Business Taxation

TAXATION

Whether it is for you personally or for your business, our aim is to ensure that you pay as little tax as possible whilst complying with all rules and regulations.

As legislation gets ever more complex and voluminous, we will help you see the wood from the trees and ensure you have the correct tax strategies in place at the right time. It is our job to keep tabs on changes in legislation that may affect you and help you plan ahead and conduct your affairs in the most tax efficient manner – the difference between a good and a poor tax strategy can literally result in a hit of £’000s to your wealth.

Having a good strategy is one thing. Simply complying with all the legislation is quite another and we know how easy it is for the uninitiated to innocently fall foul of the regulations. Let us take that risk and stress away from you by taking care of your VAT Returns and Self Assessment Returns.

BUSINESS TAXATION

There are a huge variety of taxes imposed on businesses and each is a specialism in itself. Below are some of the taxes you need to be aware of but please do contact us directly if you would like guidance on any not covered here.

TYPES OF TAX

To learn more about the different types of tax see our table below.

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Limited companies are subject to corporation tax on the profits they make but, as ever, it’s not quite as simple as that! The profits the company makes per its accounts will be adjusted by various items to arrive at the profits on which it pays tax.

Each year, the company must prepare and file a Corporation Tax Return within 12 months of its year end and pay any tax it is liable to within nine months of the year end. The responsibility for ensuring this is complied with lies wholly with the directors of the company.

With tax taking in the region of 20p of every £1 of profit made, it is essential that effective corporate tax planning is undertaken as it can result in significant improvements to the bottom line. As part of our typical services, we can:

  • Prepare and file your Corporation Tax Returns
  • Undertake a corporate tax audit to identify tax saving opportunities
  • Ensure that corporate structuring is optimised for tax purposes
  • Identify remuneration scenarios for directors and employees that are cost effective for both the individuals and the company

VAT is possibly one of the most complex taxes in existence today and impacts on virtually every organisation.

Constantly changing regulations and regular filing requirements make VAT reporting a time consuming and difficult process subject to frequent error.

It is therefore essential to obtain clear and accurate advice on this most confusing of taxes. This is even more essential if your organisation is buying or selling overseas.

We provide an efficient service that can include:

  • Determining whether you need to or should register for VAT and, if so, which scheme is optimal for the business
  • Undertaking the VAT registration on your behalf
  • Advising you on processes and procedures to ensure VAT is accurately accounted for within your organisation from the outset
  • Preparing and filing VAT Returns
  • Undertaking VAT controls and reconciliations
  • Advice on VAT planning in order to ensure no more VAT than necessary is paid

A share option scheme can be one of the most valuable tools available when it comes to retaining, motivating and incentivising staff. In simple terms, it is an option to buy shares in the company at some point in the future but at today’s price. That gives the employee the ability he or she may not otherwise have had to potentially receive a large lump sum if the company is successful going forward.

There are a diversity of schemes available with varying tax advantages. Generally the most tax efficient is the Enterprise Management Incentive scheme although it can only be implemented if a number of qualifying conditions are met.

To help you navigate through this minefield, we can:

  • Advise on the pros and cons of the various schemes and identify those which may be most relevant for you
  • Agree formal share valuations with HMRC
  • Register the scheme(s) with HMRC
  • Prepare the initial Option Agreements and other necessary statutory paperwork
  • Ensure annual scheme reporting requirements to HMRC are met

A little thought at the outset can result in a lot of saving for individuals particularly if they are owners of a business.

Most commonly, shareholders in a company are able to receive some or most of their remuneration in the form of dividends rather than salary and, even after recent changes to the taxation treatment of dividends, this is still likely to result in significant overall tax savings.

We can undertake a detailed exercise of your company’s current circumstances to:

  • Review current structuring and remuneration policies
  • Identify routes that may result in savings all round
  • Ensure that the correct processes are put in place and paperwork produced to comply with relevant legislation should any changes be made

There is generally less scope for materially improving remuneration structuring to reduce tax when it comes to non-shareholding employees. However, the goal in this regard is often to increase employee satisfaction and motivation as much as any direct financial reward and there are a number of initiatives that may be considered.

When small companies think about funding, they tend to overlook one of the best potential sources – R&D Tax Credits.

R&D Tax Credits enable companies that incur costs in developing new products or processes to either vastly reduce their tax payment or to receive a cash payment back from HMRC.

Don’t be put off by the name; people still think of R&D qualifying companies as being university offshoots that develop the latest superbug vaccine. Not at all. The Government’s desire to make the UK an attractive place for small companies to prosper has led to enhanced incentives to encourage spending on R&D type activities in the form of a far broader range of qualifying activities and improved rates.

Find out more

Read the case study below

Recent years have seen a major drive from the Government to promote investment from individuals into smaller unquoted companies. The upshot was the Enterprise Investment Scheme, (“EIS”), which provided significant tax breaks for individuals investing in qualifying businesses.

More recently, the Seed Enterprise Investment Scheme, (“SEIS”), was introduced providing even more lucrative tax breaks for investing in very early stage companies.

Should your business be looking to raise money you should be cognisant that many private investors will not now consider investing in a company unless it is under one of the above schemes. To facilitate this, we can:

  • Advise on which, if either, of the schemes your business could qualify for and what is involved in raising funds under these schemes
  • Agree a formal valuation of the company with HMRC
  • Prepare the necessary statutory paperwork and register the company for the scheme(s)
  • Liaise on your behalf with the investors
  • Prepare the ongoing paperwork as necessary

Benefits in kind given to employees have to be reported annually on forms P11D for all employees whose combined salary and benefits exceed £8,500. The employee is generally taxed on these benefits whilst the company is often subject to Class 1a National Insurance on their value.

A separate P11D must be completed for each individual employee although in certain circumstances it is possible to apply for a general dispensation from having to report in respect of certain items. This applies particularly to various expenses payments.

The most common benefits that have to be reported and which give rise to tax/NI liabilities are company cars and health insurance schemes whilst there are certain benefits such as mobile phones that are tax free provided that certain conditions are met.

If you are in any doubt about the validity of providing benefits for staff or the attendant HMRC reporting requirements, we can help by:

  • Advising on which benefits may be most valued by staff
  • Indicating which benefits may be taxable and which may not
  • Assessing the best way to provide any benefit
  • Applying for dispensations on your behalf
  • Preparing and filing the relevant forms P11D and similar with HMRC

It is no secret that HMRC are embarking on new ways of targeting a greater proportion of businesses and individuals using a range of approaches and new technology and have far greater powers than they used to have. Indeed, the Government is setting targets for HMRC to recover what it considers underpaid tax and billions of pounds are being clawed back by sharp increases in the number of investigations.

Investigations are often generated by nothing more sinister than a random computer selection. However, the stress and cost they impose on individuals and businesses can be considerable and are a real threat to small and growing businesses.

The investigations can centre upon all or any of the following:

Voluntary disclosures

PAYE investigations

VAT investigations

Corporation tax investigations

Technical disputes

Code of practise investigations

It is absolutely essential that you take specialist advice on this subject and we can help by:

  • Advising you at the outset of risk areas and what you may do to resolve them
  • Implementing processes and procedures to ensure you stay compliant
  • Offering fee protection in the event of investigations
  • Ensuring you have the relevant specialist by your side in the event of an investigation

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