Forestry sector provides some attractive tax incentives

August 10, 2017

The Scottish Government has recently committed to increase the annual tree planting target from 10,000 hectares to 15,000 hectares by 2025. There are attractive funding incentives available to landowners through the Scottish Rural Development Programme and the Forestry Commission which have been put in place to help achieve these ambitious targets. With these funding incentives the land can still qualify for Basic Payment. Also announced earlier this year is a Timber Transport Fund of £7m, which seeks to support sustainable timber transport in Rural Scotland. This funding highlights a strong commitment being made from the Government to kick start this sector. Other developments have also emerged through compliance with the Woodland Carbon Code which provides the opportunity for forestry owners to sell the rights of carbon captured by newly planted trees. There continues to be ongoing investment in biomass technology that benefits from renewable heat incentive payments.

All of these incentives are pushing forestry up the agenda. We have seen a rise in the number of discussions about planting trees, felling trees, selling forestry land or buying land to create a forestry business and discussing the tax implications of forestry in general.

As a reminder the key tax points to consider are:

  • It is generally advantageous to have the forestry business in a VAT registered entity.
  • When buying and selling forestry land check if it has been opted for VAT purposes and consider the Land and Business Transaction Tax (LBTT) implications.
  • Income realised through the sale of timber is exempt from income tax. Grants are tax free, with the exception of payments made in compensation for agricultural income foregone.
  • There is no tax relief for losses or capital purchases.
  • There is no capital gains tax liability on the gain in value of commercial tree crops. Any gain on disposal of the woodland is split between trees and land. The element relating to trees is tax free and the element relating to land is taxable.
  • No inheritance tax on death if held for two years and commercially managed.

Forestry must be commercially managed when considering it as long term investment, perhaps as an Inheritance Tax (IHT) asset protection strategy. The forestry business should have maintenance costs, a forestry management plan and either its own set of financial statements or its own enterprise accounts within a larger business.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

01738 441 888
ian.craig@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in August 2017. Laws and tax rules may change.

A New Tax Order – without Spreadsheets

August 10, 2017

As a Chartered Accountant, it may surprise you to know I am not a fan of spreadsheets. These horribly complex, fidgety things, inevitably contain annoying error messages or formula issues. Printing them never seems to quite work out first time round and presentation can be somewhat inconsistent. Armed with my magnifying glass I stress over finding that inevitable wee nasty hingmy lurking in one of the cells.

As a Tax Advisor, my view on spreadsheets is worse given their somewhat dangerous, uncontrolled properties. The reliability of spreadsheets depends on the skill of the original designer. So flexible are they in nature, even the simplest examples can morph into monsters over time. There are countless examples of infamous spreadsheet errors prompting profit warnings, plunging share prices and unforeseen tax liabilities.

Digital accounting will be mandatory in the Making Tax Digital ‘MTD’ regime. As with the demise of manual/paper record keeping and despite HMRC’s promise to let spreadsheets link up quarterly with HMRC digital accounts, using spreadsheets for tax will surely become a thing of the past. Given that the latest apps now offer a systematic way to manage processes from source data through to final tax return in a reasonably straightforward fashion across all business sizes, this seems inevitable.

Software suppliers are developing drill down features allowing the user to click through from the submitted figures in a tax return all the way back to original invoices. This is achieved via a series of Application Programming Interfaces ‘API’s’, opening doors between different financial technology products. These seamlessly produce the controls, quality, accuracy, efficiency and auditability features accountants love so much and which spreadsheets will simply not be tolerated to deliver.

Let’s embrace the new tax order without spreadsheets – and enjoy a world of smooth and efficient processes.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

0141 886 6644
mark.pryce@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in August 2017. Laws and tax rules may change in the future.

MTD remains clear destination point

August 10, 2017

The Making Tax Digital (MTD) regime was heralded over the past few years by the Government as a key element in its plans to invest £1.3bn in transforming HMRC into “one of the most digitally advanced tax administrations in the world”. Back in December 2015, HMRC launched its roadmap towards an online digital tax system starting in April 2018 with the aim of being fully online by 2020. The ultimate MTD vision being to make the tax system for businesses operate much more closely to “real time”, as opposed to the current system of reporting information on tax returns and paying liabilities long after the end of the tax year. The rush towards the original 2018 start date had the accounting and tax profession up in arms and crying out in dismay. Most external commentators pointed to a lack of developed software capable of dealing with MTD on both sides, together with the limited time available to test the new systems as key barriers to successful implementation. Significant IT and data security concerns held up access to the early pilot projects for those agents and volunteer taxpayers who had signed up as initial guinea pigs to the project. Nevertheless, it appeared that HMRC were pushing on relentlessly, ignoring the warning signs and passing over the controversy. Then with total surprise, Theresa May called a snap election for June 2017. Everything suddenly ground to a halt. The draft MTD legislation amongst other major tax measures was cut from the Finance Act 2017, before that legislation was pushed through Parliament ahead of its dissolution for the election period. MTD it seemed had been put into cold storage until the Conservatives would surely win a landslide majority and then the game would be back on again within the same timetable. Of course, the anticipated result was different and subsequently, for various reasons in the new hung parliament, the Chancellor announced that whilst plans for the MTD regime will still proceed; some of the most difficult elements would be deferred until “at least” April 2020.

By way of a recap, under MTD most businesses, self-employed and landlords will be required to keep track of their financial affairs digitally. They will be required to use digital tools, such as software or apps to keep records of their income and expenditure. The original consultation suggested that MTD will help to reduce the tax gap and contribute £945m to the exchequer by 2020/21. Ministers reported a higher tax contribution resulting from MTD as a result of HMRC having greater ability to identify evasion by criminals and getting to grips better with a renewed focus on tax avoidance. There are numerous examples, especially in Australia, South America and Scandinavia of other countries overseas who, after an initially difficult period of trial and implementation, have made a real success of digitising their tax system and are now able to claim that their taxpayers now regard their versions of MTD as a way of life and as the norm.

If you listen to HMRC, MTD is all about having a simplified tax system where bureaucratic form filing is eradicated, time delays are eliminated, with taxpayers, having self-service access to digital accounts accessing a ‘real time’ update of their tax position in a jovial manner. Smart phone and tablet apps will get taxpayers more organised and into the habit of keeping proper books and records as they go along. The carrot for business is to know the latest performance picture, to save time by using technology tools, to save hassle by managing all tax affairs online and to get the opportunity to plan forward and budget better by operating near real time calculations of tax owed. On the other hand, the threat of points based penalties akin to the motoring offences system of strikes and incremental fines for non-compliance is set out as the stick.

The idea of quarterly reporting is intended to provide HMRC with an accurate snapshot of the business trading performance, with summary details submitted throughout the year of turnover and expenses. However, without the usual accounting adjustments (accruals, prepayments, stock and tax allowances being amongst others) being added in to the mix; there is a real concern that the actual position will be very different in reality.

So what has changed post-election? HMRC’s plans to allow self-service access to digital personal and business tax accounts for individuals and businesses respectively remains the same, as will the prospect of allowing Agent access to these online. HMRC still plan to make better use of third party data in the tax reporting process, albeit this appears lower down their priority list. However, the key effect is that the earliest mandatory quarterly reporting of income taxes is now from April 2020.

The main initial focus is now on VAT under MTD which will now be compulsory from April 2019 onwards for all businesses above the VAT threshold of £85K. It is also assumed that the previous announcements on MTD quarterly reporting for Corporation Tax will largely remain in place from April 2020. Further changes and announcements on both are expected following further public consultation. We can expect a further flurry of lengthy documents from HMRC and another huge response level as happened back in late 2016 last time round.

Given all the work which has been put in to date by Government and HMRC, in my opinion it is inevitable that a full blown MTD system with mandatory digital record keeping will be in place within the next three to five years. As a result, I would recommend that all businesses start to move over to a fully compliant digital record keeping system; whether it is based on Cloud Accounting or desktop software applications. It will take several years to plan, design, implement and test new systems so that they are fit for purpose. Time is now of the essence as the countdown clock to MTD re-starts.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

0141 886 6644
mark.pryce@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in August 2017. Laws and tax rules may change in the future.

Campbell Dallas Now Largest Accountancy Firm in Perthshire with Acquisition of Bell & Company

June 29, 2017

Fast-growing independent accountancy firm Campbell Dallas has acquired Perth-based Bell & Company, a long-established independent firm specialising in owner managed businesses and private clients.

The deal will see 20 staff and 1 Partner transfer to Campbell Dallas, and adds over £1m of fee income per annum. Campbell Dallas, which recently opened a new £1m office in the centre of Perth, is now the largest accountancy firm in Perthshire.  Total staffing in the newly enlarged Perth office has increased to 5 partners and 56 staff, including 9 trainees.

Founded in 1945, Bell & Company provides a broad range of business and tax advisory services alongside robust compliance services.  The firm represents many well-known local owner managed businesses, and has developed a strong presence in the rural and farming community.

Andy Ritchie, Head of Campbell Dallas’ Perth office, said the acquisition was a natural fit for both firms, and would provide clients access to a much greater range of services and expertise: “Bell & Company is a highly respected local firm and we are delighted to welcome the business to Campbell Dallas. Our existing Perth office is well-established, but this acquisition provides us with the scale to expand the enlarged business and we will be recruiting further over the coming months.”

Charlie Carnegie, Bell & Company’s Managing Partner added: “Joining Campbell Dallas presents an exciting opportunity for our clients and staff as we can now offer a full range of advisory services together with specialist technical knowledge in areas such as tax, VAT, corporate finance and re-structuring. It will be ‘business as usual’ for our clients, many of whom have been with Bell & Company for several decades, but they will now have the resources of a much larger practice at their disposal.”

Chris Horne, Managing Partner at Campbell Dallas said “This is a solid step forward for the firm in achieving its planned growth target. Perthshire and Tayside has a wide variety of high quality businesses that we think would benefit from our entrepreneurial approach to client service.  There is also the rapid regeneration of Dundee Waterfront that is attracting local and national entrepreneurs who will need access to our full range of accountancy services.”

Scotland’s Accountancy Firm of the Year 2017, for a third year in a row

June 15, 2017

Campbell Dallas is delighted to have, once again, won “Accountancy Firm of the Year” at the Scottish Accountancy & Finance Awards 2017, held on 14 June. This is the third year in a row that we have won this prestigious award – a great achievement recognising our continued success and growth.

The firm was praised by the judges for its leadership role, innovation and boldness within the profession and an increase in fee income of more than a third during the last five years. The firm was also credited for its impressive, organic growth and continued investment in staff and offices, recently opening a new £1m office in Perth.

Ian Williams, ChairmanIan Williams, Chairman at Campbell Dallas, who collected the award on behalf of the firm on the night said: “It is very rewarding to be acknowledged by our profession for our achievements in building a progressive and growing firm. Winning the top award three years in a row is a great result, and a huge credit to all our staff who work hard to provide our clients with outstanding service and advice. We have exciting plans to develop the business further and to extend our reach and range of services in Scotland.”

Revenue Scotland Devolved Tax Specialist joins Campbell Dallas

May 25, 2017

Firm wins merit award for best tax practice in a devolved administration

Campbell Dallas has appointed Revenue Scotland’s former Head of Tax Operations and Compliance, Colin McHardy, who will lead the firm’s devolved tax service. Colin is a technical specialist in devolved taxes who also has extensive experience of drafting tax legislation and guidance.

Devolved taxes are of increasing importance as businesses and taxpayers tackle the different tax systems now evolving across the UK.

The firm’s investment in tax has just been acknowledged after it collected a merit award for ‘Best tax practice in a devolved administration’ at Tolley’s 2017 UK Tax Awards. The judges highlighted Campbell Dallas’ expertise in devolved taxes, and the investment made by the firm to ensure clients can navigate an increasingly complex tax system.

Devolved taxes in Scotland currently include land and buildings transaction tax (LBTT) and Scottish landfill tax (SLfT) with air departure tax (ADT) scheduled to come into operation from April 2018. Colin McHardy says this is an area which is growing in both scope and importance, commenting:

“The remit of Revenue Scotland is set to grow as it is charged with implementing new tax laws and recovering tax due from businesses and taxpayers.  Many businesses and individuals have operations, employees and investments in Scotland, England and overseas.  It is crucial that clients are aware of their obligations, plan ahead to ensure their tax is managed in an efficient and timeous manner and avoid penalties for non-compliance, because the obligation remains on the taxpayer to get it right”.

The Campbell Dallas tax practice has contributed expert advice to tax committees that make regular representation to the Scottish Government and Revenue Scotland. The firm is also developing a regular programme of workshops on devolved taxes across Scotland.

aileen gatesAileen Gates, Campbell Dallas’ Head of Tax added: “We are delighted to welcome Colin to the firm and to our expanding tax team. Devolved Taxation is already important, but it is going to become even more so during the next few years. Colin’s expertise and understanding of this complex area will be invaluable to our clients. Being recognised at the UK Tolley Tax Awards for our expertise in devolved tax is also a great result for Campbell Dallas, and reflects our ambition to be one of the top tax firms in Scotland.”

Campbell Dallas targets £50k with new charity foundation

May 16, 2017

Independent accountancy firm Campbell Dallas and its staff expect to raise more than £50k this year following the launch of the Campbell Dallas Charity Foundation that matches pound for pound money staff raise for their favourite causes.

The Foundation was established in 2016 to promote awareness of the problems in society and encourage staff to support the charities that tackle these challenges.

The firm appointed 20 Foundation ambassadors who encourage involvement in fund-raising projects and facilitate the support of the firm.  Each member of staff is also entitled to 2 day’s leave for volunteering in support of charitable projects.

In the last year 25 different charities have benefited, including the Prince and Princess of Wales Hospice, Bobath, CHAS and RSABI (the Royal Scottish Agricultural Benevolent Society).  The latest is the Beatson Cancer Charity, which received more than £6k after 25 members of the team completed the Glasgow Kiltwalk.

Much of the Foundation’s work is at local office level and touches local charities and support groups within reach of each of their offices. On a national scale the Foundation works with nationwide charity and support groups to maximise their impact.

Partner and Head of the Charity Foundation, David Hunter says the Foundation has been an important focus for the firm and staff: “By encouraging and supporting staff to help people that are in need the culture of the firm has also benefited.  There is a strong, internal culture of community and it is important that staff know we support those that support others.  Staff have responded really well, particularly to the idea that they can raise funds for the charity of their choice.  Everyone benefits as a result.”

Will tax become just in time?

May 15, 2017

Back in the early 1970s Toyota pioneered the concept of Just in Time manufacturing, or JIT.  JIT aimed to synchronise the manufacturing process with customer orders, thus reducing manufacturing costs and waste whilst also markedly improving customer service. JIT is now an established philosophy and methodology that has transformed the whole supply chain from supplier to customer.

‘Making Tax Digital’ (MTD), the flagship tax policy being developed by HMRC would appear to be modelled on JIT principles.  If we consider that HMRC is simply a tax recovery business, then it makes enormous sense for HMRC to maximise early receipt of cash from customers.  Making Tax Digital is possibly a strategic move towards a JIT tax recovery framework that will ultimately see HMRC seeking close to real time recovery of tax.

Currently, incorporated businesses have up to 9 months following the year end to pay any corporation tax due.  This is a significant cash flow advantage for a business, but means HMRC is denied any tax owing for up to 21 months. The vision for MTD is to see the end of reporting information on tax returns and paying liabilities long after the end of the tax year. Taxpayers will soon be required to update HMRC quarterly via a digital tax account.

The new system will require businesses to use digital tools, such as software or apps to keep records of their income and expenditure, however an annual digital submission will still be needed in addition to the quarterly reporting.  It will be important to introduce real time tax planning to ensure businesses maximise tax reliefs in a timely manner.

The new system applies to most unincorporated businesses and landlords from 2018, with businesses below the VAT registration threshold joining in April 2019.  In 2019-20 it will extend to all businesses, self-employed people and landlords with annual turnover above £10,000 and by 2020 will expand to include Corporation Tax.

Real time tax reporting is heading our way – and it could be swiftly followed by real time payment of tax.  Making Tax Digital is a seismic change to the tax system.  Make sure you plan ahead to minimise the impact and cost of the new tax order.

Planning for the long-term

April 10, 2017

It is difficult to get excited about pensions. Planning for an investment that you will not see until retirement is not high on everyone’s priority list. It is usually a decision to be put off for another day, but for our farming clients we often see first-hand the merits of long term financial planning; whether it is a pension or an alternative investment. If mother and father can retire from the family farm with the financial support of pension income, then it generally leads to a smooth succession and happy retirement.

In stark contrast where there has been no provision for retirement the farming business is often the main source of income in retirement. This reliance on the farm for income can put a financial strain on the business. The older generation may feel a need to continue working and contributing longer than they may wish or are physically able. A frustration can unfold in the younger generation who feel they are unable to take over the farming business without the involvement of their parents and financial drain.

The increase in land price may provide the comfort of a retirement nest egg. Capital growth is fine if you intend to cash in at some stage. If the intention is to pass the farm down to the next generation then the price of land is of little use. The income return from farming is very low, perhaps averaging 2% of capital value. Relying on income from farming as a way to support retirement is not great financial planning.

The key message in planning for retirement is to start early. This can make your pension scheme contributions affordable and provides a longer period for the investment to grow. It is estimated that 25% of children born this year will live to over 100. As life expectancy grows the retirement “pot” needs to be larger, which is another reason to start contributing and investing early.

There are tax advantages when contributing to a pension scheme. Tax relief is given on personal contributions to a pension scheme. For a basic rate tax payer the cost of investing £100 is £80 and for a 40% taxpayer the cost of investing £100 is only £60. Whilst invested in a pension scheme, your contributions grow free of tax. Most people are now able to access their pension savings from age 55 (57 from 2018) and there are 3 key ways to do this:

1. Buy an annuity, which guarantees a fixed income for life
2. Take 25% of your pension savings tax free and/or drawdown an income each year
3. Take all of your pension savings in cash (liable for tax)

For more information and further options see pensionwise.gov.uk

Recent changes in legislation have made it possible to pass your pension fund on death without losing the fund or suffering high rates of tax. Regardless of the tax advantages I do believe that more farming businesses should consider how they finance the retirement of the family. The investment options are more varied and complex than they were 30 or 40 years ago, but the principal of long-term investment is unchanged.

You could always adopt an alternative strategy to investment planning. A high risk strategy is to rely on a lottery win. One Aberdeenshire farmer was asked what he would do if he won the lottery. After a pause to consider the options he replied “just keep farming until I had none left”.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

01738 441 888
andrew.ritchie@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in April 2017. Laws and tax rules may change in the future.

The Apprenticeship Levy: what you need to know

April 6, 2017

The objective behind the measure is to fund and encourage new apprenticeships through the introduction of a levy on all employers with a UK payroll bill in excess of £3m per annum, regardless of whether apprentices are employed. It is anticipated to raise approximately £3b a year over the next five years.

Business impact
From 5 April 2017, employers with a UK payroll bill in excess of £3m will be charged a levy of 0.5% of their full UK payroll bill. Each employer will receive an allowance of £15,000 to offset against their levy payment, the intention being that the levy will only be payable on pay bills in excess of £3m a year. The “UK payroll bill” will be based on total employee earnings subject to Class 1 secondary NICs. Any cash payment made by an employer to an employee is likely to be earnings for NIC purposes. This includes salaries, bonuses and vouchers. It does not include the reimbursement of genuine business expenses or dividends paid.

The levy will be payable on a monthly basis through PAYE (Pay as You Earn) and will be payable alongside income tax and National Insurance. Therefore, if the UK payroll bill changes, the levy payable will reflect such changes.

In order to reduce the burden of implementing these changes, HMRC will work closely alongside employers and payroll service providers.

The levy payment will then be ring-fenced in the form of an electronic voucher that can be used to acquire training from 1 May 2017 from recognised providers. Any unused vouchers will expire after 24 months. Note that the voucher system will not be available in Scotland and funding will continue to be through Skills Development Scotland.

All employers with a UK payroll bill over £3m will be required to pay the levy, regardless of whether they subsequently re-claim voucher funds to purchase apprenticeship training.

Apprenticeship Levy payments are a deductible expense for Corporation Tax.

Based on proposed funding rules, the levy can be claimed back and spent on apprenticeship training for all employees at all levels and ages, including graduates who may be eligible for Level 6 or 7 apprenticeship programmes.

Connected businesses
Connected companies may be liable to the apprenticeship levy if the combined UK payroll bill exceeds £3m. Where several employers are connected as a group, they will only be able to use one £15,000 levy allowance. The definition of connected companies and charities is based on the definition in the Employment Allowance rule. Companies are connected for the purpose of claiming the Employment Allowance if:

• a company has control of another company
• they are under the control of the same person or people, for example companies linked in a group

The term ‘control’ is given the same meaning as in sections 450 and 451 of the Corporation Tax Act 2010. This is where a person has or is entitled to acquire the greater part of the share capital or voting power in a company, or in the event of a distribution of the company’s income the greater part of the amount distributed, or in the event of distribution of assets the greater part of the company’s assets.

Where the company is part of a group of connected employers, the group must decide what proportion of the levy allowance each employer in the group will be entitled to. This decision must be made at the beginning of the tax year and will be fixed for that tax year, unless a correction is necessary because the total amount of the levy allowance claimed across the group exceeds £15,000. Each employer in the group will then calculate what they have to pay through the same processes set out above, but using only their portion of the £15,000 levy allowance.

Further information
Technical information with worked examples is available in the Apprenticeship Levy manual.

Nadia Sohail
0141 886 6644
nadia.sohail@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in April 2017.

Campbell Dallas chooses electric

April 3, 2017

To coincide with changes to Vehicle Excise Duty (VED) for cars first registered on or after 1st April 2017, independent accountancy firm Campbell Dallas is highlighting the green business benefits of ‘thinking electric’ after acquiring two electric cars for pooled staff use.

The new VED rates could see the tax on some cars, including hybrids, rising by more than 2,000%. However, zero emission electric vehicles costing less than £40,000 will remain tax free, and could also qualify for a government grant of up to £4,500.

Veronica Donnelly of Campbell Dallas Glasgow takes delivery of a new electric car.

Veronica Donnelly, VAT Partner, charging one of the new vehicles

Campbell Dallas has acquired two electric cars which staff can use for business travel. The firm has installed an electric charger at its Glasgow offices, and will shortly be adding a charger at its new office in Perth followed by a second in Glasgow. It is hoped that staff will take advantage of the pooled cars and as demand rises the scheme will be rolled out further across its 5 offices.

Last year the firm also installed 300 solar panels on the roof of its Glasgow offices, producing enough green energy to drive a company BMW i3 nearly ten times around the world – or 250,000 miles. The investment in electric vehicles and solar panels is a core part of the firm’s desire to place sustainability at the heart of its corporate culture.

Chris Horne, Managing Partner, said: “Our staff and clients are very supportive of our commitment to reducing our carbon footprint by investing in electric cars and by generating our own power.  We are planning to expand our fleet so that by the end of the year each office has at least one electric car.”

Making Tax Digital – what does this mean for GDPs?

April 3, 2017

Having spent over 25 years looking after GDPs, I’ve long since learned to take most matters in my stride – the fast approaching introduction of Making Tax Digital (MTD) by HMRC however, is a real cause of concern for the profession and many UK taxpayers.

So what is MTD? – if you listen to HMRC, it’s a simplified tax system where bureaucratic form filing is eradicated, time delays are eliminated, with all taxpayers, including GDPs, having access to digital accounts providing a ‘real time’ update of their tax position. In addition, one of the key aims of MTD is for all accounting records to be kept digitally, meaning an end for paper systems and manual books – so what’s there to fear in all of this?

Let’s consider the reality. The concept of MTD was first issued as a consultation document early 2016, inviting feedback from all interested parties. Consistent feedback from all taxation regulatory bodies was concern over the timing of introduction – put quite simply, matters were being rushed by HMRC. What was HMRC’s response – carry on regardless, and so we have the first warning bell.

Whether we like it or not, MTD will roll out from April 2018 – if you are a self-employed dentist (sole trader or in partnership) this affects you. Quarterly reporting will be done digitally via software or an app but are you (or your software provider) ready? In addition to the quarterly reporting, there will be a final year-end submission which equates to the annual trading accounts and overall tax return position taken together. The quarterly reporting is intended to provide HMRC with an accurate snapshot of the business trading performance – will you be comfortable reporting to HMRC without prior clearance from your accountant?

We anticipate additional work and cost for GDPs, with initial costs for relevant software and training. Whilst financial penalties are unlikely for the first 12 months, this amnesty will then stop as HMRC favour financial penalties as a means of ensuring compliance. Interestingly, MTD provisions include the opportunity to make voluntary quarterly tax payments on a PAYG (Pay As You Go) basis – how long before voluntary becomes mandatory?

Putting this into context, many feel MTD has been rushed out. The testing process will not be complete until January 2019 but MTD starts April 2018. GDPs will need pro-active support as MTD becomes a reality. Importantly, at Campbell Dallas we already have plans in place to ensure our GDP clients are fully supported during the forthcoming transition period.

If you would like further guidance on how to start moving across to a digital platform, please get in touch with me here, or:

01786 460 030
roy.hogg@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in April 2017.

Annual Allowance tapering: beware the impact on 2018 tax bills

April 3, 2017

The reduction in the Annual Allowance (AA) limit (i.e. the maximum pension benefits that can accrue tax penalty) for those with an income of over £150,000 came into effect on 6 April 2016 meaning the first tax year affected will be 2016/17.

The majority of GPs in Scotland ‘earn’ less than £150,000 per annum but the £150,000 limit is based on an ‘adjusted income’ figure which is calculated by taking taxable income from all sources plus the employer’s share of a GP’s NHS pension growth in the year.

Whilst higher earning GPs (with high pensionable profits) have been aware for a few years of the potential for an additional tax charge on their pension growth in a year exceeding the AA limit, this has not been the case for most GPs.

However, GPs with significant other income (e.g. investment income such as dividends, bank interest or property rents) could find that their Annual Allowance limit is reduced from the current level of £40,000 to the minimum of £10,000 due to the new ‘tapering’ provisions. This would mean that some part-time GPs with below average pensionable profits could potentially face an unexpected tax charge, simply due to their unearned income reducing the AA limit.

Any additional tax charge will mean an increase in the tax payable in January 2018, albeit the final amount will likely not be known until the summer of 2018. There will also be a knock on impact to the assessment of ‘Payments on Account’ due on 31st January and July for the following tax year (2017/18).

For those GPs potentially impacted by this change, they should speak to their IFA regarding their options. This could include ceasing added years contracts, reducing income from outside posts (e.g. ‘Out of Hours’) and opting out of the NHS scheme for a period before opting back in.

In terms of meeting such additional tax liabilities, any GPs potentially impacted should start to put aside extra funds although there is the option for GPs to elect for the NHS pension scheme to pay some of the tax on their behalf.

Neil Morrison

01738 441 888

neil.morrison@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in April 2017.

Ardgowan Distillery launches £17 million investors fundraising drive

March 22, 2017

The Campbell Dallas Corporate Finance team, led by Harro Leusink, has been appointed to advise on a £ 17 million funding drive for a new distillery with historic links to King Robert the Bruce.

The Ardgowan Distillery, located 30 miles west of Glasgow, secured planning permission from Inverclyde Council earlier this month and is now seeking investors to bring their ambitious vision to life.

Ardgowan Distillery aerial view from west

Ardgowan Distillery aerial view from west

The project has raised over £500,000 seed capital to date, and the new distillers are advancing their proposals to build a world-class lowland malt whisky distillery and visitor attraction on the historic Ardgowan Estate.

Construction is scheduled to start later this year, with plans to be operational in 2019.

Commenting on the appointment, Ardgowan Distillery chairman and former Macallan managing director Willie Phillips said:

“I think the Ardgowan Distillery is a terrific commercial proposition and Campbell Dallas is the right firm to assist us with this fundraising – they have a strong track record of advising on funding as well as an excellent understanding of the brewing and distilling sector.

“We are planning to build an outstanding distillery of significant scale to make a lowland single malt that will have a distinctive taste and flavour given its proximity to the sea. Our flagship will be a premium seven year old single malt, which I anticipate will establish Ardgowan as a single malt of great character.

“We already have a senior management team in place with proven experience in project delivery, and have brought on board former Bruachladdich and Diageo veterans Gordon Wright and Michael Egan in commercial and product engineering advisory roles.

“Initial production will be around 200,000 litres of pure alcohol (LPA) and this will rise to over 800,000 LPA at full production. The distillery will be scalable with the option to expand production to 1.6m LPA with limited additional investment,” Willie concludes.

Murdoch Maclennan Campbell Dallas Chartered Accountants Partner

Murdoch MacLennan, Campbell Dallas

Commenting on the appointment Murdoch MacLennan, Partner, and Head of Brewing & Distilling at Campbell Dallas said:

“We are delighted to be advising the Ardgowan Distillery in raising further funds. Whisky distilleries are a well-recognised investment opportunity which can achieve strong capital returns and dividend distribution in the medium to long term.

“The Ardgowan Estate, where the distillery will be located, is within easy commuting distance from Glasgow and has tremendous historic connections going back hundreds of years. There is a good water supply and the distillery and visitor centre will be a natural step on a malt whisky route to Campbeltown and the island distilleries.

“The first spirit will be produced in 2019 and the total funding requirement is approximately £17m, which will cover the construction, commissioning and the first three years’ production costs.

“In common with other investments of this type, the distillery is anticipating a mixture of equity, debt funding and public grant support

“Investment will qualify for EIS tax relief for UK investors, and the Ardgowan Distillery will appeal to high net worth individuals, family offices, overseas investors and companies within the whisky supply chain,” Murdoch concludes.

The new distillery will resurrect the name of the Ardgowan Distillery, which was founded in 1896 and located in Baker Street, Greenock. After a few years of whisky production, the distillery was used to make grain spirt and industrial alcohol until it was destroyed in the May Blitz of 1941.

Countdown to beat new business taxes

March 14, 2017

Businesses have until April 1st before new business taxes outlined in the Autumn Statement last year come into force, a leading business tax specialist is warning.

Late last year the UK Government unveiled some 400 pages of new complex tax law, with many of the new taxes being applied from April 1st.

“Businesses don’t have long to make significant tax savings by effectively spending now to save later’” says Mark Pryce a tax partner with Campbell Dallas speaking at a March 14th tax planning event for clients.

He added: “Business taxes are broadly rising, and reliefs and incentives are contracting, with some set to disappear completely. Some of the new business taxes will include reduced relief on capital expenditure and increased taxes for employee benefits. Fortunately, Entrepreneurs Relief remains relatively untouched, which is important as it encourages the creation and growth of new businesses. Businesses with surplus cash have most to gain, but it is important that any tax saving decisions should not jeopardise cash flow, which is the most common reason for trading problems.”

Mark Pryce said that businesses still have enough time to obtain tax savings, including bringing forward company pension contributions before corporation tax rates fall; reviewing the funding of cars used by their Directors and employees (e.g. low emission / electric vehicles can attract the largest savings; taking advantage of 100% allowances for costs of converting disused property under the Business Premises Renovation Scheme before it closes down; utilising the entitlement to 100% annual investment allowance on capex up to £200k; maximising R&D tax credits claims on innovative activities before it is changed and importantly get locked into lower tax on employee perks before they rise.

Scottish regulation update: Independent medical clinics

March 14, 2017

If you are medically qualified and provide care services in Scotland outside of hospital premises, then you or your employer need to register with Healthcare Improvement Scotland as an independent clinic. This is a mandatory requirement. Registration must be in place by 1 April 2017 or you risk prosecution for operating an unregistered clinic, which could result in a penalty comprising a fine of up to £5000 and/or up to three months imprisonment.

Read more about the changes which were brought in from April 2016 here.

The registration process can take some time so the sooner you apply the better. If you have not started the registration process you need to take action now. If you are in doubt as to whether or not you should be registered, please contact us on 0141 886 6644. Our specialist Aesthetic team can discuss your business and if you should be registered.

Veronica Donnelly
0141 886 6644
veronica.donnelly@campbelldallas.co.uk

 

The information in this blog should not be regarded as financial advice.  This is based on our understanding in March 2017.

Campbell Dallas comment on #Budget17

March 9, 2017

Fraser Campbell, Partner and Head of Family Businesses at Campbell Dallas joined a select panel of Scottish business people and commentators at this year’s Herald Budget Briefing in Glasgow city centre, hosted by Iain Macwhirter.

GLASGOW, SCOTLAND - MARCH 09: panellists L-R Graham Murray (Partner, Wright Johnston & Mackenzie LLP), Fraser Campbell (Partner, Campbell Dallas), Iain Macwhirter (Political commentator for The Herald), Professor Ronald MacDonald (Research Professor of Macroeconomics and International Finance (Economics), University of Glasgow - Adam Smith Business School) and Peter Smyth (Head of Public Affairs, Indigo) pose for a photograph at The Herald Budget Briefing Event 2017 at 200 SVS on March 09, 2017 in Glasgow, Scotland. (Photo by Jamie Simpson/Herald & Times) - JS

(L-R) Graham Murray, Fraser Campbell, Iain Macwhirter, Ronald MacDonald and Peter Smyth. Picture: Jamie Simpson

Following a breakdown of the Budget into three key areas; the economy, personal taxation and business taxation the panel proceeded to take each in turn and discuss their deeper insights and answer comments from the audience.

Key themes included further debate over the definition of employed v self-employed; consumer spending bolstering economic growth; what that means for overall growth; and all against the backdrop of an impending Brexit.

Commenting, Fraser said “This a narrow technical budget looking at tidying up some perceived loop holes and inequalities and is very much a “placeholder” for the new main Budget in Autumn 2017 after the Brexit process has started”.

This year’s first Budget certainly contained no big shocks and provided a fairly upbeat message, much needed given the uncertain times ahead.

Read our Budget Summary here.

The 2017/18 Tax Card is available here.

@CampbellDallas on Twitter

Campbell Dallas on LinkedIn

Campbell Dallas reaps dividend of continued investment

February 28, 2017

£1m investment in new Perth office

Next week Campbell Dallas opens a new, larger office in Perth, with the expansion representing an investment of over £1m in the city.

The new office will comfortably accommodate the current complement of 40 staff and partners and there are plans to increase staffing to around 50 over the next two years. Campbell Dallas is already the largest accountancy firm in the Perth area.

The new office opening is marked by the release of the latest set of accounts, reporting a robust year with turnover rising to just under £12m, and staff numbers up to over 200. A programme of continued investment has been key to a successful year.

In the latest set of accounts to 31 May 2016, performance was in line with expectations as the firm continued to focus on creating a high-quality working environment for staff and on delivering outstanding service to clients.

Commenting, Chairman Ian Williams said: “2016 was a solid year for us and we are continuing to win increasing amounts of work across the business this year, with Healthcare, Rural and Family Business sectors performing particularly well. Major transactions during the year included; advice to Innis & Gunn on their acquisition of Inveralmond Distillery; fund-raising for fast-growing technology business, Traveltek, acquisition support to Morris & Spottiswood in the purchase of Lled Construction and several high profile administrations. There has been a marked increase in demand for our tax expertise, particularly in specialist areas such as VAT, international tax and business tax. We also acquired an established accountancy firm in Kilmarnock at the tail end of the year, providing us with a base from which to further develop our business in the Ayrshire market.

Ian Williams added: “Investing for the future has steered our strategy in the last two years, and we will continue with a high investment ratio. Examples include a commitment to a new IT infrastructure that will ensure Campbell Dallas is at the forefront of technology in the accountancy market. We also committed a further £250k to the recruitment of trainees as supporting the next generation of talent, which is one of the hallmarks of the Campbell Dallas approach to people development, which I’m delighted was recognised by our Investors in Young People Gold accreditation.

“The success of our overall strategy is probably best measured by growth in the business – more than 400 new clients have chosen Campbell Dallas during this last year.  We were delighted to win three top awards at the 2016 Scottish Accountancy Awards – Firm of the Year (second year running) with the Corporate Finance Team and Restructuring Team both taking home awards on the night.”

The firm has implemented an active sustainability and corporate citizenship programme. In 2016 one of the largest roof top solar panel arrays in Scotland and launched the Campbell Dallas Foundation that helps staff undertake charitable giving, volunteering and fund raising. The Foundation aims to create a supportive environment that encourages staff to do good for others.

HMRC plans to restrict VAT-free adapted vehicles

February 24, 2017

From 1 April 2017, HMRC will put restrictions in place to limit the availability of “VAT-free” adapted motor vehicles for eligible disabled people. Whilst this is perhaps a niche market, it could prove costly to dealerships that don’t take into account the new rules.

These restrictions have been a long time coming, as it follows a sector wide consultation carried out in 2014, and what HMRC views as being abuse of the relief. It was found that some people were purchasing numerous adapted vehicles in a single year, removing the adaptations and then selling the cars on for a profit. Whilst the original intention was to restrict sales of these vehicles to one car every three years per eligible person, the most recent guidance from HMRC confirms that the relevant VAT legislation doesn’t impose any specific limit on the number of vehicles that can be supplied to the same disabled customer. This may still change before 1 April 2017 however, and regardless, HMRC will expect the supplier to question eligible purchasers of these vehicles where frequent purchases are being made, including where you are aware of these going through other dealerships. Additional records will need to be kept of such discussions, as well as any supporting documentation or certificates obtained to support zero-rating of the sale of an adapted car. HMRC may issue penalties to dealerships that knowingly accept false declarations from disabled persons, or don’t confirm the reasons behind multiple VAT free vehicle purchases.

The Low Incomes Tax Reform Group has recently published a press release over its concerns regarding the restrictions, however its proposed solution is to increase data produced by the dealerships, so if taken forward could increase the compliance required of the dealership by HMRC.

Ultimately, it will be the dealership that HMRC will assess for any VAT they view as being lost due to abuse of the scheme, so it is in your interest to ensure the correct practices are in place.

Jennifer Lockhart
0141 886 6644
jennifer.lockhart@campbelldallas.co.uk

 

The information in this blog should not be regarded as financial advice.  This is based on our understanding in February 2017.

Image: Irina Borsuchenko/Shutterstock, Inc.

Are you ready for FRS 102/105?

February 20, 2017

It’s an exciting time for sure, as extra changes to accounting regulations to make things simpler and better are now upon us.

In 2016 we saw ‘larger’ entities move to reporting under FRS 102 and now smaller and micro entities must embrace the changes for themselves.

So more section numbers and acronyms, but what does it all actually mean?  How might it affect your accounts?

The simple answer to all of the above is that it will depend on the nature of your business BUT it’s crucial that you take this seriously and discuss it with your accountant as soon as possible.

In all cases there will be some minor restatement of accounts and in certain cases there may be considerable changes to the way you have accounted for certain items in your accounts.

If we look at FRS 102A, areas you should start to think about include:

  • investment property
  • goodwill
  • amortisation of intangible assets
  • revaluation of assets
  • non market rate loans
  • holiday pay
  • deferred tax

The output of some of these changes could considerably alter your year-end results.

This may affect how your customers, suppliers, bankers, credit insurers, HMRC, Companies House and other stakeholders view your business, but it’s not all bad news. Some of the changes may be enhancing and may even save you tax.

FRS105 is aimed at micro entities; generally entities who turnover less than £632k and have fewer than 10 employees.  If this is you, then you may wish to skip 105 and adopt 102A. Before you decide on this course of action, discuss it with your accountant.

Why might you stick with 105 accounts? Well, they’re far less onerous than 102A, but that may be the wrong option if you’re a growing entity and will inevitably move to FRS 102A in due course anyway.

So what do you need to do?

You should speak to your accountant as soon as possible to determine how you may be affected. It’s that simple!

The sooner you plan for transition, the sooner you can get back to working on growing your business.

Richard Patterson
0141 886 6644
richard.patterson@campbelldallas.co.uk

 

The information in this blog should not be regarded as financial advice.  This is based on our understanding in February 2017.

 

Investing in passion – the petrolhead investor

February 16, 2017

I was watching the Discovery Channel’s coverage of the Barrett Jackson classic car auction from Scottsdale Arizona the other week, and the vast volume of cars going through the auction got me thinking about the popularity of this sector. One of several big players in the US auction market, they hold 4 auctions a year across America, each lasting for around a week. This equates to the sale of over 7,200 cars a year, most of which are sold with “no reserve”. Attendance at these auctions isn’t restricted to your stereotypical classic car anoraks either, this year attracted celebrities in Justin Bieber, Steven Tyler and Burt Reynolds.

Okay, this was an American auction and you would expect an element of OTT, but how does this enthusiasm for collector and classic cars translate over to the UK? The answer is very well. Crowds flock in their thousands to Goodwood’s Revival and Festival of Speed to celebrate cars of yester-year, not to mention the plethora of car shows taking place on any given weekend around the UK during the summer months.

When people mention classic or collector cars, people immediately think of either pre-war cars or “well-established” classic cars such as Jaguar E-type’s, Jensen Interceptor’s, Austin Healey 3000’s or Lotus Elan’s. However, that is not necessarily always the case.

Collector cars are a generational thing. More often than not the enthusiasts of these cars will put on the rose tinted spectacles and buy the aspirational cars of their youth. For the baby boomer generation this would be the well-established classics mentioned above. For 90’s kids such as myself this may be Escort RS Cosworth’s, Lancia Delta Integrale’s, or TVR Cerbera’s. How long before this moves on a generation and we see a collector car market emerging for pioneering electric cars like the current model Tesla’s – could this even stretch to the Nissan Leaf or the G-Wizz? Surely not…

That said, even now we are seeing relatively contemporary models fall into the collector car bracket. For these cars, limited numbers is key. In 2016, RM Sotheby’s sold a 1995 Porsche 993 GT2 for £1.8m. This represents a return of over 800% on the original cost. This isn’t just restricted to “pie in the sky” cars either. Relatively attainable contemporary limited production BMW’s such as the E46 generation M3 CSL and the Z3 M Coupes have also seen values skyrocket in the last 5 years.

At a time when the interest base rates are 0.25% and with the inherent uncertainties in financial markets at the moment, why not invest in cars? Classified as wasting assets, any capital appreciation in classic cars is exempt for capital gains tax purposes. What are the downsides to ownership? At worst, you would get the enjoyment of a special interest car for a few years; at best you get the latter and a decent return on your investment. Like any investment, of course there are pitfalls, but the sector popularity, if nothing else, is understandable.

David Samborek
0141 886 6644
david.samborek@campbelldallas.co.uk

 

The information in this blog should not be regarded as financial advice.  This is based on our understanding in February 2017.

Image: Sergey Kohl/Shutterstock, Inc.

50 Days To Beat New April Business Taxes

February 15, 2017

Businesses have just 50 days to make significant tax savings before new taxes outlined in the autumn statement last year come into force.

Late last year the UK Government unveiled some 400 pages of new complex tax law, with many of the new taxes being applied from April 6th.

Businesses have a narrow window of 50 days in which to make significant tax savings and minimise the impact by effectively spending now to save later. The 2017 business tax landscape will see reduced reliefs on capital expenditure and an increase in taxes through extensive reforms to employee benefits.

Businesses with surplus cash have most to gain, but it is important that any tax saving decisions should not jeopardise cash flow, which is the most common reason for trading problems.  Business taxes are broadly rising, and reliefs and incentives are contracting, with some set to disappear completely. Fortunately, Entrepreneurs Relief remains relatively untouched, which is important as it encourages the creation and growth of new businesses.

Businesses still have enough time to implement tax savings, including bringing forward company pension contributions before corporation tax rates fall; purchasing electric vehicles (100% capital allowances); taking advantage of 100% allowances under the business premises renovation scheme; maximising 100% annual investment allowance up to £200k; maximise R&D tax credits before they change and lock into lower tax rates on employee perks before they rise.

Mark Pryce
0141 886 6644
mark.pryce@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in February 2017.

6 Deals in 6 Weeks for the Corporate Finance Team

February 13, 2017

The Campbell Dallas Corporate Finance team has reported a brisk start to 2017 after advising on 6 transactions in a similar number of weeks.

The deals involved due diligence and lead advisory work on five acquisitions and one sale, with Campbell Dallas acting for corporates, business owners and private equity firms.  The deals were in a variety of sectors including new media, manufacturing, healthcare and business services – both in Scotland and the wider UK, including an overseas purchaser in a sale.

Deals included, acquisition of Neva by Fleet Alliance; acquisition of Stevenswood by Polyframe; and the sale of Peach Digital to Webedia.

Graham Cunning

Graham Cunning, Head of Corporate Finance

Commenting, Graham Cunning, Head of Corporate Finance with Campbell Dallas said: “We finished 2016 on a high and started off 2017 at a similar level with a variety of high profile and interesting deals.  The team has not only advised on the deal structures, but also on tax and VAT issues, which makes for complex and interesting assignments.

He added: “Despite the unexpected events of 2016 and the continuing political and economic uncertainty, the environment for deal making remains favourable, so it is still a good time to sell or for investment, which augurs well for the remainder of the year”.

Is the “gig economy” facing an Uber problem?

February 6, 2017

The recent Uber employment tribunal decision has once again brought into focus the subject HMRC classify as “false self-employment”. This particular case only involved two individuals, but the potential repercussions could have significant direct tax and VAT implications for Uber and others operating in the ‘gig economy’. Since the Uber decision was announced there have been a number of similar rulings with further cases to be heard. On a wider scale, the case also once more brought into focus the employment status of those operating via their own companies and the impact of rule changes on these individuals and also the companies who engage them.

Uber Tribunal
Uber has always treated their individual drivers as self-employed rather than employed which means that Uber have no subsequent employer national insurance liabilities. In addition the VAT liability falls on the self-employed individuals, the vast majority of whom earn below the £83,000 registration threshold, so VAT receipts are minimal.

Conservative estimates total the number of Uber drivers in the UK at around 42,000, however this number is quickly increasing. Following the decision, it is HMRC’s intention to classify all drivers as having the same employment status. When we consider that employers national insurance is charged at a rate of 13.8% on all weekly earnings in excess of £165 and the fact that for VAT purposes the income will be deemed to be Uber’s, the potential tax amount at stake is enormous.

On a wider scale, research by Citizens Advice indicates as many as 460,000 people could potentially be deemed by HMRC to engage in “false self-employment”.

A historic check
HMRC first took action against the perceived “false self-employment” when they introduced the IR35 legislation back in April 2000. As a result, if an individual operating via a personal service company (‘PSC’) is deemed to have an employment relation with the contracting company then the income received by the PSC from that engagement is subject to PAYE and NIC. The liability falls on the PSC not the contracting company. A number of factors are considered when determining the employment status including control, financial risk, integration and mutuality of obligation – with no one factor necessarily decisive.

As always various solutions were devised to get round the IR35 rules. Managed Service Companies came and went as legislation was introduced to counteract them. However, HMRC has always held the view that the system wasn’t operating as planned and that the IR35 legislation in practice had failed to act as a deterrent to “false self-employment”.

Therefore, over the past few years there has been a number of legislative changes aimed at reforming the system. We take a look below at the major changes and who they impact:

1. Onshore Intermediaries legislation – April 2014
There was initially a good deal of confusion with regards to how widely this legislation applied. Any temporary worker operating through an employment intermediary is deemed to be employed for tax and NI purposes unless they can demonstrate they are not subject to Supervision, Direction or Control (‘SDC’). The SDC definition is very widely drafted and hence very difficult not to be caught by.

However, importantly PSC’s were not caught by the legislation, as they do not meet all the conditions. The main target was agency staff. Agencies also now need to submit quarterly electronic returns detailing payments made to those not on agency payroll, which flags up to HMRC those operating via PSC’s or Umbrella companies.

2. Travel expenses of workers providing services through intermediaries – April 2016
Umbrella Companies are another form of intermediary company. They treat the IR35 legislation as applying and pay individuals salary only, with the relevant PAYE and NI deductions. The Umbrella Company carries out all the administration with the individual paying them a small fee for their services.

However, individuals employed via an Umbrella company, rather than via an Agency, had a major advantage – the ability to deduct travel expenses on the basis they operated at a temporary workplace. As a result the take home pay for the individual employed via the Umbrella Company was greater than their Agency counterpart.

HMRC felt this to be unfair so introduced legislation removing the ability to claim travel expenses. A temporary worker employed by an intermediary is no longer deemed to be providing their services at a temporary office if under the SDC of the end client. This in effect caught all but a very small number of individuals.

What of those operating via a PSC and not under IR35? Most operating in this manner will argue they are not caught by SDC and whether this is the case or not in practice this specific piece of legislation is unlikely to intervene.

With the tax benefits removed from Umbrella Companies their future role remains unclear. Already we are aware of a number of agencies who will no longer take on an individual operating via an Umbrella Company and the Umbrella Company operators themselves are now marketing alternative payroll solutions.

3. Taxation of Dividends – April 2016
Whilst the legislation above may not apply to PSC’s the dividend tax changes specifically targeted them. From April 2016, the classic PSC remuneration strategy of paying an individual a salary up to the personal allowance level and then dividends up to the higher rate threshold will result in an additional tax liability of around £2,000 per annum.

4. Off–payroll appointments in the public sector – April 2017
The application of this legislation seems certain to cause much dispute in the years to come. Once again PSC’s are targeted and importantly there is a responsibility shift from the PSC to the contracting company. The public body will need to determine whether tax and NI should be deducted and are also responsible for the collection; they then pay the PSC the net amount.

HMRC have announced they are developing a ‘simple and straightforward digital tool’ to determine whether the rules apply, which is certain to be controversial. If we consider that the current employed/self-employed test is based on years of case law, the idea that a simple HMRC tool can suitably deal with this matter seems implausible. More cynical commentators have already suggested that the details will be entered into the digital tool and the answer will always be that the individual in question is employed. HMRC may of course point out that in practice those operating PSC’s under the current rules always appear to come up with a self-employed conclusion!

Moving forward
It is widely anticipated that if HMRC deem the public sector changes to be a success they will seek to apply these rules to the private sector as well. As noted above it seems unlikely that the implementation will be smooth, particularly in relation to the digital tool; therefore any changes would appear unlikely to be imminent.

• Employers
Where in the past the risk has always been perceived to be with the PSC, the public sector rules have started to shift this safeguard. Therefore moving forward employers will need to take care and be aware of how the ever changing rules apply to them and the underlying risks.

PSC’s
As things stand PSC’s are still governed by the IR35 legislation, providing they engage with the private sector. However, the change to the dividend regime has already began to remove certain benefits associated with the structure.

With Uber set to appeal the tribunal decision this particular case will likely run in the courts for the foreseeable future as neither party will back down due to the amounts at stake. Of more immediate concern to employers and those operating via PSC’s are the public sector changes and whether they are expanded to cover the private sector.

Campbell Dallas has a specialist team dealing with the issues mentioned above. If you are an employer or operate via a personal service company and would like more information on how the rules may impact your business, please get in touch.

Douglas Forbes
0141 886 6644
douglas.forbes@campbelldallas.co.uk

 

The information in this blog should not be regarded as financial advice.  This is based on our understanding in January 2017.

Campbell Dallas advises Fleet Alliance on 7 figure acquisition

January 25, 2017

Campbell Dallas have worked closely with long-standing client, Fleet Alliance, a vehicle leasing company, as they acquired Neva Consultants.

The Glasgow based company has now completed its first major acquisition in a seven-figure deal giving them a controlling stake in Neva Consultants, an Essex based fleet management firm. Having worked together for the last 10 years, sharing the same IT platform and back-office systems, the two companies also share the same cultural values and business outlook.

The Campbell Dallas team worked with Fleet Alliance, to advise on pre and post transactional areas. Specifically performing a financial and tax due diligence process within a short timeframe and determining the optimal group and deal structure.

Martin Brown, MD of Fleet Alliance said, “The Campbell Dallas business advisory, tax consulting and corporate finance teams have done an excellent job assisting us in acquiring a controlling interest in Neva Consultants. They worked together as a team to provide us with all-round, commercial advice in relation to significant issues for Fleet Alliance in preparation of the transaction, and in relation to financial and operational aspects post transaction.”

Fleet Alliance now stand to increase turnover by a third, to £10 million with a UK presence and staff numbers increasing to around 100.

Martin continued, “The Campbell Dallas Corporate Finance team proved themselves to be both clever and commercial throughout, providing pragmatic solutions and focusing on the key issues important to Fleet Alliance. Their good working relationship with parties on both sides of the transaction assisted in its speedy completion.”

Family Business Centre Stage in January

January 19, 2017

In the run up to The Herald Family Business Awards, I noticed some parallels between many of the business families I work with in Scotland, and a well-known business family in the United States.  This particular family business will continue to attract substantial interest and give rise to discussions on issues that will interest and affect Scotland’s family businesses.

The head of the family and business empire is a man in his 70s.  This ties with many family businesses here in Scotland established by the ‘baby boomer’ generation in the 1950s and 60s to support their families in face of massive structural changes in the industrial base and employment.  Many of these baby boomer founders are still at the helm of their families and businesses, with successive generations also involved in the business.

As social attitudes and behaviours evolved in the latter half of the 20th century it became common for family businesses to have “splinter” branches arising from failed marriages. To be in a third marriage is, I would suggest, somewhat less common here in Scotland.  Where the wealth base is limited, the fracturing of families can have a significant impact on business performance and the long term prosperity of the family.

There will have been some impact on the US family’s wider wealth and prosperity as a result of these marital break-ups, albeit the overall impact is likely to have been less severe than I would typically see within my client base.

Retirement doesn’t come easy to the baby boomer founder.  Having spent a life focused almost entirely on business and family, they often lack enough external interests. It is frequently easier to keep working than retire or develop new passions.  Avoiding retirement is also a way of ensuring that children in the business are monitored and family harmony is maintained.  Succession is the single most difficult issue faced by all families in business and the point at which most family businesses either fail entirely, or break up.

The US family is about to enter a period of either four or eight years of “forced retirement” through the founder being required to place all decisions relating to business activities at arms length while he takes up another leadership role.

This is an unusual situation and presents an interesting case study on the management and sustainability of family business.  Will the senior family member be able to keep focus on the new day job without dipping back into the family business, despite publicly stating that is his intention?  Will the children take the business in a direction approved by the founder?  What will happen after the four or eight years of forced retirement – will life be returned to normal or will retirement become permanent?

Future events and issues will change matters for the family, and indeed all of us, over the next four or eight years.  On a micro, family level, the dynamics at play are fascinating to those of us looking in from the outside.  I doubt we will ever know the true extent of the impact of the forced retirement on the family and their business.  It will not stop the speculation though!

Even if Scotland’s business families do not have the unique challenges that our US family is about to face, the question of succession management is still the biggest issue that families in business face.  The simple act of talking about the issues is a big hurdle for many families to overcome.  When business is all consuming and when it is easier to suffer in silence in order to keep harmony, families have a tremendous capacity to “just do nothing” about succession.

Doing nothing is the worst choice.  Time and natural events inevitably intervene and can severely erode the family’s capacity to cope with change through a time of crisis.  It is better to plan and act while the sun is shining, not when the storm is in full spate.

If you recognise this issue but don’t know what to do next, seek counsel from the various family business networks in Scotland, or speak to a professional formally qualified to advise families in business.

Jumpstart joins our “Best of Breed” portfolio

January 12, 2017

We have added Jumpstart, the R&D tax credit specialist, to our portfolio of third party ‘Best of Breed’ suppliers of specialist business services.

The partnership with Jumpstart provides Campbell Dallas clients with seamless access to specialist advice on the complex tax credit and management issues that companies have to tackle when investing in R&D. Since launching in Scotland, Jumpstart has helped Scottish businesses recover £84.9m of tax credits.

The service from Jumpstart will be marketed under the Campbell Dallas ‘Commercial Services’ brand, which provides clients with access to expert advice from selected independent specialists. Other services currently available under the Commercial Services brand include Insurance, Health and Safety and HR.

Commenting on the new partnership with Jumpstart, Chris Horne, Managing Partner at Campbell Dallas said: “We have been working informally with Jumpstart for a number of years, and are delighted with the cash flow benefits they have produced for our clients. This new partnership formalises our collaboration and we are delighted to now be offering Jumpstart’s expertise within our ‘Best of Breed’ portfolio.”

Brian Williamson, Managing Director of Jumpstart added “This agreement builds on the success of our current relationship, and takes us to the next level of co-operation. Our joint aim is to provide businesses with access to the highest possible levels of service, knowledge and expertise in this very specialised area of technical consultancy. We have already generated £750,000 in tax relief for Campbell Dallas clients, and plan to double that this year.”

IFS Inheritance Tax Clampdown

January 6, 2017

The Institute for Financial Studies issued a briefing note on 5 January 2017 entitled “Inheritances and inequality across and within generations”.

The note identifies that today’s elderly have more to bequeath than their predecessors, due to rising house prices, and that it will be more difficult for today’s young adults to accumulate wealth of their own due to a variety of economic factors.  The conclusion drawn is that inherited wealth will play an increasingly important role in the lifetime resources of younger generations.

The note goes on to point out the implications of this for social mobility – current pensioners with the highest lifetime incomes are also those who have inherited most in the course of their lives.  87% of people born in the 1970s and in the top income quintile expected to receive an inheritance, compared to 58% in the bottom income quintile.

This led to a discussion by Paul Johnson, the IFS director, on Inheritance Tax.  In the absence of any planning or reliefs, Inheritance Tax will of course reduce any wealth being passed down a generation on death by 40%.  He stated that on Inheritance Tax “there are some really absurdly obvious loopholes in it that one might want to sort out”.  In their Green Budget in 2015, the IFS proposed the abolition of Business and Agricultural Property Relief, as well as the lengthening of the period in which a gift will be a Potentially Exempt Transfer from 7 to 15 years.

Business Property Relief (BPR)

BPR and its farming cousin Agricultural Property Relief (‘APR’) provide an exemption from IHT for certain assets.  The main focus for entrepreneurs is that shares in an unlisted company will generally be exempt from IHT.  It is easy to point out a certain inequity in this.

Mr Smith owns a window manufacturing company (having found the widget manufacturing market to be crowded out, he moved on to the next item in the dictionary).  The company is worth £10m, and he is close to concluding a sale for this amount.  Mr Smith is fatally killed in a freak accident by a falling meteorite (he doesn’t live near a bus route).  No Inheritance Tax is paid in relation to his shares, and his daughter to whom he leaves the shares completes the share sale the following day.  No capital gains tax is due as her base cost in the shares is market value on the date of her father’s death.

In an alternate reality, Mr Smith narrowly avoids the meteor and completes the sale.  Capital gains tax of c.£1m is payable.  The next day, giddy with his new found fortune, he goes bungee jumping and is run over by a bus on the way home.  Inheritance tax is payable on the £9m of cash which he leaves to his daughter at 40%.  The date of signing of the deal has reduced the amount inherited from £10m to £5.4m.

The tax rules are functioning here to encourage entrepreneurs to retain their shares until death if they wish to optimise the tax position.  This does not seem either fiscally or socially healthy.  However, it is arguable that what is unfair is the existence of the tax and not the existence of the relief.

Inheritance Tax Planning

Mr Johnson also noted that “The problem with inheritance tax is that it is very hard to make it work for the really wealthy. It is the middlingly wealthy who end up paying it because it is pretty easy, if you can give money away during your life, or use trusts and so on, for people who have got serious money not to pay the full 40%”

The key here is that Inheritance Tax is a tax where planning opportunities continue to exist, and not exclusively for the very wealthy.  Planning need not be expensive, certainly compared to the 40% tax burden which will arise in its absence.  We would advise the “middlingly wealthy” to be engaged in a discussion with a tax specialist on how they can seek to legitimately minimise the loss of wealth to future generations of their family.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

0141 886 6644
craig.coyle@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in January 2017. Laws and tax rules may change in the future.

It’s been a most wonderful year [life]

December 22, 2016

People say “don’t look back”, as if looking back on something is bad. But for me, looking back is something I’m incredibly proud to do at this time of the year; because looking back helps me look forward. Like the engines of a space rocket surging into space, looking back is what propels me forward.

2016 has been jam-packed with great things for Campbell Dallas. It’s been a year of change and really making tangible the growth of our firm. As I write this, it’s also just shy of 40 years since the Dallas side of Campbell Dallas was formed. Most of our staff are under 40, meaning most of them weren’t even alive at the time Bob Dallas started out. Unfortunately I was!

A mere 12 months ago our numbers were looking pretty good. We were sitting at 170 staff, 19 partners, 4 offices and an £11m turnover. Now these numbers are sitting at 210 staff, 21 partners, 5 offices and we are heading towards £14m turnover.

Just because I haven’t thrown enough numbers at you, this year we also had 67 students go through exams while working with us. Students are doing various qualifications such as AAT, ACCA and CTA; amongst others. Campbell Dallas is an award winning training firm accredited to the highest standard by both ACCA and ICAS – something I’m very proud of.

For me, investing in the next generation of accountants is part of a successful firm. This year, Investors in Young People awarded us gold status saying, “This represents a true commitment to the training and development of young people and demonstrates Campbell Dallas LLP as an employer of choice for young people. This is a fantastic achievement, and testament to your effective practices around Youth Employment.”

2016 saw us winning the hat-trick at the Scottish Accountancy and Finance Awards; Firm of the Year, Corporate Finance Team of the Year and Restructuring Team of the Year. The best part of the award ceremony was being able to stand beside my colleagues on stage. A special thanks to Graham, Ali and Gerry for being with me for the CF award.

business insider best accountancy firm in Scotland 2016 - campbell dallas

L-R: Gerry McLaughlin, Graham Cunning, Me and Alastair Woodburn receiving the Corporate Finance Team of the Year award.

We expanded our office locations this year when we bought W White & Co of Kilmarnock. The Kilmarnock office came online with us in September and brings with it new people who are full of new ideas and enthusiasm. I look forward to 2017 as they fully integrate and feel the Campbell Dallas love.

Campbell Dallas aquisition of White & Co, Kilmarnock. Pic shows Chris Horne (Managing Partner of Campbell Dallas) with Bill White and Donald Boyd and Nicola Campbell in the Kilmarnock office. Copyright Ashley Coombes/Epic Scotland 2016© Free for editorial use image, please credit: Ashley Coombes

L-R: Nicola Campbell, Me, Bill White and Donald Boyd on the day we incorporated W White & Co into Campbell Dallas

But in 2016 we are a firm of leaders and not all are accountants. Our support functions keep the firm running and we’ve expanded across facilities, marketing and administration too. New people and new ideas are part of propelling us forward together and developing our culture.

Being an attractive place to work is something we’ve worked hard on this year too. We’ve always been a flexible employer and we advocate flexible working and then we make it a reality. We have staff at all levels working hours and days that fit into their lives outside of work. Life isn’t confined to out with the 9-5, and vica versa. Being flexible helps us to develop a happy staff culture; it’s not your fault if the commute into work was extra busy today and you ended up being 15 minutes late. We’ve also made sure that what people get back is fair too and we are a living wage employer.

Success isn’t just about getting bigger, making more money or employing more staff. It’s also about what our firm stands for and what the bedrock of our culture is. In 2016 we formed the Campbell Dallas Foundation. Someone else who definitely was alive 40 years ago, my partner David Hunter, has always had a close affinity with helping others. This has always been part of our DNA, so it was a natural course to take in setting up the Foundation. The ethos is simple – support a range of causes that are dear to the people of Campbell Dallas. Since July funds from the Foundation have matched staff fundraising across all of our offices for 18 different good causes.

In January we installed one of Glasgow’s biggest rooftop solar arrays and to date we have offset over 25 tonnes of CO2 – despite the bad weather.

All in all it has been a year to be proud of and that pride should extend to every person who works here. Now it’s time to look forward to 2017. I look forward with hope and optimism.

Season’s greetings and best wishes to you and yours for the coming year.

Chris Horne, Managing Partner
0141 886 6644
chris.horne@campbelldallas.co.uk

Post-Brexit Bounce?

December 22, 2016

We’re well and truly into the post-Brexit period and as Corporate Finance Partner at Campbell Dallas I’ve been looking back at Q3 deal flow. Although it’s still too early to call, this is the 1st quarter post Brexit vote, and may help to start identify what the next two years or so may hold for the Scottish & UK deals market.

Our CF team has never been busier; indeed from September in particular there has been a significant upturn. So rather than Brexit slowing deal flow, we’ve actually been experiencing the opposite. And it’s not just an increase in the volume of deals, we’re seeing more non-Scottish and foreign buyers and investors actively seeking opportunities and closing deals we’re advising on here in Scotland.

What we do know is that the post Brexit fall in Sterling is a boon when it comes to foreign buyers accessing the UK market. But we also know that quality Scottish businesses with a proven business model, good growth prospects, and a clear competitive advantage remain attractive to trade and institutional buyers.

So if there is a storm to come, then I think quality businesses will weather it. They’ve faced change and uncertainty before, and I’m sure that whatever Brexit eventually brings, they’ll find a way to be resilient, adapt and take advantage of any change.

My fellow Corporate Partner, Chris Horne agrees, “I’ve heard some comments that deals have been falling over as a result of the Brexit vote, but we’ve seen a sustained increase in M&A activity, really since early summer, and our deal pipeline is showing no sign of reducing. The reality is that while there’s been a lot of talk about Brexit, until the negotiations start in earnest, no-one really knows how it will affect companies and deal making”.

I’m also noticing a trend in trade bidders from south of the border, the US and elsewhere making unsolicited enquires to companies we’ve been hired to advise. The post Brexit quarter, and the subsequent period, has held up very nicely, and we don’t see any evidence of this slowing down in 2017. Investment in the UK in our experience isn’t being stunted as much as some commentators previously forecast.

It will take some time for the Brexit fog to clear but I don’t think this will be anytime soon, and in the meantime I think our Corporate Finance team will remain very busy advising and supporting our clients.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

0141 886 6644
graham.cunning@campbelldallas.co.uk

 

The information in this blog should not be regarded as financial advice.  This is based on our understanding in December 2016.

Voice recognition and driverless cars

December 16, 2016

I was a non-believer, a cynic you may say, when it came to the subject of connected and driverless cars. Why would you want to pass on the pleasure of driving to the latest and greatest microchip? Even the first electric car I fell in love with came unstuck when it came to range anxiety, charging points and most importantly, maxing out at 124 miles per hour – and they called it a super car?!

Toy robots_web

You call this a super car? Where do I plug it in?

I’ve watched the nonsense of driverless cars, including a tragic incident in the US with a test driver in the last year. So what has changed? Well a friend of mine gave me a present at the weekend. Not one I had any desire for, yet it is magic. I have to add this is not product placement, however the little £44.99 Amazon Echo Dot has shown me the light when it comes to home automation. And with home automation the most expensive item at the home is the car. I’ve been able to call up 40 million songs without touching a tablet or smart phone. It is not just the gimmick of voice recognition; it does genuinely tell me the time, date, weather and even (I kid you not) do my 12 year old son’s chemistry homework “Alexa what is the chemical sign for platinum?” You get the picture.

Yes it is a bit crude and perhaps it will be on the scrap heap quicker than the 1970s Teasmade that was the pioneer to the connected Nespresso machine; however I now see in my lifetime robotics being able to take on tasks like clear the dishes, do the ironing and make a cup of tea. So where do cars come in? Well Amazon are ahead of the game in that they have collaborated with BMW and built the connected car functionality of the latest generation BMWs. You can yell at the device to ‘heat up the car’ and it does so.  Home, and hence vehicle, automation is here to stay – I’ve seen it first hand and I’m away to ask Alexa what the best route to the office is tomorrow.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

0141 886 6644
donald.boyd@campbelldallas.co.uk

Higher earners in Scotland to pay more tax #ScotBudget

December 16, 2016

Yesterday’s #ScotBudget deployed the new Scottish tax powers. However given the range of tax powers they have, it was the proverbial drop in the ocean. Mark Pryce, Tax Partner at Campbell Dallas noted, “Unsurprisingly, however, it was only one of the powers which was actually unleashed.”

Mark Pryce Campbell Dallas

Mark Pryce, Tax Partner

The Scottish Government chose to pin back the band at which Scottish taxpayers start to pay the higher rate of tax at 40% with only a small inflationary rise to £43,430; whereas the rest of the UK will be at £45,000 from 6 April 2017; rising to £50,000 by the end of the UK Parliament. This leaves Scottish higher rate taxpayers £314 worse off next year than their counterparts.

Further admin hassle for UK business

The planned change also places more emphasis on all UK employers to identify their Scottish resident employees. There is now a much bigger financial impact on the Scottish economy than before and going forward Scottish taxpayers will now have to get different PAYE treatment. It is estimated that the proposal will affect over 400,000 individual taxpayers.

This Scottish Government divergence on income taxes could herald the start of further changes and an extra burden for Scottish and UK businesses. Indeed there remains further scope for different bands and rates to be introduced in next year’s #ScotBudget; provided yesterday’s proposed changes get pushed through the Scottish Parliament in the Spring. However, laid on top of 400 more pages of UK Finance Act 2017 new tax legislation, this merely adds a further considerable administrative headache for employers to contend with.

Mark added, “Is it enough of an increase to start a “brain drain” of Scottish talent to other parts of the UK? Probably not, well not yet anyway.” However some higher rate Scottish taxpayers may be starting to feel slightly aggrieved and a little uneasy at their net take home pay being out of kilter with their English colleagues.

Making tax digital: coming to a rural business near you soon…

December 12, 2016

Making tax digital was a bold aspiration set out by the Government in last year’s budget. The vision is to make the tax system for businesses operate much more closely to “real time”, as opposed to the current system of reporting information on tax returns and paying liabilities long after the end of the tax year. In this blog I will explore how this might be implemented within rural businesses from what we know so far. The Government’s consultation findings won’t be reported on until early 2017.

From 2018, the proposal is that most businesses, self employed and landlords will be required to keep track of their affairs digitally and update HMRC at least quarterly via their digital tax account. Businesses will be required to use digital tools, such as software or apps to keep records of their income and expenditure. These measures will not apply to individuals in employment or pensioners unless they have secondary income of more than £10,000 per annum from self employment or property. A consultation period has been running throughout 2016, and to say the proposals have been controversial would be an understatement. The consultation suggests that making tax digital will help to reduce the tax gap and contribute £945m to the exchequer by 2020/21.

As the pace of technology continues to develop and become part of every day life I think it is right to pursue a digital agenda. Paper is disappearing, more businesses are transacting online, and there has been a significant reduction in the use of cash in the economy due to the rise of smart and contactless payment methods. Once the digital tax regime has bedded down we will wonder how we coped under the old system. But a change to our tax system of the magnitude proposed should not be compressed into an arbitrary timetable. There are so many things that have to be put in place, not to mention the poor internet connection speeds and lack of broadband infrastructure in rural areas.

There is a feeling it’s a one size fits all approach, the scope covering businesses with many millions of turnover to businesses with profits below the tax threshold. For rural businesses quarterly digital updates do not line up well with the overall objectives of cost savings and certainty around tax liabilities. The seasonal nature of farming means that quarterly updates are unlikely to provide meaningful business management information or figures from which a tax liability can be accurately estimated. Estates and some family businesses can have complex ownership structures and very diverse activities. It would be difficult and expensive to fit such an economic unit or individual entities into a quarterly reporting framework.

Looking more widely at rural businesses, many individuals are self employed as rural employment opportunities are more limited, and some are essentially lifestyle businesses. It has been challenged throughout the consultation process if a digital solution is appropriate in these cases, and whilst I have no doubt digital will be the destination, perhaps a more phased and proportionate implementation would provide a better long term result. Any transition to a new system takes time, and in order to gather high quality data in the scale being suggested requires a sensible timetable to ensure it’s achieved.

HMRC have already confirmed data will be transmitted via a secure, encrypted system, with businesses and individuals requiring to build in further measures to keep data secure going forward. The consultation period closed on 7 November, and we must wait until after Christmas to hear the outcomes from the consultation process and governments final plans. More updates to follow….

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

01738 441 888
ian.craig@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in December 2016. Laws and tax rules may change in the future.

What impact might Brexit have on rural businesses?

December 6, 2016

After the unexpected Brexit result, many people in the farming sector are considering what impact this is going to have on them. Could this be a positive springboard for change, or will it have negative consequences?

My view is that the short term economic impact of Brexit has been largely positive for farming so far. The devaluation of sterling has increased the cost of food imports coming into UK and increased the subsidy income. I suspect the low value of the pound against the Euro will be here for some time. There are so many unknowns with Brexit and we’ll likely see the worldwide financial markets will remain cautious over the UK economy for some time.

Another positive change brought about by Brexit was the drop in interest rates. A quarter percentage point reduction is not going to make huge savings, but those expanding can secure fixed rate borrowing at very low rates. Land has traditionally been a safe asset and for this reason banks are generally supportive of farmers expanding and buying land. I don’t foresee agricultural land dropping in value, despite the poor prices across most sectors.

So has Brexit been good news for farming? Short term yes, but long term the concern is over what level of support will come from the newly re-formed UK Government. The news that the current CAP regime will remain in place until 2020 was expected. To replace the various schemes throughout the UK would be too difficult a task to undertake. The uncertainty is what comes after 2020. In Scotland, I believe a large part of the political divide sees farmers as wealthy landowners. At a UK political level agriculture may be low down the agenda and the reality is farming no longer represents a large part of the UK economy. Contrary to popular opinion I would expect a large reduction in subsidy and it would be a good idea for businesses to plan for that.

As an industry we now have an opportunity to wipe the slate clean and plan for what we want farming subsidies to look like after 2020. An area based system is unlikely to serve the industry well, because:

1) The UK public are unlikely to support an area based subsidy. Generally the public are not aware of how much farmers receive in subsidies or how the CAP system works. I believe the public perception is that other countries in the EU are getting subsidy payments so “our” farmers are entitled to it. As an industry we need to be prepared for more scrutiny and publicity and therefore not blindly lobby for more of the same, or a subsidy system mirroring our European neighbours.

2) An area based subsidy system creates inefficiency in farming. I appreciate that farming in some parts of the UK would be impossible without subsidy. But for many farming businesses subsidy only hinders the drive for efficiency and profit, encouraging businesses to act in irrational ways. It has also played a part in restricting structural change in farming and land ownership. I can only comment on the Scottish system, but here the CAP regime has encouraged landowners to retain land, often to claim subsidy for little farming activity.

3) The environmental benefits delivered by farmers must be separated from food production. The message needs to be delivered that the environmental measures have a cost to the farmer for giving up time, profit and often land. Ideally the environmental measures should be largely optional for farmers, leaving the Government to decide on how much they want to encourage and pay to deliver environmental policy.

There will be many competing interests starting to lobby Government on farm subsidies post 2020. It is important that we as an industry start to establish a clear vision of what we want. To do this we should ignore the current area based system, and instead look towards a system which is largely optional, rewards environmental measures. Of utmost importance, we need to ensure we secure the support of the UK public.

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

01738 441 888
andrew.ritchie@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in December 2016. Laws and tax rules may change in the future.

Do you know about Mineral Extraction Allowances?

December 1, 2016

We have recently had significant success advising on Mineral Extraction Allowances (MEAs) claims. This highly lucrative tax incentive is available for capital expenditure incurred in connection with mineral extraction; typically in the mining and/or quarrying industries.

Given the specialist nature and huge complexity of the MEA regime, it’s likely that many companies are failing to spot this opportunity. A few companies have simply overlooked the relief as it tends not to be widely publicised. Some potential claimants are even unaware that they are in fact carrying on qualifying activities. Whilst the claimant must be carrying on a “mineral extraction trade” we have come across some situations where the mining or quarrying company has still managed to access the relief; despite not owning the land.

MEAs are particularly valuable given that the conditions for qualifying expenditure cover expenditure which would typically not qualify for any type of UK corporation tax deduction. For example, infrastructure capital expenditure on the construction of roads and tunnels, site restoration costs and similar items do tend to qualify for MEAs.

On some occasions we have identified that even although MEAs were not available on the full amount of the capex spend, we were still able to help unlock valuable capital allowance claims on processing, plant, machinery and fixtures.

We are currently helping our clients to reduce their tax bills, where their activities include sand & gravel extraction, hard rock mining and in the field of geothermal energy. Our team have strong experience of pulling together large MEA claims. Our clients in this sector have been delighted with our proactive approach in this highly specialist area.

To find out if your company may qualify for MEA tax relief, or to discuss any of the points raised in this blog please get in touch with me here, or:

0141 886 6644
mark.pryce@campbelldallas.co.uk

The information in this blog should not be regarded as financial advice.  This is based on our understanding in December 2016. Laws and tax rules may change in the future.

Spend to save company tax before April 2017

November 25, 2016

Wednesday’s Autumn Statement got me thinking. What should your business be doing in the short and medium term to obtain the benefit of existing tax incentives which are disappearing? And what is round the corner that you should be planning for?

CORPORATES

Corporation tax rate cut from 20% to 19% in April 2017, then to 17% in 2020

It’s maybe too obvious but don’t overlook this in your forecast models. A lower rate of tax is great, however expense deductions are worth more now than in just over three years. Consider whether to accelerate expenditure on medium term projects.

Whilst there is an upside for companies with large deferred tax balances, those with DT assets may suffer a one-off P&L hit when the 17% is enacted.

Use your tax losses

The rules on utilising corporation tax losses are becoming more flexible. For some there will be immediate relief against profits from other sources for post 1 April 2017 losses. For some larger companies there could be a major restriction as brought forward loss relief will be capped.

Review your debt profile!

Corporation tax relief on interest payments will be restricted after 1 April 2017 for some larger companies. International groups will be hit hardest – firstly in their heads; the new rules are complex and difficult to navigate. Secondly, in their pockets; there is a widely held view that this measure is likely to be a major upwards driver of the effective tax rates for global businesses which traditionally debt fund local operations via intra group loans.

Research & Development tax credits

The current system has fairly generous tax relief which acts as a major incentive to innovate for all types of business; small to large.

It was announced that this is under review – it could mean more generous relief for larger corporates but the impact on SMEs is not known. If your business has substantial R&D activities, act now and claim your entitlement and be prepared for a new regime coming into effect over the next few years.

Capex

For those in the business of buying (or producing) energy saving products of building energy efficient infrastructure – some incredibly good tax incentives are on offer. This was further enhanced by commitments to offer 100% tax first year allowances on ultra low emission (electric cars) charging points, in addition to existing tax incentives for ultra low emission  vehicles (100% FYAs) already available, and a low Benefit in Kind regime for employees provided with such vehicles for private use by their companies.

Business Premises Renovation Allowances (BPRA)

This scheme offers 100% relief on costs of converting disused property in certain (nationwide) postcodes. Many areas in Scotland are covered. The scheme ends in March 2017 and there was no indication by the Chancellor this will be extended.

OTHER BUSINESSES

Incorporate or not?

With company rates being drastically reduced there are some significant tax benefits for many businesses as well as certain protections against commercial risk to consider.

Whilst the upside is the lower CT rate, businesses need to be aware that in some circumstances funds can be locked away for several years. For those businesses reinvesting in capex and building up capital however, this can be highly attractive; with the added tax incentive of achieving a lower (via Entrepreneurs’ Relief) 10% capital gains tax rate on disposal of the business at a later date.  A welcome bonus to reward hard efforts of entrepreneurs!  And there was no tinkering with Entrepreneurs’ Relief announced in the Autumn Statement; perhaps a positive indication that it’s most likely this relief will be around for quite some time yet.

There will be significant changes to the Partnership tax rules on a number of fronts, particularly in the way profits share is allocated to the partners. This is likely to be another reason many businesses may seek the certainty and in some instances relative simplicity of the corporate tax regime instead. We will know more shortly when the new legislation is finally published.

Share ownership incentives

Put simply, these could be on the way out. They were in flavour with the previous Chancellor but appear to be out of fashion with the new Conservative regime. For those considering implementing an Enterprise Management Incentives (EMI) share scheme it might be worth progressing with this sooner rather than later, or you may find it will disappear at some point soon.

ALL BUSINESSES

Review your employee benefits

The tax impact of alternative to cash salary tax efficient arrangements is changing. Whilst the Government do like pensions and electric cars, gym memberships and mobile phone salary sacrifice options will be gone over the next year or so.

There have been major changes to PAYE Settlement Agreements (simplified in some cases) and to the tax rules on termination payments which have continued to cause large scale confusion over the years. HMRC expect employers to get their employer tax compliance absolutely spot on; and in my experience they deal harshly with those who overlook their obligations and get it wrong.

Finally,

Prepare for “Making Tax Digital”

The announcement has now been delayed to January 2017 despite several Government promises. This is likely to have a massive impact on all businesses, not only in software development costs, but in business disruption; particularly if as expected a quarterly reporting regime is introduced in 2018 to 2020. Watch this space!

 

If you want to discuss any of the points raised in this blog please get in touch with me here, or:

0141 886 6644
mark.pryce@campbelldallas.co.uk

 

The information in this blog should not be regarded as financial advice.  This is based on our understanding in November 2016. Laws and tax rules may change in the future.

Autumn Statement – our key stand-outs

November 24, 2016

The new Chancellor, Phillip Hammond, presented his first Autumn Statement, against the backdrop of Brexit, Trump and under the direction of a new Conservative regime.

Our experts at Campbell Dallas were on tenterhooks in anticipation of what many thought would be a very interesting Statement. Indeed, it did not fail on that front.

Below we set out some of the key stand-outs from Hammond’s first (and last) Autumn Statement.

  1. This will be the last Autumn Statement as we know it. From 2018 there will be a Spring Statement and the main Budget will take place in the autumn. To ready for this, it has been confirmed that in 2017 there will be two Budgets; both a spring and an autumn one.
  2. Salary sacrifice for BIK (Benefits in Kind), for the likes of mobile phone contracts and gym memberships will be scrapped. However pensions, childcare, low emission cars, and cycle to work schemes will be exempt, so there are still tax saving incentives available for businesses in these areas. Note that there are phase out timescales for the benefits affected.
  3. Commit to cut Corporation tax to 17% by 2020, but not as low as 15% as previously proposed by George Osborne. This is still an incredibly low rate, well below that of many other major countries (more than half the current US rate) and a huge business tax break for multinationals contemplating locating their activities in the UK.
  4. It was announced that an estimated £2b will be raised from a clamp down on Tax Avoidance schemes. This is perhaps the price to pay for a low corporation tax rate and a lower capital gains tax rate of 20% for individuals. We are seeing that there has been not only a complete clamp down on so called aggressive planning structures, but a wider tightening of the general tax compliance regime by HMRC and a harder line taken in genuinely commercial situations.
  5. Insurance Premium Tax will increase from 10% to 12% by June 2017, having an impact on the consumer cost of insurances (car, home, buildings, etc).
  6. The higher rate tax threshold will rise to £50K by the end of this Parliament as planned. Note that the Scottish Government have set their own higher rate tax threshold and it cannot be anticipated that they will raise it beyond more inflationary increases from the current £43,000 threshold.
  7. More money for devolved parliaments for infrastructure projects, with an extra £800m for Scotland.
  8. More complexity in the R&D tax credits regime, although there is a promise to build on the existing above the line regime (RDEC).
  9. £1bn funding for upgrading digital infrastructure, including 5G mobile. A huge opportunity for many of our Scottish based tech companies.

Our experts are always available to discuss any concerns or thoughts. Speak to your usual contact, or your nearest office.

 

The information in this news item should not be regarded as financial advice.  This is based on our understanding in November 2016. Laws and tax rules may change in the future.

Tax can fund expansion of craft brewing & distilling

November 15, 2016

The expansion of Scotland’s buoyant craft brewing and distilling sector is being curtailed because attractive tax and investment incentives that can finance growth and brand development are being over-looked.

Murdoch MacLennan, a finance industry veteran and head of our Brewing & Distilling sector, says that businesses can get distracted by the production process rather than focus on creating, funding, building and protecting high value brands.

“Scotland’s craft and micro brewing and distilling industry is thriving and creating outstanding products, but valuable tax and investment incentives are often being overlooked” says Murdoch.

“If tax management is used tactically rather than reactively, valuable savings can fund cash flow and allow a business to invest in R&D, technology, brands, sales and marketing. Craft brewing is booming globally, but it is exceptionally difficult to move from being a micro business to building a valuable national, or international brand.”

“Cash flow and working capital are crucial in the early years, and we need to help more entrepreneurs to use the tax system incentives to fund growth. For example, certain investments will attract 100 per cent tax relief, which coupled with grants and incentives means that many of these businesses are missing out on valuable cashflow.”

He added: “In the medium to longer term, success in the brewing and distilling industry is determined by building a strong, protected brand able to command a premium, however the product is sold to the consumer. Strong brands also tend to become acquisition targets, and hence offer more potential for an exit to a bigger business, and we are starting to see more evidence of these outcomes.”

An example of a company in the sector which has built a distinctive brand is Innis & Gunn.

Innis & Gunn has maximised available tax incentives such as R&D and reinvested the cash saved in building its brand. The strength of that brand both nationally and internationally (70 per cent of their turnover comes from overseas) has enabled the company to expand and raise further funds for expansion. Last year just under £3m was raised through a Mini Bond, helping fund the acquisition of the Inveralmond Brewery.

 

Chairman Tony Hunt says:

“The power of the Innis & Gunn brand is central to the success of the business, and is a key component in attracting investors to our Innis & Gunn community.”

 

Our brewing and distilling team has expertise in Tax, VAT, R&D grants, duty, export regulations and IP.

Innis & Gunn are currently crowdfunding to support the expansion of their award-winning Beer Kitchens. Find out more about their crowdfunding here.

Murdoch MacLennan
0141 886 6644
Murdoch.maclennan@campbelldallas.co.uk

Campbell Dallas advises Traveltek on securing £5.3m funding

October 19, 2016

Traveltek, the fast-growing creator of bespoke booking systems for many of the world’s leading travel, cruise and hotel businesses, has secured £5.3m funding from the specialist private equity fund manager, YFM Equity Partners (YFM), to help finance a major global expansion programme.

Traveltek provides travel retailers, agents and wholesalers with the technology to sell an extensive range of hotels, flights, cruises and ancillary travel services in one seamless transaction.  The company has a rapidly expanding client base of household travel trade names including Hay’s Travel, Trailfinders, Co-operative Travel, the Flight Centre, Emirates and Barrhead Travel.

The business has grown from a start-up in 2002 to employing nearly 100 staff and turning over £4.3m.  The company processes many millions of lines of data every day, and its systems underpin the day-to-day booking operations of a growing number of travel trade businesses across the world.

traveltekblue

The investment will help expand the international office network from four to 12 offices and increase staff numbers from 100 to c. 200 during the next three years.  Significant investment will also be made in the development of the next generation of bookings software technology, systems and processes.

The new offices to be opened will include Sao Paulo, Shanghai and Dubai, joining Traveltek’s existing offices in Miami, Sydney and Hyderabad in India, which is a development centre.

Commenting on the investment and the strategy for growth, Traveltek Group Managing Director Kenny Picken said: “We are delighted to have secured the backing of YFM Equity Partners, which has an excellent understanding of this market and the growth potential of Traveltek.  The business is already in a strong position as the booking systems supplier of choice for many of the major travel trade businesses.  We can now leverage that position and develop Traveltek into a major global technology business and invest in the latest technology, new infrastructure, business systems, business development and new talent.”

“We had excellent advice from Campbell Dallas Corporate Finance, our advisors in the deal and huge support from our lawyers Bellwether Green where both firms worked extremely hard in the process.”

Chris Horne, Managing Partner at Campbell Dallas, Chartered Accountants and corporate finance adviser to Traveltek said: “Traveltek is a great Scottish success story, and has the potential, with this investment, to become a major international player in the travel bookings technology market.  We are delighted to have helped advise the business on its fund-raising, and to have worked with YFM on this deal.”

Liquidations of Stirling based windows and soft furnishings businesses

October 17, 2016

A long-established Stirling-based window and door manufacturer, Guardian Systems (Scotland) Ltd, and an associate company, Guardian Soft Furnishings Ltd, which supplied soft furnishings, have been placed in liquidation with the loss of 44 jobs.

Founded in 1993, Guardian Systems (Scotland) manufactured and supplied custom-made windows, doors, conservatories and associated products for the residential and commercial market. Based in Springkerse Industrial Estate in Stirling, the business is highly regarded across the Central Belt for the quality of its products and customer service.

Guardian Systems (Scotland) was trading strongly at the start of the year, and had a turnover close to £1.5m, but witnessed a fall in orders during the summer. Despite the best efforts of the Directors, this led to major cash flow problems and unsustainable losses, leading to a decision to place the company in liquidation, resulting in the loss of 27 jobs.

An associate company, Guardian Soft Furnishings Ltd, which supplied soft furnishings and fabrics to retail and commercial clients, has also been placed in liquidation. Guardian Soft Furnishings had an extensive client base across the Central Belt, and supplied hotels and commercial premises, in addition to residential clients. The liquidation has led to the loss of 17 jobs.

Derek Forsyth, Head of Restructuring and Insolvency at Campbell Dallas said: “Guardian Systems (Scotland) and Guardian Soft Furnishings were well-known in their markets, and had good quality clients. It is unfortunate that a number of factors created significant problems that ultimately caused both businesses to be placed in liquidation. We are marketing assets for sale and would encourage interested parties to make contact with us as soon as possible.”

Campbell Dallas will provide every possible support to the employees affected by the closure, including advice on how to file a claim with the Redundancy Payments Office.

Interested parties should contact Derek Forsyth on 0141 886 6644.

Campbell Dallas opens Kilmarnock office with Acquisition of White & Co

October 8, 2016

Campbell Dallas has made a strategic move to expand its business in Ayrshire and the South of Scotland with the acquisition of the established Kilmarnock firm of W White & Co.

The deal will see 14 staff transfer with immediate effect, including founder Bill White, who becomes a consultant. The firm will gain around £1m additional turnover, and the new Kilmarnock office will provide us with a permanent base from which to develop the exciting Ayrshire market.

Founded in 1981, White & Co has become one of Ayrshire’s leading independent firms with a diverse and high quality owner managed business client base. The firm provided a broad range of business advisory, tax, management accounting, fund-raising and insolvency services, and had developed a strong presence in the construction, engineering, medical, retail, insolvency and debt recovery markets.

Campbell Dallas aquisition of White & Co, Kilmarnock. Pic shows Chris Horne (Managing Partner of Campbell Dallas) with Bill White + Donald Boyd and Nicola Campbell in the Kilmarnock office. Copyright Ashley Coombes/Epic Scotland 2016© Free for editorial use image, please credit: Ashley Coombes

L-R: Chris Horne, Nicola Campbell, Bill White and Donald Boyd

Chris Horne, Campbell Dallas’ Managing Partner said the acquisition was great news for the staff and clients of both firms: “Bill and I are very pleased with this deal – it allows his team and clients to benefit from our services and industry expertise, and it gives Campbell Dallas an excellent gateway into Ayrshire and the South of Scotland. Ayrshire is an area the firm is keen to develop further and my fellow Partner, Donald Boyd, has advised a good number of existing clients within the area for many years. There is a band of really high quality businesses in this market, and we think there is demand for our entrepreneurial approach to advising clients. We will ensure that there is a strong ‘continuity of service’ for Bill’s clients and staff, and we will invest in the office to ensure there is a smooth and easy transition. From the clients’ view this can only be a good thing.”

Bill White added: “Joining Campbell Dallas is the best possible outcome for our clients and staff. It means we can offer a wider range of advisory services and in-depth technical knowledge in areas such as Tax, VAT and corporate finance, plus offer industry knowledge in a wide range of industry sectors including agriculture, brewing and distilling, dental, professional services and food and drink. It was very important to us that it would be ‘business as usual’ for our clients, many of whom we have served for 20 or more years, and Campbell Dallas shares the same ethos and focus on delivering quality advice. I am delighted that we have partnered with Campbell Dallas, and look forward to helping to develop the newly enlarged firm.”

We’ve become a nation of pay-as-you-go consumers

October 7, 2016

First it was the monthly credit card bills. Next I blame Orange and Vodafone for giving away seemingly ‘free phones’ which you essentially rented through your monthly bill. More recently, our Millennials have been transfixed by the ‘Pay-As-You-Go’ culture of Netflix, Spotify, Deezer, Apple Music (the list goes on). Back in the day we 70’s kids actually purchased music or bought a DVD or even, so seemingly archaic, went out and rented a VHS tape from our local video store. As a finance professional I’ve watched the definition of wealth transitioning from what you have saved in the bank, to what comes into the Bank account each month. I guess there is no other industry better at realising this switch than the motor trade.

We budget monthly and we buy everything monthly. For that reason, the actual cost of an item has become irrelevant. What is the cost of an album these days? What is the cost of a seven part box set? Who knows? All we know is that someone out there is making money off of our monthly payments. So why even bother with list prices of vehicles?

It was only last year I was in conversation with a salesman on the floor of a Jaguar Dealership who succinctly summed it up, saying that people don’t ‘buy cars’ any more, they ‘buy monthly payments’. This has been evidenced by the boom in PCP over the years, in that consumers are less bothered about the list price but rather what they are having to take out their net pay every month.

Where does this stop? We’re moving into more and more riskier areas, particularly with the advent of Personal Contract Hire. I do question whether the man in the street really understands the contractual nature of the transaction they are getting into? It also plays heavily on the residual value of the vehicles where it has been increasingly difficult to predict. In some instances, for a lower monthly payment, you can acquire a new vehicle versus a used vehicle.

Whether we like it or not the monthly payment culture is here to stay, so the trade has to keep getting more and more innovative in ways in which they can sell to consumers. Not doing so will end up with a monthly payment being run through a “checkingmonthlypayment.com” price comparison website and will this then be the death of the car showroom. This has been predicted in the past, but given the product is frankly too good today, the consumer increasingly doesn’t want to view vehicles in a showroom. The punter will rely on recommendations from friends and family.

So where do we go from here? I think it will be enhanced package deals, including insurance, servicing, road tax which the fleet market has excelled in over the years. With the advent of alternative fueled vehicles, it may be that the use of the charging sockets around the country and the installation of a personal charging socket at your home and office is inclusive. This would float the boat of many a millennial striving for that fixed financial certainty as they genuflect at the altar of Jobs, Wozniak and Musk. Elon Musk, now there’s a thought automotive industry…

donald.boyd@campbelldallas.co.uk

126 year old Scottish car dealership looking for buyer

September 27, 2016

James Haugh (Castle Douglas) Ltd,one of Scotland’s oldest car dealerships, has gone into liquidation and is seeking a buyer. Campbell Dallas Restructuring Partner, Blair Milne, is looking to sell the business and assets.

James Haugh (Castle Douglas) Ltd is a prominent and much-valued car dealership and service centre that has served the South of Scotland for well over a century. Unfortunately, in recent years the rise of internet sales has seriously affected trade and margins, and the business was not sustainable.

The dealership was founded in 1890 hiring out horse-drawn carriages and was one of the first to offer a petrol driven car for public hire in 1909. The main business was in both new and used Vauxhalls, but also in selling a wide range of other used vehicles. Servicing, fleet contract work, mobility servicing, repairs and MOTs were offered too.

It was run by six generations of the family, was an approved Vauxhall Service Centre since 1962 and had a turnover of £1million.

Blair Milne adds, ‘We are marketing the business and extensive assets for sale with immediate effect, with the hope that if a deal can be secured swiftly, a buyer has the opportunity to start trading again. The business had a very wide and loyal customer base, so the liquidation offers a good opportunity for a motor trade business or entrepreneur wanting to enter this market.’

‘We are compiling the list of assets, which includes the garage on King Street, offices, a large yard and moveable assets including motor vehicles, ramps, diagnostic equipment and tooling.

Alternatively, the site could also offer considerable potential for property development, possibly residential.’

Contact from those in the motoring trade, entrepreneurs or property developers should be made as soon as possible by contacting Blair Milne on 0141 886 6644.

The time to buy is now

August 29, 2016

With interest rates at an historic low, and a raft of tax incentives that encourage investment, there has never been a better time to buy, rather than borrow, business assets.

Leasing has long been considered good business practice – cash is king and leasing frees up cash flow and working capital. Certainly, leasing is important, but in the current climate, owner managers should be considering buying their assets before an attractive window of opportunity to make substantial tax savings closes.

For businesses needing to borrow, with interest rates in touching distance of zero there is currently a great opportunity to negotiate low cost loans to fund purchases. The capital used can then be applied to leverage tax savings from investment incentives such as the Annual Investment Allowance, which provides 100% relief up to £200k. With Corporation Tax set to fall from its current 20% to 17% in 2020, there is a further tax incentive to buy rather than lease, and offset the purchase against tax.

For businesses renting commercial premises, they should now consider buying rather than renting, particularly smaller premises. The Land and Buildings Transaction Tax in Scotland is zero up to the value of £150k on the purchase of commercial premises, and rates relief adds a further incentive for owner occupation.

Other specific reliefs for capital expenditure include BPRA (Business Premises Renovation Allowance), ECAs (Enhanced Capital Allowances for energy saving technologies) and the purchase of zero emission company cars.

If a business owner is looking to sell, it is important that the tax cost on exit is minimised by ensuring the structure of the shareholdings or group will allow for Entrepreneurs’ Relief or the Substantial Shareholdings Exemption to apply.

Low interest rates and compelling tax incentives are in alignment, creating a rare moment in time where buying can be the best way of saving tax, and yet still be investing in your business!

craig.coyle@campbelldallas.co.uk

A “clean” drive to the land of AFVs & honey

July 13, 2016

I occasionally do the school run and amongst the raft of white 4×4’s, botox and lattes, AFVs (Alternative Fuel Vehicles) have become much more common.  At first it was a mad parent with a Renault Twizzy (not very practical!), but that’s upgraded to a BMW i3 or a Tesla Model S.  However, more mainstream has been the Mitsubishi Outlander PHEV with its promise of a mind blowing energy consumption but with the practicality of having a petrol cap for emergencies.

It’s a changing landscape out there. Battery technology improvements from milk floats of the past through to the customer complaints of a poor range of hybrid options to the whole of the Nevada desert pimped out in battery cells.

At April 2016 AFV’s accounted for 3.3% of the car market and whether we like it or not, they’re here to stay.  We’re seeing many more manufacturers displaying new plug-in hybrids over the coming months, with the new Mercedes E Class plug-in hybrid model and the Volkswagen plug-in hybrid version of its Tiguan SUV.

This is just the beginning. We have witnessed the future as “range anxiety” reduces.  We have seen this with the Nissan Leaf updating its battery to a 150 mile range, BMW’s i3 to 195 miles and there’s the Tesla Model 3 coming over the hill to take the mid-size executive market by storm; with a promised 210 mile range.

At the moment there’s the appeal of lower tax bands. However, I can’t see this continuing for the future, as the Government is heavily reliant on the tax provided by the current fleet market.

It’s not quite the end for the age of diesel. The popularity of oil burners will continue, provided the range figures remain in excess of 600 to 700 miles after filling up, which compares to AFV’s at around 200 miles.

Nevertheless, AFV’s are the way forward and will continue to get more user friendly, go further on a single charge and provide green motoring (without the need to resort to cheat devices).  If we look at the June 2016 SMT registration figures, they are up 21.3% so perhaps we’re all becoming Norwegian in our outlook on the green agenda!

Payment processing exemption

July 8, 2016

The ECJ (European Court of Justice) has provided its judgement in the cases concerning the VAT liability of card handling charged for the NEC and Bookit (part of the Odeon Group).

The ECJ has acknowledged that while the activities of NEC and Bookit, including preparation and submission of the settlement file, were essential for the transfer of monies to occur, they fell short of the services required to meet the VAT exemption.

This decision is likely to have an impact on those who are charging credit and debit card handling charges and who are treating these as exempt. HMRC will be looking at those businesses which have treated separate charges as exempt from VAT and could look to assess for an underpayment of VAT for the last four years.

I would recommend anyone who is relying on VAT exemption for similar payment processing services to review their position.

Expanding our Corporate Finance Team

June 30, 2016

Building on a successful 2015 and after winning Corporate Finance Team of the Year 2016, we’ve recently expanded the Corporate Finance team with the addition of Harro Leusink and Nicola Todd. Following this move I believe the team is ideally placed for the future.

As Chris Horne (Managing Partner of Campbell Dallas and Head of Corporate Finance) has said:

“Following a very strong 2015 the team has a strong pipeline of work for the period ahead. We are delighted to have recruited a Corporate Finance Manager externally and Corporate Finance Executive internally to allow us to continue to deliver the high quality service our clients expect of Campbell Dallas.”

Our Corporate Finance team is based at the firm’s head office in Glasgow, but we continue to work nationwide in support of clients at our other  offices in Perth, Stirling and Aberdeen. The team also has strong relationships with Scottish and London-based private equity houses.

Here’s a glimpse at the newest members of the team:

Harro Leusink, Corporate Finance Manager
Harro Leusink started his accountancy career in a big four firm in The Netherlands. After moving to Scotland in 2009 he has specialised in Corporate Finance and has worked on various projects, including acquisitions, disposals and post-transaction care on secondment for a major deal in the Scotch whisky sector. Harro has significant experience in managing advisory and transactional assignments said: “I am delighted to have joined one of the leading, independent Corporate Finance groups in Scotland and I am looking forward to working with the team on helping their clients’ businesses grow and maximise value.”

Nicola Todd, Corporate Finance Executive
Nicola Todd joined the team from Campbell Dallas’ Business Advisory Services department following her recent ACCA qualification. She brings with her, experience in supporting SME clients in a wide range of sectors with reporting, financial modelling and fundraising to the team.

Campbell Dallas Triple Award Win at #SAF Awards 2016

June 17, 2016

Campbell Dallas are delighted to have scooped a triple win at the prestigious annual Scottish Accountancy & Finance Awards 2016.

The firm won Large Accountancy Firm of the Year, Corporate Finance Team of the Year and Restructuring Team of the Year.

The judging panel praised Campbell Dallas for our terrific year, where we demonstrated fast paced growth in staff and turnover, leadership in the profession, outstanding investment in staff development, innovation and first-class client solutions.

Managing Partner Chris Horne said: “These awards are testament to our staff across all offices; in Aberdeen, Glasgow, Perth and Stirling, who deliver outstanding service to their clients and each other. The judges commented on our commitment to our people development and to the clever client solutions that are a feature of our business. Our fee income is growing strongly and we are continuing to invest heavily in our staff, including the recruitment this autumn of a further 15 apprentice accountants.”

Thank you to all of our clients who helped make this year’s awards win possible. We will continue to deliver an advisory rich service to help all of our clients achieve their key growth objectives.

New International Tax Regime Threat to O&G Sector

June 10, 2016

The new international tax regime being adopted across the world presents a serious risk to the regeneration of the oil and gas sector, and must be considered by delegates to the Offshore Technology Conference next week, a leading tax expert at Campbell Dallas is warning.

New OECD tax rules regarding Base Erosion and Profits Shifting (BEPS) assesses businesses on the location of their economic activity. This is a major shift in tax rules and is accompanied by a new requirement for businesses to disclose activities in each jurisdiction.

With the global oil and gas sector undergoing massive restructuring, it is likely that changes to corporate structures will trigger international tax liabilities.  These changes will affect multinationals in particular, and those that fail to comply will suffer major penalties or worse, time draining investigations by HMRC and other national tax authorities.

Ian Williams, Chairman and international tax expert, based at our Aberdeen office is concerned that in the rush to cut costs, businesses could overlook this new regime: “Restructuring creates a ‘trail’ of liabilities that need to be disclosed in line with the new international tax order.  When a business is focused on cost cutting and survival, it often loses sight of its tax liabilities.  It is important that delegates to OTC ensure international tax is considered during discussions on restructuring”.

He added: “Companies will need to be more transparent, publish their tax strategy, demonstrate compliance, and be open to public scrutiny on matters which were previously confidential ”.

“Tax planning opportunities on a major scale will virtually be absent with commonly used cross-border tax structures no longer offering any meaningful cost savings on the effective tax rates (ETRs) in each market. It has never been easier for a tax authority to analyse the performance of a business in each of its locations”.

“Effective use of technology, local knowledge and a new range of systems and processes will help businesses comply.  If businesses do not want to be caught out by international tax they must ensure they are fully aware of the new rules, none more so than for companies undergoing restructuring.”

Blair Milne appointed Recovery & Insolvency Partner

June 6, 2016

Blair Milne has been appointed as a new Partner in the firm’s Business Recovery and Insolvency Practice.

Blair Milne has more than 20 years insolvency experience and has worked on many high profile cases, including Muirfield Contracts and The Arches. He has extensive knowledge of the issues facing the construction, leisure, hotel and retail sectors, and is highly regarded for his ability to maintain trading and secure a sale of a business post-appointment.

He also provides debt management and restructuring advice to companies, individuals and unincorporated businesses facing financial distress.

Commenting on his appointment, Blair Milne said: “I am delighted to have become a Partner in one of Scotland’s most progressive accountancy firms. I joined Campbell Dallas ten years ago, and the firm has been hugely supportive of my development, providing me with exposure to some very challenging and exciting engagements as well as a very rewarding career path”.

Derek Forsyth, Head of Business Recovery and Insolvency at Campbell Dallas added: “Blair is widely known and respected in the restructuring and insolvency market, and we are delighted to welcome him as a partner in Campbell Dallas. He has extensive experience in this sector and his appointment reflects the important contribution he has made to our practice, and to the continuing growth of the firm”.

Campbell Dallas invests £250k on 2016 Apprentices

April 22, 2016

Campbell Dallas, the leading independent accountancy firm, is to invest £250k on the recruitment and development of 15 apprenticeship accountants this year.  At present we have 50 staff currently under training contracts with the firm.
Campbell Dallas is one of the largest providers of accountancy apprenticeships in Scotland, and has focused on developing and retaining young talent in response to a major shortage of skilled young people across the accountancy profession.

iiyp_500x140In recognition of the firm’s commitment to young talent, the firm has now been awarded the highest level of Investors in Young People Accreditation, the only
people management standard that focuses on an employer’s recruitment and retention of young people.

“The accountancy profession is struggling to attract, develop and retain young people, and is losing too many to competing sectors offering graduate programmes, such as financial services.  Attracting university trainees is a major problem for the long term sustainability of the profession and will impact on succession planning in the near future.  Three years ago we set a strategy to focus on attracting and training school leavers, and I am pleased to say it has been very successful for the apprentices and for the firm” said Chris Horne, Managing Partner of Campbell Dallas.

“Since we began the apprenticeship programme we calculate that the firm has invested well over £1 million in employing, training, and development of staff.  In return we are growing our own talent, and ensuring our clients have consistency and continuity of service.  It is a model that is working for our firm, and could benefit the profession in Scotland if adopted on a wider basis.”

 

Chancellor’s Budget Highlights Widening Tax Policy Gap

March 22, 2016

The Herald and Sunday Herald Budget Briefing Event 2016 -JS. Photo by Jamie SimpsonFraser Campbell, senior Partner and Head of Family Businesses at Campbell Dallas, was a key speaker at a recent Budget Briefing event for businesses in Glasgow. Organised by The Herald, one of the most talked about issues was the widening tax policy gap between Scotland and the rest of the UK.

Fraser said: “We have had discussions with clients worried about the direction of travel in Scotland, both in terms of personal taxation, and other major changes such as the Scottish land and buildings transaction tax, and the fact that Scotland will not be able to adjust corporation tax rates.  What does that mean for businesses that may want to take advantage of some of the lower tax regime south of Border? There is a lot of uncertainty and uncertainty leads to different investment decisions. Doing business in Scotland has always been different, but the gap is widening.  The overall strategy of the Westminster government is not clear however, the budget appeared to be an advert to come and invest in the UK, and was good news for smaller businesses.  Looking ahead, it remains to be seen if that advert applies to Scotland.”

Download the Summary 2016

Download the Tax Card 2016

 

 

2016 Budget Summary

March 17, 2016

George Osborne presented his 8th Budget on Wednesday 16 March 2016. In his opening comments, Osborne stated that he would focus on the long term, and “put the next generation first” to help make the UK “fit for the future”.

Our team of experts at Campbell Dallas have produced a summary of the main changes announced in the budget speech. This will quickly bring you up to speed on the key areas of taxation including, business and corporate, employment, personal and capital.

Downloads

2016 Budget Summary

2016 Tax Card

If you have any questions about how these changes might impact you, do not hesitate to contact us for advice.

Movement on long running ‘postal services’ dispute

March 15, 2016

The Upper Tribunal (UT) has ruled that Zipvit Limited was not entitled to reclaim VAT that it argued was “embedded” within postal services provided by Royal Mail.

Zipvit supplies vitamins and minerals by mail order and used Royal Mail’s Mailmedia services to dispatch those goods. It is common knowledge that Royal Mail treated these supplies as exempt from VAT, however, the European Court of Justice decided in TNT Post UK Ltd (C-357/07) that postal services which were individually negotiated were not exempt from VAT – meaning Royal Mail’s Mailmedia services should have been subject to VAT.

Zipvit submitted a claim to HMRC – which was rejected – for the VAT they believed was embedded in the charges. Crucially, no VAT invoice was ever provided by Royal Mail and the UT concluded that they had priced their services on the incorrect assumption that they were exempt from VAT. As such, Zipvit had not borne the cost of VAT and under the circumstances HMRC were not obliged to accept alternative evidence in the absence of the invoices.

This is the lead case in a long running ‘postal services’ dispute and will be a blow to many others who have submitted protective claims. Given the values at stake, we expect Zipfit will seek leave to appeal to the Court of Appeal.

Campbell Dallas advises on GT4 Group’s acquisition of TPL Labels

January 15, 2016

Campbell Dallas’ Corporate Finance team was delighted to act agt4_logo_blks lead advisers on completion of the acquisition of TPL labels for longstanding client GT4 Group. The deal was backed with funding provided by the Scottish Loan Fund (SLF) managed by Maven CapitalPartners.

TPL Labels is a pressure sensitive label manufacturer headquartered in East Kilbride and this strategic acquisition by GT4 Group will extend the breadth of the Group’s services providing its clients with a “one stop shop” for all their labelling requirements, avoiding the need to use several manufacturers.

Ian Johnstone, Chairman of GT4 said, “The Campbell Dallas Corporate Finance team played an important role in advising Gavin Watson and the GT4 Group throughout our acquisition of TPL Labels Limited. Having built the business up over the last decade, I appreciated the attention to detail and level of understanding of the issues associated with an owner-managed business. Chris, Gerry and the team delivered on their promises, structured the deal in the most effective way and led the process from start to finish. I would have no hesitation whatsoever in recommending Campbell Dallas to any business who need assistance in raising additional capital, writing detailed financial business plans, or providing advice throughout the acquisition process.”

Managing Partner, and Head of Corporate Finance, Chris Horne commented “Mid-Chris Horne partner at campbell dallas chartered accountantsmarket Scottish transaction activity continues to present good opportunities for both vendors and prospective acquirers with multiple sources of funding available from both private equity and those corporates with balance sheets able to support a suitable quantum of structured debt. We have a strong pipeline for the coming year and expect this recent busy spell to continue over the next six to nine months”.

Farms under cash flow pressure should consider government debt scheme

January 14, 2016

Scotland’s farmers are dealing with an unprecedented range of business, legislative and financial problems that are putting many under unsustainable cash flow pressure.

Whether a dairy farm is dealing with a crippling milk price well below the cost of production, a livestock farm selling for little or no margin or a cereal farm selling at a loss, many farms are struggling for cash flow. In addition, the Basic Payment Entitlement (BPE) is now expected to be delayed, removing another line of revenue that played a key role shoring up cash flow.

Despite these problems, the bills continue to be presented, creditors can become increasingly agitated, and the Courts fill up with citations.  For a farm trying to remain in business but struggling to find short term cash, the future can easily look bleak.

Campbell Dallas is urging Scotland’s farming community to become more aware of the Debt Arrangement Scheme, and the role it can play to help farms gain control of their cash flow problems and protect the business, allowing vital time in which to undertake planning.

The Debt Arrangement Scheme, which stems from the Debt Arrangement Scheme Scotland Act 2004, is backed by the Scottish Government and governed by the Accountant in Bankruptcy.  It was previously available only to Scottish individuals but has now been made available to businesses and partnerships.  Very few farmers are aware of the scheme, and whilst it is not a long term solution if the problems are overwhelming, it does put a short term break on cash flow pressures.

Andy Ritchie, Partner and farming specialist explains how the scheme works: “This Scheme allows a farm to repay its debts at an affordable rate while preventing creditors taking any further action, meaning the assets of the business are protected.  It is particularly applicable to those farms struggling to maintain monthly contractual payments.

“The Debt Arrangement Scheme Scotland Act 2004, is not a form of insolvency, however, it is governed by the Accountant in Bankruptcy.  It allows debtors to repay their debts, in full, over an extended period of time which is dependent on their disposable income.  Once the scheme is approved creditors must freeze their interest and charges and cannot take any further action as long as the monthly payments are maintained.

“If circumstances change for the worse, for example, a farmer suffers ill health and is struggling to maintain payments to the scheme, a payment break of up to 6 months can be requested.  If and when the farming industry improves and there is an increase in disposable income the farm can increase payments to reduce the term of the scheme and if it has a good year and the funds to pay debts off in full then the scheme can be settled early.

“If a creditor objects to the scheme a Fair and Reasonable test is applied by the Accountant in Bankruptcy who administers the scheme.  This test is based on specific criteria, for example the length of the term, the method and frequency of payments, the percentage of debt that the objecting creditor holds and comments made by the money adviser putting the case forward.  It is very rare for this test to be failed.

“For farmers worried about their cash flow and their future, DAS is well worth considering and it could help them protect their business so they are in a position to take advantage of any upturn in their market.”

Campbell Dallas is offering an initial free consultation on DAS for any farm business interested in finding out more information. Contact a member of our DAS team on 0141 886 6644 or speak to our Agricultural specialist, Andy Ritchie.

2016 The year of the exit says CF Partner, Graham Cunning

January 5, 2016

graham cunning 2016 could be the ideal year in which to exit from a business with conditions for a sale set to be amongst the most favourable for many years.

Low interest rates, entrepreneurs relief at 10% up to £10m sale value, stable business confidence, larger corporates with cash piles for acquisitions and investors keen to back growing businesses are combining to create a positive environment for exits, says Graham Cunning, Corporate Finance Partner.

However, Cunning warned that these favourable conditions may not last for long, with interest rates likely to edge higher and uncertainty over the future of Entrepreneurs Relief.

“Entrepreneurs Relief rewards business owners for their hard work and fortunately remains in place, so we would urge anyone thinking of an exit to consider the benefits of bringing forward their planning before it is changed. There is a real appetite in the VC, Angel and Private Equity (PE) houses for opportunities to invest in quality businesses with a strong position in their markets and potential for good growth. These conditions will not remain for ever, so 2016 could be an ideal year for an exit, whether as trade sales, employee or management buyout, or partial sales of equity.”

During the year Campbell Dallas has advised on 15 deals with a combined value of more than £100m. These include the sale of First Hose to GS-Hydro, sale of Blyth Utilities to Energy Asset Group, acquisition of TPL labels by GT4 Group and the acquisition of HLC (Wood Products) by SCH Group. The firm is winning an increasing amount of lead advisory work, acting for business owners, banks and PE houses, and our 2016 deals pipeline is our busiest ever.

However, in relation to the Oil and Gas sector Cunning added: “Oil and Gas is the one sector that remains very subdued and there is unlikely to be a recovery in deal flow until the final quarter at the earliest. That said, despite the oil price crash, there is still an active M&A market in the Oil and Gas sector for quality businesses. However, despite the downturn there are still plenty of well-resourced oil & gas corporates that are focussing on executing their acquisition strategies, so business owners wanting to sell may wish to take advantage of that opportunity.”

New Year Chill Threat for North East Hospitality Sector

January 5, 2016

North East hospitality businesses – hotels, bars, restaurants and clubs Derek-Forsyth– face a very difficult first quarter of 2016 with the risk that a large number could close due to a major drop in consumer spending, Derek Forsyth, Business Recovery Partner is warning

There are just over 900 hospitality businesses (businesses with licenses, excluding retail) trading in Aberdeen City and Aberdeenshire.  Even a 10% closure rate would result in over 90 businesses ceasing to trade.

Derek has extensive experience in this sector and is warning that many businesses will face serious cash flow and very difficult trading in the first three months of the year as consumer spending contracts, but costs remain stable.

He said: “Once the festive period is over business and income traditionally drops rapidly in January, however operational costs such as rent and overheads remain, leading to serious cash flow problems.  The North East has already suffered significant job losses during the last two years, but given numerous forecasts of further restructuring in the oil and gas sector, with downstream businesses likely to be affected, we could see a significant impact on the hospitality and leisure sector.

“It is very important that business owners plan ahead and ensure they are on top of their outgoings, whilst also trying to maximise and maintain their income.  Quick wins include re-negotiating rent, searching for better deals on insurance and telecoms, reviewing staffing and shift patterns, and collaborating with other businesses on joint promotions.  To help businesses tackle the problems we have launched a ‘Hospitality Helpline’ that will offer a quick telephone consultancy on the key issues.  Good advice now could be the difference between survival and closure.”

Business owners can call the Campbell Dallas Hospitality Helpline on 07551 153 612, or call into the firm’s new larger Aberdeen premises at 23 Carden Place.

The British Hospitality Association estimates that hospitality is the UK’s fourth largest employer, supports 180,000 businesses employing 3 million people, 44% of whom are under the age of 30.