Charities legal services articles

When charity begins at home
14 July 2010

Budget Summary 2010 | How it will affect your business
24 June 2010

Budget Summary 2010 | For business clients
26 March 2010

Charities Act 2006 | Implications for Trustees
20 March 2010

Client article: A lasting legacy that benefits others
15 January 2009

How should a charity use its funds?
7 May 2008

Budget 2009 summary for corporate clients

22 April 2009



Summary of changes affecting corporate clients

Year on year the Budget, and more importantly, the supporting documents produced by HM Treasury and HM Revenue and Customs (HMRC) are growing more and more complicated and lengthy. Below we have highlighted a few of the proposals announced in the Budget which, if enacted, may affect clients adversely if subsequently action is not taken promptly.

Some proposed and actual changes will benefit businesses but, not surprisingly, most of the changes benefit HMRC to the detriment of the tax payer. Many of the announcements relate either to consultations which may or may not result in change in the future or to changes which will take effect in the future – this is one way to try and bury any bad news in the future.

Tax Payments and Refunds

The present law relating to claiming tax refunds is being ‘simplified’. One of the 'simplifications' means that the time limits for claiming repayments are being reduced from nearly six years to four years from 1 April 2010.

The penalty regime dealing with the late payment of taxes and the powers available to HMRC in dealing with late payers will be changed considerably (in favour of HMRC).

Personal Responsibility for Senior Accounting Officers

Although not mentioned in the Chancellor’s speech, the regime proposed in HMRC’s Budget Note 62 makes worrying reading for the senior accounting officers of larger companies (being those which are not small or medium sized). Senior accounting officers are likely to be the finance directors and if these measures are implemented they will make that post one of the least popular in a company.

The measures require the senior accounting officers, among other things, to certify annually that their company’s accounting system is ‘adequate for the purposes of accurate tax reporting’. Where a certificate is made carelessly or deliberately then this could result in penalties being imposed on ‘the senior accounting officer personally and on the company'.

The new regime, if enacted, will apply to tax returns due to be made for accounting periods beginning on or after the date on which the Finance Bill receives Royal Assent.

Corporation Tax

Corporation Tax rates are unchanged for both small and large companies.

One change that will be welcomed by groups of companies is the simplification of the regime for dealing with capital gains and losses when assets are transferred within groups of companies.

Companies who make losses in accounting periods ending between 24 November 2008 and 23 November 2010 will be able to reclaim taxes paid on profits in the last three years, albeit that this is limited to a total claim of £100,000 (being £50,000 per relevant year).

Property and Construction

A number of types of support for property and construction were announced, ranging from direct support for local authorities to build homes to additional expenditure on homes for families of members of the armed services. Maintenance of support schemes at the ‘demand end’ of the property market was also announced. However, more important (if it proves to be effective) will be the support for credit insurance, which has all but dried up in the building sector.

Landfill Tax

Although not mentioned in the actual Budget speech the Government has announced that a consultation exercise is being undertaken to consider how to modernize the existing landfill tax regime. To quote the Treasury document, ‘the consultation is aimed at ensuring the continued soundness of the administrative and legislative arrangements on which the tax is based. This will ensure the tax is robust and well placed to continue to make an important contribution to achieving environmental policy objectives’.

Any necessary changes are planned to be introduced in the Finance Bill 2010 – to come into effect "some time after that".

Capital Allowances

The rate of first-year allowance will be double, to 40 per cent, for 2009/10 for general plant and machinery. However this will not be available for expenditure on long life items or cars.

VAT

The standard rate of VAT is being returned to 17.5 per cent on 1 January 2010, as previously anticipated.

The place of supply rules for services to a business are being changed from 1 January 2010 but the changes will be phased in over 3 years. These changes will be important for any business supplying services to another business in another EU country in that the rules are being reversed so that VAT is charged in the country where the customer is established, not where the supplier is established.

Insolvency

A consultation on possible changes to insolvency laws will be launched by the Government. The stated aim is to ensure that regulations and procedures will "facilitate company rescues…. and that the knock-on effects of company insolvencies on their creditors are minimal". There will also be a consultation on a proposal to allow new funding to a company which is in insolvency proceedings which funding will have priority over other creditors.

Redundancy

It is proposed that the weekly earnings ceiling for statutory redundancy pay be increased by £30 to £380 from October 2009.

If you require legal advice, for either your private affairs or organisation, please call Buckinghamshire based B P Collins Solicitors on 01753 889995, complete the online enquiry form or email enquiries@bpcollins.co.uk.