Category: ‘Uncategorized’

Exporting goods to the EU with a no-deal Brexit

Thursday, October 18th, 2018

Last week we considered the effects of importing goods from the EU if a no-deal Brexit occurred. This week we are considering matters that government has published for exporters to the EU. A summary of the comments made in recent announcements is reproduced below.

After the UK leaves the EU, in the event of a ‘no deal’ scenario, businesses exporting goods to the EU will be required to follow customs procedures in the same way that they currently do when exporting goods to a non-EU country.

Before exporting goods to the EU, a business will need to:

  • register for an UK EORI number. You do not need to act now, but you will want to familiarise yourself with this process
  • ensure their contracts and International Terms and Conditions of Service (INCOTERMS) reflect that they are now an exporter
  • consider how they will submit export declarations, including whether to engage a customs broker, freight forwarder or logistics provider (businesses that want to do this themselves will need to acquire the appropriate software and secure the necessary authorisations from HMRC). Engaging a customs broker or acquiring the appropriate software and authorisations from HMRC will come at a cost.

When exporting goods to the EU, a business will need to:

  • have a valid EORI number
  • submit an export declaration to HMRC using their software or on-line, or get their customs broker, freight forwarder, or logistics provider to do this for them. The export declaration may need to be lodged in advance so that permission to export is granted before the goods leave the UK (the export declaration also counts as an Exit Summary Declaration – see section 3)
  • businesses may also need to apply for an export licence or provide supporting documentation to export specific types of goods from the UK, or to meet the conditions of the relevant customs export procedure.

Mitigations businesses may consider in a March 2019 ‘no deal’ scenario

Businesses should now consider the impacts on them in a ‘no deal’ scenario, which would mean a requirement to apply the same customs and excise rules to goods traded with the EU that apply for goods traded outside of the EU, including the requirement to submit customs declarations. Businesses should consider whether it is appropriate for them to acquire software and/or engage a customs broker, freight forwarder or logistics provider to support them with these new requirements.

Businesses may want to consider whether using customs procedures would be beneficial. These allow businesses to delay or relieve the payment of customs duty for goods they import into the EU until goods are ready to be released into free circulation. A customs broker, freight forwarder or logistics provider can advise in the event of a ‘no deal’ scenario whether one of these procedures would be suitable for your business. Customs procedures include the following:

  • customs warehousing: this allows businesses to store goods with duty or import VAT payments suspended. Once goods leave the warehouse, duty must be paid unless the business is re-exporting, or moving goods to another customs procedure. The warehouse must be authorised by HMRC
  • inward processing: this allows businesses to import goods from non-EU countries for work or modification in the EU. Once this has been completed, any customs duty and VAT due must be paid, unless goods are re-exported or moved to another customs procedure, or released to free circulation
  • temporary admission: this allows business to temporarily import and or/export goods such as samples, professional equipment or items for auction, exhibition or demonstration into the UK or EU. As long as the goods are not modified or altered while they are within the EU, the business will not have to pay duty or import VAT
  • authorised use: this allows a reduced or zero rate of customs duty on some goods when used for specific purposes and within a set time period.

For excise duty purposes, goods are not regarded as imported if they are immediately placed under one of these customs procedures. Businesses need to pay excise duty when these goods are released for free circulation, unless they are immediately placed in excise duty suspension.

As we are fast approaching the exit deadline affected businesses should be planning their options now.

Is this a good time to invest

Tuesday, October 16th, 2018

This article considers the question: should businesses invest in new equipment or other long-term capital acquisitions at this time?

In truth, no one knows what the impact of the Brexit will be? Brexiteers believe that the floodgates will open, and the rest of the world will rush to buy our goods and services whereas Remainers, expect recession to return when the EU drawbridge is lifted.

No doubt the reality will sit somewhere between these two extreme points of view.

With these uncertainties nonetheless present, is this a good time to consider investment in new plant and equipment or that new commercial building you have your eye on?

As always, a considered response to this question is: maybe, maybe not.

Most equipment purchases will qualify for a tax break of up to £200,000 a year – as long as the purchase fits the criteria for the Annual Investment Allowance – for example, cars do not generally qualify, but commercial vehicles and other plant and equipment will. Accordingly, as the economic outlook is unclear, making purchases to take advantage of tax reliefs may not be the most prudent course of action.

Then, there is investment in equipment that will allow you to develop a new income stream for your business. More than likely, this would be a speculative investment, with higher expected returns, but higher risks. This type of investment may be best left until the immediate effects of Brexit can be ascertained and fact6ored into your business development planning.

Finally, there are investments that will make your existing business more efficient and possibly more profitable. For example, new IT and software or replacing other worn-out business assets with up-to-date alternatives.

This final area may be a plausible investment opportunity and one that will position you nicely whatever the Brexit outcome may be.

What we would suggest is a careful consideration of your options based on a combination of tax benefits, payback periods and returns on your investment. As a downturn in economic activity is possible, this is probably not the time to throw caution to winds and make unconsidered investments.

Please call if you would like our help when making these judgements for your business.

Exclusivity and tax relief

Thursday, October 11th, 2018

In order to qualify as a deduction for tax purposes we have to demonstrate that the expenditure was incurred “wholly and exclusively” for the purposes of our business or employment.

We will also need to consider a further criterion: where the expenditure has a duality of purpose.

In a 1980’s case, a barrister claimed for the cost of business suits which she insisted were only used for business purposes. To her delight, the lower courts agreed, but HMRC were having none of it and pursued their case to the House of Lords where the taxpayer’s claim and appeal was dismissed.

The barrister failed to secure her claim as she could not escape the conclusion that although she may have purchased the required “subdued” clothing for her practice, the clothes purchased could have been worn on a private occasion, even though she may have chosen not to do so.

As always this and other related cases, open the door to speculation: when does expenditure meet these stringent rules?

For example, if the barrister’s suits had carried a visible label – the name of her practice – would this have tipped the balance as she could argue the suit was a uniform and not appropriate to wear on private occasions?

Removing any private advantage may be more difficult than it would appear.

Unfortunately, we are required by legislation to comply with the “wholly and exclusively” rule and if there is a whiff of private advantage to the expenditure, then it will likely be disallowed. HMRC in their instructions to staff say:

 

You should disallow expenditure on ordinary clothing worn by a trader during the course of their trade. This remains so even where particular standards of dress are required by, for example, the rules of a professional body.

Importing goods from outside the EU

Tuesday, October 9th, 2018

Although the Brexit issue is not yet decided it may be salutary for businesses to consider the changes they will need to face if we depart with a no-deal Brexit. We have touched on these issues in past articles posted on this blog, but today we have reproduced the present regulations you will need to consider if you import from outside the EU – with a no-deal Brexit these, or similar processes, will need to be applied to imports from the EU.

Within the EU most goods:

  • are in free circulation,
  • can be imported with minimal customs control,
  • have no import duty or VAT to pay.

Imports from outside the EU are treated differently. You:

  • must make an import declaration to customs,
  • generally, have to pay import duty and import VAT (plus VAT on import duty).

Authorised Economic Operator (AEO)

If you’re already involved in international trade and have an Economic Operator Registration and Identification Number (EORI), you can register with HMRC as an Authorised Economic Operator (AEO).

The scheme isn’t compulsory, but companies that meet the requirements can take advantage of simplified customs procedures for the security and safety of their imported goods in transit.

Import declarations

You have to send a declaration to HMRC when you import goods into the UK from outside the EU. This is usually done using the Single Administrative Document (SAD), also known as form C88.

SADs can be submitted either electronically using the Customs Handling of Import and Export Freight (CHIEF) system, or manually (although manual submissions may take longer to process).

You need to include the:

  • customs classification
  • commodity code
  • import value of your goods
  • customs procedure code explaining what is being done with the goods, for example import to free circulation.

We could continue sketching these regulations in more detail. Sufficient to say that if you presently import, or indeed export, goods from or to the EU you should research the changes you will need to make to ensure your supply chains are maintained after March 2019.

We will be keeping a close eye on negotiations and will report again as and when the news breaks.

In the meantime, if you have concerns about possible disruptions to your supply chains post Brexit, please call for more information.

Budget Breakfast 1 November

Friday, October 5th, 2018

CIDO

McCleary & Company Ltd

Lumen Financial Planning

Invite you to

BUDGET IMPACT BREAKFAST

CIDO INNOVATION CENTRE

Thursday 1 November

9:00am to 11:00am

 

The Chancellor, Philip Hammond is delivering his Budget on Monday 29 October, earlier than usual to avoid clashing with the final stage of the Brexit negotiations in November.

Here in Northern Ireland we are in a unique position but with uncertainty comes the need for information and planning.

McCleary & Company Ltd Accountants and Lumen Financial Planning will deliver a Budget Review and detail all of the changes that will impact N.I. Businesses.

If you would like to attend the Budget Breakfast, 9:00am breakfast for 9:30am start, please click the link below-

Registration Link

Did your goat eat your accounts?

Thursday, October 4th, 2018

Companies House have published a list of bizarre excuses for the late filing of their statutory accounts. They include:

  • “goats ate my accounts”
  • “I found my wife in the bath with my accountant”
  • “pirates stole my accounts”
  • “we delivered the accounts to the betting office next door to Companies House”
  • “a volcano erupted and prevented me from filing”
  • “slugs ate my accounts”
  • “it was Valentine’s Day”
  • “my company was more successful than I thought it would be, so I was too busy to file”

As you would expect, Companies House issued late filing penalties and any appeals were swiftly quashed.

The level of the penalties charged depends on how late the accounts reach Companies House and is shown in the following table.

Length of period (measured from the date the accounts are due)

Private company penalty

Public company penalty

Not more than 1 month

£150

£750

More than 1 month but not more than 3 months

£375

£1,500

More than 3 months but not more than 6 months

£750

£3,000

More than 6 months

£1,500

£7,500

A private company’s set of acceptable accounts for the accounting period ending 30 September 2009 would need to be delivered by 30 June 2010 to avoid a late filing penalty. If they were not delivered to Companies House until 15 July 2010 the company will incur a late filing penalty of £150.

The penalties will be doubled if a company files its accounts late in 2 successive financial years beginning on or after 6 April 2008. This means that if a private company, has an accounting reference date of 30 September and the accounts for the period ending 30 September 2009 were delivered late and you delivered accounts for the subsequent period ending 30 September 2010 late, then you would incur a £300 late filing penalty.

Making Tax Digital Event 11 October 2018

Thursday, October 4th, 2018

With the transition to digital tax returns impending, and a pilot scheme for digital VAT returns already underway, many local business owners are still unsure how this will affect them. Join us for our upcoming ‘Making Tax Digital’ event to get some clarity around what will be expected of your business moving forward and how this can be beneficial.

We welcome you for a light lunch at the Bannville House Hotel as McCleary & Co joins us to demystify ‘Making Tax Digital’ with some key points on what you need to know, how this will impact your business and when.

Ulster Bank will deliver a brief overview of our two different types of online banking, explaining which is most suitable for your business and how they will work with your cloud accounting software.

Click to Register

 

This is the part a series of free local Business events organised by Ulster Bank Boost to provide local businesses with the tools, knowledge and networks to grow. Find us on twitter @carataylorbge #ulsterbankboost or www.ulsterbank.co.uk/boost

If you have any questions or require more information, please contact: cara.a.taylor@ulsterbank.com or 07879677553.

 

Industrial Tribunal Cases in NI soar

Thursday, October 4th, 2018

My name is Sarah Kerrigan and I have over 20 years Human Resource Management experience, specialising in Employment Law and Employee Relations.  I am delighted to be able to work with McCleary & Company Ltd. to offer my expertise and services and I hope to be a regular contributor to the monthly e-news.  This month I’m focussing on Industrial Tribunals.

 

The number of cases registered before the Industrial Tribunal against businesses in Northern Ireland is believed to be over 8,000 in 2017/18.  This figure has soared from the previous year when circa 3,900 cases were registered and marks a further increase on the circa 3,000 cases registered in 2015/16.

 

If these trends continue it is more likely than ever that your business could be named in Industrial Tribunal proceedings and that you personally could also be named as a Respondent to a case.

 

The greatest percentage of the recent figures relates to what are classed as ‘non-discrimination’ claims.  That is, they are claims based on unfair dismissal, holiday pay, wages and other contractual disputes.

 

It is therefore crucial that you act now to help you and your business minimise the risk of such claims being lodged.  Employers have a number of rights that help to protect them in this arena but only if they can demonstrate that they have acted within the boundaries of employment law and fulfilled their obligations to their employees.  This begs the question, do you know what your rights as an employer are and can you be sure that you are complying with the law in relation to the employment of staff?

 

If the answer to this question is ‘no/maybe/not sure’ please feel free to contact me and I will be happy to offer you a complimentary audit and help to save you the time, money and repetitional damage that are so often the consequences of getting it wrong!

 

You can contact me on 07789 437801 or email info@synchronise-hr.com.

 

 

 

 

 

“Synchronise-HR offers services based on philosophy of making life easier by helping my clients to thrive and succeed whilst keeping them fully in step with employment law.  I take great pride in providing clear, concise and commercial advice and support to my clients blended with a positive and friendly approach”.  (Sarah Kerrigan – Owner)

 

Not so trivial

Tuesday, October 2nd, 2018

Options for reducing the impact of taxation on our earnings are somewhat limited. That said, there are still opportunities that will keep you the right side of the law and will increase the take home pay of employees.

One such opportunity available to employers is to pay so-called trivial benefits. The benefits may be of small value, but never-the-less, even small tax-free payments will be gratefully received.

To qualify as tax-free, the benefits paid to employees need to fit the following criteria:

  • they cost £50 or less to provide,
  • the payments are not made in cash or by the use of cash vouchers,
  • the benefits are not made as a reward for work or performance,
  • the provision of the benefits is not required in the terms of contracts of employment.

You don’t need to pay tax or National Insurance or advise HMRC that qualifying payments have been made, however, you will have to pay tax and possibly National Insurance on any benefits that don’t meet all these criteria.

Directors of smaller companies can also avail themselves of this benefit, but in their case, these payments would be limited to a maximum £300 in a tax year. This restriction also applies to members of the director’s family and household.

The benefits can also apply where the trivial benefit is provided on behalf of the employer by a third party. For example, where the benefit is provided through a management services company within a group of companies or by a third party business where management services have been outsourced, provided the cost of the benefit is ultimately borne by the employer.

Further clarification provided by HMRC regarding the payment of trivial benefits includes:

 

  • One of the conditions that has to be satisfied is that the cost of providing the benefit does not exceed £50. If the cost of providing the benefit exceeds £50, the full amount is taxable, not just the excess over £50.
  • In determining the cost of the benefit for the purposes of the exemption, as for benefits in kind more generally, use the VAT inclusive.
  • The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial.
  • Usually it will be obvious what the cost of providing the benefit is. However, on occasions an employer will provide a benefit to a group of employees and it is impracticable to establish what the precise cost is per person. In such cases, when determining whether the monetary limit has been exceeded you should take the average cost per person of providing the benefit.
  • In determining whether the average cost method should be applied, you should apply common sense, bearing in mind the circumstances, in deciding whether it is appropriate.

 

As we approach the festive season the following example may shed some light on how this scheme would work in practice.

An employer provides each of its 100 employees with a turkey at Christmas and the total bill comes to £4,500. There are a variety of sizes. Because the employer has made a bulk order, the turkeys have not been priced up individually but would cost in the region of £40 to £60 each. Employees are able to choose which bird they have. Rather than undertake a detailed analysis of the individual benefits, HMRC advise that you should accept that the cost per head is £45, reflecting an average amount of £4,500/100. The benefit can be covered by the exemption since the cost for each employee does not exceed the trivial benefit financial limit.

About turn, you can use spreadsheets

Tuesday, October 2nd, 2018

HMRC has about-faced regarding the ban on using spreadsheets to work out your VAT return data from 1 April 2019, when the new requirement to file VAT returns using Making Tax Digital (MTD) format is introduced.

Bowing to pressure from industry, the accountancy profession and Parliamentary committees, HMRC has now agreed that you can use spreadsheets for VAT purposes; unfortunately, there is a large “but”.

The rationale behind the development of MTD is that HMRC wants your returns of data through its MTD portal to be linked directly to the source material, the accounting entries that make up the returns. They do not want you to cut and paste data from your accounting records (including spreadsheets) into HMRC’s digital accounts.

Accordingly, they have agreed to the use of spreadsheets as long as the data is transferred using bridging software that is compatible with its MTD systems.

Software developers are now faced with creating this bridging solution and we will be reviewing solutions to settle on the best-fit option for clients.

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