Earlier this month, the Government announced a new COVID-19 aid measure aimed at businesses who are required to close as a result of local lockdowns. In light of recent outbreaks of coronavirus, local lockdowns and restrictions have been introduced in high incidence areas. As a result of these new rules, some businesses (e.g. hospitality venues) will be restricted in the services that they can offer and may be required to shut their doors. Going forward, where a business is forced to temporarily close due to local lockdowns or targeted restrictions, they can make a claim to receive a grant of up to £1,500 per property every three weeks. Each payment will be made for a 3-week lockdown period, with each 3-week lockdown period triggerin...

In our previous article Protect & Thrive - Asset Protection & Holding Companies (30 March 2020) we looked at the benefits of inserting a 100% parent company above a trading subsidiary. But what happens when a group decides to simplify and rationalise its structure instead? This article focuses on situations where there are a number of holding companies above one or more trading companies and looks at the reasons why a group may choose to streamline its structure and the different options available. Benefits of a Simpler Structure A group structure may have arisen as a result of one or more management buy-outs and/or capital reduction demergers, rather than a direct conscious choice by the directors. Each company is required ...

It is common for business/financial decisions to be guided by the tax treatment of the transaction. However, in light of the tax legislation's complexity taxpayers may seek advance assurance before the event takes place to guarantee that the expected tax implications will indeed apply. In light of this, it is possible to write to HMRC to request advance clearance of the tax treatment of certain transactions. The tax legislation provides for clearances for certain arrangements (i.e. statutory clearances), and HMRC also provides a non-statutory clearance service for areas where the rules do not otherwise provide for it. The most common transactions that we as a firm seek clearance from HMRC include: Share-for-share exchanges Pu...

Many businesses have carried out new activities during the ongoing Coronavirus pandemic or alternatively were forced to temporarily suspend all trading activities. In light of the above, HMRC have recently updated the section in their Business Income Manual which relates to ‘Crisis-driven changes to trading activity’ to now cover the potential specific impacts of the Coronavirus pandemic on trading activities. This blog will cover the main changes: 1. New Trading Activities During COVID-19 & Lockdown When a business carries out an entirely new activity which is completely unrelated to its previous activities, then this will usually be treated as the commencement of a separate trade. However, if a business starts carry...

In these uncertain economic times, as a business owner you may feel that your company cannot continue to trade; your company may be on the brink of being forced into compulsory liquidation by your creditors or you may have identified that your company is insolvent and unfortunately does not have a future. Alternatively, you might be considering retiring early or taking up employment elsewhere. In any case, closing down your company may be an imminent reality. This blog will look at three different options available for doing so and the tax implications of each of these. 1. Creditors’ Voluntary Liquidation (“CVL”)   A company is usually placed into CVL when it is insolvent or about to become insolvent and the dire...

HMRC have announced temporary changes to to the time limit and rules for notifying an option to tax for VAT on land and buildings. Current Time Limit Normally, HMRC will need to be notified of an option to tax within 30 days of opting to tax the property. This can be done by either: printing and sending the signed notification to HMRC emailing a copy of the signed notification to HMRC The notification need to be signed by a relevant person in the business. Temporary Change to Time Limit Where a decision is made to opt to tax a property between 15 February 2020 and 30 June 2020, the time limit to notify HMRC is 90 days. For an overview of the tax implications of opting to tax a property, please see the following art...

Individuals and businesses with land/buildings may benefit from opting to tax the property for VAT. Furthermore, there may be tax implications to consider when acquiring or selling land/buildings that are already opted to tax. Why Opt to Tax Property? Typically, property that is rented will be exempt from VAT (subject to certain exceptions). To this end, the the owner/business will not charge VAT on rent and will not be able to reclaim VAT on costs. Where the expenses of letting the property are significant, then the VAT on the expenses may represent a material cost. However, owners of commercial (non-residential) property have the option to tax the property, meaning: Output VAT will be chargeable on supplies i.e. rent Inpu...

HMRC have issued detailed guidance regarding how the coronavirus job retention scheme will work in practice. How Much is the Grant? Employers can claim: the lower of; 80% of furloughed workers regular wage, or £2,500 per month associated employer NICs on that subsidised wage, and minimum automatic enrolment employer pension contributions on that subsidised wage This gives a maximum grant per employee of £2,804 per month (£2,500 salary + £245 Employer NIC + £59 automatic enrolment pension contribution). For salaried employees; the employee’s actual salary as at 19 March 2020 (excl. commission and bonuses) should be used to calculate the 80%. However, originally the amount needed to be calculated using the emp...

On 26 March 2020, the Government announced a much awaited support package for self-employed individuals and partnership businesses that have suffered a loss of earnings due to COVID-19. Eligible individuals will receive a grant of up to 80% of their average monthly trading profits, up to a cap of £2,500 per month. Initially the scheme was set to run for a 3 month period (March to May). However, as this scheme is designed to match the support given to furloughed individuals, it is thought that it will be extended to end of October to match the extension of the Job Retention Scheme announced by Rishi Sunak on 12 May 2020. So far, only those who work in the construction or manufacturing industry have been encouraged to go back to wor...

Restrictions imposed in light of the coronavirus pandemic have resulted in widespread disruption to travel and business operations. Due to individuals being unable to leave the UK to carry out certain business duties, overseas companies could inadvertently find themselves taxable in the UK. To provide some clarity, HMRC has provided new guidance on how the residence and taxable presence rules will apply to companies with a specific focus on the impact of COVID-19. Company Residence When is a Company UK-Resident? As discussed in our blog Home or Away? Company Residence and CMC (23 October 2019), a company will be resident in the UK if either of these conditions are met: The company was incorporated in the UK; or The centr...