COMMENT - Baker Tilly

Author(s)
Richard Harvey, Baker Tilly

Richard Harvey, tax partner at Baker Tilly’s Essex office in Chelmsford, looks at what’s in store for businesses in 2010. Baker Tilly is one of several business partners Birkett Long works with on a regular basis.

This year promises to be every bit as challenging for local businesses as 2009. It is important, therefore, that they manage their tax affairs to minimise the impact on their cash flows. Areas that should be considered include:

Looking at group structures and eliminating unnecessary companies. This can reduce compliance costs and avoid loss of the lower rate of taxation available on profits up to £300,000. It may also prevent companies falling unnecessarily into the quarterly instalment regime.

Business owners should be looking at ways of mitigating the impact of the 50% tax rate which will come into force from 6 April 2010 on incomes over £150,000. Possibilities to consider include:

• Bringing income forward to 2009/10.
• Passing shares to a spouse or children to utilise their lower rates of tax on dividend income.
• For unincorporated businesses either to incorporate or introduce a corporate partner to shelter profits at the lower corporate rate.

Careful management of the compliance responsibilities. HM Revenue & Customs appear to be applying the new penalty regime vigorously and compliance failures could lead to significant penalties. Businesses should consider reviewing their procedures to ensure that all tax matters are being correctly reported.

As ever with tax the devil is in the detail so ensure you take advice before taking any tax mitigation steps.

For further details of the above issues as well as broader taxation advice, Richard Harvey can be contacted at the Chelmsford office of Baker Tilly on 01245 454057 or emailed at richard.harvey@bakertilly.co.uk

Media
BLong newsletter - February 2010

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