Practical and intelligent tax saving solutions for you and your business

Tax Solutions

Whether personal or business tax affects our everyday life and it never stands still.

In the current climate clients expect their advisers to help them make more savings each year through careful tax planning.

Shipleys have a team of knowledgeable tax and accountancy experts who constantly look at ways to add value and provide practical effective solutions whether it’s an owner-managed business or a multi-national group. Our clients know that we genuinely value their custom and ensure that they are always more than satisfied with our work and costs.

Sections


Structuring your Business

Did you realise that the way your business is structured could be affecting how much tax you’re paying?

Do you get the feeling that you could be paying too much tax?

Operating through the appropriate legal entity is vital but can often be neglected if a business has grown organically.

We can provide advice on the most suitable business structure – sole trader, partnership, company, limited liability partnership.

We can help you to structure your business in the most tax efficient way, saving you tax and improving the efficiency of the business.
We also have the expertise to advise on all areas of corporate structuring issues such as:

• Reorganisations and mergers
• De-mergers
• Company Purchase of Own Shares
• Reductions in share capital
• Planning with share rights
• Group tax planning

The taxation issues can be complex, but with our expertise we can guide you through, helping you meet your commercial objectives in a tax efficient way.

One of the most common questions we hear is “how do I get my profits out of the company paying as little tax as possible?”

We work with our clients to consider the tax picture as a whole – getting an understanding of both personal and corporate, short term and long term goals.

Because we take into account the whole picture, we can ensure that when it comes to tax, you won’t miss a trick and that all avenues of tax relief are explored.

We know that working with us, through careful planning, you can extract tax from the business without facing a hefty tax bill.

We can also help you to calculate the taxation impact of extraction policies by dividend or salary/bonus; provide advice in relation to pension contributions and also have particular expertise in tax planning using different classes of share capital.

If you like the sound of working with people who have your goals and aspirations at the heart contact us now.


Property Tax

Shipleys are experts when it comes to property tax matters, advising you on how to arrange your property transaction in the most tax efficient manner. With effective strategies, we can significantly reduce the exposure on property transactions.

Speak to us about:

  • Services for developers
  • Services for investors
  • Professionals working in the property sector
  • Services for property agents


Capital Allowances

When you buy, lease or improve a commercial property, HMRC allows you to offset some of that expenditure for tax purposes. Your advisors have probably claimed for the more obvious features, but as capital allowance specialists we dig much deeper to make significant additional claims on your behalf.

Typically, we identify Capital Allowances of between 10% and 30% of the commercial property purchase price.

We use specialist surveyors with tax expertise, to visit your property to uncover this extra layer of allowable items. This service is relevant for two types of clients:

1. Commercial property owners and investors who can retrospectively claim for unused allowances, (going back many years in some cases), for alterations, extensions and upgrades to their buildings.

2. Buyers and sellers of commercial property who need to agree a value for plant and machinery as part of the purchase process.


Inheritance Tax Planning

IHT has been commonly described as a ‘voluntary tax’ and with good reason. It can usually be reduced with proper and often simple planning, ranging from lifetime planning, will planning or even after death variation or disclaimer can mitigate tax.

IHT planning will assist in preserving family wealth and will reduce tax bills for your heirs, With careful lifetime planning, you can even reduce your exposure to IHT whilst retaining the asset and income.


Asset Protection and Preservation

Asset Protection Essential for protecting and preserving company and family assets from third party claims, divorce, bankruptcy, spendthrift spouses, and youthful improvidence. Asset Protection has a number of forms, including:

Company Asset Protection – The valuable assets in a company, namely property, cash and brand, may in certain circumstances be protected by a restructuring exercise, using group structures, all without triggering taxes on the restructure whilst affording protection.

Family Asset/Wealth Protection – Family assets/wealth can be protected and preserved from claims, bankruptcy and divorce. Typically assets are placed into a properly constituted trust within certain limits with the result that the preservation and protection of the family assets is achieved without adverse tax consequences.


Non UK Resident Domicile & Property Holding Structures

This topic always seems to raise the most debate about the fairness of the UK tax system. And has been squeezed over the years, however if you are in the tax privileged position to be either non UK Dom or non UK Resident the tax benefits are still extra ordinarily valuable in the right circumstances, to say the least. However, this valuable status is generally under used (except by the super rich).

A key area of tax planning is on property holding structures for non UK resident and non UK domiciles individuals as properly structured solutions achieve significant tax savings.


Tax & VAT Investigations

Tax investigations by HMRC often come as an unpleasant shock to individuals or businesses and can be very stressful. Those under enquiry often feel targeted and victimised.

At Shipleys we are non-judgmental, vigorous in defending our clients and aim to resolve the investigation in the most efficient manner possible without compromising the quality of our work.

We have the experience and know how to handle local district cases to large tax fraud cases both in direct and indirect (VAT) tax.


VAT Planning

Our VAT experts trained with HM Revenue & Customs (HMRC) and have a complete understanding not only of the legislation but of HMRC’s policies and procedures.

Our work extends to every aspect of VAT but some of the services we are most often asked to provide involve negotiation with HMRC on liability issues and agreeing partial exemption methods, providing VAT planning ideas for clients to improve cash flow, assisting clients through the maze of VAT property law, and advising them on EU and other international transactions.

Some of the areas we cover most include:

• VAT and property
• VAT and not-for-profit organisations
• VAT and offshore companies

Contact us now for a free no obligation consultation with a tax consultant.

Latest news & blogs…

Are You Ready For Making Tax Digital?

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

Giving shares in the family company

 

small-business-optimised

In most small family trading companies it is not unusual for the husband and wife to own all the shares. Where a family member works in the business they may wish to give them shares in the company as recognition for their input and hard work.

However, giving shares isn’t as easy as it sounds. There are various taxes that need to be considered on a gift of shares to a family member, including income tax, capital gains tax, inheritance tax and stamp duty.

If an employee of a company receives “free” shares, for example, or if you make a gift of shares to a family member who works in the business, an income tax charge could arise on the market value of the shares gifted. If, however, it can be demonstrated that the transfer of shares is for reasons of family or personal relations, the income tax charge may be avoided.

A gift of shares to a family member is also a deemed to be a disposal of shares for capital gains tax purposes.   As the gift is being made to a connected party, it is a deemed disposal at market value. In the case of a gifts it is typical that the person making the disposal receives no monies out of which to pay any capital gains tax which may arise (the gift is treated as a sale at market value). This could discourage family members from making gifts as part of any family tax planning mitigation exercise.

Therefore, capital gains tax is potentially payable on any gain arising even though no consideration is paid. However, providing certain conditions are met, it may be possible to reduce the capital gain on the shares gifted to Nil by way of gift relief. This allows the capital gain (and thus any tax liability) which is deemed to arise on gift of the shares at market value to be postponed. It does this by effectively transferring the capital gain to the recipient of the gift. To claim this relief appropriate submissions must be made to HMRC at the right time.

Stamp duty is also normally payable on the issue or sale of shares and is payable by the person receiving or acquiring the shares.   However, if the shares are gifted and no consideration is paid, a stamp duty gift exemption relief can be claimed which is likely to reduce the stamp duty costs to nil.

For inheritance tax (IHT) purposes, a gift of shares to a family member would constitute what is known as a lifetime transfer. Based on current legislation, if you survive 7 years from the date of the gift, there should be no inheritance tax consequences on the transfer of shares to the family member. In the event of your death within 7 years of the gift, IHT relief may be available on the transfer providing certain conditions are met. This could also reduce any potential exposure to inheritance tax to Nil.

Before any transfer of shares takes place, we would recommend that you seek professional advice to ensure that the available reliefs are applicable to your particular circumstances and also to ensure that the various conditions for each tax relief are fulfilled.

The advice above is general guide only and does not constitute any advice whatsoever. You must seek professional advice before taking any action. 

For more information please contact us on 0114 275 6292 or info@shipleystax.com.

Receiver’s fee and litigation expenses not allowed

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Deductibility of receiver’s and legal fees

In a recent case the First-tier Tribunal (FTT) has held that the fees of a receiver appointed to sell properties forming part of a letting business and legal fees in challenging the receivership and claiming against the bank for their actions in relation to the loan were not allowable expenditure under TCGA 1992, s. 38.

The FTT found that both a receiver’s fee and legal fees effectively paid by the taxpayers on the forced disposal of properties were not deductible for capital gains tax (CGT) purposes.

Background

The taxpayers owned ten properties, nine of which were let out. It was decided to consolidate the various related loans in place into a single loan with one bank.

Two of the properties were sold, with the bank’s permission. The taxpayers intended to use the proceeds to reduce the loan. However, the bank did not do this. It claimed that the taxpayers were in breach of the terms of the loan as the reduced rental income dropped to less than a predetermined percentage of the interest.

A receiver was appointed who subsequently arranged sale of the remaining eight properties. The taxpayers incurred various legal fees to prevent the forced sale and subsequently to claim against the bank. The bank also deducted the receiver’s fees from the sale proceeds.

Outcome

The FTT found that the receiver’s fee on the forced sale of the properties was not wholly and exclusively in relation to the sale as the receiver carried out other tasks. This was therefore not deductible. This follows the decision in the recent case of O’Donnell v HMRC [2017] UKFTT 347 (TC).

The taxpayers argued that the legal fees fell within TCGA 1992 s.38(1)(b) and were incurred wholly and exclusively in establishing, preserving or defending title to, or a right over, the asset. The FTT disagreed; the work to prevent the forced sale and the litigation with the bank were concerned with their rights and liabilities under the loan agreement with the bank. The expenses were not allowable. The FTT suggested that the fees were all in fact of an income nature.

If you need advice with capital gains tax on properties please contact us on info@shipleystax.com or call 0114 275 62 92 and ask for a tax consultation.

 

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