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What does your tax return service include?


Preparing and submitting a tax return is much more than a compliance task. If it’s done well, a tax return is also a milestone in your annual tax planning and an opportunity to save money.

Before you become a personal tax return client, we’ll discuss your needs with you so that we understand how we can best help you. We will then be able to give you a bespoke proposal and an accurate fee estimate.

We’ll provide you with a checklist of the documents and information that we need to prepare your tax return and remind you when we need it. Different sorts of tax payers need to provide different types of information. For example, if you are landlord, the information you provide will be different from a business owner or an employee.

Once we have your information, we will review your overall tax position before discussing any available allowances and reliefs with you, as well as any longer-term tax planning ideas.

You’ll receive your completed tax return for review, along with supporting information that shows how we have arrived at the final figures. If you have any queries on your tax return, we’ll be on hand to answer them.

When you’ve signed your tax return and sent it back to us, we will:

  • Submit your tax return to HMRC and provide you with a copy
  • Notify you of the amount of tax you need to pay and when you need to pay it.
  • Remind you when your tax payments are due and provide a ‘how to pay your tax online’ guide which will help you to make payments quickly and easily.

Throughout the year, we’ll let you know of any changes to tax law that may affect you. We will also be on hand answer your queries on HMRC correspondence such as their tax calculations, statements or PAYE coding.

Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

What has happened to wear and tear and renewals allowances?


The 10% per annum wear and tear relief available to those letting furnished residential property, was abolished in April 2016, along with the renewals allowance. They were replaced with a new relief which allows a deduction based on the ‘actual costs of replacing furnishings’ on a like for like basis, less any proceeds from selling the items you have replaced.

The not-so-snappily named new Tax Relief for Replacing Furnishings in Let Residential Dwelling-Houses affects expenditure incurred on or after 6 April 2016 for income tax and 1 April 2016 for corporation tax. It applies to items for domestic use including furniture, furnishings, household appliances and kitchenware, but excluding fixtures. It is not applicable to dwellings that you rent out (in whole or in parts) as holiday lets or that generate income under the rent a room scheme.

The legislation to enact this change is expected in the Finance Act 2016. WMT can advise you on how to transition between the old regime and the new so you can make the most of this relief.

Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

What is the ‘restriction of interest relief’?


If you are a residential property lettings landlord, the amount of interest relief you can claim on financial costs will gradually reduce between 6 April 2017 and 5 April 2020.

You will be affected by this change unless you are:

  • letting a residential property that meets all the criteria for a furnished holiday let; or
  • are running a property business through a company, including a non-resident company subject to income tax.

Your finance costs include mortgage interest, interest on loans to buy furnishings, and fees incurred when you take out or repay mortgages or loans. No relief is available for capital repayments of a mortgage or loan.

If affected, the proportion of finance costs you can offset against rental income from your residential buy to let properties will gradually reduce from April 2017. By tax year 2020/21, you will only be able to claim a tax deduction for these costs at the basic rate of income tax in your annual tax computation.

From 6 April 2017 to 5 April 2020, a restriction will apply as follows:

  • 2017/18 – 75% interest full deduction: 25% interest relieved at basic rate of income tax;
  • 2018/19 – 50% interest full deduction: 50% interest relieved at basic rate of income tax;
  • 2019/20 – 25% interest full deduction: 75% interest relieved at basic rate of income tax;
  • 2020/21 – 100% interest relieved at basic rate of income tax.

These rules apply to ‘costs’ of a dwelling-related loan, so they extend to other deductions including the incidental costs of obtaining loan finance.  A loan taken out to acquire a motor vehicle used in the management of a property business will also have a restriction on the allowable interest.

Tax planning advice from WMT’s specialists can help reduce the impact of the loss of relief and protect your cashflow.

Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

Which UK assets give rise to IHT?


If you are ‘deemed domiciled’ in the UK, all of your worldwide assets will fall under the UK inheritance tax (IHT) regime. Under the regime, you may be eligible for certain reliefs and exemptions, depending on your particular circumstances.

If you are neither UK domiciled or deemed domiciled for IHT purposes (a ‘non-dom’), you are only liable for IHT on assets owned in the UK.

From April 2017, the government intends to bring all UK residential property held directly or indirectly by non-UK domiciled persons into the inheritance tax regime. This will apply whether the property is owned directly or through a structure such as an offshore company or partnership.

Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

When should I elect into the Patent Box?


To maximise your Patent Box relief, you can elect into the Patent Box:

  • at the same time as you apply for your patent, or
  • up to two years after the end of an accounting period to claim relief on profits in that period.

Once your company enters the Patent Box regime, your income from the trade that falls under the regime will be taxable at a lower rate. You will need to review how you record income and expenditure so you can identify the profits for each patent that meet the criteria for Patent Box relief.

Once you have opted in, you can qualify for relief on profits for up to six years before your intellectual property (IP) right – usually a patent – is granted. You will only be able to claim the tax back once your IP right has been granted.

It is possible to make a Patent Box loss, especially if you elect to join the regime too early, so it’s important to plan the timing of your election. You can revoke an election, but then you won’t be able to re-elect for another five years.

Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

What is Investors’ Relief?


This is a new relief that enables investors to benefit from a 10% capital gains tax rate when they sell their shares in a company.

To benefit from Investors’ Relief (IR), investors must have obtained the shares on or after 17 March 2016, held them continuously for three years, and dispose of then on or after 6 April 2019.

As with ER, there is a £10 million lifetime limit for the relief.

The investment must be in an unlisted trading company and the investor must not be an officer or an employee of the company. The rules also apply to qualifying beneficiaries of trusts.

Conditions are included to ensure that the relief only applies to new shares issued for genuine commercial purposes. Also, only investors who are not connected to officers or employees of the company are eligible for the relief.

Tax incentives for investors through the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are still available in qualifying businesses. IR allows companies to raise additional funds outside these schemes, as well as potentially being attractive to investors who have exceeded the limits for EIS and SEIS.

Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

It’s easy to qualify for entrepreneurs’ relief, right?


If you take a look at the general guidance on HMRC’s website, you might get the impression that qualifying for entrepreneurs’ relief (ER) on the sale of a business or business asset is quite straightforward. This relief ensures you only pay 10% capital gains tax on the disposal of your business.  If you delve a little deeper, you will find that it is easy to be caught out.

ER is a very generous relief that a lot of people connected to a business can benefit from – shareholders, family members, employees, investors – under the right circumstances. As a consequence, there are a lot of conditions to meet in order to qualify. It is important you check that you and your company meet the qualifying conditions.

Qualifying for ER on the sale of a business

Once you have met the very strict criteria that allow you and your business to qualify for ER, you will need to maintain them for at least a year before you dispose of the business. This means that some careful business planning has to be put in place. Any significant business decisions in the year leading up to the sale must be made with your ER criteria in mind to ensure you still qualify for the relief if you sell.

You will also have to consider the impact of the terms of the sale. Share buy-backs and earn outs can affect whether you can capture capital treatment, or if ER is available.

Qualifying for ER on the sale of an asset

Assets that you own and are used by your business can also potentially qualify for ER relief if the business has used them for at least a year. You must also have sold at least 5% of your shares in the business or the business has closed.  The receipt of income or rent for the asset can restrict the relief, so care is needed in this area.

Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

How will I benefit from your advice on my corporation tax return?


All active (and some dormant) companies must file a corporation tax return each year by a specified date (usually 12 months after the end of their accounting period).

Most responsible individuals and businesses want to contribute the tax that they owe – but equally, don’t want to pay more than they have to.

Preparing the tax return is an ideal time to look for tax saving opportunities and identify planning opportunities that can help you in future years. If you are a shareholder in the business, compiling your corporate tax return is also an opportunity to think about extracting your reward from the business as tax efficiently as possible.

Saving you tax

The key to making sure you pay no more corporation tax than you have to is making sure you take advantage of every allowable deduction, expense, exemption and relief to give an accurate picture of your profits.

We will review your expenditure and prepare your corporation tax return, checking that you have:

  • Claimed all allowable expenses appropriate for your industry and business activities
  • Identified opportunities to claim corporation tax relief, available if your company makes a loss, gives to charity or sells shares to employees at a discounted rate
  • Made use of all reliefs and exemptions such as:
    • Annual Investment Allowance and Capital Allowances for plant and machinery
    • Research and Development Relief
    • Patent Box Relief

Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

What is corporation tax?


You must pay corporation tax on profits from doing business as a limited company, a foreign company with a UK branch or office, or as a club, co-operative or other unincorporated association. Your company will pay tax on profits from trading, investments or the sale of assets.

You must work out, pay and report your tax on time each financial year.

  1. Register for corporation tax when you start doing business or restart a dormant business. Unincorporated associations must write to HMRC.
  2. Keep accounting records and prepare a company tax return to work out how much corporation tax you need to pay.
  3. Pay corporation tax or report if you have nothing to pay by your deadline – this is usually 9 months and 1 day after the end of your ‘accounting period’.
  4. File your company tax return by your deadline – this is usually 12 months after the end of your accounting period – whether you make a profit, a loss or have no tax to pay.

Your accounting period is normally the same 12 months as the financial year covered by your annual accounts.

Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How will changes to the taxation of dividends affect me?

    Changes to the way dividends are taxed and the dividend tax rates were introduced on 6 April 2016. A tax credit is no longer applied to dividends.

    Every individual can receive dividends of £5,000 per annum (£2,000 per annum from 2018/19) without any tax charge applying, no matter how much non-dividend income you have.

    New rates of dividend tax

    The following table shows the rates of tax on dividends from April 2016 with a comparison to the effective rates before April 2016.

    Dividend income tax band Rates from 6 April 2016 Rates before 6 April 2016
    First £5,000 of dividend income (£2,000 per annum from 2018/19) 0% n/a
    Basic rate band 7.5% 0%
    Higher rate band 32.5% 25%
    Additional rate band 38.1% 30.56%

     

    In general, this has meant a 7.5% increase in tax on dividends across all the tax bands, subject to the first £5,000 (£2,000 from 2018/19) of dividends for all taxpayers being at a 0% rate of tax.

    It is important to note that the first £5,000 (£2,000 from 2018/19) of dividend income still forms part of your taxable income in determining the following:

    • the rate of tax on other sources of income
    • income levels for considering child benefit charges
    • the availability of personal allowances.

    Winners and losers

    If you take a salary that is within your annual personal allowance and receive dividends within your basic rate of tax you will incur a modest increase in tax charge under these new arrangements.

    As a taxpayer receiving large dividend payments and paying higher rates of tax, your dividend tax liability will increase substantially – close to 7.5%.

    At the other end of the scale, if you are a higher rate tax payer and have dividends of up to £20,000 may find there is a tax reduction. This is due to £5,000 (£2,000 from 2018/19) of dividend income being taxed at 0% despite the increase in tax on the balance of dividends.

    Many owner-managed businesses will still find dividends to be a very tax efficient way of taking income from the business, but tax efficiency isn’t the only factor to consider. For example, corporation tax at 20% is due on profits after costs, including salaries, have been deducted. Paying a salary reduces profit and therefore reduces the corporation tax bill.

    We can advise on the most suitable and tax-efficient way to extract funds from your business. Our advice takes account of your personal and business goals so you can strike the right balance between cash in your pocket and cash in the business.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • I have received notification of an HMRC enquiry. What should I do?

    A tax investigation or enquiry will start with a letter asking for information.

    The letter will tell you whether HMRC is investigating a particular aspect of your tax return or carrying out a full tax investigation. It may appear threatening or causal to try to encourage a quick response. As soon as you receive the letter, contact your accountant for advice.

    Whilst honesty is of course the best policy – lying or destroying evidence can lead to severe penalties – how you present the facts to HMRC can influence the outcome. You may find it best to deal with as much as possible in writing, through your accountant, rather than having telephone conversations or unaccompanied meetings with the tax inspector.

    Your accountant can also advise you if you should make payments on account towards any likely tax bill to reduce the amount of interest payable.

    Once a tax investigation has started, it can last several months or more. A tax investigation may also expand, for example, with a corporation tax investigation leading to enquiries into the directors’ personal tax affairs. Your accountant can advise you what to do if HMRC is asking for too much information, taking too long or otherwise behaving unreasonably.

    If WMT is your tax adviser, you can take advantage of our fee protection service. This means we can act promptly on your behalf if you receive notification of an enquiry and your fees will be taken care of.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How many years can a tax investigation go back?

    If they suspect that errors have crept in innocently, they can go back four years, and claim unpaid tax with interest plus penalties. If they think you have been careless with your returns, they can go back six years. But if they believe you have been deliberately false, they can go back 20 years.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What triggers a tax investigation?

    Tax investigations and frequent tax audits are more likely if:

    • you file tax returns late, pay tax late or make errors that need correcting
    • there are inconsistencies or substantial variations between different returns, such as a large fall in income or increase in costs
    • your costs are abnormally high for a business in your industry
    • your tax returns are inconsistent with how busy your business actually is or your standard of living
    • you have offshore bank accounts
    • you have income from property
    • you have invested in schemes or funds which HMRC views as tax avoidance investment schemes
    • you operate in a high-risk industry, such as those that routinely take cash payments, or an industry that HMRC has decided to target
    • HMRC receives a tip-off

    HMRC also carry out a number of random investigations each year to target tax evaders that are difficult to detect. Anyone – private individual or business owner – can be receive notification of a random enquiry.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What types of tax investigation are there?

    Tax investigations fall into three broad categories:

    • Aspect – where HMRC want to assess one or more areas of your tax information
    • Full – the whole of your tax return is reviewed (personal return or business return)
    • Random – spot-check full enquiries. These are usually aimed at higher risk tax areas or sectors. SMEs are a particular target.

    All types of enquiry or investigation from HMRC should be treated seriously. An aspect investigation may, for example, seem less threatening but it could easily broaden out into a full investigation if not properly managed.

    Sometimes businesses can be placed under a code 9 (COP9) investigation. These are only issued when the revenue suspects deliberate tax fraud is taking place. These are very serious indeed.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • How much is my business worth?

    Whatever your reasons for having your business valued, you will usually be looking for an open market value. This is an estimate of what someone would be willing to pay for it in the current market.

    Your valuation will take a number of factors into account such as:

    • Projected financial performance
    • Value of your assets – including tangible assets, financial assets and intangible assets such as IP
    • Level of debt in the business
    • Customer base and the certainty of future income streams
    • Experience and skills of the management team
    • Barriers to entry
    • Synergies with the buyer
    • Market position and/or the strength of your brand within it.

    The value that an interested party puts on your business could be vastly different. For example, a departing shareholder in a private limited company may think the business is worth more than its market rate.  In such situations, you will want an experience independent party to act as a buffer between you and the other party (or parties) negotiating the final figure on your behalf.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What sources of funding are available to my business?

    What sources of funding are available to my business?

    There are two main sources of long term financing – debt or equity.

    Debt finance is a loan to your business where you will have to pay back the amount borrowed plus interest. Equity finance involves giving shares in your business in exchange for an investment.

    Some of the most common sources of funds are:

    • individuals – including friends and family, business owners and angel investors.  To make yourself attractive for investment you should consider the Enterprise Initiative Scheme or Seed Enterprise Initiative Scheme. These schemes offer tax benefits on investments in qualifying companies.
    • high street banks – often a business owner’s first thought when looking for funding. Not all banks are the same. They have different risk appetites and preferred areas of investment, so if your application is rejected by your usual bank, it might find favour with another. Professional guidance on preparing your proposal will improve your chances of getting it accepted first time.
    • asset backed lenders – provide funds that are secured against an asset. The assets are usually a combination of physical assets (stock, plant and machinery or equipment) and invoices (debtors).
    • private equity or venture capital – typically some of the funding will be in the form of equity investment in the business and some will be provided under the terms of a loan.
    • turnaround investment – buyers of failing enterprises or businesses that have been through difficult times may look for specialist turnaround financing. To reduce the funder’s risk management, a turnaround director will often work with the business to implement the changes needed to take the business back into profit.
    • company vendors – if you are buying a business, under certain circumstances the vendor may be prepared to provide some or all of the finance you need to buy the business from them. The vendor will ask for a certain amount of the sale price when you acquire the business and the remainder at an agreed later date.
    • crowd funding platforms – now used to fund start-ups and growth enterprises, crowd funding platforms have proved popular with all types of small businesses. Both debt and equity funding are available and it offers an effective way to attract a number of small investors rather than just looking for one or two larger investors.

    WMT can help you evaluate funding options and choose the one that best suits your business model, market conditions and future plans.

    We can also help you to prepare information for funders that will answer their key questions and help you secure funding.

    Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

  • What types of VAT schemes are available to me?

    In addition to the standard VAT accounting there are three VAT schemes designed to simplify the process for small businesses (including those that are partially exempt):

    Flat rate scheme

    Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.

    The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.

    You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply –  typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.

    From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:

    • 2% of their turnover
    • £1,000 a year (if costs are more than 2%)

    For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.

    To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.

    This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.

    Cash accounting scheme

    You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million.

    If you use standard VAT accounting, you have to pay HMRC the VAT you charge on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. Similarly, you can only reclaim VAT once you’ve paid your suppliers.

    For many businesses, this scheme offers a cash flow advantage and relief from bad debts. If you are paid promptly at the point of sale, regularly reclaim VAT or your customers pay by direct debit, you are unlikely to benefit from cash accounting.

    You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.

    Annual accounting scheme

    You can reduce your VAT paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme.

    If you use this scheme, then you make nine monthly or three quarterly interim payments during the year. These can be smaller than a typical quarterly payment under standard VAT accounting, which can help with your cash flow.

    At the end of the year, you complete a single return and then either make a balancing payment or receive a balancing refund.

    You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. You can also use this scheme in combination with the flat rate and cash accounting schemes. It can also be applied alongside certain sector specific VAT schemes.

    Which of the VAT schemes is right for you?

    Each of these VAT schemes can help to simplify the VAT process for a smaller business. If you’re unsure which would be the right scheme (or combination of schemes) for you, it’s best to seek professional advice before making a choice.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What do I have to do once registered for VAT?

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt from VAT. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • When should I register for VAT?

    All businesses must register for VAT if they have an annual turnover of more than the current VAT threshold, or if they think they will soon go over this limit.

    Once you’ve registered your business for VAT you must:

    • Charge VAT on the goods or services you sell (whether you sell to individual customers or to other businesses,
    • Include your VAT number on your invoices,
    • Pay VAT on the goods and services you buy for your businesses, and
    • Prepare and file a VAT return to HMRC each quarter to show how much VAT you have charged (known as output tax) and how much VAT you have paid (known as input tax).

    If your output tax exceeds your input tax, you must pay the difference to HMRC. On the other hand, if your input tax exceeds your output tax, you can claim a refund on the difference.

    There are three different rates of VAT that can be charged – standard rate, reduced rate and zero rate. Some goods and services are exempt or partially exempt from VAT. There are also specific VAT rules that apply to certain trades and industries. You need to make sure you are charging the right amount of VAT to avoid unexpected demands from HMRC for unpaid tax.

    If you are VAT registered and your turnover falls below the threshold, it might be to your advantage to de-register for VAT. Your accountant should keep an eye on this for you and advise you on your best course of action.

    Do you still have questions? Get in touch with our team to find out more about how they can help you.

  • What is the ‘revenue model’ and how will it help me?

    The revenue model establishes the bridge between financial performance and the non-financial inputs of a business.

    It highlights the best ways to grow and develop your business by breaking down the turnover into 2 elements:

    • Volume – the number of customers, the frequency of transactions;
    • Value – average transaction value.

    Building a revenue model for each element of your business enables you to obtain meaningful information and avoid erroneous conclusions.

    The effectiveness of the revenue model lies not in producing ‘the numbers’, but in how the information is interpreted and what decisions are made. When used as an ongoing method of assessing business performance, it allows you to identify important trends, and see if the action taken makes matters better or worse.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

  • Why do I need a business plan?

    A business plan sets the direction of travel for your business, maps out goals and gives an indication of who will help you achieve them. Many businesses have a three or five year ‘master plan’ which they supplement with annual plans.

    Without the helicopter view that a plan provides, it is easy to see how the business can get lost in the ‘doing’ and fail to reach its full potential by investing more time in ‘thinking’ – often conceptualised as too busy working in the business to work on the business.

    We can help you write a traditional detailed business plan or a one-page-strategic summary, backing up your plan with financial forecasts including:

    • Cash flow forecast;
    • Profit and loss forecast;
    • Balance sheet forecast;
    • Breakeven and sensitivity analysis.

    Do you still have questions? Get in touch with our business consulting team to find out more about how they can help you.

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