Risk Management for Academies

Today’s video features Sarah Ollerton and Nicola Mason as they discuss risk management for academies.

This year the academies financial handbook has changed the requirement for a risk register from a should to a must, meaning academies need to update and review their existing risk register.

Watch to learn more!

Disposals of UK land – changes to the capital gains tax compliance regime for non-UK resident individuals

What’s new from 6 April 2019

The non-residents capital gains tax (NRCGT) rules have been extended to include non-residential property. The rules now apply to direct and indirect disposals of interests in all UK land (i.e. both residential and commercial).

A direct disposal is a disposal of land, whereas an indirect disposal is a disposal of shares in a company (whether the company is UK resident or not) and at least 75% of the value of the shares is derived from UK land. This briefing note covers the rules surrounding direct disposals for individuals and further advice should be sought for disposals by non-UK resident companies.

Background

The NRCGT rules were introduced on 6 April 2015 and apply to disposals of residential properties from this date. Only the gain arising after 5 April 2015 is chargeable and there are different ways of calculating the gain depending upon the individual’s circumstances.

The new rules now extend NRCGT to cover gains on commercial property, but only to the extent that the asset has increased in value since 5 April 2019.

Compliance

All persons making a NRCGT disposal have 30 days following the conveyance of the property (not the date of exchange) to submit an on line NRCGT Return to HMRC. A return must be filed even if there is no tax payable or the property is sold at a loss.

Late filing and payment penalties may be charged if the 30 day deadline is missed.

The Return must include a calculation of the chargeable gain or allowable loss and the tax due must be paid within 30 days of conveyance (i.e. the same deadline as the filing of the Return).

The rate of tax depends on whether the property is residential or non-residential and the level of the individual’s other income for the year.

The compliance regime has also been revised from 6 April 2019 to require all non-residents to make a payment on account of the CGT due on the disposal, irrespective of whether or not the individual is within the Self-Assessment regime. 

Potential problem areas

Due to the short filing and payment deadline not all of the relevant information may be known within that timeframe. It may be necessary to include reasonable estimates in the computations and then amend the Return when the actual details are available. In addition, it may not be possible to correctly calculate the amount of tax payable because the rate of CGT depends on an individual’s UK taxable income for the whole tax year and this may not be known at the time of submitting the return.

How we can help

We would be happy to calculate the capital gains tax position on the sale of the UK property and advise upon which method of calculation is most beneficial for your client. We can also file the NRCGT Return with HMRC.

Should you wish to discuss this in further detail please contact a member of our Professional Practice Team on 01772 821021.

Income recognition for charity

In this video Nicola Mason and Sarah Ollerton are discussing when a charity becomes entitled to recognise it’s income.

In the case of a grant, evidence of entitlement will usually exist on the offer of funding. That being said, some grant offers will contain terms and conditions which must be met before the charity is entitled to recognise this income.

Watch to find out more!

Are you thinking of starting up in small business?

Starting up in business can be a fresh start for some, an exciting opportunity for others, a need to satisfy one’s personal goals and ambition, or simply something to do in your spare time.  You might decide to stay small, keep your costs low, think about maximising profit on a small turnover.  Conversely you might aspire to grow your business fast, have multiple sites, build a team around you, generate your profit with low margins but high turnover. 

Whatever your drive to be in business, whatever your size and aspirations, it’s important to get the fundamentals right from the outset, seek professional advice in areas where you don’t have the skill or knowledge, but even if you do have those skills, it always good to have business advisers working alongside and supporting you. 

Our guide talks through some of the common areas to consider when starting in business, but likewise it might be worth a read for some business owners looking to move their business forward.

Open Banking Changes within Quickbooks

Open Banking regulations have been introduced in the UK.

In line with these regulations, QuickBooks is upgrading its bank feeds. Existing connections will be switched off and replaced with a more stable process which will give you a better experience.

Once these new feeds are ready, we’ll ask you to log in into QuickBooks and authorise the new feeds. This will allow your data to keep flowing into QuickBooks without interruption.

The new feeds will give you more control, improving the process and making it more secure.

Please note, for security reasons, the connection will need to be re-authorised every 90 days. If you have further questions about Open Banking, you can find more information on this FAQ on the link HERE

SMEs and International Tax

Expanding a business overseas can be a new and exciting chapter for a business but in order to transact successfully overseas, the business must understand the various tax considerations to ensure they don’t miss out on profits and don’t fall foul of foreign tax regulations.

One of the main issues arising from overseas business transactions is Withholding Tax.

Withholding Tax (WHT)

WHT is a tax deducted at source by the customer in the overseas company. The local tax regulations of the country will determine the percentage deducted. SMEs must understand the implications of this and factor in ways to mitigate this tax otherwise it can become an absolute cost to the company.

First thing is to consider the rate that could be applied, the overseas country may have a double tax treaty with the UK and this means that the rates of WHT can be reduced to the treaty rate which is generally lower than the countries standard rates or in some cases reduces the WHT percentage to 0%. If a company is charged in excess of these rates, an application can be made to recover the difference. The success of an application will depend on the relevant countries’ procedures and deadlines.

The other way of mitigating the tax is by double tax relief. Double tax relief works by offsetting the tax withheld against the UK tax charge. This can mean in some instances the whole of the WHT can be offset and the UK liability is reduced to nil conversely however if there is a small amount of CT chargeable or the WHT tax rate is in excess of the UK CT rate (currently 19%) then the difference is again going to be a cost to the company.

What’s the answer?

It is important to create a dialogue with the customer at the beginning to understand what they are planning to deduct. Often problems can arise if there are disagreements as to the nature of the service, and therefore which rate to apply.

It may be that a gross up clause is included in a sale agreement which would effectively negate the WHT, This could create problems however if a customer does not wish to accept the increased values.

Further Advice

If you would like to discuss this article in more detail or you would like to speak with a member of our team, please call us on 01772 821021 to be put in contact with a member of our Tax team.

Data Analytics in Audit

In audit terms, data analytics in audit is a tool which auditors can use to analyse large volumes of data, to assess risks in a population and identify items for further testing.

The main benefits are:

– Enhanced audit quality

– Improved audit effectiveness

– Mitigating risks of fraud

Data analytics should increase; the focus, approach to risk, and the outcome from the audit process.

Blackpool car repair firm opens new £3m premises

A family-run accident repair centre in Blackpool has set the wheels in motion to become Lancashire’s number one car repairer, following a £3m investment in their brand new bodyshop.

Fylde Coast Accident Repair Centre (ARC) has relocated to a new 18,000 square foot workshop on a site covering 2.3 acres at the Blackpool Airport Enterprise Zone, creating five new jobs to date.

With a turnover of £3.5m its workshop currently repairs over 2,400 vehicles per year, working alongside major insurance companies.

The firm was advised on its expansion by MHA Moore and Smalley. The team, led by David Bennett and Judith Dugdale, provided advice on fundraising and tax for the acquisition and development of the site.

Fylde Coast ARC is run by owners David and Linda Hyland, together with their son Dane. Between them they have over 35 years of experience, specialising in the repair of car and light commercial vehicles.

David, managing director, said: “I started the company in 1982 with just one apprentice and by building a loyal customer base, we’ve been growing the business ever since. Once we realised we had outgrown our old premises, we decided to take the brave decision to build a new state-of-the-art facility.

“Since opening our doors it’s really taken off. With an eye on the future, we have invested heavily in the latest vehicle technology including charging points for the new generation of electric vehicle repairs, as well as training on electric vehicles for our technicians. The feedback from our customers has been very encouraging.”

David added: “We’ve already secured a new contract with a major leading insurance company and we’re attracting skilled technicians who are keen to work in our brand new facility. Our ambition is to be one of the best accident repair firms in Lancashire.”

Judith Dugdale, corporate services director at MHA Moore and Smalley, added: “Fylde Coast ARC is a great example of a successful family-run business planning for the future. We’ve worked with David and Linda for over 15 years and it’s great to see their son Dane join the team.

“Building new premises is a big step but we provided expert advice to ensure they maximised tax savings available on the new-build, money they can reinvest in growing the business. I am delighted to assist them with the next stage of their business growth and continue their success story.”

Founded in 1982, Fylde Coast ARC employs 36 staff and is an approved repairer for Audi, Citroen, Hyundai, Mitsubishi, Peugeot, Seat, Skoda, Vauxhall and VW.