Save Thousands with Research and Development Tax Relief

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Graphic Design Work by Yemi Davis

Graphic Design Work by Yemi Davis

Research and Development (R&D) Tax relief is designed to support companies that work on innovative projects in science and technology.

 

Projects where R&D is claimable

In order for a project to qualify for R&D relief, the project must be aimed at making an advance in science or technology. Social sciences like economics are not included in this relief.

 

What you need to explain to claim the relief

·      That you were looking for an advance in the field

·      Show that there was uncertainty

·      Explain how you tried to overcome the uncertainty

·      Show that a professional in this field couldn’t easily work this out

 

 

Types of Research and Development relief:

 

Small and medium sized enterprises R&D Relief


If you are an SME with less that 500 staff and a turnover of under £100mil you are eligible to claim SME R&D Relief.

You may need to include linked companies and partnerships when you work out if you’re a SME.

What you’re entitled to under SME R&D

As a company claiming SME R&D relief you are entitled to:

·      Deduct an extra 130% of your qualifying costs from your yearly profit, as well as the normal 100% deduction, (making a total of 230% deduction)

·      Claim a tax credit if your company is making a loss, worth up to 14.5% of the surrenderable loss.

 

Research and Development Expenditure Credit (RDEC)


This replaces the relief previously available under the large company scheme .

The credit is calculated at 11% of your company’s qualifying R&D expenditure. The credit is taxable. Depending on whether your company is making a profit or loss, the credit may be used to discharge the liability or result in a cash payment.

 

Costs claimable under RDEC:

·      Staff costs

·      Subcontractor costs

·      Consumable items

 

CONTACT US FOR MORE R&D TAX RELIEF ADVICE

HMRC announce they no longer issue SA302s

Since 4th September 2017 HMRC are no longer issuing paper SA302s directly to agents.  SA302s are documents confirming how much tax a person has paid on their earnings, in a given period, once they have filed a tax return.

Before this date agents would have to ring HMRC and request SA302s, which could take up to 2 weeks to come.

Many agents request SA302s, as their client’s lender who will not accept self-serve copies printed from their HMRC online account or commercial software needs them. The case may also be the commercial software does not print. Often many lenders consider SA302s to be the best proof of earnings.

HMRC have been liaising with The Council of Mortgage Lenders and their members to work around their needs and make necessary changes so the lenders will accept self-served copies. A list of the lenders who accept the self-serve copies has been published. HMRC have also been liaising with commercial software companies to ensure their software facilitates printing.

Contact us for expert UK accounting advice

The History of New York Fashion Week: A look back in time

Celebrating the first day of New York Fashion Week with a brief look at the fashion-filled week’s history.

Prior to 1943, Parisian couture dominated the American fashion and press. However, when American journalists couldn’t travel to Paris for Paris Fashion week during World War 2, a fashion week in New York was introduced as a creative compromise.

Read More

BFI London Film Festival: What's to come?

Yesterday, we attended the 61st BFI London Film Festival launch at the ODEON Leicester Square. The 12-day London film festival is a celebration of both established and emerging talent, illustrating the richness of international filmmaking.

Over the next 12-days there will be 28 World Premieres, 9 International Premieres and 34 European Premieres. The 242 programmes screening at the festival include: 46 documentaries, 6 animations, 14 archive restorations and 16 artists’ moving image features.

Each evening will see a headline Gale presentation at the Odeon, just around the corner from our base in Covent Garden.

The Festival takes over screens at 15 venues across the capital, from the West End to Haymarket to Chelsea to much more.

 

Galas

Breath

Breath is the directorial debut of Andy Serkis, on Wednesday 4th October. A live cinecast bring all the excitement to life in Leicester Square.

An inspiring, heart-warming true love story about Robin and Diana Cavendish, an adventurous couple, who refuse to give up in the face of disease.

Call Me By Your Name

Call Me By Your Name marks Luca Guadagnino’s return to London Film Festival with an adaption of André Aciman’s coming-of-age novel.

An American-Italian is enamoured by an American student who comes to study and live with his family. Together they share an unforgettable summer full of music, food, and romance that will forever change them.


The Florida Project

The Festival Gala, in association with Time Out, will feature Sean Baker’s magical and magnificent madcap follow up to Tangerine, which screened at London Film Festival in 2015.

Set all in one summer, the film follows precocious 6-year-old Moonee as she courts mischief and adventure with her ragtag playmates and bonds with her rebellious but caring mother, all while living in the shadows of Disney World.

A Fantastic Woman

A Fantastic Woman returns to the BFI LFF following the success of last year’s inaugural event. A brilliant Sebastián Lelio drama about a transwoman navigating the death of her lover.

 

Stands

To encourage discovery and open the festival up to new audiences the programme is organised in sections:

·      Love

·      Debate

·      Laugh

·      Dare

·      Thrill

·      Cult

·      Journey

·      Creative

·      Family

·      Treasures

·      Expermenta

 

Love

On Chesil Beach

The Love Gala section of LFF marks the European Premiere of Dominic Cooke’s quietly heart-breaking film debut On Chesil Beach.

A drama set in the early 1960s and centred around a young couple their honeymoon.

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Debate

Foxtrot

This years debate gala features Samuel Maoz’s Foxtrot, a film that will encourage and inspire riveting conversation.  Maoz uses his experience as a soldier in the Israeli army for inspirations to the story.

It’s Israeli military like you have never seen it before.

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For more on the BFI London Film Festival follow our blog. If you are a professional in film or the creative arts contact us now for expert advice on your tax return.

Investment options for Canadian Expats

There are a number of pros and cons that Canadian expats must consider when investing in real estate and securities whilst living abroad.

A Canadian non-resident can buy rental profit in Canada and can manager it themselves from abroad or have a property manages. Property managers are generally are in charge of finding tenants, collecting rent, handling repairs and essentially being the landlord. Fees for a property manager can range from one month’s rent to simply find a tenant to 20% of rent collected for more comprehensive property manager.

If your rental property is a short-term residential rental where people rent for less than a month you must collect, remit and report the sales tax depending on the province where your property is located. Rates range depending on the province.

Other investments

Typically, a non-resident is not able to contribute to a Tax-Free Savings Account while abroad. It is likely that a non-resident won’t be able to buy Canadian mutual funds either, however you can invest in Canadian stocks and exchange-traded funds.

 

Contact us for more expert Canadian tax advice

 

UK Film Tax Relief Broken Down

As a team of tax experts for the UK film industry, we are more than familiar with UK Film Tax Relief.

UK Film Tax Relief (FTR) can allow qualifying British films of any budget level to claim a payable cash rebate of up to 25%. The tax relief is capped at 80% of core expenditure, with no budget limit.

Qualifying for UK Film Tax Relief

In order to qualify for UK FTR, films must either pass a cultural test or qualify as an official co-production.

The film must be:

·      Intended for theatrical release

·      Reach a minimum UK spend requirement of 10%

·      Have a UK production expenditure on the of either 80% of total core expenditure or the actual UK core expenditure incurred

 

Minimum spend requirement

A set minimum of 10% costs must be spend on UK qualifying production expenditure.

UK qualifying production expenditure is defined as expenditure incurred on filming activities which take place within the UK, irrespective of the nationality of the persons carrying out the activity.

HM Revenue & Customs’ (HMRC) definition of UK spend introduces the concept of where a good or service is “used or consumed” in the UK. If they are used or consumed in the UK, the expenditure is treated as UK expenditure (under the rules set out in the clauses of the Finance Bill). If they are used or consumed outside the UK, they do not count as UK expenditure.

Further details on the definition of “used or consumed” are available in HMRC’s guidance on Film Tax Relief.

Changes to Canadian Business Tax

Last month, the Government of Canada announced tax changes that will affect tac benefits available to Canadian Business owners operating through private corporations. The tax changes include, but are not limited to:

1.     Introduction of reasonability tests on dividends (and other income payments) to family members (either directly or through a trust);

2.     Limitations on the ability of family members to claim the $835,714 lifetime capital gains exemption (LCGE) on the sale of a business;

3.     Eliminating the ability of minors to claim the LCGE;

4.     Eliminating the ability to multiply the number of LCGE claims by holding shares of the company in a trust and allocating the gain on sale to beneficiaries of the trust (e.g. family members).

On January 1st, 2018 the tax changes will come into play. Although some tax changes aimed at restricting transactions designed to covert what would otherwise be a dividend into a capital gain were put to action from July 18th, last month.

 

Contact us for specialist Canadian Tax Advice

 

Do you need to appoint an accountant for your limited company?

If you are a limited company contractor questioning whether you should appoint an accountant or not, this article is aimed to advice and inform you.

 

There are no legal obligations for a limited company contractor to appoint an accountant, however there are a number of reasons you may choose to do so.

 

·      As a limited company director, you are personally liable for any mistakes made in the preparation of your accounts. Using a professional to look after your accounts will minimise the risk of errors being made.

  • Taking care of your own accounts can be time consuming and confusing. You will need to complete dozens of financial tasks each year, including; calculating and paying your income tax, corporation tax, NICs and VAT liabilities, dealing with HMRC and Companies House, completing your personal, corporation, VAT and company Annual Returns.

·      Expert accountants are aware of your industries tax exemptions, reliefs and obligations. Therefore they are trained and specialist in saving you money against tax.

·      Having an accountant is imperative for a reference towards mortgage or tenancy applications.

 

Contact us for more advice as to whether appointing an accountant is the right move for you.

 

Tax Investigation- what you need to know

It is not uncommon for businesses and self-employed workers to face an audit from time to time. Whilst an investigation triggered by the HMRC suspecting inaccuracies may be more serious, audits can also be triggered as part of routine procedure.

If you are registered for VAT or have employees paid through PAYE you should expect and prepared for a routine tax audit. Routine tax audits are less likely when it comes to income tax or corporation tax. On average tax audits can be expected every 5 or so years.

A tax audit and inspection can be extremely stressful and confusing. Unless you are confident and have prior experience dealing with tax investigations you should seek professional advice.

How do you know if you’ve been chosen for a tax audit or tax investigation?

The HMRC will notify you if you have been selected for a tax audit or investigation. For a tax audit they normally will ask you to check your tax records. A tax investigation will begin with a letter stating what information they are requires.

If you are dealing with a tax audit or investigation you should seek advice as soon as you are notified.

 

Contact us for expert tax investigation advice

Everything you need to know about HMRC’s new trusts registration service

The HMRC’s new Trust Registration Service was due to start during June following the withdrawal of the paper form 41G (Trust). However, the launch, which was intended to coincide with the beneficial owner registration requirements of the EU’s Fourth Money Laundering Directive transposed into UK law, was delayed.  The aim of the service is to act as a single point of contact for trusts and estates to comply with their registration obligations and with notification of any changes.

The new registration system will allow the HMRC to collect up-to-date trust information centrally in line with the requirements of the 4MLD.

Under the new system, any new or existing trusts that generate a ‘tax consequence’ will be required to information on:

·      The identity of the settlor

·      The trustee

·      The protector

·      The beneficiaries

·      A detailed picture of the assets held

The new requirements to register or update details online apply in any year the trust generates a UK tax consequence. Although this is much more demanding system than of what trustees have previously experienced, trusts that hold collectives will have needed to register under the previous system too. Therefore little more will change other than when and how information is provided.

Trusts that hold no assets other than onshore or offshore single premium investment bonds will be subject to new rules that will presumably mean online registration will not be required unless either a chargeable event occurs or a chargeable occasion for IHT occurs.

 

Once the new service is in operation, trustees will have until 5th October to register new taxable trusts and until 31st January to provide information on existing trusts.

 

Contact us for offshore tax advice

 

 

Key Upcoming US and UK tax dates to watch out for

With time moving faster than ever it is only a matter of months until the tax season is here. Here is a reminder of all of the tax deadlines you should be aware of.

UPCOMING UK TAX DATES

5th October 2017

Register for Self Assessment if you're self employed or a sole trader, not self-employed or registering partner or partnership

 

31st October 2017

Paper tax return deadline

 

31st January 2018

Online tax return deadline

 

31st January 2018

Pay all tax owed

 

UPCOMING US TAX DATES

 

15th September 2017

  • 3rd Quarter estimated tax payments due for the 2016 tax year
  • Final deadline to file corporate tax returns for 2016 if an extension was requested.

 

1st October 2017

Deadline for self-employed persons or small employers to establish a simple-IRA for the year 2016

 

16th October 2017

  • Final deadline to file individual tax returns for the year 2016.
  • Last day the IRS will accept an electronically filed return for the year 2016. If filing after October 2015, you'll have to mail in your tax return for processing. 
  • Final deadline to fund a SEP-IRA or sole 401(k) for tax year 2016 if you requested an automatic extension of time to file

Contact us for expert UK or US tax advice

 

 

 

Everything you need to know about The Statutory Residence Test (SRT)

The Statutory Residence Test is used in the UK to determine the residency status of an individual. Whether an individual is a UK resident or not is an important factor in determining how their worldwide income should be taxed. There are three tests to determine the residency status of an indivudal:

1.     The Automatic Overseas Test

2.     The Atutomatice Residence Test

3.     The Sufficient Ties Test

 

The Automatic Overseas Test is always considered first when determinging the residency status of an individual. If an individual meets none of these conditions then the Automatic Residence Test will be used. If the residency of an individual cannot be determined using either of these tests, finally the Sufficient Ties Test is considered. The Suffcieint Ties Test is usually needed for those individuals who spent between 46 and 182 days in the UK during the tax year. 

What is your residency status?

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The Sufficient Ties Test

 

There are 5 ‘ties’ to consider in the Sufficient Ties Test which include:

1. Family:

·      You have a spouse who is resident in the UK or

·      You have a child who is under 18 and resident in the UK who you see at least 61 days in the tax year

2. Accommodation:

·      You have a place to live in the UK which is available for you to use for a continuous period of at least 91 days in the tax year and you actually spent at least 1 night there during the tax year

3. Work:

·      You have worked for at least 40 days during the UK tax year. (A workday consists of at least 3 hours of work)

4. UK presence:

·      You were present in the UK for at least 90 days in either of the previous two tax years

5. Country (only for individuals who have been a UK resident for at least 1 of the previous 3 tax years):

·      You spent more days in the UK than in any other country individually in the current tax year.

 

The number of ‘ties’ you have with the UK is combined with the number of days you were present in the UK during the tax year to determine your residency status.

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The Split Year Treatment

The split year treatment allows certain UK residents to split their tax year so that for part of the year they will be taxed as a UK resident and the other part as a non-UK resident.

The split year treatment applies automatically if you are a UK resident for the tax year and you fall into any of the following categories, you are:

·      Starting to work overseas

·      Accompanying a partner overseas

·      Ceasing to have a home in the UK

·      Starting to have an ‘only home’ in the UK

·      Starting full-time work in the UK

·      Coming to the UK after ceasing full-time work abroad

·      Returning to the UK with a partner

·      Starting to have a home in the UK

 

Contact us for expert expat tax advice

Domicile, Non-Domicile and the UK

Domicile is a legal concept in the UK, which can determine how an individual’s foreign income should be taxed. An individual’s domicile is not necessarily the same as their country of birth or residence.  There are three different ways an individual can obtain their domicile:

 

Domicile of Origin:

An individual acquires domicile of origin at birth. Their domicile will not necessarily be their place of birth, but rather the domicile of their father (or mother, if their parents were not married at the time).

 

Domicile of Dependence:

Until an individual reaches age 16, their domicile will follow that of the person on whom they are legally dependent. If a parent becomes a non-UK domicile, so will their child.

 

Domicile of Choice:

From age 16 an individual can choose where they wish their domicile to be. However, changing one’s domicile is a difficult process. An individual has to provide satisfactory evidence to HMRC that they intend to leave the UK permanently/indefinitely. HMRC will consider many factors when considering a change in domicile including the individual’s:

·      Family interests

·      Business interests

·      Permanent residence

 

 

The Remittance Basis

 

Taxpayers who are both UK residents and non-UK domiciled are unique as they can elect for their foreign income to be taxed on a remittance basis. This means that any foreign income they receive will not be UK taxable unless it is brought back to the UK. If the foreign income is brought back to the UK, it will be taxed in the UK at non–savings income rates (20%/40%/45%), including foreign interest and dividends.  

A new claim needs to be made for every year that an individual wants their foreign income to be taxed on a remittance basis.

 

The Remittance Basis and Personal Allowance

If an eligible individual opts for their foreign income to be taxed on a remittance basis, they will not be eligible to claim either the personal allowance or married couples allowance for that year. Generally, if your foreign income is in excess of the personal allowance (£11,000) it would be more beneficial to elect to use the remittance basis. This will not affect those individuals with income of £122,000 or more, as are not entitled to the personal allowance.

 

The Remittance Basis Charge

There is a charge for individuals who elect to use the remittance basis when they are long-term residents.

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The remittance basis charge will be payable through the self-assessment tax return.

 

Automatic Remittance

 

If the amount of income being remitted to the UK is less than £2,000, the remittance basis will apply automatically. In this case, the individual will be exempt from the remittance basis charge and will also be entitled to the personal allowance and married couples allowance.

 

Overseas Workday Relief (OWR)

 

Overseas Workday Relief allows UK employees who earn income from duties performed wholly/partially overseas to have the resulting earnings taxed on a remittance basis.

 

An employee must meet the following conditions to claim OWR:

·      The employee must be foreign domiciled and a UK resident, and

·      They must have elected for their foreign income to be taxed on a remittance basis, and

·      They were not UK resident for three consecutive years, and

·      The current tax year is any of the three years directly following this period of non residency

 

OWR can also be applied to a split tax year, although it will only affect foreign earnings that relate to the part of the year when the individual was considered a UK resident.

 

 Contact us for expert Expat Tax advice

  

Everything you need to know about Diverted Profits Tax

Diverted Profit Tax (DPT) is designed to counter the use of any aggressive tax planning techniques used by multinational enterprises to divert profits from the UK.

DPT applies to profits gained since the 1st April 2015 and focuses on contrived arrangements that are designed to erode the UK tax base. DPT is purposely set at a higher rate than corporation tax as to encourage those businesses with arrangements within the scope of DPT to change those arrangements and corporation tax on profits in line with economic activity.

 

Who is affected?

1.     UK companies that uses entities or transactions that lack economic substance to exploit tax mismatches

2.     Foreign Companies with a UK-taxable presence that uses entities or transactions that lack economic substance to exploit tax mismatches

3.     Individuals who carry on activity in the UK in connection with the supply of goods, services or other property by a foreign company and that activity is designed to ensure that the foreign company does not create a permanent establishment in that UK, with an intention to avoid tax.

DPT has it’s own individual set rules for notification, assessment and payment. Diverted property tax is not self-assessed, however companies are required to notify the HMRC within 3 months of the end of an accounting period in which they are potentially within the threshold of the tax and do not meet set conditions for exemptions. There is a penalty for those who fail to do so.

Exemptions from liability

General exemptions

·       Small and medium enterprises ( EU definition) are not subject to the DPT

·       Certain loan relationships are not subject to the DPT

·       Where a mismatch arises solely due to persons being exempt from tax by reason of being a charity, pension scheme or having sovereign immunity, the DPT will not apply.

 

Avoided PE exemption

·       Activities of agents of independent status are excluded

·       Certain alternative finance arrangements are excluded

·       Foreign companies are not subject to the avoided PE DPT charge where either

·       Their total UK-related sales revenue in a 12-month period does not exceed £10m

·       Their total UK-related expenses in a 12-month period does not exceed £1m.

 

Contact us for specialist accounting advice regarding diverted profits tax