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How Apron helps Prysm Financial manage £2 million of monthly client payments with less risk

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Handling accounts payable for leading hospitality establishments required a tech-driven solution to speed up and streamline our payment processes, reducing the need for time-intensive manual reconciliations of client bank accounts and payments.

The challenge: Incomplete solutions

Before discovering Apron, Prysm explored several traditional wallet-based applications like Modulr. However, these tools only addressed a fraction of their problems, primarily focusing on fund transfers into bank accounts for payments.

These solutions also didn’t solve for Bhimal’s other major challenges:

Lack of integration: Despite trying different embedded payments software, Bhimal found that integration with other parts of his workflow were still lacking. He was still having to lift payment details manually, send remittances manually, and reconcile payments manually.

Risk of fraud: Prysm manages millions of pounds of client funds each month. The solutions Bhimal had been using were inherently more prone to errors and risk.

Prysm needed a comprehensive solution that covered a broader range of issues in the accounts payable workflow.

Discovering Apron

Apron came to Bhimal’s attention through a client referral. Recognising the need for an all-in-one tool to address their pain points in accounts payable, Prysm found that Apron aligned with their specific requirements — namely a need for better efficiency and greater security.

Why Apron stood out

Bhimal chose Apron because we provided solutions to multiple pain points in the accounts payable workflow, integrating seamlessly with Prysm’s accounting software, Xero.

Apron offers full transparency throughout the payments process, making it easier for Bhimal to manage payments and invoices. Additionally, according to Bhimal, Apron’s “user-friendliness and scalability” were vital factors in the decision-making process.

What’s changed since switching to Apron

After implementing Apron, Prysm experienced significant improvements in their financial operations and payments as a service offering:

Time savings and automation: Prysm previously had to manually prepare payment runs for clients and load them into bank accounts, a process that posed security and risk challenges. Apron automated remittances and invoice-to-payment reconciliation in Xero, resulting in streamlined bookkeeping and substantial time savings.

Risk reduction: Managing over £2 million in payments per month came with inherent risks, such as invoice fraud and bank fraud. Apron’s account number matching feature enhanced payment security by ensuring funds were confidently routed to the correct bank accounts.

Scalability and uniform processes: Apron provided Prysm with an approach that could be uniformly applied across all clients. This standardisation facilitated effortless scaling of services without the need to adjust processes for individual client preferences.

Taking the pain out of supplier payments

“Apron takes the pain out of supplier payments. There’s a reduction in risk, a reduction of man hours, and an increase in efficiency.”


Results so far

Prysm has seen the following since implementing Apron:

  • Volume of payments processed: Over £2 million in payments per month, including supplier and payroll payments.
  • Security and fraud prevention: Enhanced security with account number matching to prevent invoice and bank fraud.
  • Efficiency in Reconciliation: Automation of remittances and invoice reconciliation in Xero, reducing bookkeeping time.

HMRC reminds restaurants and takeaways of VAT obligations on hot food

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HM Revenue & Customs (HMRC) has recently issued letters to restaurant and takeaway businesses across the country, emphasising the importance of correctly applying VAT on hot food.

HMRC has identified 4,000 traders who it believes are under reporting their sales and is writing to 500 agents who it has on record as representing those 4,000 traders.

The Institute of Chartered Accountants in England and Wales (ICAEW) has a copy of the letter being sent to selected agents. This suggests that HMRC has analysed data from the ever-popular food delivery intermediaries such as Uber Eats, Just Eat and Deliveroo and has identified discrepancies between that data and filed VAT returns or on corporation/sole trader tax returns.

HMRC has identified 4,000 traders who it believes are under reporting their sales and is writing to 500 agents who it has on record as representing those 4,000 traders.

The Institute of Chartered Accountants in England and Wales (ICAEW) has a copy of the letter being sent to selected agents.

This move comes amidst potential confusion amongst business owners regarding the varying VAT rates applicable to different types of food items.

Understanding VAT on hot and cold takeaway food

The crux of the matter lies in distinguishing between hot and cold takeaway food items and their corresponding VAT rates.

It’s essential to note that all hot takeaway food and most drinks are subject to a standard VAT rate of 20 per cent.

This includes a wide range of items typically sold in a heated state or specifically prepared to be consumed hot.

On the other hand, certain cold takeaway foods can enjoy a zero-rated VAT status.

Notably, this includes items like sandwiches, cakes, and even pasties and other cooked pastry products.

However, for these items to be zero-rated, they must not be advertised as hot products and should not be kept warm post-cooking.

HMRC prompts UK residents with a financial connection to India to disclose under the WDF

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Between August 2020 and December 2020, HMRC issued “nudge letters” to UK residents with potential tax liabilities on overseas income or gains, prompting them to make a disclosure under the Worldwide Disclosure Facility (WDF).

This latest batch of letters specifically targets UK residents with a financial connection to India, such as those that hold a high-yield rupee fixed deposit account or a NRI/NRO/NRE accounts. In most cases, UK residents are subject to UK taxation on their worldwide assets, including overseas bank interest.

Common Reporting Standard (CRS)

It is understood this latest wave of letters follow the receipt of financial information under the Common Reporting Standard (CRS) from the Income Tax Department of India. The CRS is an international agreement involving the UK and over 100 countries including India. It allows for the exchange of information between jurisdictions about financial accounts and investments to help stop tax evasion.

Certificate of Tax Position

Attached to the letters is a Certificate of Tax Position. This instructs individuals to sign a statement stating that either their tax affairs need to be brought up to date through the Worldwide Disclosure Facility (WDF), or they have correctly declared all their worldwide income and gains. the consequence of making an incorrect Certificate of Tax Position declaration could be severe.

About the Worldwide Disclosure Facility (WDF)

UK residents are subject to UK tax on worldwide income and gains, including in India. This is generally reported through an annual self-assessment. Those that have failed to declare may now need to do so under HMRC’s Worldwide Disclosure Facility (WDF).

The WDF, launched in 2016, allows those with undisclosed offshore money, gains, investments or assets to settle and regularise their tax affairs with HMRC, but unlike previous disclosure arrangements, no longer offers any favourable terms or lower penalties.

How far back?

There are complex rules that determine the time period that needs to be disclosed under the WDF. Generally speaking, if a taxpayer has submitted inaccurate tax returns, the time period can be capped at 4 years for innocent errors, 6 years for careless errors and 20 years for deliberate errors. If the taxpayer failed to notify chargeability i.e. failed to register for self-assessment, the default position is 20 years, unless the taxpayer has a reasonable excuse for the failure.

It is a misconception that you can avoid filing a disclosure under the WDF by simply amending or filing historic tax returns.

WDF penalties?

WDF disclosure after 1 October 2018 are subject to the Requirement to Correct (RTC) sanctions which sets out minimum penalties to reflect HMRC’s toughening approach.

FTC penalties for a “prompted” disclosure is generally 200% of the unpaid tax, but can be negotiated down to 150% depending on the quality and accuracy of the disclosure. “Unprompted” disclosures can be reduced down to 100%, again depending on the quality and accuracy of the disclosure.

FTC will not necessarily apply to all years and there are complex rules for determining how many years may be assessed and the rates of penalty chargeable.

Moreover, HMRC have confirmed an inaccurate or incorrect disclosure may lead to a civil intervention or criminal prosecution. It is therefore important to appoint a qualified professional with the relevant experience in dealing with such cases. Jeffreys Henry LLP has significant experience in dealing with HMRC investigations and disclosures, including the current WDF (opened on 5 September 2016) and previous the Liechtenstein Disclosure Facility (closed in 31 December 2015).

The WDF will not be appropriate in every case and in more serious cases an alternative approach may need to be adopted.

Regardless of whether a disclosure is required or not, the consequence of making an incorrect Certificate of Tax Position declaration could be severe.

What is Non-Dom and How Does it Work?

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The term ‘non-dom’ has been under the spotlight in recent news.  ‘Non-dom’ or ‘non-domiciled’ generally refers to residents of the UK whose permanent home is outside of the UK.

By default, UK residents are subject to UK tax on a worldwide basis – meaning that their UK and overseas income and gains are subject to UK tax.

Anyone claiming to be domiciled outside the UK who is a resident in the UK for tax purposes should seek expert advice on the matter. A very brief outline of the current tax regime for UK residents and non-domiciled individuals is set out below.

What is The Remittance Basis of Taxation?

Individuals who are UK residents but non-UK domiciled can elect to pay tax on the ‘remittance basis’ which refers to paying UK tax only on UK sources of income and gains and those remitted to the UK from foreign sources.

The rules concerning what constitutes a taxable remittance are complex. However, to summarise, any foreign income or gains are subject to tax in the UK if those funds are transferred or effectively enjoyed by the non-dom in the UK by any means. This also applies to the case of a close family member such as a spouse, child, or grandchild under 18 who has the effective employment of the funds following a gift outside the UK.  In addition, bringing money to the UK through a trust or company can also give rise to a UK tax liability.

Claiming for The Remittance Basis of Taxation

Once a non-dom has been a UK resident for 7 out of the previous 9 tax years, the remittance basis of taxation will only be available if they make a lump-sum payment of £30,000 for the year concerned.

This charge increases to £60,000 for those who have been a UK resident for 12 out of the past 14 tax years.

Once the individual has been a UK resident for 15 out of the past 20 tax years, the remittance basis will no longer be available and the individuals will be treated as ‘deemed’ UK domiciled for all tax purposes and their worldwide estate would also fall within the scope to UK Inheritance Tax.

A decision on whether or not to pay the remittance basis charge can be made on a year by year basis, but it should be appreciated that foreign income or gains of a year for which the remittance basis is claimed and not remitted to the UK will still be subject to UK tax in a subsequent year if it is remitted to the UK.

Any claim for the remittance basis for any tax year will mean that the usual income tax personal allowance and capital gains tax annual exemption will not be available.

However, those with modest amounts of foreign income or gains (under £2,000 per annum) are not required to pay the charge and they may continue to benefit from the remittance basis of taxation (and also preserve their entitlement to the personal allowance and annual exemption).

National Insurance Rates Rising: April 2022

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From April 2022, the rates of National Insurance Contributions (NICs) are set to increase by 1.25 percentage points. The increase in NICs was legislated as a means to increase funds directed to the National Health Services (NHS).

Who Pays NICs and Who Will be Affected?

NICs are paid by employees, the self-employed, and employers on behalf of their employees. The increase in NICs will apply to employees and self-employed individuals who earn above the current primary threshold limit of £9,568. Those who earn below £9,568 amount are not required to pay NICs. However, as of April 2022, the current primary threshold limit will increase to £9,880.

How Much NICs Will I Be Paying?

Currently, employees who earn above £9,568 pay the main rate of 12%, increasing to 13.25% from April 2022. Employers who pay on behalf of their employees who earn above the current NICs threshold of £8,840, currently pay 13.8%, rising to 15.05% from April 2022. Finally, self-employed people who earn above £9,568 currently pay the main rate of 9%, rising to 10.25% from April 2022.

Employees and self-employed individuals who earn above the higher-rate threshold of £50,270, pay a rate of 2%, increasing to 3.25% from April 2022. Employers who pay on behalf of their employees who earn above the higher rate threshold pay 13.8%, rising to 15.05% in April 2022.

See here for a breakdown of NIC rates by Gov.UK.

Super-Deduction – What is it and how does it work?

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Earlier this year, the Chancellor Rishi Sunak announced a new super-deduction to encourage businesses to make additional investments and to bring planned investments forward.

Chancellor Rishi Sunak said: “With the lowest corporation tax in the G7, we need to do even more to encourage businesses to invest – for decades we have lagged behind our international peers. We need to unlock cash reserves so today I can announce the super-deduction. For the next two years when companies invest, they can reduce their tax bill with super deduction by 130% of the cost.”

Between 1 April 2021 and 31 March 2023, companies can claim a super-deduction in the form of first year relief of 130% on qualifying plant and machinery additions.

This means a company spending £100,000 on qualifying assets would have £130,000 deducted against its taxable profits, resulting in a tax saving of £24,700 per £100,000 of expenditure.
Companies can also claim a 50% first year rate deduction for qualifying special rate assets, such as long-life assets and integral features. This would mean a £50,000 upfront deduction for every relevant £100,000 that’s spent, with the remainder attracting allowances at 6% per annum.

WHAT TYPE OF EXPENDITURE CAN BE CLAIMED?

The type of expenditure which can be claimed in respect of the 130% super deduction and 50% first year allowance is generally quite wide.

Any plant and machinery which would generally qualify for the main rate pool allowance and special rate pool allowance will qualify for the super deduction and first year allowance respectively. This can include:

  • Kitchen equipment, fridges, ovens
  • Computer equipment and servers
  • General fixtures and fittings such as tables, chairs, paintings etc.
  • Air con units
  • Lighting

The list is not restrictive to what has been mentioned above, however these are just some examples. Certain assets such as cars and second-hand equipment and leased plant & machinery do not qualify.

WHAT TYPE OF BUSINESSES CAN BE CLAIMED?

Most types of businesses can claim, including the fit-out, repair or refurbishment of offices, retail and shopping centres, factory and manufacturing plants, mixed use developments, restaurants, nursing homes, hospitals, hotels and banks.

SUPER-DEDUCTION TAX EXAMPLE

The super allowance can particularly be useful for restaurants, bars and hotels.

For example, a hotel spends £1m on qualifying plant and machinery as part of their refurbishment and decides to claim the super-deduction. This will mean the company can deduct £1.3m (130% of the initial investment) in computing its taxable profits. Deducting £1.3m from taxable profits could save the company up to 19% of that – or £247,000 – on its corporation tax bill.

DATE OF EXPENDITURE

The general rule is that the expenditure must be incurred on or after 1 April 2021 and before 1 April 2023. Expenditure is “incurred” on an asset as soon as there is an unconditional obligation to pay for it. Typically, this is the date of delivery, but it can also be the date when a certificate is issued.