Practical and intelligent tax saving solutions for you and your business
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.
- Structuring your Business
- Property Tax
- Capital Allowances
- Inheritance Tax Planning
- Asset Protection and Preservation
- Non UK Resident Domicile & Property Holding Structures
- Tax & VAT Investigations
- VAT Planning
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
• 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.
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
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.
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…
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.
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.
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  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 email@example.com or call 0114 275 62 92 and ask for a tax consultation.
From 6 April 2017 a UK residential property will now be subject to UK Inheritance Tax regardless of ownership structure and residence or domicile status of the ultimate owner.
Who will be affected?
The new rules will affect all non-UK domiciliaries and the trustees of trusts they have established who hold an interest in an offshore structure which derives its value from:
- a UK residential property;
- loans (is provision applies to all loans not just those between connected parties) used to acquire, maintain or improve UK residential property; or
- collateral for such loans or who have thereunder made or provided collateral for such loans.
Which assets are relevant?
The new legislation imposes an inheritance tax charge on three categories of property:
Interests (e.g. loans or shares) in closely held companies which derive, directly or indirectly, their value from UK residential property. The interest in the parent company will still be caught even if there is a chain of companies underneath before you get to the residential property. However, if any of the companies is widely held (for example a real estate fund), this will not be caught.
An interest in a partnership, the value of which is directly or indirectly attributable to UK residential property. Unlike companies, it does not make any difference how many partners there are and whether or not they are connected. A real estate fund which is structured as a partnership will therefore fall within the new rules.
The benefit of loans made to enable an individual, trustees or a partnership to acquire, maintain or improve a UK residential property or to invest in a close company or a partnership which uses the money to acquire, maintain or improve UK residential property.
To avoid back-to-back lending arrangements, assets used as collateral for such a loan will also be subject to inheritance tax under the new rules.
An interest in a close company, or a partnership which holds the benefit of the debt or the assets which are used as collateral, are also caught.
UK residential property
The rules will apply where the shares’ (or other interest’s) value is attributable to any UK residential property, whether that property is occupied or let and whatever the property’s value (subject to limited exceptions such as care homes). A property which is being constructed or adapted for residential use will be treated as UK residential property.
The rules will not apply to the extent that the asset’s value is derived from commercial property. It is to be welcomed that previous proposals to include a property which had had a residential use at any time in the last two years have been dropped. Rather, it will simply be the use of the property at the time that the IHT charge arises that will be relevant.
Legislation is still awaited for properties used for both residential and non-residential purposes. Based on the 2016 consultation paper this will be on an apportionment basis.
Value subject to IHT and debts
Where an IHT charge arises on shares etc. under the new rules, the IHT liability will be calculated on the open market value of the shares (or other interest) to the extent that their value is attributable to UK residential property. In determining the value of an interest in a close company, the liabilities of the close company will be attributed to all of its property pro rata. The liabilities attributable to the residential property will be deductible in determining the value within the scope of IHT.
Under the original proposals, debts that related exclusively to the property were to be deductible when calculating the value for IHT purposes, unless the borrowing was from a connected party. In response to concerns that this could result in a double IHT charge, the Government’s solution contained in the legislation and other documentation published on 5 December 2016 is to treat any debt used to finance the acquisition, maintenance or repair of UK residential property as an asset subject to IHT in the hands of the lender, with look through provisions where the lender is itself a non-UK close company or partnership. Similarly, any security or collateral for such a debt will be within the scope of IHT in the estate of the provider of the security.
Whilst this removes the potential for double counting, it would appear to defeat certain IHT mitigation options which the Government previously appeared to accept when the provisions relating to debts were revised in 2013. The application of these rules to debts, whenever created, seems unduly harsh and a restriction to debts created after 19 August 2016 (when an iteration of the provision was first announced), if not to commencement date, would be welcomed.
Two year tail
Newly included in the 5 December 2016 draft legislation are provisions such that following sale of close company shares or partnership interests which would have been within the scope of the new IHT rules, or indeed repayment of a lender’s loan, the consideration received (or anything which represents it) will continue to be subject to IHT for a two year period following the sale or repayment. This appears to be a provision introduced to combat specific anticipated avoidance. However it will, as drafted, have a wider effect and give rise to an IHT charge in normal commercial situations even where UK residential property is no longer held.
Targeted anti-avoidance rule
Any arrangements whose whole or main purpose is to avoid or reduce the IHT charge on UK residential property will be disregarded. This anti-avoidance provision is extremely widely drawn.
If you are affected by any of the above and for advice and guidance on what actions you should take next please contact us on firstname.lastname@example.org or 0114 275 6292.
The above is not intended to be advice, we strongly recommend professional advice is sought before taking any action.
What with cyber-snooping being all the rage these days it seems the taxman is getting in on the act too.
HM Revenue & Customs has now fully unleashed its super-computer, costing over £100m and many years to make, to identify those who may have paid too little tax.
The powerful system, benignly dubbed “Connect”, now automatically gathers information from a myriad of government and corporate sources to create a detailed profile of each taxpayer’s financial position. Where this differs from the information provided by the taxpayer, the account is flagged up and subject to further possible investigation.
Connect now automatically collects information from over 30 databases, covering details of taxpayers’ salaries, bank accounts, loans, property and car ownership..
The system’s data-hoarding does not just stop at the income people have received from work and investment. It also amasses data from the digital footprint left by taxpayers online.
It collates data from diverse sources such as Airbnb and eBay, as well as obtaining anonymised information on all Visa and Mastercard transactions, enabling it to identify areas of likely underpayments which it can then target further.
HMRC also has powers to request one-off bulk data from third parties where there may be particular cause for concern. Insurance companies, hospitals and dentists supplied information to assist with the Tax Health Plan, for instance.
For those with investment properties, it can also access Land Registry records to see houses purchased/sold to check against information on a tax return. In addition, further sources enable it to determine if properties are being rented out and whether that income has been declared. Crucially, it can also determine if someone is likely to be able to afford such properties, or whether they are suspected of having used previously undeclared income or savings.
Particularly striking is the gathering of information from social media. HMRC are now monitoring online posts about holidays, parties and purchases. They may wish to ask questions where they do not feel lifestyle fits with an individual’s reported income.
The tax profession has raised concerns that HMRCs growing reliance on automated systems could mean an increasing number of innocent taxpayers facing investigation. Whilst many of the leads generated by Connect’s data collection maybe worth following up, a proportion will be unfounded causing unnecessary stress and anxiety to those targeted. A surface analysis of data or online information could quite easily lead to misinterpretation. An exaggeration over twitter or Facebook, for example, could paint a highly inaccurate picture resulting in false leads.
Shipleys Tax has many years of protecting taxpayers and succeeding in tax investigations with HMRC, if you need help please contact us 0114 275 6292 or email email@example.com.
What HMRC can find out about you
- UK & overseas bank accounts, pensions: From 2017 HMRC will receive information from banks in more than 60 countries.
- Web browsing and email records: Under the ‘Snoopers Charter’ HMRC will be able to access individual’s digital information
- Property sites -adverts on the internet e.g. Rightmove and Zoopla
- Land Registry records: To determine properties purchased, stamp duty paid and capital gains tax
- Earnings: From any employer, including those you have worked for casually, or on an ad-hoc basis. This includes any company benefits received. It can also access child benefit and maintenance payments through the child support agency
- Internal tax documents: Systems show council tax paid, relevant VAT registration, previous tax investigations, last year’s tax return (or absence of one)
- Visa and Mastercard transactions: Anonymised information on all payments
- DVLA: Details of cars purchased and owned by individuals
- Online marketplaces: Websites such as eBay and Gumtree can be accessed to weed out regular traders
- Social media: The Connect system can also look at public social media account information, including from Twitter, Facebook and Instagram
Connect cross-references information from many other UK government databases, including:
- Council tax
- Companies House
- DWP (former Benefits Agency)
- The electoral roll
- Gas Safe Register
- Insurance companies
HMRC also independently looks at Google Earth.