Employers have to cope with a raft of legislation and have liabilities to various Govern-ment agencies. Those operating as sole traders or partnerships have a very clear and unlimited liability cover-ing everything from PAYE and National Insurance deductions for employees, to VAT collected on behalf of H M Customs & Excise. This is in addition to responsibility for their own tax and National Insurance.

Company directors and owners often feel secure behind limited liability status but there are some areas where running the business means that you are liable.

• VAT
Although Customs & Excise cannot seek to recover from a director any VAT that is evaded, a penalty can be claimed from the individual. Customs usually apportion the penalty according to the benefit received by the individual. Where directors have collaborated over dis-honest conduct of a company, each director is equally liable for any penalty unless that individual could prove otherwise.

• Tax on Directors' Remuneration
The McVeigh case in 1996 established quite clearly that the Revenue can recover tax from a director who had wilfully taken remuneration without tax deduction by the company, or knowing the deducted tax had not been paid to the Revenue.

• National Insurance
Any employed earner (including directors) will himself be liable to pay primary Class 1 contributions where, for instance, the contributions have not been paid due to an act or default of the earner.

• General Liability on debts
Directors are liable to creditors in general when they have continued trading in circumstances where they knew the company could not pay its debts.
Running a business is never easy so please contact us if we can assist you on any of these issues.

The problems faced by accountants, when presented with clients' records, are enormously varied but some occur more frequently than others.

The trend to switch to computerised accounting can, if done properly, be a definite improvement. However, organisations often acquire software and set up systems without proper advice. Some of the critical success factors to look out for are:

• Take advice about the choice of software.
  Ensure sufficient training for staff.
• Talk to your accountant about coding and setting up the chart of accounts.
• Consider running the manual system alongside the computerised system for a while.

Other common areas of difficulty are:

• Understanding year-end cut-off, meaning the relationship between supplier invoices, stock records and customer sales at the point in time that falls at the year-end.
  
• The difference between capital expenditure and revenue expenditure. Too often people think money spent on their business property will reduce the taxable profit. Any improvement is capital expenditure whereas repairs and maintenance are charged against the profits.
  
• Private expenses being paid through the business can cause difficulties whether the entity is a limited company or unincorporated. Talk to your accountant about a plan to extract funds from the business in a controlled manner.

All these problems can be avoided by dialogue, so please ask us before the difficulties arise.