Pros and Cons of using a Trading Name

Many people believe that a Company has to use its name as its brand when it communicates with its clients. But it does not have to be. A Company can use a trading name instead. Or even more than one.

A trading name is just a name used instead of the legal name. There is no need to file anything at Companies House nor at HMRC when creating a trading name but there are a still a few things to keep in mind:

1. You will need to inform the bank of those trading names so that you can cash cheques for example. While you can create separate accounts, you don't have even though it's good practice. 
2. Even though no registration is required, the same rules that apply to company formation apply to trading names. For example, the trading name cannot be similar to another company or business name in a way that might be confusing. Also, the use of sensitive words is prohibited as part of a trading name in much the same way as it is for limited company names. You cannot use words like “association”, “group”, “federation” for example.

Tougher penalties for late filers

The new HMRC penalty regime for late filing and late payment of self assessment income tax begins on Wednesday (6 April). As a result, a tax return filed six months late could attract a penalty of at least £1,300. In the past, being late to file your tax return would generate a fine but that fine would be waived is no tax was due. Not anymore!

The new sanctions are:

• Just one day late: an initial penalty of £100, even if there is no tax to pay or all tax owed has been paid.
• Three months late: an automatic daily penalty of £10 a day up to a maximum of £900.
• Six months late: further penalties charged of the greater of 5% of tax due or £300.
• Twelve months late: the penalty will be the greater of 5% of tax due or £300. In serious cases, a higher penalty of up to 100% of the tax due could be charged.

The penalties are on top of the interest HMRC will charge on outstanding amounts, including unpaid penalties, until payment is received.

SMEs face potential penalties on accuracy of records

HMRC are planning a programme of checks that will review the adequacy and accuracy of records kept by small and medium-sized enterprises. The programme will use existing law regarding both record-keeping requirements and penalties for failure to comply, with sanctions imposed for significant failures. The Revenue says it conducted a random enquiry programme that indicated poor record-keeping is a problem for 40% of SMEs. The department has issued the consultation document Business Records Checks to discuss the implementation of a new programme. The campaign would begin in the second half of 2011, with around 200,000 small businesses being selected for one of the new checks. HMRC expect to raise £600 million over its first four years.