Archive for January, 2018

Young people with great business ideas apply here

Wednesday, January 31st, 2018

The Princes Trust and Innovate UK have formed a partnership to support young people with business ideas that could become a reality. The nuts and bolts of the scheme are set out below.

Ideas can come from anywhere

The competition – part of the ideas mean business campaign – will help young adults to make their ideas a success, no matter where they come from. Business ideas could be spotting a solution to a problem or a different way of doing things. They could involve:

  • changing something for the better in a local community
  • a new way of using technology to fix an everyday problem
  • a new way to tackle an environmental issue


What support is on offer?

Support is available to young innovators who can commit 15 hours a week to developing their idea.

This award will include:

  • an allowance to cover time spent working on the idea
  • coaching and mentoring from an innovation champion
  • a funding pot for activities or resources, such as travelling to meet customers and partners, training courses, equipment, office space and IT

Who can apply?

To be eligible applicants must:

  • be a UK resident that has the right to work in the UK, or is applying for the right to do so
  • be unemployed or either working less than 35 hours a week if applying through the online programme, or working less than 16 hours a week if applying through the in-person programme
  • not be studying or studying less than 14 hours a week
  • be aged between 18 and 30

People currently receiving support from the Prince’s Trust’s in-person Enterprise programme are also eligible to apply.

How to register

Applicants will need to register with The Prince’s Trust, where they will then be able to sign up to attend one of a series of regional events. These events will help young people to develop their ideas and give more information about the application process.

You must attend an event to apply and you will be able to get your costs reimbursed. If you are not able to attend but still want to apply contact to discuss.

Autumn Budget 2017

Tuesday, January 30th, 2018

The Chancellor Philip Hammond presented his first Autumn Budget on Wednesday 22 November 2017. Some of the key announcements are set out below.

Increased limits for knowledge-intensive companies

The government will legislate to encourage more investment in knowledge-intensive companies under the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs). The government will:

  • double the limit on the amount an individual may invest under the EIS in a tax year to £2 million from the current limit of £1 million, provided any amount over £1 million is invested in one or more knowledge-intensive companies
  • raise the annual investment limit for knowledge-intensive companies receiving investments under the EIS and from VCTs to £10 million from the current limit of £5 million. The lifetime limit will remain the same at £20 million, and
  • allow knowledge-intensive companies to use the date when their annual turnover first exceeds £200,000 in determining the start of the initial investing period under the permitted maximum age rules, instead of the date of the first commercial sale.

The changes will have effect from 6 April 2018. This measure is subject to
normal state aid rules.

Proposed changes to Entrepreneurs’ Relief

The government will consult on how access to ER might be given to those whose holding in their company is reduced below the normal 5% qualifying level as a result of raising funds for commercial purposes by means of issues of new shares thus diluting their holding. Allowing ER in these circumstances would incentivise entrepreneurs to remain involved in their businesses after receiving external investment.

This proposal is welcome and addresses a particular problem which can arise. ER broadly requires a holding of 5% of the ordinary share capital. It may be that significant external investment is made which would reduce the holding to below 5%.


Improving Research and Development (R&D)

A number of measures have been announced to support business investment in R&D including:

  • an increase in the rate of the R&D expenditure credit which applies to the large company scheme from 11% to 12% where expenditure is incurred on or after 1 January 2018
  • a pilot for a new Advanced Clearance service for R&D expenditure credit claims to provide a pre-filing agreement for three years
  • a campaign to increase awareness of eligibility for R&D tax credits among SMEs
  • working with businesses that develop and use key emerging technologies to ensure that there are no barriers to them claiming R&D tax credits.

Business rates

Business rates have been devolved to Scotland, Northern Ireland and Wales. The business rates revaluation took effect in England from April 2017 and resulted in significant changes to the amount of rates that businesses will pay. In light of the recent rise in inflation, the government will provide further support to businesses including:

  • bringing forward the planned switch in indexation from RPI to CPI to 1 April 2018
  • legislating retrospectively to address the so-called ‘staircase tax’. Affected businesses will be able to ask the Valuation Office Agency to recalculate valuations so that bills are based on previous practice backdated to April 2010.

SDLT relief for first time buyers

The government has announced that first time buyers paying £300,000 or less for a residential property will pay no Stamp Duty Land Tax.

First time buyers paying between £300,000 and £500,000 will pay SDLT at 5% on the amount of the purchase price in excess of £300,000. First time buyers purchasing property for more than £500,000 will not be entitled to any relief and will pay SDLT at the normal rates.

The new rules apply to transactions with an effective date (usually the date of completion) on or after 22 November 2017. This measure does not apply in Scotland as this is a devolved tax. This measure will apply in Wales until 1 April 2018, when SDLT will be devolved to Wales.


For advice on how the Autumn Budget announcements will affect you and your business contact us.



Reasonable excuse for late filing of tax returns

Tuesday, January 30th, 2018

According to an announcement made on the website last week, more than three million self-assessment tax returns had not been filed with just a week to go before the 31 January deadline. That’s a third of returns due to be filed.

Readers who find themselves in this category may feel that they have an excuse for late filing, and should not pay the automatic penalty of £100. HMRC will consider a reasonable excuse and the criteria they will consider is set on their website and is reproduced below:

What may count as a reasonable excuse?

A reasonable excuse is something that stopped you meeting a tax obligation that you took reasonable care to meet, for example:

  • your partner or another close relative died shortly before the tax return or payment deadline
  • you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
  • you had a serious or life-threatening illness
  • your computer or software failed just before or while you were preparing your online return
  • service issues with HM Revenue and Customs (HMRC) online services
  • a fire, flood or theft prevented you from completing your tax return
  • postal delays that you couldn’t have predicted
  • delays related to a disability you have


You must send your return or payment as soon as possible after your reasonable excuse is resolved.

What won’t count as a reasonable excuse

The following won’t be accepted as a reasonable excuse:

  • you relied on someone else to send your return and they didn’t
  • your cheque bounced, or payment failed because you didn’t have enough money
  • you found the HMRC online system too difficult to use
  • you didn’t get a reminder from HMRC
  • you made a mistake on your tax return

If you did miss the deadline, for whatever reason, it will be in your best interest to file the outstanding return as soon as possible. In addition to the automatic £100 late filing fine there are progressive penalties if your late filing extends for months rather than days.

Practical support for subcontractors affected by the Carillion liquidation

Friday, January 26th, 2018

If, as is widely predicted, the Carillion liquidation proceeds, sub-contractors owed money by Carillion will have to join the list of unsecured creditors and are forecast to receive no more than 1p in the £ as a pay-out.

Apparently, most Carillion suppliers have been keep waiting for 120 days to get their invoices paid. If that proves to be the case for your business, there are a few basic steps you could take to regularise your financial position apart from laying off staff and sub-contractors engaged for your Carillion work. They are:

  • Bad debt: First job is to quantify the amount of the debt owed by Carillion, contact the liquidators and register your claim.
  • VAT: If you are registered for VAT and using the standard method of accounting you will have paid over any VAT added to your invoices to Carillion, and if these debts are now irrecoverable you can claim this VAT back. You will need to wait as debts need to be unpaid for 6 months. If you use a VAT special scheme (Cash Accounting for example) you only pay VAT when you are paid so no claim will be necessary.
  • Self-employed? If you are self-employed, any payment on account for 2017-18 (due January 2018) will be based on your taxable income for 2016-17. As your profits for 2017-18 are now likely to be much reduced, it may be possible to reduce the payments on account falling due for payment January and July2018. You will need to lodge a formal application with HMRC.
  • Limited Company? If you are an incorporated subcontractor you will have lost possibly four months past turnover to bad debts and future income from your Carillion contract(s). This will make a severe dent in your current year’s profitability and a significant reduction in any corporation tax you may owe. In many cases it may result in losses for the current year that can be carried back for corporation tax purposes and used to reduce tax paid in previous years. You will need to take professional advice on this point.
  • Banks: Hopefully, your bank will be sympathetic, and extend facilities to see you through. They will, however, need forecasts to determine that you can survive the loss of past and future earnings from Carillion. Which bring us to the last and perhaps most important review you should undertake.
  • Update your business plans: You will need to sit down with your advisors and consider your options. Perhaps this blow will be terminal for your business and you will need to follow Carillion into liquidation, but this may not always be the case. On careful consideration of your options will show the way.

The government has also issued a press release for businesses that were contracted to Carillion and will be concerned about their ability to pay their tax. As part of its ongoing commitment to delivering support for businesses, HMRC will provide practical advice and guidance to those affected through its Business Payment Support Service (BPSS).

The BPSS connects businesses with HMRC staff who can offer practical help and advice on a wide range of tax problems, providing a fast and sympathetic route to agreeing the best way forward and addressing immediate concerns with practical solutions.

The BPSS can:

  • agree instalment arrangements if you’re unable to pay your tax on time following the Carillion collapse
  • suspend any debt collection proceedings
  • review penalties for missing statutory deadlines
  • reduce any payments on account
  • agree to defer payments due to short-term cash flow difficulties

HMRC can also provide workers and their families with cash support through the tax credits system – details are on the website.

If you find yourself without advice at this difficult time, please call to discuss your options. Clients affected should call as soon as possible so we can organise tax appeals and consider other matters.

World first register to crack down on money laundering

Tuesday, January 23rd, 2018

The government has made the following announcement regarding a new register they are creating to provide government with greater transparency on overseas companies. In short, the register will provide a:

  • world-first public register will require overseas companies that own or buy property in the UK to provide details of their ultimate owners,
  • £180 million worth of property in the UK has been brought under criminal investigation as the suspected proceeds of corruption since 2004,
  • government will publish draft laws this summer and the register will go live by early 2021.


A world-first register revealing owners of overseas companies buying property in the UK will go live by early 2021 to crack down on criminal gangs laundering dirty money in the UK, the government has announced.

More than £180 million worth of property in the UK has been brought under criminal investigation as the suspected proceeds of corruption since 2004. Over 75% of properties currently under investigation use off-shore corporate secrecy – a tactic regularly seen by investigators pursuing high-level money laundering.

The Department for Business, Energy and Industrial Strategy’s register will require overseas companies that own or buy property in the UK to provide details of their ultimate owners.

This will help to reduce opportunities for criminals to use shell companies to buy properties in London and elsewhere to launder their illicit proceeds by making it easier for law enforcement agencies to track criminal funds and act.

Recently, in the House of Lords, the government committed to publishing a draft bill this summer and introducing it in Parliament by next summer. Following legislation, the register would go live by early 2021.

Business Secretary Greg Clark said:

We are committed to protecting the integrity and reputation of our property market to ensure the UK is seen as an attractive business environment – a key part of our Industrial Strategy.

This world-first register will build on our reputation for corporate transparency as well as helping to create a hostile environment for economic crimes like money laundering.

The register will also provide the government with greater transparency on overseas companies seeking public contracts.

What options are left to pay your tax

Thursday, January 18th, 2018

As we have previously reported on this blog, HMRC will no longer accept payment of tax using a personal credit card. Also, payments cannot be made at the Post Office. The remaining options are to make payment by:

  • A personal debit card,
  • A business credit card,
  • Bank transfer/online banking,
  • Taking a payment slip to your bank or building society with a cheque made payable to HMRC and quoting the correct reference,
  • Setting up a direct debit with HMRC,
  • Sending a cheque to HMRC with a payment slip,
  • By adjusting your tax code to recover the tax due. There are limitations to the use of this method.

You could set up a Budget Plan with HMRC to make regular payments in advance; unlikely to be a favoured option, and if cash flow is an issue, you might be able to pay off arrears by instalments. To do this you will need to contact HMRC and agree a plan. They will need to know:

  • your reference number (for example, your 10-digit unique taxpayer reference or VAT reference number)
  • the amount of the tax bill you’re finding it difficult to pay and the reasons why
  • what you’ve done to try to get the money to pay the bill
  • how much you can pay immediately and how long you may need to pay the rest
  • your bank account details

They will also ask you about:

  • your income and expenditure
  • your assets, like savings and investments
  • what you’re doing to get your tax payments back in order

HMRC will use this information to decide whether you should be able to pay immediately, or if you can’t, whether you’ll be able to get your payments back on track with more time.

You should also be prepared to be asked more in-depth questions if you’ve been given more time to pay before. In more complex cases HMRC may ask for evidence before they decide.

In most cases the NMW is an obligation not a guide

Wednesday, January 17th, 2018

There is a temptation to consider that the National Minimum Wage (NMW) and National Living Wage (NLW) rates are a guide to the amounts you should be paying employees. In fact, they are the minimum rates you should use (unless you are covered by the exceptions listed below) and they are a legal requirement, one that has teeth.

We have reproduced below workers entitled to these rates, and those not entitled.

Workers entitled include:

  • part-timers
  • casual labourers, for example someone hired for one day
  • agency workers
  • workers and homeworkers paid by the number of items they make
  • apprentices
  • trainees, workers on probation
  • disabled workers
  • agricultural workers
  • foreign workers
  • seafarers
  • offshore workers
  • apprentices are entitled to special rates if under 19 or in the first year of their apprenticeship.

Those not entitled include:

  • self-employed people running their own business
  • company directors
  • volunteers or voluntary workers
  • workers on a government employment programme, such as the Work Programme
  • members of the armed forces
  • family members of the employer living in the employer’s home
  • non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and aren’t charged for meals or accommodation, for example au pairs
  • workers younger than school leaving age (usually 16)
  • higher and further education students on a work placement up to 1 year
  • workers on government pre-apprenticeships schemes
  • people on the following European Union programmes: Leonardo da Vinci, Youth in Action, Erasmus, Comenius
  • people working on a Jobcentre Plus Work trial for 6 weeks
  • share fishermen
  • prisoners
  • people living and working in a religious community
  • a student doing work experience as part of a higher or further education course
  • of compulsory school age
  • a volunteer or doing voluntary work
  • on a government or European programme
  • work shadowing

HMRC oversee the use of these rates and are entitled to visit your premises to check and see if you are complying with your NMW and NLW obligations. If they find you have short paid employees, you will have to compensate workers immediately and face possible fines for non-compliance. HMRC can also take an employer to court on behalf of employees.

If you are unsure of your obligations, we can check out what your position is and advise accordingly.

VAT – what is disaggregation

Friday, January 12th, 2018

There are many businesses that benefit from not being VAT registered. In the UK, there is no obligation to register until your taxable turnover exceeds £85,000. For many smaller businesses, especially those that buy and sell goods and services in competition with larger concerns, charging their customers without the 20% VAT add-on can be a compelling advantage especially when they are selling to the public, who can’t reclaim the VAT they would otherwise be obliged to pay.

There is a temptation for traders who want to capitalise on this competitive advantage, to split off parts of their business into a separate trade if VATable turnover was likely to exceed the £85,000 registration limit. In this way, the two businesses could bill up to £85,000 each and therefore double their advantage in the market place.

Unsurprisingly, HMRC are not keen on this strategy and the disaggregation – business splitting – rules basically outlaw this attempt at avoiding VAT registration.

To challenge this type of arrangement, HMRC need to be able to prove that the two (split) businesses have “financial, economic and organisational links.” For their challenge to work, HMRC must prove that all three apply.

In practice, this still offers planning opportunity for smaller businesses, but to be successful achieving the necessary arms-length outcome can be difficult especially if family members are involved. There are other issues that need to be considered. For example:

  • Separation of bank accounts and business records.
  • Each business must be separately registered with HMRC and submit its own tax return.
  • Customers should be convinced that they are dealing with two businesses.
  • Any charges for goods and services between the split businesses must be conducted at arm’s length.

Traders who are approaching the registration threshold, and would like to consider splitting off part of their trade to a separate business, should undertake careful planning to avoid the disaggregation rules, if that is possible. Please call if you would like to discuss your options.

Timing is everything – part two

Wednesday, January 10th, 2018

The week before Christmas we posted an article stressing the value of checking out the tax consequences of investing in new plant and equipment. We stressed the importance of timing.

But this is just one issue that should be considered before the end of the current tax year. Every business owner and individuals with significant earnings, should take time out to consider their planning options before 6 April 2018.

The 5th April may not seem to be a particularly important day, but at midnight on that day 90% of your options to make beneficial changes to your financial circumstances for 2017-18 disappear.

We all have obligations to abide by the law, but it is perfectly acceptable to organise your affairs to retain as much as you can of your hard-won earnings and profit, and still stay within the terms of the UK tax code.

Your planning options for 2017-18 fall into two main groups:

  1. Strategies to reduce the impact of taxation on your profits and earnings, and
  2. Strategies to avoid stepping into one or more of the tax “bear traps” that await the unwary tax payer.
  1. business is different, and every individual has unique financial circumstances. For these reasons it is dangerous to generalise about the possible benefits of tax planning; which is why we recommend year-end tax planning to all our clients and business prospects.

Timing, as the title of this article asserts, really is everything in this regard. If you have a business, or are concerned by the amount of tax you are paying, please call and organise a conversation with us so that we can consider your options for 2017-18. The clock is ticking.

Tax Diary January/February 2018

Monday, January 8th, 2018

1 January 2018 – Due date for corporation tax due for the year ended 31 March 2017.

19 January 2018 – PAYE and NIC deductions due for month ended 5 January 2018. (If you pay your tax electronically the due date is 22 January 2018)

19 January 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2018.

19 January 2018 – CIS tax deducted for the month ended 5 January 2018 is payable by today.

31 January 2018 – Last day to file 2016-17 self-assessment tax returns online.

31 January 2018 – Balance of self-assessment tax owing for 2016-17 due to be settled on or before today. Also due is any first payment on account for 2017-18.

1 February 2018 – Due date for corporation tax payable for the year ended 30 April 2016.

19 February 2018 – PAYE and NIC deductions due for month ended 5 February 2018. (If you pay your tax electronically the due date is 22 February 2018)

19 February 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2018.

19 February 2018 – CIS tax deducted for the month ended 5 February 2018 is payable by today.