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Frequently Asked Questions
Have a question? Start here.
What exactly do you do?
We offer bespoke tax planning solutions for individuals and businesses helping them legally minimise their tax burden in a variety of ways. We also help with accounts.
Can you save me tax?
In most cases, probably yes. This is more likely if you haven’t done any tax planning before.
Isn’t it wrong or illegal?
No – tax law allows you to administer your affairs in the most tax efficient manner possible.
Which tax can I save?
Potentially all taxes can be mitigated, some less than others. The main taxes are Income Tax, Capital Gains Tax, Corporation Tax, Stamp Duty and VAT (quite a lot of taxes!)
Why can’t my accountant just do it?
As with most things in life the best advice is usually given by those who specialise in a particular field or topic as opposed to getting a generalist to advise on an specialist area.
Do you sell tax “schemes”?
Tax schemes usually are “off the shelf” high risk tax planning products which are almost sold like insurance products. In such cases HMRC require you to disclose these on your Tax Return. Our tax planning is in-house and based on your circumstances, meaning they are completely unique.
I am being investigated by the tax man – what did I do wrong?
Some tax investigations are random others are as a result of HMRC obtaining some sort of intelligence. The important thing to remember is that early intervention by a tax investigation specialist could resolve the dispute relatively quickly; what not do to is to attempt to correspond with the tax man yourself as you could unknowingly put the proverbial “foot in it”.
I heard I have to pay up to 40% tax on death on my assets is this true?
Partly. Inheritance tax is payable on ALL WEALTH above the inheritance tax threshold. However, there are some simple ways to mitigate inheritance tax.
What are your costs?
We have a fixed cost structure so there are no surprises. However, we aim to keep costs low at all times and be the most competitive in market given the expertise and experience we have. We have a small motto at Shipleys: “we’re happy to talk problems, but ideas cost money…”
Latest news & blogs…
TO PREVENT the abuse of Research & Development tax credit relief claims, HMRC are looking to step up their crackdown on unscrupulous companies promoting exaggerated claims.
At Shipleys Tax, we are aware of the many pitfalls of an ill-prepared claim and the issues to avoid and how you can maximise the the tax relief claim.
This was borne out by the recent case of AHK Recruitment v The Commissioners for HMRC in the First Tier tax tribunal where a claim for Research & Development (R&D) was denied due to lack of credible evidence. In particular, the R&D report which was submitted did not give clear evidence as to how the research and development took place. The Tribunal was amazed that no competent professional gave evidence, not even a witness statement. Nor was there any professional representation.
What is R&D?
Research & Development is a significant driver of innovation, economic growth and employment across all regions of the UK.
The R&D tax relief is a very valuable relief. Under the SME scheme, where expenditure incurred by a SME qualifies for relief, the company can claim an extra deduction in calculating its taxable profits. That extra deduction is 130% of the qualifying expenditure, which means that the company obtains a total deduction of 230% (that is the original spend plus the additional deduction) of the original qualifying expenses.
If the company makes a loss for corporation tax purposes, the loss from the R&D deduction can (with some restrictions) be ‘surrendered’ in return for a payment of R&D tax credit. The payable tax credit is then 14.5% of the loss surrendered.
Abuse of R&D claims
Unfortunately, R&D is not a regulated industry and there are no real barriers to entry which has resulted in a tsunami of new overly enthusiastic entrants who exaggerate what should be considered as true R&D within the rules of the scheme. They may have incorrect suggestions as to what might qualify to encourage potential clients to sign up to their commission-based fee engagements.
The consequences of incorrect claims can be significant on the business. Not only will the business need to repay tax and interest, it may have significant tax penalties which may hit cash flow hard.
One underlying issue is that taxpayers are still failing to understand that the UK tax system is inherently “process now” and “check later”. Therefore whilst the business may receive a tax repayment from HMRC, HMRC have a window to enquire into the affairs of the business and this can be extended in some cases to 20 years.
Therefore, it is imperative to ensure that you instruct experienced and credible R&D firms who are real professionals and technically competent, as well as having high ethical standards, as this is a complicated area of tax law.
- The importance of the competent professional and their experience and qualifications.
- With software claims, the advance and uncertainties have to be in the field of software, not the industry it is being used in.
- Concentrating too much on functionality as opposed to advancement in the field of research, and uncertainty in the report.
- Lack of detailed evidence of costs.
At Shipleys Tax we expect to see a significant rise in cases such as AHK Recruitment above. HMRC are stepping up their crackdown on fraudulent R&D claims and have increased resources to tackle tax abuse due to a significant increase in incorrect and fraudulent R&D claims.
HMRC’s consultation on preventing abuse of R&D tax relief for SMEs closed Friday, 28 August 2020.
To talk through your potential R&D claim and how our team of experts might be able to help, please call 0114 272 4984 or email email@example.com.
IN STRIFE AS IN DEATH, tax is never far away it seems. The government has made various support payments available to individuals and businesses to help mitigate the profound effects of the Covid-19 pandemic but there is a sting in the tail. What is the tax position of these payments?
Those self-employed people and business owners who have received a grant during the coronavirus pandemic, do they need to take these into account when preparing their tax returns for 2020/21. Shipleys Tax looks at the lesser known tax impact of these payments here.
Payments under the Coronavirus Job Retention Scheme?
Grants payments made under the Coronavirus Job Retention Scheme (CJRS) for fully furloughed and flexibly furloughed employees are included in the calculation of the employer’s profits. However, they can deduct payments made to employees and associated employer’s National Insurance and pension contributions.
As far as the employee is concerned, grant payments paid over to them are treated in the same way as normal payments of wages and salary. They are taxable under PAYE and liable to Class 1 National Insurance contributions.
Grants under the Self-employment Income Support Scheme
The self-employed, can, if eligible, claim grants under the Self-employment Income Support Scheme if their business has been adversely affected by the Covid-19 pandemic. The first grant could be claimed in May and the second can be claimed in August.
The grants should be taken into account in computing profits for 2020/21, returned on the self-assessment tax return due by 31 January 2022. As they are included in profits, where these exceed £9,500 for 2020/21, Class 4 National Insurance contributions are payable. If profits exceed £6,475, the trader must also pay Class 2 contributions.
Where profits are below £6,475 for 2020/21, there is no obligation to pay Class 2 contributions. However, it can be beneficial to pay them voluntarily to ensure that 2020/21 remains a qualifying year for state pension and contributory benefit purposes.
Various other grants were also paid to particular types of business, such as those eligible for small business rate relief and grants to those in specific sectors, such as those payable to businesses in the hospitality, retail and leisure sectors and to Ofsted registered nurseries.
Where the business operates as a company, the grants should be taken into account in calculating the profits chargeable to corporation tax.
If the grants were payable to a sole trader or unincorporated business, they should be taken into account in computing the profits chargeable to income tax.
If you need assistance regarding the tax treatment of government support grants, please call us on 0114 272 4984 or email firstname.lastname@example.org.
AT SHIPLEYS TAX, we like to make life easier for everyone. In today’s tax note we highlight a nifty tool which can help you identify which support is available to you. Even with the plethora of support announced by the government, there are those who have unfortunately been left out and the tool does not cover all circumstances.
For the lucky few, Coronavirus (COVID‑19) support is available to employers and the self-employed, including sole traders and limited company directors. You may be eligible for loans, tax relief and cash grants, whether your business is open or closed.
Support finder tool
The government has developed this business support finder to see what support is available for you and your business. The ‘support finder’ tool will help businesses and self-employed people across the UK to quickly and easily determine what financial support is available to them during the coronavirus pandemic.
Government support in a nutshell
To support business, workers and the self-employed during the coronavirus outbreak, government has:
• made up to £330 billion of loans and guarantees for businesses
• offered to pay 80 per cent of the wages of furloughed workers, up to £2,500
• deferred the next quarter of VAT payments for firms, until the end of June – representing a £30 billion injection into the economy
• introduced £20 billion in tax relief and cash grants to help businesses with cash flow
• introduced the Coronavirus Business Interruption Loan Schemes for both SMEs and larger businesses to make it easier to access vital financial support • offered to cover the cost of statutory sick pay
• entirely removed all eligible properties in the retail, hospitality and leisure sector from business rates temporarily
• introduced the Self-employment Income Support Scheme, offering a taxable grant worth 80% of trading profits up to a maximum of £2,500 a month • deferred Self Assessment payments due in July 2020 until 31 January 2021
• allowed companies required to hold AGMs to do so flexibly, which may include postponing them or holding them online
• suspended wrongful trading provisions for company directors to remove the threat of personal liability during the pandemic; and
• offered a 3 month extension for filing accounts to businesses hit by coronavirus.
Access the new business support finder tool on the link below, to see what support is available to you in your business or as a self-employed person:
If you need help with any if the above government support, please call us on 0114 272 2984 or email email@example.com.