With great anticipation I thought I might learn something from Panorama screened on BBC1 on 14 May. What a disappointment.

What did we learn? What is the truth? That large corporations take full advantage of perfectly legal structures and arrangements in order to minimise their exposure to UK taxes? So what?

That the Luxembourg government is prepared to accommodate such perfectly legal arrangements and attract business and finance to the Grand Duchy in the form of negotiated taxes? Is anyone really surprised?

What is the “scandal” (if there is one) is that Luxembourg is in the European Union and so the UK Revenue’s efforts to legislate against this tax planning has proved to be contrary to European Law.

Large corporations will inevitably seek to minimise taxes because taxes are regarded as a cost and an overhead to be minimised by businesses as far as legally possible. And not surprisingly, that attitude is not solely the domain of the largest businesses. Many businesses of all sizes seek to legally mitigate taxes. So too do individuals. How many people do you know who voluntarily pay more tax if they can legally minimise it?

The truth about tax in the UK is that many businesses and entrepreneurs believe taxes are too high and will seek to legally minimise them wherever possible.

Colin Tice is the partner in charge of Cassons tax department. 
Please contact us for any advice regarding taxation planning.
Email: Colin.tice@cassons.co.uk

Permalink | Leave a comment  »

Guest blog from Andrew Thorp, founder of Speakeasy.

At MojoLife (and through our Cassons Speakeasy sessions) we’ve been on a bit a mission to get business people to embrace the importance of stories and storytelling. We believe that stories are your key competitive advantage and help you connect with others on a deeper, more emotional level. That’s essential if you want people to buy from you.

The good news is that more people are starting use them in their marketing, presentations and blogging, but there’s some confusion as to what constitutes a decent story.

Early converts tend to relate just facts, and although they explain what happened, they don’t create an emotional response in the audience. Here’s an example:

 Last year Sara and I took a display stand at Civil Service Live in Olympia. On the last day Peter Jones (from Dragons Den) visited the show and he walked past our stand. We got his attention, he asked us about what we did, we told him and then he left.

These are indisputably the facts, but it’s hardly compelling stuff. Try this instead:

 Last summer Sara and I took a display stand at Civil Service Live, an important business exhibition at Olympia in London. It was a big deal for us, our first major public display amongst the good and the great of Whitehall, and we managed to grab 10 minutes with the Cabinet Secretary at a private function on our first night there.

On the final day, word reached us that Peter Jones, the multi-millionaire TV Dragon was prowling around the building. He was one guy we really wanted to meet and when some advance security men scrurried down our aisle, whispering into their wrists like Secret Service agents, we steadied ourselves to make our ‘pitch’. Suddenly, this huge skyscraper of a man rounded the corner and walked our way – it seemed our moment had come. Tragically, he was looking the wrong way when he reached our stand!

 Now I have a problem mithering famous people in public places like restaurants; I just can’t bring myself to do it. But Sara has no such qualms. “Oi, Peter!” she yelled (or words to that effect) and managed to get his attention. Slightly flushed but on good form, she pitched the MojoLife concept to the fearsome investor. Peter Jones’ teeth flashed that TV smile. He turned to me and I blurted something out about the business concept and our hopes for the future. Then he said something that totally stopped me in my tracks.

“So your business shrinks,” he opined. I was lost for words. “Oh god”, I thought. “He’s seen the flaw in our business concept. That’s what Dragons do after all. They sniff out the weakness like a bloodhound." Sensing my confusion, Jones clarified his point. “I mean you’re business psychologists!”

 If you’ve read Lynne Truss’s 'Eats Shoots & Leaves' you’ll understand how a grammatical misunderstanding can create confusion. We all had a giggle and the great man departed.

A couple of days later we wrote a blog about our experience at Olympia and our encounter with a TV Dragon, and Mr Jones very obligingly re-tweeted it…to 303,000 followers!

A couple of points here:
First, the longer version uses more emotive, colourful language to bring the story to life. The scene is essentially ‘enacted’, inviting the audience in to share our thoughts and feelings at the time. There’s a key moment of drama – the misunderstanding – that creates tension (you’d leave a longish pause after “So your business shrinks” if you were relating the story verbally). And there’s the reveal, when the audience realises what Peter Jones actually meant.

Second, there’s a point to the story – the short epilogue reveals what happened after the show and of course it’s a terrific endorsement of using social media in business! It’s an example of drawing on your personal story vault to reinforce a point you want to make.

So, by all means use stories in your business communications. But remember to look broadly at what you’ve got in your locker (in this case just a daft 10 minute conversation), make the necessary link with what you want to say and get good at embellishing and enacting the story – for maximum impact!

Speakeasy takes place at Cassons on the third Wednesday of each month, with the next session on 23 May.  Click here for full details and contact us to book your place.

www.speakeasygroups.com
Twitter: @andrewthorp
Email: andrew@andrewthorp.co.uk

Permalink | Leave a comment  »

The BBC has reported (http://www.bbc.co.uk/news/uk-politics-17927792) that Treasury Secretary Danny Alexander is “shocked” by the scale of tax mitigation being implemented in the Civil Service with “more than 2,000” public-sector workers avoiding higher rates of income tax and national insurance contributions by using their own companies to provide their personal services.

We said as much in our blog on 22 February. What we find so shocking is that Danny Alexander is shocked! In the vast majority of cases we suggest that the tax avoidance (if any) is caused and created by those Government departments who achieve savings of 13.8% via national insurance contributions and probably eliminate (wholly or partly) exposure to employment related liabilities. This therefore is not so unusual. Government departments are under pressure to minimise costs and so they are able to take workers “off payroll” and in doing so the workers may well end up with lower gross contracts and therefore the same net earnings as if they were under PAYE - but the Government pockets the savings.

It seems that higher paid “off payroll” workers with the Government will now have to prove the amounts of tax they have paid or lose their contracts, even though the tax savings may have been enjoyed by the Government. And they have only 3 months to sort it out. This politically motivated clampdown on tax efficiency appears misguided. Tax rules already exist to “catch” the provision of personal services through a company, but whether those rules are being properly operated or whether HMRC is properly policing them is another matter. In the meantime the compensation the Government might have to pay for breach of contract might well dwarf the tax savings.

Is there really anything wrong with choice? In just the same way that businesses may choose to legitimately minimise their exposure to tax and may choose to minimise costs, these public sector workers have a choice. They do not have full employment rights or gold plated pension schemes but they choose to operate through limited companies.

In the meantime, Cassons believe that businessmen and entrepreneurs should have the choice and control over their finances and in the way they operate, and as such we can provide suitable and effective alternatives to the “one-man band” companies now being targeted by the Treasury.

Permalink | Leave a comment  »

Real Time Information (RTI) is being introduced into the operation of PAYE by changing how and when employers (and pension providers) report information to HMRC. Essentially, employers will tell HMRC about tax, national insurance contributions (NICs) and other deductions when or before the payments are made (which may be weekly or monthly) instead of waiting until after the end of the tax year.

The fundamentals of PAYE will be unchanged, for example the use of PAYE code numbers, and employers remaining responsible for deducting tax and NICs.

RTI is being piloted with certain employers / agents / software developers from April 2012. These are primarily the very largest employers/pension providers who will start to use RTI during 2012/13. The official start date is April 2013 from “the top down” but even the smallest of employers will be required to use RTI by October 2013.

You will probably have received a note from HMRC about RTI and how it will affect your business, but please don’t panic as it is still 12 months away.  HMRC’s guidance notes for employers are here. http://www.hmrc.gov.uk/rti/employerfaqs.htm

Everyone expects teething problems, except it seems the Treasury. HMRC is doing its best not to say anything except to quote the official deadlines.

Permalink | Leave a comment  »

So was this a Budget to gladden the hearts of North West entrepreneurs? Not if you have an elderly relative subject to the “granny tax” set to rake in £1 billion in 2015/16! But as a top rate taxpayer you may be comforted by the reduction to 45% although not until 2013/14. So perhaps you will seek to defer the receipt of your income until April 2013 where possible?

As an entrepreneur, you will be pleased to see corporation tax rates continuing to fall – a top rate of 24% from April 2012, falling to 22% by April 2014. But the “small company” rate stays at 20% and there is every likelihood there will be just the one corporate tax rate in a few years.

Are North West businesses really encouraged to “earn our way out” of trouble? What about the risk takers? If you are setting up a business, you will seek to mitigate risks as much as you can. But of course you cannot eliminate all business risk. If your venture fails, you would at least expect to receive tax relief for your losses. From April 2013, that might not be the case.

The Chancellor says “it can’t be right” for you to have tax reliefs that promote investment, support charitable giving and reflect genuine business losses that you take advantage of year after year. Why not? If the Government believes those reliefs are being abused then properly targeted anti avoidance rules should apply. Instead, your genuine business losses might now be capped at no more than £50,000 or 25% of your income in a year. This means your genuine business losses (not just artificial tax scheme losses), your investment losses, your gifts to charity (although these seem to warrant special mention to try and protect charities) or indeed other reliefs might be restricted for tax purposes. Just how does that help entrepreneurs?

The Government might want to keep certain animated characters (that cannot be mentioned for copyright reasons!) “where they are”. One of them being a mad inventor would surely want tax relief for his business losses – it seems he won’t get them here.

Colin Tice, Partner & Head of Cassons Tax Team
Call 0845 337 0409

Permalink | Leave a comment  »

From Phil Kelly, Director, Petty Chartered Surveyors

What is asbestos?

Asbestos is a generic term for naturally occurring fibrous silicate materials. The three main types are white, brown and blue.

For many years, asbestos was used in many building products until its legal usage ceased in 2000. 

The health effects of exposure to asbestos containing materials are well known and include mesothelioma and asbestosis. 

Asbestos related deaths are still increasing.

Legislation surrounding asbestos is extremely strict.

Legislation

The Control of Asbestos Regulations 2006 requires non-domestic property owners, occupiers and managers to identify and control asbestos containing material in their property. 

If potential asbestos containing material is in good condition and undisturbed, it is recommended that the material is identified and a management plan formulated, as follows:

• Identify its position.
• Inspect its condition regularly.
• Take a precautionary approach to maintenance and minimising disturbance that could cause fibre release.
• The Health & Safety Executive sees removal as a last resort unless the material is in poor condition or at risk of damage.

The asbestos containing materials must be safe, sealed, labelled and managed.

The regulations require that a written document known as an Asbestos Management System is produced which should be reviewed at least annually or following any physical changes.

In addition, key staff may require asbestos awareness training in order to safely implement the management system. 

Asbestos survey

The Control of Asbestos Regulations 2006 require all non-domestic buildings to have an asbestos survey carried out to a nationally recognised standard. 

For further information

If you need to know more about your asbestos situation, then contact a qualified asbestos consultant who will be able to provide a comprehensive asbestos survey.

Some asbestos consultants offer asbestos awareness training targeted at employees whose daily work could expose them to asbestos, particularly demolition workers, building workers, electricians, plasterers and related trades, surveyors, architects, plumbers and engineers.

Which building materials contained asbestos?

Asbestos could be present in any building that was built or refurbished before the year 2000. 

Typically, components of buildings containing asbestos include the following:

• House insulation – loose asbestos can be found as insulation in wall and floor cavities and in lofts.

• Water tank – many water tanks were made of asbestos cement, often found in older properties.

• Textured coatings, eg Artex can be found throughout properties on ceilings and sometimes walls.

• Toilet cisterns – toilet cisterns often contain asbestos reinforced resin composite materials.

• Floor tiles - vinyl and thermoplastic floor tiles can contain asbestos.  The tile backing may also contain asbestos paper. 

• Fuse box – each fuse wire often had individual asbestos flash guards.  The panel behind the fuse box could be asbestos. 

• Wall panelling – asbestos can be found as external wall cladding and as internal wall panelling, both particularly around windows.

• Soffit boards around roof overhangs – soffit boards sit behind the fascia at eaves level. The board could be made from asbestos cement or asbestos insulating board.

• Rainwater items - roof gutters and downpipes can often be made of asbestos cement.

• Heater cupboard – heater cupboards around central heating boilers often contained asbestos insulating board. 

• Corrugated asbestos roofs of industrial buildings and garages.

Finally, if in doubt, contact a qualified asbestos consultant and check out the HSE’s asbestos site www.hse.gov.uk/asbestos.

Phil Kelly
Director at Petty Chartered Surveyors
Email: p.kelly@petty.co.uk:
Twitter: @PettyCommercial

Permalink | Leave a comment  »

Yesterday, HM Revenue & Customs issued Revenue & Customs Brief 03/12: VAT Tribunal Decision in Paymex Limited v HMRC.

The Paymex case broadly found that the services of an Insolvency Practitioner in dealing with an Individual Voluntary Arrangement were to be treated as VAT exempt.

In September last year, HM Revenue & Customs announced in its Brief 35/11 that it accepted that the Paymex finding applied to all types of IVA so that they should be treated as exempt supplies but stated that the ruling did not apply to either Company Voluntary Arrangements, (CVAs), or Partnership Voluntary Arrangements. (PVAs).

However, its latest Brief 03/12 now states that, having undertaken a review of all insolvency processes in light of the Paymex case, it has concluded that the VAT exemption should apply to all of the following:

Individual Voluntary Arrangements
Company Voluntary Arrangements
Partnership Voluntary Arrangements
Protected Trust Deeds (only in Scotland)

This means that Insolvency Practitioners may now be able to reclaim VAT paid over to HM Revenue & Customs – not just on IVAs, but on CVAs and PVAs as well.

However, it is important to recognise that the rules relating to VAT reclaims are not straight forwards and the process is further complicated for Insolvency Practitioners in these cases because of their special duties and obligations in relation to both debtors and creditors in respect of such Arrangements: specialist advice is recommended.

Permalink | Leave a comment  »

From Karen Hands, Thought into Action Ltd

Have you ever noticed how rarely women are included in the programme to speak at events and conferences? Or how few women feature in regional business magazines or the business pages of the press? Yet a significant proportion of small business owners are women, so why is our voice so rarely heard? Only today (9 Feb) David Cameron said that the UK economy would be in better shape if there were more women sitting on company boards.

Catherine Sandland and I set up Phenomenal Woman just over a year ago, based on a shared frustration and a shared passion. The frustration is that so few women’s voices are heard on the business circuit. Even when we do speak up at networking events and the like, it’s so often with a timid style, an apologetic tone and a nervous giggle. We rarely seem to do ourselves justice. Yet we have some fantastic products and services to sell, and it’s so much easier to forge the personal relationships through which business is done when we can explain what we do, clearly, confidently and with the customer firmly in mind.

Our shared passion is that the ability to speak confidently in public is a skill that can be learned, and Catherine and I have set out on a mission to help develop women to become more confident and persuasive speakers. Phenomenal Woman provides seminars, weekend workshops and local Speaking Clubs where women can discover our 5-Star Model for giving presentations that will take them from panic to poise.

We have reached this shared understanding through very different routes. Catherine has been delivering presentation skills training to executives for many years, whereas I had to overcome my nerves about public speaking in front of an audience of engineers and production managers at a pivotal point in my career. We have each seen our business blossom as a result of our speaking skills and we know that many women feel it’s something they ought to be doing too!

We are delighted that Cassons will again be playing host to our seminar, From Panic to Poise, on 27 March. It’s a lunchtime session for women who know that the ability to speak confidently in public could take their business into a whole new league of performance. Bookings are now available on Eventbrite at http://p2pcassons0312.eventbrite.co.uk. For more information about this - or the Lancashire Speaking Club which meets monthly in Clitheroe - please contact me via e-mail: karen@thoughtintoaction.com or mobile: 07775 707140.

I hope you can join us and start getting your voice heard, too.

Permalink | Leave a comment  »

According to the Daily Telegraph, it appears that many top executives at the Department of Health have arrangements to use their own companies to provide their services, potentially avoiding PAYE tax and National Insurance. It also seems likely that other government departments will have similar cases.

But Colin Tice, Tax Partner at Cassons Chartered Accountants, is quick to point out that this is only part of the story.

“The fact is that just setting up a company to replace an employment relationship – as these stories suggest – often doesn’t work and should be caught by what is referred to as the ‘IR35 legislation’ which essentially removes the tax benefits by imposing PAYE and National Insurance on the company. Of course, that requires HM Revenue & Customs to properly police such arrangements.

In the right circumstances – and fundamentally with the right implementation – there are tax benefits in running a limited company instead of suffering tax as an individual. And with the right structure even the IR35 problems can be legitimately avoided. But people need to be aware that it really isn’t as simple as some news stories seem to indicate and getting things wrong can be expensive.”

If you'd like any information or advice about strategic tax planning please get in touch!  You can call us on 0845 337 9409.

Permalink | Leave a comment  »

Anyone who’s met me or read any of my musings will know of my enormous respect for Sir Ken Robinson. A professor and thought-leader on educational reform (or rather ‘transformation’), Sir Ken’s most famous speech is his 2006 TED Talk on how schools are killing creativity. I find his ideas on education and creativity compelling, but I’d like to focus not on his views but his delivery style. Not without reason is he considered one of the world’s great communicators, and in this talk at the Royal Society of Arts in 2008, he’s on cracking form.

I'd like you to focus on the section 3 mins 20 secs to 6 mins 30 secs on this YouTube clip. The rest is worth listening to (as is anything he says!), but there are some things he does in this section that warrant comment.

Light and Shade

If Sir Ken ever tired of campaigning for educational revolution, a career as a stand-up comedian surely awaits! He moves so easily from the profoundly insightful to the comically rib-tickling, and this ability to juxtapose light and shade is a mark of great speakers. There’s something faintly ridiculous about a highly respected academic speaking so openly about getting married in an Elvis Chapel!

Specificity

One of the keys to successful storytelling is the provision of detail. Dickens was a master at this, and while we might not have the time to go into such precise descriptions of characters or situations, an element of detail helps put the audience where you want them to be. Psychologists speak of ‘contextual embedding’ – these details help us sense what it was like to be in a particular situation. It establishes a stronger connection with the audience. So Sir Ken gives us a date (3rd January) when he received a call from the Getty Institute. “Would you like to come to California?” they asked. “We left immediately…the phone’s still hanging off the hook!” (as he waves his arm to simulate it).

Throwing the punchlines

Sir Ken has a nice way of tossing a punchline in an unexpected direction. He turns his head at the moment of delivery and it gives the line more impact. This is a great technique for making your speaking more effective. It also shares things around the audience better.

Use of Metaphor

After the comic set-up about Las Vegas he uses a key ‘link phrase’ – “I mention it because…” This gets him into more profound territory, explaining why Las Vegas symbolises for him the unique ability humans have to use their imagination (which forms the basis of his proposition). Metaphors and analogies are great ways to introduce heavier themes, softening up the audience so they’re more likely to follow your argument.

Stillness

Sir Ken suffered from polio as a youngster and his mobility is limited to this day. For that reason he doesn’t move around too much when he speaks, but this just adds to his gravitas. It helps us pay attention to what he’s saying, with no unnecessary movement to distract us. I remember watching my own TEDx talk from 2010 and thinking to myself, “For goodness sake, stop pacing up and down!”. It’s an idea to video yourself speaking. Watch it with the sound on mute and you’ll be more aware of your movement and any issues with body language.

The beauty of YouTube (and the likes of TED Talks) is that we can study and enjoy watching great speakers like Sir Ken, and incorporate some of their techniques into our own styles. But remember, that style without substance is an empty experience – you soon get found out!

Andrew Thorp coaches business leaders in presenting and the development of authentic storytelling skills.

For more information, see www.mojolife.org

You can see details here about Andrew Thorp's Speakeasy at Cassons. The next events are 22 February and 21 March.

Permalink | Leave a comment  »

From Phil Kelly, Director, Petty Chartered Surveyors

From April 2011, the empty property Business Rates threshold reverted to rateable value of £2,600 from the previous level of £18,000.

This is of great concern for SMEs and commercial property owners who have empty premises in their portfolio.

This will result in businesses with empty properties facing the prospect of having to pay thousands of pounds extra in business rates from April 2011. The Federation of Small Businesses has warned that this will place a very significant burden on companies struggling in the current economic climate.

After a short holiday of six months, when no rates are paid on empty industrial buildings (and three months for offices), owners or former occupiers are liable for full rates payment irrespective of their efforts to lease the buildings. Business Rates are basically a tax, similar to Council Tax on residential property.

In opposition, both the Conservative and Liberal Democrat parties were opposed to this tax but since coming into power they have yet to do anything about it, except for a marginal increase in the threshold of those small properties which are exempt from paying Business Rates. This may in some part be due to the higher than anticipated revenue raised by the initiative and the Government's requirement for income to finance public expenditure.

Empty rates on commercial buildings are effectively a tax on the landlords' or owners' failure to attract an occupier. In the current climate the continuing lack of finance and a shortage of business tenants have stalled speculative development, with many developers being further discouraged by the potential burden of empty rates payments whilst the property is being marketed to let.

There are many foreseen adverse results of empty rates:

Firstly, taxation should generally be levied on profit or income, but in the case of empty rates it is being levied on failure, making a bad situation even worse. Building owners never intentionally leave a building empty, regardless of whether the owner is a large institutional landlord or a small business. If a property does not generate rent, then there is no income from which the owner can pay his tax.

It is also important to appreciate that many buildings remain empty due to comanies restructuring to reduce costs in order to survive this downturn and empty rates penalise this strategy.

If a tenant is paying Business Rates as well as rent on a surplus vacant building, it represents a substantial drain on their business.

Secondly, in the current economic climate buildings remain empty due to the fact that there is a surplus of commercial properties and limited demand, regardless of price.

The argument that increasing the financial penalties of holding empty buildings will encourage greater competitiveness in the market is therefore mistaken. Companies which hold leases on vacant surplus buildings are tied into a rental commitment by their lease, which generally cannot be avoided.

Thirdly, institutional investors often include pension funds, which now face additional costs of holding empty buildings when no income is generated and this, in turn, will reduce the amount of money paid to pension pots when many funds are already depleted due to the downturn.

Fourthly, empty rates are acting as a deterrent to investment in building projects at a time when there is a general shortage of good quality new commercial stock. This will certainly adversely impact on the future competitiveness of the North West as a region.

Whilst the Government is under pressure to raise tax revenues from all sources, empty business rates penalise investment and development and substantially reduce the ability of SMEs to not only survive these difficult times but also to plan further expansion. The Government has the opportunity to put measures in place to aid the recovery by the abolition of this penal tax.

Phil Kelly
Director at Petty Chartered Surveyors
Email: p.kelly@petty.co.uk:
Twitter: @PettyCommercial

Permalink | Leave a comment  »

Following the Government's announcement late last year, that small businesses would be given extra time to prepare for auto-enrolment, a new timetable has now been released.

Companies employing 250+ individuals will not see any change to their staging date.

"Automatic enrolment will begin on time this October, taking up to 10 million people into pension saving - many for the first time ever, and all employers will be part of it" said pensions minister Steve Webb.
"We have done all we can to ease any burden on business the reforms will bring and employers of all sizes now know the date they need to start enrolling their staff."

The UK's largest employers will be expected to lead the way this October as scheduled, followed by medium sized employers and ultimately small companies. All existing companies, regardless of size will have to have introduced auto-enrolment by April 2017, with any new companies by February 2018. The new timescale means that 70 per cent of individuals will have been automatically enrolled by the next general election.

The level of pension contributions will be phased in over time to help employers and individuals adjust. Full contributions will have to be paid from 1 October 2018.

The table below sets out the revised automatic enrolment dates for all employer sizes.

Permalink | Leave a comment  »

HMRC has announced that late filing penalties will be waived for anyone who files their tax returns by 2 February. A similar grace period is in place for any tax payments which are also due by 31 January.

When the Public and Commercial Services Union confirmed that its one-day strike in HMRC call centres was going ahead on 31 January – the deadline for filing tax returns – it followed that tens of thousands of taxpayers would struggle to file their tax returns in time. HMRC expected around 90,000 calls on the last day of filing, and that only about 20% of those calls would be answered in the event the strike proceeded.

Filing by the deadline is important, because there are automatic penalties for late filing – this year, for the first time, the penalties are charged even if there is no tax due.

HMRC has just announced that anyone who files their tax returns by midnight 2 February will not receive a ‘late filing penalty’.

This is a complete change from the previous official line, which was that anyone who struggled to speak to a call centre operator on the 31 January would have to claim a “reasonable excuse,” that the industrial action prevented them from filing their return.

“This is primarily of benefit to taxpayers that don’t have an adviser, and have to rely on HM Revenue & Customs to help them to navigate the complex forms”, said Colin Tice, Cassons’ Tax Partner.

“We are pleased that HMRC has recognised the difficulties that a strike would have caused and have allowed a couple of days’ grace so that people can get the help they need. This was always going to be a difficult year for people filing tax returns, particularly with the new, more stringent penalty regime. It’s good that they have also allowed more time for people to pay their tax, as of course you generally need to finish your tax return, in order to work out how much tax is owed.”

Colin appeared on Radio 5 live this lunchtime (Thursday) to advise on the new rules for filing tax returns and the problems the strike would cause for people struggling to file their tax returns by 31 January. Perhaps someone from HMRC was listening?

Permalink | Leave a comment  »

The ABC of R&D tax credits

Generous tax reliefs are available for companies that incur qualifying expenditure on eligible Research and Development (“R&D”) activities. The reliefs could take the form of an enhancement of the amount deemed to be spent for tax purposes, meaning more tax relief, or even an actual tax repayment.

Since the introduction of the R&D tax credit scheme in 2000, only 2% of British companies are actually claiming the relief. This equates to around £9 billion which is left on the table unclaimed each year.

One of the reasons is that most companies think they’re not eligible for the scheme because R&D tax credits are only for companies with R&D departments and “men in white coats”.

What exactly are “eligible activities” for R&D?

It’s as easy as ABC for R&D experts Jumpstart. Here are three companies that have recently received a substantial monetary return from the R&D tax system.

A is for Apps. Companies writing software for applications on mobile phones are eligible when they:

1. Make substantial improvements to existing products (where those improvements relate to the performance or capability of the product rather than its functionality); or
2. Incorporate new or untested technology into products, where experimentation is required to select the best implementation route; or
3. Make existing products work on new platforms (e.g. making an iPhone game or app work on an Android device), where this involves overcoming technical problems that haven’t been solved before; or
4. Work to create games engines or application frameworks where these represent a measurable and objective improvement over existing systems; or
5. Overcome bugs or limitations in existing technology; or
6. Test new technology where there is little information on their usage in the public domain.

B is for Blind Manufacturers. Textile companies are often eligible for R&D tax relief as they regularly attempt to overcome technical or manufacturing problems in a variety of areas such as:

1. Attempting to increase the abrasion resistance of a material; or
2. Improving chlorine stability (in swim suits, for example); or
3. Changing the blending ratio of a material to try to achieve increased strength or other desired physical properties; or
4. Attaining a higher stability e.g. maintaining colour or water resistance after a set number of machine wash cycles; or
5. Development of weaving processes for the production of a material with a new composition.

C is for Cake Manufacturers. Or other food manufacturing businesses that regularly work on new projects (often because of changes to legislation, consumer trends and specialist dietary requirements), such as:

1. Eliminating allergens and food additives;
2. Extending the shelf life of goods;
3. Product development for specialist dietary requirements (Low salt, sugar etc.);
4. Resolving technical problems with production processes (e.g. seasonal variation in product quality);
5. Retaining the same look, taste and texture after changing ingredients/ raw materials; or
6. Developing new processing methods after the introduction of new equipment.

D is for Do We Need to Say More? We could exhaust the alphabet many times over!

How can Jumpstart help?

Jumpstart are specialists on R&D tax credits, 100% focussed on helping companies make successful claims.

Jumpstart’s analysts derive from many scientific backgrounds enabling them to identify eligible activity that is often hidden in the daily routines of a company’s production and processes, and then translates what can be exceptionally technical detail into meaningful reports that are consistent with HMRC’s R&D guidelines.

Working together with Cassons, Jumpstart seeks to find and maximise a company’s R&D eligibility while Cassons utilise the tax benefits for their clients. Jumpstart always seek to complement not to compete.

Jumpstart has consistently found R&D eligibility in companies’ processes where the R&D legislation did not seem to be relevant.

So if you are a manufacturer and your industry sector starts with a letter of the alphabet then Jumpstart your cash flow now! See us at www.jumpstartuk.co.uk   Alternatively you can begin your conversation with Cassons chartered accountants on 0845 337 9409.

Permalink | Leave a comment  »

Following a recent case, HMRC have changed their stance on the recovery of VAT on the cost of entertaining overseas customers. The block on the recovery of VAT incurred on the cost of entertaining UK customers continues, but if you entertain overseas clients then you can make a claim. HMRC will consider claims for previously restricted VAT in respect of the entertainment of overseas customers over the last four years. If you need assistance on making such a claim then please contact us.

Bear in mind that it is only the recovery of VAT that is affected. The normal tax disallowance of business entertaining as a deduction from your assessable taxable profits will continue, so you will not obtain direct tax relief for entertaining overseas customers.

Permalink | Leave a comment  »

In August I posted a blog about the new agreement between the UK and Switzerland designed to prevent UK taxpayers illegally evading UK tax by hiding money in Swiss bank accounts. (Click here to see earlier blog.) I reported that if you had a Swiss bank account on 31 December 2010 (and still have it on 31 May 2013) you will suffer a one-off tax charge in the range 19% to 34% of all your Swiss funds. At that time the Revenue had not explained how the charge would be calculated. They have now done so. Frankly, the calculation is difficult to understand – even for a professional. The Revenue give two examples, in which the actual rates would be 23.3% or 26.7%. Pretty scary!

In my earlier blog, I also suggested that it might be better to move the funds to Liechtenstein so as to qualify for the Liechtenstein Disclosure Facility, with the possibility of a lower tax rate. Since then the Revenue have tightened the rules, so that it is now harder to qualify for the Liechtenstein Disclosure Facility. But it is still possible.

Permalink | Leave a comment  »

Significant changes, as introduced by the recent Pensions Act, will take effect on workplace pension schemes  from October 2012.  In this webcast, John Davenport, Cassons Pensions Manager explains the obligations of the employer and how to start planning now.  Information correct November 2011.  Some dates have changed and have been updated in John's blog December 2011 - Click here to see it.

Permalink | Leave a comment  »

George Osborne announced in the autumn statement that two key elements of Workplace Pension Reform will be delayed.

Staging dates

Employers with fewer than 3,000 employees will see their staging put back, whilst employers with fewer than 50 employees will have staging dates delayed until “the next parliamentary session” (i.e. until after May 2015).

Employers with more than 3,000 employees will not see any changes to their staging dates. The pensions minister, Steve Webb, said the final timetable would be issued in January 2012.

Phasing

Phasing is the gradual increase in both the minimum employer contributions and the minimum total contributions required to satisfy the duties under Workplace Pension Reform.

The original plan required 1% employer contributions and 2% total contributions from an employers’ staging date until October 2016. From October 2016 until October 2017 minimum contributions of 2% employer and 5% total were required. From October 2017 the minimum contributions would have been 3% employer and 8% in total.

The rise in employers’ minimum contributions from 1% to 2% from 1 October 2016 will not now take place. There has been no confirmation of a new date and no clarity as to whether increases to total contributions will also be delayed.

Our comprehensive guide to Workplace Pension Reform is now available as a webinar - click and follow link.   Other new dates will be communicated as soon as the timetable is released. In the meantime, if you have any further questions please contact me!

John Davenport, Cassons Pensions Manager

Permalink | Leave a comment  »

If you haven't yet filed your 2010/11 tax return, make sure you do so electronically!

New penalties introduced by HM Revenue & Customs mean that you can now be penalised for filing a 2010/11 tax return on paper – even though the filing deadline isn’t until the end of January next year.

The £100 late penalty for filing a Self Assessment tax return late has been around for several years. Previously, it was possible to avoid the penalty by just making sure that your tax liabilities were settled in full by 31 January – the filing deadline. However, this is no longer the case and any ‘late’ returns will result in a penalty even if the tax is fully paid.

This also means that tax returns filed on paper will now automatically carry a penalty, as the deadline for submission of paper returns (for 2010/11 returns) was 31 October 2011.

It is still possible to file a tax return electronically – you have until 31 January 2012 to file your 2010/11 tax return online – but this will not prevent a penalty if a paper return is submitted after 31 October. In other words, it is not possible to remove a penalty for filing a late paper return by filing a ‘replacement’ return electronically, before 31 January.

There are also new, substantial penalties for late returns which are more than 3 months overdue – again, even if no tax is actually due – and for the late payment of tax.

And whilst it is still possible to file your tax return online, you will need to register with HM Revenue & Customs in order to do so if you haven't filed online before - we strongly recommend you don't leave this until the end of January!

 If you need help with filing your tax return – particularly in light of these recent changes – then please feel free to contact us.

Permalink | Leave a comment  »

Guest blog from Andrew Thorp, founder of the Speakeasy Groups

On a recent visit to London I happened upon the wonderful Le Pain Quotidien (PQ) café/restaurant. It’s a memorable experience – something worth talking about (evidently!).

The food is superb, the service excellent and the environment simply draws you in. Wooden tables exude warmth and naturalness, cakes, pastries and bread are displayed to make the mouth water and the open kitchen shows chefs at work and having fun.

But the thing that intrigued me most was the PQ story. On each table is a fold-out card with a cartoon strip charting the origins of this international phenomenon. Like many entrepreneurial tales it was borne of an experience – in this case the founder Alain Coumont’s frustration at not being able to find decent bread for the restaurant he worked at in Brussels. Quite by chance, he found suitable premises, opened his own bakery and started supplying the most magnificent bread and pastries to his former employer (and other restaurants too). PQ now has branches around the world and, having sampled 2 of them in London, I can vouch for their quality. They are remarkable and Coumont's story is a great piece of pull marketing.

There was one disappointment though – a salutary tale for anyone looking to develop their own corporate story. We were served by a charming young woman and when I mentioned the cartoon story she confessed she wasn’t really familiar with it. This surprised me. I assumed this would form a fundamental part of her induction, but perhaps like so many inductions it focused on the practicalities - in this case, how the till works, what’s on the menu and how to clock in and off.

Your corporate story is only as good as the people living it and delivering it. This includes your staff and your clients (I’m an example here – spreading the word about PQ). The philosophy of a strong business is the very foundation of its success, but every member of staff should be able to articulate it (and believe in it)…from the inside.

Andrew Thorp

If you'd like to attend a Speakeasy event at Cassons, details are here.  Next events are Weds 26 October and Weds 16 November

www.speakeasygroups.com

Permalink | Leave a comment  »