‘The CBI called on the Chancellor to use his March Budget to score the growth and investment policy goals he put forward in his Autumn Statement and give the UK economy and jobs a real boost.’

‘In its submission to the 2012 Budget, the CBI also urged changes to the UK tax system which it believes could help persuade businesses to invest in the UK and further stimulate growth.’

The Chancellor will present his Budget on Wednesday 21 March 2012. We will update you with significant announcements.

Internet link: CBI

Although the 31 January 2012 deadline was unchanged, HMRC announced that no penalties would be issued for online returns received by midnight on 2 February, due to industrial action at HMRC contact centres.

The busiest day for online returns was 31 January, when HMRC received nearly 445,000 returns. Apparently the ‘rush hour’ occurred between 4pm and 5pm on 31 January, when 37,460 returns (more than one every 6 seconds) were received by HMRC.

David Gauke, Exchequer Secretary to the Treasury, said:

‘I’m delighted so many people filed their tax returns online this year. The record number proves that it’s quick, easy and secure to do.’

‘HMRC have always been clear that they want returns not penalties, so it is good news that over 90% of all returns were submitted on time.’

Internet link: Press release

HMRC have previously offered Tax Catch Up Plans to Plumbers, Dentists and Tutors amongst others. According to the press release their latest campaigns will target:

‘Missing returns. This will contribute to wider HMRC activity tackling failure to complete tax returns. It will initially focus on those who fail to complete tax returns and who are liable to pay tax at the highest rates.’

‘Home improvement trades. This will build on campaigns aimed at plumbers and electricians, and will include several 100,000 tradespeople in construction and building work such as roofing, window fitting, bricklaying, carpentry and joinery.’

‘Direct selling. This will target customers who ought to be paying tax on income they earn from buying and selling goods direct to others, or from the commission on these sales.’

‘As with previous campaigns, the focus of the new campaigns will be on providing those in the selected groups, who may not be paying the tax they owe, a chance to put their affairs in order on the best possible terms.’

HMRC have announced that they will be using new technology to identify traders in both sectors with unpaid taxes.

Marian Wilson of HMRC said:

‘We are offering all the people targeted the opportunity to come forward. Penalties will be higher if we come and find people after the opportunity.’

Internet links: News release HMRC website

The government is asking businesses and public organisations to pay suppliers on time and for small businesses to pursue those who put them at risk by delaying payment.

Prompt payment is vital for SMEs, with many businesses not able to survive the cashflow problems that late payments create.

The government is encouraging SMEs to:

• proactively agree payment terms before delivering orders.
• sign up to the government’s Prompt Payment Code, run by the Institute for Credit Management
• raise complaints over late payment from Code signatories and use legislation already in place to help companies pursue late payers
• use electronic invoicing where possible.

Internet links: BIS press release Get Paid guide

HMRC will now postpone making any new business records check appointments until the revamped approach is launched early in 2012/13. The delay is to allow further consultation with representative bodies on the implementation of the recommendations in the review and on some details of the new approach.

HMRC’s Director of Local Compliance, Richard Summersgill, said:

‘Four out of ten businesses had an issue with their business records, and of those that required a follow-up visit, we found that some 90% subsequently improved their record-keeping.’

‘However, after reviewing the pilot programme and listening to the views of businesses and representative bodies, we acknowledge the need for a fresh approach to business records checks.’

Internet link: News Release

Employers have been aware for some time now that the government is to introduce legislation designed to encourage more people to save for their retirement.

Under the rules employers must:

• ‘auto-enrol’ eligible employees into a pension scheme
• make employer pension contributions for them, and
• make deductions of employee pension contributions from the employees pay.

The rules come into force from October 2012. However they only impact on the largest employers from that date, as few employers have a workforce of more than 120,000. For those employers with a more modest number of employees the start dates have been amended. This was previously announced and has been confirmed in a written ministerial statement.

Steve Webb, the Minister of State, Department for Work and Pensions confirmed:

‘On 28th November 2011, the Government announced that the timetable for the implementation of automatic enrolment will be adjusted so that small businesses are not affected by the reforms during this Parliament. This will provide them with some additional breathing space to prepare for the reforms whilst operating in tough economic times.’

‘I can now confirm that under the revised timeline, all employers with an existing staging date of on or before 1st February 2014 are unaffected. This means that no large employer will have to make any changes to their plans – which are in many cases already advanced.’

Medium sized employers will be re-allocated automatic enrolment dates between 1st April 2014 and 1st April 2015. This means that the implementation dates of some of these employers will be up to nine months later. However, this still means that around 70% of eligible workers will be automatically enrolled before the end of this Parliament compared with around 75% under previous arrangements.’

‘Small employers will be allocated automatic enrolment dates between 1st June 2015 and 1st April 2017.’

The guidance contains a table of revised implementation dates for small and medium employers, by size. We will keep you informed of further announcements.

More information on employers’ obligations is available on the Pensions Regulator website or please do contact us.

Internet links: Pensions Regulator website Statement

The law which applies to how businesses use cookies and similar technologies for storing information on a user’s equipment such as their computer or mobile device changed on 26 May 2011. The ICO guidance on the new cookies Regulations sets out the changes to the cookies law and explains what steps businesses need to take to ensure they are complying.

Following an EU Directive, businesses are now obliged by law to obtain the explicit consent of each of their websites’ visitors before storing any data on their device. Websites must also provide ‘clear and comprehensive information‘ about the purposes of the storage.

The UK actually introduced the amendments on 25 May 2011 through The Privacy and Electronic Communications Regulations 2011. However, website owners have been given until May 2012 to make their websites compliant with the new legislation.

It remains to be seen how strictly this law will be enforced, but the ICO have already introduced a maximum penalty of £500,000.

Internet link: ICO cookie guide

The CBI’s Industrial Trends Survey reported that demand in the UK manufacturing sector strengthened in February, with both export and domestic order books returning to normal levels for the first time since last August. Manufacturers expected a solid rise in output over the next three months.

The Eurozone purchasing managers index (PMI) edged back into contraction in February after improving in December and January. The German and French PMIs both fell, but remained modestly in positive territory, while the rest of the Eurozone saw a small acceleration in the fall in output. Meanwhile, the EC Eurozone consumer confidence indicator increased slightly for the second-consecutive month, but remained deeply negative.

Pay forecasts for 2012 reflect faltering confidence amongst UK businesses. Two thirds of respondents state that the worst of the recession is not over for their organisation. Almost a third expect to miss performance targets this year.

Organisations are keeping a tight rein on pay increases as a result – leading to concerns over the impact on workforce morale.

However, there is good news for some employees, as the majority of private companies plan to lift the pay freezes implemented during recession.

Business confidence under strain

UK organisations predict a challenging business environment in 2012.

Two thirds (66%) of respondents believe that the greatest impact of the recession is still to come for their organisation. Only 7% believe the worst of the crisis is over. By contrast, 61% of firms experienced an upturn in business performance last year.

Almost a third (32%) of firms expect below target performance this year – up from less than 23% in 2011.

Real pay squeeze

As a result of faltering business confidence, close to half (43%) of organisations report pressure to decrease pay in order to control costs.

Despite this, the strong majority (85%) of organisations actually plan to increase pay in 2012 – but at a rate well behind inflation.

Around three quarters (75%) of private sector organisations, and some 90 per cent of public sector organisations, will increase pay – by a median of 2.8%. The Consumer Price Index (CPI) currently stands at 4.2%.

And as inflation continues to erode take-home pay, organisations report a detrimental impact on workforce morale. Over half (5%) of respondents agree that uncertainty around pay has resulted in a downturn in employee engagement.

Adam Burden, reward information consultant at Hay Group said, “As ongoing instability hits business confidence, a continued squeeze on pay is inevitable. Our research reveals the demoralising effect pay uncertainty is having on employee morale”.

Bonuses rolled back

Falling business confidence is also affecting the prospects for bonus payouts in the coming year.

In 2011, almost three quarters (73%) of organisations with bonus plans forecast payments to be on or above target. This year, the proportion has fallen to 60%.

Pay freezes begin to thaw

The report offers a ray of hope for some workers, however: the lifting of pay freezes in the private sector.

Over a fifth (21%) of private sector organisations implemented freezes in 2011. In 2012, over half (58%) anticipate lifting these.

The outlook is starker in the public sector, where more than two thirds (67%) of organisations froze pay in 2011. Only a third (34%) will lift freezes this year.

Burden adds, “Organisations must take an open and transparent approach to pay to ensure that productivity doesn’t suffer. Engaging employees and communicating reward policy will be key to maintaining motivation during the difficult year ahead”.

www.haygroup.com