Indicators continue to point in the direction of the future need to produce more food to feed the world’s increasing population but this is not yet reflected in grain prices. Notwithstanding this, UK agriculture should remain resilient to the worldwide economic situation. After all it has seen a long recession of its own when the rest of the economy was in a strong position and farming has become quite able to cope in a difficult financial climate.
The worrying trend from the tax perspective is the apparent campaign by HMRC who are targeting rural diversified businesses, with particular attention being paid to the VAT status of such businesses. If the new business venture is to be kept outside of VAT registration the owners need to ensure that there is sufficient separation and that all transactions with the farming business are on a commercial footing.
Finally, some attention has been given to tax savings where there are large amounts of depreciation within the year-end valuation. Our view is that it is only worth making the adjustments where it will result in a reasonably sized reduction in the tax bill as, once started, you are committed to making the adjustment annually. This will result in an additional cost to make the calculation that, following a one-off tax saving in year one, will only result in a small tax change thereafter depending on whether depreciation in stock has gone up or down. The choice is yours.
For further information contact Graham Page
Technology businesses survive on turning their bright ideas into unique solutions for their customers. The Government has recently revisited the rules for Research and Development Expenditure relief making a number of changes affecting businesses of varying sizes.
The changes brought in by the Government and the harsh economic times mean that there is no better time for technology businesses to review how they spend money on creating their “bright ideas” and, ensuring that all possible tax reliefs are claimed. It really is feasible to make your bright ideas work even harder for your business.
For further information contact Steve Runnacles
From April 2009 the Quality and Outcomes Framework (QOF) prevalence formula will change, leaving many practices facing significant funding shortfalls. Since 2004, prevalence figures have been square rooted to limit the variation in weighting of QOF pay. Practices in the bottom 5% of the range are rounded up to the 5% mark to top up their pay. From April, the square rooting mechanism will be dropped, increasing the variation in pay. From April 2010 a second change means pay will be weighted to raw prevalence. This will impact on practices with low prevalence by having their QOF pay significantly reduced. Worse, these practices will have to rely on the generosity of their Primary Care Organisation to make up that shortfall.
Some Trusts are working with practices or their Local Medical Committee (LMC). Others refuse even to discuss it. Most worryingly, a third group do not even seem aware of the issue. As a result the negotiating landscape LMC’s face is hugely variable.
For further information contact Ivor Gorman
Reporting Serious Incidents
It has always been good practice for charity trustees to report to the Charity Commission any serious incidents which have caused or could cause harm to their charity. In the current economic climate, there is potentially a greater risk of fraudulent activity and trustees should therefore be aware of their responsibilities.
Charity Commission guidance on ‘Reporting Serious Incidents’ can be found on the Commission’s website www.charity-commission.gov.uk
Incidents should be reported immediately, and trustees are required to confirm in the charity’s Annual Return that there are no incidents which have not been reported. Failure to provide this confirmation is a breach of legal requirements. The guidance explains the Commission’s approach, clarifying what is considered to be serious and when, how and what information to report. The Commission’s response to a report will be specific to the circumstances, but the main aim is always to safeguard the charity and public confidence.
Public Benefit Reporting
Trustees’ Reports covering periods starting on or after 1 April 2008 must include
- details of those activities undertaken by the charity to further its charitable purposes for the public benefit;
- a statement by the trustees that they have complied with the duty to have due regard to the public benefit guidance published by the Charity Commission.
Charity Commission guidance, ‘Public Benefit Reporting’, includes links to example Trustee Reports which may prove useful to trustees in this first year of reporting.
For further information contact Helen Rumsey
If you’ve considered making an acquisition over the last few years, you may well have concluded that buying a business was simply too expensive. It has for some time been a seller’s market which drove up price expectations to unsustainable levels. We are now, however, very firmly in a recession and, contrary to popular opinion, it’s not necessarilyall bad news. Acquisition opportunities you were thinking about may now be a real possibility.
A number of transport related businesses are inevitably experiencing difficulties and may be in the position of wanting to sell and to do so quickly. This will drive down prices and, if you have a strong business, you could be in a good position to take advantage.
However, on the flip side, if your own business is struggling it is vital that you look for an investor or buyer sooner rather than later. I’m sure I don’t have to tell you that every day that passes will erode value from your business if it is on a downward trend.
In both cases, our Corporate Finance department are available to help. Whether it be selling or sourcing potential businesses to buy – carrying out due diligence or arranging finance – we can help take the strain.
For further information contact John Matthews
A year on from the major changes to how businesses obtain tax relief for expenditure on buildings, what can we report?
Tax allowances can produce savings of up to 15% of the capital cost of new projects. The new ‘integral features’ category of expenditure can amount to up to 85% of the cost of a typical office development. This demonstrates that correctly identifying plant and machinery on which tax allowances can be claimed remains a high priority no matter if it is a new build or the purchase of a second hand building.
The Government remains keen to increase the scope of 100% relief on Enhanced Capital Allowances for certain ‘green’ technology which can be incorporated in both new builds and renovations. New for 2008 is that these allowances can now be surrendered for a cash repayment. But the allowances are seldom seen in practice; often it seems that the qualifying technology is ‘engineered out’ without realising the impact on after tax costs. If advantage is to be gained from the ‘green’ benefits and the tax breaks, then it is important that the technology is specified from the outset and duly certified by suppliers.
Business Premises Renovation Allowances is another area where uptake has perhaps been slow. 100% relief is available for conversions and renovations – but only for qualifying buildings in designated areas. Whilst these areas are relatively rare in East Anglia, it is worthwhile researching this before contemplating a new project.
For further information contact Paul Williams
