The old adage that "cash is king" is never truer than in a recession. So what can we do to improve cash flow? Here are some ideas that may help:-

• Tighten payment terms. If possible, get deposits up front;
  
  
• Defer tax payments. Call the HM Revenue & Customs Business Payments Support Line on 0845 302 1435. They are helpful and their interest rates are low (2.5% in most cases);
  
  
• Focus cash collection on the big accounts;
  
  
• Defer 60% of the increase in your business rates. When your local council writes to you, apply to have 60% of your increase deferred to 2010/11. This will be especially valuable for businesses whose transitional relief has ended;
  
  
• Negotiate an overdraft or an increase in your lending well before you need it;
  
  
• Run a weekly cash flow forecast so you know of any problems ahead;
  
  
• Stick rigidly to your policy for dealing with late payers. Make no exceptions.

Criminal gangs are targeting taxpayers with thousands of scam emails offering bogus tax refunds. The online attacks, know as "phishing", have peaked during July leading to increased reports of fraud to HM Revenue & Customs (HMRC).

The scams tell the recipient that they are due a tax refund and ask for bank or credit card details so that the fictitious tax refund can be paid out. HMRC is warning customers about the possible dangers of falling for this scam during this phase of increased attacks on UK residents.

All customers who provide their details to the fraudsters run a real risk of their accounts being emptied and credit cards used to their limit. The victim also risks having their personal details sold on to other organised criminal gangs.

Lesley Strathie, HMRC Chief Executive said: "Customers due a refund are only ever contacted in writing and by post. We never use emails, telephone calls or external companies in these circumstances. I would strongly encourage anyone receiving such an email to immediately send it to us for investigation and delete it from their computer".

Good advice

Andrew Hamilton FCA CTA Cert PFS

The limit for tax free investments in Individual Savings Accounts (ISAs) has been increased from £7,200 to £10,200. For tax year 2009/10 and onwards, those who have reached their 50th birthday can invest £10,200 into an ISA (note the increase takes effect from 6th October 2009). From tax year 2010/11 the increase is extended to everyone. (NB you can invest up to £10,200 into an ISA as long as the cash element does not exceed £5,100; in practice, cautious savers will buy a £5,100 Cash ISA; those with a more adventurous attitude to risk will buy a £10,200 ISA with exposure to stocks and shares as well as cash).

Planning Point
For those aged 50 or over who have already invested £7,200 into a 2009/2010 ISA, remember to top this up by £3,000 on or after 6th October 2009 (our reading of the HMRC press release says that this must be done with the same provider).

Did you know that there is some scope - but not a lot - for joint-owners of a property to be taxed on the rental income other than in equal proportions? Talk to us if you think this could be of relevance to you and if possible, BEFORE you make a joint investment.

As most of you will know, the pound has recently declined in value against the major foreign currencies, notably the dollar and the euro. If you are selling overseas assets, this is usually good news; for example a property bought when the euro was worth 67p and subsequently selling at 85p per euro translates into a currency gain (regardless of the actual euro sale price) of 33%.

If, however, you borrowed in euro to purchase the property, the resulting currency loss is not deductible from the currency profit meaning that you would pay a lot more Capital Gains Tax than you would think. This may seem very unfair, but unfortunately it is true!

The provision of one mobile phone to any employee is tax free in the employee's hands but ONLY if the phone is in the employer's name. Where the employer reimburses the employee for the costs of their own phone, the employee is liable for tax, subject to a separate claim by the employee for the business element.

Having said that taxes would never go up under their watch, the Government has passed legislation to increase the top rate of income tax to 50%. Here is a summary of who will be affected and when:-

• The new rate doesn't come in until 6th April 2010.
  
  
• The new rate only affects those taxpayers whose income exceeds £150,000 per annum.
  
  
• The tax free personal allowance (currently £6,475) will be progressively withdrawn for those individuals earning between £100,000 and £112,950.
  
  
• Those taxpayers who earn more than £150,000 per annum will not be allowed full income tax relief on pension contributions made (see further article).
  
  
Planning Points
• It may be worth accelerating post April 2010 income into the current tax year.
  
  
• Sole traders and partnerships may wish to turn their businesses into companies and extract income via dividend rather than salary.
  
  
• Any opportunity to translate earnings into capital gains (taxed at only 18%) should be considered. (In appropriate cases we have already put in plans for clients and anticipate further discussions between now and 5th April 2010).

From 6th April 2011, tax relief on pension contributions made by taxpayers who have income in excess of £150,000 will gradually be reduced from 40% to 20%. Once your income reaches £180,000 then income tax relief is worth 20%, the same as a basic rate taxpayer.

To stop higher earners putting large contributions into a pension scheme between now and 6th April 2011, special anti-avoidance rules have been introduced with effect from 22nd April 2009. These affect taxpayers with earnings over £150,000 in the current tax year (2009/2010) or either of the previous two tax years.

If you fall into this category, then you will continue to get higher rate tax relief on regular pension contributions up to 6th April 2011. Regular contributions are defined as monthly or quarterly payments but specifically exclude annual payments. A new cap will restrict income tax relief to the basic rate (20%) for any further contributions made over and above your regular pension contribution.

This cap is set at £20,000 less any contributions you have already made. For example, if you pay £1,000 per month (equal to £12,000 p.a.), you could contribute an additional single gross pension premium of £8,000 and get 40% income tax relief.

Caveat
If you have had taxable income of more than £150,000 in 2007/08 or 2008/09, please contact us before making any additional pension contributions, as you may be caught by these new rules.

There are now two nations within the UK. Not rich and poor, as identified by Disraeli, but pension-rich and pension-poor as created by Brown. On the one hand there are private sector employees who have to provide for themselves in their old age. On the other, there are state sector employees who have inflation-proof pensions thrust upon them. The government has undermined company pension schemes over a long period but has protected the pensions of the vast numbers of people who work for the state.

It has been calculated by the Treasury's actuaries that there is already a total contingent liability hanging over the next generation of £900 billion. (The British North-American Committee, an independent thank tank, has calculated that the amount is actually £1.2 trillion). This is worth £20,000 for every man, woman and child in Britain. Taxes of course may have to increase, but the next government, of whatever colour, will need to take drastic action to reduce public spending. These measures could include some or all of the following:-

• Closing all final salary inflation-linked pension rights to new employees in the public sector.
  
  
• Negotiating changes in pension rights to existing public sector employees.
  
  
• Allowing private pension funds to reclaim tax credits on dividends once again (scrapped by the last chancellor).
  
  
• Increasing the current maximum higher rate relief on private pension premiums from £30,000 to £100,000.
  
  
• Abolishing all Quangos and all non-essential jobs in the public sector.
  
  
• Cutting the total cost of public sector employees - from doctors to dustmen and from judges to librarians - by at least 10% over the term of the next parliament.

If you are an employer you will already be aware of the nightmare of trying to adhere to all the rules and regulations of employment law. Whilst we can deal on your behalf with many of the mechanics of payroll administration, the most common problems arise not in that area but from a failure to fulfil basic responsibilities. Here is a checklist of some of those more important responsibilities:-

• Do you check that every new employee is eligible to work in the UK?
  
  
• Do you issue all staff with written terms of employment within 2 months of their starting?
  
  
• Do these terms tell them all they need to know, for instance what happens if they are sick?
  
  
• Are you aware of the national minimum wage rates? Do you carry employer's liability insurance?
  
  
• Are you obliged to provide access to a stakeholder pension scheme?
  
  
• Do you meet the minimum annual leave provisions?
  
  
• Do your part-time employees receive a paid holiday entitlement?
  
  
• Is there such a person as a casual employee?
  
  
• If you have any self-employed contractors, are you certain that they are not really your employees?

The government website www.businesslink.gov.uk offers clear guidance on the above and other related matters. If you follow the trail "employing people/taking on staff" you will discover a useful checklist. In any event, do remember that the H M Revenue & Customs have powers to inspect and penalise you if you fall short and do ask us for a "payroll" quote if you would like our help.

There is a very gloomy economist called Bill Bonner who some of you may follow. He is very critical of America and Europe's decision to stimulate their economies by printing money (known as Quantitative Easing). In a recent article he looks at the Roman Empire's (failed) attempts to stimulate their economy.

"The Roman Empire is in some measure a stimulus story. It conquered. It grew. Each conquest brought more booty - gold, silver, land and slaves. Each led to more conquests, bringing forth more booty.

But the stimulus of this booty did not stimulate real prosperity - it undermined it. First, slaves bought by rich landowners destroyed the free labour market and ruined small farmers. Then imported wheat from the provinces - paid as tribute - put the large-scale farmers out of business too. Italy was then dependent on foreigners for its food. In the first century AD, Roman conquests reached the point of diminishing returns; the stimulus came to an end. However borders still had to be protected, and Roman mobs (made up of displaced small landowners and out- of-work labourers) still needed bread and circuses. This drained the Treasury.

The first financial crisis of the imperial period came early. Caesar Augustus tried to solve it with more stimulus. Neither paper money nor the printing press had been invented, so Augustus increased money supply in the only way he could; he ordered slaves in the silver mines in Spain and France to work around the clock. This did not bring prosperity; it caused price inflation. In a period of about three decades, Rome's consumer price index almost doubled. When mining output could be increased no further, Augustus's great-nephew, Nero, found a new source of stimulus; he reduced the silver content in the coins. This source of stimulus proved ineffective, but enduring. By the time barbarians took over in 404AD, the silver denarius contained almost no silver at all. Rome itself was played out too".

Rome's problem was that by the end it neither made anything which it could eat or sell to bring in revenue, nor provided a service which anyone wanted to buy. If we see a parallel with Britain today it is clear what we must do to keep the barbarians from our own gates.

    

A Cambridge undergraduate was cleanbowled by Trueman:
"That was a good ball, Mr Trueman"
"Aye lad, it were wasted on thee" /div>

A good golfing partner is one who is always slightly worse than you.

If your opponent has trouble remembering whether he shot a 6 or a 7, he probably shot an 8.

It is invariably true that only very bad golfers give golfing tips to their opponents.