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...

Structures and Buildings Allowances (“SBA”) was previously introduced to provide relief on qualifying expenditure on non-residential commercial buildings or structures incurred on or after 29 October 2018. SBA is a form of capital allowances which allows the SBA to be deducted when calculating the taxable profits for the business. Since its inception, there have been some changes to the allowance and further changes were announced in the Finance Act 2021 on Freeport qualifying expenditure. Please note that this article does not discuss requirements where the 'relevant interest' is the lease of a building. What expenditure can qualify for the SBA? The SBA is available for qualifying expenditure on non-residential commercial str...

As part of the government’s coronavirus measures, businesses were given the option to defer their VAT payments between 20 March 2020 and 30 June 2020 under the VAT Payment Deferral Scheme. Initially, they were given until 31 March 2021 to pay any VAT liability accumulated in that period. However, it was later announced as part of the government’s Winter Economy Plan that these businesses would be able to opt to pay their VAT liability in up to 11 equal instalments over 2021-22 (interest free) using the VAT Deferral New Payment Scheme. Your Options In effect, if you deferred your VAT liability as part of the VAT Payment Deferral Scheme, you currently have three options for paying this: Pay the full amount of deferred VAT o...

Running a company imposes an abundance of filing obligations, those of common knowledge include accounts and company tax returns. However, there are also additional filing requirements that are often overlooked / incorrectly inputted despite the fact that omission / inaccuracy of these filing requirements can lead to fines and implications down the line. This article will highlight some of these filing obligations and the implications of failing to comply with these obligations. The Confirmation Statement The confirmation statement (annual return) is essentially just a check that the information Companies House has about a company is correct every year. Every company is required to submit one, including non-trading / dormant compan...

At PD Tax Consultants we value companies for all kinds of reasons, ranging from setting up employee share schemes to facilitating a management buy-out. In this article, we have provided a brief overview of the methods we typically use to value unquoted trading companies. It is important to understand that valuing companies is both a science and an art, and each valuer will make different judgement calls resulting in a differing result. With this in mind, it is often appropriate to use two or more valuation methods in order to ascertain a better idea of a value range and to ensure that the valuation reached is reasonable. 1. Maintainable Earnings Method The first and most commonly used method for valuing trading companies is the mai...

Efforts are being made by the Government to motivate businesses to own lower CO2 emission cars in the push to become a greener society. From April 2021, new tax measures - particularly relating to capital allowances - are being introduced to encourage and incentivise businesses to opt for more climate-friendly vehicles. First Year Allowances (FYAs) The Government announced during its last budget in 2020 that FYAs would be restricted to expenditure for new zero emission and new electric cars from 01 April 2021 onwards, with these FYAs being extended until April 2025. These allowances allow the whole of the expenditure incurred by the business to be deducted against trading profits in the period. It is important to note that the FYAs ar...

Companies (small or medium enterprises) that engage in research and development (R&D) activities can claim enhanced expenditure against their corporation tax where the R&D project or projects qualify for R&D tax relief. Complex rules apply in determining whether qualifying R&D has taken place, however a successful claim can bring material tax savings along with a cash injection into the company (where there is a loss). Furthermore, for ongoing R&D projects, claims may be made year on year. Note - large companies may also obtain relief for R&D under the RDEC scheme, however the focus of this article is on the rules applying to small and medium enterprises (SMEs). Rates are based on the 2020/21 UK tax year. Wh...