Beware of auto enrolment fines for non-compliance

Beware of auto enrolment fines for non-compliance

On the back of The Pensions Regulator fining Swindon Town Football Company £22,900 after it failed to put eligible workers into a pension scheme, this article is a worthwhile reminder of auto enrolment fines.

What auto-enrolment fines could you receive?

If your business does not comply with your auto enrolment duties you are risking fines of at least £400.

Regardless of the size of your business, non-compliance could mean an initial £400 fine, with the possibility of further escalating fines. Escalating auto enrolment fines are daily penalties that are imposed in addition to the initial £400 fixed penalty and could be as much as £50 per employee.

Example

Your business has 10 employees and you miss your staging date. Your auto enrolment fines could be:

  • £400 fixed penalty
  • £50 x 10 = £500 per day escalating fines

By delaying your staging date by just one week you could face auto enrolment fines of £3,500.

When are auto enrolment fines imposed?

If your business does not satisfy the rules i.e. have a pension scheme in place, have a system to record the relevant information, or you miss your staging date, The Pensions Regulator will send you a statutory notice

In the last quarter of 2015 The Pensions Regulator issued more than 2,500 statutory notices to businesses, over 1,000 fixed penalty notices and 24 escalating penalties.

Preparing for auto enrolment – free workshops

We recommend that you start talking to your pension adviser as soon as possible to build a timescale and agenda to make sure it all falls in to place. It is really important that you seek professional help if you do not understand or you are unsure about your auto enrolment requirements.

We would be happy to help and would like to invite you to attend one of our free auto enrolment workshops with our specialists from Hawsons Wealth Management. We have been working closely with our in-house payroll team to prepare our clients for auto enrolment for the past few years, and have a great deal of experience in this area.

Do not wait until it is too late, or risk you could face considerable auto enrolment fines.

Each month we run free auto enrolment workshops in Sheffield, Doncaster and Northampton.

These workshops have been very popular and have proven to be very helpful for business owners. For more information and to book onto one of our free workshops please click here.

Free initial meeting

Natasha Fathers, Director of HWM

Natasha Fathers

Director of Hawsons Wealth Management Limited, Sheffield

0114 229 6557
Charitable Incorporated Organisation (CIO) conversions

Charitable Incorporated Organisation (CIO) conversions

Charitable Incorporated Organisation (CIO) conversions

There are various legal forms that can be used when structuring a charity. The newest of these is the Charitable Incorporated Organisation model (available since 2013), which has been designed specifically with charities in mind.

Following the notable success of the Charitable Incorporated Organisation structure for smaller charities to date, the Charity Commission has now issued draft regulations on converting existing charitable organisations and Community Interest Companies (CICs) to the legal structure. The government has started a consultation process and is inviting responses.

What is a Charitable Incorporated Organisation?

The Charitable Incorporation Organisation (or CIO) is a relatively new form of incorporated legal structure that was introduced in the Charities Act 2006. Since the CIO was introduced in 2013 over 6,500 new CIOs have been set up in the UK. This company structure option now accounts for around one in four new charity registrations.

Advantages of a CIO 

The CIO is only available to charities and is designed to allow them to take advantage of many of the benefits of incorporation without being registered with Companies House. A CIO only needs to register with the Charity Commission.

The two main advantages for a charity adopting a CIO structure is that of greater legal protection for trustees and members and the commercial advantages of reduced administrative burden whilst creating a more business like structure.

It is very similar to the current charitable company limited by guarantee model, with the exception of having to file with Companies House in addition to the Charity Commission. CIOs only file with the Charity Commission.

CIOs are recognised as separate legal entities and, again, this is very much like charitable companies limited by guarantee. As a result, they can increase the level of protection available to trustees when compared to a charitable trust model, for example.

The more business like CIO structure will also allow charities to reap some of the benefits of being a company without the associated burdens. For example, having just one regulator (the Charity Commission) could lead to a reduction in reporting requirements, freeing up staff time.

The consultation

Although the CIO is a simplified framework, converting to the legal structure can be a complex and detailed process. Under the current system CIOs can only be formed from existing unincorporated charities or as completely new entities.

The consultation, therefore, proposes draft regulation required to allow existing charities and CICs to become CIOs.

The consultation will last 10 weeks from 1 April 2016 to 10 June 2016.

Find out how to respond or make an enquiry to the consultation here.

The future of CIOs – proposed conversion timetable

Proposed timetable for charitable companies to convert to CIOs:

  • 1 October 2016: Charitable companies with an annual income greater than £500,000;
  • 1 December 2016: Charitable companies with an annual income between £250,000 and £500,000;
  • 1 February 2017: Charitable companies with an annual income between £100,000 and £250,000;
  • 1 April 2017: Charitable companies with an annual income between £25,000 and £100,000, and;
  • 1 July 2017: Charitable companies with an annual income of less than £25,000.

The proposed conversion timetable for CICs to CIOs is 1 October 2017.

This timetable is subject to change. We will keep you updated with any further information.

Is a CIO model right for your charity?

The CIO model is not suitable for all charitable organisations and, in many cases, there are a number of factors that should be considered before deciding whether becoming a CIO is right for your charity.

Two of the key considerations for your charity will be:

  • Does the charity need to enter into contracts (including employing people) in its own right, and/or;
  • Is there a good reason to want to limit or remove trustees’ personal financial risk.

If you are thinking about setting up a new charity as a CIO (or converting to a CIO following the consultation process), then we recommend you seek professional advice. The type of structure you choose affects how your charity will operate and it is important to get this right.

For more information and guidance on the Charitable Incorporated Organisation structure please do get in touch.

More from our charity experts

You can find all of our latest charity sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Simon Bladen Partner

Simon Bladen is the partner responsible for looking after the firm’s legal clients and has worked at Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Simon on [email protected] or 0114 226 7141.[/author_info]

General Practice Forward View – an accountant’s perspective

General Practice Forward View – an accountant’s perspective

General Practice Forward View – an accountant’s perspective

The much anticipated “rescue package” for general practice has now been published and sets out plans to tackle historic underfunding, the recruitment crisis, red tape and unnecessary GP workloads, in a new document entitled the General Practice Forward View.

General Practice Forward View – the headline news

The headline news from this week’s General Practice Forward View package is that there will be an real-term increase in spending on general practice by 14% by 2020/21 – compared with 8% across the rest of the NHS.

This will mean that around 10% of the total NHS England healthcare budget will be devoted to general practice.

General Practice Forward View – what is means by 2020/21:

  • Increase in general practice to increase from £9.6bn to £12bn per year
  • 5,000 more doctors by 2020
  • £900m spent on improving general practice facilities
  • 5,000 additonal non-medical staff by 2020
  • Reduction in the frequency of CQC inspections
  • 10% of GPs’ time freed from red tape
  • A paper free NHS

This week’s announcement comes after warnings from the profession that the future of general practice is at real risk of collapse, but has received a mixed response since its publication. A number of GP leaders have already backed the funding package, however, including RCGP chairwoman, Dr Maureen Baker, who said that this was the “most significant announcement for our profession since the 1960s” following the announcement.

In the following section of this article we take a look at an accountant’s perspective of the General Practice Forward View document and analyse the details behind the headline announcements.

General Practice Forward View – an accountant’s perspective

Scott Sanderson, Partner and Healthcare Specialist at Hawsons, welcomed the news, commenting: “The General Practice Forward View package represents a significant set of positive proposals to support general practice both now and in the longer term.”

“It’s no secret that the sector has been facing mounting pressures, heightened by unsustainable workloads, an unprecedented recruitment crisis and an unacceptable sustained decline in practice funding. Couple all of that with rising patient demand and it is clear to see why general practice has been in a parlous state for the last few years. The General Practice Forward View package is an acknowledgement of those challenges and proposes measures that are an initial step in the right direction.”

“The General Practice Forward View package will not solve all of the challenges facing general practice but it does set a new direction and mark a step-change for primary care. The majority of initiatives set out in the new package are what the profession has been asking for and they could even mark an important step for the sustainability of the entire UK healthcare system.”

“Many GPs will welcome the proposals but argue whether these measures really go far enough. What I would also say is, whilst the package’s proposals are a positive development, it will be the details that we do not yet know and the implementation of the measures that will facilitate a real change for GPs.”

GP Forward View

Additional funding 

There will be an real-term increase in spending on general practice by 14% by 2020/21 – compared with 8% across the rest of the NHS. Funding will rise by £2.4bn a year by 20/21.

This additional funding should give struggling practices the opportunity to invest more in staff and boost facility investment in order to deal with the overwhelming rise in patient demand.

It remains to be seen, however, how accessible the additional funding commitments will really be to practices given that none of it is going directly into core pay. It could be that a lot of the money with be tied up in red tape.

There continues to be strong opposition to how seven-day GP access will be serviced and funded but, with £500m of the recurrent funding set aside to improve GP access including “sufficient routine appointments at evenings and weekends” to meet local demand, it still remains very much on the NHS England agenda.

Targeting the recruitment crisis

The package unveiled a £206m funding structure to help meet the government target of recruiting an additional 5,000 GPs by 2020 and develop the wider primary care workforce, with 5,000 extra non-medical staff.

This includes increasing trainee places for new recruits, an international recruitment drive, plans to simplify return to work processes and major funding commitments for training and development of non-medical staff.

NHS England and general practice must still accept, however, that there remains a very long way to go to before they hit their ambitious recruitment targets of 5,000 new full time GPs by 2020.

Reducing the frequency of CQC inspections

One of the key measures proposed to reduce practice burden is to reduce the frequency of CQC inspections for GP practices and move to a ‘risk-based’ approach in the future. In addition to this, those practices that achieve ‘good’ or ‘outstanding’ CQC ratings will be inspected only once every five years.

Anything that reduces the amount of strain GPs are facing and the amount of red tape in the sector is welcome news, and the scaling back of CQC inspections is exactly that.

It will now be very interesting to see if there is a u-turn in the recent hike in CQC fee levels (CQC announced in December last year a significant increase to their fee levels), given that inspections will now cost much less to fund.

Forward View – the clue was in the name

Although there are a number of supportive measures that will come into effect over the next year, including significant additional funding and a reduction in the frequency of CQC inspections – that are of course all very welcome – the General Practice Forward View package is very much a blueprint for the future

However, general practice is under strain here and now; the sector is arguably in a state of emergency and many would have expected a greater focus on the immediate sustainable and stability of primary care.

Overall – tentative optimism for the future

With historic general practice underfunding you can understand some of the cynicism expressed by the profession at this week’s General Practice Forward View package. Many GPs are arguing that these measures simply do not go far enough.

But, whilst this is undoubtedly a belated package and will not solve all of the issues facing general practice, it is still a positive development for the sector and brings, at the very least, tentative optimism and hope for the future.

You can read the full NHS England General Practice Forward View document here.

More from our GP practice experts

You can find all of our latest GP practice sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Scott Sanderson

Scott Sanderson Partner

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.[/author_info]

Expenses exemption replace dispensations from 6 April 2016

Expenses exemption replace dispensations from 6 April 2016

Are you aware of the changes to dispensations?

In the past, many businesses have applied to HMRC for dispensations. Dispensations have allowed expenses and benefits to be provided to employees without being included on a P11D or subject to PAYE and NIC. A dispensation was only given where HMRC were satisfied that the employee would have been entitled to full tax relief on that payment or benefit.

A change: expenses exemption to replace dispensations

From 6 April 2016 businesses are no longer able to apply for a dispensation and all existing dispensations have come to an end. Instead, a new exemption has been introduced which effectively means that businesses will not have to pay tax and NIC on paid or reimbursed expenses payments or put them on a P11D. The exemption is subject to the condition that the business satisfies itself that the employee would be entitled to full tax relief on that payment or benefit.

The main types of expenses to which the exemption applies are:

  • Travel and subsistence expenses
  • Fees and subscriptions
  • Business entertainment expenses.

All other non-allowable expenses will still be reportable on a P11D and/or subject to PAYE (and possibly NIC). Employees will still be able to claim tax relief in respect of unreimbursed business expenses.

The new exemption does not apply to expenses or benefits provided under a relevant salary sacrifice arrangement. This includes any arrangement where an employee gives up the right to receive earnings in return for tax free expenses payments or where the level of their earnings depends on the amount of any expenses payment.

Consequences of the change

In the past, HMRC were prepared to include some payments in dispensations which were reasonable but perhaps not strictly in accordance with the law. However, this will not be the case going forward.

In addition, tax rules are not simple. For example, HMRC’s guidance on the rules on tax relief for travel and subsistence costs is 70 pages long. If HMRC conducts a compliance visit which determines that some payments are not exempt, the business may be subject to P11D penalties or be responsible for the payment of arrears of tax, NIC, interest and penalties.

Scale rates

As part of these changes, a second option has been introduced, which allows amounts based on scale rates to be paid or reimbursed, instead of the employee’s actual costs. The rates that can be used are either HMRC approved figures or figures specifically agreed with HMRC in writing.

We have linked a downloadable appendix of the HMRC approved figures at the bottom of this article.

These only cover meals purchased by an employee in the course of business travel. If the business wants to pay bespoke rates for other types of expense, it can apply to HMRC for an approval notice, and HMRC have issued a specific form for this purpose here.

Authorised mileage allowance payments (AMAPs) are scale amounts that employers can pay to employees using their own vehicle for business travel. For cars and vans, the scale rate is 45p per mile for up to 10,000 miles in the tax year and 25p per mile above this. AMAPs are a separate statutory regime and therefore continue as before and do not come within the new exemption regime.

Important points to note about scale rates

Employers must operate a system for checking that the employee is incurring and paying amounts in respect of expenses of the same kind and that tax relief would be allowed. HMRC have issued guidance on what checking systems they will expect employers to operate and these are also attached as an appendix.

What to do following the changes to dispensations

The new system means that you may have to change what you have been paying or reimbursing your staff and/or apply to HMRC for new rates. The changes are not simple, so we suggest you review your dispensation as soon as possible and contact us if you are unsure as to how the new rules will affect you.

Listed below are 5 key action points to consider following the changes:

  1. To review all existing dispensations
  2. To see if there are any reimbursements in there that are at bespoke rates
  3. To seek an approval notice for any bespoke rates
  4. To assess whether the new rules mean that other items in the dispensation will now not be eligible for exemption and to deal with the consequences
  5. To only return real benefits in kind on P11D in future and to forget all things which are now not required to go on there
  6. To ensure a checking system is in place

Download the dispensations appendix here.

If you would like to discuss any of these changes or would like help with applying to HMRC for new scale rates, please do not hesitate to get in touch with your usual Hawsons contact.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Stephen Charles partner

Stephen Charles is a tax partner at the firm, specialising in corporate and business taxation. For more details and advice, please contact Stephen on [email protected] or 0114 266 7141.[/author_info]

Agriculture update for UK farmers – April 2016

Agriculture update for UK farmers – April 2016

Welcome to our latest agriculture update for UK farmers.

Please do register for our agriculture newsletter if you would like to receive the agriculture update each month, along with our quarterly agriculture newsletter and topical sector developments.

Farm leaders worry about new National Living Wage

Farm leaders have warned that the introduction of the new National Living Wage will devastate the UK horticulture sector. From 1 April 2016 the new rates come into force, meaning workers aged 25 and over must be paid at least £7.20 per hour.

From its starting point of £7.20 per hour in April (50p above the current National Minimum Wage), the National Living Wage is projected to rise to more than £9 per hour in 2020.

A report from Christie + Co, using data from The Resolution Foundation, found that the estimated wage increases by 2020 for the agriculture, forestry and fishing sector is 1.7%. This is almost three times more than the average UK sector.

Other agriculture news…

  • DEFRA has cancelled plans for new industry led animal welfare codes at short notice despite planning them since 2012. The poultry sector was the first to implement on 27 April 2016. There has been strong criticism from animal welfare bodies.
  • Richard Keenan & Company, which was a producer of mincer wagons and diet feeders, went into receivership on 12 April, reflecting the financial pressure on agricultural machinery suppliers following pressure on farm incomes and low confidence in the sector. Plimsoll have suggested almost 25% of companies are making a loss.
  • The new Inheritance Tax “the residence nil rate band” is due to be phased in from April 2017 with a threshold of £100k for each individual, but rising to £175k by April 2020. This is in addition to the existing nil band of £325,000.
  • Farmland values fell in the first quarter of 2016 as weak agricultural commodity prices and EU uncertainty made buyers more cautious. Knight Frank have said that English values of bare arable and pasture land fell by 3% in the first quarter to average £8k per acre. However, values are still 32% higher than 5 years ago and 176% higher than 10 years ago.
  • The Scottish government has announced million pound projects aimed at improving sustainable food and farming production Scottish Rural Affairs secretary, Richard Lochhead, said that the £48m has been allocated to strategic scientific research, including crop science, animal welfare, food security and climate change.
  • Countryside Stewardship applications have been extended to 30 September.
  • The National Association of Agricultural Contractors (NAAC) has launched an Assured Land Based Contractor (ALBC) scheme designed to provide a review of businesses and help contractors improve their record keeping.
  • Public Health England has issued an updated eatwell guide.
  • Pressure is mounting for a full government enquiry after MPs blamed late BPS payments on DEFRA and the Government Digital Service’s inability to work together. There has been a failure to introduce an IT solution for delivery of the BPS.
  • In March, more than 1000 farmers marched in London to highlight the slump in the livestock and arable sectors.
  • Oilseed rape prices have risen sharply over the past week (8 April) following a weakening of sterling.
  • Potato prices have improved with the average up to £3.22 per tonne to £188.32 per tonne.

More from our agriculture experts

You can find all of our latest agriculture sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Martin Wilmott is a partner at Hawsons

Martin Wilmott acts as lead engagement partner for a wide range of corporate and non-corporate clients in the Doncaster office, especially in the Legal and professional, agricultural, transport, property and construction, manufacturing, healthcare and hospitality sectors. For more information or advice on anything covered in this article please contact Martin on [email protected] or 01302 367 262.