BACK TO WORK, BACK TO SCHOOL AND WELCOMING BACK THE SUNSHINE.
Welcome to the September newsletter from Harbour Key. As the summer holidays come to an end, our dedicated team at Harbour Key remains actively engaged. Our compliance work, encompassing accounts and tax matters, is progressing swiftly, and our advisory projects, especially in light of heightened HMRC activity, show no signs of abating.
Last week, Chancellor Jeremy Hunt disclosed his plans to deliver the Autumn Statement to Parliament on November 22. He has already started rallying his party, emphasising that there won't be any tax cuts. We are eagerly anticipating the statement, and as always, we will furnish you with a comprehensive summary once the Chancellor has concluded his statement.
After returning from sunny destinations, some of which were quite hot, many people are contemplating permanent relocation or purchasing holiday homes where they can spend more time, thanks to the possibilities of remote working. Several countries, including Spain, Portugal, Greece, and now Canada, are expanding their offerings of "digital nomad" visas. These visas often come with enticing tax incentives or low tax rates, as these countries aim to attract affluent individuals or the skilled professionals they require.
Apart from permanent moves abroad, employees increasingly expect flexible work arrangements, with employers collaborating to attract and retain talent. This shift towards flexible work patterns is creating a more globally mobile workforce. However, it's important to note that even having just one employee working outside the UK can trigger tax and regulatory obligations for both the employer and the employee. Find out more on our blog below.
THE RISE OF OVERSEAS REMOTE WORKING & TAX
Alternatively, some individuals may have returned from their annual leave contemplating their retirement plans and the future of their businesses. It's essential to highlight that a significant number of businesses are unnecessarily exposed to risks due to a lack of proper exit strategy planning. A noteworthy statistic reveals that only 30% of businesses available for sale successfully find buyers each year.
This statistic reflects the quality of businesses ready for sale rather than the number of buyers in the market. We strongly advocate exit planning and engaging in regular discussions with our clients on this topic. For further information, please refer to our second blog below.
HMRC ACTIVITY
HMRC have recently started sending a letter to certain non-resident companies that own non-residential property in the UK. The letters target those companies that appear to have failed to notify for tax reporting where they own commercial property. The companies may need to disclose rental income to HMRC, the letters explain what they need to do next. The letter is linked to HMRC’s ongoing programme of work to identify and tackle potential non-compliance by offshore corporates owning UK property. Per August’s newsletter, with HMRC increased investigation and enquiry activity, we highly recommend that clients take out tax investigation service, which will cover the fees in dealing with the enquiry. If you are interested in taking the service, please do not hesitate to contact us.
HMRC TO INVESTIGATE THE WORKING FROM HOME TAX BREAK
HMRC is to investigate individuals working from home and claiming tax breaks, with concerns that people are claiming homeworker tax relief even though a majority of workers can now go into the office. HMRC has forecast that it will pay out £80m in working from home tax breaks for 2022/23. Calculations suggest that around 1.5m people were still claiming the relief in the 12 months to April 2023. This is despite HMRC declaring in April 2022 that people can only claim if they have no choice but to work from home, or their contract of employment states their place of work is their home. HMRC relaxed the homeworking relief rules during the pandemic, allowing anyone who worked from home at any point to claim a yearly sum of up to £125 in tax relief.
COMPANIES HOUSE FEES
Companies House is set to increase its fees, with the expectation to raise revenues from £12 million to £19 million in 2024-25. This review particularly targets smaller fees, like the £12 company incorporation fee. These fee hikes aim to cover the costs associated with Companies House's new investigative and enforcement activities, creating a more sustainable funding model. Companies House has already initiated efforts to rectify incorrect information on its registers using new powers, and it's introduction of the Register of Overseas Entities to hold owners accountable. Furthermore, Companies House is enhancing collaboration with HMRC and other agencies to share data, combat economic crime, and address concerns about the registers’ data quality. Alongside potential fee increases, Companies House is taking swifter action in issuing penalties and enforcing non-payment.
SOLE DIRECTOR COMPANIES
In the recent case of Hashmi v Lorimer-Wing (2022), the High Court has determined that a private limited company operating under the Model Articles (automatically issued when you incorporate a limited company) must have a minimum of two Directors, and that Model Articles require amendment to permit a single Director to make decisions.
As a result of the ruling, the decisions made by a sole Director may be called into question and lead to concerns regarding the validity of the decisions made by a sole Director. Should you have concerns regarding the validity of decisions made by a sole Director, there are several solutions available to mitigate any potential problems and we would recommend seeking legal advice on your situation.
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