Hawsons Partners complete a-26 mile hike for charity

Hawsons Hike for Charity

On the 27th July 2019 Hawsons partners David Owens, Paul Wormald, Scott Sanderson, Pete Wilmer and Craig Burton all took part in a 26-mile hike in the Peak District raising over £1,700 for Macmillan Cancer Support.

Macmillan Cancer Support is a service that helps anyone with cancer live life as fully as they can, providing physical, financial and emotional support.

Scott Sanderson, Partner, said: “It was great to be involved in such a well organised event by MacMillan and to raise over £1,700 for the charity and complete the route in tough conditions is something we should all be proud of.”

If you want to still donate, please visit: https://www.justgiving.com/fundraising/hawsonshikers2019

To find out more information on this event, visit: https://www.macmillan.org.uk/get-involved/fundraising-events/event-detail/1724/peakdistrictmightyhike

Get on the Right Track for Tax Credits

Get on the Right Track for Tax Credits

Get on the Right Track for Tax Credits

Despite the railways having been around in the UK for nearly 200 years, they remain a key part of the national transport infrastructure.

The railway today is a far departure from the days of Brunel and the Stephensons, but the level of innovation and development that is evident in the industry would surely have captured the interest and admiration of those early pioneers.

The key challenges of providing a more reliable, safer, cleaner, energy efficient railway means that those businesses involved in supplying the sector are heavily involved in developing new products, services, and methodologies.

This level of innovation and development inevitably involves substantial investment of time and funds. HMRC’s Research and Development Tax Credit scheme is a key tool in the tax system that encourages businesses to invest in this area.

What are Research and Development (R&D) tax credits?

R&D tax credits are a tax relief designed to encourage greater R&D spending, leading in turn to greater investment in innovation.

They work by reducing a company’s tax bill or by the payment of a credit, linked to the amount of the company’s qualifying R&D expenditure.

A company can only claim R&D tax credits if it is liable for Corporation Tax.

There are two schemes for claiming relief:

(1)  the Small or Medium-sized Enterprise (SME) scheme;

(2)  the Research and Development Expenditure Credits (RDEC) scheme

The RDEC scheme (also known as ‘Above-the-Line’) was introduced in April 2013 for large companies.

A company with no tax liability can now receive a cash payment from HMRC via the RDEC scheme.

What tax reliefs is available to SME companies?

A company can claim an enhanced deduction against its taxable profits for expenditure which is qualifying R&D expenditure. The amount of the enhancement has increased over the years. The rate was 125% for expenditure incurred before 31 March 2015 and has increased to 130% from 1 April 2015. This amount is in addition to the actual expenditure (i.e. a 230% total deduction from 1 April 2015).  The relief can generate significant tax savings and tax repayments.

If the R&D claim creates a tax loss, then the company may be able to surrender the loss for a cash repayment. This is currently 14.5% of qualifying R&D expenditure. A surrendered loss could therefore give a repayment of up to 33.35% of the expenditure.

Newly created companies can also benefit.  Where the company incurs qualifying R&D expenditure before it starts to trade, it can elect to treat 230% of that expenditure as a trading loss for that pre-trading period.

The pre-trading loss created by the R&D relief can then be surrendered, as above, which could provide much needed cash flow for new companies.

R&D capital expenditure may be eligible for research and development capital allowances which provide a 100% deduction for tax purposes.

What about the RDEC scheme?

R&D relief may not be available under the SME scheme if the R&D project has had the benefit of a grant or subsidy.  There may, however, be an alternative claim available to the company.  This is known as the Research and Development Expenditure Credit scheme (RDEC).

RDEC allows the SME to claim a taxable credit of 12% of the eligible R&D expenditure.  As this amount is taxable it is known as an ‘above the line’ credit.

The credit received is deducted from your company’s corporation tax bill, or if there is no tax payable, the net amount can be claimed as cash.

The RDEC scheme is also available to an SME for subcontracted R&D carried out on behalf of a large company.

What type of project qualifies?

R&D relief can only be claimed by companies that have incurred expenditure on qualifying R&D projects that are relevant to the company’s trade.

Broadly a project should address an area of scientific or technological uncertainty and be innovative.  The innovation needs to seek an improvement in the overall knowledge in the relevant field of research, not just an advancement for the company.

Qualifying projects in the rail sector could include those which:

  • increase the service life of track parts or reduce the amount of wear and tear they are subject to;
  • increase the visibility of signalling equipment in challenging lighting conditions
  • increase the service intervals for rolling stock and reduce in service failures

An important point to appreciate is that the activity does not have to create something completely new from scratch.  It could include:

  • developing a product that exists but where there is some technological uncertainty which can be improved
  • making an improvement to a product or process, e.g. exploring new cost effective materials, which could allow a product to perform better.

How we can help

We have extensive experience of making successful R&D tax relief claims and are currently working on claims in this sector.  If you would like to discuss whether your company may be eligible to claim R&D relief, please get in touch with us.

 

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Category M prices are set to increase from August.

Category M prices are set to increase from August.

Category M reimbursement prices will increase by £15 million a month from August 2019 while the single activity fee (SAF) will increase to £1.27, the Pharmaceutical Services Negotiating Committee (PSNC) has announced. This is to correct a predicted shortfall in the margin delivery rate for the current financial year and it will be reviewed again in the autumn. The increase will help to ensure that the overall amount of margin delivered in the 2019/20 financial year equals the agreed annual sum of £800million.

The SAF 1p increase is to guarantee delivery of the correct amount of funding to contractors this year.

Category M prices did increase by £10million a month in April 2019, however, the April reimbursement levels were lower than predicted.  This was likely caused by movement in the drug mix in April, which means that contractors would have not seen the positive cash flow impact that would have been expected.

Due to the margin recovery process affecting contractors’ cashflow, the PSNC is concerned about the resulting financial position many contractors find themselves in. These concerns have been forwarded to the Department of Health and Social Care (DHSC) and the PSNC will continue to work with them to try to smooth the delivery of margin to contractors in the future.

Simon Dukes, PSNC Chief Executive, said: “The past few months have been incredibly difficult for many community pharmacy contractors. These August price increases are being made to try to correct margin delivery for this financial year and this should bring some relief for contractors.”

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Tax gap remains low

Tax gap remains low

HMRC has published a report showing that the UK tax gap in 2017/18 is estimated to be £35 billion.  This is 5.6% of total theoretical tax liabilities, and a small increase of 0.1% from 5.5% in 2016/17. HMRC therefore secured 94.4% of all tax due.

The tax gap is the difference between the amount of tax that should be paid to HMRC compared to what is actually paid. Further details in the report show:

  • the overall tax gap has fallen from 7.2% since 2005/06
  • the duty-only excise tax gap has reduced from 8.4 % in 2005/06 to 5.1% in 2017/18.
  • the corporation tax gap has reduced from 12.5% in 2005/06 to 8.1% in 2017/18.

Jesse Norman MP, Financial Secretary to the Treasury, said:

‘The UK’s low tax gap underlines both how the vast majority of people are paying the correct amount of tax, and how effective HM Revenue and Customs has been in its efforts to clamp down on tax evasion and avoidance.’

The report advises that the majority of taxpayers want to get their tax right, but many are still finding this hard, with avoidable mistakes costing the Exchequer over £9.9 billion a year. HMRC advise that £3 billion of this is attributable to VAT alone.

With the introduction of Making Tax Digital (MTD) for VAT, HMRC anticipates that the tax lost due to avoidable errors will be reduced because of the improved accuracy that digital records provide.

Internet link: GOV.UK news

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

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New measures to ensure small businesses get paid on time

New measures to ensure small businesses get paid on time

The government has announced a package of measures to ensure small businesses get paid on time. Under the proposals large businesses could be fined for failing to pay smaller suppliers on time as part of a robust package of measures.

The measures include:

  • proposed new powers for the Small Business Commissioner to tackle late payments through fines and binding payment plans
  • company boards to be held accountable for supply chain payment practices for the first time
  • the introduction of a new fund to encourage businesses to use technology to simplify invoicing, payment and credit management.

The government has also announced that responsibility of the voluntary code of best practice,  the Prompt Payment Code, will be moved to the Small Business Commissioner.

Small Business Minister Kelly Tolhurst said: ‘The vast majority of businesses pay their bills on time, with the amount owed in late payments halved over the last five years. But as a former small business owner, I know the huge impact a late payment can have on the ability of a small business to plan, invest and grow. Small businesses are the backbone of our economy and through our modern Industrial Strategy we want to ensure the UK is the best place to start and grow a business. These measures will ensure that small businesses are given the support they need and ensure that they get paid quickly – ending the unacceptable culture of late payment.’

Internet link: GOV.UK news

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