Monthly Archives: December 2014

More Tax Blows for Solicitors

HMRC image for future blog

It’s been a tough few months for some solicitors.

It started with the crackdown from April on Limited Liability Partnerships which introduced tough new rules meaning some LLP members have to be taxed as employees and removed the tax benefits available from having complex structures involving companies and LLPs.

More recently, George Osborne’s Autumn Statement included measures to significantly reduce the tax benefits of incorporation.  The measures, which remove the benefit of the 10% tax rate from Entrepreneurs’ Relief on the sale of goodwill to a company controlled by the former partners, are likely to have an impact on any professional practices considering incorporation.

Incorporation has been an increasingly attractive route for solicitors and many firms will now need to pause and rethink their strategy.  In some cases, it is still the best option for both tax and commercial reasons.  Others, however, now need to go back to the drawing board.

Following this, HMRC have now launched their Solicitors’ Tax Campaign, the latest in a series of targeted campaigns to tackle tax avoidance with a time-limited disclosure opportunity.  The campaign is focused on the legal profession and will see HMRC actively targeting lawyers in an attempt to find undisclosed income and underpaid tax.

Any members of the legal profession who are aware or concerned that their previous tax returns have been less than complete should take advice immediately with a view to using this opportunity to disclose and pay tax now with low penalties, rather than risk facing much tougher penalties later on if HMRC discover the omissions.

Whilst this will not affect most firms who have paid the right amount of tax, anyone who suspects they may have some income to disclose or additional tax to pay should seek advice now.

For more information, please contact Jane Parry at jane.parry@pmm.co.uk or call 01254 679131 to speak to our tax team.

Improving Blackburn with Darwen by Skill and Hard Work

prosperity blog

On Tuesday 18th November, PM+M Corporate Services Partner David Gorton attended A Plan for Prosperity held at Accrol, which laid down Blackburn with Darwen’s plan for the next six years. With 27 priorities identified in total, over 100 attendees addressed issues including infrastructure and housing, business investment and innovation, employability, quality of life and image and marketing. Here’s what David had to say about the event:

“It was great to see a rational, achievable plan for improving Blackburn.

A legal requirement of auditors is being professionally sceptical and this comes very easily to me.  I am sceptical of bureaucracy (whether large corporate, central government or local government), I am sceptical of anyone self-important and I am particularly sceptical of pompous plans where bureaucracy combines with self-importance to generate bland nonsense.

I was sceptical of the launch of the Plan for Prosperity, an event co-hosted by the Blackburn with Darwen Local Strategic Partnership, Blackburn with Darwen Borough Council and the Hive business network.

Confounding my scepticism, it was an event produced by a lot of skill and hard work. It ran on time, it included focused and interesting business presentations and it briefly and impressively explained the background to and the key features of a competent plan for the borough’s future.

The plan builds on the great businesses founded in the borough and targets creating more of these to push through wider improvements.  Real priorities were identified and pushed by presenters in ways which made good sense and struck a chord across the diverse audience.

Putting improving the image of Blackburn as a key priority is a welcome acceptance of reality, as is the need to provide housing of a type which people at all levels of society want to live in.  There were also realistic targets for increasing commercial property availability, improving transport and driving up the number of jobs created in the borough.

Inevitably, in parts the plan was a bit “motherhood and apple pie” – priorities such as “longer life expectancy”, “more residents in work” and “more people living and working in the borough” are bland.  It’s hard to see how soft but important matters can be targeted much better.

The real issue noted during presentations (and afterwards) is the challenge of linking up education and employment – governments for years treated exam qualifications as equivalent to being fit for employment, despite the message from business of all sizes is that this becomes less true every year. I think that the message from schools is that the central focus on results and league tables makes flexing school activities for local employment needs really difficult.

It was striking that of the 10 high schools in the borough, only 1 head teacher attended the presentation – I think the employability part of the plan may be the most challenging!”

Following the event, Blackburn with Darwen Council and HIVE have launched the 2014 Business Survey. How has 2014 been for you as a business in Blackburn with Darwen? What does 2015 hold? Please take a few minutes to complete the survey and have your say: https://www.snapsurveys.com/wh/s.asp?k=141509808219

Jane Parry, PM+M Tax Partner, qualifies as a Trusts and Estates Practitioner

Jane ParryCongratulations are due to Jane Parry (PM+M Tax Partner) who has recently qualified as a Trusts and Estates Practitioner. The Society of Trust and Estate Practitioners (STEP) qualification is formal recognition for professionals advising on trusts and inheritance tax. The STEP qualification is cross professional and incorporates both the legal and accounting aspects of trusts and inheritance tax.

Speaking of her achievement, Jane described the process as “tough” but was delighted to have achieved the required standard for such a recognised professional body. “Whilst the process took a while, I have now consolidated my expertise in the field and I am looking forward to being able to pass this knowledge on to our clients”.

Well done Jane!

The Pensions Regulator Strikes Back

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Earlier this month The Pensions Regulator released its quarterly statement, outlining the actions they have taken from July to September to ensure employers are complying with their auto enrolment obligations.

Despite auto enrolment having come into effect in October 2012, this is the first time we have seen the Regulator actually take a stand and issue its first set of Fixed Penalty Notices.

One could argue that 3 repeat offenders out of the 177 slapped wrists to date is pretty good going, but the gentle approach the Regulator has been taking looks set to be coming to an end, especially now as we head towards the smaller end of the scale.

From next April, businesses with less than 50 employees are going to be reaching their staging dates. It is a growing concern that many of these 1.25 million firms yet to stage are wholly unprepared and unaware of the obligations they have to meet within at least 3 months of their staging date. This was further cemented by the research the Regulator had conducted back in September, showing that 1 in 5 SMEs would not seek advice when choosing a pension scheme, while 1 in 10 were unaware of how to even select a scheme.

A certain level of hand-holding will be given by the Regulator for these firms as they take their first steps. However, with many providers becoming picky about the schemes that they take on and the Regulator are starting to issue compliance notices and penalties, it has never been so important for an employer to plan in advance.

For further information on pensions and auto enrolment please contact Antony Keen on antony.keen@pmm.co.uk or call 01254 679131.

VIDEO: Autumn Statement 2014

Chancellor George Osborne delivered his Autumn Statement at 12:30 yesterday to a mixed response.  As always, there will be some winners and some losers from the measures announced.  On some of them, the details will only emerge as consultation processes progress. In the following video, Stephen Anderson (Managing Partner) and Jane Parry (Tax Partner) deliver their key takeaway messages from the Chancellor’s speech.

Our full Autumn Statement summary is available to download here and the full list of key points is detailed below:

Measures affecting business

  • The main rate of corporation tax falls to 20% on 1 April 2015 as planned.
  • The Annual Investment Allowance for investment in plant and machinery remains at £500,000 until 31 December 2015.
  • The R&D tax credit deduction for small and medium sized companies increases from 225% to 230% from April and the large company above the line deduction increases from 10% to11%.
  • Less good R&D news is that the cost of materials incorporated into products that are sold will not be eligible for inclusion in R&D claims after 1 April 2015.
  • The Patent Box, which provides a reduced rate of corporation tax on profits from qualifying patents, is to be phased out starting in 2016 and ending altogether in 2021.  No new claimants will be allowed to join the scheme after June 2016.
  • Entrepreneurs relief, which allows a 10% capital gains tax rate, will no longer be available on the sale of goodwill when incorporating a business.
  • A new 25% “Google tax” is to be introduced to tax multinational businesses diverting profits from the UK.
  • A package of investment in the Northern Powerhouse was announced including transport and connectivity improvements, research facilities and a new Sovereign Wealth Fund to reinvest fracking cash in the North.
  • £500m extra funding for the Funds For Lending/Enterprise Finance Guarantee scheme to support bank lending to businesses and £400m to support venture capital investment in businesses.
  • An increase in export funding of £45m to encourage development of export markets in Africa, Asia and South America.
  • A reform of business rates – results to be announced in 2016.
  • From April there will be no NIC cost of employing people aged under 21, or under 25 if they are apprentices.

Measures affecting individuals and trusts

  • The personal tax allowance increases to £10,600 on 6 April.
  • No changes to income tax rates.
  • The 40% tax threshold increases to £42,385.
  • There is to be a complete overhaul of the employment expenses and benefits rules and a removal of the distinction between employees earning above and below £8,500 from April 2016.
  • Universal credits to be rolled out nationwide.
  • The Annual Tax on Enveloped Dwellings (ATED) charge which taxes residential properties held in companies currently applies to properties worth £2m or more.  That threshold drops to £1m in April 2015 and £500,000 in April 2016.
  • The remittance basis charge applying to non-domiciled individuals living in the UK is to increase.
  • Non-residents owning UK residential property are to be made subject to capital gains tax from April 2015.
  • The major overhaul of trusts and introduction of the Settlement Nil Rate Band has been stopped.  Instead measures targeted at tax avoidance using multiple trusts are to be introduced.
  • New rules affecting 10 year charges for trusts and the treatment of accumulated income are to be introduced as planned.
  • Stamp duty land tax on residential properties is substantially amended with immediate effect so that rates apply in bands, rather than the current rate thresholds which apply one rate to the whole property value.

Pensions and investments

  • The major pension reforms announced earlier this year are to be introduced as planned in April 2015.
  • The current death tax of 55% is to be abolished and pension pots will be able to be passed to family members tax efficiently.
  • The beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity will be able to receive any future payments under such policies tax free.
  • Pension savers will have much more flexibility in how and when to access their pension funds.
  • ISA income tax beneficial status will be preserved when ISAs pass to a surviving spouse.

If you think you may be affected by any of the above, please give us a call on 01254 679131 and we will be more than happy to assist or email info@pmm.co.uk.

Angel Investment Scheme Arrives in the North West

investmentThere is increasing confidence being felt by many business owners and advisers in the North West and it is therefore perhaps of little surprise that last week witnessed the launch of a new North West focussed angel investment scheme. The Co Angel Investment service is the first of its type in the North of England and is a joint initiative by Business Finance Solutions and the British Business Bank.

The plan is for syndicates of business angels to invest alongside the British Business Bank. This will provide an alternative funding source for businesses looking to raise finance, particularly those requiring growth funding which may not be readily available. An increase in the sources of finance that are available to businesses generates more options and leads to more opportunities being created for connected parties.

Read more on this story here.

If you would like to find out more information on possible finance options, please email Tim Mills at tim.mills@pmm.co.uk or call 01254 679131.

VIDEO: PM+M Quiz for Derian House Children’s Hospice

Derian House is renowned throughout Lancashire as being the forefront of children’s palliative and respite care. Derian House currently support 300 families who have a child with a life shortening illness, and a further 200 who are receiving bereavement support. The support that Derian House provide is vital for so many children and families and they provide a range of care and support services to meet the individual needs.

We have recently had an influx of new team members starting at PM+M and hosting a quiz evening for our professional network was a great way to get together, whilst having some fun raising money for a fantastic cause.

PM+M raised a total of £400 for Derian House Children’s Hospice, Chorley. Woodcocks Solicitors took the trophy home on the night with an impressive 86.5 points, with Southern Solicitors following as very worthy runners up. We would like to thank all attendees for their generosity.