Business News

How can your firm best ensure to protect against money laundering? The UK Financial Intelligence Unit received and processed 901,225 Suspicious Activity Reports (SARs) in 2022, a 21 per cent increase on the previous year.

Out of these 901,225 SARs, 2,052 were made by solicitors, and 1,160 were requests from solicitors and firms who raised concerns regarding suspicious activity they had noticed.

In order to protect against money laundering, your firm should ensure to make a SAR if you know or suspect money laundering.

Not only will this help your firm to protect against criminal activity, but these reports also help law enforcement authorities to reduce criminal activity with intelligence you provide.

There are many resources you can use to put in place effective anti-money laundering systems such as ensuring to keep your business safe through risk assessments. These assessments should consider economic crime and business ethics.

Making a Suspicious Activity Report (SAR)

You will need to ensure your firm is up to date with how and when to make a SAR, what to include, how to request for defences against money laundering and the consequences if you fail to report suspicious activity.

Is your firm up to date with the latest ways to comply with its responsibilities? Staying updated is an important part of ensuring your firm runs smoothly and you continue to offer a high quality of legal service.

The Solicitors Regulation Authority (SRA) has released a list of actions they will be taking to ensure solicitors are complying with regulations.

The Regulator have announced this in response to the Legal Services Boards recent statement of policy on ongoing competence.

The Chief Executive of the SRA, Paul Phillip said: ‘We expect the profession to deliver a high standard of service to those who need their help. That means we must make sure that solicitors and the employees of firms we regulate have up-to-date skills, knowledge, and behaviours.’

Throughout 2023, the SRA aims to work with firms who are not meeting standards and to take action where firms fall short to ensure customers are protected.

Through this approach, the SRA is prioritising annual goals for compliance.

The plan outlined by the SRA includes ensuring thematic reviews which will target areas where competence is an identified risk. They will also continue to review training records, especially so for pre-identified high-risk areas.

Other objectives are to respond to specific cases of incompetence on an individual basis and to take action where it is needed. This could be in terms of providing supervision. They will also aim to create an enhanced follow up approach to competence records which are below their standards.

Firms should recognise these annual aims and ensure to stay in line with guidance which will ensure maintaining high standards.

Your business may be sailing along quite nicely, or it may be struggling with the effects of shortages, rising prices and an energy crisis.

In both cases, it could be time to step back and reflect on where you are, develop what has worked and abandon methods that don’t.

It is time to plan out a strategy for the long term. It could be a one-year or five-year plan that considers:

• Where the company is heading
• What you hope to achieve
• The challenges you anticipate along the way
• What investment will be necessary
• The people, technology and skills required to achieve your goals.

Within this plan, you will need to consider commercial guidance and tailored business planning, including funding, financial management, advice on succession planning, your business structure and strategy and of course financial reporting.

You may take pride in how you run your business, but it makes sense to enlist professional support. That advice can save you money and help plan for future growth.

Don’t let your business run on autopilot – take action today by contacting us.

With the Spring Budget looming in March, it is easy to be tempted to delay tax planning until afterwards in hopes of favourable tax cuts.

However, the Chancellor has made it clear that significant cuts to taxation aren’t likely to be announced and so businesses should be taking steps now to prepare for the changes already being introduced in the months ahead.

Tax planning for businesses doesn’t have to be complicated. Small business owners can take advantage of certain deductions, credits and other tax benefits to help reduce the amount of tax they owe.

Corporation tax is a major tax for companies and tax planning allows businesses to reduce liabilities by taking advantage of capital allowances, R&D tax relief or other initiatives that encourage investment by offsetting expenditure against profits.

Your taxation planning should be part of a wider business plan, which helps you to:

• Outline your business’s goals
• Plan for investments and expenditure
• Identify and be prepared for potential problems
• Have the ability to measure your progress

A robust and well-prepared corporate tax plan can help you to make the most of the money and assets within your company. If you would like a carefully tailored tax plan for your business, please get in touch.

With the end of the tax year fast approaching on 5 April, it makes sense to assess your tax situation and make use of the reliefs and allowances available to you.

Here are a few quick wins you can consider to help reduce your liabilities now and in the future:

Inheritance Tax (IHT)

Each tax year individuals are allowed to give away up to £3,000 worth of assets or cash without it being added to the value of their estate, referred to as your ‘annual exemption’.

If you have any unused annual exemption, this can be carried over to the next tax year.

Capital Gains Tax Allowances

Capital Gains Tax (CGT) is charged when you sell or dispose of an asset and make a profit. You are only taxed on the amount you gain from the sale or disposal.

UK residents can make a certain amount of gains each tax year before being charged CGT, this is known as the Capital Gains Tax Annual Exemption.

The figure for 2022/23 is £12,300 but this will fall to £6,000 for 2023/24, before being reduced to £3,000 for 2024/25.

You should ensure that, where possible, you are using your CGT Exemption before the end of the tax year and plan disposals to take advantage of the current higher rate.

Personal Allowance (PA)

Each individual is entitled to their own personal allowance (PA), which is set at £12,570 for 2022/23.

Part of the PA can be transferred between spouses and civil partners. The Marriage Allowance of £1,260 can be transferred, but only where neither spouse/civil partner pays tax at the higher rate.

Annual Pension Allowance

Ensuring you have made full use of your annual pension allowance is an important way to save tax. The current allowance allows most individuals to invest up to £40,000 a year before tax is applied. This allowance can be carried over several years if it has previously been unused.

Individual Savings Accounts (ISAs)

You pay no Income Tax on the interest or dividends you receive from an ISA and any profits from investments in an ISA are free of Capital Gains Tax. You can pay your whole allowance of £20,000 (for 2022/23) into a Stocks and Shares ISA, a Cash ISA or any combination of these.

It is good practice to repeat the process every tax year. To find out how we can help you with tax-efficient investments, please speak to us.

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will now come into effect in April 2026 for businesses, self-employed individuals, and landlords with gross business and/or property income over £50,000.

This will be followed in April 2027 for those with similar incomes over £30,000. The question is, how soon should your business start using cloud-based compatible software before that deadline?

The answer – the sooner the better.

Beyond compliance, the benefits of MTD cloud accounting software include:

• Reduce human error by keeping digital records and submitting tax information digitally
• Easily capture and digitise receipts using associated apps
• Making important decisions faster with a real-time overview of your financial position and performance
• Automate important financial functions, like cashflow forecasting
• Reduce your costs and saves you time by remaining constantly connected to your business through secure, remote servers
• Enjoy up-to-date software, with all the latest functions and legislative compliance
• Your work is saved automatically as you go, so you save both time and money on backup procedures
• Collaborate with your accountant anywhere in the world, at any time.

MTD-compliant cloud accounting software will generate the summary updates, which must be sent to HMRC every quarter via your HMRC digital account under Making Tax Digital.

You will be able to see how much tax you owe based on the information you have provided, so you can be better prepared for future tax bills.

Being prepared for MTD and having the correct software in place and ready to use will ensure a smooth transition to the new system, but, as you can see, the benefits go far beyond compliance.

Don’t wait until the last minute to adopt MTD-compliant cloud accounting software. Even though MTD for ITSA has been delayed until 2026, it’s important to start using cloud-based compatible software as soon as possible to benefit from its many advantages.

Take action today and speak to us to start using cloud-based compatible software to streamline your business and stay ahead of the curve.

Business plans provide goals to work towards, help identify potential problems, give insight into competitors, and highlight potential opportunities.

A great business plan should include a concept, strategy, executive summary, market analysis, competitor analysis, the company’s financials and a clear action plan.

Concept

This part of the business plan is usually broken down into three elements:

• Executive summary
• Company description
• Products/services.

The executive summary will highlight the mission of the business by describing its products and services.

It might also be a good idea to briefly explain why you are starting your business and include details about your experience in the industry that you are entering.

Strategy

Understand the scope of your business, as well as the amount of time, money, and resources you will need to get started by writing it down to help clarify your ideas.

Market analysis

You should identify your target customers’ needs, desires and challenges to understand how you products and/or services can meet them. You also need to understand what else is available on the market and how your offering differs.

Competitor analysis

While it is important to understand the market you are operating in, it is also important to assess the success and weaknesses of competitors within your market to spot gaps and beat the competition.

Financials

A crucial area, this should outline projections for short-term growth and long-term profitability. You should include profit and loss projections, balance sheets, and cash flow statements for the next three years.

Setting these points out should help you create a clear set of definable actions that can help your business to grow and flourish.

Having a detailed, well-prepared business plan will increase the chances of survival and success for any venture.

For help preparing an effective strategy for your business, speak to our experts.

Small business owners need to take measures to avoid costly mistakes when it comes to calculating, reporting and paying Value Added Tax (VAT).

The best way to prevent errors and stay on the right side of HM Revenue & Customs (HMRC) is to have an expert take care of your VAT affairs.

Having a qualified accountant or bookkeeper can ensure that all calculations are correct, up-to-date, and submitted on time and in line with the latest VAT regulations, including Making Tax Digital.

Employing an accountant to keep on top of record keeping will go a long way to preventing expensive mistakes and financial penalties related to VAT.

Some of the most common VAT errors include:

·         Entertainment: You can claim back VAT on entertaining employees, but not normally for clients.

·         Split usage: Where you provide items such as cars or phones, you can only claim VAT back on business use.

·         Inaccurate information: Entering the wrong figures on a VAT return may leave you liable to an investigation by HMRC or lead to you paying too much or too little tax.

·         Filing late: Ensuring that you file the necessary VAT information, on time, each quarter is essential to preventing the accumulation of penalty points, which can lead to a fine.

·         Failing to register: If you reach a taxable turnover of £85,000 or more in any tax year, you will need to register.

To cut down on the chance of errors there are a few things you can do to improve VAT reporting:

·         Take time to update – Keep on top of VAT by setting aside a regular time each week – or each day – to update your accounting records.

·         Maintain accurate records – It is important that you retain invoices and receipts so that you can accurately report VAT. This is easily achievable with the latest cloud accounting software and apps.

The SRA has proposed several amendments to its Standards and Regulations following feedback from the sector.

These planned adjustments will affect areas where rules were found to have had unintended consequences. It is also hoped the proposed changes will reduce the time taken on time-consuming regulatory tasks.

The proposed amendments include changes to the rules relating to:

• Solicitors reclaiming costs paid out on behalf of the client
• Firms managing bank accounts run on behalf of clients
• Pro bono work, or administering oaths or statutory declarations outside of a solicitor’s employment
• When indemnity insurance requirements apply for solicitors working in non-regulated bodies

Paul Phillip, CEO of the SRA, said: ‘When we introduced the new rules, the aim was to get rid of unnecessary and burdensome prescription and focus on what matters – high professional standards

‘Feedback so far suggests the approach of putting more trust in a solicitor’s professional judgement is working well and has been positively received. Firms have also really valued the extra flexibility our rules allowed throughout the Covid-19 pandemic.

‘There are, however, a few small areas where we have had feedback that the rules would benefit from amends to make them work better in practice. We have listened and these proposed changes will help make sure our rules aren’t creating unnecessary burdens or having unintended consequences.

These alterations, if ratified, are seen as being a positive step as more trust will be placed in a solicitor’s judgement.’

The SRA’s consultation is currently inviting feedback from the profession and will close on 8 March 2023.