Tax Abuse And Insolvency

Tax Abuse And Insolvency

HMRC are currently awaiting the passing by Parliament of the latest Finance Act, which will give them a new weapon in their fight against tax abuse arising from insolvencies. 

HMRC have regarded for some time that insolvency laws are open to abuse and that this abuse has led to the loss of tax, whether it be VAT, corporation tax or PAYE. The Finance Act will now give HMRC powers to make directors and shareholders jointly and severally liable for outstanding tax liabilities. 

Thy will identify those in a company who have facilitated the tax loss. Be it someone who evades tax or facilitates tax avoidance, such as disguised remuneration schemes. 

Where HMRC believe an insolvency or the preparations for an insolvency have taken place to allow a company to avoid its tax liabilities, then HMRC can use their powers to make individuals personally responsible for the tax that the company owes. 

It should be stressed that the new regulations are aimed at what HMRC regard as serial offenders who have been involved in at least one prior insolvency where there were significant amounts of tax not collected due to the insolvency. 

If you are considering an insolvency at this time, especially due to the effects of Covid-19, please seek advice at the earliest opportunity. We here at Churchill Tax Advisers can advise you of the course of action you should take. Please call our dedicated number.

Offshore tax restructuring of business

Offshore tax restructuring of business

This client came to us following a recommendation by their own accountant for specialist tax advice. The client had a successful retail business including online sales. The existing business model meant that it was paying more corporation tax and VAT than it needed to. After thorough research of the legislation and HMRC guidance, we were able to propose a better business structure that would mitigate the corporation tax as well as VAT liabilities. Whilst majority of the tax planning was within the UK, the new structure also included elements of offshore tax planning which meant the UK corporation tax liability would be reduced.

Our analysis: The key for business growth is to have the right structure including a long term tax strategy. Once set up properly, the tax benefits can be reaped over a number of years bringing a significant return on investment for the specialist advice taken. We have come across a number of situations where businesses have grown without considering a long term tax strategy. The cost of then re-modelling a matured structure is usually quite high

Churchill Tax Advisers Advise On Structuring For A Large Development

This case came to us from a firm of accountants in London and involved a large property development project. The issues at hand were how to mitigate potential inheritance tax, capital gains tax and income tax implications for the owners. Recent changes in the tax legislation on using structures such as limited liability partnerships created further complexities. We were able to put together a structure, in light of the new legislation, whereby our clients could achieve lower income tax liabilities as well as capital gains tax and flexibility to mitigate potential inheritance tax liabilities. By seeking specialist advice prior to the commencement of the development project our client can have benefits in the short and long term. Had this advice not been taken at this stage, there could have been significant tax implications for making any alterations due to the rise in the value of the property subsequent to the development work.

Tax Seminar for Landlords – “How to Increase Your Wealth Through Tax Planning”

Tuesday 12th February 2019 (London)

Following the success of our previous seminars in London and Glasgow, we will be hosting our next “FREE” seminar focusing on landlords / developers and buy to let investors. The seminar will focus on the following areas:

1-    Current tax climate and challenges for landlords

2-    How tax planning can increase your wealth

3-    Inheritance tax planning

4-    Capital gains tax planning

5-    Section 24 (tax relief on mortgage interest) and how to avoid it

6-    HMRC tax investigations on landlords and how to stay safe

The seminar will be based at our new offices very near to Holborn station at 125 Kingsway, London, WC2B 6NH and will run from 5:30pm to 7:30pm.

This seminar is focused on landlords and property investors and is expected to be fully sold out soon so please book your place as soon as possible. Spaces are limited and bookings will be allocated on a first come first serve basis.

Please register for the complimentary seminar on our website Refreshments will be provided.

The seminar will qualify for CPD points if this is relevant to you.

Tax planning for landlords

This case involved a group of new potential landlords / developers that needed tax advice on setting up a tax efficient structure for their future ventures. This was a wise decision as we have come across landlords and developers who do not think about tax advice until they have acquired the properties or in worst cases, until they have sold the property. Our team of tax specialists were able to put together an acquisition structure that prevents the new rules on tax relief on interest restriction from applying. In addition, as for the acquisition, we were able to suggest some reliefs that allowed a substantial reduction on stamp duty land tax (SDLT). The tax planning advice involved a holding company and subsidiaries and special purpose vehicles (SPVs) that can be used for different types of development / buy to let projects.

This tax planning implemented in advance can save significant tax liabilities in the coming years allowing the clients to use the excess cash (as a result of the tax planning) to be used in further acquisition / development projects.