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Fiona Macritchie joins MacKenzie Kerr We are delighted to announce that Fiona Macritchie FCCA, CTA has joined our team as Director. Fiona most recently worked as a Partner with another local firm, and has over 20 years’ experience as a qualified accountant and tax professional, serving clients involved in agriculture, tourism and manufacturing industries. Fiona is looking forward to working with MacKenzie Kerr to strengthen the team and grow the business. Speaking on behalf of the Directors, John Fraser, said “We wish to extend a very warm welcome to Fiona and are thrilled that she has accepted this key position in our firm. Her professional experience and skills will undoubtedly enable us to further enhance our services to clients throughout the North of Scotland”.

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Highland Cross 2017 As one of the main sponsors for the Highland Cross, our Directors would like to congratulate all competitors that have been successful in securing a place in the oversubscribed event. We hope your training is going well as it is now less than 10 weeks until the event on the 17th of June. The Kintail registration team which consists of staff from Mackenzie Kerr all look forward to meeting you on the morning of the Cross and will safely set you off on your adventure. The Mackenzie Kerr time recording team will look forward to your safe arrival in Beauly. Mackenzie Kerr Limited, The accountants who count them on and count them off the course!!

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Making Tax Digital pilot scheme launched by HMRC HM Revenue & Customs (HMRC) has launched a new Making Tax Digital for Business (MTDfB) pilot scheme, designed to ‘make it easier for customers to get their tax right’. The launch of the pilot scheme represents HMRC’s next step in moving taxpayers to a fully digital tax system. From April, businesses and their agents will be invited to sign up to the new service which will allow them to report their income and expenses online. In addition to being able to make use of accounting software to record their business income and expenses, firms will be permitted to send quarterly summary reports directly from their digital records and sign up to ‘go paperless’. HMRC states that, based on the information that customers submit, businesses will receive an ‘estimated tax calculation’. Once the new service has been thoroughly tested by the first group of businesses, HMRC will invite other customers to join the pilot scheme. Upon receiving participants’ feedback, the Revenue will then seek to develop and improve the service.

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VAT flat rate scheme changes: are you prepared? April 2017 sees the introduction of changes to the VAT flat rate scheme, which are likely to have a significant impact on certain small businesses. We consider the changes below. Understanding the flat rate scheme The VAT flat rate scheme was designed to reduce the administrative burden on small businesses operating VAT. Under the scheme, instead of having to identify and record the VAT on each and every sale and purchase made, a business can apply a flat rate percentage to its turnover as a one-off calculation. Businesses can opt into the scheme, but only if they do not exceed the relevant limits. Businesses must leave the scheme once income in the last 12 months exceeds £230,000, unless this is as a result of a one-off transaction and income will fall below £191,500 in the upcoming year. Businesses are required to also leave the scheme if there are grounds to believe that total income is likely to exceed £230,000 in the next 30 days. What's changing? In the 2016 Autumn Statement, Chancellor Philip Hammond announced the introduction of a new 16.5% rate for 'limited cost traders'. This type of trader is defined as one that spends less than 2% of its VAT-inclusive turnover on goods in the accounting period. Businesses whose VAT inclusive expenditure on goods is greater than 2% of their VAT inclusive turnover, but less than £1,000 per year (providing the prescribed accounting period is one year) may also be defined as a 'limited cost trader'. The new rate will be introduced from 1 April 2017 for those firms with limited costs, such as many labour-only businesses, including hairdressers and IT consultants, amongst other professions. Any business wishing to make use of the scheme will be required to determine whether or not it meets the definition of a 'limited cost trader'. The regulations outline that the goods must be used exclusively for the purpose of the business. Expenditure on the following items is excluded: •capital expenditure •food or drink for consumption by the flat rate business or its employees •vehicles, vehicle parts and fuel (excluding businesses that provide transport services, such as taxi firms, and which use their own or a leased vehicle to carry out such services). These are excluded as part of the test to prevent traders from attempting to inflate their costs above 2%. The government hopes that the introduction of the new rate will help to 'level the playing field' and maintain the accounting simplification for the small businesses that make use of the scheme as it is intended to be used. Anti-forestalling provisions The government has issued anti-forestalling provisions which are designed to prevent a business defined as a limited cost trader from continuing to use a lower flat rate beyond 1 April 2017. Businesses which provide a service on or after 1 April 2017 but either issue an invoice or receive a payment for that service before 1 April 2017 will be affected by the new provisions. How will I know if my business is affected? HMRC is set to introduce a new online tool to help businesses decide whether or not they should use the new 16.5% rate. It has also pledged to begin communicating with those businesses which will be affected, ahead of the 1 April 2017 implementation date. If you believe that you will be affected by the new rules, or for more information on the flat rate scheme, please contact us today. We would be delighted to assist you.

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Director John Fraser makes a presentation to Caroline Dickie celebrating 25 years of service with MacKenzie Kerr.

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HMRC publishes Making Tax Digital consultation response The initiative is intended to create a 'transparent and accessible tax system fit for the digital age', and is due to be implemented between 2018 and 2020. HMRC sought the opinions of businesses, the self-employed and landlords, who are amongst those likely to be the most affected. The government published a raft of proposals, taking into account the views of consultation respondents. These include: •providing free software to those businesses with the 'most straightforward' tax affairs •allowing businesses to use spreadsheets for their record-keeping, which can be linked to the software in order to send updates to HMRC •excluding charities from the requirement to keep digital records •deferring MTD until 2020 for partnerships with turnover exceeding £10 million •giving taxpayers at least 12 months to familiarise themselves with the changes before any late submission penalties are applied. HMRC also stated that it will introduce changes gradually, and that any such changes will be thoroughly piloted with businesses before they are fully implemented. The government hopes that pilot schemes will help to ensure that the MTD software is 'user-friendly', and will give businesses and individuals time to prepare and adapt. Jim Harra, Director General of Customer Strategy and Tax Design, commented: 'MTD will help businesses to get their tax right first time; it will help reduce the likelihood of errors, lower the chance of unwelcome compliance checks and give them greater certainty that they are getting things right.' The government’s response to the consultation feedback can be viewed here: https://www.gov.uk/government/publications/making-tax-digital/summary-of-consultation-responses

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Our auto enrolment advisor, Kerrie Thomas, and tax manager, Katrina Morrison have now helped more than 150 businesses to meet their requirements under auto enrolment. Kerrie and Katrina can tailor their assistance to meet your requirements, whether you have only one employee or several hundred employees. If you are struggling with auto enrolment please feel free to get in touch with us.

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The number of UK businesses affected by corporate fraud and cybercrime has risen by 16% over the past year, according to a new report published by risk management company Kroll. 90% of firms who were interviewed by Kroll said that they had experienced an incident of cybercrime over the past 12 months. Theft of physical assets and the misappropriation of funds were found to be the most common types of fraud. Businesses also reported that the majority of those carrying out fraudulent activities came from inside the company. The report also suggested that the UK has the second highest rate of cyber incidents: 92% of companies interviewed revealed that they had experienced a cyber-attack or loss of information over the past year. Tommy Helsby, Co-Chairman of Investigations and Disputes at Kroll, commented: ‘It’s becoming an increasingly risky world, with the largest ever proportion of companies reporting fraud and similarly high levels of cyber and security breaches. ‘The impact of such incidents is significant, with punitive effects on company revenues, business continuity, corporate reputation, customer satisfaction and employee morale. ‘With fraud, cyber and security incidents becoming the new normal for companies all over the world, it’s clear that organisations need to have systemic processes in place to prevent, detect and respond to these risks if they are to avoid reputational and financial damage.’

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Former Pensions Minister, Sir Steve Webb, has said that tens of thousands of grandparents are missing out on National Insurance (NI) credits, which could be worth more than £230 a year when they retire. Mothers who give up work are given NI credits while their children are under 12. Under the Specified Adult Childcare credits scheme introduced in 2011, if they return to work the credits can instead be claimed by relatives of working age who care for the child in question – in most cases, this will be grandparents. A grandparent or other relative who takes part in the scheme for a full year is able to claim an extra 1/35th of the state pension – worth £231 a year. It has been suggested that, in the year to the end of September 2016, only 1,300 people claimed the credits. However, Sir Webb, who is now Director of Policy at Royal London, believes that as many as 100,000 relatives could be entitled to claim them, and wants the government to do more to raise awareness of their availability. He said: ‘The scheme is not much use if hardly anyone takes it up. The government needs to act quickly to alert mothers to the fact that they can sign over the NI credits that they do not need.’ Those who have missed out on the scheme can make backdated claims for all the years to 2011.

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Salary sacrifice: an overview Salary sacrifice allows employees to exchange a portion of their cash pay in return for non-cash benefits-in-kind (BiK). Depending on the BiK, the effect of such arrangements is often to reduce the amount of tax and employee and employer national insurance contributions (NICs) due on the employee's remuneration. Those employees who wish to opt out of a salary scheme are required to have their contract amended by their employer. Staff members' contracts must clearly outline their cash and non-cash entitlements. Meanwhile, employers have a duty to report any non-cash benefits to HMRC at the end of the tax year. These must be included in the relevant sections on the P11D form. What's changing? From April 2017, the tax and employer national insurance advantages of salary sacrifice schemes will be removed in an effort to 'promote fairness in the tax system'. As a direct result of this, employees swapping salary for benefits will be required to pay the same tax as individuals who buy them out of their post-tax income. Under the government's new rules, certain arrangements will no longer offer tax and NIC benefits. These include: •Cash and non-cash vouchers •Living accommodation •School fees •Cars (excluding ultra-low emission cars) and fuel •Vans and fuel •Beneficial loans. However, some benefits will remain in place unaffected. These include: •Pension contributions and arrangements (including pensions advice) •Childcare vouchers •Workplace nurseries •Cycle to Work schemes •Ultra-low emission cars with CO2 emissions of up to 75 g/km. At the Autumn Statement, the Chancellor outlined the government's intention to protect certain arrangements: plans put into place before April 2017 will be protected until April 2018, and those made for cars, school fees and accommodation will be protected until April 2021. Will the changes affect me? The changes to salary sacrifice may have a significant impact on your own arrangements; under the new rules, most schemes will be affected. Both employers and employees may therefore wish to rethink their salary sacrifice plans. Employees may still be eligible to join salary sacrifice schemes up until the 6 April 2017 deadline. However, from this point on, remaining in such a scheme may result in an additional tax bill. Employers, on the other hand, will no longer benefit from employer NIC savings, and may be required to review staff members' contracts, as salary sacrifice schemes may be incorporated into the terms and conditions of employee contracts. For more information on the changes to salary sacrifice, please contact us.

The directors would like to congratulate Caroline Dickie on reaching 25 years service with Mackenzie Kerr. Caroline is the ninth current employee to reach that milestone.

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UK businesses owe HM Revenue & Customs (HMRC) a total of £1.8 billion in late corporation tax payments, research from financial supermarket Funding Options has revealed. The value of corporation tax payments in arrears has risen from £1.59 billion to £1.82 billion, according to Funding Options’ research. This represents an increase of 15% over the past year. The online business finance supermarket also warned that HMRC is using ‘increasingly aggressive methods’ to recover overdue tax. These methods include issuing late payment penalties, sending debt collectors to business premises and seizing assets. Funding Options warns that such measures may have ‘serious negative repercussions’ for businesses. Conrad Ford, CEO of Funding Options, commented: ‘These figures demonstrate the growing pressure on cashflow for companies, which could get worse following the outcome of the EU referendum. Companies might want to explore in detail alternative finance options available to them before HMRC comes knocking on their door. ‘Businesses need to make sure they have the adequate funding to pay tax bills on time, without taking capital from other areas of the business.’ We can help with all of your tax planning requirements – please contact us for more information.