Budget boost for business investment

With the Budget 2018 announced just a few days before Halloween, there was much speculation about whether the Chancellor’s famous red Budget Box would be full of tricks or treats. As the last Budget before Brexit, it was highly anticipated by both business owners and individuals.

During Pierce’s annual Budget Breakfast event, which welcomes business leaders and clients from across Lancashire, Chairman John Green described Philip Hammond’s latest announcement as ‘the most small business friendly budget ever’ which had ‘enterprise at the heart.’

For me, the most welcomed announcement was the Chancellor’s helping hand to kick start business investment by increasing the Annual Investment Allowance (AIA) from £200,000 to £1m. The increment provides opportunities for businesses to gain significant tax relief when they invest in plant or machinery.

During his speech, Hammond said the aim of the increase was to ‘stimulate business investment’ and it is a strategic move to help boost business confidence during uncertain times as Brexit creeps even closer.

In my experience, since the AIA was introduced a decade ago back in 2008, it has encouraged business owners to move forward investment plans and I’m sure that this announcement will encourage even further growth.

With the increased amount available from 1 January 2019 – 31 December 2020, I would urge businesses to look at their investment ambitions and maximise on this opportunity while they can.

The timing of the investment is critical, the expenditure must be incurred at the correct time and in accordance with the rules. Your accounting period end will influence the ideal timing.

Available to an individual, partnership or company carrying on a trade, profession or vocation, a UK non-residential property business or a furnished holiday let, the AIA covers plant and machinery, vans, lorries, equipment, building fixtures and computers.

For a full breakdown of the Budget 2018, visit our website. For more information about how your business can drive investment forward with the help of the AIA, call Mark Walmsley on 01254 688 100 or email  m.walmsley@pierce.co.uk

UK Income Tax Liabilities regarding Offshore Matters

New legislation has introduced a legal requirement for UK taxpayers who have undisclosed UK tax liabilities to income tax, capital gains tax and inheritance tax in respect of offshore matters to disclose the relevant information to HMRC by 30 September 2018.  This is known as the Requirement to Correct (RTC).

The penalties for failure to correct (FTC) start at 200% mitigated to a minimum of 100% of the tax.  There can also be asset-based penalties in more serious cases.

With effect from 1 October 2018, the Common Reporting Standard will be introduced under which 100 jurisdictions will exchange financial account information on residents’ investments offshore hence the need to report any undisclosed liabilities by the 30 September 2018.

When the legislation was first drafted it was thought it was intended to target deliberate tax evasion, such as routing undeclared UK income through off shore structures. However over the course of the last few months it has become clear that HMRC will be taking a more aggressive approach even in cases where an innocent error has occured.

In brief, a person must correct any offshore tax non-compliance, including failure to notify chargeability to tax or failure to submit a Return that should have been submitted.

The RTC covers tax years as far back as 2013/14 if a failure has occurred but the taxpayer has taken reasonable care, back to 2011/12 if behaviour was careless and back to 1997/98 if the behaviour is deliberate.

If you have any assets overseas, for example holiday homes, letting income, bank interest, then Pierce can help you prepare for the new legislation.

For further information, please contact Anne Wilson on a.wilson@pierce.co.uk or call 01254 688 100.

Pierce’s payroll manager shortlisted as biggest influencer

Pierce is celebrating after their payroll manager, Lisa Kennery has been shortlisted for a prestigious industry award.

Lisa has made the final eight for the biggest influencer category at the Chartered Institute of Payroll Professionals Annual Excellence Awards.

Lisa was nominated by Pierce’s payroll assistant manager Philip Johnson, after receiving unrivalled support from Lisa during his career at Pierce.

Philip said: “Lisa has not only played a key role in enhancing my knowledge needed for my professional qualifications but also in gaining the softer skills needed to develop my career. Since being at Pierce I have worked my way up from being an apprentice to assistant manager which is all thanks to the support, guidance and encouragement from Lisa.”

Lisa added: “It was such a shock to find out that I have been shortlisted for this award. It’s a great achievement and I’m thrilled that Phil nominated me.”

The 2018 Annual Excellence Awards will be taking place in Birmingham on Thursday October 11.

Making Tax digital – What will the future bring?

The government announced on 13 July 2017 that Making Tax Digital will commence in April 2019 for all VAT registered entities with a turnover above £85,000. Vat registered businesses with turnover below this amount will not be required to use the system but can choose to do so. They will also be able opt in for other taxes, benefitting from a streamlined, digital experience.

 Making tax digital will extend to other areas of tax for example,  self-assessment tax returns  in April 2020 . This gives you two years to adapt to the change of reporting digitally,

 Challenges you may face:

  • Converting manual records to digital version
  • Converting spreadsheets to recognised book-keeping software that will link direct with HMRC
  • Upgrading old software that will not be compatible
  • Adapting bespoke software
  • Cost of doing the above
  • Time processing

How can we help

  • Assisting in selecting the correct software for you
  • Implementing the software
  • Provide training initially and as and when required
  • Take the headache away and provide a full package

Spring Statement 2018

Chancellor Philip Hammond has delivered his Spring Statement 2018, and on his promise to move away from two major iscal announcements every year.

There was no red briefcase, no red book, and no tax changes as the chancellor announced updated economic forecasts in a speech lasting less than half the length of any of his previous statements.

Click here to download our in-depth report.

Changes to company car benefits – are you ready?

From April 6, 2018 there will be a change to the way company car benefits are payrolled, improving the process for both the employee and employer.

From the new tax year, if you choose to payroll company cars, the car information must be submitted via payroll and tax will be collected in real time through a monthly deduction.

The new streamlined process will reduce the number of tax calculation errors, eliminating the chance that employees will be landed with a big underpayment bill. The changes are easier for employees to understand as the tax code will remain at the personal allowance, presuming the employee has no other adjustments.

There’s benefits for employers too as P11Ds and P46 cars will no longer be required, reducing the amount of paperwork and saving valuable time.

Form P11D(b) is still required to report class 1A National Insurance due and companies need to provide the employee with a summary of the benefits payrolled, the cash equivalent as well as details of any benefits not payrolled, before June 1 every year.

The change means that all benefits apart from beneficial loans and employer provided living accommodation, can be processed through payroll.

If employers wish to payroll benefits in the 2018/19 tax year, they will need to act fast and register prior to the start of the tax year. If you use payroll software, then most platforms are ready for the change.

Although the payrolling of benefits is still voluntary, HMRC are moving to real time, so we predict that this will become mandatory in the near future.

After successfully completing payrolling benefits with a client, we are looking to roll it out to other businesses ahead of the implementation date. If you would like Pierce to help you with the changes, contact Lisa Kennery on 01254 688 110 or email l.kennery@pierce.co.uk.

Lisa Kennery is the payroll manager at Pierce.

Businesses urged to review Christmas party tax plans

As the decorations go up and the opening of advent calendar doors begins, Pierce Chartered Accountants suggests that Lancashire businesses should review their Christmas party plans to avoid tax hangovers!

Party time

Employees are exempt from tax on the cost of an employer provided annual party where the cost is less than £150. This event can be a Christmas party or other annual function, such as a summer BBQ, and can cover more than one occasion if it doesn’t exceed £150 per head in total across eligible events.

When calculating the cost of the event this should include food, drink, entertainment, venue hire, transport and overnight accommodation as well as VAT in arriving at the total cost per attendee.

The amount of £150 is a limit, not an allowance. If the cost is £151 per person attending, then the whole benefit becomes taxable.

The event should be primarily for entertaining staff and be open to all employees. If guests are invited, then the total cost should be divided by each attendee (including non-employees). If a business is spilt over various locations, then separate events can be held, so long as all members of staff have the option to attend one party.

The employer will also be able to claim a tax deduction for the cost of the staff party even if it exceeds the £150 per head limit.

Staff Gifts

Generous employers who give their staff a gift at Christmas should also consider the tax implications for their employees.

If you give your employee a non-cash gift worth no more than £50 the employee does not have a tax liability on the benefit in kind.  For example retail vouchers, flowers or a hamper would be eligible,  but the gift must be no strings attached such as a performance award and must not be a contractual entitlement.

Companies who give their employees a cash bonus will have to pay the bonus through the payroll and deduct tax and National Insurance as normal.

For further information about tax pitfalls during the Christmas period, call Pierce on 01254 688 100.

Solicitors could face hefty VAT bill for electronic property search fees

Solicitors are being warned they could face hefty VAT bills for electronic property searches after a landmark ruling deemed they should not be treated as a disbursement.

The caution comes following the case of Brabners LLP Vs HM Revenues & Customs (HMRC) which cast doubts over solicitors’ treatment of disbursements.

Brabners conducted searches and used the results as part of its advice to clients. The law firm treated the cost as a disbursement and invoiced the client for this cost, excluding VAT. HMRC assessed the law firm as liable for VAT, a decision that the law firm appealed.

It is standard practice in the sector to treat such costs as disbursements where no VAT has been incurred, this has now changed for electronic search fees.

Guidance from the relevant regulatory bodies, which sets out how legal disbursements should be treated for VAT purposes, is now under review following the tribunal decision.

HMRC which applies strict criteria to such situations, argued that Brabners’ costs were not VAT disbursements as the recharge of the cost formed part of the onward supply to the client and was therefore subject to VAT.

The First Tier Tribunal was in agreement with the HMRC, meaning Brabners was ordered to pay a £68,000 VAT bill as the results were used as part of their advice to clients, and they were not acting as a middle man to collect the search fee from the client.

At Pierce, we would advise law firms to review their disbursement treatment in light of the outcome of this tribunal, for both previous and future policies.

If your firm is using the same process as Brabners, then contact the Law Society to seek clarification before amending your practices as Brabners may consider taking this appeal further.

For more information regarding VAT for solicitors, please contact Gary Speak on 01254 688 100 or email g.speak@pierce.co.uk