minister Ed Davey revealed that a consultation into the EU directive will take place this winter, which will then transpose the legislation into UK law in the first half of 2012 – a year earlier than required.

The directive will set standard payment terms at 30 days, and label any terms in excess of 60 days as ‘grossly unfair’. It will also entitle businesses to a statutory interest rate of 8 per cent above the European Central Bank rate for late payments.

According to Davey, late payments are affecting businesses of all sizes, he said: “Late payment is not exclusive to any sector or to any style of business. Although I sympathise with those who say that this is big business abusing its power, an awful lot of payment is between small businesses. The majority of contracts that any small business has are with other small businesses. We should not say that it is just a big business problem against small businesses, because the issue is about more than bully-boy tactics. Research shows that of the moneys owed by large businesses, around 40 per cent is overdue compared with 30 per cent for small businesses. The problem therefore affects businesses of all sizes.”

The announcement follows figures released by the Federation of Small Businesses (FSB) in July, which found that 73 per cent of businesses had paid late in the last 12 months. Commenting at the time, John Walker, national chairman of the FSB said:

“In the current economic climate, every penny counts and for small businesses a late invoice can mean not being able to pay their staff. We need to see all businesses ensuring that they make payments on time if the private sector is to get on with the job in hand of strengthening the recovery.”

The Forum of Private Business is urging all small suppliers who have suffered to come forward and anonymously name and shame offending businesses.

“Late payment destroys companies, yet it is often seen as normal practice by big supermarkets and other companies, which believe it is acceptable to create lines of credit at the expense of their smaller suppliers. We certainly do not,” said the Forum’s Head of Campaigns, Jane Bennett.

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The Government must do more to support small businesses, the Federation of Small Businesses (FSB) will tell the Liberal Democrat Autumn Conference this week.

In response to recent economic data, which has highlighted sluggish growth and accelerating unemployment, the FSB is launching its ‘Real-Life Entrepreneurs’ campaign.

The FSB believes that it is those that have taken a risk and started their own business that will be responsible for boosting growth and employment opportunities that will help the economy to get back on track, but that unnecessary obstacles stand in their way.

The campaign focuses around six steps, that the FSB believes the Government could take that would make a real difference. These steps include increasing routes to finance, improving cash flow, simplifying business taxes and adopting a new approach to regulation.

Commenting, John Walker, National Chairman, Federation of Small Businesses, said:

“The economy has stalled and as the impact of the public sector cuts continue to bite, the Government needs the UK’s small businesses – those Real-Life EntrepreneursTM that have taken a risk to set up in business – to pick up the slack. But, for this to happen we need to see a strong plan for growth put in place.

“While the culture of celebrity entrepreneurs will have spurred people into starting a business, more needs to be done to make doing so more accessible to more people. We are calling on the Business Secretary to listen to the Real-Life Entrepreneurs that have told us their problems and to make changes that address their needs. Not only will this help them to grow their businesses, but it will also help other people realise that they can go it alone and become one of these important Real-Life EntrepreneursTM.”

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The Institute of Credit Management (ICM) and the Minister of State for Business and Enterprise Mark Prisk have published their monthly ‘tip’ for small businesses to better manage their cashflow.

“Watch out for any wording in documents from your customer that changes the agreed payment terms. If you accept their order, you might also be accepting their changed payment terms.”

The cashflow ‘tips’ are derived from the series of Managing Cashflow Guides published by the ICM for BIS that have to date been downloaded more than 245,000 times.

For further information, log on to http://www.creditmanagement.org.uk/bisguides.htm

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Business owners in the UK are spreading themselves too thinly by taking on so many different roles within their own company, according to new research by invoice finance specialist Bibby Financial Services.

The findings paint a picture of the modern business owner as an extreme multi-tasker who spends more than half their time chasing payments, securing finance on top of the day-to-day running of their firms, and taking on more and more responsibilities as the downturn has resulted in many firms operating with fewer staff.

Business owners are well aware that wearing a range of different hats is par for the course, but the findings of the survey highlight the full extent to which many have to take on extra roles.

Some of the more surprising findings include 65 per cent are taking on cleaning duties around the office, 63 per cent find themselves in charge of the stationery order and even 39 per cent say they have to make deliveries or collections.

The survey also found that 82 per cent of business owners are taking on the responsibility of dealing with suppliers themselves, 62 per cent are busy trying to secure finance for their business, 63 per cent are chasing payments from customers and 58 per cent are pursuing new business leads or opportunities in addition to their ‘day-to-day’ roles.

Edward Rimmer, UK chief executive for Bibby Financial Services which works with 4,000 businesses, says: “Working closely with so many business owners across the UK, we understand the pressures that managing directors are under, and that they often have to take on many different roles in order to make their business a success.

“The research really highlights just how demanding running a business can be and that some MDs may be taking on too much. It is, however, a concern that many owners are spending so much time chasing payments, dealing with suppliers and securing funding, in addition to their many duties.

“People go into business because they have a passion for something and a good idea, but it is easy to underestimate how many different roles need to be taken on.

“For many small and medium-sized enterprises cash really is king and ensuring finances and cash flow are in order has to be a priority, which might mean outsourcing those tasks to specialist organisations if they are not a strength of the business owner, such as chasing payment from suppliers. There is a real danger that some firms will suffer if the MDs continue to shoulder all the responsibility for the operations of their business.”

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Solicitors from Hell website owner Rick Kordowski is being threatened with court action by more than 100,000 lawyers after he set up the website which names and shames members of the profession alleged to have given bad service.

It is not the first time Mr Kordowski’s website has been the cause of controversy. The bankrupt self-employed graphic designer has been sued 16 times for libel and still owes more than £150,000 in fines.

Mr Kordowski, who sees the website as a public service, told the Independent: “There’s a need for my website, as many people have said, and it makes them feel better for being able to post on it.

“All I need is an appropriate story from someone which is useful to other people and their contact details.

“I see it as helping people voice their complaints – and it has been working: authors have contacted me and said, ‘I’ve now sorted it out with my solicitor, please can you take my listing down’.”

If Mr Kordowski refuses to close his site down, he will appear before a High Court Judge to face charges of alleged defamation, harassment and breaches of the Data Protection Act.
He must also promise not to launch a similar site in the future.

More than 100,000 solicitors, represented by the Law Society, have banded together to threaten him with legal action if he fails to shut down his website.

It seems that Mr Kordowski remains defiant, having reportedly threatened to sue the Law Society’s chief executive Des Hudson himself for defamation.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Age UK is calling on banks rebuild consumer confidence in cheques, following their U-Turn on an original decision to scrap them.

On September 15, the Payments Council, which represents the banks and building societies, is meeting to decide how to make the clearing system – central to the operation of cheques – more efficient and less expensive.

If the Council’s members don’t come up with solutions to bolster confidence in cheques, Age UK believes the damage cannot be reversed.

Michelle Mitchell, Charity Director of Age UK said,

“This is an opportunity for the banks to live up to their promise to keep cheques for as long as they are needed, and to make them truly viable for older people and others who rely on them. If they squander this opportunity, confidence in cheques will continue to evaporate.

“The Payments Council must invest in the cheque clearing system to make it sustainable. Small businesses must also be able to use cheques with confidence, whether that means bringing back the cheque guarantee card or some other way.”

We are also calling for further work on developing alternative and innovative payment systems which are accessible to all consumers. Without viable alternatives, Age UK firmly believes that cheques remain essential.

Our research suggests that many people with bank accounts are effectively unable to make payments safely and independently because they do not have systems which meet their needs.

The Payments Council is not expected to report back before the end of the year at the earliest.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Mukhesh Girdharlal Vagharia, a bankrupt, has been sentenced by Leicester Crown Court to 12 months imprisonment after pleading guilty to two counts of fraudulently removing property before and after his bankruptcy. Mr Vagharia’s conviction follows an investigation by The Insolvency Service and prosecution by the Department for Business Innovation and Skills (‘BIS’).

The investigation showed that between September 2007 and December 2007 Mr Vagharia, 53, of Leire Street, Leicester removed £63,000 in cash from three bank accounts to defraud the Official Receiver. Once a bankruptcy order is made, the bankrupt has a duty not to dispose of their assets other than for day-to-day living expenses.

Mr Vagharia ought to have been aware of his obligations as a bankrupt as the Official Receiver had been in contact with him and had reminded him of his duty not to dispose of his assets.

Having failed to attend a number of meetings with the Official Receiver in 2007, Mr Vagharia was ordered to appear at Leicester County Court in February 2008. After one adjournment, Mr Vagharia did attend court on 26 February 2008, where he disclosed details of his bank accounts.

The Official Receiver’s investigations uncovered cheques and deposits made out to Mr Vagharia. In mitigation, he claimed he had been asked to hold these on behalf of a Mr Chanduhbhai. The court did not accept the existence of any such person. Nor did Mr Vagharia provide any evidence to support his claims.

In sentencing Mr Vagharia, Leicester Crown Court accepted the Official Receiver’s evidence that this was a clear case of Mr Vagharia seeking to avoid paying his creditors. The judge ordered that the sentences are to run concurrently.

Glenn Wicks, Deputy Chief Investigation Officer at the Department for Business, Innovation and Skills said:

“The Insolvency Service and the Department for Business will take firm action when we find that undertakings given to protect the public and the business community have been breached. And, where directors knowingly allow their companies to trade whilst insolvent”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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The banks must not use the reform of the banking sector as an excuse to increase the cost of borrowing once the Independent Commission on Banking (ICB) has laid out its recommendations, says the Federation of Small Businesses (FSB).

It is thought that the ICB, due to report on Monday, will propose that internal ringfences should be put in place to separate the banks’ retail and wholesale divisions and that the banks should increase the amount of capital they hold.

The banking lobby has said that doing this would have a detrimental effect on the amount of money that it can lend and that the cost of finance would increase as a result. They have also said that any reforms now would derail economic recovery.

The banks say that ringfencing will remove the implicit Government guarantee to bail-out a bank that is in trouble and that being required to hold more capital will mean that there is less money to lend.

However, in a new paper, ‘Does bank ringfencing automatically mean an increase in the cost of borrowing?’, the FSB argues that the guarantee would be removed from the investment banking arm and would remain for the retail arm – the section of the bank that lends to people and small businesses.

And, increasing the capital requirements over the medium term and putting a ringfence in place would be beneficial to the structural resilience of the UK banking sector.

If the ICB suggests that capital requirements are raised to more than 10 per cent for example, the FSB recommends reforms be announced as soon as possible but that the banks be given the course of this Parliament to reach those standards. Funding for this increase can be made up from ear-marked profits and reductions in short term incentivised pay.

Our research shows that one in four (19%) respondents said that they’d seen an increase in the cost of finance in the preceding two months. Of those, 49 per cent said that the cost increased between two to three per cent. The FSB does not want to see the banks use the ICB’s report as yet another method of increasing the cost of finance to cash-strapped small firms.

John Walker, National Chairman, Federation of Small Businesses, said:

“The banking sector cannot be too big to fail as the taxpayer cannot afford another bank bail-out. The Government has a golden opportunity to reform the banking sector and it must stand by the promises that it has made.

“The recommendations that the ICB make must be looked at closely and the Government must act on them as soon as possible and ensure they are completed before the end of the next General Election. The Government must use this once in a lifetime opportunity to make the banking sector safer, more competitive and less burdensome on the taxpayer.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Small businesses are set to be able to access equity finance more cheaply and effectively with early changes to European regulatory measures.