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…

VAT AND STAMP DUTY CUTS ANNOUNCED TODAY

Tax Solutions Shipleys Tax Advisors

IN A SEEMINGLY DESPERATE BID, the UK Chancellor, Rishi Sunak, gave his Summer economic update today in Parliament to revive jobs and the boost the ailing economy following the outbreak of COVID-19 Coronavirus. 

Along with a Stamp Duty holiday (£125k to £500k), a 15% VAT reduction for the catering/leisure industry he announced new job scheme subsidies for young unemployed workers. We outline some of the plans below.

Stamp Duty Land Tax (SDLT)

  • The current residential SDLT threshold of £125,000 will rise to £500,000.
  • This will apply from 8 July 2020 until 31 March 2021.
  • First-time buyers qualify for relief, whereby they pay less, or no tax, if the purchase price is £500,000 or less.
  • Applies only to property purchased in England and Northern Ireland.

VAT: Temporary VAT cuts

The rate of VAT on food, accommodation, entry fees etc is cut from 20% to 5% for the next six months.

VAT on food and non-alcoholic drinks

  • From 15 July 2020 to 12 January 2021, to support businesses and jobs in the hospitality sector.
  • The reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.
  • Further guidance on the scope of this relief will be published by HMRC in the coming days.

VAT on accommodation and attractions

  • From 15 July 2020 to 12 January 2021, to support businesses and jobs.
  • The reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK.
  • Further guidance on the scope of this relief will be published by HMRC in the coming days.

New Jobs Retention Bonus

  • A new bonus of £1,000 will be paid to employers for bringing back and retaining furloughed employees until January 2021.
  • Employees must be paid at least £520 per month.

Job Retention Scheme (JRS)

  • The Employee Job Retention Scheme (JRS) is due to wind down and it will end in October 2020. The Chancellor has said “It is a false hope to keep furloughing open forever”. 

Kickstart scheme

  • The Kickstart scheme will pay employers who take 16 to 24-year-olds for a minimum of 25 hours per week at the National Minimum Wage (NMW).
  • The grant will pay the wages or around up to £6,000 for the first six months.
  • No cap on the number of places available.

Training places

  • Pay employers £1,000 to take on new trainees.
  • Apprentices: pay employers to create new apprenticeships, £2,000 per place.
  • £1,500 payment for taking on apprentices aged over 25 years old.

Eat Out to Help Out

  • The ‘Eat Out to Help Out’ scheme aims to encourage people to return to eating out.
  • Every diner will be entitled to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishments.
  • The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including non-alcoholic drinks) for the entire month of August 2020 across the UK.
  • Reclaimed by the business which must apply to participate.

If you need help with the issues above, please call us on 0114 272 4984 or email info@shipleystax.com – we are ready to assist.

Furlough fraud – HMRC to go after directors personally

Tax Solutions Shipleys Tax Advisors

The forthcoming Finance Bill 2020 proposes to give HMRC wide powers to make directors personally liable for a company’s tax liability. Under the new proposals, HMRC plans to penalise company directors who intentionally breach the rules of the furlough scheme – the so called “furlough fraud”.

What does this mean for company directors and what should you do to minimise your risk? We outline the issues below.

Identifying abuse of the furlough scheme

With the Coronavirus Job Retention Scheme (“CJRS”) in the process of being wound down towards the end of October, the government is now focussing their attention to identifying those companies who have made fraudulent grant claims for reimbursement of staff wages in this period.

Abuse of the system includes:

  • forcing employees to continue to work on a part-time or ad hoc basis despite being declared as furloughed
  • where employees not told that their employer was claiming reimbursement of their wages under the CJRS.
  • companies claiming furlough for ‘ghost’ employees who may not actually work for the company at all.

With the Coronavirus Job Retention Scheme (“CJRS”) in the process of being wound down, the government is now focussing their attention to those companies who have made fraudulent grant claims for reimbursement of staff wages in this period.

Furlough fraud is manifestly an exploitation of employees, as well as a blatant abuse of a system set up to help companies through this period of unparalleled business turmoil. With billions of pounds paid out through this scheme, HMRC are now looking to seriously penalise those who have flouted the scheme for profit.

Joint and Several Liability of Directors – the new proposals

Legislation is currently being rushed through Parliament and is likely to become law in early July as part of the Finance Bill 2020.

The Bill proposes a new regime which will give HMRC the power to make directors and co-directors jointly liable and severally liable for the company’s tax liabilities if:

  1. the liability arises from tax avoidance arrangements or tax evasive conduct, repeated insolvency, penalty for facilitating avoidance or evasion; and
  • where the company begins insolvency proceedings or is expected to begin insolvency proceedings so that some or all of the tax liability will be lost.

Of particular concern – and potentially worrying for some – is that these proposals include circumstances where a director did not know about a co-director’s fraudulent conduct – hence the “joint and several” liability. HMRC will seek to apply these provisions for penalties raised in relation to fraudulent furlough payments. It is understood that the penalties will apply in cases of deliberate fraud but could also catch directors who unintentionally breached the rules or who did not know that their fellow directors had made a claim under the scheme.

Of particular concern is that these proposals include circumstances where a director did not know about a co-director’s fraudulent conduct – hence the “joint and several” liability.

Penalties

Penalties for those found guilty are likely to include fines for companies, while directors of companies which have subsequently been liquidated could face personal liability for the falsely claimed furlough costs. Imprisonment for convicted fraudsters is also a possibility as exploitation of the CJRS amounts to defrauding the Treasury. The end result is directors potentially being personally liable even in circumstances where they did not personally benefit from the CJRS grants.

HMRC’s tougher approach

These new powers – indicating HMRC’s intention to take a strong approach to recovering any payments made as a result of fraud – looks to be just the start of a new wave of anti-fraud HMRC enforcement and enquiries arising out of COVID-19 crisis.

It remains to be seen exactly what form these measures will take, however directors are well advised to check whether any CJRS claims have been made on behalf of companies of which they are officers, ensure that any such claims were made in accordance with the rules and confirm that any payments received were then applied properly.

If you need help with the issues above, please call us on 0114 272 4984 or email info@shipleystax.com – we are ready to assist.

Tax Tip – mortgage payment holidays for landlords

Tax Solutions Shipleys Tax Advisors

As lockdown slowly eases across the UK, we look at some of the practical issues faced by individuals already impacted by COVID-19. One issue we are being asked about is the impact of buy-to-let landlords who have decided to take a mortgage payment holiday. We outline the impact of this and how this can affect your tax payment for the year.

In March, the Government announced that homeowners struggling to pay their mortgages due to Coronavirus would be able to take a three-month mortgage payment holiday. They confirmed that this option would also be available to buy-to-let landlords, who may suffer cashflow difficulties if, as a result of the virus, their tenants were unable to meet their rent in full when it is due. In May, the Government announced that those struggling to pay their mortgages because of the impact of Coronavirus would be able to extent their mortgage payment holiday by up to three months.

… interest continues to accrue during the period of the mortgage holiday, although the landlord will not be required to make any payments during this time.

Where a landlord opts to take a mortgage payment holiday, what impact does this have on tax relief for interest payments and, in turn, their tax payments?

Interest continues to accrue

The first point to note is that interest continues to accrue during the period of the mortgage holiday, although the landlord will not be required to make any payments during this time. This is important and will impact on the timing of the associated interest relief, which will depend on whether accounts are prepared on a cash basis or on the accruals basis.

At the end of the holiday, the missed payments and interest may be recovered by extending the term of the mortgage or by making higher payments once payments restart.

Relief as a basic rate tax reduction

From 2020/21 onwards, tax relief for finance costs (such as mortgage interest) on residential properties is given only as a tax reduction at the basic rate. This means that 20% of the allowable finance costs are deducted from the tax that is due.

As expenditure under the cash basis is recognised when paid, if the landlord does not make a payment, there will be no relief for that expense until the payment is made.

Impact of a mortgage holiday – Cash basis

Most landlords whose rental receipts are £150,000 a year or less will prepare the accounts for their property rental business under the cash basis. As expenditure under the cash basis is recognised when paid, if the landlord does not make a payment, there will be no relief for that expense until the payment is made.

Where the landlord takes a mortgage, no interest will be paid during the period of that holiday. As a result, a landlord may pay less in interest in 2020/21 than in 2019/20. The interest rate reduction is calculated by reference to the interest paid in the year.

Example

Ali has a buy-to-let property on which he has buy-to-let mortgage, the interest on is £500 per month. As a result of the Covid-19 pandemic, his tenant struggles to pay his rent on time. Ali takes a three-month mortgage payment holiday. The mortgage term is effectively extended as a result.

Under the accruals basis relief is given for the period in which the expense arises rather than when payment is made.

In 2020/21, Ali only makes nine mortgage payments instead of the usual 12, paying interest of £4,500 rather than £6,000. The tax reduction for 2020/21 is £900 (£4,500 @ 20%) rather than £1,200 (£6,000 @ 20%).

Tax reduction – accruals basis

Under the accruals basis relief is given for the period in which the expense arises rather than when payment is made. As interest continues to accrue throughout a mortgage holiday, the landlord will be able to claim the full tax reduction on the interest accruing in the 2020/21 tax year, even if the interest was not paid in full in the year because the landlord took advantage of a mortgage payment holiday.

So if, in the above example, Ali prepared his accounts for 2020/21 on an accruals basis, he would be able to claim a tax reduction of £1,200, whereas under the cash basis his deduction will only £900, the higher deduction will of course reduce any rental profits (or increase a loss) subject to tax and thereby reduce any tax payable in the year.

If you need advice regarding your rental properties please call us on 0114 272 4984 or email info@shipleystax.com.

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