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BIM
Strategic Direction (2019)
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1. Strategic Direction:
1. HMRC have a Strategic Direction initiative called Making Tax Digital (MTD) to replace many tax returns with a unified quarterly return.
2. Making Tax Digitial will begin in April 2019 and will impact all small companies and self employed contractors making VAT returns.
3. Every business that have used spreadsheets for accounting are now obliged to strategically change direction and embrace more secure and private application services.
DIRECTION:
1. With more than 20 years experience in providing bespoke application services, the foundation is proven to help a few businesses to improve their productivity.   It is easy to provide a complex service, but it takes a lot of experience to provide a simple service.
2. A very large number of procedures are provided and a business may choose those procedures they wish to use and the rest can be ignored until they are needed.   Not all businesses are at the same level of development and so a bespoke application service is mandated to match the requirements of any one business.
3. Making Tax Digitial is just one (mandatory) step in making the whole business digital.   Every business will (eventually) be judged by others by the quality of its digital interface to customers, suppliers and all business associates.

2. Bespoke Application Service:
1. "Eliza" is the AI technology core that provides the foundation knowledgebase of how a business operates.
2. "123BIM" is the application base that provides bespoke application services for exacting business requirements that exceed the capabilities of conventional one-size-fits-all software systems.
3. "Business Information Management" (BIM) is bespoke, so only a select business that chooses to improve its productivity can be invited to be a member.

3. Standardization:
1. Bespoke application procedures are driven by International Standards that include:
  ISO 9001 Quality Management Standard (QMS) providing the Quality Management Service .
  ISO 45001 Occupational Health and Safety Standard (OHS) providing the Health and Safety Service.
  ISO 20001 Information Technology Infrastructure Library Standard (ITIL) providing IT Infrastructure management.
2. The above application services working in comliance with the International Standards are suppliemented with:
  ISO 31001 Risk Management Standard (RMS) providing the Risk Management Services with impact assessments and the deployment of control measures.
  ISO 22301 Business Continuity Standard (BCS) providing the Rbusiness continuity so applications never stop and cannot be stopped.
  ISO 14001 Energy Management Standard (EMS) providing the Energy Management Services with renewable solar and wind electrictity generation, battery storage and very efficient computing devices.
3. Very high levels of productivity begin with documented procedures based on International Standards and good working practices.   Exceptional productivity is driven by continual evolutionary improvements to documented procedures based on experience.

4. Accounts:
1. Every business must record their financial account transactions in accordance with Generally Accepted Accounting Principles (GAAP) and published by UK Financial Reporting Council (FRC).   "Cash Accounting" is the only viable accounting scheme.
2. FRS 105 is the micro-entity standard (of 146 pages) that applies to companies up to 632000 pounds per year and may be applied to personal and partnership accounts.   A micro-entity must not have an average of more than ten employees and must not hold assets worth more than 316000 pounds.   A large number of small companies may be more stable and lasting than a small number of large companies.   Each micro-entity is totally independent. No groups, subsidiaries, associates or jointly controlled entities exist.
3. Business accounts are represented as a "Diary" that may exist for:
  (1). Each shareholder must have a Directors loan account and personal annual return account.
  (2). Each company must have an account and an account for each project-contract that is being managed on behalf of customers.
  (3). Each credit account supplier has an account to be managed and any major supplier without a line of credit may also need their own account.

5. Financial Position:
* The financial position may be presented as (1) assets, (2) liabilities and (3) equity.
1. Assets: as a policy, no assets are retained because a purchase is generally a cost-of-sale.   A business with no assets on its balance sheet is not likely to be sued and is not likely to be the subject of an acquisition.   Property, plant and equipment are tangible assets that may be owned by a shareholder, but should not be owned by the business.   Depreciation of assets is minimised by reducing the assets owned by the business - equipment can be rented as and when needed as a cost of sale.   Capital gains on assets is minimised by not owning property - property can be rented as and when needed as a cost of sale.
2. Liabilities: as a policy, liabilities are paid off at the end of each calendar month.   A business with no liabilities is free and agile enough to take advantage of any new business opportuity.   All bills are paid off by the end of the month or as they become due.
3. Equity: as a policy, equity is reduced towards a handful of dedicated shareholders with one share each.   No one shareholder is indispensable, a line of sucession must exist and no one shareholder has more rights than any other.   Equity is the value of assets minus the value of liabilities - all numbers that tend towards zero.

6. Performance:
* The performance of the business is the relationship of (1) income, (2) purchases and (3) expenses.
1. Income: is revenue and gains from assets.   It would be foolish to own assets and not earn income from those assets, but where the company is not an asset management business, it would be foolish to try to earn a living from assets.   Revenue is what customers pay and that has nothing to do with what is invoiced or what is quoted or what is contracted.   Payments made is the only contract that pays the bills - every other contract is just a set of words.
2. Purchases: as generally a cost-of-sale that are necessary to earn income.   Purchases that do not directly contribute to earning income are minimised.   Purchases include salaries, pensions and associated benefits.   Every purchase must have a cost-code for classification and audit analysis purposes.
3. Expenses: are purchases that are made by a shareholder and claimed from the company as a purchase.   Administrative expenses are to be minimised.   Entertainment expenses are not permitted.   Expenses shall be wholly and necessarily for the benefit of the business.   HMRC published allowances shall be accepted where applicable.

7. Recognition:
1. It is a policy to recognise income, purchases, assets and liabilities in real time as they happen with consilidation every calendar month.   Actual net amounts are recorded (1) without projection, (2) without probability and (3) without uncertainty.
2. Prudence: is the preparation of accounts based on actual amounts that are banked.   Income cannot be overstated because only cash-accounting rules are deployed.   Assets cannot be overstated because assets are minimised.
3. Reliability: is achieved by eliminating estimates and only measuring actual transactions as they happen.   Account statatments are based on the "Accrual Basis" based on real transactions.

8. Profit or Loss:
1. Profit or Loss is the difference between income and purchases so no definition or transaction is needed to manage the Profit and Loss Account.
2. Asset and Liability valuation is the actual cost or the "fair value" on the open market.
3. Where an open market does not exist, then the price of a recent transaction may suffice.
4. Investments in shares shall be valued at cost.
5. Instruments are measured at cost adjusted for interest together with any transaction costs.
6. Property, plant and equipment are measured at cost less depreciation and losses.
7. Inventories are measured at cost less operational costs to sell the goods.
8. Valuation of assets are measured as the best estimate for disposal on the reporting date - this may tend towards zero.

9. Mandatory Statement:
1. Financial position as of the reporting date - this means last year and this year for comparison.
2. Income statement as Profit or Loss performance for the reporting period.
3. Financial notes as:
  (1) Off-balance sheet arrangements as required by section 410A of the Act (none).
  (2) Employee numbers as required by section 411 of the Act (two).
  (3) Advances, credit and guarantees granted to directors as required by section 413 of the Act (none).
  (4) Financial commitments, guarantees and contingencies required by regulation 5A and para 57 of part 3 of schedule 1 to the Small Companies Regulations (none).

10. Financial Position: (date)
Assets:
1. Called up share capital not paid (zero).
2. Fixed assets (zero).
3. Current assets (2 pound in bank).
4. Prepayments and accrued income (zero).
  Total Assets from above
Capital, Reserves and Liabilities:
1. Capital and reserves (zero).
2. Provision for liabilities (zero).
  Creditors:
  1. Amounts falling due within one year (zero).
  2. Amounts falling due after one year (zero).
3. Accruals and defered income (zero).
  Total liabilities from above
ALSO:
1. Each shareholder name (and DOB) with number of shares, type of share, nominal value and amount paid in consideration.
2. Each Director: loans, and credit transactions: advances, payments, interest, write-offs, outstanding.

11. Profit or Loss: (period)
1. Turnover.
2. Other Income (zero).
3. Cost of raw materials and consumables (cost-of-sale).
4. Staff costs.
5. Depreciation of assets (zero).
6. Other charges (admin).
7. Tax.
8. Profit or Loss.
ALSO:
1. Dividends paid.
2. Any transfer between retained earnings and other reserves.
3. Any change in retained earnings and other reserves.
4. Brought forward profit or loss.
5. Carried forward profit or loss.

12. Directors Loan Account
1. Every Director may buy supplies for and on behalf of the business and then claim those amounts as expenses.
2. Every Director is free to loan the business money in order for the business to remain in business.   A "Directors Loan" is when the business loans the Director some money - this is not a reasonable way to run a business.   A "Directors Loan Account" is when the Director loans the business some money - this happens every day.
3. Where a Directors pay is delayed because the business has a cash flow issue, then that becomes a transaction in the directors loan account.   As soon as is practical, the business shall reduce and minimise each Directors loan account - pay expenses, wages and dividends.   Dividends can only be paid from profits and cannot be paid where the business is making a loss.

13. Policies
1. Errors do not exist because every transaction is "actual" rather than an estimate.
2. Forcasts are not made because only prudent tranactions are recorded.
3. The business shall not make a loan to a Director.   However each Director will make loans to the business.
4. The business shall not control other businesses and shall not be controlled by other businesses.   However many independent businessess may work in cooperation.
5. Asset valuation is trivial because asset values tend towards zero.
6. Liability valuation is trivial because liabilities are paid when due or by the end of a reporting period.
7. The business is not in the business of dealing in financial instruments and does not gamble in money markets.
8. The business chooses to hire a very small number of very experienced and highly motivated people with very high levels of productivity.   The business chooses to hire equipment when needed so assets (1) do not need to be insured against loss, (2) secure storage is not required and (3) asset valuation is avoided.
9. The business shall not buy in any intengible assets such as goodwill or research.

14. Directors Liabilities
1. When a director quotes to do a job this month, to invoice at the end of the month on 45 day payment terms, hen a liability is recorded.
2. The Director paying for people to undertake the job and is paying for the customers project.
3. The Director is personally loaning the business and the customer the value of the contract as an unsecured short term loan of 60 to 90 days.
4. Eventually, the customer may pay for their project and the Director can be repaid without interest.   If the customer does not pay, then the Director has paid for the customers project.   This is known as an "onerous contract" because the quotation created a liability that the business could not sustain.
5. A contract to fund the customers job with delayed payment terms is a "financial committment" that may be recognised in the annual report.
DIRECTION:
1. Quotation payment terms must be to invoice on completion of the job with payment within 7 days.
2. Sub-contractors are paid by the job to be invoiced at the end of the job with payment within 7 days.
3. With care and dilligence, cash flow issues can be avoided and the business can thrive, but the old way of working is not sustainable.

14. Intangible Assets
1. Research and development may be an intangible asset and they are bought from others but not when internally generated.
2. Brands and logos may be intangible assets when bought from others, bit not when internally generated.
3. Start up costs and training costs are purchsed expenses.
4. Internally generated goodwill is a purchased expense.
5. Bought in intangible assets have a nominal life cycle to be written off over up to ten years.
6. Deferred tax is not an asset to be sold or traded.

Document Control.
1. Document Title: Strategic Direction (MTD).
2. Description: Strategic Direction, policies and guidelines.
3. Keywords: Strategic Direction, policies and guidelines.
4. Privacy: Shared with approved people for the benefit of humanity.
5. Edition: 1.1.
6. Issued: 12 Nov 2018.