Posts Tagged ‘Finances’

The new Criminal Finances Bill

Thursday, May 11th, 2017

New legislation to increase the powers of law enforcement received Royal Assent 27 April 2017.

The Criminal Finances Act 2017 will give law enforcement agencies and partners, further capabilities and powers to recover the proceeds of crime, tackle money laundering, tax evasion and corruption, and combat the financing of terrorism.

The act:

  • creates unexplained wealth orders which can require those suspected of serious crime or corruption to explain the sources of their wealth
  • creates new criminal offences for corporations who fail to prevent their staff from facilitating tax evasion
  • enables the seizure and forfeiture of proceeds of crime and terrorist money stored in bank accounts and certain personal or moveable items
  • provides legal protections for the sharing of information between regulated companies and extends the time period granted to law enforcement agencies to investigate suspicious transactions
  • extends disclosure orders to cover money laundering and terrorist finance investigations
  • extends the existing civil recovery regime in the Proceeds of Crime Act to allow for the recovery of the proceeds of gross human rights abuses or violations overseas

These changes are the biggest extension of asset confiscation and the money laundering legislation since the Proceeds of Crime Act was passed in 2002.

 

The legislation will need to be considered, and with some care, as this new act has extended liability in sensitive areas, not least new criminal offences for corporations who fail to prevent their staff from facilitating tax evasion.

All is fair, unless you expect HMRC to minimise your tax bill

Tuesday, February 14th, 2017

Although HMRC refer to taxpayers as customers, and thereby suggest a degree of customer service, in the real world this rarely extends to offering “customers” pro-active tax advice.

Historically, tax collectors are trained to maximise the assessment and collection of tax. Consequently, tax payers should be wary, they should check the tax statements that are delivered in brown envelopes and make sure that they have taken advantage of reliefs and allowances available to them.

Take for instance the personal tax allowance. Not much to go wrong here you might think. For 2016-17 your personal tax allowance amounts to £11,000 and this amount will be deducted from your taxable income before any calculation of taxes due is made; or will it?

Three planning issues for 2016-17 come to mind:

  1. Will your total income be under £11,000? Consider Peter and Jane. They are married, Peter’s income is below £11,000 and Jane is a basic rate, not a higher rate taxpayer. Peter could transfer up to £1,100 of any unused personal allowance to Jane. This would save Jane £220. HMRC are aware of Peter and Jane’s earnings and yet they require the couple to make an election and claim the relief. Which is fine if Peter and Jane are aware of the relief. HMRC are apparently surprised that a large number of couples who could claim the relief do not.
  2. If you are in business, there is a very generous allowance you can claim if you buy qualifying commercial vehicles or equipment. Since 1 January 2016, you can deduct the full costs up to £200,000. If you are self-employed there is a danger that claims such as this Annual Investment Allowance (AIA) could reduce your taxable income below the £11,000 personal allowance threshold. If this occurs, any unused personal allowance is lost – it cannot be carried forwards and claimed in the next tax year. What you could do is restrict your claim for the AIA such that your taxable income equals £11,000 and your personal allowance would be fully utilised. Any balance of capital expenditure could be carried forward and used in future years.
  3. If your income exceeds £100,000 you will lose your entitlement to claim the personal allowance at the rate of £1 lost for every £2 your income exceeds £100,000. This means that when your income for 2016-17 exceeds £122,000 you can no longer claim the £11,000 deduction. Readers who have an interest in numbers will be interested to know that income is taxed at a marginal rate of 60% in this £100,000 to £122,000 band. Tax payers heading for this outcome can take steps to reduce their earnings below the £100,000 trigger point, but HMRC will not advise you on the steps you could take.

The UK has one of the most complex tax codes and many tax payers run the risk of paying too much tax just because they are not aware of the allowances and strategies they could employ to minimise their expose to taxation. We are not suggesting any form of avoidance activity, we are only suggesting that you claim your full entitlement to allowances and reliefs that are available to you. Of course, we would be delighted to be part of the process – call any time for a consultation.

Where there is a Will

Tuesday, August 2nd, 2016

If you leave your entire estate to charities, will you be turning in your grave if disinherited relatives mount a challenge to break your last will and testament, and succeed?

In a 2015 case heard by the Court of Appeal, a disinherited daughter challenged her deceased mother’s Will.

The background to the case is illuminating. The daughter had not been in touch with her mother since she left home at age 17, some 26 years prior to her mother’s death. The mother had made no provision for her daughter in her Will and left the majority of her estate to animal charities.

Aggrieved, the daughter brought a claim under the Inheritance (Provision for Family and Dependents) Act 1975. After many court appearances and appeals, the Court of Appeal has ruled that the daughter is entitled to share in approximately a third of her mother’s estate. It should also be pointed out that the daughter’s financial circumstances were somewhat straitened.

The charities that stand to lose out in this process are making a further appeal to the Supreme Court…

The Courts, therefore, have the power to over-rule the testamentary wishes of a deceased person if it feels that the needs of relatives prevail over and above the needs of non-related beneficiaries.

What is next for Brexit

Thursday, June 30th, 2016

Clients who are concerned by the uncertainty created by the Brexit vote should contact us. There are steps we can all take now that will ease our progress through the transition.

Essentially, we need to be financially fit. The areas of our businesses that we should fine tune are:

  1. Record keeping. There has never been a time when fast access to financial data has been more important. If you don’t use accounting software now may be a good time to research what is available.
  2. Cash flow. Maintaining liquidity, cash in the bank, or spare capacity in your overdraft facility will make it easier for your business to weather the storm. Credit is likely to harden as time progresses. Dust off your credit control procedures and offer a selection of payment options including payment by credit card.
  3. Reconsider investment decisions and focus on those that will enable you to increase sales or reduce costs.
  4. Take a hard look at costs and trim any “gym membership” type expenditure that no longer makes a positive contribution to your business.
  5. Cast around for alternate suppliers that offer a better price deal.

And last but not least, take advice. If you have any concerns about the effects of the vote on your business, please call.

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