Clear and hassle-free advice for pharmacists

Pharmacy

Clear and hassle-free advice for pharmacists.

Shipleys have been using their specialist knowledge in the healthcare sector for over 10 years. We act for pharmacies of all sizes from small independents to larger groups, as well as GP linked pharmacies and locums.

The industry has seen a surge in growth in recent years, achieved against a back drop of challenges to maintaining and increasing profits. Independent Pharmacy owners need to be proactive in providing more of the advanced and enhanced services on top of the essential services with many pharmacies now providing additional enhanced services to help support and promote dispensing.

Sections


Independent Pharmacies

We are here to help you maximise your income by letting you concentrate on your business. We provide the following compliance services at a fixed price:

• Monthly bookkeeping, VAT and payroll
• Annual accounts
• Corporation tax return
• Personal tax returns
• Unlimited Ad hoc telephone and email advice

As part of our service we will automatically look at and discuss the following areas when we do your accounts:

• GP margin and turnover comparisons to other similar clients
• NHS income v OTC income
• Staff/locum costs
• Net profit margin
• Drawing money out tax efficiently
• Other tax specialist planning advice

We have nationwide coverage and are happy to come and visit you.


Locum Pharmacists

As specialist locum accountants, Shipleys has become the preferred tax and accounts service provider for http://www.pharmacy-forum.co.uk members.
As well as doing your normal tax returns and accounts for the year, we will help with the following:

• If you have not done any planning then you probably are paying over the odds. Call us now to arrange a FREE TAX HEALTHCHECK.

• Sole trader v limited company – which is the best route for you? We will give you a tailored answer as part of our free tax healthcheck.

• Withdrawing money – what’s the best way of paying yourself? Again, if this isn’t done right you could end up being classed as being employed and not self employed under employment status rules and lose valuable tax reliefs

• How to minimise the risk of a tax enquiry using simple techniques.

• Expenses – are you claiming everything you are allowed to claim? We will give you a specially prepared list of expenses for locums.

• Buying a car – which is the best way, personally or through the company?

• Those in the property game – they can explain how you can pay significantly less income tax and capital gains tax on your property investments and dealings.

• Ad hoc telephone and email advice


Tax Planning for Pharmacies

Tax law never stands still and goal posts are always moving. It is crucial that you have the right adviser to guide you through the maze and help reduce your tax bill through legitimate and transparent means.

Shipleys Tax has a number of specialist tax advisers with wealth of experience in the pharmacy sector who can talk to you about the many tax saving opportunities.
We always say the best tax planning is done before a major event in the business so seek advice early in the lifecycle of a transaction. Some areas to consider:

• Buying or Selling a Pharmacy – huge tax saving opportunities both personal and corporation tax
• GP linked pharmacies – tax efficient trading structures
• Reduce inheritance tax on death
• Reduce stamp duty land tax on buying
• Offshore tax planning advice for certain businesses
• Provide property development strategies
• Use of EIS/SEIS and corporate venture vehicles
• Use of LLPs and corporate partnerships
• Asset protection and preservation of wealth
• Estate planning and succession

Latest news & blogs…

Loans to company directors – is it tax free?

Pharmacy Shipleys Tax Advisors

IN THESE tough times company profits maybe severely affected but what if your family company is lucky to have cash in the bank? Is there a tax-efficient way to make a short term loan to directors to meet personal bills with a view to clearing the loan with a dividend payment when the business picks up? This can be a tax-efficient strategy, but there are tax pitfalls – in today’s Shipleys Tax note we briefly look at the options.

Tax implications of making loans to directors

Where a family company has cash in the bank but profits have been adversely affected by the pandemic, directors of a family company may wish to take a short term loan to enable them to meet personal bills, with a view to clearing the loan with a dividend payment when business picks up. This can be a tax-efficient strategy, although there are tax implications to be aware of if the loan balance exceeds £10,000, or if the loan is not repaid by the corporation tax due date.

A tax-free loan?

It is possible to enjoy a loan of up to £10,000 tax-free for up to 21 months. To enjoy the maximum tax –free period, the loan must be taken out on the first day of the accounting period. Where the loan is taken out during the accounting period, as long as it is does not exceed £10,000, it can be enjoyed tax-free until nine months and one day after the end of the accounting period.

Provided the loan is for £10,000 or less, there is no benefit in kind tax to pay. But if the outstanding loan balance exceeds £10,000 at any point, the director is taxed on the benefit of the loan.

The dreaded tax charge

To avoid a tax charge, the loan must be repaid within nine months and one day of the end of the accounting period. This is the day by which corporation tax for the period must be due. A section 455 tax charge (named after the legislative provision imposing it) is a charge on the company set at 32.5% of the outstanding loan balance. The charge is aligned with the higher dividend tax rate.

If the loan is cleared by the corporation tax date, there is no section 455 tax to pay. There are various ways in which the loan could be cleared, for example, by declaring a dividend (assuming that the company has sufficient retained profits) or by paying a bonus. However, there will be tax implications of these too. Unless the director can use funds from outside the company to clear the loan or will pay tax on the dividend or bonus being used to clear it at a rate which is less than 32.5%, it may be better to pay the section 455 charge instead.

The section 455 charge is a temporary charge which is repaid if the loan is repaid. The repayment is made nine months and one day from the end of the accounting period in which the loan was repaid, usually be setting it against the corporation tax liability for that period.

However, it should be noted that anti-avoidance provisions apply to prevent a director from trying to clear the loan shortly before the corporation tax due date and re-borrowing the funds shortly afterwards. What mechanisms would work to circumnavigate these provisions are beyond the scope of this tax brief.

Benefit in kind charge

Note that a tax charge will also arise on the director under the benefit in kind legislation if the loan balance exceeds £10,000 at any point in the tax year. The amount charged to tax is the difference between interest due on the loan at the official rate (currently set at 2.25% since 6 April 2020) and the interest, if any, paid by the director. The company must also pay Class 1A National Insurance (at 13.8%) on the taxable amount.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that we do not give free advice by email or telephone.

R&D Tax Credit Boost for SMEs

Pharmacy Shipleys Tax Advisors

LEGISLATION introduced to tackle the abuse of Research and Development (R&D) tax relief claims, which inadvertently affected genuine claims from small businesses, is being amended.

In today’s tax brief, Shipleys Tax looks at the new proposed changes to R&D rules and suggests why it’s good news for SME’s looking to get tax relief on research expenditure.

For a general overview of R&D and its abuse see: https://www.shipleystax.com/2020/09/beware-of-unscrupulous-rd-tax-relief-claim-companies/

Under the UK R&D tax credit relief rules, R&D costs incurred for work done anywhere in the world can potentially qualify for R&D tax relief. This is a very generous aspect of the tax relief but one that was open to widespread abuse.

For example, companies outside the UK with no real business interests in the UK, would set up UK companies and run foreign R&D costs through the company only to obtain the refundable/payable R&D tax credit from HMRC. HMRC state they have identified approximately £300M in fraudulent claims.

In order to prevent this abuse, draft legislation was introduced whereby any payable R&D tax credit would be capped at three times the PAYE costs incurred (thereby limiting the claim).

Under the UK R&D tax credit relief rules, R&D costs incurred for work done anywhere in the world can potentially qualify for R&D tax relief.

One of the major problems with this cap was an unintended result to deny or substantially reduce the R&D tax credit payable for certain SMEs; in particular start-ups. In many cases, start-ups tend to engage staff on a contract basis as opposed to employee/PAYE basis for various reasons. This would mean a low PAYE base cost.

As such, you could have the situation where a start-up has one employee on a reduced salary (because the company is “bootstrapping”) and hiring R&D staff on a contract basis. For example, if the PAYE were £5,000, the payroll cap would be £15,000 and hence any payable tax credit over this amount would be denied even if the qualifying expenditure was much higher. With the average SME receiving over £55K in tax credits, this could result in a substantial reduction, or denial, of R&D tax credit relief.

Under new draft legislation however, these restrictions have been lifted and there are now two exceptions to the rule above.

Firstly, any payable R&D tax credit below £20K is not affected by the cap. Secondly, and more importantly, any SME will not be subject to the cap if:

  • its employees created the intellectual property behind the R&D work and
  • its expenditure on externally provided workers (and work subcontracted to a related party) is less than 15% of its overall R&D spend.

Currently the legislation is draft and, if passed, is welcome news to SMEs in the UK. In particular it would benefit those startups with very low PAYE costs and hand them a cash boost when it’s needed most.

The new legislation is expected to apply to accounting periods on or after 1 April 2021.

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 info@shipleystax.com.

Tis the season to be scammed

Pharmacy Shipleys Tax Advisors

Tips on avoiding tax scams

AS THE FESTIVE SEASON draws nearer, HMRC is warning millions of Self Assessment customers to be aware of fraudsters in the run up to the 31 January tax deadline. Cyber criminals are taking advantage of “reminder” SMS messages and bogus emails during the festive season to trick taxpayers out of their money.

Just in the last year, HMRC received nearly 900,000 reports from the public about suspicious HMRC contact – phone calls, texts or emails. More than 100,000 of these were phone scams, while over 620,000 reports from the public were about bogus tax rebates.

Cyber criminals are taking advantage of “reminder” SMS messages and bogus emails during the festive season to trick taxpayers out of their money.

At Shipleys Tax we look at some of the most common techniques fraudsters use to entrap taxpayers and what you should do if you suspect foul play.

Faking it

Probably the most common methods we come across that fraudsters use includes:

  • Phoning taxpayers offering them a fake tax refund
  • Leaving a voicemail message threatening enforcement action or imprisonment if a bogus tax bill is not paid immediately
  • Pretending to be HMRC by texting
  • Emailing a link which will take customers to a false page, where their bank details and money will be stolen.

…taxpayers should never give out private information, reply to text messages, download attachments or click on links in texts or emails, even if it looks like a message from HMRC…

Taxpayers need to recognise the signs to avoid becoming victims themselves. HMRC, like other genuine organisations and banks, will never contact customers asking for their PIN, password or bank details. HMRC also do not email taxpayers direct.

Needless to say, but taxpayers should never give out private information, reply to text messages, download attachments or click on links in texts or emails which they are not expecting, even if it looks like a message from HMRC complete with logo and branding.

What should you do if you suspect a scam?

  • Number one rule: do not respond. Always check with your professional adviser (or HMRC direct) regarding the status of your tax affairs.
  • HMRC operates an inbox for people to report suspicious emails to, at phishing@hmrc.gov, while SMS messages should be forwarded to 60599.
  • If you have suffered financial contact your bank immediately and report it to Action Fraud online at actionfraud.police.uk or by calling 0300 123 2040.

As always, if in doubt check and check again before taking any action.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that we do not give free advice by email or telephone.

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  • 0114 272 4984
  • Wharf House, Victoria Quays,
    Wharf Street Sheffield,
    S2 5SY

Contact Shipleys today

Want to know how Shipleys can help you with practical tax planning through innovative ideas? Let’s talk. Call or email us directly and a member of our team will be in touch within 48 hours.

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