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…

Coronavirus Job Retention Scheme – The Final Countdown?

Tax Solutions Shipleys Tax Advisors

The Government today (29‌‌ May) announced in what seemed like the final countdown further details about the extension of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme, we’ve outlined these below for you.

The Chancellor announced three changes to the job retention scheme:

  1. From 1‌‌ July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
  2. From 1‌‌ August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
  3. The scheme will close to new claimants from 30‌‌ June.

Part time furloughing

From 1‌‌ July 2020, businesses using the CJRS scheme can bring previously furloughed employees back to work part time.

  • The government will continue to pay 80% of wages for any of the normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.
  • Employers will decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.
  • Any working hours arrangement agreed between a business and their employee must cover at least one week and must be confirmed to the employee in writing.
  • When claiming the CJRS grant for furloughed hours, they will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred.
  • Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August, the CJRS grant will be slowly tapered with contributions made by employers as follows:

Month% of wages CJRSMax CJRS wages capWho pays NIC & Pension?Employer contribution
    
June & July80%£2,500GovtNIL
  
August80%£2,500EmployerNIL
  
September70%£2,187.50Employer10%
  
October60%£1,875Employer20%

Note that many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the government contribution.

Important dates

It’s important to note that the scheme will close to new claimants from 30‌‌ June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30‌‌ June.

This means that the final date by which an employer can furlough an employee for the first time will be 10‌‌ June for the current three-week furlough period to be completed by 30‌‌ June. Employers will have until 31‌‌ July to make any claims in respect of the period to 30‌‌ June.

Self-Employment Income Support Scheme 

The Chancellor also announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade continues to be, or is newly, adversely affected by COVID-19 (coronavirus). Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

The eligibility criteria for the second grant will be the same as for the first grant. People do not need to have claimed the first grant to claim the second grant: for example, their business may have been adversely affected by COVID-19 more recently.

Claims for the first SEISS grant, which opened on 13‌‌ May, must be made no later than 13‌‌ July. Eligible self-employed people must make a claim before that date to receive the first SEISS grant (a taxable grant of 80% of their average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total).

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.

Bounce Back Loans: avoid the 32.5% tax trap

Tax Solutions Shipleys Tax Advisors

The Bounce Back loan scheme is fast, attractive and gives small businesses easy access to money. But many unsuspecting SME companies are unaware of a potential 32.5% tax charge if used incorrectly. We look at how this arises and what you can do.

The government introduced Bounce Back Loan scheme on 4 May 2020 to help small businesses get access to a injection of cash up to £50K. As loans, the Bounce Back terms are very attractive: no interest or repayments for the first year, a low interest rate afterwards, and no penalties if you pay them back before the six years are up.

What is the loan used for?

The problem arises when the money is taken out as cash withdrawals to fund private expenses even though the Bounce Back Scheme terms specifically states that it is not for personal purposes.

In these circumstances, as a company, you essentially have two basic options: treat the withdrawal as dividends or treat the withdrawal as a loan owed to the company by the shareholder/director.

In a Coronavirus riddled world, many small companies will not be in a profitable place and hence may not be able to legally declare dividends. In such scenario, to avoid the prospect of “illegal” dividends, the second option kicks in and you are faced with treating the monies withdrawn as a “loan”. Specifically, they become what is known as directors’ loans which is a loan from the company to the director/shareholder. The upshot of this is that you must repay the loan balance to back the company at some point in the future.

Corporation tax charge on loans: 32.5%

And this is where the problems kick in.  The Bounce Back loan has very attractive repayment terms, so it is tempting to leave it outstanding beyond the first 12 months. However, loans to directors can be subject to a corporation tax charge at 32.5% if not repaid within a certain time period. This 32.5% tax charge becomes due if you do not repay the director’s loan back to the company within 9 months of the company’s year-end passing. For those withdrawing the full £50,000, the tax charge can amount to an eye watering £16,250! This tax is payable by the company and will no doubt severely impact cashflow.

Can you avoid the 32.5% tax charge?

If you’re planning on taking a loan and repaying it within 9 months of your company accounting year-end (the date in which you actually applied for the BBL loan does not matter here for tax), no corporation tax charge will arise.  But, if you end up having to pay the 32.5% tax charge, there is some relief as you can reclaim the tax back from HMRC at a later point when the loan is cleared and under certain circumstances.

Personal tax issue

Also, as if paying 32.5% corporation tax wasn’t enough, there is a potentially a further additional tax on the loan when borrowing money from your company. This occurs when a director’s loan exceeds £10,000 at any point during the year; HMRC treat this as receiving a “benefit in kind”. This can have personal tax implications, including a National Insurance charge for your company. However, to avoid this, the company can charge you interest on the loan at HMRC’s official rate for the duration of the “loan”.

Paying a salary instead

The more straightforward option is to pay yourself a salary. But by doing so you will be essentially taxing the loan via PAYE. This may or may not be cheaper than paying the £16,250 above depending how it is structured.

But remember, Bounce Back Loans are not for personal purposes, and insolvency practitioners (who would presumably act on behalf of banks should you fail to repay the loan) have warned that increasing salary payments after receiving Bounce Back Loans may be treated as a being for personal purposes, although we feel this interpretation may be open to challenge.

If you are considering taking out a Bounce Back Loan and need help with the issues above, please call us on 0114 272 4984 or email info@shipleystax.com.

Deferring VAT during the COVID-19 pandemic

Tax Solutions Shipleys Tax Advisors

If your business pays VAT, you can defer it until 31 March 2021. To defer, you do not need to tell HMRC – but make sure you remember to cancel your direct debit.

To help businesses struggling with their cashflow during the COVID-19 pandemic, VAT registered businesses can opt to defer the payment of VAT that becomes due between 20 March 2020 and 30 June 2020. This will cover returns for the quarter to 28 February 2020 (due by 7 April 2020), quarter to 31 March 2020 (due by 7 May 2020) and the quarter to 30 April 2020 (due by 7 June 2020).

Businesses do not have to take advantage of the option to defer – they can instead choose to pay their VAT as normal. Where they have sufficient income and have received payment from their customers, this may be a preferable option to prevent running into debt later. The VAT will still be due – the payment date is simply delayed.

HMRC will not charge interest where VAT is paid later as a result of this measure.

Businesses that wish to take advantage of the option to defer paying their VAT do not need to tell HMRC – they simply delay paying the VAT over to HMRC.

Cancel direct debits

Where a business has set up a direct debit to pay their VAT, they will need to cancel the direct debit if they wish to take advantage of the deferral option. If they forget to do this, the VAT payment will be taken automatically.

Paying deferred VAT

Any VAT that is deferred must be paid over to HMRC by 31 March 2021.

File returns on time

Deciding to defer payment of VAT does not affect the obligation to file a VAT return. VAT returns that fall due within the deferral window should be filed as normal and on time.

VAT repayments

Where a VAT returns shows that a repayment is due, HMRC will make the repayment as normal.

After the deferral period

When the VAT deferral window comes to an end, VAT for periods outside the window must be paid as usual.

If you need help with VAT deferral or any COVID-19 financial or tax issue please call us on 0114 272 4984 or email info@shipleystax.com – we are ready to help.

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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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