On the 8th July 2020, Rishi Sunak (the Chancellor of the Exchequer) set out the next round of financial provisions aimed at counteracting the contraction of the economy due to the impact of coronavirus. The headline policies from the fiscal event, dubbed a 'mini-budget,' are as follows: 1.Furlough Funding Eased - The furlough scheme will gradually wind down before concluding at the end of October. Currently, the Government pays 80% of wages up to £2,500 plus associated National Insurance contributions (NICs) and pension contributions leading to a maximum grant of £2,804 per employee. However, there are several changes proposed in the coming months to ease this finance: August - Employers will now need to pay employers NICs a...

In these uncertain economic times, as a business owner you may feel that your company cannot continue to trade; your company may be on the brink of being forced into compulsory liquidation by your creditors or you may have identified that your company is insolvent and unfortunately does not have a future. Alternatively, you might be considering retiring early or taking up employment elsewhere. In any case, closing down your company may be an imminent reality. This blog will look at three different options available for doing so and the tax implications of each of these. 1. Creditors’ Voluntary Liquidation (“CVL”)   A company is usually placed into CVL when it is insolvent or about to become insolvent and the dire...

HMRC have announced temporary changes to to the time limit and rules for notifying an option to tax for VAT on land and buildings. Current Time Limit Normally, HMRC will need to be notified of an option to tax within 30 days of opting to tax the property. This can be done by either: printing and sending the signed notification to HMRC emailing a copy of the signed notification to HMRC The notification need to be signed by a relevant person in the business. Temporary Change to Time Limit Where a decision is made to opt to tax a property between 15 February 2020 and 30 June 2020, the time limit to notify HMRC is 90 days. For an overview of the tax implications of opting to tax a property, please see the following art...

Individuals and businesses with land/buildings may benefit from opting to tax the property for VAT. Furthermore, there may be tax implications to consider when acquiring or selling land/buildings that are already opted to tax. Why Opt to Tax Property? Typically, property that is rented will be exempt from VAT (subject to certain exceptions). To this end, the the owner/business will not charge VAT on rent and will not be able to reclaim VAT on costs. Where the expenses of letting the property are significant, then the VAT on the expenses may represent a material cost. However, owners of commercial (non-residential) property have the option to tax the property, meaning: Output VAT will be chargeable on supplies i.e. rent Inpu...

In this ‘pause from normality’ it is important to keep your tax compliance guard up. The period we are going through is not a ‘tax holiday.’ If the quality of your tax compliance drops, then the existence of Covid-19 will be no excuse for inaccuracies or negligence later down the line when faced with an HMRC enquiry, nor is it likely to be an excuse for late returns unless you become seriously ill. The reality of this is exemplified by the fact that people are still receiving loan charge settlement letters (which require a response in 30 days) during this time. Our advice: Understand the specific tax payment holidays and reliefs that exist through Covid-19 and apply them to the best of your ability. Prepare cash-...

From today (4 May 2020), businesses that have been affected by the coronavirus pandemic can apply for a loan under the Bounce Back Loan Scheme (BBLS). As noted in our previous blog, the BBLS was introduced to help smaller businesses that were struggling to obtain finance under the previously announced Coronavirus Business Interruption Loan Scheme (CBILS). The key features of the BBLS are as follows: Small and medium sized businesses can apply for a loan from £2,000, up to 25% of the business' turnover (capped at £50,000). The loan will be guaranteed 100% by the government (as opposed to 80% guaranteed under the CBILS). The government will pay interest and fees for the first 12 months, and the interest rate for the facility i...

In line with government guidelines, large swathes of UK workers are currently working from home.  Whilst there are a range of expenses you may be able to claim depending on your specific circumstances, this blog is aimed at those of you who own a limited company and are running the business from home. Rather than claiming the flat rate of £6 per week (£26 per month) under the simplified expenses rules, it may be more beneficial to instead rent out the personal work space in your home to your limited company. Under this arrangement, where the rent charged is equal to costs (see below), then no taxable rental profits will arise. Furthermore, provided that the rent is charged at no more than the market rate then the rental payments ma...

On 27 April 2020, Chancellor of the Excheuqer Rishi Sunak acknowledged that many smaller businesses were struggling to obtain finance under the previously announced Coronavirus Business Interruption Loan Scheme (CBILS). In light of this, a new Bounce Back Loan Scheme was announced which will be 100% guaranteed by the government (as opposed to 80% guaranteed under the CBILS). The Bounce Back Loan Scheme will launch on 4 May 2020 and will allow small and medium-sized businesses (SMEs) to borrow between £2,000 and £50,000. It has been confirmed that loan terms will be up to 6 years and there won't be any fees, interest, or repayments to pay for the first 12 months. Eligibility You can apply for a loan if your business: is based...

In these uncertain times, surplus cash not required for working capital and other prized assets held by a company are potentially being left at risk. Therefore, a company may wish to implement an asset protection strategy to help limit liability risks arising from the coronavirus crisis. Holding Companies & Shielding Company Assets A holding company (“HoldCo”) is a limited liability company that acts as the parent of a trading company (“TradeCo”). HoldCo does not carry out any trade activities itself and will instead own the shares in TradeCo along with any other assets that the owners would like to protect. The basic steps to implement the planning are as follows: The shareholders of TradeCo incorporate a new c...

The IR35 anti avoidance provisions are contained in ITEPA 2003. The provisions impose employment taxes on those using a Personal Service Company (PSC) to enter into a contract for services (and thus pay corporation tax on profits) who in practice are engaged under a contract of service (and therefore should pay income tax and NICs on income). Recently, there has been a string of cases involving HMRC challenging well known TV presenters on the basis that they are caught by IR35. The most recent judgement of which was Eamonn Holmes v HMRC (2020). The Facts TV personality Eamonn Holmes set up a PSC in 2001 called Red, White and Green Ltd (RWG). From 2006 onward he has been presenting This Morning on ITV. During this time, RWG has been...