Update on Finance Bill 2017

Following the Prime Minister’s unexpected announcement that there will be a snap general election on 8 June 2017, Parliament will now be dissolved on 3 May 2017. After this date, no further legislation will be passed until Parliament opens again after the election.

Any Bills that have not received Royal Assent by the date of Parliament’s dissolution will lapse and the next government will then have the option to present them again, either in their current or an amended form. Similarly, any secondary legislation, i.e. statutory instruments, not passed by the date of dissolution will also have to be laid before Parliament again after the election.

The scope of the Finance Bill 2017 that was published only last month has now been cut significantly so that the bill can be fast-tracked through Parliament and receive Royal Assent before Parliament is dissolved. The original bill ran to a mammoth 762 pages but following the Finance Bill committee stage debate on 25 April 2017, the Government deleted 72 out of 135 clauses and 18 out of 29 schedules. This resulted in the residual Bill being cut to roughly 140 pages.

This has been done to remove certain contentious items and to remove the risk of rushing through some key measures without time for proper due diligence. This includes the legislation for the introduction of Making Tax Digital (MTD) over which there had already been significant concerns that the timetable for the introduction of MTD was very tight. It remains to be seen if the plans for the introduction of MTD will be changed although the April 2018 deadline will be very hard to meet.

Other measures that have been removed from the Bill include corporate loss relief and interest deductibility, VAT in relation to fulfilment houses and penalties for enablers of defeated tax avoidance schemes. The changes to the main income tax rates for 2017-18, overseas pensions and offshore transfers, the soft drinks industry levy and some VAT and IPT measures have remained in the shortened Bill.

It is likely that should the election result in a Conservative victory that most of these measures will be will be reinstated in an identical or very similar way. It still remains to be seen if the Prime Minister will stick to her predecessors commitment (known as the tax lock) not to raise VAT, income tax and national insurance contributions. If not, we may see more tax increases than expected in the next Budget.

Back

Case Studies

The Tax Man

Minimise the stress of an investigation and make use of our extensive experience in securing best outcome for our clients

Business Valuation in Distress

Take advantage of our impartial and rigorous due diligence procedures

FD in The Cupboard

Our innovative ideas are here to improve your business performance and secure appropriate and cost effective funding

The Tax Man

The Tax Man

A new client was introduced to us via a recommendation with whom we arranged to meet on a regular basis in order to determine a number of changes that we felt were needed to their business structure. The client was at the time operating as a husband and wife partnership. The business was flourishing and had a number of large contracts with big organisations.

At the start of the process they were still heavily immersed in their day to day operations so we can get a full flavour for their ambitions, aspirations and growth plans. We quickly recognised there were sufficient tax savings which can be achieved by changing the structure from a partnership to a corporate entity. We carried out a business valuation and disposed of the goodwill from the old to the new business. Unfortunately, as often is the case with efficient tax planning, HMRC got involved and disputed our valuation.

An HMRC investigation can be a very stressful time for any client, even for those best prepared. However, our client had minimal input in the HMRC communication as we dealt with this professionally behind the scene. As an added benefit, our client could rest on the security that all work was covered by insurance and therefore all costs and time in dealing with this enquiry were covered by the fee protection policy we had put in place.

The initial approach taken by HMRC was very aggressive and they tried to present an argument that there was no goodwill in the business. We challenged HMRC’s view that the goodwill was worthless. After lengthy correspondence and numerous telephone calls, HMRC agreed 100% with our original valuation, which preserved our original tax saving plan for the client. Tax savings on this case where in the region of £75K at the outset, with ongoing savings of £6,000 per annum. We are pleased to add another happy client to our portfolio.

Business Valuation in Distress

Business Valuation in Distress

Selling a business is never an easy process, but when disputes arise, the need for a reliable third party due diligence process is even greater.

Tearle & Carver have extensive understanding of the requirements for remaining objective when managing a potentially difficult company buyout. In one such case, we were approached by the courts to act as independent accountant for an acrimonious business sale in which one partner was exiting the business and selling shares to the other. Given the circumstances, both sides had totally polar views of what their business was worth.

After arranging an initial meeting with the company, we were thorough in ensuring we completed due diligence, validating the figures in the accounting records, carrying out adjustments where appropriate, and drafting a set of reliable management figures within the framework required by the court.

A draft version of the report detailing our findings and conclusions was submitted to both parties, giving them the opportunity to voice any queries or concerns and ensure all relevant factors had been taken into account.

Through this process, we were able to submit a final report to the courts that was both binding and acceptable to both parties, effectively resolving what could otherwise have been a time consuming and costly process for all sides.

FD in The Cupboard

FD in The Cupboard

For smaller companies, it is often not possible or cost effective to pay for a full-time Financial Director.
Many of our clients therefore make use of Tearle & Carver’s extensive expertise to provide the services of an FD as and when required.

In this case, we were approached by the management team of an organisation looking to acquire the existing business via an MBO (Management buy out). Their business plan had proved ineffective for securing funding, and what they needed was financial expertise from someone with a developed understanding of the company’s internal workings.

Tearle & Carver helped deliver the solution our clients were looking through utilising our bank contacts in order to make the MBO viable, while also building a robust business plan and preparing our client for the rigorous vetting process. To help with cash flow issues, we introduced factoring which led to improved cash flow management.

We advised on the appropriate business valuation and structure, and continued to prepare monthly accounts to track profgress once the management were fully in command of all the information they needed to move their business forward.

In order to best assist these clients through the crucial first year of ownership, we attended board meetings on a regular basis, a service that we continue to provide to date.

With our continually developing understanding of their business, this client is able to remain confident that Tearle & Carver can provide any financial support they may need, now and in the future.