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Taxation

What is Taxation?

To tax (from the Latin taxo; “I estimate") is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.

Where?

The Central government, whose revenues come primarily from taxation, and Local government in the form of Business Rates.

How?

There are a number of different taxes that you may have to pay in the UK.

• Capital Gains
• Corporate Tax
• Income Tax
• Self-Assessment
• Inheritance Tax
• VAT
• Tax Investigations

Capital Gains

Capital Gains Tax liabilities can arise on the disposal of assets either to third parties, to family members or into vehicles such as trusts or limited companies.

As well as calculating liabilities after transactions, ABDS can also advise on planning for these liabilities and setting up business arrangements so as to minimise exposure.

Capital Gains Tax often interacts with other taxes such as Corporation Tax, Stamp Duty, VAT and Inheritance Tax planning. Gains are reported either on personal Self-Assessment Returns or Corporation Tax Returns.

Our expertise shows its true benefit when negotiating with H M Revenue & Customs regarding valuations used in calculations. The valuation of, in particular, company shares is extremely subjective and it is essential to take our advice before entering into a transaction. Valuations will be fundamental to the calculation of Capital Gains Tax liabilities where either a valuation is needed at March 1982 or an asset is transferred other than at arm’s length – for example to a connected person. From the 2008/09 tax year the disposal of any asset originally acquired before March 1982 will necessitate the obtaining of a March 1982 valuation.

Examples of areas in which we can advise regarding Capital Gains Tax calculations and planning include:

  • Principal Private Residence Relief
  • Transfers within a Corporation Tax Group
  • Deferring gains through holdover into new assets
  • Gifts or sales at under value to connected persons
  • Disposals of minority interests in private limited companies
  • Transfers to your spouse and associated tax planning
  • Corporate structure and recommended vehicles in which to hold assets
  • Business disposals and associated planning opportunities
  • March 1982 valuations and negotiations with H M Revenue & Customs
  • Pre 5 April 2008 disposals and Indexations and Taper Relief

If you are considering buying or selling an asset then contact the ABDS Tax Team before the transaction to ensure than your liabilities can be minimised both now and in the future.

Corporate Tax 

Whilst company accounts need to be prepared in order to comply with statutory obligations, the accounts preparation process is an opportunity to review the tax planning work that has been carried out through the year.

At ABDS as well as ensuring that our clients tax computations are prepared within statutory requirements, all of our limited companies undergo a tax review regardless of their size to ensure that all possible claims and reliefs are being taken advantage of in order to minimise the tax burden.

This review will also identify possible planning opportunities in the future and may interact with the director’s personal Self-Assessment position.

Tax Compliance is becoming an increasingly complex and fluid legislation bound area. At ABDS, we can relieve you of the burden of filing timely and accurate Returns, therefore allowing you to concentrate on your core strategies. Once our tax review has maximised the use of all deductible expenditure, we prepare and file Returns quickly and accurately using the latest Corporation Tax software.

Key features of our Corporation Tax Self-Assessment service include:

  • Pre year end Corporation Tax reviews and profit projections
  • Corporation Tax health checks
  • Advice on the interaction of Corporation Tax with other taxes
  • Cash flow management and projection and remuneration planning
  • On line filing
  • Dealing with Revenue enquiries and disputes
  • Quarterly payments on account
  • Business acquisitions and disposals
  • Group tax and structure planning

If you would like to discuss how ABDS can assist with your Corporation obligations and planning then please do not hesitate to contact us.

Income Tax

Income Tax is probably the tax that you will be most familiar with. There is however a common misconception that there is only one right answer when it comes to reporting this on a personal Self-Assessment Tax Return.
Especially when preparing business accounts, it is essential to make full use of all claims and reliefs that are available. Perhaps the most common error in this area is not taking full advantage of all allowable expenditure and Capital Allowances.
Our accountancy and Self-Assessment services ensure that accounts and Tax Returns are prepared in the most tax efficient manner whilst complying fully with Revenue regulations.
As well as fulfilling your compliance obligations, our tax department can:

  • Carry out tax efficiency reviews, for example through remuneration planning.
  • Offer advice on PAYE codes through our payroll and CIS services.
  • Assist with Revenue enquiries and disputes.
  • Consider profit extraction from limited companies
  • Corporation Tax
  • Capital Gains Tax
  • Business Plans and forecasts
  • Business financing.
  • Ensuring the maximum use Personal Allowances and lower tax rates
  • Advise on the interaction of the numerous components of Income Tax which include rental income, business income, interest, remuneration under PAYE and dividends
  • Assess the Income Tax and other liabilities associated with receiving benefits from an employer, for example a company car.

Please contact ABDS now if you require any assistance with any Tax matter, accountancy or other business queries.

Self-Assessment

Whilst HMRC introduced Self-Assessment to make it easier for taxpayers to complete and file their own Tax Returns, the constant daily changes to tax legislation means that the annual forms are becoming more and more difficult to understand. We can therefore save you time (and money) by offering you a fully comprehensive service for the completion, on line submission and agreement of your Self-Assessment Return.

In preparing the Self-Assessment Return, we also produce fully detailed schedules and tax computations, so you are fully aware of your tax liabilities and the basis of their calculation as well as ensuring you are notified well in advance of the timing of payments to the Revenue.

ABDS have extensive experience in dealing with the minutiae that is Revenue & Customs, and can therefore manage your affairs effectively. And by taking advantage of our Tax Protection Scheme then if you are selected for a Tax investigation or are involved in a dispute then you will rest assured in the knowledge that we will argue your case whilst protecting you for the costs associated with our professional services.

Self-Assessment does of course apply equally to limited companies as well as individuals, partnerships and trusts. We can assist with Corporation Tax planning and mitigation as well as fulfilling your compliance obligations through on line filing of accounts, Returns and computations with the Revenue.

Larger companies will need to ensure that group taxation planning opportunities are exploited and that they comply with the requirement to make quarterly payments on accounts where appropriate.

Please contact ABDS now if you require any assistance with any Tax matter, accountancy or other business queries.

Inheritance Tax

Or, how to avoid paying tax again on wealth you have already paid tax on

Current tax rates mean that an increasingly large number of individuals and couples have estates which bring them into the scope of inheritance tax.  Indeed with property price inflation, many with relatively modest estates can now benefit from planning to reduce or avoid a potential inheritance tax liability.
 
Individuals should review their pension plans regularly to avoid a shortfall on retirement and to ensure they are protected from IHT in the event of death before retirement. Since none of us knows when we shall die, this means making the necessary provisions now.

Proper estate planning is essential if you wish to mitigate tax liabilities and to pass on your wealth as far as possible to your beneficiaries. The earlier you make the arrangements, the greater your chance of taking full advantage of the tax opportunities available. After all, you will have worked hard throughout your lifetime, minimising tax exposure where possible. Nothing is more demoralising than the thought that a substantial slice of the wealth you have worked hard to accumulate will end up in the Government's coffers!  Often the final piece of tax planning in terms of Inheritance Tax is overlooked.

What Is Inheritance Tax?

Inheritance Tax (IHT) is currently charged on the value of your estate after certain reliefs and exemptions. At ABDS we can help to significantly minimise the amount of Inheritance Tax you pay and help you benefit from IHT exemptions and reliefs, we will develop the creative plan that considers every aspect of your current and future estate.

Our comprehensive Inheritance Tax service can help ensure that you achieve the maximum tax savings. This will include:-

  • A full review on the tax efficiency of your Will (if you have one)
  • A full assessment of the valuation of your Estate
  • An assessment of your current Inheritance Tax liabilities.
  • Advice on lifetime planning in terms of gifts, trusts, insurance and associated Capital Gains Tax and Inheritance tax issues.
  • The possible use of Trusts in tax planning, which will obviously consider the latest changes in government legislation.
  • Combining the Inheritance Tax review with efficient lifetime tax planning, particularly with regards to Income Tax and Capital Gains Tax.
  • Advice regarding Inheritance Tax efficient lifetime investment opportunities.
  • Assessment of the availability of Business Property Relief and Agricultural Property Relief.
  • Valuations and associated negotiations with the Revenue.
  • However, estate planning is not solely about tax and we adopt a common sense approach, helping you to ensure your own financial needs are met and to avoid "giving away too much too soon".

As an integral part of our Estate Planning and Inheritance Tax Services, we can also provide you with advice on how to create and update Trusts and Wills. With ABDS, you can look forward to a more certain future.
So whether you are

  • Individuals whose estate planning is close to the nil rate band or many times larger
  • Looking to mitigate inheritance tax on family homes, family businesses and investment portfolios
  • Looking at potential future IHT liabilities
  • Lifetime transfers and wills
  • Your future income and capital gains for long term financial planning

Please do not hesitate to contact us if you would like further details of this service or require any assistance with any of the provisions above. This service may be extended to include other savings and sources of income. Inevitably, it will give reassurance to some, while others will have to redress how much they save and/or consider delaying their retirement date.

VAT

Arguably, VAT is the most complex area of taxation encountered by businesses and ensuring that you comply with the rules whilst staying tax efficient can be an area in which considerable savings can be achieved. VAT is classed as an indirect tax by the Revenue and it is often overlooked in tax planning exercises.

Compliance is considered as part of our accountancy and bookkeeping services, ensuring that you meeting filing deadlines and correctly account for liabilities, whilst receiving refunds due on a timely basis.

The list of planning opportunities and compliance issues can seem overwhelming, but some of the key areas in which we can help are:

  • On line VAT registration
  • On line filing of VAT Returns allowing extra time to pay and prompt receipt of refunds due
  • Assessment of the appropriateness of VAT schemes such as Cash Accounting, Annual VAT Returns and Flat Rate Schemes
  • Advice on the need to register of VAT and opportunities to be considered through voluntary registration
  • Enquiries and dispute assistance
  • Attending VAT inspections
  • VAT considerations on the acquisition or disposal of a business or asset
  • VAT issues associated with property transactions, including  zero rated, reduced rate and exempt transactions; the distinctions between commercial and residential property, listed and unlisted buildings, renovation and repair
  • Partial Exemption calculations and advice, to include Annual Adjustments
  • Interaction of VAT with Stamp Duty, Capital Gains Tax and Corporation Tax
  • Overall assessment of the impact of VAT decisions on business plans and forecasts, bookkeeping, and Corporation Tax.

If you require assistance or advice concerning VAT, Compliance, Bookkeeping or any Accountancy services contact ABDS now

Tax Investigations

Receiving a letter through the post from HMRC can be one of the most daunting and scary moments imaginable.

The cost of dealing with investigations can run in to several thousands of pounds and given the ‘black hole’ in the economy you can be assured that Tax Inspectors will become increasingly aggressive.

Contrary to popular belief, many aspects of tax are subjective and can be argued with H M Revenue & Customs. It is also essential to be able to judge the likelihood of a successful argument and to know when it is time to try to reach a negotiated settlement.

Revenue enquiries can take one or two forms:

  • An Aspect Enquiry which focuses on specific queries raised by the Revenue
  • Full Enquiries which look at the Self-Assessment position as a whole.

Tax investigations can take many forms, but may include:

  • PAYE and National Insurance disputes arising from Revenue Compliance visits
  • Enquiries into the Corporation Tax Return for a limited company
  • Self-Assessment enquiries.
  • VAT disputes arising from compliance visits or queries raised in respect of filed Returns
  • CIS gross payment status appeals

Defending clients in enquiries is an area in which we have considerable expertise but the costs can be extensive as enquiries or disputes can drag on for many months.  Even if no additional tax is found to be due, you or your business would be faced with additional fees incurred.

The frequency and complexity of enquiries has increased to such an extent that we feel it is appropriate to offer our clients an alternative to these costs.  As such we have implemented a service backed up by Abbeytax whereby we have insured our practice to cover our professional fees for the following events:

  • Income Tax Self-Assessment Full/Aspect Enquiries
  • Corporation Tax Self-Assessment Full/Aspect Enquiries
  • VAT Disputes.
  • Employer Compliance Disputes (Payroll and CIS :PAYE/P11D/P9D/NIC/IR35)

This service allows us to represent our clients during enquiries and disputes with the Revenue whilst protecting against the professional fees which inevitably arise, provided that the cover is taken out before the enquiry begins.
Please note that this cover includes not only your business, but also all directors or partners for their personal Self-Assessment Tax Returns, as long as we complete those Tax Returns and they show no other self-employed income (otherwise separate additional cover would be needed).

We strongly recommend that clients take advantage of this additional service that enables us to offer our clients peace of mind in ensuring that these additional costs are no longer charged to our clients.

Please do not hesitate to contact us if you would like further details of this service or require any assistance with disputes with the Revenue.