Practical and intelligent tax saving solutions for you and your business
Tax Solutions
Business or personal, tax affects our lives and never stands still
In the ever-evolving landscape of the UK tax system, staying abreast of changes is crucial, whether you’re a small business owner, a entrepreneur, or a large corporation planning for your financial future. From deciphering complex regulations to finding opportunities for savings, the implications of not getting it right can be costly. As your trusted UK tax advisers, we bring clarity, ensuring you’re well-equipped to navigate the tax rules confidently.
Shipleys Tax have a team of knowledgeable tax and accountancy experts who constantly look at ways to add value and provide effective tax solutions whether you’re an owner-managed business or a large national group. Our clients appreciate our genuine commitment to their needs, consistently finding value in our services and expertise.
Sections
- 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
Most people know that the way their business is structured could affect how much tax you pay. What they don’t usually know is how to get the best advice on this.
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 have the expertise to advise on all areas of personal tax planning and corporate structuring issues including:
• 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 and help you meet your commercial objectives in the most tax efficient way.
How do I get my profits out of the company paying as little tax as possible?
A common question with many solutions. Which is why 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 is crucial in developing a road map to successfully optimising your tax affairs.
Taking a holistic approach, we can ensure that when it comes to tax, you won’t miss a trick and that all avenues of tax relief are explored.
Working with us through careful planning, you can expect to extract profits from a 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 value your needs and 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 this topic has been caused much controversy over the over the years. Certainly, if you are in the somewhat tax privileged position to be either non UK Domiciled or non-UK Resident, the tax benefits are still extraordinarily valuable in the right circumstances, to say the least. However, this valuable status is generally under used – except by the super rich and famous.
A key area of tax planning is property holding structures for non-UK resident and non-UK domiciled individuals, properly structured solutions achieve significant UK 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…
Autumn Budget Statement 2023
IN A LARGELY uninspiring speech and, amidst declining inflation rates, the Chancellor’s Autumn Statement delivered some fairly unspectacular tax cuts.
In today’s Shipleys Tax note we give you a snapshot of what you need to know as an employer, self-employed or business.
National Insurance Takes Centre Stage
Following much vaunted speculation post-October’s inflation report, expectations were high for potential reductions in corporation tax, inheritance tax, and National Insurance (NI). The final decision primarily impacted NI, affecting both employees and self-employed individuals. However, the effective dates for these changes vary.
Employee NI Rate Cut from January 2024
Effective from 6 January 2024, the Primary Class 1 main NI rate will decrease from 12% to 10%. This alteration, reminiscent of the mid-year modifications in 2022/23, necessitates payroll software updates. It’s crucial for businesses to ensure these updates are implemented before processing January’s payroll. Note: The rate for earnings above the Upper Threshold remains at 2%.
Significant Changes for Self-Employed NI Contributions from April 2024
Starting 6 April 2024, Class 2 NI contributions, mandatory for the self-employed, will be abolished. Self-employed individuals with profits between £6,725 and £12,570 will maintain access to contributory benefits like the state pension through NI credits without paying contributions. Voluntary Class 2 payments remain an option.
Additionally, the main Class 4 NI rate will be reduced from 9% to 8%.
Extended NI Incentive for Hiring Veterans
The beneficial NI incentive for recruiting veterans is now extended until 2025.
Expansion of Cash Basis Accounting for Self-Employed Businesses
The Autumn Statement also brought some good news for self-employed businesses using cash basis accounting. The turnover limit for this accounting method has been removed. Previously, businesses had to switch to the accruals basis after exceeding £300,000 turnover
Business tax
- Capital allowances – permanent full expensing – Full expensing is now a permanent tax break for companies. The Spring Budget 2023 introduced two new temporary first-year allowances. For expenditure on plant or machinery incurred on or after 1 April 2023 but before 1 April 2026, companies can claim a 100% first-year allowance for main rate expenditure – known as “full expensing” – and a 50% first-year allowance for special rate expenditure. Today’s announcement makes full expensing and the 50% first-year allowance permanent by removing the expiry date of March 2026.
- The two R&D reliefs (RDEC and the SME scheme) to merge from 1 April 2024 – A range of measures on tax reliefs have been announced including enhanced support for Research and Development (R&D) intensive small and medium-sized enterprises, an extension to the ‘sunset date’ for freeport tax reliefs and administrative changes to the creative industry tax reliefs.
- The EIS and VCT schemes are extended for another decade.
- The tax reliefs for Investment Zones and Freeports are extended to ten years.
More to follow.
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When are Directors liable for unpaid company taxes?
IN THE UK’s corporate realm, the concept of limited liability shields directors from personal accountability for company debts, including tax obligations. However, there are specific instances where HMRC can pierce this corporate veil, seeking recompense directly from directors.
In today’s Shipleys Tax note we outline these rare yet significant circumstances and the potential legislative defences that may be available to company directors.
The Principle of Limited Liability Status
Limited liability maintains a distinct legal separation between the company and its directors. Nevertheless, this shield is not impervious. There are certain situations, often involving serious misconduct or negligence, where directors can find themselves personally liable for the company’s unpaid taxes.
Where Might Directors Face Personal Liability?
Director’s Personal Guarantees
When a director provides a personal guarantee for a company’s debt, they pledge their own assets as security for the loan. This guarantee means that if the company cannot repay its debts, the director’s personal assets can be targeted to recover the amount owed. Similarly, if a director has an outstanding balance in their director’s loan account, which is not settled before the company enters insolvency, they may become personally liable to repay this debt.
There are certain conditions, often involving serious misconduct or negligence, where directors can find themselves personally liable for the company’s unpaid taxes.
Wrongful or Fraudulent Trading
Directors must act responsibly with regard to the company’s financial status. Under insolvency rules, if directors continue to trade when they know the company is insolvent, or if they incur debts without a reasonable prospect of the company being able to repay them, they can be held personally liable for wrongful trading.
Fraudulent trading goes a step further, where directors deliberately set out to defraud creditors. In such cases, the courts can hold directors personally responsible for the company’s debts, resulting in serious legal and financial repercussions.
Tax Evasion or Avoidance
Tax legislation gives HMRC additional powers to hold directors accountable for tax evasion or avoidance. If a director is found to have a history of corporate insolvency, particularly if insolvency has been used as a means to evade or avoid tax liabilities, HMRC can pursue them personally. This legislation aims to deter directors from using insolvency as a tax evasion strategy, ensuring that corporate tax liabilities are met.
Personal Liability Notices (PLNs)
HMRC uses Personal Liability Notices to hold directors personally liable for the non-payment of PAYE or National Insurance Contributions (NIC). These notices are issued when HMRC believes that the non-payment was a result of the director’s neglect or fraudulent behaviour. Once a PLN is issued, directors can face significant personal financial liabilities, which HMRC will actively seek to recover.
…where directors deliberately set out to defraud creditors… the courts can hold directors personally responsible for the company’s debts, resulting in serious legal and financial repercussions.
Possible Mitigating Factors
When facing action from HMRC for liabilities such as PAYE, NIC, VAT, or Corporation Tax (CT), directors can employ several defences to potentially mitigate or challenge personal liability:
- Lack of Intent: Demonstrating that there was no intention to evade tax payments, that any underpayment was a result of genuine error or misinterpretation of complex tax laws, can be a defence. Evidence seeking clarification or rectifying mistakes as soon as they were discovered needs to be maintained.
- Reliance on Professional Advice: reliance on the advice of competent tax advisors or accountants might provide a shield against liability. However, reliance on professional advice is not absolute and usually requires proof that the advice was professional, based on correct accurate information, and reasonable.
- No Direct Involvement: A director may argue they were not involved in the day-to-day management of the company or in the financial decisions that led to the unpaid taxes. This could apply in situations where there is a clear division of responsibilities among multiple directors.
- Procedural Errors by HMRC: If HMRC fail to follow proper procedures or meet certain legal requirements when issuing a Personal Liability Notice (PLN) or taking other actions, this may invalidate their claim.
- Unforeseeable Circumstances: Events beyond the director’s control, such as sudden market changes, natural disasters, or other external shocks that impact the company’s ability to pay, might be used as a defence, especially if these events can be clearly shown to correlate with the period of non-payment.
- Active Engagement with HMRC: Demonstrating that there was active engagement with HMRC regarding any payment issues, attempts to negotiate payment plans, or voluntary disclosures of potential underpayments can act in the director’s favour.
- Economic Reality: In some cases, directors can argue that, despite their best efforts, the company was unable to meet its tax obligations due to economic conditions affecting the company’s liquidity.
It is crucial for directors to maintain accurate records and documentation to support these defences. They should engage with legal and tax professionals as soon as they are aware of potential tax liabilities or HMRC actions, to ensure their case is as strong as possible.
In conclusion, while the UK legislation primarily places the burden of unpaid taxes on the company, directors can be made personally liable in certain circumstances. If a director finds themselves facing a PLN or potential liabilities for unpaid taxes, it’s essential to seek advice from an tax expert or professional adviser.
For further assistance or queries, please call 0114 272 4984 or email info@shipleystax.com.
Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. For advice on tax matters, always consult with a qualified professional.
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TAXING BEAUTY – HMRC’s new approach to VAT for cosmetic procedures
DUE TO THE rapid growth of the private cosmetic medical sector in the UK, some noticeable shifts have begun to appear in HMRC’s approach to VAT in the cosmetic medical sector. HMRC have reportedly now established a dedicated team to examine the VAT implications of treatments such as Botox, skin fillers and facial peels.
In today’s Shipleys Tax brief, we consider whether HMRC’s position is now seemingly leaning towards categorizing certain treatments as standard-rated for VAT rather than exempt.
Historical Stance vs. Current Direction
While traditionally, treatments aimed at medical purposes have often been exempt from VAT, those perceived as purely cosmetic have leaned towards being standard rated (20%). This distinct separation is becoming more blurred. Procedures that serve dual purposes, such as Botox, now find themselves in a VAT grey area. There’s a growing inclination from HMRC to classify certain ambiguous cosmetic treatments as standard-rated unless they solidly fit within the medical exemption.
There’s a growing inclination from HMRC to classify certain ambiguous cosmetic treatments as standard-rated unless they solidly fit within the medical exemption.
Recent court case
In one recent tribunal case involving a prominent skin clinic, these VAT issues were brought to the forefront. The clinic had applied for a VAT credit for a specific timeframe, a claim which HMRC challenged asserting that the services during that period were not exempt from VAT.
During the tribunal, a wealth of evidence was presented, including testimonies from the clinic’s lead practitioner, a highly qualified registered medical professional who had pivoted to ‘aesthetic medicine’ and operated the clinic, offering an array of cosmetic treatments.
While the tribunal acknowledged the lead practitioner’s expertise and dedication to professional ethics, it ruled that that cosmetic treatments provided by the clinic did not qualify for VAT medical exemption. It found that the treatments were for “aesthetic reasons” and not for clinical reasons.
The Impact
This evolving stance means that businesses offering cosmetic treatments need to be extra vigilant. The ruling underscores the importance of the nature and intent behind services in determining VAT status, emphasizing the need for meticulous record-keeping and understanding of HMRC’s evolving views on VAT exemptions in the cosmetic medical sector.
…cosmetic treatments provided by the clinic did not qualify for VAT medical exemption. It found that the treatments were for “aesthetic reasons” and not for clinical reasons.
How Shipleys Tax can help
With the landscape shifting, our Shipleys VAT team can help ensure that your practice remains compliant, anticipating and adapting to any changes in HMRC’s perspective on VAT within the sector.
Adapting to change is vital in today’s dynamic environment and ensuring your practice stays ahead and compliant is crucial to avoid falling foul of the legislation.
If you would like assistance, or would like more information, please call 0114 272 4984 or email info@shipleystax.com.
Please note that Shipleys Tax do not give free advice by email or telephone.
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