The UK Government provides tax reliefs to incentivise and encourage companies who are entrepreneurial and come up with innovative ways to progress and develop technological advancements, especially tax reliefs for Corporation Tax. This article discusses the Patent Box regime which benefits companies who exploit intellectual property (“IP”) rights, and will be particularly useful for companies with the rise of Corporation Tax to up to 25% from 01 April 2023. The Patent Box: A Brief Introduction The UK Patent Box tax regime operates by applying a deduction to the Corporation Tax bill, effectively reducing the tax rate on profits from the use of patents or other similar IP rights to 10%. This is compared to the current Corporation T...

From April 2022, in order for individuals to renew certain licences they will be required to prove to HMRC that they have completed a "tax check". These new rules, which apply in England and Wales, will apply to the following licences: Taxi Driver Licences; Private Hire Vehicle (PHV) Driver Licences; PHV Operator Licences; Mobile Collector Licences for Scrap Metal Dealers; and Site Licences for Scrap Metal Dealers. Individuals looking to renew their licences will be need to complete an online check to confirm that they are registered for self-assessment. The aim of the measure is to ensure that applicants have complied with their tax obligations. The introduction of this tax check is one of the latest tools that HM...

Shares and granting share options are often provided to motivate and retain key employees but there are often circumstances such as where shares are provided to family and friends for a domestic purpose. The recent case of Vermilion Holdings Ltd v HMRC [2021] CSIH 45 highlights the importance of considering whether shares are received ‘by reason of employment’ as this can have tax consequences. Securities and Securities Options The rules regarding receiving shares ‘by reason of employment’ govern both securities and securities options. The definition of ‘securities’ under legislation includes shares, rights under a contract of insurance (other than excluded contracts of insurance), debentures, debenture stock, loan stock,...

Earlier this year, we published The Price is Right: Valuing Trading Companies (8 February 2021) which provided an overview of the various methodologies and principles typically used to value unquoted trading companies. In this article, we will set out how we value property investment companies and the kind of factors that must be considered in order to reach a robust valuation. When might a valuation be required? In our experience, valuations of property investment companies are typically required in the following circumstances: Inheritance tax planning Sale or transfer of shares Matrimonial proceedings Family Investment Companies It's important to note that this is not an exhaustive list, and a valuation may be requi...

Following the release of our recent blog Structures and Buildings Allowance – Capital Allowances (published 30 June 2021), HMRC have published a policy paper on a proposed additional requirement for preparing an allowance statement. The allowance statement is required to make a claim for Structures and Buildings Allowance (“SBA”) and this proposed amendment will have effect once the next Finance Bill 2021-22 receives Royal Assent. In order to make a claim for the SBA, the current requirements that the allowance statement must meet are as follows: Details of the building or structure; The date of the earliest contract for the construction of the building or structure; The amount of qualifying expenditure incurred on its c...

HMRC has opened a consultation on reforming Basis Periods for unincorporated businesses, such as sole traders and partnerships. The current rules are  straightforward for those that draw up their annual accounts to 5 April, however complexities arise for those with alternative accounting periods, particularly in the first few years of trading. Current Rules Under the current rules, businesses are taxed on the Current Year Basis. If a business draws it's accounts to 5 April, then the profits in that accounting period is allocated to the same tax year (i.e. 6 April - 5 April). Where a business selects an accounting period end date other than 5 April the situation becomes more complex. The Basis Period for a tax year for the busin...

In the upcoming years, taxpayers will not be issued with automatic penalties for the late filing of tax returns or the payment of tax. Instead, HMRC will issue "points" for missed deadlines, before a financial penalty is levied. It is intended that this new system will be fairer and only penalise those who persistently fail to meet their compliance obligations. The changes will apply to VAT customers for accounting periods beginning on or after 1 April 2022, and to those who submit self-assessment tax returns with business or property income exceeding £10,000 p/a for accounting periods beginning on or after 6 April 2023, and to all other self-assessment taxpayers from 6 April 2024. Current Rules (Self-Assessment) Under the current...

As an employer, there are numerous ways that you can remunerate or reward your employees and encourage their ongoing commitment to the business or company. Such rewards can be monetary, the provision of some form of benefit, or the gift or transfer of an asset. However, care should be taken when considering such "rewards" or "gifts" as in many cases they are likely to be deemed to be earnings and therefore subject to tax and/or National Insurance Contributions (NICs). Recent Case In the recent case of Mullens v HMRC (TC08112),  Mr Mullens (the taxpayer) sought to persuade the First-tier Tribunal (FTT) that huge payments he received from Bernie Ecclestone’s businesses, as well as from Ecclestone’s ex-wife and trusts, were gifts...

If you are an employer and you operate either an Enterprise Management Incentives (EMI) scheme or an Employment Related Securities (ERS) scheme, you will need to file an EMI or ERS return by 6 July after the tax year end. For the tax year ended 5 April 2021, the deadline is 6 July 2021. Furthermore, there may be cases where an ERS return is required but no official scheme is in place, such as where an employee or director has acquired shares in a company by reason of their employment (subject to certain exceptions), or the company has been restructured and employees/directors have received new shares. Enterprise Management Incentives (EMIs) EMI is a form of employee share option scheme that allows selected employees to be rewarded ...

In the last 12 months, the UK Government has provided several schemes aimed at supporting businesses through COVID-19. These include the the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Scheme (CBILS), where the Government has agreed to back loans provided under these schemes to help businesses obtain funding and to encourage lending from loan providers. Under the SME R&D tax relief scheme, small and medium sized companies (SMEs) that engage in qualifying research and development projects may also claim enhanced corporation tax relief in relation to certain qualifying expenditure, and where the company is loss making, part of the loss may be surrendered for a repayable tax credit from the Government under ...