Accountants for Charities

The tax landscape is changing rapidly.  This change is driven by the government’s push to replace paper-based tax filings with more economical digital filing procedures.

I hear many business owners talking about the need for digital transformation and the benefits of becoming a digitally enabled business.  Though, far too often businesses will start their digital transformation journey without assessing their current state, often leading to the costly purchase of systems that are not right for the current or future business.

As the Summer draws to a close, and the children go back to school, it is the time of year when our routine begins to return to normal. This has led me to reflect on many changes which have occurred over the last 18 months as a result of our pandemic. Much of our life has changed with a greater reliance on remote working, and the requirement for maintenance of social distancing.

Many people think accountants are there just to give good tax advice. We can of course do that, but our advice is so much more than that! One thing I am keen to talk to people about is the doomsday scenario – have you thought about what would happen to your business if something went drastically wrong? Perhaps an unfortunate accident involving an employee or customer, a major error leading to a loss of customer confidence, or a serious data breach? Unfortunately, despite all of the best planning in the world, serious issues do occur. What can businesses do to protect their assets in a doomsday scenario?

Boris Johnson yesterday (07/09/21) announced his long-awaited social care reform and the start of the much-anticipated tax hikes for the masses following the COVID-19 pandemic announcing increases to National Insurance and Dividend tax rates.

Transfers of assets between most married couples/civil partners in the UK are exempt from inheritance tax (IHT) whether made at death or during their lifetime.  At death transfers from an estate to other persons will generally be subject to IHT unless another relief, exemption or allowance can be set against the value of the transfer.

Getting the right management information and key performance indicators (KPIs) in the right format at the right time is vital to controlling a business. However, there are many common problems encountered on the road to getting this right.

There are two manners in which software development may qualify for R+D tax relief.

Qualifying as part of a larger project

The first is where it is being used as a tool as part of a project, rather than being an end goal, for example, developing software to use in testing machinery, recording results, or designing prototypes. The development costs will then be allowable as part of the expenditure on this larger project.

It always amazes me how many businesses out there still put little reliance on thinking about stock and work-in-progress. There are lots of practical reasons why counting stock and valuing work-in-progress is an excellent idea; forward planning on stock requirements, monitoring cashflow requirements, improving physical controls around stock, and reducing the risk of stock going missing to name but a few.

The short answer to this question is yes. However, the answer is not as simple as you might expect.

In order to understand the effect of the coronavirus support schemes on qualification of companies for tax relief, we first need to understand a couple of terms. There are two different schemes for relief, the first (RDEC scheme) is targeted towards large companies, while the second (SME scheme) is targeted towards small and medium-sized enterprises.

HMRC released a consultation on basis periods on 20 July 2021.

Although we would perhaps not normally provide details of HMRC consultations,  there is draft legislation published, and we would expect full legislation to follow in due course, as this consultation is all part of HMRC’s policy of moving towards Making Tax Digital.

Recent data published by HMRC showed it opened 102,000 compliance investigations in Q1 2021, up 36 percent from 75,000 in the previous quarter.

This was almost quadruple the low of just 27,000 in the second quarter of 2020.

HMRC is turning its focus back to tax investigations as the pandemic has left it with a lot of catching up to do.

R&D under the beneficial SME scheme is only allowed if the project is not subsidised.
This is not a new rule, but HMRC have recently started to change their view of when an R&D project is considered to be subsidised.
In some cases HMRC are now treating projects that are undertaken for a specific customer as being subsidised by that customer and therefore ineligible for the beneficial SME R&D relief.

We are delighted to announce that Tax Partner Liz Peters has recently been appointed to the board of the Institute of Chartered Accountants in England & Wales (ICAEW) Tax Faculty.

The majority of business owners understand the need for digital transformation and the benefits of becoming a digitally enabled business, though a question I often get asked is:

“Where and how do I start Digital Transformation?”

It has always amused me when tax cases arise deciding on how to categorise a certain product or good. These cases often lead to large numbers of highly paid lawyers battling it out, with huge sums of money at stake, over what would appear completely trivial to most of us. However, some of these have real life relevance to many OMBs, so it is definitely worth asking yourself if the tax treatment of the things that you are doing is correct.

“We operate as a farming partnership and are looking to raise some cash. One suggestion my partner made was to sell some of our machinery, but I am concerned we will have to pay tax. Is this right?”

Negotiating and procuring a new I.T system is not a simple process and can be a very daunting experience.

Negotiation and procurement is a very important stage in selecting and implementing a new I.T system, and it is crucial that sufficient effort and time is assigned to this process.  It is key to realise that this process is not just about negotiating the lowest licence fees and day rate, there are many factors that need to be considered, negotiated and agreed. 

You may well have heard of EBITDA, or Earnings Before Interest, Tax, Depreciation, and Amortisation. It is used widely as an approximation for the amount of cash a business generates annually, and that its owners can deploy as they wish depending on a variety of factors such as the chosen financing structure, growth plans, reward strategy etc. In the context of a transaction, a similar idea in the US is Seller’s Discretionary Earnings or SDE, which is a helpful way of thinking about cash generation.

I still get asked all of the time about whether a car is better being owned by the company or by the individual. There are lots of factors in play here, but in general terms there is a simple over-riding principle – standard cars (particularly diesel) or almost certainly better owned privately, electric cars are almost certainly better owned by the company, and hybrid cars are more borderline depending on their emissions, value, and electric range. Let’s look at a few options:

A claim for research and development tax relief may be available for any attempt to make any improvement to the industry standard in any field of science or technology. In this context “technology” is a very broad term.

Software selection is an important and often daunting choice for any business. When selecting a new software system, historically many businesses have followed the route of listing the detailed functionality requirements into a Request for Proposal (RFP), and distributing this to several suppliers. The responses would be reviewed and marked, and a software demonstration focusing on the functionality would follow. The outcome being a preferred software supplier to then begin financial negotiations with.

Put simply, it is the ability to process and access your up to date financial information any-time, anywhere, allowing you to make well informed business decisions faster and respond to the ever changing world in which we find ourselves.

The Kickstart Scheme provides funding to create new job placements for 16 to 24 year olds on Universal Credit who are at risk of long term unemployment

Perhaps the trickiest conversation to have in a family business is when one generation relinquishes control in favour of the next. However it is also one of the most important discussions to have.

There are a number of changes that may affect your household finances taking effect in April 2021 including tax rates, increases to household outgoings and changes to COVID related loan repayments agreements. This article covers some of the pending changes.

Whether you are considering retirement, looking for the next challenge, or for any number of other reasons, the decision to sell your business is one of the most important you’ll make. Maximising the return on your hard work and securing your legacy takes careful planning, and whatever stage of its lifecycle your business ownership is currently at, a focus on your exit plans will add value.

The CIO or IT Director is usually the most senior IT member of a business responsible for the management, implementation, and usability of information and computer technologies.  In recent times this role has evolved not only to be responsible for the current state IT systems but also to define and lead the IT strategy of a business. 

For accounting periods beginning on or after 1 April 2021, the payable R&D Tax Credit for SMEs will be restricted

The Optional Remuneration Arrangements (OpRA) rules were introduced on 6 April 2017 and changed the tax position for employees receiving most benefits via a salary sacrifice arrangement, or instances where there is an option between the employee receiving either a cash or benefit as part of their package.

In the Chancellor’s recent Budget statement, he announced the pending launch of the Restart Grant Scheme. The is effectively a £5bn grant kitty aimed at retail, hospitality and leisure sector businesses to tackle the fallout of the COVID pandemic and support them until the planned reopening.

The Chancellor put forward his Budget today (3rd March) in what was one of the most anticipated statements of its type in recent years.

There were rumours of tax hikes being introduced in the short term but it seems these will be phased in, the first of these being an increase to Corporation Tax in 2023

The SME Brexit Support Fund will soon open for applications. This fund will give businesses up to £2,000 to support training or professional advice on the following areas:

The CIS VAT domestic reverse charge measure will apply to supplies of construction work from 1 March 2021. The measure was due to commence in October 2019 and has been delayed twice due to Brexit and the Coronavirus.

As of 1st January 2021, the transitional arrangements for the supply of goods and services between the UK and the EU has ceased. Agreement has been reached on a post-transition trade agreement, but this does not prevent the UK from leaving the EU VAT regime. As a consequence, there are a number of ways in which the treatment of VAT on transactions with the EU have changed.

With the 2021/22 tax year budget having been delayed to March 2021, business owners, investors and landlords have a narrow opportunity to plan in anticipation of potentially material tax hikes.

The Chancellor announced further extensions to the CJRS and a 3rd SEISS today (5 November 2020).

The government’s Job Support Scheme (JSS) will be expanded to protect jobs and support businesses required to close their doors as a result of coronavirus restrictions, the Chancellor announced today, 9 October.

The Chancellor Rishi Sunak today outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK.

Applications for the second and final Self-Employment Income Support Scheme grant are now open. If you’re eligible and your business has been adversely affected on or after 14 July 2020, you must make your claim for the second grant on or before 19 October 2020.

The Coronavirus Job Retention Scheme also known as the furlough scheme will be changing from 1 October 2020. We have compiled a review of the core elements.

Listen to our recent podcast which we hope you find useful and interesting. This episode explores whether you can claim and how to claim for areas including motor expenses, subscriptions, home internet, mobile phones and much more.

A common query we are receiving recently is surrounding staff working from home due to the current situation. We have therefore set out the general position for both the employer and employee.