Autumn Winter 2016

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AUTUMN/WINTER 2016 AUTUMN/WINTER 2016
What do we do?
Every business, whether large or small,
will experience outstanding debt now
and again. Often these debts are
ignored, with businesses thinking it is
not worth the hassle to try and recover
them. In contrast, we try to recover
every debt – no matter how small – as a
matter of principle.
How can we offer our service free?
The legislation covering compensation
and costs for recovering debt lets
us claim interest, late payment
compensation and reasonable costs for
recovering the debt, allowing us to add
these costs to the debt. So they may
be recoverable from the debtor.
Interest and late payment
compensation
If you have not included a clause in your
terms and conditions and you supply
goods and services, the Late Payment
of Commercial Debts (Interest) Act 1998
allows you to claim ‘statutory interest’.
Interest is applied to each outstanding
invoice at 8% plus the Bank of England
base rate (currently 0.25%), 30 days
after the date of the original invoice.
You can also charge a business a fixed
sum for the cost of recovering a late
commercial payment on top of claiming
interest from it.
The amount you’re allowed to charge
depends on the amount of debt.
What is the process we follow?
We send a Letter Before Action, this is a
legal notice to your debtor. This letter
informs them of:
• invoice amount due
• interest claimed
• late payment compensation claimed
• reasonable costs claimed
“You have a statutory
right to claim interest
and compensation on
late payments.”
All of these sums are added together
and become the sum due. The debtor
is then given seven days from the date
of the letter to contact us to make
payment in full or propose a repayment
plan.
For some businesses, awaiting payment
of an invoice may not cause any
cashflow issues. However, if you are
a sole trader or small/medium sized
business waiting more than 30 days
for payment could lead to significant
cashflow problems and even the end of
your business.
Our aim is to ensure that our clients
receive the full outstanding invoice sum
and with our service being FREE – what
have you got to lose?
We have recovered 78% of our clients’
outstanding debts just by sending our
Letter Before Action, demonstrating
that our service is quick, effective and
economical for your business.
Business-to-business debt recovery
Are you tired of the same old excuses? If you are, then
you may benefit from our FREE business-to-business debt
recovery service.
If you would like Dianne to help your
business’s finances then call her on
01228 713070.
Dianne McDermott
Debt Recovery Manager
dianne.mcdermott@davidallen-
If you would like further
information or to take
advantage of our FREE
business-to-business
debt recovery service,
call Dianne on 01228
713070.
We do, however, already know that the
UK has up to two years to exit the EU
and there may be an option to extend
this period by a further two years if the
majority of the member states agree. If
no extension is agreed, the UK would
cease to become an EU member state
at the end of the two-year period.
The VAT legislation is currently dictated
by the EU, with the member states
having the freedom to adjust certain
rules and rates within specific limits set
by the EU.
Now we are leaving the EU, the UK will
have a free rein to implement VAT rules
and rates which only the UK must follow
and abide by.
Due to the revenue which is raised from
VAT, it is unlikely that the Government
will totally rewrite the legislation,
they will probably replicate parts
of the existing legislation with few
amendments.
The ‘Leave’ campaign indicated that
they would like to zero-rate some items
such as fuel and sanitary products
which the UK was unable to impose due
to EU restrictions. However, the main
area likely to see significant change will
be the treatment of the sale of goods to
the EU.
Currently, you have to charge VAT
on dispatches to non VAT registered
individuals within the EU. Dispatches
to EU VAT registered businesses can
be zero-rated as the reverse charge
mechanism comes into play. There is
no VAT on exports to non EU countries.
It is therefore not clear if sales to the EU
will now be chargeable at the standard
rate of VAT or will be zero-rated if the
UK retains a VAT system similar to what
is currently in place.
“Now we are leaving the EU,
the UK will have a free rein to
implement VAT rules and rates
which only the UK must follow
and abide by.”
On a positive note, Intrastat and EC
Sales lists will no longer need to be
completed. However, this would
be replaced by the requirement to
complete additional import and export
declarations.
The decision to leave the EU will have
a significant impact on businesses who
sell electronic services online such
as apps, music and videos which are
available to download in the EU. VAT
needs to be paid on these sales in the
country where the file is downloaded.
Currently the VAT can be accounted for
through the MOSS accounting scheme,
where you can declare and pay the VAT
over on one return regardless of the
country involved. The MOSS scheme
may cease to be available once the UK
leaves the EU, meaning that businesses
may have the additional administrative
burden of registering for VAT in each
individual country they sell electronic
services to.
We will keep you up to date with any
developments as they are announced,
but it is with certainty that changing
times lie ahead.
VAT and the implications
of Brexit
Following the monumental decision to leave the European
Union (EU), there are significant questions about the
position regarding VAT, this being an EU tax.
As there is so much to consider, the Government is yet to
announce the impact this will have in terms of VAT.
If you would like more information
about VAT call Julie on 01228 711888.
Julie Osborn
Business Services Specialist
Whatever your VAT query,
speak to Julie by calling
her on 01228 711888.
‘The cheque is
in the post’