Government outlines VAT proposals for post-Brexit Britain

Businesses groups have voiced concerns over government proposals to amend the way in which EU imports will be treated following the UK’s withdrawal from the EU in 2019.

Plans to change the VAT rules are included in the Taxation (Cross-Border Trade) Bill 2017-19, which is currently making its way through Parliament. The proposals could see UK businesses being required to pay VAT upfront in cash to HMRC.

Currently, goods imported from the EU are treated as ‘acquisitions’ for tax purposes, meaning that VAT is not paid until the products have been sold to the end consumer. However, if the UK exits the Customs Union, goods from the EU will be treated in a similar way to other imports.

The British Retail Consortium (BRC) has warned that the proposed changes could create ‘additional burdens’ for UK businesses. Commenting on the Bill, the BRC stated: ‘If the Bill becomes law without any commitment to inclusion within the EU VAT area, UK businesses will become liable to pay upfront import VAT on goods being imported from the EU27 for the first time.

‘Liability for upfront import VAT will create additional cashflow burdens for companies, as well as additional processing time at ports and border entry points attached to the customs process.’

Meanwhile, the Chair of the Treasury Select Committee, Nicky Morgan, has written to the head of HMRC, Jon Thompson, urging him to address the BRC’s concerns.

Ms Morgan stated: ‘I have written to HMRC to seek clarification on the costs to businesses and consumers arising from this legislation, the options being considered to mitigate these costs and the likelihood of the UK participating in the EU VAT area as part of its end-state relationship with the EU.’

As your accountants, we can help you with your VAT obligations. Please contact us for advice and assistance.

Strategies for saving tax ahead of the 5 April year end

With the end of the 2017/18 tax year approaching, now may be the ideal time to think about strategies to help mitigate your tax liability. There are many different options to consider so do contact us for further advice.

Reducing your personal tax liability…

Are you making the most of your tax-free personal allowance (PA)? Individuals are entitled to their own PA, which is set at £11,500 in 2017/18. Therefore, if your spouse or partner has little or no income, you could stand to benefit by spreading your income more evenly to ensure that each PA is being fully utilised.

Some married couples may also be eligible to transfer 10% of their PA to their spouse under the Transferable Tax Allowance, or ‘Marriage Allowance’. It means £1,150 may be transferred in 2017/18, which could help to reduce a couple’s tax liability by up to £230 in this financial year. Certain rules apply.

And despite relatively low interest rates, for many individuals ISAs are still an attractive tax-free way to save. For 2017/18, the overall subscription limit for ISAs is £20,000, of which no more than £4,000 can be deposited into a Lifetime ISA. With a range of ISAs to choose from, you have until 5 April 2018 to make your 2017/18 ISA investment.

… and your business’s tax bill

Are you maximising claims for capital allowances? The majority of businesses are able to claim a 100% Annual Investment Allowance on the first £200,000 of expenditure on most types of plant and machinery (except cars). In many cases, a purchase made just before the end of the current accounting year will mean that the allowances are available a year earlier than if the purchase was made just after the year end.

Business owners may also wish to consider tax-efficient ways in which they can extract profit from their business. There are many ways to achieve this. Some may opt to take dividends instead of a salary or bonus, as these are paid free of national insurance contributions. Others may wish to talk to us about incorporating their business, while employer pension contributions can be another tax-efficient means of extracting profit.

As always, it is important to seek our advice before taking action. For more information on tax-saving strategies to implement ahead of the 5 April 2018, please visit the Hot Topics section of our website.

Backdated ‘staircase tax’ bills branded unfair to small firms

The Head of the Treasury Select Committee, Nicky Morgan, has branded the sending of backdated business rates bills to small businesses in England and Wales as ‘particularly unfair’.

Dubbed the ‘staircase tax’, businesses which occupy space on multiple floors of a communal commercial property now receive separate business rates bills for each floor they occupy, where the areas separating the offices are communal (for example lifts, corridors and stairs). Some firms in England and Wales have seen their business rates rise significantly as a result.

The Valuation Office Agency (VOA) determines business rates for firms in England and Wales, and made the changes as a result of a previous Supreme Court ruling which considered how different storeys under common occupation in the same block are assessed for business rates purposes.

Business rates are calculated separately in Scotland, using the rateable value which is set by a local assessor, and the ‘poundage rate’ which is set by the Scottish government. For 2017/18, a Large Business Supplement of 2.6p is being added to all business properties with a rateable value of £51,000 or more.

Commenting on the so-called staircase tax, Ms Morgan said: ‘It seems unfair to tax businesses differently depending solely on whether the staircases between their rooms are communal or private.

‘It seems particularly unfair for the increase in rates to be backdated.’

Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: ‘No small business should receive a sudden tax hike of 5,000% simply because a workplace has been separated, for years, by a communal area, stairway or lift.

‘Some small business owners are discussing whether to knock holes in their walls or stick a staircase on the outside of their premises.

‘This is no way to run a tax system in the 20th century, let alone the 21st. Ministers have the power to provide relief, and they should do this urgently – to correct this defect in the UK tax system.’

Recommended App – TAX READY

TAX READY

With cloud-based technology becoming a feature of everyday life, businesses are wise to implement good, modern software and apps where possible. The right apps can simplify your life and work; improving efficiency and profitability (time is money)!

So, continuing with our regular app recommendations, this month we’d like to recommend TAX READY – our very own, brand new app!

What is it?

Tax Ready is a smartphone app (available on Apple, Android and Windows devices). It has been designed with business owners and managers in mind; providing a range of useful tools to help with the operational aspects of running a business.

How much does it cost?

£0 – it’s free!

What are its features?

  • Tax calculators – there’s a calculator for almost everything but, as an example, the income tax and NI calculator enables you to work out the gross cost of employing a new staff member – or help your employees to understand their net pay.
  • Tax tables – quick access to up-to-date tax rates.
  • Key tax dates – keep track of deadlines and easily add them to your phone’s calendar (just one-click and the reminder’s there) .
  • News – regular news articles on a variety of useful topics.
  • Mileage and expense recording – keep track of your mileage and expense claims whilst on the move, then download them as a spreadsheet when required.

Why do we recommend it?

Although somewhat biased, we genuinely believe the app is a useful resource for our clients and contacts. We think it’s easy to navigate, has a fresh, modern design, and it’s free!

How do I get the app?

To add the app to your device, search ‘Tax Ready’ in your app store … then download and enjoy exploring the features.

 

 

 

The new General Data Protection Regulation

Businesses have been urged to prepare for the introduction of the new General Data Protection Regulation (GDPR), which will impose new requirements on all organisations that collect, store and process individuals’ personal information, with significant financial penalties for non-compliance.

The new GDPR places an increased emphasis on accountability and transparency, and businesses should ensure that they have up-to-date records relating to the personal data that they hold, including where the data came from and who it has been shared with.

Businesses are also advised to review any privacy notices they have in place and, where necessary, make sure that these are amended in time for the implementation of the new GDPR, which comes into effect in May 2018.

Organisations must also identify their ‘lawful basis’ for processing activity within the GDPR, record this and update their privacy notices accordingly. The GDPR will modify some individuals’ rights, depending on the lawful basis. If you use consent as your lawful basis for processing, clients will have a greater right to have their data deleted, if they so wish.

Businesses must also ensure that adequate security systems are in place to protect data, and to detect, report and investigate any data breaches.

Commenting on the new GDPR, David Riches from the British Chambers of Commerce (BCC), said: ‘Businesses need to be proactive about ensuring they are ready for the new data protection regulations when they come into force [in May 2018] and not leave preparations until the eleventh hour’.

For more information on the GDPR and how your business can prepare for its introduction, please visit the Hot Topics section of our website.

Young Talent Shines at Shepherds

The Shepherd Partnership celebrates its newest Accountant as Sophie Renou, 26, qualifies and becomes an affiliated member of Association of Chartered Certified Accountants (ACCA).

As the youngest member of the team, Sophie is showing all the signs for a long and fruitful career.  The Shepherd Partnership has keenly supported Sophie with her career development from day-1, when she joined them in a support role.

Sophie with her official qualification certificate
Sophie with her official qualification certificate

Director Adam Dutton comments:

“Sophie joined the firm in 2006 as something of a’ Girl Friday’, helping with admin and reception duties. Before long we enrolled her on the AAT qualification, and then on to the ACCA. She’s achieved good grades across the board and is showing great potential. We’re proud to have such young talent at Shepherd Partnership”.

As well as the ACCA and MAAT (Member of the Association of Accounting Technicians) qualifications, Sophie also has an Advanced Diploma in Accounting and Business.

She may have an impressive track record already, but her training won’t end here. Sophie intends to start a BSc (Hons) degree in Applied Accounting later this year.

Fourth Free Business Seminar Success

The fourth consecutive Business Seminar & Budget Response event was a success once again. Businesses from across Skipton benefited from advice from some of the leading business experts in the area.

The morning-only event included presentations from Growth Accelerator, a unique service led by some of the country’s most successful business growth specialists, and the Business Team from Barclays Bank in Skipton. In addition, the day concluded with a digest from the previous week’s Budget 2014 announcements. Shepherd Partnership Director, Adam Dutton, talked through the key elements of the Budget that are relevant to local small businesses. Here are some photographs from the day:

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Delegates mingle over coffee & breakfast rolls
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Director Alan Webb introduces the seminar
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Adam Dutton summarises the Budget 2014

In addition to the formal presentations there were networking opportunities and complimentary breakfast rolls, tea & coffee.

A big thank you to all our delegates and speakers! See you next year…