HIGHLIGHTS: SG LLP merger with Silver Altman JANUARY 2008 Welcome to the Simmons Gainsford Newsletter I hope that within our newsletter there will be matters which are not only of interest, but which will directly impact upon you and assist you in your business, tax and commercial life. On behalf of the Simmons Gainsford team, I wish you a happy, healthy and prosperous New Year. If you would like to discuss anything further, please contact me on 020 7291 5617 or email stevens@simmonsgainsford.co.uk Steven Strauss, Senior Member SG Procurement Services How can you reduce costs for your business? Capital Gains Tax Reform How does this affect you? New Rules for Non UK Domiciled Individuals Have you complied with the new rules for VAT? SG Financial Services SG Insurance Solutions For more information, please read on.. SIMMONS GAINSFORD LLP AND SILVER ALTMAN MERGER We are delighted to announce the merger of Simmons Gainsford LLP and Silver Altman on 1 st January 2008. With our continued growth and the increasing quality of our client base we had been looking for a like minded firm to bring added quality and depth across the various services offered by the Simmons Gainsford Group to our clients. Silver Altman s philosophy and commitment to clients mirrors our own and they add significant commercial experience to that in-house. Silver Altman bring with them the status of UK representative of the Fidunion International Federation which we believe will give us a very significant presence internationally, and allow us to better service those of our clients whose business activities extend outside of the UK. If you would like further information on the international network please contact Abdul Pisavadi on 020 7291 5622 or email him at abdulp@simmonsgainsford.co.uk The following have joined us as members and we look forward to introducing you to them: Robert Ward Oscar Dodd Stephen Jennings David Pumfrey RajivThakerer Norman White 1
SG LLP CHANGES DURING 2007: Jack Iacovou became a member in April. Jack joined the firm with the merger with Gainsleys in 2001. Anton Goldstein and Raj Patel together with their entire team merged their practice of Groves & Partners with Simmons Gainsford LLP with effect from 1st August. As a result of this strategic merger, the clients of Groves & Partners will benefit from the combined expertise and resources of the Simmons Gainsford Group especially in the fields of taxation, corporate finance, financial services and commercial consultancy. In addition to his commercial experience Raj also brings specialised skills to advise those businesses in the field of mining and exploration which is an area of expertise of Raj. Please contact Raj on 020 7291 5613 or email; rajp@simmonsgainsford.co.uk SG PROCUREMENT SERVICES: Simmons Gainsford Procurement Services Limited is the latest addition to our SG branded service offering. They can work with you and your team to help you lower the price that you pay for everyday overheads and capital purchases. They can also work with you to review the number of suppliers you deal with, manage tendering processes, check the prices on your invoices, arrange consolidated monthly invoicing and set up cost centre billing. All this is designed to help you focus on your key performance indicators so that we continue to work together to generate improved returns for you. If you would like to arrange for a meeting with a representative from Simmons Gainsford Procurement Services Limited to discuss with them the services that this new business can offer please contact Philip Austin on 020 7291 5658 or email him at philipa@simmonsgainsford.co.uk NEW RULES FOR NON UK DOMICILED INDIVIDUALS: The Chancellor is intending to introduce new rules to catch non -domiciled people who have been resident in the UK for seven fiscal years or more by 5 April 2008. Such individuals will have the option of either paying an annual fee of 30,000 on top of the tax on any monies remitted to the UK (income or gains) in order to retain the benefit of the remittance basis, or else be taxed in each fiscal year on the income and gains actually arising in that fiscal year. As we have recently had a requirement to claim the remittance basis on the tax return rather than automatically being entitled to the remittance basis, this means that consideration of whether an election should be made each year will be a very important part of the review of a non domicile s taxation affairs. Other measures which will affect non domiciled but resident individuals is that where the remittance basis is now claimed, they will also lose entitlement to the UK personal income tax allowance unless the un-remitted foreign income is less than 1,000. For a higher rate taxpayer based on the current personal income tax allowance this is in effect a further tax charge of 2,090 and therefore the true cost for the benefit of non-domiciled status is in fact 32,090 based on current allowances and reliefs and the Chancellor s proposals. If you have any queries on the taxation issues, please contact Darren Hersey on 020 7291 5620 or email him; darrenh@simonsgainsford.co.uk 2
REFORM OF CAPITAL GAINS TAX FOR INDIVIDUALS: The Chancellor announced that with effect from 6 April 2008 there will be a single rate of charge to Capital Gains Tax at 18%. The quid pro quo of this is the complete withdrawal of taper relief and indexation allowance. This could have a dramatic effect of your capital gains tax position. Taper relief was introduced in 1997 and came into effect for disposals after 5 April 1998. During its 10 year life, the relief as it related to business assets was made progressively more generous culminating in the current two year minimum owning period to qualify for 75% taper relief i.e. to achieve the effective 10% rate of tax commonly referred to. There will be some winners on the taper relief front, principally those individuals (or trustees) who have acquired non business assets, such as residential buy to lets, since 1998. Between now and the 5 April 2008 it is essential you consider the assets that you hold and whether such assets, looking purely from a tax perspective, should be realised crystallising a lower effective rate of tax than will be the case after 5 April 2008. PLANNING POINTS: The most straight forward planning may simply involve the outright sale of an asset so as to take advantage of the reliefs referred to above. Clearly, it will be necessary to see draft legislation before any aggressive tax planning can be achieved. For other assets it may be more complicated to crystallise capital gains. Possible techniques may include the following: For properties held personally, or perhaps through an investment LLP it may be possible to transfer those properties, into, for example, a Limited company which you control. This would crystallise a disposal for capital gains tax purposes of the properties and would create a loan account from which you could draw down in future. There would be stamp duty land tax implications of such a transaction and it would also be necessary to consider whether there are any other anti-avoidance rules that may be in point if such planning is undertaken. For shares in unquoted trading companies which would currently qualify for the 10% rate of tax, it may be possible to consider transferring these shares into trusts which again would have the effect of crystallising a capital gain. Care would have to be taken to ensure that such transfers would not come within the scope of inheritance tax and that current anti-avoidance rules could not apply to the transaction. Gifts of shares and other assets, other than to spouses and civil partners, would again crystallise disposals for capital gains tax. Under present legislation such gifts would constitute potentially exempt transfers for inheritance tax purposes, assuming they are not made to settlements. If loan notes are held it may be possible to negotiate their early redemption with the issuing company. If you have a pension fund then the trustees of that fund may wish to purchase the assets in question, subject of course to their not breaching pension fund rules as to ownership of prohibited investments. For further advice, please contact Darren Hersey on 020 7291 5620 or email him; darrenh@simmonsgainsford.co.uk 3
NEW RULES FOR VAT: Changes to the rules regarding the content of VAT invoices came into effect on 1 October 2007. Many businesses will have had to change their procedures, as they already voluntarily complied with the rules. The following summary illustrates the full scope of the changes: All invoices are required to be sequentially numbered by law. This is the only aspect of the changes that affects every VAT registered trader, and as many already number their invoices, there will be no change. However, businesses which restart their invoicing sequence each financial year will now have to ensure that every single invoice has a unique number, and that number sequences are not repeated. Where businesses use separate sequences for different customers or product types this is acceptable, provided each sequence is identifiable and unique. Using customer prefixes is also fine, provided the sequencing is discernable. Any system under which invoice numbers are duplicated for whatever reason is unacceptable. If a business supplies goods under the second hand margin scheme this will have to be indicated on VAT invoices. The invoice may make a reference to the relevant legislation (either UK or EC) but the simplest is to put a statement on invoices such as This invoice is for a second-hand margin scheme supply. Similarly, supplies made under the Tour Operators Margin scheme will have to be identified as such from the invoices. Example statements are provided in the information sheet, but a simple statement such as This is a Tour Operators Margin Scheme supply will suffice. Cross border EC supplies will need a reference where the supply is either one which would be exempt if made in the UK, or is subject to the reverse charge arrangements. HMRC will not dictate what the statement needs to say, and indeed the requirement for such a statement is in fact determined by the recipient s member state and the VAT rules applying there. Most businesses making intra- EC supplies which are exempt will probably include a statement such as Exempt supply for VAT purposes on all of their cross border supply invoices to avoid having different procedures for different member states. Reverse charge supplies will need to state Subject to reverse charge in the country of receipt or similar on the invoice. Finally, on intra-ec supplies of goods, which are therefore zero rated for VAT in the UK a statement to this effect must be included. In many cases, the existing invoicing procedures will suffice, but the statement might read Intra-Community supply subject to VAT in the country of acquisition. If you have any queries, please contact Jack Iacovou on 020 7291 5653 or email; jack@simmonsgainsford.co.uk. 4
SIMMONS GAINSFORD FINANCIAL SERVICES EFFICIENT INVESTING: The world of financial planning is changing. The Wrap Platform has firmly arrived and many clients are starting to benefit from lower charges to buy investments along with lower annual management charges (AMC). Historically the purchase cost of a unit trust, ISA or similar investment would attract an initial cost of up to 6% and an ongoing management charge of up to 2.25% for the more specialist funds. Wrap platforms in many cases have driven the purchase cost down to less than 0.25% and the average AMC to a little over 1% with many funds under 1%. But not only have costs reduced but platforms have given clients the ability to have all their assets in one place. Clients can amalgamate share portfolios, unit trusts, ISA s, PEP s, insurance bonds and pensions into one place and benefit from viewing and dealing over the internet. Simmons Gainsford Financial Services Ltd can advise on the best platform for clients needs together with financial planning advice to structure your investments in the most tax efficient manner. KEYMAN INSURANCE: There will be very few small and medium sized enterprises that would not agree that they have at least one key person in their organisation whose death or serious illness would have a major impact on profitability. Research conducted by a well known insurance company has shown that there is a 1 in 4 chance of a male non-smoker aged 30 making an income protection claim by the age of 65, and a 1 in 7 chance of him making a critical illness cover claim during the same period. The equivalent odds against a claim occurring on his life assurance cover are 1 in 12. If a key individual dies or is too ill to work for a lengthy period then there could be further consequences if your business ends up in the hands of an inappropriate party. These risks can however be safeguarded against by arranging key person cover. Life and health policies, which are typically written for up to a five year term, can be arranged in a way that protects the business against losing contributions made by one or several key individuals. Cover is written on the life of the key individual concerned but the premiums are paid by the employer, and any claims benefit due is payable to the business. Please contact Robert Stein on 020 8371 3111 or email; rstein@simmonsgainsford.co.uk 5
SIMMONS GAINSFORD INSURANCE SOLUTIONS: Simmons Gainsford Insurance Solutions Ltd is a general insurance broker, authorised and regulated by the Financial Services Authority. You have nothing to lose, so why not give us a try and entrust your insurances to a safe pair of hands. With our senior staff having over 20 years experience in the insurance business, we have a range of products and services that deliver an outstanding level of security to the business community. Our relationships with insurers at the highest level enable us to secure highly competitive terms. Our deep understanding and wide experience of the market results in you getting the best for your business. We offer 24 hour claim services and have dedicated staff to fast track your claims to swift and satisfactory settlement. We deliver a highly personalised and consistent level of service to our clients. Over 98% of our clients renew their insurances with us each year. OUR ADDED VALUE SOLUTION S: Free Insurance Audit. Health & Safety solutions to the SME market. We go that one step further when reviewing your arrangements. WE WILL: Analyse your current scope of cover. Determine the extent of exposure to risk. Reveal any uninsured risks. Assess the value of current premium costs. Offer highly competitive alternative. Please contact Carin Johnson on 020 7291 5635 or email carin@sginsurance.co.uk or visit our websites at www.simmonsgainsford.co.uk/insurance and www.sghealthandsafety.co.uk FEE INSURANCE: We are pleased to announce that we have been able to secure cover for the cost of professional fees involved in dealing with in depth HMRC tax enquiries. Routine aspect enquiries are not covered. Fees payable to secure cover are modest and for further information and full details of cover please contact Philip Austin on 020 7291 5658 or by email; philipa@simmonsgainsford.co.uk Feedback from our clients is very important to us. Please do not hesitate to contact us to discuss any matters referred to in this newsletter or generally. 6