Professional review of 2013

posted on December 13, 2013in the Blog Category

Professional review of 2013

It’s the time of year that we reflect back over the past 12 months and consider what the next 12 months has in stall for us! There is no doubt that the economy remains challenging even if there are some slight signs of improvement. The banks continue to say that they are lending yet they still fall well short of their lending targets. I think perhaps we have lost a little faith in the UK banking system with the constant streams of fines for misspelling making businesses reluctant to seek support from their banks. We have therefore seen a switch in people's borrowing habits and over the last month have had clients successfully obtain funding from non-bank sources. One client successfully pitched for funding from a crowd lender which is a new and very novel way of raising funds where business pitches for a loan and a crowd of lenders pledge to lend and pitch for the interest rate that they want to obtain. In our client's case, £110,000 was raised from approx. 80 lenders who, on average, lent £1,400 each with an interest rate just below 10%. It looks like funding where everyone is a winner! Another client has managed to obtain funding from the Regional Development Fund to finance their expansion. On a negative, we are still seeing HMRC being increasingly active and setting up specialist teams across the UK to look at specific sectors such as IR35 and employment status issues as well as investigating evasion in many specific sectors such as restaurants, buy to let property owners etc. This has led to us being approached to make disclosures on behalf of taxpayers in order to take advantage of HMRC amnesties! You could view it as either a negative or a positive but HMRC seem to have been singularly ineffective at closing tax avoidance schemes. We do now have a General Anti-Abuse Rule (GAAR) but all that seems to be doing is making us have concerns that general tax planning might be caught and continually having to make judgement calls about whether planning is abusive. Rather than legislating to close tax avoidance schemes, HMRC has looked to the use of scare tactics designed to worry people sufficiently that they withdraw from the use of avoidance strategies. Leading Tax Counsel has described this as “huff, bluff and puff”. Our attitude to avoidance strategies is that we will continue to give clients the choice to use them but only where clients fully understand the risks associated with the planning and where we believe we can see some clear commercial rationale. We don’t allow clients to be seduced by the benefits without fully understanding any downsides! As ever, we have looked throughout 2013 to continually expand our range of services and offerings for clients. Looking ahead to 2014 I think we can expect to see more of the above. Growth in the economy is likely to be slow, HMRC will be increasingly active, the GAAR will continue to create problems for routine tax planning and tax avoidance strategies will continue to remain one step ahead of HMRC. Have a great Christmas and New Year. Tony Collier, Managing Director

Written By: MBL

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