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Aug 24
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Capital Gains Tax and the end of Entrepreneurs’ Relief

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Capital Gains Tax and the end of Entrepreneurs’ Relief? On the 14th of July this year, in the midst of the Coronavirus Pandemic, with Her Majesty’s Government helicoptering money throughout the United Kingdom, the Chancellor of the Exchequer decided that now was the time to order a review of Capital Gains Tax [CGT], to consider how gains are taxed compared with other types of income as it applies to individuals and small businesses. A burning issue, I think you will agree, in these unprecedented times. And who is to undertake this review? Why, the Office of Tax Simplification. And what is the OTS? Well, it terms itself as an “independent office of HM Treasury” [I think my old English Teacher would have referred to that as an oxymoron] which according to its website gives “independent advice to the government on simplifying the UK tax system, to make thing easier for...
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Nov 26
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Entrepreneurs in the cross hairs

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25 November 2019: "Entrepreneurs in the cross hairs" 2019 UK Election Manifesto Commitments from the main parties to the UK Entrepreneur “Cross Hairs” noun a pair of fine wires crossing at right angles at the focus of an optical instrument or gunsight, for use in positioning, aiming, or measuring. Example: "I raised my rifle and got the deer in the cross hairs" “Entrepreneurs” noun persons who sets up a business or businesses, taking on financial risks in the hope of profit. Example: "I raised my rifle and saw many entrepreneurs in the cross hairs" “Entrepreneurs Relief” definition is a tax relief that reduces the amount of Capital Gains Tax when you dispose of shares in your business. It results in a tax rate of 10% [instead of 28% on other capital gains] on the value of the disposal and you can claim as many times as you like up to...
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Jul 02
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Private sector off-payroll rules [IR35]

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The imminent death of the Personal Service Company [PSC]? Never mind the prospect [Certainty? Ed.] of a Corbyn led government in April 2020, a further and potentially far reaching erosion of entrepreneurism also occurs on that same date, with the introduction of the off-payroll rules [known as IR35] to the private sector. The Budget in 2018 announced that from April 2020 businesses in the private sector will become responsible for assessing an individual’s employment status and determining whether or not the off-payroll rules apply. In cases where the business does consider that such rules apply, like it or not, the individual who historically will most likely have operated via a PSC, will be deemed an employee. Goodbye dividends, hello PAYE and NICs! HMRC has long been concerned that individuals utilising PSCs pay less income tax and NICs then those employed directly. In April 2017 the off-payroll rules were applied to...
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May 02
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HMRC quadruples spending on private debt collectors

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Autopsy of a Newspaper headline At the end of last month the main heading of this article was the heading to a piece in the pages of an internationally renowned daily UK newspaper- the one that does not quite fit the riddle “what is black and white and red all over?”-more pink if you get my meaning. The findings, by a well-regarded firm of accountants, seem to have been covered by all the leading papers utilising headlines in much the same vein. As someone who, in his working life, has almost daily contact with HMRC, this headline rather surprised me, as in my experience, I have almost never seen evidence of private debt collectors [“PDCs”] in matters of tax. I suspect that this is because our practice is one that predominately deals with companies in financial difficulties rather than individuals with debt issues. Yes, we do very occasionally come across…

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Dec 19
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The High Street is dead! Long live the High Street!

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The High Street is dead! Long live the High Street! And why is the number 14 haunting your author? High Street, definition OED Noun, British, Meaning: Place you end up when you get lost. The imminent, inevitable, incontrovertible demise of the UK High Street has been written about many times in recent years. So much so, that I have never really thought it worthwhile to put together a piece on a subject that is well travelled ground. Hardly a week goes by without another old established department store group or celebrity chef chain throwing itself at the mercy of its creditors by attempting to downsize and restructure through the Administration or Company Voluntary Arrangement insolvency processes, resulting in closed outlets and job losses. Well that was until earlier this month [the same month that saw the demise of Woolworths 10 years ago] when I started to see the number 14…

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Dec 19
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Companies House – user beware

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“Long firm fraud” given a helping hand by the openness and visibility of the information at Companies House… As my long departed Great-Grandmother used to say to me “There’s nowt new under the sun”. Long firm fraud has probably been around as long as credit itself –  a nice little earner, much used back in the 1960s by East End villains, has not gone away and in this era of increasing identity theft, this type of fraud is very much on the increase. A long firm fraud uses a trading company that has been set up to appear to all intents and purposes as a legitimate business. Quite often a company, that has been dormant at Companies House for several years, is reactivated. Several years of glowing accounts are filed overnight, bogus lists of shareholders and directors are posted and then the company starts to buy goods and services and…

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Dec 19
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Zombie business’ numbers drop to record low

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How do you kill a Zombie company? By having an interest rate rise of course! Zombie business’ numbers drop to record low. In November 2015 we reported that Zombie companies-those businesses that can just about pay the interest on their bank debts, but little else, had seen a dramatic decline [much to the chagrin of us Insolvency Practitioners]. Well, the decline continues, according to research commissioned by our trade association R3. Figures published this week, based upon findings by international market research company BDRC, have revealed that the proportion of businesses only paying interest on their debts-equivalent to 49,000 firms-is now the lowest it has been since R3 began tracking the Zombies in June 2012. Here are the trend percentages: November 2012: 9% August 2014: 9% November 2015: 8% September 2016: 8% April 2017: 5% December 2017: 3% Back in November 2015, the same research model revealed that some 77,000…

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Dec 19
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Restaurant chains continue to suffer

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Not so lovely jubbly Restaurant chains continue to suffer in today’s economic climate-a sector that often leads the way in a full blown recession. Jamie Oliver’s Italian restaurant chain has recently had to report that it is suffering cash-flow problems. In the last 12 months it is understood that the 60 strong chain lost £9.9m and has been propped up by a short term loan from its parent company. That loss equates to each trading unit losing over £3,000 per week, every week of the year. Well Jamie has called in the beancounters to devise a “cashflow management plan” which will no doubt see a number of closures and potential job losses. At the beginning of this year, the chain closed 6 outlets, but the 120 staff that were affected were offered jobs with the rest of the group. At the time, the then Chief Executive [recently departed for challenges…

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Dec 19
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HMRC now charging interest on tax that is not even due

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Statutory Interest at 8% on Corporation Tax in Solvent Liquidations Unfortunately, we have to report that HMRC now require the payment of statutory interest at 8% per annum from the commencement of a solvent liquidation [Members’ Voluntary Liquidation aka MVL] on any Corporation Tax that falls due after commencement of the liquidation, even if the normal due date for payment is not due until after the commencement of the liquidation, and the payment is made before the due date. For example, let us assume that the company’s year-end is on 30 April 2017. The Corporation Tax Return is not due for submission until 12 months after the company’s year-end i.e. not due until 29 April 2018 and any tax due is not payable to HMRC until 9 months and 1 day after the company’s accounting period i.e. not payable until 1 February 2018. Let us assume that the Corporation Tax…

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Oct 30
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IT’S THE BREXIT EFFECT STUPID!

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When I tell people that I am an Insolvency Practitioner, the universal response is almost always “Well you must be busy” - that and the fact that they usually take a couple of steps backwards. Now, when I tell people that I am an Insolvency Practitioner, most people say “Well, you are going to be even busier, what with the Brexit Effect” - and of course, the couple of steps backwards. In fact, the Insolvency Profession has not been busy for the last 7 years and, apart from a relatively small upward blip around the time of the 2008 financial crisis, the profession wasn’t particularly busy in the 7 years after the start of the new millennium either. Financial failure rates, for both individual and companies, have been on a long decline for many years now, but people’s perception is very different. And as Tom Peters, the American business guru,...
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