Would the autoentrepreneur system work in the UK?

[Kitty]

I am an autoentrepreneur (AE) in France.  Having previously been self employed for 20 years in the UK, I find the AE so simple in accounting that it is refreshing.  OK the tax rate is high and none of my expenses can be offset against income but it is bliss not needing accountants and massive monthly spreadsheets etc.

Would it work in the UK?  David Cameron said that it was down to Brits to start businesses.  So should the Business Secretary be thinking about setting up an AE system in the UK?

[Keni]

i agree that it should be looked at - having run a business in the Uk for nearly 20 years, like many other businesses around me, we all felt the paperwork stopped us from actually running and prospering the business.

[HoneySuckleDreams]

[quote user="Cathy"]OK the tax rate is high and none of my expenses can be offset against income .... [/quote]

 

I think you've answered your own question.

 

 

[Gluestick]

It has never been easier to run a small biz as a self-employed sole trader in the UK!

Current Self Assessment regime allows just two simple entries on the Self Employment section (SA103s): gross Income: and Gross Expenditure.

If one's gross revenue (income receipts) are no more than £68,000 per annum.

VAT offers a number of simple schemes also.

Software for preparation and online filing of personal tax affairs, including self employment costs from between nothing and £ 50.

Massive Spreadsheets? What one earth were you doing, Cathy?

Of course, a business man or woman who fails to keep proper records hasn't a clue if they are profitable or on the edge of bankruptcy.

Online (free) aids for simple tax planning and minimising are legion: as are simple books: such as Here:

[Will]

I agree wholeheartedly with Gluestick.

Having been a self-employed sole trader in Britain, having done the same in France under both micro and réel regimes. and being married to an autoentrepreneur, the UK system is by far the simplest, fairest and least restrictive. There is no need for a special small-business autoentrepreneur scheme in UK - anybody can start as many small businesses as they like, with no registration, Siret type formalities, and just declare the profits on the self-assessment forms. You obviously need very basic accounts just in case you are asked to justify the figures, but that's about all.

Of course, once you get into VAT/TVA and start employing people or move into one of the more complex regimes like limited companies/SARL then it gets more complicated, and you need to keep full accounts, which probably means the services of an accountant. That applies in both countries, but I still think the UK system wins hands down in terms of bureaucracy.

[Théière]

I also agree with Gluestick and Will, as a business with a lot of material cost and running cost the simplified UK system is very easy. The AE only suits some types of businesses.

[Quillan]

Even buying a Ltd company in the UK is quick and simple. I paid around £80 at the time for my first company which included everything, company seal, the lot. This used to be the prefered system for IT contractors. Once you have had your accounts done by an accountant they are easy enough to do yourself.

The problem in France is they don't like failure, the expect every new enterprise to succeed where as in the UK (it used to be) if 1 in 3 survived that was pretty good and expected because you at least had one more company than you had before. As always with the French and English, different mind sets.

[zarathustra]

Although I'm micro-BIC and not AE, I have to agree with what the majority are saying - I found the UK system much easier and friendlier to those wishing to run a small business. You could even start trading and declare that you'd started up to three months later! That would have been a great help to me when I first moved to France, as I didn't get my SIRET number for more than two months (admin delays), which prevented me from opening a business bank account, and as I'd moved to the capital with only a couple of grand in my wallet, things were pretty tight. From what I recall there is no messing about being pigeon-holed for a particular type of business, and you could easily pay taxes on your actual expenses. With that said I prefer the French system based on a set percentage, as my profit margins are reasonable, and I find that I benefit. For others, I think the AE is quite a harsh system, and they'd have to seek alternative tax systems or business models.

I have found the French tax office around the corner, friendly and helpful, and the tax declaration forms are simple, meaning you don't need an accountant.

I don't think the UK needs to change its system.

[Gluestick]

I do believe the UK could and would benefit from rolling out some of the European models.

As an example, whilst much has been spouted and written about Vocational Qualification, the UK has yet to adopt such a regime.

For example, anyone can legally set up shop as a motor garage, offering to "Repair" customer's vehicles.

They can immediately start playing with brakes and suspension with zero knowledge and developed trade skills.

Same with the building industry: and the results are too common to mention here!

Having been involved, professionally, with a number of Business Enterprise and start-up initiatives, what is wholly missing is mandatory training and some simple level of test to ensure basic understanding of various aspects of record keeping: such as writing out VAT compliant invoices!

Years back I "Sat In" on an Enterprise Allowance course: if anyone remembers this Thatcher government concept, those who had been unemployed for a minimum of 6 months could attend a short course and if they could access £1,000 of capital, could start a business and receive £40 a week, tax free for one year.

Few of these start-ups lasted much past year one.

The course was wholly pathetic (Run by Manpower Services Commission): the example accounts didn't even add up correctly!

Since various current aspects of compliance are demanding and carry punitive sanctions for non-compliance, then some form of pre-activity training should be mandatory.

Many new clients my practice finds, are non-compliant in a range of areas. A favourite being employment contracts.

Others are COSHH; Health & Safety at Work; Data Protection; Public Liability and Employer's Liability; Money Laundering Regulations: and so on.

Yes, it is very easy to start a business in the UK: ensuring its survival and success tend to be another matter.

The stats use to show only two out of ten start-ups lasted for more than two years.

[Will]

Very good points, Gluey. But we were considering the business regimes - the ability of individuals to run a business, and the soundness of any business plan, are other issues. Though very relevant to the number of business failures of course.

Given that most autoentrepreneur registrations seem to be from people already in employment and wanting a legal way to earn some spare cash, rather than those actually setting up a serious enterprise, it will be interesting, after the scheme has been running for a few years, to see the number of registrations that convert into 'real' businesses (as Hervé Novelli intended) and the number that fall by the wayside.

[EuroTrash]

In the UK there are too many people who make their living out of new start businesses. Not only all the business advisors and enterprise agencies who compete with each other to help new entrepreneurs tap into the grants that are available, but also all the equipment and service providers who are approved suppliers under the grants schemes. It is in all these people's interest to get as many businesses starting up as possible, and once everyone has got their share of the start-up funding most of them don't care whether the business carries on or not. Funding is given to a lot of start ups that are obviously not sustainable. Sorry if this is off topic but I was picking up on the point that in France setting up a business is seen as more of a commitment to succeeding than in the UK.

[Gluestick]

[quote user="Will"]Very good points, Gluey. But we were considering the business regimes - the ability of individuals to run a business, and the soundness of any business plan, are other issues. Though very relevant to the number of business failures of course.

Given that most autoentrepreneur registrations seem to be from people already in employment and wanting a legal way to earn some spare cash, rather than those actually setting up a serious enterprise, it will be interesting, after the scheme has been running for a few years, to see the number of registrations that convert into 'real' businesses (as Hervé Novelli intended) and the number that fall by the wayside.

[/quote]

I meant to convey, Will, that whatever regime one chooses in France, certain other hoops must be jumped through, firstly.

And some of those would be sensible in the UK.

[Kitty]

Thanks to all for the interesting comments and gratitude to Gluey for the link etc.

I guess that I had accountants who made things deliberately complicated.  I used to get cross that they would apportion things like insurance premiums to match the accounting year when there was no need and do complicated depreciation calculations that were impossible to check etc.

I still have one business running in the UK but I wouldn't mind just paying a simple percentage of the income quarterly like the AE scheme.  It would be good for the UK government as it is a cheap method of tax collection.

[Gluestick]

[quote user="Cathy"]Thanks to all for the interesting comments and gratitude to Gluey for the link etc.

I guess that I had accountants who made things deliberately complicated.  I used to get cross that they would apportion things like insurance premiums to match the accounting year when there was no need and do complicated depreciation calculations that were impossible to check etc.[/quote]

The reason insurance premiums are so allocated, Cathy, is they are strictly an advance payment. Thus if say, the premium is due six months through the Trading Year period, then on the last day of that trading year (Trading Year is the core basis for tax), 50% of the premium is an Advanced Payment on the first six months of the subsequent trading year.

Technically, by charging advance payments (intended to be "Consumed" over a whole year) to one year, depresses taxable profit.

It's the same as adjusting the value of Purchases (Goods bought for re-sale by way of trade) by the closing stock value: if not adjusted, then this falsely depresses profit for tax.

Depreciation calculations can become complicated, as various asset classes are depreciated at different rates: that said, since First Year Allowances have been abandoned, with rare exceptions, the depreciation calculations would normally only be less than allowed, if the adviser was under-claiming, total capital allowances available, in a low profit year. Pointless to waste it!

And, in any case, your adviser should be delivering to you as part of the accounts set, an Asset Schedule which clearly shows depreciation against each asset.

[quote]I still have one business running in the UK but I wouldn't mind just paying a simple percentage of the income quarterly like the AE scheme.  It would be good for the UK government as it is a cheap method of tax collection.[/quote]

In the UK under current tax codes, it would be an invite to tax avoidance!

Also, what about trading losses?

Taxpayers would be paying tax on a loss!

Rather than carrying it back to earlier profitable years, or carrying it forward to write down against future profits.