Carillion Saga…

Paula Veysey Smith • 29 January 2018

The saga of Carillion continues with the news only this morning showing that payments into the company pension fund were missed as its troubles grew though dividend payments to shareholders and bosses bonuses continued. All the signs were there that Carillion was a bad debt waiting to happen and many of the companies now caught up in its collapse may be wondering why they didn’t act earlier to recover their funds. What can you do when you are seriously looking down the barrel of a bad debt to ensure the bullet doesn’t hit you squarely between the eyes?

1. Assess the situation carefully. Is the non-payment due to poor administration or the company going it administration? The more you build a relationship with your client which we talked about in the last blog the more likely you are to be able to gauge the reason for non-payment.
2. Ensure that you keep a full set of notes when you begin credit chasing in earnest. Most modern software packages will enable you to do this and it gives a concise record of the communication you’ve had with the client and the actions you have taken. It is valuable information when you are negotiating with the client as you can give exact details of the exchanges you’ve had with the company and will also be important if you decide to go to court to reclaim your debt.
3. I’m going to mention using legal measures to reclaim your debt at this point. I have used Money Claim Online (MCOL) which is effectively going through the small claims court to issue proceedings when a debt is overdue. The online service, MCOL, is very efficient and cost effective. However, my experience is that if you get to this point the debt is almost certain lost but you may be able to gain the satisfaction of being able to enforce a County Court Judgement (CCJ) against the debtor. You also could use solicitors at this point who may be able to induce your debtor to pay with the use of legal letters but again, my opinion, is it is much better to work out your dispute in relationship with your client rather than using the force of the law, which unfortunately can be a path into nothing.
4. My last two points are around what YOU can do rather than going legal. Through negotiation there is much you can achieve so go and “do deals”. My understanding is that the Carillion unsecured creditors will be lucky to receive 1p in the £1 of debt they have. In many situations there just isn’t enough funds in the company for any pay out to an unsecured creditor. I have helped many of my clients reclaim the vast majority of their debt by offering payment terms of a certain amount per month or giving inducements so that if an amount is paid immediately then the rest will be credited off – you will certainly get more than a penny in the pound by doing this.
5. There’s nothing quite like nagging – it’s the dripping tap syndrome that can ultimately work. Just keep contacting the customer until finally they just give in and make sure your payment is one that happens. In fact one of my favourite exchanges with a client’s customer occurred due to this strategy. I knew that the customer was in trouble and that I only had a small amount of time to secure the funds; we had always had a good relationship and I made it my mission to call him twice a week as he promised payment though none arrived. In the end I made him an offer he couldn’t refuse, having a bit of a sweet tooth, and promised to send him his favourite confectionery if he actually sent the payment. If worked, the cheque came through and was honoured and I duly despatched a number of Walnut Whips to him. Yes, this story is a bit flippant but shows what you can achieve if you are bold enough to be creative!

If any of the points raised in the last two articles has struck a chord please do get in touch with us as we have years of experience with credit control. Your business is too important to let it fail due to a bad debt and professional assistance from the start can help to protect you against this.

Paula

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by Paula Veysey-Smith • 5 June 2025
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Working from home

Working from Home Expenses You Can Claim in 2025–26

by Paula Veysey-Smith • 22 May 2025
Do you work from home? If you do, either full-time or part-time, you may be eligible to claim certain expenses either against your own taxes or your Limited Company ones. Many factors will determine what you can claim such as working location, employment status (employee, self-employed, company director), and how much of your home is used for work. What can I claim as an employee of a company? You can claim: A flat-rate allowance of £6 per week (or £26 per month) without needing to provide evidence of expenses. This is the simplest method and can be claimed via your tax code or tax return. The actual costs (if you don't use the flat rate) which can include a proportion of the following: Heating and electricity Internet and phone bills Water (if it’s metered and usage is clearly work-related) You cannot claim rent or mortgage interest unless you're self-employed. These expenses can be claimed via HMRC’s online portal if they have not already been reimbursed by your employer! What can I claim if self-employed (sole trader or via a Partnership)? Here you have two options: 1. Simplified Expenses (Flat Rate) Based on hours you work from home each month: 25–50 hours/month → £10/month 51–100 hours/month → £18/month 101+ hours/month → £26/month 2. Actual Expenses Method You can claim a proportion of: Rent or mortgage interest (not capital repayments) Utilities (gas, electricity, water) Council tax Internet and phone Cleaning and maintenance Home insurance (if work-related) You’ll need to work out the percentage of your home used for business, usually by the number of rooms (not including bathrooms, corridors, storage space) or square footage. One word of warning is never claim the whole use of a room for business as every room will have duality in use. This is also important if you own your home as a room declared purely an office could attract Capital Gains Tax when the property is sold. We suggest that any room should only be claimed at 90% for business. And only one room can be used, not a multiple! These costs should be included on your Self-Assessment tax return. Can I make a claim for these expenses in my Limited Company? Yes, you most certainly can. At MPower Accounting we not only recommend using the actual expenses method as set out above, we provide our clients with a bespoke spreadsheet to calculate these expenses, and others such as mileage, on a month-by-month basis. These amounts can then be claimed as expenses to the Company and paid out to you. It is one of the tax efficient methods of taking money from your business. Capturing and calculating monthly your regular working from home expenses is the best way of ensuring they are recorded correctly. To help you do this we are offering a free download of the spreadsheet usually only available to our clients; please use the link below to get this. Paying taxes is a necessary evil but I am a firm believer in minimising this liability for both individuals and companies. Correctly claiming working at home expenses is one way to reduce your tax bill. Please do contact us if we can help you further identifying all the expenses you can claim and also for further assistance in how to correctly use and populate the downloaded template.

Tax Efficient Salary for Directors in 2025-26

by Paula Veysey-Smith • 28 April 2025
Key changes in Employer National Insurance (NI) rates and thresholds for the 2025-26 year have meant advice on the tax efficient salary for Directors has significant altered.
A box of receipts sits on a desk next to a lamp and calculator - Making Tax Digital

How will I be affected by Making Tax Digital for Income Tax (MTD for ITSA)?

by Paula Veysey-Smith • 23 March 2025
HMRC are starting to send out letters to sole traders and landlords in the initial steps towards Making Tax Digital for Income Tax. If you receive one of these letters do not panic, help is at hand. So let’s answer your most asked questions about Making Tax Digital. What is Making Tax Digital for Income Tax? Making Tax Digital for Income Tax (MTD for ITSA) is a UK government initiative aimed at modernising the tax system. It will require individuals and businesses to keep digital records and submit tax information to HMRC using compatible software. It is part of a broader initiative to digitalise tax returns and follows on from the changes already implemented for VAT reporting. Will Making Tax Digital affect me? MTD for ITSA will affect individuals who: Are self-employed (e.g. sole traders) and/or landlords (earning income from property). Have a total income over £50,000 per year (combined from self-employment and property). Are currently required to complete a Self-Assessment tax return. From April 2026 , MTD for ITSA will be mandatory for those earning over £50,000. From April 2027 , this threshold will reduce to £30,000. What will I have to do if my earnings are over the threshold? You will need to keep digital records for income and expenses which will mean using MTD compatible software. This will be a major change for those of you still keeping paper records. Instead of submitting an annual self-assessment return you will need to submit quarterly updates 4 times a year to HMRC. At the end of the tax year an End of Period Statement (EPOS) and a Final Declaration will need to be submitted which essentially replaces the current Self-assessment return. All of these will be required digitally, paper records and manual calculations will no longer be accepted. This means that instead of 1 annual return you will need to make 6 submissions! So what software do I need to use to keep digital records? Acceptable software include: QuickBooks Xero FreeAgent Sage or, HMRC-recognised spreadsheet tools with bridging software ( not highly recommended ) No more shoeboxes of receipts or manual books — everything must be digitally recorded. When will I need to register for MTD? You’ll need to sign up for MTD for ITSA before April 2026 . This is a deadline and not a target, signing up early is always advisable. HMRC will provide a service for you to do this but having the guiding hand of an accountant will make this a much easier task.
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