Get offa my cloud

June 11th, 2010

The buzz in accounting software at the moment is about the “cloud”. Actually, it’s not just in accounting software, it’s about all software.

There are many terms being bandied about but the most common seems to be “cloud-based” and “software as a service” or SaaS as it’s known. What it means is that instead of software being resident on your PC or network server, you use software which is stored elsewhere through your internet connection. This has been made possible because of the increase in speed and reliability of internet connections particularly for businesses.

Riley have been enthusiastic adopters of “cloud” computing for a couple of years now and I thought it would be useful to relate our experience of the change and how we see the future developing for our customers.

Our office systems were almost totally reliant on Lotus Notes – a secure groupware system which enabled us to store, catalogue, discuss and record the way we worked and the communications that we had with our customers, referrers of business and suppliers. Notes also handled our e-mail, contacts and diaries. We started using it in 1998 and quickly became dependent on it for all we did. However, over the years we started to see the deficiencies in the system, the difficulties of the technical management issues, the “clunkiness” of it’s user-interface (UI) even after major updates and the access issues compared to the personal e-mail systems we had all started to use at home.

But there is so much inertia related to mission-critical software – we were aware that alternatives existed but were so well tucked up by the fire with our pipe and slippers that we didn’t want to go out in the cold and see what the noise was outside. However, changes in our key team forced us to look properly at other solutions and we settled on migrating our e-mail, calendars and instant messaging to Google. The migration was handled painlessly by Glo-Networks and we moved the majority of our communication IT to web-browser access without a hitch.

That first step was a revelation. Not only was our information now accessible from anywhere in the world, from any computer or device (phone) with an internet connection, the move massively freed up resources of people (and cash) and removed the restrictions on our thinking about IT. We still had (and have) certain legacy databases on Notes but have started to wind these down as more content is now cloud based. For example our old Teamtalk database from Notes which contained office gossip, quick updates on who was where and why and news snippets has been moved to Yammer. This application also contains our “humour” database – a “must read” compendium of up to date jokes, links and general office twaddle. What we also found was that Google Apps allowed us to store all of our templates for letters, spreadsheets and many of our management tools too.

We have also been able to dispense with the office-based back-up solution which was the bane of many of our lives. This has been replaced by on-line back-up for server based systems and a reliance on the cloud for back-up of e-mail, calendars and contacts. And there have also been no problems with software updates – I’m sure that they exist but they happen painlessly when we don’t notice or incrementally as the developers finish a feature. We don’t have to buy an upgrade path or worry about compatibility – it just happens.

Sure, there are some who miss features from the old systems but there are way more new “goods” than old “bads”. And because the software is constantly improving, new features become available all the time.

Would we go back? No way, and in the next blog entry I will talk about some of the specific systems we are using for accounting and talk about a great new opportunity for our customers to have free accounting software for a year. I bet you can’t wait!

Jon Stacey

Capital Gains Tax – time for a new “kink test”?

May 19th, 2010

Our last blog entry about the possible changes in tax rates and targets for the “Emergency” budget on 22 June caused more calls to the office than any other we have written. ┬áWas the cause of those calls the possible rise in VAT to say 20%? Perhaps the dropped promise on IHT? The confusion on NIC changes? No, the possible increase in Capital Gains Tax (CGT) has been the over-riding issue. ┬áAnd rightly so if the commentators are to be believed.

The rumours are that the new government is planning to increase the CGT rate from 18% to 40% or 50% – in other words, the marginal rate of income tax. Sure, for some this would mean a rise to “only” 20% if the basic rate of tax remains the same – and there’s no suggestion that it won’t. ┬áBut for others, more than doubling or potentially nearly trebling the rate of CGT is seen as highway robbery. It’s a change which would attack second-home owners, those with a portfolio of shares for investment and buy-to-let investors who prefer property to pensions. Business assets are seen as potentially getting a “fairer” crack of the whip with what is being touted as “generous exceptions for entrepreneurial activities”.

The issue that many people mention about the current system is the lack of what is called “indexation”. CGT was introduced by Harold Wilson’s government in 1965 to stop the increasing trend of passing off income as capital and hence avoiding tax. You see, there’s nothing new in tax policy! Gains pre-1965 were exempt (and still are). An Indexation allowance (using RPI as a measure) was introduced in 1982 in an attempt to remove the gains relating purely to inflation while leaving the growth in capital taxable. You can see why they did it from this graph.

The period after 1985 was obviously the perfect time to be a tax advisor as CGT calculations became ever more complex and phrases such as the “kink test” were bandied about in accountant’s offices. Although it sounded interesting, somewhat disappointingly, the “kink test” was a calculation designed to check whether it was better to elect for a March 1982 value to be used for the cost of an asset rather than a calculated value using the purchase price and allowing for the rule changes up to 1982.

Alastair Darling finally removed indexation and the “kink test” in the Pre-budget report in 2007 – probably because Gordon told him that he had laid inflation to rest with “no return to boom & bust”. This is a phrase we all remember but which Gordon now claims never to have uttered! At the same time Darling “simplified” CGT rates from 10%, 20% and 40% to a uniform 18%. It was argued that the effective reduction in rates more than compensated for the removal of the inflation adjustment which Gordon had told him was no longer required.

So why is indexation in the news again? Well, if the commentators are correct and CGT rates return to the marginal rates of tax including the shiny, new 50% rate, shouldn’t we take account of the fact that inflation again stalks the land? After all, on 18 May the Office for National Statistics announced that the RPI was now at 5.3%, the highest inflation figure for 19 years. And it’s pretty obvious that the longer you hold an asset, the bigger effect inflation can have on the value of it. Removing inflation so that CGT is only paid on the “real” gain, not the inflated figure, is just a fair tax policy. And fairness, as we all know is something that all parties claim they support.

Jon Stacey

New Government, new tax rumours……

May 13th, 2010

Since the politicking has ceased (momentarily) and we now know the shape of our new Government, we also know a bit more about how the coalition views the tax regime and therefore the possible changes to tax policy that may be included in the emergency Budget within 50 days.

These might include:

  • A substantial increase in the rate of capital gains tax on non-business assets to marginal rates of tax which could therefore be 40% or 50% rather than 18%. Apparently, there will be “generous exceptions for entrepreneurial activities”.
  • A large increase in the income tax personal allowance in April 2011 as the Government aim to raise the threshold to ┬ú10,000 during this parliament. The first step on this transition will be to increase personal allowances by ┬ú1000. This will cost around ┬ú5bn and be paid for by not implementing the Conservative plan to raise the employee threshold for National Insurance. The remainder will come from raising capital gains tax for individuals as mentioned above.
  • Adoption of the Conservative proposal to recognise marriage in the tax system, although the Liberal Democrats will abstain from (rather than support) this measure.
  • Scrapping at least part of Labour’s proposed national insurance increase in April 2011.
  • Shelving the Conservatives’ proposal to increase the inheritance tax threshold to ┬ú1m, and the Liberal Democrats’ ‘mansion tax’ proposal.
  • An increase to 20% of the standard rate of VAT from “next year”

There are rumours that the increase in CGT rates could also include a return to either the retirement relief or taper relief regimes.

If you would like to discuss any issues prior to the 50 day budget, please give either Bernice Constantine (01752 203651), Nicola Cowie (01752 203600) or myself a ring.

We’ll update you as soon as we hear anything more, even if it’s just vicious rumours!

Jon Stacey

Micro or Macro – it’s all the same to the rumour mill.

May 5th, 2010

This article in the Independent this morning made me think;

I always find it amazing how rumours spread through our local business community – only this morning I was breathlessly told by two people that one of our clients had “gone bust”. In fact I had met with them very recently to conclude some interesting planning work and knew that they were in rude financial health. I called anyway to see if they knew that the rumours were rife – they did, and in fact could identify the source with some confidence.

There were other rumours “doing the rounds” in the city too; a well known local entrepreneur can’t make the first payment on a CVA, another has failed to make his, a business was buying something I knew to have been sold to someone else – and so it goes on. Conclusions are drawn, connections made and the rumour mill runs wild with speculation – just another day in city business.

And it’s not just word of mouth either. The proliferation of social media through networks such as Twitter, Facebook and Buzz means that rumours don’t just pass from person to person┬áany more, they spread by contagion through networked groups and become “viral”. Some local rumours are harmless, others such as the example mentioned above cost at least reputation and possibly more.

It’s obviously the same on an international stage too. To quote from the Independent;

The Spanish markets fell 5.4 per cent on talk that the country would call for an emergency loan. It forced the Prime Minister, Jose Luis Rodriguez Zapatero, to respond: “I was told something about that rumour and the truth is I give it no credit, it is complete madness.”The Spanish premier added: “These rumours can increase differences and hurt the interests of our country, which is simply intolerable and of course we intend to fight it.””

I’m not sure how much 5.4% of the Spanish market was worth or what the value change on a European scale has been. One thing’s for sure, “an unverified explanation of events circulating from person to person and pertaining to an issue of public concern” has cost someone a “shed-load of cash”.

A day in the life of….Val

April 6th, 2010

This article first appeared in Chamberlink…..


I get up, breakfast and help my husband get the children ready for school. This morning involves a complicated hair do for my 8 year old daughter (not so much complicated, actually I am just rubbish at doing hair!) and my 5 year old son is ÔÇÿnot happy with MummyÔÇÖ for some reason or other ÔÇô nothing new there.


As myself (@valdoyle) and Riley (@rileycom) are Twitterers and generally into social media as a whole, I have a quick look on Tweetdeck to see if we have had any mentions and have a look at what fellow tweeters are up to.


After a hit of caffeine I am ready to function. Today I am finishing off some management accounts for a growing medium sized company who import from Europe and the Far East and sell to the UK and Ireland. The same company also require a minor tweak to their financial forecasts which I do and email over to the MD. I have a few emails and phone calls to deal with during the morning. We all have direct lines so we can act immediately.


Lunchtime is a quick bite to eat at my desk (its Friday so something hot from the Spar emporium across the road is called for and whatÔÇÖs this? a chocolate bar has somehow been purchased!).


This afternoon I review the data being produced by our online book keeping function for one of our clients to make sure that the results look as expected and to determine any action points to run through with the client. The online book keeping is proving popular as clients can keep control oftheir business whilst at the same time having the peace of mind that their records are maintained by our experienced team. I make a call to our client to arrange for me to pop out and run through the results with them and discuss business generally.


Time to go home.Plan to bribe the kids to go to bed early with a ÔÇÿDVDÔÇÖ.


The peace is heavenly so a (not unsubstantial) glass of wine is consumed along with a quick look on Facebook to see what my friends, family, colleagues and associates are up to this evening.

So it’s goodbye from me…

March 31st, 2010

After 39 years in accountancy of which 27 years have been spent at Riley, today is my last day: I’m off to do exactly what I want to do. As long as my wife will allow it, of course.

I started acounting shortly after my eighteenth birthday and have worked for just 4 firms: Neville Russell (now Mazars) and Price Waterhouse (now PwC), both in London; Nevill Hovey in Plymouth (that didn’t last long!) and Riley. At the outset I had little idea of what the job would entail and I’m pleased to say that I’ve enjoyed it far more than I anticipated. It has its stressful moments, of course: any worthwhile activity does.

Working for a firm of chartered accountants offers the opportunity to experience many different workplaces. Like TV business gurus, we visit a range of enterprises, can ask just about anything to discover how the business works and we can then offer our own advice. Among the clients I’ve worked with have been large & small charities (one favourite in London was the┬áRoyal Institution); and…stockbrokers, solicitors, doctors, dentists, manufacturers (from machine tool makers to an assembler of rat traps); in the 1970s several Soviet-owned enterprises including an oil and a shipping company; house builders, hotels, property developers, financers of dodgy Greek shipping lines, eurobond traders, financial services firms. There’ve been retailers, wholesalers, motor traders, computer service companies, farms, wine importers, food distributors. But fortunately, no banks.

Some of the jobs have appealed to my inner nerd – a start-up company that designed and built medical electronics equipment, another that made non-electronic logic control circuits (they worked through┬áfluidics), commercial radio stations. Others have offered a view of the differing commercial practices of other parts of the world, both within Europe as well as the USA, Canada, China, Japan, Nigeria (which was pretty much as you’d imagine) and the Gulf states.

The best part of it all has been the people. Colleagues, clients, clients’ employees. The chance to gain from their experiences and to offer advice to help their careers or businesses along, to help make their jobs easier. There’s a bit of a misconception that ours is a profession based on numeracy. That does play a part, but far more important is the ability to assimilate a large volume of business, accounting and legal information and then apply it to varying situations. Listening, interpretation, persuasion are key skills.

When I joined Peter Riley two years after he started Riley in 1981, we wanted to build a practice where the technical quality of our work and its ethical basis were the bedrock; where we offered a major and positive impact on the businesses and financial lives of our clients. To do that we needed bright and talented people to join us. Thankfully they did, and I’ve lost count of the number of accounting technicians, chartered and certified accountants who have trained and qualified with us. We also wanted our firm to be an open, warm, friendly place with everyone supportive of their colleagues and willing and able to push themselves to achieve more than they thought they could…

I’m very grateful to our current team and past employees, my current and past partners Jon, Bernice, Val and Peter and of course our clients for making this such a wonderful place to pass most of my working life. I’m confident that the success and growth of the firm will continue.

As to my future, I’ll be working with my wife in developing our smallholding and I’ll now have more time to design, build and use the radio and electronic gear that has always fascinated me. There’ll be long walks (the South Downs Way first, probably); travelling, wildlife watching, reading and perhaps writing. But you can be sure that I’ll be carefully avoiding any contact with anything to do with accounting and tax. It’s been fun, but enough is enough.

David Powell

Budget 2010 – would you like some more Vanilla with that?

March 25th, 2010

Well, that was exciting wasn’t it?┬áInstead of the normal pre-election bribery, this time we had a bunch of IOU’s being spread around like an over-used library card. As a politicking exercise it was pretty bland with Darling using his time at the despatch box to set out the rationale for the Labour economic policy for the election.

For all we know, this budget may last only as far as the election date plus 50 days – and that’s not long. And while it was a statement that was rather short of headlines, there were some useful items for businesses even if the net give-away is only around ┬ú30 per person.

And the reaction? Well, a couple of headlines will set the scene admirably…… From the left, The Daily Mirror lead with “A safe pair of eyebrows” and the Sun responds from the right with “Budget Battering” and what it calls ” a squalid attempt to save Labour votes”. Away from the Red-tops, the Times says that ” in a speech that lasted almost an hour, a┬áskilful┬áMr Darling managed to say almost nothing” while the Independent says that the “budget defines the political debate but leaves the economic outlook clouded”.

And so to the detail….

Business & corporate

  1. There were no changes to either the mainstream or small companies rates of Corporation Tax which remain at 28% and 21% respectively
  2. There’s good news on the Annual Investment Allowance which has been increased from ┬ú50,000 pa to ┬ú100,000 pa from 1 April 2010 for corporation tax and 6 April 2010 for income tax. Accounting periods which span these dates will be given a pro-rata allowance. This applies to most expenditure on general and special rate pools excluding cars and will mean that many businesses will get full tax relief on their capital expenditure. It goes some way to rebalancing the removal of the 40% first year allowance which was withdrawn in the last budget.
  3. Tax relief has been removed for a write off of loans to participators in close companies – in English this means that one of the most tax efficient routes to correct an overdrawn director’s loan account has been removed.
  4. HMRC have tightened the rules requiring disclosure of tax avoidance schemes and brought forward the trigger point for informing them of the existence of “actively marketed schemes”.
  5. There are loads of new anti-avoidance measures aimed at specific schemes and loopholes many of which are highly esoteric.
  6. There’s an extension to the list of energy efficient technologies for enhanced allowances including the sub-technologies “permanent magnet synchronous motors” and “biomass fired warm┬áair heaters”. If anyone knows what the first of these is or understands how it works…┬áSeriously though, 100% allowances are available on energy or water efficient technologies and there have been some minor amendments to the list of approved kit.
  7. Expenditure on zero emission goods vehicles will be eligible for 100% first year allowances provided the vehicle is new and does not produce CO2 under any circumstances.

Employment taxes

  1. There is an amendment to the childcare tax allowances scheme which many business run through salary sacrifice. The amendment appears to allow businesses to apply salary sacrifice to all employees including those on minimum wage who have been effectively excluded before.
  2. While we have known that zero emission cars had 0% benefit in kind since the pre-budget report in 2009, this budget introduces a new category of Ultra-Low Emission Cars which will have a 5% benefit in kind charge from 6 April 2010 to 5 April 2015. This low rate coupled with the 100% first year allowances and exemption from vehicle excise duty in the first year (also announced) for vehicles producing less than 130g/km of CO2 may make these the go-to car for many company schemes.

Personal taxes

  1. There have been no changes to personal allowances which hadn’t been announced in the Pre-Budget report but don’t forget the new ┬ú150,000 50% rate (42.5% for dividend income) starts on 6 April 2010.
  2. From 6 April 2010, ISA limits are increased to £10,200, half of which can be into a cash ISA. From 6 April 2011, it is proposed that ISA limits will increase with RPI, but who knows what the other lot might do!
  3. The IHT nil rate band of ┬ú325,000 has been frozen for the next 5 years – further erosion of the limit against the inflation many expect.
  4. Due to a decision by the European Courts of Justice, you can now claim Gift Aid on donations to EU Charities and those in Norway and Iceland (It’s possible that the last one of those is the Icelandic Government? Just saying….)
  5. Rule changes dictated by EU decisions mean that the VCT/EIS legislation will be extended to businesses having a “permanent establishment” in the UK which will therefore allow overseas business investment through tax incentivised schemes.
  6. There have been changes to EMI and approved share schemes to comply with EU law and close various tax loopholes and further hardening of the HMRC attitude to Employee Benefit Trusts (EBT’s).
  7. The Lifetime and Annual Allowances levels for Pensions will be frozen at the 2010/11 levels for the next two years.
  8. Between 2012 and 2016, on a phased basis, all UK employers will┬áneed to automatically enrol all their eligible employees into a Qualifying Workplace Pension Scheme (QWPS – how are we going to say that acronym then?) or NEST (National Employer Savings Trusts – do you think there will be an automatic gift aid to the RSPB?).

Property taxes

  1. The lower Stamp Duty Land Tax (SDLT) limit has been doubled to ┬ú250,000 from 25 March 2010 and there is a new upper limit of 5% from properties over ┬ú1m which starts from 6 April 2010. And guess what, the lower limit change is only for 2 years, the upper limit change is permanent – cynical? Moi?
  2. There has also been a crack-down on various avoidance schemes for SDLT which have become prevalent on expensive and commercial properties over the last few years.

VAT and other indirect taxes

  1. VAT registration threshold has been increased to £70,000 from 1 April 2010 with de-registration increasing to £68,000.
  2. From 1 April, VAT payments will only be treated as paid when they are cleared into HMRC bank account. If you pay your VAT by cheque this mean that you will need to send your cheque at least a week before the due date. It’s all part of the push for electronic payment which also gives a cashflow incentive.
  3. Fuel Scale Charges are going up from 1 May 2010 – but then you’d already guessed that hadn’t you?
  4. Despite the Chancellor saying “I have no further announcement to make on VAT..” from 1 February 2011, although stamped mail will remain exempt from VAT, other Royal Mail services will become chargeable.
  5. New legislation will be introduced in the next Parliament to introduce another EU decision on assets with private use. Businesses will only be able to recover the VAT relating to business use up front rather than reclaiming the whole amount and then accounting for output VAT on private use during the period of ownership.
  6. Landfill tax has been increased from £40 to £48 per tonne from 1 April 2010 and will rise to £56 per tonne in 2011 to encourage recycling (or as seems to be the case fly-tipping?)
  7. Can we draw any conclusions from the 1% increase in tobacco duty, the 2% reduction in Bongo duty and the 10% increase in cider duty? No, thought not. But you will no doubt be pleased that the fuel excise duty increase has now been staggered over the coming year, probably in part due to the amazingly high price of fuel anyway.
  8. And don’t forget the new Landline duty of 50 pence per month expected in from 1 October 2010.

Other stuff

  1. Penalty regimes have been standardised across most taxes with a maximum penalty of 100% of the tax due. If there’s offshore regimes involved that increases to150% for countries we exchange information with and 200% where we don’t. Nice thought!
  2. Where HMRC believe that the payment of PAYE/NIC is “seriously at risk” they will insist on security being made available and if this isn’t provided a criminal offence which could lead to a fine of up to ┬ú5,000. There are already similar provisions for VAT and this ┬ámay increase the drive for incorporation and the protection of limited liability.
  3. HMRC have announced that they will be “naming and shaming” people involved in the evasion of tax of ┬ú25,000 or more – you’ll be pleased to know that there is an appeal process before you end up on the HMRC Facebook page.
  4. Only offences committed after 1 April 2010 will be included in the new legislation.
  5. The disclosure regime for health professionals ends in June 2010 but will no doubt be replaced by a new regime aimed at similar professions. The regime allows a fixed penalty of 10% for full disclosure of tax under-declarations going back up to 20 years.

Well, there it all is. If you’ve read this far through I commend your attention to detail and hope that you’ve gained something from the last five minutes. If you want further details I have attached the Taxline3d budget commentary. It’s aimed at the profession but is well written and as clear as this stuff can be. If you’re interested in any specific advice please contact Bernice Constantine or Nicola Cowie on the e-mail addresses above or phone 01752 203647. We will of course be contacting many of you who we feel may require specific advice on opportunities in the next week or so.

Finally, no doubt you’ll all be pleased to know that┬áHMRC want to introduce new legislation to penalise tax agents┬áwho assist clients in tax evasion or promote tax avoidance schemes. Some commentators believe that it is so widely drafted that┬áany tax advice which reduces a tax liability could┬ábe seen as a ÔÇÿwrongdoingÔÇÖ by the agent. At best these suggestions need some serious redrafting. I’m just off to check the retirement provisions in our partnership agreement!

The increase in national insurance will cost jobs

March 23rd, 2010

Tomorrow is Budget Day, but one tax increase has already been announced: the rise in national insurance rates.

Employers national insurance has long been viewed by many economists as simply a tax on jobs. It is a direct imposition on companies payable as a percentage of (most) salaries; in 1997 it was levied at a rate of 10 per cent but from April next year it will be 13.8 per cent.

It does not take a genius to grasp that a tax of this nature will lead to a cut in incomes and a cut in employment. The attraction of it to this government rather than one of the alternatives – a rise in the VAT rate, perhaps – is that it is more stealthy: most of the electorate won’t notice it, at least, not until their jobs disappear. That may make it, to Gordon Brown’s way of thinking, a better political bet.

The British Chambers of Commerce think it’s a daft idea; a new report, Taxation, Growth and Employment from Policy Exchange (the pdf file can be downloaded here)┬ádiscusses research that reveals a direct link between higher NI rates and unemployment.

When overall taxes have to be as high as is now required to feed the hungry demands of state spending, that is bound to have a depressing effect on the private sector and on economic growth. The only solution, which would eventually lead to higher growth, is to cut that state spending by more than any party will dare promise this side of the election.

Let’s hope they have the sense to do so once the votes have been counted.

News about paying VAT

March 8th, 2010

While most businesses already submit their VAT returns online, this will be compulsory from 1 April for all VAT registered traders with a turnover of more than £100,000 annually as well as for all newly registered traders.

If you still pay your VAT by cheque, from 1 April HMRC will treat the payment as having been received by them on the day when cleared funds reach their bank account – so if you still pay by cheque you should be mailing it to them at least a week before the due date to avoid becoming liable to a penalty surcharge.

There’s more about paying VAT┬áhere.

Boom, bust and recovery

March 5th, 2010

Boom and bust. Despite the wishes of well intentioned but out-of-their-depth politicians, it will always be with us.

Share prices overreach themselves until the time when the reaction sets in, then the bears turn up and drive stock markets too low. It’s the same with property prices, energy costs and all commodities.

A similar cycle affects many businesses.

The sensible reaction when the the current downturn hit was for businesses to cut costs – recruitment & training put on hold, perhaps some thinning of the workforce, advertising and marketing initiatives cut, cash conserved at all costs.

The excess dip in the stock markets in March 2009 has now corrected itself and anyone that had the money and courage to invest in the early part of last year will have seen a huge return on their cash. And all businesses should be planning to take advantage of the upside, too.

There are pretty clear limits on the amount of cost-cutting that businesses can achieve, but there is no limit on the gains they can make in sales – until, I suppose, they have achieved 100 per cent market share. Even then they can broaden their product or service offering.

The economy has done little more than bottom out for now and the recovery may be a long slow climb, but so far in history every recession has ended and there comes a time – different for every business and of course dependent on cash available – but there does come a time to invest for the future. And if you haven’t prepared for that in your business yet, it’s probably time you did.

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