Lounds & Co Chartered Accountants

27/09/2024

Does your business / staff receive tips from customers or put a service charge on the bill?

If so, are you aware of the new change in the law regarding how you need to communicate with staff over how the tips are distributed?

From 1 October 2024 the law will require employers to pass on all their tips to their staff, keeping nothing back for the employers themselves...

08/04/2024

Social media tax advisers should be avoided, especially when claiming to have the backing of a barrister.

A man in a smart tweed blazer stands in front of a flipchart. On the flipchart are various diagrams and shapes connected by arrows, depicting a complex structure with companies and trusts. The man approaches the camera and explains that he has an ingenious solution to completely avoid millions of pounds in inheritance tax.

He adds further arrows to the diagrams on the flipchart. You might think this sounds like a lecture for students or professionals on the intricacies of tax planning, but you’d be wrong. This is a TikTok video designed to sell potentially dubious tax avoidance schemes to unsuspecting and financially naive individuals.

Social media has, until recently, been the wild west in terms of regulation. Social media stars and influencers wilfully ignore advertising rules to sell everything from washing up liquid to counterfeit designer clothes. And now, TikTok and Instagram are host to the latest trend in influencer advertising, tax avoidance schemes.

HMRC has spent decades battling artificial tax avoidance schemes, with legislation frequently enacted to close the loopholes exploited by an increasingly reduced pool of unscrupulous advisers, who exploit their clients and extract extortionate fees in the process. The war on avoidance is not yet won but significant progress has been made.

The ‘tax gap’, which represents the difference between what should theoretically be paid in tax and what HMRC actually collects, is currently estimated to be £35.8bn in total. The tax gap relating to avoidance of income tax, National Insurance contributions and capital gains tax has fallen over time to £0.5bn, less than 1.5% of the total tax gap.

Most tax advisers do not engage in providing artificial tax avoidance schemes, and members of professional bodies are bound by a code of conduct which specifically prohibits the promotion of highly artificial or contrived arrangements.

However, providing tax advice is not formally regulated and anyone can present themselves as a tax adviser. It’s perhaps unsurprising then that there are still a minority of individuals who are happy to persuade ordinary individuals to engage in risky tax planning, for a fee.

Those promoting what appear to be complex tax avoidance schemes on TikTok or elsewhere will often highlight that their advice is backed by a barrister’s opinion, a long-standing tactic designed to provide comfort when caution may be the more appropriate response. It is often good practice to take the opinion of a barrister where the tax analysis of a taxpayer’s affairs is uncertain. However, heavily promoted tax planning which emphasises the support of a barrister’s opinion can represent a red flag.

Legislation to target the promoters of tax avoidance schemes has strengthened in recent years to include a criminal offence for certain activities associated with promoting such schemes and which has recently been extended to include promoters that fail to comply with notices to stop promoting specified schemes, with those convicted potentially liable to an unlimited fine in England and Wales or a prison sentence of up to two years.

But this doesn’t yet seem to have deterred this new breed of TikTok tax avoidance promoters, who appear to believe the provision of advice over the less well-regulated social media channels leaves them untouchable.

Anyone who buys ‘advice’ from these individuals or firms could also find themselves in very hot water with HMRC. By the time they discover that the schemes do not work, they could be slapped with heavy penalties or in extreme circumstances, criminal proceedings.

Meanwhile, the individual or firm promoting the scheme, together with its ‘advisers’, will often be long gone. Be very wary of anything that seems too good to be true, and be especially wary of anything of a complex financial nature sold via social media.

It is possible to organise your affairs in a tax efficient manner, but if support is needed, taxpayers should seek out the support of a reputable adviser, giving tailored advice that is both within the letter and the spirit of the law.

Call now to connect with business.

20/03/2024

Is it worth claiming Child Benefit again?

The threshold for having to pay back all of the Child Benefit has increased from £60,000 per annum to £80,000 per annum from the 24-25 tax year.

We've had lots of clients in the past who have stopped claiming it as their income went over £60K. It will most probably be worthwhile claiming it again now for these people.

Have a think about how much you will earn in 24-25 and if it is less than £80,000 look at reapplying to receive Child Benefit again.

25/07/2023

On 10 July 2023, the Insolvency Service launched their new information hub to support company directors. Particularly, this provides guidance which will help directors comply with their general duties.

There has been a recent increase in the Insolvency Service’s investigation into director misconduct. It is crucial for directors to ensure that they are complying with the duties they owe when running a company. The introduction of the information hub provides clear and concise videos and reports on this and also provides information on penalties they could face, highlighting the significance of their duties as directors.

The director information hub can be accessed here - https://www.gov.uk/guidance/director-information-hub . You will be able to access advice on topics such as:

Getting your company started

Your duties, responsibilities and obligations as a director

Company money

Spotting the signs of company distress

Turning your company around

Avoidable insolvency and insolvency

Consequences of company insolvency

With the ever-increasing numbers of investigations into directors’ misconduct, it is crucial that directors understand their duties. The new director information hub provides a helpful resource for all directors.

This director information hub is a home for information and guidance to help current and future directors. It only takes a minute to learn the essentials.

21/07/2023

Benefits of doing your tax return now:

- submitting your tax return now does not mean you pay now — when you submit your tax return, you’ll know how much you need to pay, so you can plan your finances and cash flow better — this might mean you can book a holiday, make an investment or it may mean you have to save for your tax bill

- your tax return provides you with proof of income — you’ll need this if you apply for a mortgage, loan, or if you need to access certain benefits and schemes such as Tax-Free Childcare
you can claim a refund faster — if you’re due one

- knowing what you owe, might mean you can reduce your payments on account if your tax bill is lower than forecast. If it turns out to be higher, you don't have to pay the excess until January, but at least you will know what you need to pay and have time to save up for it.

- you’ll avoid any chance of getting a penalty for submitting your tax return late, so do it now and get it out of the way

- beat the rush — our busiest time is September through to the end of February, so getting the information in sooner means that you will get the tax return back more quickly

- peace of mind — so you can get on with the important things in your life (am I supposed to suggest that tax returns aren't important?)

Grab a refreshing beverage during the next couple of damp weeks and pull everything together and send it in. Even if the weather is rubbish, you'll feel much better that the tax return is getting sorted.

&Co

14/06/2023

Don't miss out - are you sure you will have enough contributions for a full state pension?

HMRC have extended the deadline for voluntary contributions until 5th April 2025.

It usually makes sense to make sure that you will have the full 35 years in before your state retirement age.

You can check your national insurance record via your Government Gateway account.

https://www.gov.uk/check-national-insurance-record

Don't miss out - even Martin Lewis recommends that we do it

https://www.moneysavingexpert.com/savings/voluntary-national-insurance-contributions/

If you're aged between 45 and 70, you may find that buying extra national insurance years is the best way to boost your state pension. If you're eligible, the returns can be huge. Learn more about who might be eligible and how to do it.

12/06/2023

Are you an Air B'n'B landlord? If so HMRC now knows that you earn money through letting out your property. It is only a matter of time before they get in touch, rather than will they ever find you.

Get in touch to discuss options, we have helped a lot of people get in touch with HMRC to minimise the penalties that they will pay.

We can help

23/09/2022

Government change re IR35 will make a big difference to contractors.

OFF-PAYROLL - Being repealed from April 2023. Back to the old rules, for all contractors. It's as if the CEO of HMRC went into the shower, and came out, and… | 58 comments on LinkedIn