Tax, VAT and Making Tax Digital

Tax Planning for businesses and individuals

“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores”. Lloyd Clyde in the case of Ayrshire Pullman Motor Services v Inland Revenue (1929).

Our tax planning team has a proven track record of helping our clients to structure and manage their affairs, both business and personal, in the most efficient way possible.  We place a significant amount of importance on getting to know you so that we understand your objectives, what matters to you and how you see the future panning out. 

If you’re a business owner and whether you’re just starting out or are more established, we’ll not only identify the most suitable structure for you, but we’ll ensure that it dovetails and complements your personal life and overall aspirations.  We’ll also consider other possible key areas such as employees’ incentives, the implementation of share option schemes, share re-organisations, any key reliefs that you may be entitled to such as Research & Development tax relief, or the sale and purchase of companies.

Guiding our clients with practical as well as technical advice from the start to the end of their journey is central to what we do.  Looking at the longer term picture is particularly important with exit planning and capital gains tax planning featuring highly, along with identifying the most efficient way for the owners of the business to be paid, and inheritance tax advice.  Our experienced team will help find the best solution for you.

Whatever it is, we’ll take a helicopter look at your circumstances, and above all we’ll always try to bring the issues that you may face to your attention before they arise offering you sound and commercial advice as to how to tackle them. 

Tax investigations services

You may suddenly find yourself under HM Revenue & Customs’ microscope in the form of tax enquiry. You could have been picked at random, or because HMRC is targeting certain professions or because there is something in particular on your tax return that the inspector wishes to focus on, or because the inspector has decided to conduct a business records check.

Regardless of the reason, it is up to you to prove your innocence at your own cost. As HM Revenue & Customs is opening more and more investigations each year taking out fees protection insurance for any professional help and guidance that you need is a good safeguard should you find yourself or your business in this situation. It’s a relatively modest fee, which will give you peace of mind. If you’d like to find out more about how it works and what it covers, please contact us.

Fine Art & Antiques

Mrs G is a buyer and importer of Asian art.  She buys a small number of high value artefacts on buying trips to the Far East and then brings them back to the UK for sale.  Her clients are private individuals, and every transaction is different.  Sometimes she buys a number of pieces of art in one transaction making them more difficult to value.

Tell me more

Corporate Tax

Most companies will find themselves having to pay corporation tax because they’ve made what HM Revenue & Customs class as taxable profits.  These can include the profit from your company’s trade, any investment profits or if it sells any assets for more than they cost.  You have to pay corporation tax or advise HM Revenue & Customs that you have nothing to pay by your deadline, which is usually 9 months and 1 day after your accounting period end.  You will usually need to file your company tax return 12 months after the end of your accounting period. 

However, the responsibility of calculating what corporation tax you need to pay is yours, and there are certain things that you need to do to work it out and to report the amount you owe.  Your starting point is keeping up to date accounting records and then using them to prepare the company’s corporation tax return. 

We can help you to do this and also to ensure that you are paying the right amount of tax, and claiming the reliefs that you’re entitled to.

Share option schemes

A high calibre staff is your asset.  Once you find them, engaging them and motivating them can be critical to the overall commercial success of your business. 

You may wish to reward the key members of your team by sharing the success of your business’ growth.  Whilst many schemes are no longer as advantageous from a tax point of view as they used to be, there are other things that you can do such as implementing a tax efficient share option scheme.  For example, Enterprise Management Incentives (EMIs).  There are a number of options available and we can advise you on the best approach for you and your business.

Tax reliefs

Businesses and individuals are allowed to claim certain types of tax relief which they can deduct from their turnover or income to reduce the amount of tax they ultimately have to pay.  To ensure you pay the right amount of tax, it’s important that you claim what you’re entitled to.  Equally, you must be careful that you don’t claim anything that you’re not supposed to.

We can guide you on your entitlements whilst ensuring that you remain compliant.  Some forms of relief such as Research and Development Tax Relief are particularly generous and yet many companies do not realise that they are entitled to them.  We can assist you with any claim from start to finish and our technical knowledge is backed up by significant practical experience. 

Capital Allowances (CAs)

If you buy assets for use in your business such as machinery or business vehicles, you can deduct some or all of the value of the item from your profits.  They are known as Capital Allowances (CAs) and they can reduce the amount of income tax or corporation tax you have to pay. 

However, Capital Allowance legislation is extremely complex and there have been various changes to it over the years by the Treasury as well as amendments to the Finance Acts.  Using our knowledge we can give you clarity about what you can claim as well as assisting you with your capital allowances computation.  We’ll also advise you about the timing of purchases and the sales of capital assets as this can have an impact. 

Property has become a particularly challenging area for Capital Allowances and we work with industry specialists who can advise you on proposed projects to ensure that the highest claim value and tax benefits is made, as well as existing properties where they may not have been fully claimed if at all. 

Capital Gains Tax (CGT)

Although there are exemptions, you pay Capital Gains Tax if you sell an asset and make a profit.  The amount of tax due is calculated on this profit after applying a tax-free allowance known as an annual exemption.  You may also be able to minimise your bill by deducting any losses you’ve made or by claiming reliefs.  You can either do this straight away by using the ‘real time’ CGT service or through Self-Assessment. 

It can be complicated, but we can help you to calculate the amount of CGT due as well as assisting you with the reporting to HMRC. 

VAT

Our in-house VAT expertise has helped many clients over the years to deal with issues ranging from VAT registrations, VAT return assistance, advice on how to avoid and mitigate penalties and specialist VAT projects. 

It’s a highly technical area, but having the right knowledge and expertise at hand, we’ll ensure that you are claiming what you can.  Our projects range in size and complexity and have covered the following:

VAT disputes & appeals:  we’ll advice you and guide you on any VAT assessments that you are considering challenging.  Furthermore, we’ll negotiate on your behalf to secure you the best settlement.
VAT planning and structuring transactions:  more often than not the way in which you structure a transaction will have a direct impact on the VAT treatment, so we’ll assist you to achieve this in the most efficient way
Partial exemption:  this is a particularly difficult aspect of the UK VAT system.  It relates to businesses which have some income which is exempt from VAT as well as some that it is taxable.  But rather than struggle to get your head around it, our experts can help you to maximise your position and, along with it, your VAT recovery.
International trade:  Businesses involved in an international supply chain may find themselves facing some tricky VAT issues.  Our VAT experts will guide you every step of the way, so that you’re on top of any resulting cash flow implications or repayments from other countries.

Personal tax planning

The way you arrange your personal affairs has a direct impact on the amount of tax you pay and that’s why it’s so important to get it right. Whilst HM Revenue & Customs may be hotter these days on penalties and randomly selecting individuals for a closer look at their tax position, our experts will take a holistic look at your circumstances and plans for the future.  This way we’ll ensure that you’re efficient and compliant.

Income tax and Self-Assessment

Our personal tax team will give you peace of mind by providing you with as little or much support as you need. Income tax is an area of the UK tax system which affects us all, but it’s become increasingly complex over the years.  Furthermore, as HM Revenue & Customs use self-assessment to collect income tax, the responsibility for compliance lies with the tax payer.

Of course, there are deadlines that you have to meet for the submission of the return and to pay any tax that’s due or you’ll be fined.  So, we’re here to assist you, ensuring that you:

  • claim the reliefs you’re entitled to
  • you report other taxable income or gains,
  • the calculations you need to do are correct

If HMRC do have any queries, we’ll deal with them on your behalf.

Capital Gains Tax (CGT)

If you sell a personal possession or give it away, Capital Gains Tax can be due if there’s been an increase in its value whilst you’ve owned it.  This applies to property and other assets, but it isn’t chargeable if you sell a car or if you make a profit on selling the home you live in.  There are specific rules about CGT and they can be complex, but with planning there are ways in which you can minimise the amount you have to pay.  We’ll give you practical advice about CGT in relation to your specific circumstances as well as assist you with the calculations and reporting to HMRC. 

Entrepreneurs’ Relief

Entrepreneurs’ Relief is particularly valuable as it reduces the amount of Capital Gains Tax payable if you are selling all or part of your business during a specified period.  Therefore if you’re intending to make a sale, planning ahead of time to ensure that you meet all the qualifying conditions can save you money.  Talk to us and we’ll explain the details in a clear and uncomplicated way.

Inheritance Tax (IHT)

With careful and sensible planning, whilst the inheritance tax rules are complex, they can be managed in such a way so as to minimise the amount owed to HMRC.   We understand that it can be a sensitive topic and not one that people like to broach.  But, we take an overall look at our clients’ affairs and, given timing is particularly key in this area, our approach is sensitive as well as practical.

Trusts

Whilst the use of a trust can be an effective and efficient way of passing on certain assets to the next generation, there are different types and the rules vary.  Therefore, getting the right advice to set up the most appropriate type, as well as the running of it in the longer term, is essential.  Our personal approach means that we’ll take an overall look at what you’re trying to achieve, considering all aspects of your circumstances whilst making you fully aware of how the trust works in practical terms. 

Non-domiciles

Your domicile, or in other words your place of residence, can have a huge impact on the amount of tax you pay.  It can also be tricky to understand and work out as the rules are complex and are frequently subject to change.  However, the workers of today’s world are becoming increasingly global and moving from country to country is not uncommon.  Our personal tax advisers are here to ensure that we provide our clients, who have non-domicile status or those with foreign income, with the necessary advice and support to deal with their affairs.  Our service includes the following:

  • Working out your domicile status
  • Income tax – there are special rules if you work in the UK or abroad including secondments abroad
  • Capital Gains Tax
  • Inheritance Tax

Tax investigations services

You may suddenly find yourself under HM Revenue & Customs’ microscope in the form of tax enquiry.  You could have been picked at random, or because HMRC is targeting certain professions or because there is something in particular on your tax return that the inspector wishes to focus on, or because the inspector has decided to conduct a business records check. 

Regardless of the reason, it is up to you to prove your innocence at your own cost.  It can be stressful, but our assistance is on hand and our team is highly experienced at handling tax enquiries and with liaising with HMRC on behalf of our clients.  As HMRC is opening more and more investigations each year, taking out fees protection insurance for any professional help and guidance that you may need from us is a good safeguard should you find yourself or your business in this situation. It’s a relatively modest fee, which will give you peace of mind.  If you’d like to find out more about how it works and what it covers, please contact us.

Making Tax Digital

Whilst there’s been a lot in the press about ‘Making Tax Digital’, there are still plenty of questions. We’re here to assist you – to answer your questions and to help you to implement any changes that you may need to make to bring your business up to speed. Get in touch for a chat!

What is Making Tax Digital?

HM Revenue & Customs is introducing electronic reporting on a quarterly basis of your income, expenses and profit to your Digital Tax Account (DTA). It’s being labelled Making Tax Digital or MTD for short.

What is a Digital Tax Account (DTA)?

Your DTA is your HMRC account where you can see all of your tax details in one place.

You’ll be able to use your DTA to communicate with HMRC on a confidential basis by digital means.

What does it mean for me?

If you’re a VAT registered business with a turnover over the VAT threshold of £85,000, you’ll have to keep digital accounting records and submit VAT returns to HMRC electronically from 1 April 2019. So businesses which fall into this category will have to use software which is compatible with HMRC’s Making Tax Digital systems.

When does MTD begin?

From 1 April 2019, businesses above the VAT threshold will need to maintain digital records and will need to send their VAT information to HMRC using third party commercial software. They will not be able to send it via HMRC’s on-line portal.

In October 2018, HMRC updated their approach for businesses with more complex requirements by deferring MTD by six months to give them “sufficient time to test the service with them in the pilot”. This deferral will affect around 3.5% of mandated businesses meaning that they will not have to join MTD until 1 October 2019.

Businesses affected are: trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information alongside their VAT return (Government departments, NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users.

What are the important dates I need to remember?

October 2018: MTD is open to sole traders and companies (except those which are part of VAT group or VAT Division) provided they are up to date with their VAT.

Late 2018: Private testing begins with partnerships, those customers that trade with the EU and users of the Flat Rate Scheme.

Late 2018/early 2019: MTD will be open to sole traders and companies who are not up to date with their VAT and businesses newly registered for VAT that have not previously submitted a VAT return.

Early 2019: MTD is open to partnerships and those customers that trade with the EU.

Spring 2019: Pilot is open for MTD customers that trade with the EU. April 2019: mandated businesses, ie those with a turnover above the VAT threshold of £85,000 will need to send their VAT information to HMRC digitally.

October 2019: complex organisations [trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information alongside their VAT return (Government departments, NHS Trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users] will be required to keep their VAT records electronically to comply with MTD.

What do I need to do to get ready?

If you’re affected, think about the accounting software package you’re using and find out if it’s MTD compliant. The major accounting software houses and the cloud accounting providers are preparing for MTD so it’s likely they’ll conform. If, however, it’s not compliant or you’re not using a package at all because you’re maintaining your records manually or on a spreadsheet, you’ll need to start thinking about converting to an appropriate package soon. The good news about Excel is that there are some HMRC approved APIs, which you can download. They can read the relevant data and can then submit the VAT return figures to HMRC.

What are the advantages of using a cloud software package?

Here are three key advantages.

Accessible 24-7 wherever you are: you’ll be able to manage your accounts, process expenses and raise invoices on the go, which will save you time.

Enhanced security: a cloud accounting system will help you to detect fraud more quickly and efficiently. Furthermore, storing data in the cloud can serve as a good back up.

Digital feeds: you’ll be able to set up digital feeds directly from your bank. Your transactions will update every day meaning that you’ll find it easier and quicker to produce your bank reconciliation.

We can help!

If you’d like to have a chat about what MTD means for you and some guidance about how to approach it, feel free to get in touch. We can help you choose a package and we can train you how to use it. Alternatively, if you would prefer someone else to take the strain you can completely outsource your requirements to our bookkeeping and management accounts service. Our team is here to assist you as much or as little as you need.