Corporate Tax

Corporate Tax

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Corporate Tax Services:

Corporation tax self assessment requires companies to work out their own tax bills, as part of their return obligations and account for the ‘self-assessed’ liability to corporation tax to HMRC.

An automatic penalty of £100 will be imposed if you file your return more than 12 months after the end of the accounting period, rising to £200 if the failure to file continues beyond a further three months.

In the absence of a return, HM Revenue & Customs may make a determination of the tax to the best of its information and belief. No appeal can be made and the tax must be paid. The determination can be displaced only by filing a completed return and self assessment.

We will give you as much advance warning as possible of your amount and timing of tax payments due as part of our comprehensive compliance and advisory service.

Micro Entities:
The government has recently announced that the EU "Micros Directive" is to be implemented in the UK meaning simplified accounts can be prepared for micro-entities. However for tax purposes, there is still a requirement for full records to be maintained and for the submission of full accounts to HMRC with the company tax return. Download all the details here.

Partners in firms are taxed on their share of the profits of the firm for the tax year with each partner effectively taxed as if he was a self-employed business, with profits equal to his share of the profits of the firm.

So instead of tax being deducted from your earnings at source, you should be prepared to receive a bill at some time in the future. This can come as an unwelcome surprise if you have failed to put sufficient funds aside.

We will give you as much advance warning as possible of your likely amount and timing of tax payments due as part of our comprehensive advisory service.

One of the few remaining significant tax breaks for business, Capital Allowances covers certain types of capital expenditure.

The allowance works by reducing the profit on which tax is calculated. Most allowances are given gradually over a period of years, but some special allowances are allowed 100% up front.

Categories of allowance include: plant and machinery; integral features in buildings; remediation of contaminated land and renovation of business premises. Recent years have seen a discernible shift towards investment that is beneficial towards the environment.

Every project must be critically assessed as there is a plethora of detailed rules and regulations. Fortunately, we have extensive expertise in this field and can assist you throughout this process.

Can you get money from the taxman? The answer may be yes if you are eligible for research and development (R&D) tax relief.

This relief is available for companies that incur R&D costs to improve their trading results and covers staff costs of employees involved in the R&D, costs of software or other consumables and a proportion of payments made to any sub-contractors involved in the R&D.

Our tax team has particular industry experience on R&D tax credit claims and our support and advice has delivered substantial tax reclaims for a growing number of clients.

Properly structured and implemented share schemes can significantly contribute to a performance of a company and increase shareholder value.  They are also an excellent means for a company to distinguish itself from the competition as an employer and assist in the attraction and retention of key employees.

Conversely, a poorly implemented incentive scheme can have the opposite effect.

The team at French Duncan has considerable experience in advising on all forms of equity incentives including:

  • Approved and tax efficient option plans such as Enterprise Management Incentive options (EMI), Share Incentive Plans or Company Share Option Plans.
  • Unapproved option plans. These are quite common but there is no particular tax advantage to an unapproved plan.
  • Direct share rewards, including growth shares, forfeitable shares or long term incentive plans.
  • Cash bonuses linked to increasing share values, such as phantom share options.
  • The complex rules concerning employment related securities and remuneration provided via third parties.

The more effective share incentives are those which are closely linked to a company’s short and mid term objectives and business plan.  EMI options are extremely flexible and options can be exercised, for example:

  • On the sale of a business or the company shares. This allows employees to share in the growth in the value of the company to which they have contributed without having to acquire any shares until the point of sale.
  • Based on performance criteria which are pre set. Options can therefore only be exercised where, for example, a profit or turnover target is reached.
  • Adopting multiple targets with options being exercisable on the attainment of each.

EMI options are normally granted for no consideration, the employee only having to fund the purchase of shares at the point of exercise.

Generally, the value of a small minority shareholding is agreed with HMRC on a discounted basis at the point of grant of the option.  When the employee exercises his option, and pays the amount agreed with HMRC at the time of grant, there is no tax liability and the employee will only suffer capital gains tax when he sells his shares.

It is possible for employees to pay less than the value agreed with HMRC but there will be an income tax and possibly an NIC liability of the difference between the actual price paid and the market value at date of grant. 

On sale, capital gains tax could be at the 10% entrepreneurs relief rate provided that the period from the date of grant of the option to the sale of the share is at least one year.

Company share option plans are much more restrictive than EMI options but both can be targeted on specific employees rather than having to be open to the entire workforce. 

Share incentive plans have to be open to all of a company’s employees with limited exceptions.  They are however a means of incentivising the entire workforce with the number of shares being allocated to employees “on similar terms”.  This can be equally or based on relative salary levels or length of service. 

There is an advantage to an employee being able to acquire shares immediately, as he will be entitled to dividend payments by the company.  He will however have to pay for the shares or be subject to income tax if he pays a lesser amount, albeit that the value of the shares will be calculated on a discounted basis to reflect the value of a minority shareholding. 

HMRC do not disapprove of unapproved share schemes but approved arrangements offer significant tax advantages over an unapproved arrangement.

Further information can be found on the VAT Services page of this website.

The Patent Box is an optional regime offering companies an effective 10% rate of corporation tax on income from the exploitation of patents.

Qualifying companies are those which own or licence patents granted by either the UK Intellectual Property Office, the European Patent Office or specified EEA countries. The company must also have undertaken the development of the patent or product incorporating it.

Our tax team understands the importance of this regime and the benefits it can offer. We can advise on how the Patent Box can achieve maximum tax savings for you and assist you in the process from application to corporation tax computation.

Meet some our Corporate Tax specialists

Barry  Laurie

Barry Laurie
0131 225 6366

Stephen  Thom

Stephen Thom
0141 221 2984

Robert  Barrie

Robert Barrie
Senior Tax Manager
0141 221 2984

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