VAT returns to go online within next few weeks
It seems like an age since we first brought this to your attention, but it’s really now just around the corner. If your next VAT quarter starts on April 1, you’ll be required to file the return for it online, and pay it by electronic funds transfer. That means you’ll be filing it online at the end of July.
The adoption of online returns applies to any business that registers for VAT after April 1 this year, and to every other business with a net annual turnover (ie excluding VAT) exceeding £100,000 which obviously affects the vast majority of forecourt retailers. There are apparently two exceptions: any business currently the subject of insolvency proceedings, and businesses run by people who can convince HMRC that they have a genuine conscientious objection to using computers. Quite how anyone in any modern retail business could try to prove the latter point is a matter of conjecture.
Anyway, if you’ve avoided thinking about online VAT for the past year or so, you need to think about it now. There are two basic ways of doing it:
1 open a Government Gateway account for yourself (as a sole trader) or your business (as a partnership or limited company) at www.gateway.gov.uk and select ’New VAT Returns’ from the ’Services’ menu, then follow the instructions from there.
2 authorise your accountant to act as your registered agent for HMRC. You’ll remain responsible for the accuracy of the VAT return, of course, as well as for paying any amounts due, but your accountant will submit the online VAT returns on your behalf.
Whichever route you choose, you’ll also need to make the payments electronically there are a variety of payment methods accepted by HMRC, and the requirement is that the cleared funds reach HMRC’s bank account either seven days after the standard due date (for most transfer methods) or 10 days after the standard date if you give HMRC authority to collect payment from you by direct debit.
You’ll most likely receive a reminder from HMRC in the near future, but you should be discussing this with your accountant now.
Is your PC running illegal software?
While you’re looking at your PC, just stop a minute and think about what programmes you’ve installed on it over the years, and whether they’re all legal. According to a recent report by the Business Software Alliance (BSA) some researchers estimate that a staggering 41% of all software in use around the world is technically illegal. It points out that, as far as businesses are concerned, in the majority of cases there is often no intention to use software illegally. Many businesses don’t even realise they’re doing it, and are horrified when they realise the potential implications. Typically the problem starts innocently enough for example the business ’buys’ a legitimate copy of a programme through normal commercial channels but then, over time, installs that programme on more machines than were covered by the original licence. It may seem like splitting hairs, but to the Intellectual Property lawyers those additional installations are no different to the dodgy copies sold on CD by the shady-looking man in the pub.
Forget, for a moment, any moral or even legal implications of running unlicensed software. Just think about what it might mean for your business in practical terms. In most cases you won’t be able to download any manufacturers’ updates for your software, and many of those updates are security-related. If you’re going to be filing tax information and making electronic payments from your PC, do you really want to do it on a system that is wide open? How much valuable, and sometimes-irreplaceable business data could you lose just by running software that hasn’t had any recent bug fixes applied to it?
Debit cards only, please
We’ve seen retail fuel prices rise by over 25ppl over the past 12 months, with no sign that they’re going to ease back any time soon, if ever. Remember that the UK, along with most other Western economies, is still in a recession what happens to fuel prices when worldwide demand picks up again is the stuff of nightmares. As always, the general media universally ignores the simple fact that for almost every petrol retailer the gross margin on fuel has stayed static, despite the retail price changes. The consequences on the individual site, however, can be quite dramatic, and always negative.
Take turnover. Assuming the site sells 4.5m litres a year, the price increases so far would result in a gross turnover increase of over £1.1m in a year and that’s ignoring shop sales where tobacco prices have also risen (again with virtually no change in retailers’ margins). If the site revenue is split equally three ways between cash, credit cards and debit cards, the resulting increase in costs over a year (using typical industry card rates and bank charges) would be some £1,950 in cash-counting charges and £5,850 in credit card merchant charges. That’s an extra £7,800 a year in cost with no revenue benefits whatsoever.
The only way of avoiding this sort of cost increase would be to persuade all customers to use a debit card on the forecourt the transaction fee being unrelated to the sales value. The banks aren’t going to volunteer to cut their cash-handling costs if anything it will be quite the reverse. The card issuers won’t look at merchant fees without an almighty push from the whole industry. But along with most other retail sectors, petrol retail has managed to consign the cheque to history could it possibly do the same to credit cards?