The Fizz! Blog

Bank charges - an unpopular view?

The Supreme Court (it doesn't feel right to be typing that, we're not American!) has ruled that UK banks don't have to repay charges levied on the current accounts of 1.2 million of their customers.

I suspect that the general view is going to be that this is a bad thing, and just another example of big banks ripping off the man in the street.

I don't really agree with that.  I actually think that there's a moral argument to be made the other way.  The customers concerned signed up to the terms and conditions of those accounts willingly.  If they kept to the commitments they made - only spending money that they had, unless they'd arranged an overdraft in advance - then they wouldn't have to pay anything.  If they reneged on, or overlooked, their commitment, they'd pay the charges that had been specified.  It wasn't a complicated arrangement by any means.

And it doesn't seem unreasonable to expect customers to stick to the agreement.  If they spend the bank's money on themselves - which is what an unauthorised overdraft amounts too - then surely they should stick to their side of the bargain and pay the agreed fees?

While there are certainly cases where banks do act unreasonably, and sometimes charges can lead to unauthorised overdrafts, which lead to more charges and so on, it can't be right to just tear up the customer side of the agreement for every single account holder who hasn't stuck to their side of the bargain and give them all their money back.  Nobody forced them to enter into the agreement, and they'd have been pretty unhappy if the bank had suddenly decided that it wasn't going to stick to its own side of the agreement and, for example, refuse to release the customer's money to them.

The wider picture, I think, is a failure of people to take responsibility and ownership of their own financial affairs.  It's unfortunate if someone doesn't have the money to meet an unexpected bill, but that's an issue around budgeting, saving and living within your means.  Along with many other people, it does seem to me that somewhere over the last 10 or 20 years taking responsibilty for one's own financial decisions seems to be a concept that has been forgotten about by many - thought with the endless offers of cheap borrowing we've all been exposed to over that period, it's understandable to some extent.

There will be no doubt be a lot of comment about how this ruling hits those on lower incomes and benefits "rich" bankers.  But, unfortunately, it's those who have the lowest incomes who are most in need of careful budgeting, and others can't be expected to take that responsibility away from them.  No matter how low your income, you have to a) work out a way of living within your means and b) take corrective action if you see problems on the horizon.

Perhaps this verdict might encourage everyone to think a bit more about financial education and personal responsibility.

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VAT rate change - planning opportunities

The VAT rate is going back up to 17.5% on 1 January.  At least, it's scheduled to go back up to 17.5% - there's a school of thought that says it might be raised higher, as a tax-raising measure.  I can't see it myself, I don't think another tax hike affecting poor and rich alike will go down well in an election year.  We'll have to wait and see.

In any case, there are some opportunites for a bit of VAT planning around the rate change.  If you're selling to VAT registered businesses, they won't be fussed if you charge them 15% or 17.5% as they can reclaim the VAT anyway.  But if you're dealing with customers who *can't* reclaim the VAT - like private individuals or many charities - then it might well be desirable to charge them 15%, not 17.5% - either because you'll lower your price to them, or you'll keep the gross price the same but be able to give less to the taxman and keep more yourself.

If so, then in most cases, if your customer agrees, you can invoice them in December, not January, fixing the VAT rate on the invoice at 15%.  There are some specific rules to prevent "abusive" early invoicing - in particular, on sales of more than £100,000 - but for many small businesses it's very workable.  Give us a call or email if you'd like to discuss it.

www.fizzhq.com

Plug pulled on Microsoft Office Accounting

Microsoft have decided to withdraw their accounts package, Microsoft Office Accounting.  It was launched a couple of years ago, and, as I wrote at the time, it appeared likely to cause Sage and QuickBooks some real problems, particularly as the basic version was free.

Well, it didn't work out that way.  Firstly, Microsoft never really seemed to push it too hard.  Although I'm sure it was available, I didn't notice it coming through any of the channels I would have expected to see it.  And, although they launched an accountants' "club" to try and promote the software via firm like Fizz, after initially giving us an MS Office licence as an incentive to join, they just went completely silent.

Secondly, the thing that has actually caused problems is the rise of online accounting services, like our own FizzBooks.  They meant that the market for traditional accounting software has been gradually contracting anyway, so not only did Microsoft not get as big a slice of the pie as they hoped, but the pie was shrinking at the same time.

Fortunately, we've no clients using the package.  For companies that are using it, there should be minimal disruption if they want to continue using it for accounting - ongoing support is being provided, and you often don't need support or upgrades for accounts software anyway - I'm still happily monitoring my personal finances on a copy of Microsoft Money 1999.  For companies using Microsoft Office Accounting for their payroll, there is a problem, as the use of that is just being withdrawn in December, in the middle of the PAYE year.  So users will have to process the remaining three months and the year-end of their payroll some other way.

www.fizzhq.com

Online accounting with Fizz

We've launched a new web-based bookkeeping system, which, here in the office, we're calling FizzBooks. Rather than keeping your accounts on a software package on a PC in your office, you log into our system and create and maintain your accounting records online.

Some of the key benefits:

• You’ll never have to worry again about upgrades to your accounting software. Every time you log on, you’ll be using the latest version.
• If you’re away from the office and your usual PC, you can still access your accounts data. You can enter and review data from any PC with an internet connection.
• If you want your accountants to look at your records, they don’t have to have the same accounting software as you, and you don’t have to email a Sage or QuickBooks backup or a spreadsheet to them. They can just log on and see the same data that you see. If your accountant needs to make amendments to your data, you don’t have to stop your bookkeeping while they’ve got the live data file – they can enter the adjustments online and you can just carry on with your bookkeeping as normal.
• You don’t have to worry about losing your data if your PC dies and it’s not backed up; your data is continually backed up online.
• You can email documents straight from the site to your customers, email regular invoices to customers automatically, be notified by email when an invoice becomes overdue, and perform lots of other tasks more easily than with traditional accounting packages.

There's more on our website here.

www.fizzhq.com