Register of people with significant control

From April 2016, rules are introduced which require companies to keep a register of people with significant control (PSC register). In addition, the details of people with significant control (PSCs) will have to be filed with Companies House from 30 June 2016.

A PSC is defined as an individual that:

  • holds, directly or indirectly, more than 25% of the shares or voting rights in the company; or
  • holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company; or
  • has the right to exercise, or actually exercises, significant influence or control over the company; or
  • where a trust or firm would satisfy any of the above conditions, any individual that has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm.

The details of the individuals which need to be entered on the PSC register include:

  • name and address
  • usual residential address, country of residence and nationality
  • date of birth
  • date when they became a PSC
  • the nature of their control over the company.

Failure to comply with the requirements of the PSC regime could lead to the company or directors, or identified PSCs committing a criminal offence. The company and its directors could face a fine or imprisonment or both.

Further guidance can be found on the Companies House website or please contact us for more guidance in this area.

Companies House

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Pensions Freedom Update

According to HMRC figures over 230,000 people have used the new pension freedoms introduced one year ago and accessed over £4.3 billion in pensions saving.

In April 2015, the government introduced significant pension reforms giving people the ability to access their pensions savings how and when they want. The statistics show that in the first year of these new rules being available, more than 232,000 people have accessed £4.3 billion flexibly from their pension pots.

The Economic Secretary to the Treasury, Harriett Baldwin said:

‘It’s only right that people should have a choice over what they do with their money and in their first year our successful pension freedoms have already given thousands of people access and responsibility over their hard-earned savings.

We will continue to make sure that the pension freedoms work well for everyone, including through working with our partners to ensure consumers are protected and that there is simple information to help people understand their options.

The government has already taken action to ensure the new freedoms work for consumers and that they have the right information to make informed decisions.

It has announced that it will be capping early exit fees, allowing earlier access to Pension Wise guidance, and working with industry to introduce a Pensions Dashboard.

It has also announced that it is extending the popular freedoms even further, giving millions more people the right to sell their annuities if it’s best for them from April 2017.’

Since the pension flexibility rules took effect from 6 April 2015:

  • 232,000 individuals have accessed their money flexibly
  • People have flexibly accessed over £4.3 billion of their own money through 516,000 payments.
  • In the most recent quarter, 74,000 individuals withdrew £820 million. In the previous quarter, 67,000 individuals withdrew £800 million.
  • Figures are taken from information voluntarily reported to HMRC by pension scheme administrators from 6 April 2015 to 31 March 2016. It is not mandatory for scheme administrators to flag these up as pension flexibility payments until April 2016.
  • HMRC statistics cover ‘flexible payments’, which means partial or full withdrawal of the pension pot, taking money from a flexible drawdown account, or buying a flexible annuity.

If you would like advice on the tax implications of pensions freedom please contact us.

Gov.uk Pensions flexibility Gov.uk News

Parking fines ruled not deductible

A tribunal has ruled that security firm G4S cannot reduce its profits for tax purposes by deducting parking fines.

The company, G4S Cash Solutions, tried to reduce their corporation tax bill by approximately £580,000 but the first-tier tribunal has ruled in HMRC’s favour in rejecting the claim for the deduction of the fines.

The company G4S incurred a substantial amount of parking fines usually while delivering consignments of cash over the pavement. The business tried to claim these were a business expense and so could be used to reduce the company’s profits for tax purposes.

The tribunal ruled G4S staff consciously and deliberately decided to break parking restrictions for commercial gain.

The ruling upholds HMRC’s long standing view that fines for breaking the law cannot be used to reduce a tax bill.

HMRC’s Director General of Business Tax, Jim Harra, said:

‘We’ve always said fines incurred for breaking the law are not tax deductible. The tribunal has now established a clear precedent for rejecting any future such claims.’

If you would like advice on calculating your taxable profits and the deductibility of any expenditure please get in touch.

Internet links: Press release Tribunal decision

Cameron and Panama

We don’t do politics either but we found this an enjoyable read from BKL regarding Cameron and his tax affairs

Panama

We don’t do politics. But we do do tax: and it hurts us to see a travesty of the facts reported in the press. So this note is about the “Panama papers” in general and Mr Cameron’s involvement in his late father’s investment fund in particular.

First, on the general point, there are all sorts of reasons for using non-UK vehicles, and they are used by all sorts of people. Some are driven by tax motives; some by a desire for confidentiality; and some by entirely commercial considerations having nothing to do with either. In each case the motive may be entirely innocent and understandable: or it may be less so, shading into criminality. We’re not so naïve as to suppose that Mossack Fonseca don’t number some crooks among their clients. But let’s not tar all users of non-UK arrangements with the same brush – it’s not fair and it’s not sensible.

Second, let’s look specifically at Mr Cameron. The investment which has caused such apparent controversy was not, as you might imagine from the press, a concealed bank account opened to conceal dodgy assets from HMRC. On the contrary, it was an investment in an investment company called Blairmore Holdings Inc. Like many other investment funds it solicited investments on the basis of its prospectus (available here should you be interested). Its prospectus sets out the intention that it should, like very many offshore investment funds, distribute the great bulk of its income to investors whereupon any UK-resident investors become liable to UK taxes. It is simply, in other words, a form of investment vehicle no different from hundreds or thousands of others which have been known and recognised by HMRC for many years and to which a specific well-established taxation code applies. To represent it as anything else is either ill-informed or mischievous.

Finally, when it comes to the fuss about Mrs Cameron’s gift to her son, we don’t know whether to laugh or cry. There is no Gifts Tax in this country because Parliament has not chosen to impose one. The idea that by making a gift Mrs Cameron is avoiding tax is risible. You might just as well say that anyone who spends their money rather than hoarding it is reducing their estate for IHT purposes and is a tax avoider: and that a miser who spends nothing is thereby reducing the amount of VAT he suffers and is equally a tax avoider. This way madness lies.

 

What will the Budget bring for businesses?

With two Budgets in 2015 it does not feel like that long ago since we last had a Budget but the next one is not that far away and will take place on  Wednesday 16 March 2016. Ahead of the Budget the CBI have written to the Chancellor outlining what they would like to see in the Budget proposals.

The CBI emphasise that businesses have suffered sizeable policy costs which impact on their ability to remain competitive. These include the Apprenticeship Levy, the National Living Wage and also pension auto enrolment. They therefore want the government to provide additional tax incentives to promote productivity and the delivery of jobs. Examples would include:

  • new capital allowances for investments in structures and buildings
  • allowing smaller companies claiming research and development tax credits to be able to claim repayments in part payments throughout the year rather than yearly
  • introducing a payroll incentive to help small firms with the costs of hiring high-skilled staff along the lines of the Employment Allowance.

We will keep you informed of pertinent Budget announcements.

CBI

Year end tax planning

With one month to the end of the tax year there is still time to save tax for 2015/16. We have set out some points you may want to consider.

  • Review dividend payment timing – with new dividend tax rates and a £5,000 dividend allowance from 6 April 2016, the timing of dividends could make a difference to the tax charge.
  • Consider company car options – going forward for each tax year the taxable percentage increases 2% for each CO2 emission band and the diesel 3% supplement which was expected to be abolished from April 2016 is now to be retained.
  • Review personal pension contributions to ensure annual allowances are being used effectively as from 6 April 2016 the annual allowance may be tapered for those with incomes over £150,000.
  • Defer capital gains by reinvesting in Enterprise Investment Scheme shares.

Please contact us to discuss your personal situation.

Benefits and expenses – bespoke scale rates

From 6 April 2016 there are a lot of changes to the way in which benefits and expenses are reported to HMRC.

HMRC have set out the maximum tax and NICs free allowances that can be paid by employers to employees for subsistence. Subject to qualifying conditions, the amounts are set out below:

Minimum journey time Maximum amount of meal allowance
5 hours £5
10 hours £10
15 hours £25

Where a meal allowance of £5 or £10 is paid and the qualifying journey in respect of which it is paid lasts beyond 8pm a supplementary rate of £10 can be paid.

Employers may choose to reimburse employees for the actual costs incurred. However where employers wish to use bespoke rates other than those set out above, they will need to apply for approval from HMRC for bespoke rates.

HMRC have issued an online application form to allow employers to request approval for these bespoke amounts. This should state the rate that the employer wishes to pay and also needs to demonstrate that the amount is a reasonable estimate of the amount of expenses actually incurred by the employees.

To establish these amounts, HMRC have confirmed that the employer should carry out a sampling exercise to verify the actual expenses incurred by employees. We would be happy to advise you on the sampling which would need to be carried out for your business.

In addition, employers will need to have a checking system in place which ensures that the payments or reimbursements are only make on occasions where the employee would be entitled to a deduction from their earnings and that the employees have actually incurred and paid the amounts.

Once approval has been given by HMRC, they will issue an approval notice which sets out the date from which the approval is given and what expenses are covered. It will also state the date when the approval notice ends which will be no later than five years from the start date.

Please do get in touch if you would like help with benefits and expense reporting or agreeing Bespoke rates.

GOV.UK HMRC