Archive for May, 2019

Brexit – don\’t take your eye off this ball

Wednesday, May 29th, 2019

There is no doubt that many of us are heartily tired of the drawn-out Brexit debate, and yet we should not ignore this topic completely.

Opinion seems to be hardening for the so-called “hard” Brexit: where we leave at the end of October 2019 with no agreement. Ignoring the political arguments, this would have an impact if you are in business as none of us will be isolated from the changes to our trading terms with the EU after this date.

Businesses that trade directly with EU customers and or suppliers will hopefully have contingency planning in hand based on a thorough risk assessment. This article does not have space to consider the planning options in detail but affected importers and exporters should get their ducks in a row as a matter of some urgency.

And even if you do not trade directly with the EU, your UK suppliers or UK customers may do so, and this may have a direct impact on your business if supply chains are disrupted or prices are increased to account for tariff changes.

It is instructive that the only detailed advice offered by government is to outline what we should do if a “no-deal” scenario occurs. In the conclusion to a publication published December 2018, the Department for Exiting the European Union said:

Our communication with businesses and the wider public about a no deal scenario will increase as we approach our exit from the EU.

As a responsible government we have spent more than two years carrying out extensive preparations for all scenarios, including no deal.

We recommend businesses now also ensure they are prepared and enact their own no deal plans.

The full report “UK government’s preparations for a “no deal” scenario” can be viewed online at https://www.gov.uk/government/publications/uk-governments-preparations-for-a-no-deal-scenario/uk-governments-preparations-for-a-no-deal-scenario#conclusion.

If you need help to revisit this issue and refresh your contingency planning, please call asap. The clock is very definitely ticking.

Adventures in trade

Tuesday, May 28th, 2019

Readers are reminded that if you profit from a hobby – sell what you produce on a regular basis – you may attract the attention of HMRC.

If your annual sales (income before any costs are deducted) are below £1,000 you will pay no tax as you can claim exemption under the tax-free trading income allowance. If your annual gross income exceeds £1,000 you may need to submit details to HMRC by filing a tax return.

If you doubt HMRC’s resolve in tracking down and enforcing their interest in miscellaneous income streams, consider the plight of tax evading dog breeders outlined in a recent HMRC press release. They said:

HMRC set up the taskforce in October 2015 after discussions with animal welfare groups suggested tens of thousands of puppies were being reared in unregulated conditions and sold illicitly every year.

Officers uncovered fraudsters selling puppies on a mass scale and for a huge profit, but because of the underground nature of the activity – failing to declare their sales.

Using a full range of civil and criminal enforcement powers, HMRC has recovered £5,393,035 in lost taxes from 257 separate cases since the formation of the taskforce.

Of those breeders and traders targeted, they include:

  • two unconnected puppy breeders in the west of Scotland who were handed tax bills of £425,000 and £337,000
  • a puppy breeder in the Midlands who was former Crufts judge, given a £185,000 bill
  • a dealer in Northern Ireland told to pay £185,000 in tax
  • a Somerset puppy breeder was given a £114,000 bill
  • a puppy dealer in the east of Scotland was handed a tax bill in excess of £400,000
  • a Swansea puppy breeder was given a £110,000 tax bill

Several arrests have been made in relation to the taskforce’s work over the past four years.

Whilst these cases involve trading on a large scale, it does demonstrate HMRC’s resolve to bring income from “hobby” type trades into tax. A further example would be buying and selling goods on the internet on a regular basis.

If you have recurring income from sources that are presently not reported to HMRC, and you want to check and see if you need to advise HMRC, please call for more information. It may not be necessary to make a return, but the criteria that determine when tax needs to be paid are fairly involved and will vary on a case by case basis.

Keeping an eye on the competition

Thursday, May 23rd, 2019

If your competitor is a company, there is quite a lot of information you can obtain free of charge. For example, from the Gov.uk website you can obtain the following details:

  • company information, for example registered address and date of incorporation
  • current and resigned officers
  • document images
  • mortgage charge data
  • previous company names
  • insolvency information

You can also set up free email alerts to tell you when a company updates its details (for example, a change of director or address).

You should also make a point of reviewing your competitors’ websites on a periodic basis as this will keep you up-to-date with changes to their service or products including pricing and innovative ideas that might influence your product development planning.

Create a list of sites and factor in your observations into your planning meetings.

When did you last survey your existing customers?

It makes sense to survey your customers from time to time to get objective feedback on your current service levels. This can be invaluable data to factor into your systems development.

In particular, you should tease out the details of any factors that are likely to affect their future buying decisions:

  • economic concerns,
  • price sensitivity,
  • redundancy, are your products keeping pace with those offered by competitors,
  • discounts,
  • buying experience,
  • after sales service,
  • loyalty bonuses and so on.

Offer a gift or other inducement to participate in the survey and act on the results.

Our competitors can be a rich source of ideas for our own business development as well as the strategies innovated from within our organisations. Keeping an eye on the competition should be part of your planning options. Ignore them at your peril.

The new State Pension

Tuesday, May 21st, 2019

Prior to April 2016, men born before 6 April 1951 and women born before 6 April 1953, qualified for a basic State Pension and an Additional State Pension.

If you were born after these dates you will qualify for the New State Pension and will no longer be eligible for the Additional State Pension (unless you inherit the Additional State Pension of your partner).

The remainder of this post set out details of the New State Pension (NSP). The basics:

  • The earliest you can claim the NSP is when you reach the relevant State Pension Age.
  • You will need to have paid at least 10 years National Insurance Contributions (NICs) to be eligible for any NSP payment.
  • You will need 35 years of NICs to qualify for the full NSP.
  • The NSP is currently £168.40 per week.

Check your pension record

You can apply online for a Pensions Statement that sets out the number of years contributions you have already made.

Claiming your pension

You have to claim your NSP, there is no automatic entitlement. You can claim online, by phone, by downloading a pension claim form or following a separate claims procedure if you live abroad.

Pension planning

Clearly, if a State Pension is your only income after you reach the State Retirement Age, this will be unlikely to cover the basics and you will need additional income or savings to make up the difference.

And the earlier you start this planning process, the more chance you have of achieving a reasonable income after retirement.

Action plan

We recommend that all readers consider the following action plan:

  1. Apply for a State Pension Statement that clearly sets out the number of years NIC contributions you have made and those you still need to make to qualify for the NSP.
  2. Organise a formal planning meeting with your pension’s advisor to ensure that you are keeping pace with your need to supplement the NSP with a private pension after retirement.

Time flies. Don’t leave this important aspect of your personal financial wellbeing until it is too late to create a reasonable pension fund, from State or private sources.

Tax-free gains 2019-20

Thursday, May 16th, 2019

There are still a number of sales (disposals) that a UK taxpayer can make that will not incur a charge to the UK’s Capital Gains Tax. For most of us they are limited in extent, after all legislators have had plenty of time to close any favourable loop-holes.

For most of us, the major tax-free gain remains the sale of our home, but even this generous relief can be compromised. For example, readers who have let their home for a period should take professional advice to see if this will trigger a CGT liability when they sell.

Also, for the tax year 2019-20, individuals are entitled to make chargeable gains of up to £12,000 and pay no CGT.

If you jointly own a chargeable item, you would both be entitled to this £12,000 exemption and the £6,000 personal possession relief highlighted below.

Other tax-free gains include:

  • personal possessions as long as the proceeds do not exceed £6,000
  • your car, unless used in a business
  • anything with a limited lifespan, unless used in your business
  • ISA’s

Additionally, any gift to your spouse or civil partner, that would usually be subject to a CGT charge, is free of any CGT liability.

Even if none of the above exemptions apply in your circumstances there are a considerable number of additional reliefs you may be able to claim to reduce the impact of any CGT payable. If you are likely to be making disposals it is well worth the investment to see how you can quite legally reduce any impact of CGT.

A final note: take professional advice BEFORE you make the disposal. Seeking advice after disposal is rather like waiting for a bus after the last service has departed.

 

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