News

HMRC to review partner status

The budget informed us that HMRC has the intention to scrutinise partnership agreements.

Partnerships are most popular within professional service industries such as lawyers and accountants. The main reason being is to avoid the income tax effects of issuing shares to employees wanting to take part in the business, avoid problems where the shareholders wish to exit the business, additional paperwork involved in share schemes and their restrictions.

Within professional services, the business is only as good as its people. Fancy marketing may bring in clients but unless you can deliver and provide the high quality service, they will leave damaging the goodwill of the firm. The main cost to these businesses is understandably the employees themselves.

With the introduction of Limited Liability Partnerships, this has opened up further opportunities to control and minimise this cost. One opportunity is to make employees partners of a firm. The benefits here being the removal of employment rights, the elimination of jobs taxes and the limited status ensure no other partner can suffer losses due to other partners actions.

HMRC will be looking at partnership arrangements to ensure they do not disguise employment relationships along with other common tax reducing techniques.

Please click HERE for further reading.

VAT Investigations increase by 50%

VAT refunds have increased significantly over the last few years leading to HMRC to focus their investigations in this area of tax.

This is ultimately to detect and prevent fraudulent activity. This does however mean that legitimate businesses who are relying on quick access to these funds for working capital purposes may suffer.

Businesses who are not members of their accountants Tax Investigation Service will not only struggle with the delay in obtaining funds but will also have to pay the accountants fees for representing them and dealing with the Inspector of Taxes.

For more details, see the full article HERE.

For protection against unexpected fees resulting from Tax Investigations, see our Tax Investigation Service detailed in the Financial Planning area of the site or click HERE.

Budget Summary 2013

The Budget has now been declared and our summary is available for download in the 'Tax Zone' area of the website.

Whatever your views on the budget, you will find our analysis an interesting read with planning opportunities throughout.

Feel free to post us any questions you may have or alternatively request a call back.

Please provide us with any feedback. We are continuously looking for ways to improve and to bring you greater value.

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