Asset Protection examples…
Company Assets – Ring Fencing
Client A wished to remove a commercial property from his business as part of an asset protection planning exercise. The property was demerged away from the trading business and effectively ring fenced; this transaction was commercially driven. There was limited stamp duty exposure of 0.5% on this transaction and no other taxes.
Comment: Asset protection is fundamental consideration when entering or embarking on new ventures, it is key that the transactions to protect assets are commercial/investment driven.
Private Assets – Trusts
Client B wished to gift assets to his family members whilst retaining an element of control. The client was concerned about potential claims against the beneficiaries in the future by spouses, trustees in bankruptcy etc, therefore the gifts were made into a relevant trust which provided the desired protection.
Comment: In order to provide real protection the trust has to be properly constituted, the correct type of trust must be used and not be a sole beneficiary trust as the courts have looked through such trusts in recent cases.
Offshore and Domicile
X individual had a sizeable portfolio of residential investment properties. We restructured the tax affairs to transfer the properties into an offshore company without triggering any taxes, all with HMRC clearances (which in our mind are essential for comfort).
As the individual was non UK domiciled for inheritance tax purposes, the strategy avoid IHT on the portfolio immediately, hence saving £2.1M, whilst operationally not affecting how the business was operated.
Latest news & blogs…
Received an automated message from HMRC saying you are under investigation? Do NOT reply – this is scam. Read on…
We are getting some reports of an HMRC telephone scam. This is not a new scam but seems to be rearing its ugly head again so beware: Scam: a recorded message is left, allegedly from HMRC, that starts: “This is Her Majesty’s Revenue & Customs. We have been trying to reach you to let you know that we are filing a law suit against you/you have a tax refund due.” The recipient is then asked to phone 0XXXX XXXXXXX and press “1” to speak to the officer dealing with the case. Do not to reply to this message as they will then try to extract money from you.
Tip 1 If the caller can’t verify their identity, you should never disclose any personal details.
Tip 2 If you receive either of these scam calls, report it on the Action Fraud website or you can call 0300 123 2040.
For more on this visit: https://lnkd.in/gzpdUJE
If you are under a Tax or VAT Investigation and would like a specialist to review your case for free, please call 0114 275 6292 and book an appointment with our Tax Investigations Team.
Buying a car through a company
As good accountants know, buying a car through a company is usually not the most tax efficient.
This is because the company car tax regime taxes both the employee and the employer company on the provision of a company car and the way car tax is calculated. The amount of tax payable is based on the ‘car benefit’ assumed to have been provided, this is calculated by reference to the List Price multiplied by a % based on the CO2 emissions of the car. But as the value of the car depreciates, the car tax benefit remains the same as the calculation is based on the List Price not “market value”, hence the tax payable remains constant and not representative of actual value.
New car benefit rates
However, things are set to get better for the long suffering company motorist. From April 2020, there will be a sharp reduction in the car benefit rates for ‘Ultra Low Emissions Vehicles (ULEV) i.e. electric company cars with CO2 emissions of less than 75g/km. This taxable car benefit rate will reduce from 9% (2018) to 2% in April 2020.
Jaguar I-Pace EV400; List price £63,440; CO2 emissions 0g/km.
- 13% (2018-19)
- 16% (2019-20)
- 2% (2020-21)
Based on the above the car tax benefit charge will drop from £8,247 to £1269, a massive £6,978 saving!
So what now…
Well given that the new ULEV company car tax regime is set to become much more tax efficient from April 2020, you may want to consider deferring any new car purchase until April 2020, or at least choose a ULEV car which will then benefit from the much reduced car benefit rates applying from April 2020.
If you have any queries about this or any other tax planning, please contact us on 0114 275 62 92 or email firstname.lastname@example.org.
The advice above is a general guide only and does not constitute advice. You must seek professional advice before taking any action.
Businesses in the UK now have less than nine months to prepare for wide-ranging new rules requiring them to manage their accounts and submit tax returns digitally.
The government’s long-anticipated and controversial Making Tax Digital regime, hailed as the biggest tax and accounts shake-up in a generation, finally comes into effect in April 2019.
Experts in the accountancy world have warned the changes could catch many businesses off-guard. Shipleys Tax have urged business owners to begin researching and investing in digital reporting software that’s compliant with the new rules.
What is Making Tax Digital (MTD)?
Making Tax Digital for VAT is being brought in by the government as an attempt to streamline and simplify the tax reporting system. Making Tax Digital for business (MTDfb) begins on 1 April 2019 with MTD for VAT. From that date, VAT-registered businesses above the threshold of £85k (currently) will have to keep digital records and submit VAT returns using compatible software.
There will be specific rules for how business will report digitally and the software used to do this has to comply with HMRC’s guidance. Gone are paper records and spreadsheets (to a certain extent), in its place will be digital books and records stored online in the cloud.
This may come as a culture shock for many small businesses who are used to doing it the traditional way.
Businesses that exceed or expect to exceed the VAT registration threshold will need to consider:
· are they exempt from the requirement to file returns electronically under MTD (charities, local authorities, government departments and overseas businesses will not be exempt from MTD for VAT)?
· what records will need to be kept digitally
· what the digital VAT account should look like
· how to submit their digital VAT return in line with MTD requirements
· whether to submit their digital VAT account to HMRC
· penalties for late filing and payment of VAT, and for not keeping digital records or having digital links.
It is also worth noting that the government has plans to roll out MTD requirements for all other taxes in 2020.
What are the key dates to look out for?
· April 2018 – HMRC opened pilot for businesses to volunteer to submit their VAT returns
· Spring 2018 – HMRC launches consultation on MTD for corporation tax
· 1 April 2019 – start of first VAT period where MTD is mandatory
· 7 June 2019 – submission deadline for first monthly VAT returns under MTD
· 7 August 2019 – submission for first quarterly returns under MTD
· 1 April 2020 – MTD mandatory for all taxes (planned)
What can you do now to get ready for MTD?
Reports suggest some businesses have not heard about MTD. There is less than 12 months to go until MTD is implemented, many are still uncertain about the requirements and how specifically these requirements will apply to their business.
HMRC is still publishing further guidance on specific definitions and how MTD will work in practice. However, what businesses can do now is to review existing VAT accounting systems and processes in relation to the preparation of VAT returns.
Our recommended steps
To ensure that your business is ready for MTD, we would recommend the following steps:
1. Review your internal reporting systems, processes and controls. Liaise with your advisers/software providers and internal IT teams to get a view on what they can do to help to get ready for MTD.
2. Consider likely costs and potential disruptions to your business. Agree additional budgets for changing and maintaining your systems, seeking specialist advice.
3. Test the integrity of your data and consider whether your VAT-related data is accurate, current and complete.
4. Consider what information you wish to submit to HMRC and how the API connection will work. Do you need to develop or acquire additional software? Is it easier to outsource the submission of VAT returns to a third party?
Accounts and IT system changes may take 9 to 12 months to review and implement. HMRC advise that failure to meet the necessary MTD requirements could result in penalties although there will be a 12 month grace period (‘soft landing’) after MTD goes live to enable businesses to ensure that they have the necessary processes in place and digital links. It is important therefore that all affected businesses start reviewing their systems, processes and VAT adjustments now.
If you have any queries regarding the above, please contatct us on 0114 275 6292