The magazine of International Association of Bookkeepers

BOOKKEEPERTHE

April / May / June 2018

THE NEW DATA PROTECTION

REGULATIONS: ARE YOU

PREPARED?

The future of bookkeeping

Chancellor’s spring statement

The secret bookkeeper

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International Association of BookkeepersSuite 5, 20 Churchill Square, Kings Hill, West Malling, Kent, ME19 4YU

Phone: +44 (0)1732 897750Email: membership@iab.org.ukWebsite: www.iab.org.uk

Twitter: @IABinfoFacebook: IABBookkeepers

Contents

03 Janet’s welcome A message from the chief executive.

04 The future of bookkeeping Exploring ways you can adapt your business to work in the

cloud.

06 News items A selection of news items including new laws to protect

company directors from identity fraud.

07 Chancellor’s spring statement: a summary

The key announcements from the spring statement.

08 The new data protection regulations: are you prepared?

Guidance on the new General Data Protection Regulation (GDPR) which is set to come into effect on 25th May 2018.

10 Stand up and be counted: Is your model broken?

How to charge for your services to ensure you never under value yourself.

11 HMRC news Updates from HMRC including on Making Tax Digital.

12 Automatic enrolment: April 2018 contributions increases

Important information about the changes to pensions contributions including points for employers to check to ensure they comply.

13 The secret bookkeeper A new feature from a bookkeeper recalling real life

experiences of working in practice.

14 Notice of Annual General Meeting

Announcement of the date of the next AGM.

14 IAB event: IAB London seminar

The seminar will cover topics including Making Tax Digital and working in the cloud. Find out more and book your place.

15 Meet the election candidates Discover who is standing for election and re-election at

the AGM.

16 IAB Form of Proxy Use the form to vote at this year’s AGM.

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2 | The Bookkeeper

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Featured in this edition is working in the cloud, including a case study from one of our members. How are you finding

the change from paper to cloud? Let us know your story and how it’s changed your practice.

We are also featuring an article on GDPR. Are you ready?

We would love to hear your views on Making Tax Digital (MTD). We have a presentation from HMRC on MTD at our London seminar on the 23rd May. Make sure you are booked

in. There will also be a presentation on the updates to the AMLCC platform- anti money laundering compliance software. Don’t forget if you are registered as a member in practice and supervised by the IAB this is free to use. It also makes it easier when renewing your practising certificate.

We have an article from the secret bookkeeper. I am sure you have all had similar experiences. If you would like to share a secret bookkeeper story then please do by emailing it to mail@iab.org.uk.

We also have an article on how to price your services. Remember you are a professional so never under value yourself.

That’s all from me, enjoy the magazine. We are happy for any suggestions on articles you would like to see.

Janet JackChief Executive

Welcome to our new magazine,THE BOOKKEEPER, we hope you like it!

£80 MILLION TO BE ALLOCATED TO SUPPORTING SMALL BUSINESSES WISHING TO ENGAGE AN APPRENTICE.

A CONSULTATION WILL BE LAUNCHED OVER THE POSSIBLE REDUCTION OF VEHICLE EXCISE DUTY FOR THE ‘GREENEST’ OF VANS.

FROM NEXT MONTH, £50 MILLION WILL BE RELEASED TO HELP DEVELOP THE ‘T LEVEL’ QUALIFICATION.

THE NATIONAL LIVING WAGE ROSE TO £7.83 FROM APRIL 1 2018

For the last few years I have anticipated, prepared and implemented changes within my business to weather the

storm that the rise in online bookkeeping packages has created. At times it has been stressful, as there was no clear roadmap, but I’m now pleased with the new business model I have achieved.

Primarily I need to stress that no action is not an option. If you want your practice to grow, or more importantly survive, then you need to embrace the changes.

So here are my tips for a successful transition:1. Do learn to be an expert in one or two

softwares and not be a “jack of all trades”. Do your research and find one of the many new softwares that suit you and your clients the best. Consider if the softwares are capable of carrying out the tasks you would have expected of your desktop alternatives, the online softwares are

constantly improving but some are still quite basic in terms of their technical ability.

2. Do pass on the cost of the software to your clients. The population as a whole is becoming used to the new purchasing model of monthly subscription brought about by the Internet. This is great for us bookkeepers as we can follow suit, previously it was very difficult to pass on software costs.

3. Start viewing your bookkeeping services as products; for example, I now view preparing a Vat Return as a product that a client may choose to buy rather than a service I carry out. If viewed this way it becomes easier to price and sell.

4. Do spend more time on value add rather than compliance.

5. Do move your clients to a fixed fee. This is probably the area I most struggled with, however, if you view fixed fee options as being bespoke to each client then it becomes much easer to implement. There

is much new research on menu pricing, which is very relevant, but make sure you have an option to review the fixed fee every quarter with your client so you don’t end up out of pocket.

The overriding change online software has created is efficiency; this is either a blessing or a curse depending on your point of view. Efficiency leads to time savings but if your income is based on an hourly charge then it’s clear less time spent on individual clients has a direct impact on your income. However, time freed from compliance work can allow more time to be spent on higher value aspects of bookkeeping such as

The overriding change online software has created is efficiency; this is either a blessing or a curse depending on your point of view.

Online Softwares: A Brave New World

Sarah Palmer

The future of bookkeeping

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4 | The Bookkeeper

management accounts. Ironically most of your clients want more of this face time with you and will actual pay more for this service than the compliance work we know is essential.

So how do I see the next 5 to 10 years working out? I hope to see the bookkeeping industry gain the recognition it deserves

and move away from the “cottage industry” reputation it currently has to the professional industry it deserves to be. In doing so I think the competition amongst bookkeepers and accountants in this space will increase but it will be a great development for business owners and the industry as a whole. There is huge opportunity for bookkeepers to “up their game” and compete with accountants

for an advisory role and be remunerated for this accordingly. I cannot ignore that there will be winners and losers but I believe change is a good thing so long as you are open to the possibilities it brings.

Love to know your thoughts,Sarah Palmer, FIAB, owner of Women Who Count

Here is a case study provided by one of our members about how they have modelled their business around the move

to the cloud.

Written by Jason Sweetman MIAB– Director of Cloud BookkeeperJason Sweetman MIAB started his humble beginnings working within the music industry. He had started his first business by the age of 19 producing his own music and

selling vinyl records across the UK. This led to touring across America, marketing and promoting his music amongst some big audiences as well as working with top 10 chart artists in the UK and America.

With a keen interest in business Jason also managed to open a vinyl record store in the heart of Croydon in 2005 which saw great success with many celebrity customers visiting the store and mentoring artists who went on to have chart success.

Unfortunately business declined due to the impact of Mp3 and illegal downloading. The consumer no longer required a physical item anymore. Major high street record stores had closed down due to the same reasons and the store had to finally close its doors in 2009.

Jason said: “Having a strong interest in business and having handled my own bookkeeping over the years, it seemed like a secure career move to gain a bookkeeping qualification”.

“One of the most financially secure people I had met throughout my career was my accountant. He was an authoritive figure with high levels of knowledge and when we talked about my accounts he would be really interested whereas most people would find it boring. This accountant knew how to grow and run a business as well as being technically knowledgeable. I admired and I respected these qualities.”

Having qualified as a bookkeeper and achieved member status with the IAB, Jason set out on his path to create Cloud Bookkeeper. He chose the name from the cloud software technology which was just starting to come to life in the industry. Many people were not interested in cloud accounting, nor did they understand the benefits, but Jason could instantly

see the value in cloud software. It was obvious to him (as he is a bit of a techie) that collaborating on the cloud would open up a whole new way of bookkeeping.

He added: “After choosing the name and clarifying the USP I proceeded to create a brand. I didn’t want the business to be Jason’s Bookkeeping Service, but a brand that could be recognised and grown into a larger business. My mission statement was and still is to be the number 1 service provider for cloud bookkeeping services and take Cloud Bookkeeper to the high street.”

The first step in achieving this goal was the website; a website easily found within the search engines which is clean, crisp and easy to navigate and read. He knew that a website is like your business card and the shop window for your clients. Everyone judges by the kerb appeal. Jason set to work creating ‘www.cloudbookkeeper.co.uk’.

Speaking about gaining his first client he said: “After having no customers and just a website - finally the phone rang one morning. It was a potential client who had found me on the directory listing on the IAB website. After a meeting and presentation there, I was with my first client, a property management company.”

After some time (and determination) the strong branding and website brought in new clients. Personal referrals from existing clients also followed and soon the business began to grow. The vision of Cloud Bookkeeper finally materialised with the first high street office opening in 2015 in Surrey.

Jason concluded: “We live in a world of glossy brands from cars and clothes to cups of coffee, so why not bookkeepers. It seems bookkeepers haven’t traditionally needed to market themselves in this way but the way people buy has changed. It doesn’t matter if you’re looking for a holiday or a bookkeeper, clients no longer go out looking for products and services - they Google them, read reviews and make comparisons. Brands create images which are socially acceptable and gives confidence to the consumer. This, alongside the website, has helped Cloud Bookkeeper secure new business.

“Overall the website and branding of Cloud Bookkeeper has helped the company see rapid growth. Since the opening I have never looked back with a growing portfolio of clients, the business is seeing growth from month to month.”

CASE STUDY

The Bookkeeper | 5

UK workers contributed £31.2bn of free labour last year, completing a total of two

billion hours unpaid overtime, according to research by the TUC. Its analysis suggests some 5m workers put in an average of 7.4 extra unpaid hours, missing out on an average of £6,265. The TUC says that for the average worker, that is equivalent to not being paid for any work they have done from the beginning of the year until 22 February.

According to its research, managers and professionals do the most unpaid hours, including a quarter of chief executives (25.5%) and 39.5% of finance institution managers. However, the practice of doing some free hours has spread fairly wide, even creeping into hourly-paid retail work, where shop assistants are often asked to come in before the store open and to stay after it closes.

Public sector employees make up a quarter (25%) of total employees but produce more than a third (39%) of all unpaid overtime.

The TUC says this is partly because professional roles have tended to remain in the public sector (medical staff and teachers for example) while services like cleaning have been outsourced.

Chief executives do the most unpaid overtime, with an average of 14.1 extra hours per week, while finance institution managers work for free for 8.2 hours. However, teachers are a close second in terms of free work, averaging 12.5 unpaid hours a week, and welfare professionals are putting in 8.6 free hours each week.

The proportion working unpaid overtime is highest in London (24.8%) and the south east (23.1%), compared to the national average of 18.4%. People in their 40s were most likely to do unpaid overtime (23.4%).

The TUC’s data was released as part of its Work Your Proper Hours Day campaign, which is encouraging employees to try to take a proper lunch break and leave on time, while managers are asked to consider how to move away from over-reliance on unpaid overtime.

Card transactions, driven by our love of contactless, are now outpacing cash

ones for the first time. The Bank of England has said we passed ‘cash peak’ sometime last year. Apart from being a seminal moment in the history of finance, there is real concern that the decline in cash transactions could lead to higher costs for smaller retailers as cash remains the cheapest

The government is to introduce new laws to help protect company directors

from identity fraud and personal harm by allowing them to remove their personal address from the company register at Companies House.

This comes in response to reports that fraudsters are using this publicly available information to pose as company directors to buy products online. There are also concerns the information is leaving company directors vulnerable to violence and intimidation.

They are twice as likely to be the victims of identity fraud, with company directors being victims in one in five recorded cases, according to research by fraud prevention organisation Cifas.

The new laws will enable company directors to remove their personal addresses from the UK’s official company register on Companies House. Directors must still provide their business address as a legal requirement.

means of payment. It is estimated that cash transactions cost retailers less than one-and-a- half pence per transaction (0.155 of the value), compared to over five pence per transaction for debit cards, 0.24% by value. Even with cheques and bank transfers in the 1970s cash accounted for 95% of all transactions. Countries such as Sweden have already passed peak cash in terms of volume.

Business Minister Andrew Griffiths said: “These new laws will protect new and existing business owners from potential harm and identity fraud, while ensuring we maintain our high standards of corporate transparency.

“Under the new laws, directors can replace their personal addresses with an alternative one, like a company address, where they can be contacted to ensure companies meet their legal requirements.”

Currently, personal addresses can only be removed when Companies House and the relevant authorities judge there is a serious risk of violence or intimidation as a result of the company’s work.

The new laws will also ensure transparency in legal information as public authorities such as the police, the Insolvency Service and The Pensions Regulator will still be able to access directors’ information, such as their personal address.

The laws will come into force by the end of summer 2018.

UK unpaid overtime equates to £32bn

Looks like cash is on the way out

Laws to protect company directors from identity fraud

6 | The Bookkeeper

NEWS ITEMS

The introduction of low tax electric cars has resulted in 960,000 individuals being

provided with company cars in 2015/16, up 10,000 (1.05%) on the previous year, according to research from UHY Hacker Young.

The popularity of electric cars could be the reason behind this increase in uptake as these vehicles have low tax rates compared to diesel and petrol cars.

Company cars have been in decline since 2001 due to the tax rates being increased on company cars to try and lower the number of vehicles on the road.

Businesses have started to buy large fleets of electric cars to give employees as perks mainly due to the tax breaks available to

these low emission vehicles. Tax rates on diesel cars can be as high as 37% of the list price annually.

For example, an electric Nissan Leaf would cost a business less than £120 per month in tax as a company car, while a comparably-priced diesel Nissan Qashqai would cost almost £200 per month.

As announced in Autumn Budget 2017, from April 2018, employer-provided electricity to allow employees to charge their vehicles will be exempt from being taxed as a benefit in kind. This will apply to electricity provided in workplace charging points for electric or hybrid cars owned by employees.

Mike Crellin, director at UHY Hacker Young, said: “Last year we saw the first increase in

the use of company cars for more than a decade, and that trend is clearly continuing. Lots of businesses have seen the tax advantages there are at the moment in giving their employees the perk of an electric car. It’s a very tax-effective employee benefit indeed, especially compared to petrol and diesel cars.

“In a worst-case scenario, a company car user can end up paying tax on the entire retail price of a car in less than three years, if it is a luxury diesel. An electric car will cost a fraction of that, thanks to the generous tax breaks. Of course, the more businesses start to use this tax break, the greater the chance the Government will make it less attractive, so the window of opportunity is likely to be quite limited.”

Company car uptake grows by 10,000

A ‘Tiggerish’ Chancellor Philip Hammond delivered a Spring Statement with few

surprises.

The good news, he told a packed House of Commons, was that inflation and borrowing are on the way down while economic growth was better than expected and employment figures are on the way up. Economic growth for 2018 will be 1.5%, better than forecast, although it will fall to 1.3% for both 2019 and 2020. Inflation is set to fall to 2% by the end of this year.

Chancellor Hammond confirmed that in 2018-2019, day-to-day spending will be in

surplus – debt will peak at 85.6% this year, then falling to 77.9% in 2022-23.Borrowing as a percentage of GDP is also set to fall – the Office of Budget Responsibility (OBR) has revised its borrowing forecast down from £49.9bn to £45.2bn for 2017/18. He described this as a “turning point in the nation’s recovery” from the financial crisis of 2008.

Other highlights include:• The National Living Wage to rise to £7.83

from April 1 2018.• £80 million to be allocated to supporting

small businesses wishing to engage an apprentice.

• £50 million will be released to help develop the ‘T level’ qualification.

• A consultation will be launched over the possible reduction of Vehicle Excise Duty for the ‘greenest’ of vans.

• The government is to examine ways to help small businesses deal with late payments, which the Chancellor described as a ‘scourge’.

• Government to consult on a new VAT collection mechanism for online payments.

• The next business rates valuation will be brought forward to 2021, from 2022.

• Supporting people to get the skills they need, the government is seeking views on extending the current tax relief to support self-employed people and employees when they fund their own training.

To view the Spring Statement newsletter which summarises the latest news and forthcoming measures that may affect you, the business you work for or your clients please visit: www.iab.org.uk/pub/IAB_(I024)_SPR18.pdf. This is also available to view by logging into the Members’ Area of our website.You can also view the Tax Rates Centre on the Members’ Area which provides a summary of some of the essential tax rates, dates and figures for 2018/19. A link to view this can be found here: www.iab.org.uk/2018-tax-rates/.

Chancellor’s Spring Statement: a summary

The Bookkeeper | 7

What is the GDPR?With the exponential growth of the digital economy, and significant changes to the ways in which information is collected and used, having in place clear and robust policies on data protection is now more important than ever.

On 25 May 2018, the new GDPR will come into effect, requiring all organisations that deal with individuals living in an EU member state to protect the personal information belonging to those individuals, and to have verified proof of such protection. Failure to comply with the new regulation will result in significant fines.

The new GDPR places an emphasis on transparency and accountability, and requires businesses of all sizes to be responsible for safeguarding the collection, storage and usage of personal data, stating that the protection of personal data is an individual’s ‘fundamental right’.

The GDPR applies to processing carried out by organisations operating within the EU, and also to those offering goods or services to individuals who live in the EU – including international businesses which are located outside, or process data outside, the EU. The UK’s decision to leave the EU will not affect the introduction of the GDPR, and the government plans to

introduce similar legislation thereafter, so it is essential to ensure that your business is prepared.

What constitutes personal data?The GDPR expands on the existing Data Protection Act (DPA) definition of ‘personal data’, including not only information such as the names and addresses of customers, but also information on current and former employees and associates. In addition, it encompasses a significantly greater range of personal identifiers.

Taking account of changes in technology, this now includes ‘online identifiers’ such as IP addresses or website cookies which are used to collect individuals’ information – and even in some cases personal data that has been pseudonymised, depending on how difficult it is to identify the individual.

‘Sensitive personal data’ is defined in the GDPR as ‘special categories of personal data’ and its parameters have been expanded to include such categories as genetic data and biometric data where this is used to identify an individual person.

The new rules apply to both controllers and processors of data, as defined under the DPA – with the ‘data controller’ determining the purposes and manner in

which data will be processed, and the ‘data processor’ being responsible for processing the data on behalf of the controller.

Under the GDPR, data processors will be specifically required to maintain records of personal data and processing activities and will have increased legal liability for any breaches. Meanwhile, data controllers will be under additional obligations to ensure that their contracts with processors are compliant with the GDPR. Certain types of data breach must also be reported to the relevant authority, under the new laws.

What does it mean for my business?The GDPR places a new emphasis on accountability and transparency when it comes to dealing with personal data. While businesses may already be compliant with many of the regulations as covered under the DPA, they will be required to provide documentary evidence of their compliance with the GDPR.

Specifically, the new rules state that businesses must be accountable for their data usage, and must identify a lawful basis for processing personal data.

The GDPR specifies that personal data must be:• processed lawfully, fairly and in a

transparent manner

The new General Data Protection Regulation (GDPR) is set to come into effect in May 2018, strengthening the obligations on all businesses in regard to the safeguarding of individuals’ personal information. Here we provide an overview of the new legislation and outline some key areas to consider.

The new data protection regulations: are you prepared?

8 | The Bookkeeper

• collected for specified, explicit and legitimate purposes

• adequate, relevant and limited to what is necessary

• accurate and, where necessary, kept up-to-date; where personal data is inaccurate, it should be either erased or rectified without delay

• kept in a form which permits identification of data subjects for no longer than is necessary

• processed in a manner that ensures appropriate security of the personal data, including protection against unauthorised or unlawful processing and against accidental loss, destruction or damage.

The GDPR builds on the existing rights and principles for individuals under the DPA, as well as introducing some additional rights. Some of the key rights under the GDPR include:Condition for consent – you must obtain consent from individuals to gather information for specific purposes, and be able to prove that you have done this Right to access data – individuals may request details of information that is held about them, how, why and where it is accessed, what categories of data are being accessed and who has access to the information. The maximum amount of time allowed to deal with a subject access request has also been reduced from 40 to 30 days under the GDPR, and the right to charge a subject access fee has been removed (except in the case of unfounded, excessive or repetitive requests) Right to erasure – meaning that individuals have the right to ask that data about them is

deleted. This would include ensuring that all copies of information are deleted, including data stored in an online cloud systemRight to rectification and objection to profiling – individuals may request that inaccurate data is corrected, and may object to any profiling that could result in them being discriminated against.

The new law places particular emphasis on the issue of consent, stating that an indication of consent must be specific, unambiguous and freely given. Positive consent cannot be assumed from inaction, such as failing to click an online ‘unsubscribe’ box, or from the use of pre-ticked boxes. Businesses also need to make sure that they capture the date, time, method and the actual wording used to gain consent, so it is important to ensure that your business has the means to record and document such information.

Additional obligations apply to certain organisations and those with more than 250 employees.

What action should I take?It is important to prepare for the new regulations and introduce robust processes and controls, ahead of time. Failure to act could impact on your reputation and your bottom line, and the financial penalties for non-compliance are severe, with fines costing up to €20m or up to 4% of total annual worldwide revenue, whichever is the greater.

The arrival of the GDPR brings with it the need to adopt a forward-thinking approach to data protection, building in the appropriate privacy and security protections from the outset wherever possible when developing or using products or services that involve the use of personal data.

Businesses should take steps now to assess their readiness for the GDPR, allocating a sufficient budget and resources to examining their existing data sets and security processes, to identify and mitigate potential areas of risk. Some of the main areas for action might include:• Making sure, if there are members

of staff, they are aware of the new regulations, and providing ongoing training

• Identifying the lawful basis for your data processing activity

• Reviewing and classifying the personal data your business holds, its origins and who you share it with

• Creating an audit trail• Reviewing your procedures relating to

consent, requesting and documenting fresh consents from customers/clients where necessary to ensure that your business is seeking, collecting and managing consent in line with the GDPR

• Updating procedures to ensure they cover the enhanced rights for individuals, including the right to have data erased and the right to data portability, as well as a new protection for children’s data and the reduced deadline for subject access requests

• Reviewing your privacy notices• Adopting a principle of ‘data protection by

design’ for all future projects• Including procedures for identifying and

investigating data breaches• Assigning responsibility for data

protection to a key member of staff; appointing a Data Protection Officer (DPO) will be a legal requirement for some organisations

• Making sure that your data and processes are regularly reviewed to ensure that they remain compliant.

Further information and guidance can be found on the Information Commissioner’s Office website: www.ico.org.uk.

With stringent new regulations approaching, businesses are advised to review their data privacy and security practices, identifying areas of risk and introducing robust processes and controls, ahead of time. This will not only help to ensure that you are compliant, but will also help to improve your business’s efficiency and engender loyalty and engagement amongst your customers.

This information is for general guidance only. Professional advice should be sought before taking or refraining from any action.

DISCLAIMER: This newsletter is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.

The Bookkeeper | 9

Bookkeepers and accountants are two of only a small number of professions still stuck with the broken model of

charging by the hour. Before you take offence at my comment, let me explain why I think the model is broken, and how we can learn from other sectors.

If we go back 10 years, almost every bookkeeper and accountant was charging by the hour. It was always done that way and it was easy. Pretty much everyone also used Sage. Things have changed in our profession though, and problems have started to emerge.

One of the biggest changes has been in technology which has a direct impact on how we charge our clients. There are a raft of new apps and time saving software. There’s the first problem… Time saving. If we invest in this technology and save time we take a hit twice. First in the cost of the tech and second in the reduction of fees through the time saved.

There are two more issues though. The first is to do with the glass ceiling. We can all agree that there are only so many hours we can work in a week. While almost all bookkeepers starting out never dream of filling these, when you do it becomes a major challenge. It doesn’t matter how hard, or smart you work when you reach your limit of time, what else do you sell?

The final issue I want to look at before we see what others are doing that we can learn from is the disjoint between what we sell and what our clients buy. I’m willing to bet that no one has ever phoned you and said “I want to buy three and a half hours of your time.” It just doesn’t happen. Clients are buying results and we’re not selling that. No wonder finding new clients can be hard work.

So, what’s the solution?Interestingly, part of the answer may lie in pick’n’mix. Really! Those sweets you bought from Woolies could hold the secret to improving our lot. Historically, when you went to buy these you filled a bag and took it to the counter. You knew how much 100g cost, but this was the first time you actually knew how much you were going to pay. It was ambush pricing at its best. Consider the similarities with our hourly pricing. The client knows the price per hour, they may even have an estimate of how long it will take. But the first time they really know the cost is when they receive their invoice.

Think, then, about how things have changed when Candy King came along. No longer was there uncertainty. Now you had a cup and you knew before you took a single sweet how much the cup would cost you. The price didn’t change, but the psychology behind it did. This also allowed them to add a bit of psychology to make you spend MORE than you really wanted to.

The second area is in movies. Before Netflix we actually went to the video shop. We had to pay for every movie we rented. Then along came Netflix. Initially they posted dvds to you for a fixed monthly charge. It revolutionised home movie rental. It took away the cost per unit and gave certainty at a fixed price.

Think about these two very different industries and how they have become so popular. Both have done exactly the same thing but in very different ways. Both have taken away uncertainty and replaced it with certainty.

How can we do the same in our profession?By moving away from the ‘easy for us’ hourly pricing to something that helps to eliminate uncertainty from our clients is a welcome step in the right direction. Whether it’s menu pricing or value pricing, the opportunity to truly revolutionise our bookkeeping practices is here. Like Candy King, we can add a bit of simple pricing psychology and begin to earn what we are really worth.

Thank you to Kris McCulloch MIAB from The Bookkeepers Alliance for providing this article.

You can find out more information about The Bookkeepers Alliance via the links below:

Website: www.bookkeepersalliance.co.uk

Facebook: www.facebook.com/bkprsalliance Twitter: @BkprsAlliance

Stand up and be countedIs your model broken?

10 | The Bookkeeper

HMRC has signalled it is extending its flagship Making Tax Digital (MTD)

initiative to include income tax reporting, by offering self-employed individuals and their agents the opportunity to join a pilot for using software to keep business records digitally and send income tax updates to HMRC, instead of filing a self assessment tax return.

The service is available for those who are a sole trader with income from one business and whose current accounting period ends after 5 April 2018. Anyone with income from any other sources may still have to report it using a self-assessment tax return. You can access the service here: www.gov.uk/guidance/use-software-to-send-income-tax-updates.

Those who sign up can choose from what HMRC describes as ‘a number of options’ for software. On the approved list currently are two names: IRIS and Rhino. The list of MTD compatible software products for Income Tax can be found here: www.gov.uk/guidance/software-for-sending-income-tax-updates.

Individuals are required to use the software to keep a record of income and expenses. If they want to carry on using their current recording method to keep business records, they are required to make sure that the

software used to send updates to HMRC can link to this to automatically transfer the data.

An income and expenses summary must be sent to HMRC every three months. Users can view an estimate of the tax they might owe at the end of their accounting year, based on the information provided so far in their business tax account, as well as through their software.

Individuals will also need to send a final report to confirm their income and expenses at the end of their accounting year. If they need to claim allowances and reliefs, they can do this within that final report.

Users can also choose to send an update to HMRC more often, for example, if they want to see a more up-to-date estimate of the tax owing, and can pay their bill on a ‘pay as you go’ basis if that makes it easier to manage their budget. They can also ask their accountant to send updates on their behalf.

To sign up for the pilot, users need to use the government gateway user ID and password they got when they signed up to the self assessment online service.

HMRC was forced to reduce the planned scope of Making Tax Digital last July, when it was announced that it would be mandated only for VAT-registered businesses initially.

Powers to ensure online sellers pay the right tax, and don’t leave law-abiding

high street and online businesses at a disadvantage, came into force on 15 March.

These new rules strengthen powers to make online marketplaces accountable for VAT fraud committed by online sellers on their platforms.

These powers are known by the term joint-and-several liability (JSL) for online marketplaces. If sellers based in the UK or overseas are not paying the correct VAT when selling in the UK, and are not removed from the site following the issue of a notice by HMRC to the marketplace, HMRC will pursue the marketplaces themselves for any future unpaid tax by those sellers.

For any sales made from today onwards, the rules also make online marketplaces liable for VAT where they knew or should have known that an overseas online seller should have been VAT-registered, but was not.

This sends a clear message that businesses in the UK and overseas, online and on the high street, must all play by the same rules, protecting traditional high street and legitimate online sellers who pay what they owe.

Marketplaces must now also make sure sellers using their platforms display a valid VAT number on the site, when they are given one. This will help buyers make an informed choice about buying goods from a VAT-registered businesses with confidence.Financial Secretary to the Treasury, Mel Stride, said: “Whilst the honest majority pay what they owe, some businesses that sell goods online to UK shoppers are failing to pay the correct amount of VAT.

“This behaviour unfairly undercuts businesses trading in the UK that play by the rules, abuses the trust of buyers, and deprives the government of significant revenue that funds vital public services.

“We are clear that everyone must pay their fair share of tax, and tackling tax evasion in all its forms is a top priority for the government.”

The new guidance explains how to recognise when a contact from HMRC

is genuine and how to recognise phishing or bogus emails and text messages. It has been updated to add new sections at 1.1 Annual Tax Summary and 1.2 and 1.3 on

National Minimum Wage. HMRC will be sending emails advising customers that their annual tax summary for 2016-17 is ready and will also be contacting working tax credit customers by SMS text message to advise of the National Minimum wage increases.

For more go to www.gov.uk/government/publications/genuine-hmrc-contact-and-recognising-phishing-emails/genuine-hmrc-contact-and-recognising-phishing-emails

HMRC launches Making Tax Digital income tax pilot

HMRC levels the playing field by tackling online VAT fraud

HMRC guidance: Genuine HMRC contact and recognising phishing emails

The Bookkeeper | 11

HMRC NEWS

As you’ll no doubt already be aware, April sees the start of increased pensions contributions for employers

and their staff. The total minimum contribution will rise from 2% to 5% and then to 8% in April next year.

Increasing minimum contributions should be a straight forward task for your clients or employer to do but there are a number of checks they’ll need to make. The Pensions Regulator (TPR) has information alerting employers to what they need to do and pension providers are also providing employers and staff with information.

By now clients and employers should already have implemented plans and procedures for the increase in contributions. However, please find below a summary of the changes which have taken place and the responsibilities which employers should have acted upon. Tell staff about the changes While there is not a legal duty to tell staff about the increase, TPR encourage employers to have information they need about their staff’s workplace pension and how it is changing. TPR’s recent advertising campaign encourages staff to get to know their pension and appreciate its benefits and staff are likely to want to know about the changes.

It’s the lawNearly one million employers have now enrolled more than 9 million people and staff

now expect a workplace pension. Automatic enrolment is creating a new savings culture and the increase in contributions is an important part of the policy to boost retirement outcomes.

TPR know most employers want to do the right thing for their staff and they are there to help. However they will take action if an employer is not meeting their responisbilities. Failing to make and maintain the correct pensions contribuitons could result in a fine or court action.

It is not enough to just comply with automatic enrolment laws by putting staff into a scheme. Employers must also meet their duties to contribute into their employees’ pensions every month and they must ensure they are paying in at least the minimum.

Pension providers have a duty to tell TPR if an employer is not maintaining the correct contrbutions and staff can also use TPR’s anonymous whistleblowing service if they are concerned the correct payments are not being made.

Three things for employers to check:1 Will their payroll deduct the increases? While many payroll providers may

automate their software so contributions are increased automatically, employers should check if their payroll software will do this. Their payroll should be ready to deduct the increased contributions from when they rose on 6 April 2018 and then

again in April 2019, otherwise the right contributions might not be paid across to the scheme at the right time.

2 Is their pension scheme making the changes needed to support the increases?

Employers should also check their pension scheme is making necessary changes to support the increases and ensure they are continuing to use a qualifying scheme and the right amount of pension contributions are deducted. If an employer’s chosen pension scheme doesn’t support the increases, then they will need to talk to them about their options.

3 What are they currently contributing? They may not need to take action

Employers and their staff can also choose to pay in more than the minimum contributions if they want to and employers who are already paying above the increased total minimum amounts need not take any further action.

Useful linksGuidance for business advisers: www.tpr.gov.uk/phase

Guidance for employers including a letter template to tell staff about the changes: www.tpr.gov.uk/increase

For information relating to specific scheme rules, contact the pension scheme provider.

Automatic enrolment: April 2018 contributions increases

12 | The Bookkeeper

Let’s start with my first ever client: “...so you registered with HMRC four years ago, and today you got this bill

from them for £4,846.57 which they’re demanding you pay now?”. “Yes” she said. “And you’ve told me you’ve never submitted a self-assessment return since you registered?”. “Yes” she said. “OK. There’s a lot to do then” I said. “We’d better get started right away”.

My next customer was having an issue with his previous accountant. He told me there was something wrong with the VAT. It turned out the wrong VAT Flat Rate had

been applied right from the start. Fixing that was easy. It’s the sort of day to day work I enjoy because I love being the detective.

Client number three asked if I could do the bookkeeping for his one man business.He assured me it was very simple. No investments. No other income. No weird financial arrangements. Not even a pension.

Turned out, he had an extra bank account, two credit cards, and two merchant accounts he hadn’t mentioned in our original interview.

But what really set it off was the other limited company he also failed to mention.

Despite these extras, the expectation was that I could do all of it for the same price I originally quoted. He did this drip by drip by not revealing anything until it turned up on a bank statement. Here’s how:

Me: “I noticed you’ve received some payments from GoCardless, are they one-off payments or something like that?”. Him: “Ah no, that’s from a training course. It’s OK though, they’ll all be paying me through that one link regular as clockwork, so it should be easy to do right?”.

And he continued: “I’m doing that through my other company. But I’m thinking of winding that up. Could you close it for me? Apart from the training, there’s no recent trading, and the only thing left is a credit card, but I only owe a few hundred quid on that”.

Before you scream and run away. Bear this in mind. When you first start out, there’s a very good chance you’ll pick up the work other bookkeepers (and accountants) turn down. That’s business. Eventually, you’ll turn down these people too, but right now, this is the best baptism of fire you could possibly get. You’ll learn very fast why bookkeepers matter more than ever.

Let me finish on customer number four. She turned up on my doorstep with her paperwork neatly done month by month in folders. She had a complete set of statements from her one and only bank account. Her HMRC filing was up to date. And she paid me in full in advance.

These are the people that make being a bookkeeper a total joy. But I’m glad I went through the difficult ones first. I wouldn’t wish it any other way.

All the following stories are true (names and figures have been changed to protect individuals).

I’m doing that through my other company. But I’m thinking of winding that up. Could you close it for me? Apart from the training, there’s no recent trading, and the only thing left is a credit card, but I only owe a few hundred quid on that.

A copy of the abbreviated accounts can be viewed by logging into the Members’ Area of the Company’s website: www.iab.org.uk/login/ and visiting the AGM page.

IAB Abbreviated Accounts

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The Bookkeeper | 13

The IAB’s London seminar is taking place on Wednesday 23rd May and will cover a range of highly topical areas including Making Tax Digital, the move to working in the cloud and much more! It is an excellent way to gain updates for your own business and your clients or your employer.

Reasons to attend these events:• Keep up-to-date and find out more about key legislation and

developments affecting you, your clients or your employer, including Making Tax Digital

• Gain Continuing Professional Development (CPD) points• Network with fellow IAB members and other businesses• If you have your own bookkeeping practice or are thinking of

becoming self-employed, then gain guidance on complying with the Money Laundering Regulations

Please find more information about the seminar below:The presentations will include:• An update from HMRC on Making Tax Digital• Updates to the AMLCC platform – anti-money laundering

compliance platform and how it can help you to comply with the updated Money Laundering Regulations

• The cloud and new digital technologies• VAT update and general overview

To view the full programme please visit: www.iab.org.uk/pub/IAB_London_seminar_programme_-_23rd_May_2018.pdf.

NOTICE IS GIVEN that the ANNUAL GENERAL MEETING of The International Association of Bookkeepers (the “Company”) will be held at 10.45am on Thursday 21st June 2018 at CIPP offices, 90 Long Acre, (Arne Street Entrance), Covent Garden, London, WC2E 9RA to consider the following resolutions which will be proposed as ordinary resolutions.

1. To receive the report and accounts for the year ended 31 December 2017.2. To elect Nicola Bate as a member of Council.3. To re-elect Sue Renaut as a member of Council.4. To re-elect Jenny Coffin as a member of Council.5. To re-elect James Sheppard as a member of Council.

Note: A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and vote at the meeting in their place. A proxy does not need to be a member of the Company. To appoint a proxy, please complete the proxy form, following the instructions about its completion and return.

By order of the Council. Sue Renaut, Chair of Council.

Date of posting: 1st May 2018Registered office: Suite 5, 20 Churchill Square, Kings Hill, West Malling, Kent ME19 4YU

How to book:To download the booking form please visit: www.iab.org.uk/pub/IAB_London_seminar_23rd_May_2018_Booking_form_-_professional_members.doc. You can also book over the phone by contacting the membership team: 01732 897750.

Please note there is no parking available at this venue and the nearest tube station is Green Park.

Further events will be arranged later in the year. You can keep up-to-date with the latest events taking place on the events section of the IAB website: www.iab.org.uk/calendar/.

You will also find here events arranged by The Institute of Financial Accountants, who have arranged conferences taking place in London, Birmingham and Huddersfield covering topics including payroll, Making Tax Digital and more. The Bookkeepers Alliance has also arranged their fourth annual conference for bookkeepers from across the professional bodies. The conference will take place in Stratford-upon-Avon on Monday 11th June. For further information or to book please see: www.bookkeepersalliance.co.uk/bookkeepers-conference/.

FURTHER

IAB London seminarHilton London Green Park, Half Moon Street, London W1J 7BWednesday 23rd May 2018 | 9:30am – 4pm

Notice of annual general meeting

14 | The Bookkeeper

BOOK NOW!

Sue Renaut FIAB Sue has had a varied career in Business Management and has run her own bookkeeping and accountancy practice for many years, specializing in small business accounting.

She is committed to improving the image of bookkeepers, for too long undervalued in the business and accounting world. Currently, as Chairman of IAB Council, working towards greater recognition of IAB qualifications in the recruitment sector.

She believes that book-keeping has become a profession in its own right, and is now seen as performing a vital role in the business community.

Serving on the IAB Council for the past 6 years has enabled her to work with other Council members to raise the profile of the organisation, and offer its members help and support, as well as the opportunity to improve skills through training and education.

Nicola Bate MIAB AIAAP mpf BSc(Hons)

I worked in the accounts departments of the manufacturing industry for 27 years, during which time I gained a wealth of experience in both Financial and Cost Accounting as well as Payroll. My responsibilities were varied including producing monthly management reports for the Board of Directors, through to managing the Accounts and IT functions for an engineering company. This also involved membership of their selection, steering and implementation committees, overseeing the replacement of the company’s manufacturing, management and accounting computer systems. It was during this time that I gained my degree and an initial teaching qualification and also began in-house training of staff in the use of the new systems.

In 2005 I became a part-time Bookkeeping, Payroll and Digital Skills tutor in the adult education field and started my own bookkeeping business, choosing IAB to update my skills and qualifications due to their close affiliation to the needs of business. In 2008 I became a co-owner and director of a small, family run, specialist retail business, whilst also undertaking additional level 5

James Sheppard MIAB It has been my pleasure to support the work of the IAB since my previous election to Council and I am delighted to stand for re-election this year. With the inauguration of a new Chief Executive, we are in a strong position to respond to the challenges facing both the IAB and the bookkeeping profession in general. I would be honoured to continue to use my skills in support of the IAB members and the organisation’s ambitious plans for the future, as we seek out new collaborations and new opportunities.

teacher training, achieving my DTLLS qualification in 2010.

I believe that my ongoing career as a ‘skills for work’ tutor, business owner and employer, interacting daily with a socially, economically and ethnically diverse group of people, gives me a valuable insight into the needs of both educators and business. Should I be elected to Council it is my intention to harness this experience to offer a fresh perspective and I look forward to being given the opportunity to facilitate IAB’s continued growth and success.

Jenny Coffin MIAB AIAAP I qualified as a bookkeeper in 1999 after taking the IAB qualifications in bookkeeping and payroll, and set up my own bookkeeping and accountancy practice. Over the years, and in addition to bookkeeping I’ve also been involved in owning and/or running various other businesses including a domiciliary care agency, a shop, a traders’ association, a magazine and being Treasurer of a charity. If I am re-elected to IAB Council I will continue to bring my experience of being an IAB member in practice, plus almost 20 years of business experience. My main area of

interest within the Council is working on how the organisation works with and actively supports its members.

Hobbies include golf, clay pigeon shooting, gun dog training, rugby and cricket, although the last two are spectator only!

VOTE AT AGM OR USE THE PROXY FORM ON BACK PAGE

Meet the election candidates

The Bookkeeper | 15

FORM OF PROXY

(Please print name and address)

I of Address

Postcode

being a member of the Company, appoint

This proxy form must be received by no later than 10.45am on Tuesday 19th June 2018. You can return it in either of the following ways:• by post to Suite 5, 20 Churchill Square, Kings Hill, West Malling, Kent ME19 4YU; • by email to kellyo@iab.org.uk.

Notes:

1. As a member of the Company you have the right to attend, speak and vote at the meeting. If you cannot or do not wish to attend the meeting but still want to vote you can appoint someone to attend the meeting and vote on your behalf. That person is known as a “proxy”. You can use the proxy form to appoint the person chairing the meeting or someone else as your proxy. Your proxy does not have to be a member of the Company.

2. If you wish to appoint as a proxy someone other than the person chairing the meeting, please delete the words “The Chair of the meeting” and insert the name of the other person (who need not be a member of the Company). You must initial all alterations that you make to the proxy form.

3. The completion and return of the proxy form will not prevent you from attending the meeting and voting in person should you subsequently decide to do so.

4. If you wish your proxy to cast your vote for or against the resolution you should insert an “X” in the appropriate space. In the absence of instructions or if you put an “X” in the “At Discretion” column your proxy may vote or abstain from voting as they think fit on the specified resolution, and, unless instructed otherwise, may also vote or abstain from voting as they think fit on any other business (including on a resolution to amend a resolution, to propose a new resolution or to adjourn the meeting) which may properly come before the meeting.

5. The “Vote Withheld” option is provided so that you can instruct your proxy to abstain from voting on a particular resolution. A “Vote Withheld” is not a vote in law and will not be counted in the calculation of the proportion of the votes “for” or “against” a resolution.

6. You (or your attorney) must sign and date the proxy form and insert your membership number in the space provided.

or the Chair of the meeting as my proxy to vote for me at the Annual General Meeting of the Company to be held on Thursday 21 June 2018 and at any adjournment of that meeting. This form is to be used in respect of the resolutions mentioned below as follows:-

(Please mark with an ‘X’)

Resolutions For Against At Vote Discretion Withheld

1. To receive the report and accounts

2. To elect Nicola Bate as a member of Council

3. To re-elect Sue Renaut as a member of Council

4. To re-elect Jenny Coffin as a member of Council

5. To re-elect James Sheppard as a member of Council

signed date membership number

The Bookkeeper | 16