THE Christmas-New Year period is a time for
festivities. But your well-intentioned plans can
easily turn into a nightmare if detail is ignored.
Whether it’s the staff party, playing festive music or taking account of
the bank holiday disruptions, you
need to think ahead. Here is a 10-
point checklist to making merry –
whilst you make money.
1. The staff party
Top of the list for many businesses, even
in these hardened times, is the staff
Christmas party. But organising this isn’t
as simple as it sounds. Apart from the
logistics of the event itself, your biggest
concern may be how HMRC deals with
your expense claim for the party.
Sadly, HMRC has specific rules on
what can be claimed on staff
entertainment. In simple terms, a
Christmas party – and other similar events – is
exempt from a benefit in kind tax charge for
employees, and national insurance liability for
employers, but only if the event is open to all
employees, or all employees at a particular location,
and the cost per attendee (not just staff) is under
£150 (including VAT).
“Cost” includes all costs, including travel and
accommodation, before employee contributions. Also,
the £150 limit is an annual amount for one or more
events, and the whole cost of an event which causes
the limit to be exceeded is taxable.
You may want to take advice from your accountant
or see www.hmrc.gov.uk/guidance/480.pdf.
2. Alcohol
The provision of alcohol, not unsurprisingly, has its
own rules. The good news is that no licence is required where alcohol is supplied
free, but do bear in mind the law
on supplying alcohol to under
18s.
You may need a Temporary
Events Notice from your local
authority if you plan to sell
alcohol and do not already have a
Premises Licence. It’s quite easy
to apply for and only costs £21.
But don’t wait until the last
minute before applying, as two
copies need to be sent to the local
authority with another copy being
sent to the police – who need to
not object – at least 10 days
before it’s needed.
There are conditions that apply to a Temporary Events Notice such as the event must run for 72 hours or less and there must be a break of
24 hours before the next Notice can start.
If in doubt, apply for a Temporary Events Notice:
you risk a fine of £20,000 or six months in jail
otherwise. If you permanently retail alcohol you will
need a Premises Licence.
3. Music
Silent Night or Rockin’ Around The Christmas Tree – it’s
your choice. If you want to play music in a workplace,
such as your reception area or prep room, for the
benefit of your clients or employees, you will need to
be licensed.
Music, whether played via an iPod, CD or the
radio, is invariably subject to copyright and this means that you can only play it with the appropriate
permissions from both the Performing Rights Society
(www.prs.co.uk) and Phonographic Performance
Limited (www.ppluk.com). These two bodies are not
the same. The PRS distributes royalties to music
composers and publishers whilst PPL looks after
payments to the record companies and performers.
They are two sides of the same coin and they have
different fees for different events and sizes of
audience. You may find it more cost effective to buy
an annual licence.
Failure to purchase licences could land you in hot
water with heavy legal costs.
4. Posting days
Despite the advance of the internet, post is still very
important. The run-up to Christmas is a very busy
time of year and so if you want to be assured of
timely delivery of cards, payments to suppliers, your
postal bank account deposits or delivery of stock and
supplies, you need to be mindful of the posting
deadlines.
Royal Mail, as in previous years, has published its
list of latest posting dates
(www.royalmail.com/portal/campa…
=1000002&mediaId=111000771) for those who want
to beat the Christmas rush.
For example, second class letters need to be posted
by 18th December, first class by 21st December and
international airmail by 6th December for some
countries.
Remember that bad weather such as the deluge of
snow we had over the last winter could quite easily
come between you and your deliveries.
5. Banks and their holidays
Banks, as usual, will be closed on a number of days over the Christmas period. The days that should concern readers in England, Wales and Northern
Ireland are Monday 27th and Tuesday 28th December
and also Monday 3rd January, all of which are
substitute days as Christmas Day, Boxing Day and
New Year’s Day all fall on a weekend – and readers in
Scotland will know that there is always an extra day’s
holiday at New Year!
This may disrupt your cashflow, so work to ensure
that you have funds, in good time, in the right places
so that you can stay on the right side of your overdraft
limit, pay your staff or suppliers, or pay your tax bills
without delay.
Remember that some banks will make you wait
until the fourth day after a cheque is deposited before
allowing you to draw down funds as cleared.
6. VAT changes
As we get closer to the New Year, you’ll hopefully not
miss all of the publicity that is bound to surround the
increase in the VAT rate to 20% on 4th January.
The increase is going to have plenty of
ramifications for your business even though more
likely than not you’ll be reclaiming the input VAT on
your purchases.
You’ll need to check your new VAT flat rate
percentage, if that applies to you, and you’ll certainly
need to adjust your prices unless you intend to absorb
the costs on behalf of your customers.
On a personal level – or if you aren’t registered for
VAT – consider bringing forward any large purchases
or at the minimum, try to sign deals (with payment
and completion by the end of June) while the old VAT
rate is in force. Doing this means that you may be able
to get the supplier to invoice you, in advance, at the old rate.
There are, however, rules on what HMRC will let your supplier get away with: HMRC is concerned
about losing tax. For more information, see
www.hmrc.gov.uk/vat/forms-rates/rates/rate-
increase.htm.
7. Christmas gift packs
Christmas is a time for giving so why not enhance
your “merchandising” by bundling up certain products
into gift packs?
Buy in some quality packaging and offer a free
wrapping service and you may be able to sell more
product, albeit with a slight discount, and increase your
turnover and profit at the same time.
Try to make the deals look attractive and also put
an end date on the promotion to give your clients a
“call to action” so that they buy now.
8. New Year sales
And, of course, the start of a new year is a great time
to clear out old stock whilst raising cash to bring in
new product – and you might even consider special
offers on certain procedures as well as products.
Use this time to prepare: create the signage, print
point-of-sale material, re-price products and if
necessary re-programme the PMS/invoicing system
while you have a lull.
9. A new financial start?
Could the New Year also prompt you to see if you can
get a better deal on your financial arrangements, both
personal and business? A little time flicking through
websites such as www.moneysavingexpert.com,
www.moneyfacts.co.uk, www.moneysupermarket.com will serve you well. You will see plenty – almost too
many – tips on the latest deals for bank or savings
accounts, credit cards, insurance and even shopping
vouchers.
Also, a little time spent at the British Bankers
Association website at http://bba.moneyfacts.co.uk/
will show you that there’s a huge disparity in the
charges levied by the banks. See if it’s worth your
while moving.
10. Christmas gifts for staff
Finally, Christmas is a time of giving so think about
thanking your loyal and hard-working staff with a gift.
Again, there are rules on what you can and cannot give
staff tax-free.
Fundamentally, a gift to an employee is not taxed
as a benefit providing it is “trivial”. This means that
the cost of the item is deductible in your accounts and
you can reclaim VAT on the cost of the gift. However,
where a business makes gifts in excess of £50 or
makes a series of gifts to one person exceeding £50
per year, HMRC states that it should account for VAT
on the value of the gifts as if it had been sold at cost.
If gifts are over £50, or not “trivial”, you also have
to pay Class 1A National Insurance on the value of
those gifts. Trivial items can include seasonal gifts such
as a turkey, an ordinary bottle of plonk (not fine
vintage or champagne), or a box of chocolates.
Where you are considering making larger gifts to
each employee, such as a Christmas hamper, you can
include the cost of those gifts in a PAYE Settlement
Agreement with the tax office. The PSA allows you to
pay the tax and NI due on behalf of your employees.
If in doubt, as with nearly all the other issues
raised, take advice from your accountant.
