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pkf-francisclark.co.uk Speaker Spring tax update Torquay March 2017

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PowerPoint Presentation

Speaker

Spring tax updateTorquay March 2017

pkf-francisclark.co.uk

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Speaker

Chairmans welcomeJohn Rowe, Partner

pkf-francisclark.co.uk

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Housekeeping

@pkfFrancisClark#FCSpringTax17 #Torquay

A copy of the slides will be sent to you by email shortly

pkf-francisclark.co.uk

pkf-francisclark.co.uk

Staff update newly appointed Partners

Holly Bedford became Tax Partner on 1 December 2016Corporate and personal taxation expertLeads the tax team in the Plymouth office Previously with Arthur Anderson in Chicago and EY in London and EdinburghLucinda Coleman will become Business Recovery Partner on 1 April 2017Licenced insolvency practitioner and Company Voluntary Arrangements expertJoined PKF Francis Clark as a graduate trainee in 2003.

pkf-francisclark.co.uk

pkf-francisclark.co.ukStaff update newly appointed PartnersJason Mitchell will become Partner on 1 August 2017Specialises in providing accountancy and advisory services to the legal sectorSRA Accounts Rules expertProvides a wide range of accountancy services to SMEs across the region

pkf-francisclark.co.uk

pkf-francisclark.co.ukStaff update newly promoted Directors, 1 April 2017

Liam Dushynsky, VAT Director, ExeterAdam Kefford Corporate Tax Director, ExeterKatie Skea, Director, PlymouthIan Pring, Tax Director, PlymouthChris Watts, Tax Director, Torquay (FCTC)Jemima Fox, Tax Director, PlymouthJustin Gliddon, Director, Plymouth (1/10/16)Frances Kingsnorth, Director, Salisbury

pkf-francisclark.co.uk

pkf-francisclark.co.ukPart of our on-going commitment to progress and invest in our staff and acknowledging the experience and expertise they bring to the firm6

James Barratt, Director, PlymouthDaniel Sladen, Tax Director, TruroLisa Macpherson, Tax Director & Head of Tax Technical, PooleMartin Brown, Tax Director, Taunton (FCTC) joined 6/3Staff update newly promoted Directors, 1 April 2017

pkf-francisclark.co.uk

pkf-francisclark.co.ukInvesting in new recruits across the tax practice, focussing on specialisms that our clients are requesting and who we believe will add significant value7

Budget day changing to autumn from 2017

This update will be in March again next year

More convenient timing for attendees

We have better information to share

Access to consultations and draft legislation.

Spring tax update

pkf-francisclark.co.uk

pkf-francisclark.co.ukProgramme for today

pkf-francisclark.co.uk

Making tax digitalBusiness tax updatePaul Collings, Tax PartnerPaul Collings, Tax PartnerPersonal tax updateAndrew Squires, Tax PartnerFinancial planning updateKevin Stoyle, Chartered Financial Planner

pkf-francisclark.co.uk

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Speaker

Budget overviewPaul Collings, Partner

pkf-francisclark.co.uk

10

Measured & boringHammonds speech

pkf-francisclark.co.uk

pkf-francisclark.co.uk

Overview

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

PSNB as % of GDP (per OBR)

EstimateForecast2015-162016-172017-182018-192019-202020-212021-22Public sector net borrowing3.8%2.6%2.9%1.9%1.0%0.9%0.7%Cyclically-adjusted public sector net borrowing3.6%2.6%2.9%1.9%0.9%0.9%0.7%Treaty deficit4.0%2.7%2.8%1.9%1.1%0.9%0.9%

pkf-francisclark.co.uk

pkf-francisclark.co.uk

Crisis over?Spring tax update

pkf-francisclark.co.uk

pkf-francisclark.co.uk

Speaker

Making Tax DigitalPaul Collings, Tax Partner

pkf-francisclark.co.uk

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Making Tax DigitalNew HMRC initiative revolutionising the way businesses file onlineLandlords and unincorporated businesses 5 April 2018VAT registered businesses from 5 April 2019Corporates and large (> 10m) partnerships 5 April 2020

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

Making Tax DigitalNew HMRC initiative revolutionising the way businesses file onlineLandlords and unincorporated businesses 5 April 2018 5 April 2019VAT registered businesses from 5 April 2019Corporates and large (> 10m) partnerships 5 April 2020

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

Making Tax DigitalDeadline for submitting quarterly returns one month after the quarter end Deadline for submitting final adjustments for year will be the sooner of ten months after the year end, or 31 January following the year of assessment (the existing tax return deadline)Applies to the first accounting period that begins after 5 April 2019, so 5 April year ends first quarterly reporting date is 5 July 2019, and first MTD deadline on 5 August 2019First years will have multiple deadlines to meet

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

Making Tax DigitalGovernment has given some assurances regarding small businesses, and the digitally excluded: Businesses can use spreadsheets for record keeping, but must file via MTD-compliant softwareBusinesses eligible for three line accounts can submit quarterly updates with only three lines of data (income, expenses and profit)Free software will be available to businesses with the most straightforward affairs in practice, this will mean those under the VAT registration limit and with no employees

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

Making Tax DigitalNo need to scan in invoicesOnly one update for the entire property business Accounting adjustments can be made in final adjustmentDeclaration of partnership splits now optional for quarterly updates must be notified in year end adjustmentPartnerships must return all income and gains i.e. investment income as well as trading incomeWill not include CIS returns for the time being current quarterly return system will continue.

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

Making Tax DigitalGovernment has yet to decide on de minimis limit below which MTD will not apply10,000 is seemingly too lowWhat is the masterplan? What are the issues?

pkf-francisclark.co.uk

pkf-francisclark.co.uk

An Introduction to Cloud AccountingPaul Collings

pkf-francisclark.co.ukIntroduce yourself.Cloud accounting is one of the ways Francis Clark are approaching MTD.Although, irrespective of MTD, there are benefits to both client and accountant, by working in collaboration through cloud.So, whats being covered:22

What is Cloud?.

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What is it?Cloud technology is simply to host, or store, data remotely rather than on a machine at your premises.

pkf-francisclark.co.uk

pkf-francisclark.co.ukIn its simplest form, cloud computing is storing and accessing data and programs over the Internet. Sharing of servers allows a pooling of processing power.Also means less IT infrastructure required in house, hardware costs more than software.Access cloud via WiFi or mobile data.Cloud already used day to day by business and individuals.QuickBooks research showed 78% of businesses use cloud for business critical tools.Examples: Apple + iTunes. (Not business critical but most public use of the word cloud) Google Docs, Gmail, etc. And Online Banking, to name a few.23

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What does Cloud Accounting allow?Multi-user & multi-locationImmense server processing powerMachine learningApplication Programming Interface (API).

pkf-francisclark.co.uk

pkf-francisclark.co.ukSo why cloud accounting?Building upon the previous slide:As the image shows, get away from the desktop. Mobile. Access anytime, anywhere. And anyone. We advocate giving your accountant access = proactive advice.Sharing servers = more processing = do more with it.Machine learning: Artificial intelligence is like teaching a child,Do it once, do it twice, then software remembers and recommends actions.This cuts down input time, reduces errors and increases consistency.APIs: Creating a joined up business solution.Connect EPOS, stock, payment processing, CRM, etc. to accounting software.And a bit about our software partners:Platinum partners with Xero and QuickBooks. These are the high street vendors aimed at the SME OMB market and cost c.25 per month, before partner discounts.Most people pay more for a telephone contract these daysExact sit in the space between these vendors and larger offerings like NetSuite and Oracle.They have product sweet spots in manufacturing, wholesale & distribution and time & fees.24

How does Cloud help accounting?Time saved on your books is time to invest in your self or your businessAutomated bank feedsInvoice recognitionBetter Management accountsMake business decisions based on real time data

pkf-francisclark.co.uk

pkf-francisclark.co.ukThe average OMB is likely to see the owner doing the record keeping.This could be at least an evening a week of their personal time,Or during the day eating in to their chargeable or business development time.By automating the input of bank transactions and invoices this allows you to focus your time on the business.Then use that time to make business decisions based on real time data.Either from a real time snapshot, Or more detailed management accounts.Lets move on to a demo25

What does this achieve?EfficienciesQuestions can now be answered in real time- What pension contributions can I make?- When do I have to register for VAT?- Should I purchase the equipment this year or next?

pkf-francisclark.co.uk

pkf-francisclark.co.ukI thought we would finish on a case study, one of Darrens live clients:Background: A Senior Manager left his existing employment and set up his own limited company in project management. His partner looks after the accounting records. A typical owner managed business.Efficiencies:Historic Excel records were poor. A mutual dislike from client and accountant of the Excel records and a joint decision was made to move to cloud software.Both client and accountant input on the basic accounting functions have lessened.As training needs reduce and efficiencies grow, this positive trend will continue.Real time information:As we have seen, cloud platforms give you great real time data.In this instance, at the end of Q3, profitability was seen to be up tenfold. The client was reluctant to pay tax on thisAdditional services:Both directors were over 55 years old.A pension contribution was a logical means to shield corporation tax and efficiently extract some of the cash profit at the same time.Our financial planning team was introduced, identifying that both directors had pre-existing SIPPs and unused prior year allowances: a not uncommon occurrence. It was therefore possible to shelter a proportion of the corporation tax liability.Further to the contributions, the financial planning team will have additional work managing the SIPPs and, rather than extracting cash, assisting with a purchase of commercial property within them.Tax savings:The SIPP contributions saved a considerable amount of corporation tax. Real time information enabled the client to consider future supplier payments and tax liabilities ensuring a suitable balance between working capital requirements and tax savings.Improved cash flow:The client issued a stage payment request for 200,000, raised at the end of the VAT quarter. Contract delays meant payment would not be received before the VAT payment date fell due. Being on the invoice basis for VAT the client was exposed to the additional VAT liability before payment was received by them.To alleviate this cash shortage the VAT basis was changed to cash for the one quarter, thus VAT was not due on the unpaid invoice. The following quarter the basis was reversed to invoice basis.Overall, one happy client.26

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Who to contact?

Thomas Roberts ACCACloudSourcing Technologist [email protected]

Darren Jasper ACA CTAHead of [email protected]

pkf-francisclark.co.uk

pkf-francisclark.co.ukIf you would like to know moreUnfortunately Darren is currently away with Exact working on a joint plan for the next 12 months.

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MTD journey very much part of the master plan

Training and Investment

Consider FC Relationship

Where now?Is that it?

pkf-francisclark.co.uk

pkf-francisclark.co.uk

Speaker

Business tax updatePaul Collings, Tax Partner

pkf-francisclark.co.uk

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Corporation Tax RatesNorthern Ireland12.5% from 2018Year commencing 1 AprilMain rate %Small profits rate %201028%21%201126%20%201224%20%201323%20%201421%20%201520%-201620%-201719%-201819%-201919%-202017%-

pkf-francisclark.co.uk

pkf-francisclark.co.ukAnnual Investment AllowanceCapital allowance 100% tax relief

Period fromAIA1/6 April 200850,0001/6 April 2010100,0001/6 April 201225,0001 January 2013250,0001/6 April 2014500,0001 January 2016200,000

pkf-francisclark.co.ukWhen limits go up, the transitional rules are favourable.When limits decrease, the rules can catch people out. Amount of allowances depends on year ends. 31

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Corporation Tax - LossesNew rules will increase flexibility for relieving corporate tax losses

Losses arising from 1 April 2017 can be carried forward and offset against other income streams

Losses can also be carried forward and group relieved

Companies with profits > 5m only 50% of profit can be relieved by losses brought forward

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

Corporation Tax - InterestNew rules will restrict each groups net deductions for interest to 30% of EBITDA taxable in the UK or, if higher An amount based on the net-interest to EBITDA ratio for the worldwide group.De Minimis of 2,000,000 of interest

pkf-francisclark.co.uk

pkf-francisclark.co.ukResearch and Development - SmallSMEs (Turnover 83,000 in next 30 days anticipated

threshold increasing to 85,000 from 1 April 2017

eligible to register if making taxable supplies

Allows VAT to be reclaimed on costs

pkf-francisclark.co.uk

pkf-francisclark.co.uk.

VAT flat rate schemeSimple scheme where business does not recover input tax and charges flat rate of VAT on turnover16.5% rate applies for limited cost traders from 1 April 2017Limited cost traders expenditure on goods: