Partnership’s are now on HMRC’s radar…..

As a choice of business vehicle, partnerships offer a level of flexibility that companies may not enjoy. The perception at HMRC appears to be that, in some cases, this flexibility has been taken too far and “the misuse of the partnership rules has become a feature of many avoidance schemes”. The Chancellor has therefore announced an intention introduce new legislation designed to target the use of partnerships to artificially reduce tax liabilities.

One concern is that employers are avoiding paying national insurance by encouraging staff to become members of an LLP with national insurance rates on partners being lower than those payable by employers and their employees. The indications are that there may be a substance test introduced to determine whether an individual is to be treated as a member (and thus self employed) or an employee, and based upon similar tests already in existence we should expect to see consideration being given to voting rights, capital contributions of members, exposure to losses and remuneration which varies in direct correlation to the results of the business.

Whilst the artificial manipulation of partnership profits in order to gain tax advantage must understandably be discouraged it is hoped that any new legislation does not hamper the potential for improved participation and performance and the sense of loyalty to a business that genuine equity participation can encourage.

If you are concerned that the proposed new legislation may adversely affect you please contact either Andrew, Jigna or Karen for advice.

HMRC Cracking down on Loans from Companies

Legislation will be implemented to counter arrangements under which close companies seek to avoid the charge to tax under section 455 (formally section 419).

Section 455 tax is applied when a person who possesses, or is entitled to acquire, share capital of a company has a loan from the company which remains outstanding at the end of the accounting period. The charge is equivalent to 25% of the amount of the loan or advance and the company can claim relief for any s455 tax payable if the loan is repaid to the company.

The new legislation has been implemented with immediate effect in order to prevent bed and breakfasting whereby loans are repaid simply to avoid paying the Section 455 tax but very quickly afterwards reinstated. The new rules will look to ensure that in these circumstances tax is still payable even though the original loan has technically been repaid.

Due to these changes the cash flow of the company could be greatly affected each year. If you would like further assistance regarding how this change affects your company, please contact Andrew Knott who would be happy to advise you further.

Simpler income tax for small businesses…..

Small businesses with a turnover less than the VAT registration threshold (currently £77,000 but increasing to £79,000 from 1 April 2013) will, from April 2013, be able to use a simpler method to work out their profits to charge to tax.

The new method will simply measure money in against money out of the business rather than use more complicated accounting principles that might see adjustments for debtors, creditors or stock. Some businesses will also be allowed to use flat rates to calculate certain business expenses and there may no longer be a need to distinguish between capital and revenue monies spent.

Whilst this simplification is welcomed, making it easier for business owners to see a direct correlation between the amount of their profit and the amount that is charged to tax not all businesses will benefit and its important that the position is reviewed regularly to ensure that you do not advertently fall foul of these simplified rules.

If you want to know more about what is proposed or need help to establish whether your business is affected, please call our Small Business Manager Nick Hillsdon for further advice on 01656 867167.

Advisory Fuel Rates from 1/3/2013

HMRC has published advisory fuel rates to operate form 1 March 2013

CST

Hybrid cars are treated as either petrol or diesel cars for this purpose.

If you would like more details regarding the implementation of the new rates, please contact our specialist, Karen Best for further information.

Tax Saving Tips for the Year Ahead

There is a range of tax planning opportunities to consider ahead of the tax year end, some of which expire on 5 April 2013. Why not consider some key strategies to help you minimise your tax liability, whilst looking ahead to the raft of tax and business changes set to take effect in 2013/14.

Click here to see our help sheet on tax savings strategies, contact us on 01656 867167 or email on Karen for further information.

Real Time Information (RTI) Seminar

Real time information (RTI) is one of the biggest changes to payroll since the introduction of PAYE in the 1940’s. It will affect all employers and how they run their payroll systems.

HM Revenue & Customs (HMRC) are introducing RTI in order to improve the operation of PAYE to make it easier to administer and improve the accuracy of their records. This  will then reduce the number of errors made by HMRC and enable them to collect arrears of PAYE & National Insurance Contributions (NIC) more easily.

RTI will require employers to transmit details about the tax and NI treatment of payments to HMRC each time a payment is made. This means that the tax decisions made about payments e.g. whether or not all or part of any payment is tax free, NIC free or both will be included in the RTI submission. Additional employee data, such as the number of hours they work also has to be including in the RTI file and so will need to be gathered for inclusion into the payroll system. Your payroll software will need to be capable of sending the RTI submission direct to HMRC.

Due to popular demand we are running a further 2 courses on the dates below.

We are running 2 free seminars one on Tuesday 12th March 2013 and the other on Wednesday 20th March 2013. Both seminars will start at 9.30am at our office.

Register now at http://www.clayshawthomas.com/events/ or alternatively contact us by email at tellmemore@clayshawthomas.com or telephone 01656 867167

Economic Growth Fund Relaunch

The Welsh Government has confirmed it will relaunch its Economic Growth Fund with £30m in new funding to invest in job creating capital projects in the private sector. The first round of the Growth Fund provided non repayable finance to support businesses with expansion projects. The reintroduced fund will be allocated £10m this year and a second tranche of £20m for 2014-15.

Wales Economic Growth Fund is a short term, fast track fund for business, providing immediate access to capital funding for investments that will create and retain jobs in Wales. The Grants are not repayable or restricted to any specific sectors. All offers are discretionary and made subject to due diligence.

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Financial Forecasts and Planning

With the economic climate looking uncertain and competition strong in 2013, it is essential as a business owner that you look towards the future to ensure that you achieve maximum value from your cash and other assets. If you are planning to invest in new assets or developmental activity, you need to base decisions on reliable, comprehensive budgets, supported by realistic forecasts that encompass the profit and loss and balance sheet, and particularly future cash flows. Once clear budgets and forecasts are in place, these provide key tools for monitoring ongoing performance and analysing where improvements could be made.

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Real Time Information (RTI) Seminar

Real time information (RTI) is one of the biggest changes to payroll since the introduction of PAYE in the 1940’s.  It will affect all employers and how they run their payroll systems.

HM Revenue & Customs (HMRC) are introducing RTI in order to improve the operation of PAYE to make it easier to administer and improve the accuracy of their records.  This will then reduce the number of errors made by HMRC and enable them to collect arrears of PAYE & National Insurance Contributions (NIC) more easily.

RTI will require employers to transmit details about the tax and NI treatment of payments to HMRC each time a payment is made. This means that the tax decisions made about payments e.g. whether or not all or part of any payment is tax free, NIC free or both will be included in the RTI submission. Additional employee data, such as the number of hours they work also has to be including in the RTI file and so will need to be gathered for inclusion into the payroll system. Your payroll software will need to be capable of sending the RTI submission direct to HMRC.

We are running 2 free seminars one on Tuesday 26th February 2013 and the other on Wednesday 6 March 2013. Both seminars will start at 9.30am at our office.

Register now at http://www.clayshawthomas.com/events/ or alternatively contact us by email at tellmemore@clayshawthomas.com or telephone 01656 867167.

 

Business rates relief for enterprise zones

The Welsh Government has started two grant schemes to provide £20m in business rates grant relief for smaller companies in enterprise zones and £1.5m for renewable
power producers.

The Enterprise Zone Business Rate scheme will be open annually in each financial year until 2015/16. For the 2012/13 financial year the scheme will be open from 15 January 2013 until 11 February 2013.

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