Capital allowances case study
Capital allowances can be claimed by businesses and companies as a way of reducing their taxable profits.
Most businesses will buy assets for use in their business. Most of these assets lose value as they are used and as such from an accounting perspective these are “depreciated”.
The depreciation charge is an expense in the business’ profit and loss account. However, businesses cannot claim tax relief for the depreciation of the assets they use in the business because these are capital in nature.
This issue is overcome by the use of capital allowances which allows for a prescribed amount to be deducted against their annual taxable profits.
Our team can put your mind at ease through assisting you with the following areas:
- Preparing and reviewing your capital allowances computations
- Ensuring that capital allowances are claimed in the most efficient way
- Optimisation of the Annual Investment Allowance
- Highlighting elections and ways of optimising capital allowances claims
How we can help
Our dedicated team work alongside our clients and their accounts staff to understand what has been purchased and what the business purpose of the expenditure is.
So why not see if our team can help you with:
- Maintaining your asset pools
- Utilising the Annual Investment Allowance
- Identifying assets qualifying for enhanced deductions
- Additional considerations for R&D qualifying assets
- The new super deduction
- Group considerations
- Split periods
- HMRC investigations
Why not speak to one of the team to see whether you have maximised your capital allowances claim as we can even re-submit a prior year return, which in some circumstances can generate a repayment.
The benefits of outsourcing your Capital Allowances computations
Our tax team have extensive experience and expertise in preparing and reviewing capital allowance claims for a number of clients. Why not ask them to do the same for you, this will free up your time to focus on developing your business.
The team can help you in a number of ways, including ensuring that claims are made in the most tax efficient way for your business.
How we have helped our clients
An audit client had completed an extensive redevelopment of a new site, re-furbishing a warehouse and buying new equipment totalling more than £700,000. Through our expertise and working with our client’s accounts team we were able to claim capital allowances on 87% of total expenditure.
Get in touch if you would like to book an introductory meeting, or have any questions on our Restructuring and Re-organisation tax service. Meetings and consultations can be held virtually.
Corporation tax case study
Corporation tax is payable by companies on their profits, investment gains and chargeable gains.
Seymour Taylor can assist you with advisory and compliance matters.
We have a dedicated team of Corporation tax specialists who work with you and our accounts preparation team. We know that having a team of experienced and knowledgeable advisors is key to maximising tax planning opportunities as well as providing support and guidance.
Our team can put your mind at ease by assisting you on the following areas;
- Preparing, reviewing and submitting your Corporation Tax return
- Electronic “iXBRL” tagging of accounts
- Highlighting tax planning opportunities, allowances, elections and reliefs
- Proactively helping our clients plan for the year ahead and when new legislation is announced whilst providing support as and when your business requires it.
- Liaising with HMRC on your behalf
- Support with what is tax-allowable and what isn’t
The benefits of outsourcing your Corporation Tax services
Outsourcing your Corporation Tax needs to us will take the burden of the task off of your shoulders. This will free up your time to focus on progressing your business.
Outsourcing these services can also ensure that you have access to a team with extensive knowledge and experience in Corporation Tax, as well as having the latest accounting technology to be able to provide you with the best service. This will also save you money, as you won’t have the need to hire a specialist to complete this for you in house.
How we work with clients – Client A
One of our audit clients had completed a large redevelopment of one of their buildings totalling more than £700K, using our expertise we were able to claim capital allowances on 87% of project costs working with the client and accounts team.
How we can help
Our dedicated team use their knowledge and expertise to prepare your Corporation Tax calculation based on your accounting records so if we already prepare your accounts why not let us manage this area for you as well.
We strive to meet the expectations of our clients whilst helping to ensure that your business pays the right amount of tax but also on time. Our friendly team of experts can also assist with more specialist areas including:
- Forward planning to help you to maximise your capital allowance claims
- Tax compliance for groups and consortia and tax planning opportunities
- Group re-organisations
- Subsidiaries and overseas companies with a permanent establishment in the UK
- Controlled foreign companies (CFCs)
- Research and Development claims under the SME and RDEC regimes
- Loans to participators
- Quarterly corporation tax
Get in touch if you would like a FREE no obligation consultation, meeting or have any questions on our Corporation Tax service. Meetings and consultations can be held virtually.
Restructuring and re-organisations case study
As businesses develop and progress through the business lifecycle the people within the organisation will inevitably change and the purpose of the business may alter.
For example, you may want to consider the exit strategies available, transferring assets from one company to another, capitalising loans provided to fellow group companies or demerging a company between two parties who have fallen out.
Do any of the below apply to you?
- Are you concerned that your group structure no longer supports the way your business is managed but are not sure about the most efficient way of restructuring?
- Would you like to implement a restructuring plan but are worried about the accounting implications?
- Do you lack confidence in the distributable reserves positions of the entities within your group and the lawfulness of proposed transactions?
- Do you spend considerable time each month reconciling intercompany balances and considering the recoverability of those accounts?
Our team of experts can take the stress away and advise on various options including:
- Group re-organisations
- Mergers and demergers
- Purchase of own shares
- Capital reductions
- Management buy-outs
- Transfers of trades and/or assets
Company re-organisations can have complicated tax issues, which can sometimes make them feel unnecessarily difficult. Our expert team can help you consider the best way to do this and to come up with an effective plan for your business looking at the commercial advantages or re-organising business activities or shareholdings and how this can be done on a tax free or low tax way.
Example
A client came to us who had a large historical intercompany loan account to find out what options they had to restructure this debt into equity. We worked with the client in the UK and overseas to work out exactly what their requirements were and we were able to restructure debt on the balance sheet to reduce liabilities by more than £600k and to increase equity. This resulted in the balance sheet position of the company improving considerably and more reflective of the current business.
Get in touch if you would like a FREE no obligation consultation, meeting or have any questions on our Restructuring and Re-organisation tax service. Meetings and consultations can be held virtually.
Research and Development (R&D) case study
Seymour Taylor support clients in a variety of sectors in claiming their Research and Development tax credits.
Back in April 2000, HMRC launched the Research and Development (R&D) tax relief scheme specifically to reward UK businesses making scientific and technological developments. Many companies who could be eligible are still failing to claim this valuable relief.
Research and Development (R&D) tax relief (or credit) is a company tax relief; that can either reduce the company’s tax bill, or for some companies provide a cash sum. Research and Development credits are available to large (under the RDEC regime) and small and medium sized companies (SME regime). Depending on whether the company has taxable profits these can result in a cash repayment for the company which helps with cash flow particularly when turnover may be minimal.
To qualify for R&D tax credit a company must be carrying on a project that seeks an advance in science or technology. It is necessary to state what the intended advance is, and to show how, through the resolution of scientific or technological uncertainty the project seeks to achieve this.
The advance being sought must constitute an advance in the overall knowledge or capability in a field of science or technology, not that of the company alone.
Under the SME regime, the R&D tax credit works by allowing companies an increased (enhanced) deduction in respect of qualifying expenditure on R&D activities. The enhanced deduction either reduces a company’s profit or increases its losses for tax purposes. It is also possible to “cash in” or surrender losses for a repayment.
Any business in any sector is eligible for R&D tax credits as long as they are undertaking development activities that lead to progression in science or technology.
Key benefits of R&D tax credits
- A reliable way to raise business funding
- Claims can be made each year
- Can help businesses by improving cash flow
- Help businesses to support their growth
- Attractive to investors
- We make them easier to claim
How we work
- Liaise with the client to establish whether there is an innovative project that would qualify for R&D
- Establish whether they are already obtaining any government grants or other state aid
- Help clients to access the eligible tax credit
What Counts as Research and Development (R&D)
- Creating new products, processes or services
- Changing or making amends to an existing product or service
There are two schemes for R&D, and a company can claim under both schemes in any one year, the two schemes are the SME scheme and the large company RDEC scheme.
A simple comparison of the two schemes is laid out below:
| SME Scheme Have fewer than 500 employees (across the entire group of companies) plus their turnover is less than €100 million or their balance sheet is less than €86 million | Reseach and Development expenditure credit (RDEC) Applicable to large companies |
| Higher rates of enhanced deductions | Lower rates of enhanced deductions |
| Payable credit | Potentially a payable credit (depends on company’s situation and should be assessed on a case by case basis) |
| Notional tax credit that can potentially be offset against other liabilities | |
| Can claim for expenditure subcontracted to others | Generally companies can only claim for R&D carried out itself, there are very limited circumstances where it can claim for work subcontracted out |
| Company cannot claim for contributions to independent research | Company can claim for contributions to independent research |
| Claims can be reduced if project is subsidised or receive a grant in respect of it | No reduction for grant or subsidy |
How we help identify the project is R&D within the tax definition
There are guidelines that define all the following terms, and it’s important to understand these concepts before attempting to reach a view on whether your company or organisation has a qualifying R&D project for tax purposes.
Qualifying R&D
Improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty.
A qualifying project is one that therefore seeks to:
a) extend overall knowledge or capability in a field of science or technology; or
b) create a process, material, device, product or service which incorporates or represents an increase in overall knowledge or capability in a field of science or technology; or
c) make an appreciable improvement to an existing process, material, device, product or service through scientific or technological changes; or
d) use science or technology to duplicate the effect of an existing process, material, device, product or service in a new or appreciably improved way (e.g. a product which has exactly the same performance characteristics as existing models, but is built in a fundamentally different manner)
Claiming R&D tax credits
R&D claims can be made retrospectively as it is possible to re-file the company’s Corporation Tax Return. The Corporation Tax return is accompanied by a justification report that is used by HMRC to determine whether an advance has been made.
How we help our clients
We go through the key areas, with you when filing your Company Tax Return, so HMRC can clearly see how the definition of R&D applies to your project or projects.
- We involve you every step of the way to ensure that you are fully onboard with the claim.
- We will make the process as seamless as possible for you.
- The first year typically involves a significant amount of additional work whilst we liaise with a client in understanding their business and the types of projects that may qualify.
- After this initial period we can then tailor our work and computations to suit the clients requirements.
Examples of our work with clients in the area of Research and Development (R&D).
WOUNDCHEK™ Laboratories develop novel wound diagnostic products to help improve outcomes in wound care. They launched the world’s first and only point of care test to detect EPA (elevated protease activity) in chronic wounds in 2012, and over the past several years has become a recognised leader in wound diagnostics.
Seymour Taylor have been completing R&D tax credits for Woundchek for a number of years. The team liaise with the CFO at each year end to discuss whether projects from the prior year are ongoing. The team obtain a detailed nominal ledger from the client and begin analysis work on expenditure ensuring they are clear as to what it relates to. For Woundchek the draft workings for R&D are based on both the SME and large scheme as there are multiple projects covering both schemes. Our team liaise with the CFO over the claim and run through the eligibility. We work with the company to prepare the justification report and pass to the CFO at Woundchek for review. After this is agreed they will prepare the tax computation and liaise with HMRC regarding the refund.
“I approached Seymour Taylor back in 2016 about Research and Development tax credits to see whether they could help us. The team at Seymour Taylor weren’t put off by the technical nature of the work that Woundchek did and they were able to manage the work at a reasonable cost. It was Seymour Taylor’s open approach plus their reasonable billing rates that gave me the confidence to work with them on the R&D tax credits. As this was a new area to us, I wasn’t sure at the beginning how much money we would get so this was an important factor I needed to take into account when discussing the service with Seymour Taylor.
The only funds we get are purely through shareholders and grants so the R&D tax credits make a huge difference to our business. We have to raise significant funds in order to be able to run the required clinical trials enabling us to prove our claims to the FDA (Food & Drug Administration) in the US and the legal requirements of the CE European Marking system. These trials enable us to get regulatory clearance and hence market the products in those countries. The extra funds have assisted us to do these trials. Seymour Taylor help us to prepare our RDEC claim on the basis that we receive two grants from Innovate UK and Invest Northern Ireland.
The R&D tax support I get from Seymour Taylor has been great. I have known and worked with Rachel Pugh and Liza Rowles for a number of years now and they are always timely in their responses to my questions. I like working with Seymour Taylor because I can always pick up the phone and contact them and get immediate advice or speak to someone who I can direct my question to.
I would recommend working with Seymour Taylor on the R&D tax credits as they are able to manage complex technical products such as our own. They have a very honest and open approach and are responsive, which I feel is important for this area.
They also have a local feel and approach and charge me a reasonable rate for the work that they do”
Malcolm Williams, Chief Financial Officer – Woundchek
ETLogic Ltd provide expertise in electronic trading systems used by investment banks and price makers in government bonds, credit bonds, swaps and other derivatives. These systems connect to electronic RFQ negotiation venues such as Bloomberg, Tradeweb, MarketAxess and Bondvision, and to the order matching venues such as MTS, and apply rules such as client tiering, price contributions logic, and auto-negotiation logic.
The team at Seymour Taylor prepare the year end accounts for the client and discuss with them any current projects and whether any historic projects have changed in scope or ceased for R&D. Once the team have finalised the accounts they then review the client’s expenditure during the year for items that may be qualifying expenditure. Our team liaise with ETLogic as to which projects the expenditure relates to. Our R&D experts then draft the workings under the SME scheme and review the associated justification report. Directors within our business will review the report before sending onto the client with any questions we may have. Once the team at ETLogic are happy with the report we will make any necessary changes before finalising the tax computations and then we will submit it to HMRC.
“Being able to hand over the R&D tax relief claims to Seymour Taylor to run with, frees up our time to focus on our business”
“As a business we were looking for a new accountant who could do both our accounts work plus R&D.
Seymour Taylor were able to offer the whole package of services we wanted and were more cost effective. They offered a fixed price for the R&D work whereas previously we had paid 20-22% of the tax relief that we received to the accountant doing the R&D tax work for us.
Seymour Taylor had a history of R&D tax relief work which was reassuring as we wanted to make sure the R&D claim went through smoothly as we didn’t want to do it all ourselves. We felt they offered a more personal service compared to other firms which also appealed to us.
Whilst initially the information we provided for the R&D claims was quite time consuming now we have a structure in place with Seymour Taylor where we just have to make tweaks to the information and update it yearly, so that it continues to be relevant and applicable to the work we are doing.
The advantages the R&D tax relief brings is that it allows you to invest more in R&D as you get some of the money back. Without the R&D tax refund we wouldn’t be able to do as much Research and Development. Therefore it allows ETLogic to be more innovative and to invest further in our business.
We find it easy to work with Seymour Taylor. They are always available, respond to calls and emails. Communication has always been good between us. There is a collaborative approach between our two companies which is important as R&D is not something you can just hand over without any input so it is important that you work together in conjunction to achieve the end goal.”
Stephen McDermott, Director – ETLogic
Get in touch if you would like a FREE no obligation consultation, meeting or have any questions on our Research and Development (R&D) tax service. Meetings and consultations can be held virtually.
Land remediation relief case study
Land remediation relief (LRR) is a tax deduction often not claimed by smaller property developers and investors and the claiming of it can result in a tax reduction or a cash credit from HMRC.
If land remediation relief is available, then a company will benefit from an uplift of 50% of the costs of the repairs, including the costs of any surveys / preparatory works, or potentially a cash credit from HMRC.
Qualifying costs for land remediation relief include the following:
- remediation of contaminated land
- removal of asbestos from buildings
- breaking-out buried structures and the treatment of harmful organisms and naturally occurring contaminants such as: Japanese Knotweed, radon or arsenic
- any pollution from previous industrial activity e.g. heavy metal contaminants from industrial processes
Qualifying Land Remediation Relief must meet a number of conditions, which are referenced below at A to F.
Qualifying Land Remediation Expenditure
| A | A Expenditure is on land all or part of which is in a contaminated state or a derelict state |
| B | B The claimant has not created the contamination or dereliction |
| C | It is— (a) in the case of land in a contaminated state, expenditure on relevant contaminated land remediation undertaken by the company, or (b) in the case of land in a derelict state, expenditure on relevant derelict land remediation so undertaken |
| D | The expenditure is— (a) incurred on staffing costs, (b) incurred on materials, (c) incurred in respect of relevant land remediation contracted out by the company to another person with whom the company is not connected, or (d) qualifying expenditure on connected sub-contracted land remediation. |
| E | E The expenditure is not subsidised. |
| F | The expenditure is not incurred on landfill tax. A claim for the costs must be made within two years of the expenditure being incurred. |
Client Case Study
A client was looking to expand their warehouse and upon a survey found that there was asbestos within the roof. Costs to repair this were to be £250,000. By claiming a deduction for the enhanced relief under LRR, an additional deduction from the profits chargeable to corporation tax of £125,000 could be obtained, which saved £23,750 in corporation tax (based on a tax rate of 19%).
As an alternative, if the company had been loss making then they could have obtained a cash credit refund from HMRC up to a maximum of £60,000 based on the above figures.
Get in touch if you would like a FREE no obligation consultation, meeting or have any questions on our Land Remediation Relief service. Meetings and consultations can be held virtually.
Outsourcing your payroll case study
Businesses of all sizes outsource their payroll function
In a smaller business the payroll is often processed by a Director or business owner, which is not always an efficient use of their time! Doing the payroll for a business can be time consuming and you need to be aware of all the current legislation and regulations surrounding employment, pensions and taxes. These change every year, and whilst there are many software packages that offer to help the payroll processor, it makes more sense to hand the whole thing over to a specialist, for a very modest fee, so that they can focus on running the business.
As business size increases, it is likely that the payroll will become more complex. The more employees there are, the higher the likely incidence of statutory absences such as Maternity, Adoption or Sick Leave, and Shared Parental Leave. Not to mention Pension Duties in the form of Automatic Enrolment, the potential for part time and zero-hour employees, and Attachment of Earnings orders, Student and Post-Graduate Loan deductions, Child Maintenance, and so on.
Outsourcing the payroll can help maintain confidentiality as the payroll is processed offsite. Additionally the employer won’t need to be concerned about holiday or sickness absence affecting payroll processing.
Larger businesses will often maintain their own HR department, but it can still make sense for them to outsource the payroll function. Why employ and train an in-house payroll operative or department when you can outsource the service for a fraction of the cost?
The payroll provider may also be able to offer facilities such as BACS payments, electronic payslips and P60s, and perhaps additional services such as payrolling of Benefits In Kind and preparation of P11Ds.
Where an employer needs to take on staff in other countries, additional complications can arise due to the many different regulations that exist overseas.
At Seymour Taylor we are part of MGI Worldwide, a global accounting network, so any international queries or payroll questions can be easily handled with our connections across the world.
Our Payroll Service
Starting from £50 + VAT per payroll run, we are able to offer weekly, fortnightly, monthly or quarterly payroll processing.
These include:
- Clear, easy-to-understand electronic payslips for the staff
- A wide range of payroll reports and departmental analysis
- Assistance with auto enrolment compliance
- Calculation of Student and Post-Graduate Loan deductions
- Dealing with CSA and other Deductions from Earnings orders
- Preparation and submission of all required returns to HM Revenue and Customs
- Electronic End of Year P60 certificates
- Preparation of P45s for leavers, delivered electronically
Other services available include BACS payments of salaries and HMRC liability, bespoke reports and P11D Returns of expenses and benefits; payrolling of Benefits In Kind.
The employer should be aware that even if they are outsourcing their payroll it is, nevertheless, always their responsibility to ensure that they are complying with the various laws and regulations including, but not limited to, National Minimum Wage/National Living Wage, confirming that their employee has the right to work in the UK, Pension Duties, and paying PAYE and NI liabilities on time. These responsibilities cannot be delegated to others.
Specific examples of how we have assisted clients with their payroll requirements:
Company 1 had about 75 staff, processing their payroll internally, relying on 1 individual for this and HR services. As this person was planning to emigrate, and the company was expanding, they decided that outsourcing the payroll to Seymour Taylor was commercially advantageous, while expanding the HR department. Several years on and the company now employs over 130 staff, with an HR department of 4, but continue to outsource their payroll, BACS and P11Ds to Seymour Taylor.
Company 2 is a smaller organisation. Employing around 7 staff, there is no payroll expertise in house and Seymour Taylor provide a complete solution to process their payroll, initiate BACS payments to the staff and to HMRC, assist with their auto enrolment and provide electronic payslips, P60s etc..
Get in touch if you would like a FREE no obligation consultation, meeting or have any questions on our Payroll services. Meetings and consultations can be held virtually.
Outsourced accounting services case study
At Seymour Taylor our Outsourced Accounting Services team support our clients in delivering any element of their accounting function in a way that suits them. We use a combination of on site and office based working to deliver whatever is required, on a time frame that suits them.
How we work with Outsourced Accounting Services Clients.
In June 2019 Seymour Taylor began working with Mintec a business, which is the world’s leading independent provider of global food pricing data and analysis. Mintec made a number of changes in 2019 to their finance function. As a business they were looking at ways to automate processes they were doing and streamlining aspects of their finance function so that they could spend time making decisions and driving their business forward. Mintec recognised that the purchase ledger and accounts payable part of their finance function was time consuming and they were looking for a provider to manage this area.
Mintec chose to work with Seymour Taylor as we were local to where the company is based and they wanted to work with an accountancy firm that they would be able to meet with face to face. Mintec felt that Seymour Taylor were a good fit for their business as they were a good sized firm, who shared similar values to them and could offer a complete solution to meet their needs with a personable service.
Our Outsourced Accounting Services
At Seymour Taylor our Outsourced Accounting Services team can offer a range of time savings initiatives that can make a real difference to businesses like Mintec such as;
- Payroll bureau services and auto enrolment
- Bookkeeping
- Bank processing and reconciliations
- VAT returns, registrations and MTD compliance
- Management accounts
- Control checks
- Cloud software setup, support and training
“Within a month we were set up and ready to go. Seymour Taylor came into our offices and we showed them everything we needed in one go. They then picked it up and ran with it”.
Jack Saunders – Finance Manager – Mintec
Seymour Taylor’s outsourced accounting team support Mintec in the following areas;
- Each week we process purchase invoices on SAP Concur software.
- Mintec send the actual invoices to the Concur team, who upload them onto the system.
- We log onto Concur, view and check the invoices, allocate departments and nominal ledger accounts, enter details and check the net, VAT and gross values of the invoice.
- The invoices are then submitted to Mintec who approve them and upload them to the Accounting software, Netsuite.
- Once a fortnight, we process a payment run for Mintec, from the supplier’s payable on Netsuite. There are different types of payments, in different currencies, which we set up on their online banking system.
How this supports our clients
As Mintec have found, outsourcing aspects of your accounting function frees up the time that many business owners would rather spend doing what they do best – growing the company.
“We would definitely recommend Seymour Taylor, the work they do for us allows the finance team to focus on other areas. It was very quick to set up the services with Seymour Taylor and the benefits we saw were instant”.
Tom Smith Finance Director – Mintec
Other Benefits
Using Seymour Taylor’s outsourcing accounting services can help to reduce operational cost as the company is fully supported at all times as well as having access to a team of expert advisors. We can also advise on the latest technology and practices, keeping you one step ahead.
“The Seymour Taylor team have spotted certain areas that I would not have necessarily noticed, which have saved us time and money. They are very good at questioning things, which means we don’t have to get heavily involved, as they manage the process for us”.
Jack Saunders Finance Manager – Mintec
Our experienced team
We provide a dedicated team member to each client as their key contact. This enables us to build close relationships and to understand each clients’ needs so that we can provide the best possible reporting and advice. We are able to produce information in a variety of formats, tailored to the reporting requirements of each individual client.
“Everyone I have been involved with has been great to work with. I feel confident that the services we get from Seymour Taylor are being done well and it’s never too much trouble if we need something. For example I needed to change the days the invoice processing was carried out and Seymour Taylor amended this for us quickly and easily the same day”.
Jack Saunders Finance Manager – Mintec