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VAT on Property

Through our VAT on Property Service, we can help you to save and reclaim VAT on your property.

How can we help?

We can:

  • Ensure that you are paying the correct amount of VAT.
  • Assist you with reclaiming VAT that you have already paid from HMRC.
  • Explain the VAT implications of your plans, ensuring that you are making the most VAT efficient decisions for your property.
  • And more!

When might seeking assistance from us be beneficial for you?

The main areas where we may be able to provide valuable assistance and save you money are as follows:

Identifying the correct VAT treatment for your project – We will explain the VAT implications of your potential options so that you can make informed decisions about how to move the project forwards in the best way.
Building and conversion projects – We can help to identify if there is a qualifying conversion into a dwelling that may qualify for the reduced VAT rate of 5%.

Transfer of Going Concern (TOGC) – We can identify whether your transactions meets the TOGC conditions to be outside the scope of VAT, and how the transaction should be executed to ensure the most beneficial VAT treatment.

Opting to Tax (OTT) – We can identify whether opting to tax land and buildings (to allow you to recover VAT on expenses relating to the property) would be beneficial.

Change of intention – If you will no longer make taxable supplies from/of a property, you may face a clawback from HMRC of any input VAT on expenses relating to the property. We can help restructure your business to ensure favourable VAT treatment.

The VAT Self-Build Scheme – If you are planning to build your own new house or convert a non-residential building for yourself or your relative to live in, you may be able to reclaim VAT on specific construction costs.

Other related areas where we may be able to add value include:

  • Property ownership, acquisition, and incorporation (if appropriate).
  • Tax calculations on proposed sales of property and mitigation of SDLT

Why contact us?

We can review your specific circumstances and ensure that you are paying the right amount of VAT, claiming any applicable reliefs and fully understand the VAT implications of your plans, enabling you and your business achieve the best possible results.

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Sale of Business to Third Party

Selling your Company

If you’re selling your company, then the amount of tax you pay can make a significant difference to the money you have in your back pocket to spend or reinvest.

Mitigating and understanding your tax position is therefore vital and this article includes some areas where a difference can be made:-

 

Should you sell the Trade and Assets or the company?

This is an important first step in deciding and agreeing with the buyer what will be sold.

Quite often as a vendor you will prefer to sell the shares in the company as there is only one level of tax in doing so.

When you sell the trade and assets, there are two levels of tax to consider if you want the proceeds in your back pocket.  However, a trade and assets sale can sometimes be the only practical way of selling of you have other valuable assets in the company that you want to retain.

Tip – On occasion, it may be possible to demerge any assets you want to keep before selling the trading company

 

Will I Qualify for 10% Tax?

A 10% tax rate is available (on the first £1m of lifetime gains) if you sell shares in your company to someone else.

The 10% rate is available through Business Asset Disposal Relief (BADR).  To qualify :-

– you must have had at least 5% of the shares

-you must have been a director or employee; and

– the company must have been ‘trading’..

for at least the previous two years.

There are pitfalls waiting, so care is imperative here.

 

Complexity with Earn-Outs

This is where things could get tax tricky.

If an earnout is successful, then the potential range of tax payable is between 10% and 48.25%, which is a huge range.

If we structure the earnout with thought then you will have more chance of getting closer to the lower end of that range.  Every case is different and also of importance is establishing whether it is possible (and beneficial) to defer payment of tax on an earn-out right until any monies are received.

 

Loans in and out of the Company

If loans are owned by you to the company, then it should be possible for these to be settled in a tax effective way, if a strategy is agreed with the Buyer.

Other areas to consider are the tax warranties and tax indemnity that the Buyer may ask you to sign, especially if you are selling the company.  Sometimes these can be overly onerous and it can be helpful to have some to assist who understands the workings of tax therefore whether the warranty is necessary.

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Insertion of a Holding Company

Profits developed by a successful business are often reinvested into working capital to continue its growth.

Company owners may also make a decision to capitalise some profit for the longer term, by investing it in tangible fixed assets (plant & machinery property) or acquiring other businesses.  Acquiring capital assets of this nature may also help the business growth or it could be seen as a way of securing its base and increasing profitability in the mid to long term.

If material capital assets are acquired then they are valuable to the company and its shareholders and it is wise to be pro-active in protecting their ownership and value.

The use of a holding company is a relatively straight forward way of protecting a business’ fixed capital base.

Property, plant and machinery and ownership of other businesses can be distributed to a holding company from the existing trading company, so that creditors of the trade can never have a claim over those capital assets.

Tax Status

The transfer of fixed assets from Trade Co to Holding company can be carried out free from tax.

If a holding company is not already in place, then it should be possible to insert one without incurring any tax liabilities.  Although to insert the company free from tax it will be imperative to gain a clearance from HMRC before proceeding.

Consideration of other taxes such as VAT will be important and establishing the Holding Company with its own accounting system and bank account is often a good idea.

If you would like to understand the benefits and practicalities of utilising a holding company for asset protection please call and ask to speak to arrange an initial free consultation with Paul Davison

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Companies House Compliance

Our Accufile service takes the stress and hassle out of filing documents and statements with Companies House, allowing you to focus on your business.

Why choose the Accufile service?

Penalties for late filings have been introduced of up to £1500 for private companies and £7500 for public companies.

Officers of companies can also face prosecution if the company is operating but fails to make submissions to Companies House.

The Accufile service takes the hassle out of filing documents with Companies House – we will prepare and submit the relevant documents for you and keep track of upcoming deadlines, helping you and your business to avoid any late filing penalties.

PD Tax are experienced in providing Companies House compliance services to businesses.

What’s included:

  • Reminders of when accounts, confirmation statements and any other documents are due
  • Submission of your Confirmation Statement
  • Notification of Director/Secretary changes
  • Notification of a change of address of your registered office and of your company records
  • Notification of a change of company name
  • Notification of a return of an allotment of shares (excluding non-cash)
  • Recording dividends
  • And maintenance of the statutory books

Find out more today and call 0113 887 8432 or email laura.b@pd-tax.co.uk

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What is the Health Check?

As a business owner, you will invest a significant amount of time and money into ensuring the continued success of the business, which undoubtedly can leave little time for understanding the business’s tax position. UK tax laws are an everchanging maze, and it can be difficult to keep abreast of the changes affecting your business.

At PD Tax, we are committed to fully understanding your business, its tax needs to help you to ensure that you are fully tax compliant, and to assist you in identifying areas of risk which may have adverse effects on you/your business and tax planning going forward.

The Health Check will allow you and your business to put appropriate planning in place to tackle such risks, and provide peace of mind that the business is compliant, and operating tax efficiently. We aim to ensure that you are making full use of relevant reliefs and allowances, considering the historic tax position, and the future objectives of the business.

Choose from 3 service offerings as a part of the Health Check:

Bronze Review – from £1,500

Silver Review – from £2,500

Gold Review – from £5,000

Further details on what is included under each review may be found below.

To get started, please click the button below to complete our short questionnaire, and put yourself on the road to peace of mind. We will contact you within 2 working days to discuss your business/company in more detail, and will follow up with an in-depth synopsis of each review, and tailored fees for your business.

Areas Covered

  1. Review of remuneration package
  2. Business Expenses and Tax Free Benefits
  3. CIS (if applicable)
  4. Follow up meeting
  5. Call 6 months later

Areas Covered

  1. VAT compliance
    • claiming VAT on expenses
    • VAT records and returns
    • flat rate scheme/cash accounting scheme
    • capital goods scheme
  2. Review of remuneration package
  3. Business Expenses and Tax Free Benefits
  4. CIS (if applicable)
  5. Review of Capital Allowances
  6. PAYE Compliance Review
  7. Follow up meeting
  8. Meeting 6 months later

Areas Covered

  1. VAT compliance
    • claiming VAT on expenses
    • VAT records and returns
    • flat rate scheme/cash accounting scheme
    • capital goods scheme
  2. Review of remuneration package
  3. Business Expenses and Tax Free Benefits
  4. CIS (if applicable)
  5. Review of Capital Allowances
  6. PAYE Compliance Review
  7. Employee share schemes (EMI/CSOP)
  8. R&D Tax Credits (if applicable)
  9. Miscellaneous Items (eligibility for ER, BPR, review of SH agreements, business activities)
  10. Follow up meeting
  11. 2 further meetings at 6 and 12 months

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Business Asset Disposal Relief (formerly Entrepreneurs' Relief)

Business Asset Disposal Relief is a valuable capital gains tax relief which may be available when you sell all or part of your business.

Provided that the relevant conditions are met, capital gains tax will be charged at a rate of 10% on the entirety of the gain.

As this is such a precious relief for entrepreneurs, PD Tax recommend that regular reviews are undertaken to ensure that you and your business meet the necessary requirements. We can advise you on whether you qualify for the relief, and if not, recommend steps you can take to ensure that you are eligible on a future sale.

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Roll-Over Relief

When you sell a business asset and reinvest the proceeds in acquiring another business asset, Roll-Over Relief may be available to defer the payment of capital gains tax.

In order to be eligible for the relief, the asset must be used for the purposes of the business and qualifying assets include land and buildings, goodwill, and fixed plant and machinery.

If the proceeds are not fully reinvested in a new asset, then Roll-Over Relief will be restricted.

The rules differ for for non-depreciating assets (e.g. land/property) and depreciating assets (e.g. leases of 60 years or less, plant and machinery), therefore expert advice should be taken to ensure that the correct tax treatment is applied.

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Gift Hold-Over Relief

A gift is a disposal for capital gains tax purposes. Therefore, you may have tax to pay on the gift of an asset even if you did not receive any money for it.

In light of this, Gift Hold-Over Relief is available in certain situations to roll over the gain against the base cost of the gift, effectively transferring the gain to the person who received the gift.

It is important to note that not all gifts qualify for Gift Hold-Over Relief; only qualifying business assets and gifts into trust will be eligible for the relief.

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Incorporation Relief

On the incorporation of a sole trade or partnership to a company, the transfer of assets (e.g. land/property, goodwill) may give rise to a chargeable gain on which capital gains tax may be charged.

Where all the assets of the business are transferred to the company in exchange for shares, then Incorporation Relief may be available to reduce the capital gain to £nil.

The effect of the relief is to “roll-over” the gain on incorporation into the base cost of the shares, effectively deferring the gain until the shares are sold at a later date.

In some circumstances it may be beneficial for the taxpayer to sell the assets to the company in part for a loan and in part for shares, however this will in turn restrict Incorporation Relief available.

With this in mind, expert advice should be taken prior to incorporation to ensure that is structured in the most tax efficient manner.

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Tax Partner Service

Practical, expert tax advice is just a phone call away

As an accountant, your focus is on helping your clients thrive by supporting them to reach their goals, whether that be growing their business or planning for the future.

By signing up to our Tax Partner Service, you will have access to an experienced Chartered Tax Advisor who can assist with tax queries so you can concentrate on what you do best – developing your clients’ businesses and helping them prosper.

Our consultants have years of experience with advising clients on a practical level and are therefore just as familiar with the processes and procedures as they are with the relevant tax principles and legislation.

With our Tax Partner Service, you will benefit from:

  • Immediate access to an experienced Chartered Tax Advisor
  • Quick turnaround of work
  • Tax knowledge with a practical application
  • A reduced charge-out rate

So whether you require assistance with a tax matter outside your comfort zone or just chatting through your ideas with another professional, our Tax Partners can help!

Fee Structure

With our Tax Partner Service, you can benefit from practical, straight-talking tax advice at a discounted rate.

Our bespoke service is tailored to your business’s individual needs. However, to give you an idea of how you can save by signing up today we have provided some examples below:

Please note that the above figures are for illustrative purposes only, and the monthly fee and number of hours provided will be determined on the facts of each case.

To find out more about the Tax Partner Service and to receive your bespoke plan, please call us on 0113 887 8432 or email Paul Davison at paul@pd-tax.co.uk