Month: September 2012

Business Property Renovation Allowance as used by the rich and famous

Earlier this year there were a number of press articles such as

http://www.thisismoney.co.uk/money/celebritymoney/article-2083797/Wayne-Rooney-cuts-tax-investing-office-park.html

So what is BPRA and how does it work?

BPRA is a form of Government Aid given as a Tax Break in certain areas of the country for the renovation and reuse of commercial property.

You can purchase property for your own use or invest in a scheme with others.

Investors might in theory invest £100k but but scheme might borrow 75% leaving the investor to put in only 25%, but the investor will get 100% tax relief on the £100k (“initial allowance”).

BPRA will be available until March 2017 when its likely to be withdrawn, it could also be capped from 2014.

Its a complicated high risk investment and authorised advisors need to able to advise on unregulated collective investment schemes.

If you sell the investment within 7 years a tax charge will be triggered (“balancing charge”) effectively withdrawing the “initial allowance” this tax charge can also be triggered by death.

Income Tax on Profits and Capital Gains on sale will apply.

steve@bicknells.net

 

 

 

Should the wealthy pay more tax?

Its a popular theme. Earlier this week Danny Alexander said to the wealthy ‘we are coming to get you’.

http://www.guardian.co.uk/politics/video/2012/sep/25/danny-alexander-tax-avoiders-video

When it comes to tax dodgers and moving money and assets overseas he may have a point but what about mansion tax covered in the same speach. Is a tax on property the way to go?

France now want their top earners to pay 75% tax!!

http://www.bbc.co.uk/news/world-europe-17189739

But will this just lead to businesses and individuals moving to lower tax countries?

Will the UK be a winner, the UK Government want us to have the lowest corporation tax rate in Europe and we are moving towards a main rate of 20%.

steve@bicknells.net

Donate Trade Pounds to Charity and get Cash Back

Bartercard has many charity members who all love getting donations http://belmontmail.co.uk/ZFF-YPOC-E24SJ4HO59/cr.aspx

But often charities and those making donation fail to claim the cash back relating to the donations, for example:

Gift Aid

25% tax refunds in cash http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/GivingMoneyToCharity/DG_10015097

This means that for every £1 donated, you can claim an extra 25 pence.

Individual Tax Relief

If you pay higher rate tax and make a donation through Gift Aid you can claim some tax back too.

Corporation Tax Relief

When your company makes a qualifying donation to a charity the amount paid is treated as a ‘non-trade charge’ – this means your company can make a claim in its Company Tax Return to set the amount of the donation against its taxable profits.

steve@bicknells.net

 

What if my tax adviser gets it wrong……

I have seen some great articles on this recently for example ‘Tips & Advice Tax’ (Indicator Issue 22 September 2012)

A few years ago the tax rules were updated and the government added one aimed at ensuring those who took “reasonable care” in preparing their tax returns shouldn’t be penalised if the return is incorrect.

But HMRC don’t always remember the “reasonable care” rule for example J R Hanson and HMRC (H and HMRC) as reported in ‘Tips & Advice Tax’ Article HMRC overzealous on penalties.

H incorrectly applied a capital gains tax deduction he wasn’t entitled too and was hit with penalty for £14000, however, H used an accountant to prepare the returns and he had shown reasonable care so HMRC lost the case.

In addition under current rules HMRC could not pass the penalty to his accountant, so that means the accountants PI cover remains intact.

Here are some tips on how to show you have taken reasonable care:

1. You must supply your adviser with all the information that is relevant, don’t hold back information

2. Check your tax return agrees with the information you supplied

3. Ask about entries you don’t understand and keep records of the answers, you don’t need to become an expert you just need to keep notes

There are cases where reasonable care hasn’t been a successful defence for example Mr Waseem Shakoor v HMRC [2012] highlight by www.rossmartin.co.uk as they point out in the this case the taxpayer didn’t follow the the 3 steps above and it was commented at the Tribunal that this was:

“a case of shutting one’s eyes to what either was or ought reasonably to have been seen as incorrect advice – if, indeed, any such advice was actually given –a matter upon which we entertain significant doubt.”

steve@bicknells.net

 

Pay Day by Pay Day Tax Relief

Pay Day by Pay Day Tax Relief also know as Pay Day Relief Models have been used by Umbrella Companies and Employment Businesses but I have no doubt other business have used them too.

Basically the employer applies for Dispensations for Expenses and then without a valid employee claim reduces the employees pay to cut PAYE and NI costs.

There is a great example to be found on the Ross Martin website

http://www.rossmartin.co.uk/index.php/employers/employee-expenses/957-dispensations-agencies-and-umbrella-companies

HMRC issued a further statement in August

http://www.hmrc.gov.uk/news/news290812.htm

Its worth reading to makesure your procedures are HMRC Compliant

steve@bicknells.net

When the HMRC inspector visits get some extra help

HMRC campaigns and task forces are on going and Compliance checks are becoming common.

So its worth knowing that you can appoint an extra advisor to help you answer the inspectors questions, its quick and easy to to arrange using this link

http://www.hmrc.gov.uk/forms/Comp1.pdf

Its a temporary authorisation that does not cancel or amend permanent authorisations ie your normal advisers/accountants

HMRC have also issued new Fact Sheets for Compliance Checks and Penalties

http://www.hmrc.gov.uk/compliance/factsheets.htm

Sometimes we all need a little help and specialist advice can be invaluable

steve@bicknells.net

New Case Law on Limitation of Liability

This case involves a Project Manager who tried to limit his liability on a Construction Project

http://www.bailii.org/ew/cases/EWHC/TCC/2012/2137.html

The Trustees of Ampleforth Abbey Trust v Turner & Townsend Project Management Ltd [2012] EWHC 2137 (TCC)

In summary the dispute was between the Project Manager and the employer over the building of new boarding accomodation the quality of work was not disputed but there were delays.

The Employer claimed that if the Project Manager had acted with care and skill, it would have ensured the Contractor execute the building contract (rather than letters of intent) and that would have produced a more advantageous outcome in the dispute with the Contractor for delay, as the Contractor would have been liable for liquidated damages.

When submitting its fee proposal for this project, the Project Manager attached its standard terms and conditions, including a limitation of liability which had not formed part of the Project Manager’s appointment on two earlier projects at the college.  A limitation on liability incorporated into the Project Manager’s retainer, on this third project was found to be unenforceable as it did not meet the requirement of “reasonableness” as set out in the Unfair Contract Terms Act (UCTA) 1977.

Had the limitation been enforceable, the Project Manager’s liability would have been limited to the amount of its fee, which totalled £111,321. The Employer was instead awarded damages of £226,667.

The case has been circulate and written up by Law Now

http://www.law-now.com/DirectMail/%7B2E6BA698-284E-44D6-B906-CBA2DE28F3C8%7D_profapptmpfsept12.htm

Well worth a read
steve@bicknells.net

Finding a new Retail Unit Tenant

The Salvation Army have been running a charity shop from 695-697 Christchurch Road Boscombe since the 1970’s but earlier this year they decided to end their lease and moved out in August. Its a double shop unit, lots of space, toilets and an office. The Salvation Army have been an absolutely brilliant tenant always helpful and excellent payers.

We are using Nettleship Sawyer (Steve Chiari) steve@nettsawyer.co.uk to market the property, we are are happy to give a short lease or a long lease, on a long lease we would agree to a rent free period and break clauses or to refit the unit.

What would you do to market a Retail Unit like this? Do you know any one that would like a shop?

steve@bicknells.net