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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.

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.

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).

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).

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.