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A recent study by
MORI reveals:
three out of
five European companies are online
|
| half the
remainder expect to go online within a
year |
| nearly 25% of
these companies are already making a
profit from online commerce |
| almost half
believe that e-commerce is the best
option for the future of their business. |
|
| These findings are consistent
across the entire spectrum of small, medium and
large businesses. |
According to another study by
Andersen Consulting:
| 82% of
European companies believe e-commerce
will have an affect on their business
strategy |
| 19% view
e-commerce as a significant competitive
threat to their business |
| only 39% have
an e-commerce strategy in place |
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| Clearly, the rapid growth of
e-commerce is not something that can be ignored.
Apart from anything else, a well-designed
commercial web site is open for business
twenty-four hours a day, seven days a week, and
can penetrate markets anywhere, however remote
from the host location. This makes for a much
more competitive business environment. While your
sales department is closed, potential clients
could be shopping around on your competitors'
web sites. |
| E-commerce does not
necessarily mean selling goods or services
online, but it does mean Marketing online - and
having a seamless interface between your
conventional and online Marketing strategies. |
| Take car sales as an example.
No one would actually buy a car online, but 16%
of the 15 million customers who purchased new
cars last year used the Internet for research
before making a purchasing decision, compared
with 10% in 1996. Specialists foresee this figure
rising to as many as 50% over the next two years. |
| This is just one example, but
it serves to illustrate how important the
Internet has become for sales and Marketing. |
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| It
could be you |
| The combined forces of
the Inland Revenue and the Contributions
Agency appear to be tightening up their
inspection procedures in line with the
strict self assessment regulations - and
there are potentially very severe
penalties for those found to be in
default. |
| They are finding P11D
errors and omissions relating to the
calculation of the 'cash equivalent' of
taxable benefits, especially on
directors' and employees' cars. Lack of
adequate mileage records is a common
fault. |
| Re-examine your
systems and records to ensure you have
recorded full information on all expenses
and benefits, properly accounted for tax
and NIC at the right time, and completed
annual returns correctly. |
| Staff perks |
| Because employers tend
to provide benefits in |
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|
 |
| preference
to extra pay, the Inland Revenue
looks closely at the whole range
of staff perks including cars and
fuel, travel and subsistence,
cash payments, staff
entertainment, use of credit
cards, and all directors'
benefits as well as loan account
transactions. |
| The Revenue
starts by checking information
reported on forms P11D and P9D,
but is also interested in
information not
reported, and payments not
taxed under PAYE. |
|
|
| Don't
be complacent |
| You are now
more likely than ever to be
subject to a full review of your
compliance systems and
procedures. |
| If you are
selected, it will be your duty to
prove your records are adequate,
not the Revenue's duty to prove
otherwise. |
| We strongly
urge you to contact us if you are
not 100% sure of your procedures.
We can help you to get everything
in order before the Revenue calls
on you. |
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| Your questions answered |
| Q
My income is
made up entirely of dividends from unit
trusts and Personal Equity Plans (PEP's).
Will I be worse off under the new tax
rules? |
| |
| A You will no longer be able to
claim a repayment of tax credits on
dividends paid after 5 April 1999.
Because you have no other type of income,
you will lose the benefit of your
personal allowance for 1999-2000 and
beyond. |
| If you were able to
use your personal allowance, the new
rules would have no overall effect.
Although the tax credit is being reduced
from 20% to 10%, rule changes mean that
lower or basic rate taxpayers will have
no additional tax to pay. Higher rate
taxpayers' dividends will be subject to a
special tax rate of 32.5%. |
| You should consider
switching to investments producing income
other than dividends, where you could at
least cover your personal allowance and
obtain the appropriate tax repayment. |
| Your PEPs should not
be affected in the near future. The
Government has announced that PEP
managers will be able to receive the 10%
tax credit on dividends paid from 6 April
1999 to 5 April 2004. This is in line
with the rules for the new Individual
Savings Accounts (ISAs). |
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|
| Q
I am
about to set up an antiques shop. How is
VAT likely to affect me? |
| |
| A
You will
have to register for VAT if your turnover
exceeds £50,000 within any twelve-month
period. Under the normal VAT rules, you
have to charge VAT on the full value of
any goods you sell, even though there
will probably be no input tax to deduct
on most purchases. However, there is a
special optional scheme for secondhand
goods in which VAT is charged only on the
excess of selling price over purchase
price (the margin) for each item. |
| You can reclaim the
VAT you are charged on business
overheads, repairs, parts or accessories
etc, and such costs should not
be added to the purchase price of goods
you sell under the margin scheme. |
| Some businesses
trading in large quantities of low value
secondhand goods find it difficult to
comply with the detailed accounting
procedures. There is a further optional
scheme of global accounting that
works on total sales and purchases rather
than on individual items. Apart from
simplifying your record keeping, global
accounting will effectively allow you to
have the benefit of any losses on
particular items. |
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