MB McGrady & Co is pleased to announce the relaunch of its Castlewellan Surgery Office on Monday 14^th of May. The office which has been established for over 30 years will be relocated to The Lodge Business and Cultural Centre in Castlewellan and will be open every Monday (except Bank Holidays) from 1pm-4pm. The surgery will be in the very capable hands of Jennifer Murphy BSc FCA and Malachy McGrady BSc (Econ) FCA. Jennifer is a Fellow of the Institute of Chartered Accountants Ireland who has been with MB McGrady & Co for 10 years. She has a broad range of experience providing accounting, audit and taxation advice for SME’s within a wide range of industry sectors, including farming, construction and charities. Jennifer also specialises in providing advice and training for new and existing computerised accounting packages such as Sage 50. Mal is a Fellow of the Institute of Chartered Accountants in Ireland and Senior Partner in the firm. He has been providing accountancy, taxation and general commercial advice to a wide range of locally owned and managed businesses for over 20 years.  Our highly qualified staff can provide you with a bespoke service in particular specialist tax consultancy which can help minimize your tax bills and save you money. For more details please contact our Downpatrick Office 028 44 616321 or email info@mbmcgrady.co.uk.

Also please find below details of a free seminar we are holding in The Burrendale Hotel Newcastle on Thursday 24^th May at 7pm. Everyone welcome.

Prior to 1 March 2012 there was a relatively straight forward way for shareholders to wind their company up and withdraw the remaining funds.  Under Extra Statutory Concession C16 (ESC C16) it was possible, on giving of certain assurances to HMRC, for the distribution made on a winding up to be treated as a capital receipt in the hands of the shareholder.  This is usually, (but not always!) the desired result as the resulting capital gain can usually (but not always!) attract the beneficial 10% tax rate (due to Entrepreneurs Relief) as well as the annual exemption (currently £10,600).  The alternative tax treatment, (as a dividend), means an effective rate of tax of 25% for higher rate taxpayers.  Moreover no formal liquidation process was required, simply a completed form and £10 payment to Companies House did the trick.

However new rules introduced from 1 March 2012 mean that the capital treatment is now subject to an overall cap of £25,000.  If the remaining undistributed funds are in excess of this, and capital treatment is desired, a formal liquidation will be required.  In even the simplest of cases, where all creditors have been paid and only cash remains on the balance sheet, this is likely to cost in the region of £5,000.  As always where tax is concerned, there are both pitfalls and planning opportunities.  If you would like more information, please contact us at info@mbmcgrady.co.uk or call one of our offices on the numbers below.

With these concerns in mind, Lorraine Hunter will give a talk outlining the workings of inheritance tax with particular emphasis on life-time giving.

Michael Graham, who is a Director of Cleaver Fulton Rankin Limited, Solicitors, will explain the rules which determine how much you may be required to contribute to the cost of long term care and, against this background, how you can begin to plan for it.

Refreshments will be provided with the opportunity to ask questions. It is completely free.

With these concerns in mind, Lorraine Hunter will give a talk outlining the workings of inheritance tax with particular emphasis on life-time giving.

Michael Graham, who is a Director of Cleaver Fulton Rankin Limited, Solicitors, will explain the rules which determine how much you may be required to contribute to the cost of long term care and, against this background, how you can begin to plan for it.

Refreshments will be provided with the opportunity to ask questions. It is completely free.

Starting from 6 April 2012 HMRC will be able to ask employers to pay a financial security if they think there is a serious risk that the employer will not pay their PAYE tax deductions or National Insurance contributions on time.

This financial security will be determined individually depending on the amount of tax at risk and will be either:

• A cash deposit from the business or director – held by HMRC or paid into a joint HMRC/taxpayer bank account
• A bond from an approved financial institution which is payable on demand.

HMRC have stated that this will not affect the vast majority of employers who pay their tax on time and in full and it will not be used for employers who are having genuine financial problems. However, it will put increased pressure on businesses already in difficulty as they will be required to raise additional funds to pay this security.

Failure to provide a security to HMRC will constitute a criminal offence, potentially leading to fines of up to £5,000.

The main target areas for HMRC are those employers who:

• Deduct money from employees’ pay packets, under the pretext of paying their employees’ income tax and NICs, but have no intention of paying it to HMRC
• Have a history of building up large PAYE or NIC debt
• Avoid responding to HMRC’s contact attempts

If you consider your business at risk of receiving a financial security and are experiencing financial difficulties please contact one of our offices or e-mail us at info@mbmcgrady.co.uk for more information on how an appeal can be made.

If you are in receipt of UK rental income you are required to complete and submit an income tax return to HM Revenue and Customs (HMRC). A potential tax liability arises on the net rental income received from the properties i.e. rent less expenses. Allowable expenditure includes rates, insurance, repairs and any utility usage not covered by the tenant. Relief is also available for the interest element of any finance or loan used to purchase the property. For furnished lettings a further wear and tear allowance is also available being 10% of the gross rental income less rates.

The liability to tax depends on your other sources of income. For 2011/12 tax year, if your total sources of income (including your net rental income) less your personal allowance of £7,475 are less than £35,000 you would pay tax at 20%; if between £35,0001 – £150,000 you would pay tax at 40% and if greater than £150,001 you would pay tax at 50%.

HMRC receive returns in relation to all tenants who are funded by government agencies such as NIHE/DHSS. It is therefore essential that personal tax returns are made to prevent an investigation which may result in back taxes, interest and penalties. If returns have not been made a voluntary disclosure should be made to HMRC for each year that you have received rental income. It is also important that you can demonstrate in many cases how the property acquisition was funded.

A penalty and interest would be charged on any unpaid tax. The level of penalty can range from 0% to 100%. However for a voluntary disclosure it is likely that the penalty could range from 0% to 30%. This is an area where HMRC are attempting to recover significant unpaid tax and have issued letters recently to individuals who they believe have been in receipt of rental income which has not been disclosed or taxed. If you find yourself in such a position take professional advice as action taken now could significantly mitigate any penalty.

If you would like to discuss this please contact us on 028 44 616321 or e-mail us at info@mbmcgrady.co.uk .

Download the MB McGrady Tax Rates Guide 2012-13

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In January David Cameron made a statement saying he was disappointed at the poor response to the governments NI holiday scheme. This offers new businesses up to £50,000 of savings by exempting them from employer’s NI contributions for each of the first ten workers they employ.

There is no clear reason why there has been a poor response to this scheme. The recession is likely to be a major factor in that businesses simply are not taking on workers. It is also likely that all the red tape associated with starting and running a new business has caused the scheme to be overlooked. In our view, this really shouldn’t be an obstacle – the savings for new companies are just too good to miss.

As you would expect with an offer so apparently generous there are some conditions to meet, not least of which is that the scheme is not open to all business in the UK. Here is a quick checklist of the scheme’s conditions. It will take seconds to read but it might save you thousands in National Insurance:

• Your business started on or after 22^nd June 2010
• Its located in the UK
• Your employee(s) started work for you for the first time on or after 22^nd June 2010.

If you answer “Yes” to all three, your business is probably entitled to an NI holiday in respect of one or more of its workers. Subject to restrictions, the NI holiday can also apply to salary paid to company directors, shareholders and their relations.

For more information please contact one of our offices or e-mail us at info@mbmcgrady.co.uk .

As we are fast approaching the end of the tax year for 2011/12 we have outlined below a summary of key areas that you need to consider before 5 April 2012.

Click to download the MB McGrady Year End Planner

• Capital Allowances

If you are self employed or a limited company you will get 100% tax relief on capital expenditure up to £100,000. This will be reduced in 2012/13 to £25,000 so if you are planning a big spend do it now. Care should be taken with accounting periods that span this date as the allowances may be prorated.

• Personal Pension Contributions

Pension contributions must be paid by 5 April 2012 to apply against 2011/12 income. Contributions can be up to 100% of earnings up to a maximum of £50,000 per year. If you have not contributed the full £50,000 in any of the previous three years you may carry forward any unused annual allowance, so you may be able to pay increased amounts prior to April 2012. As the lifetime allowance is being reduced from £1.8 million to £1.5 million from 6 April 2012 you should also review your retirement plans.

• Capital Gains Tax Annual Allowance

You are entitled to capital gains tax allowance of £10,600 during 2011/12. If you have not used this years allowance and you have something such as an investment in shares which has made a gain that you were thinking of selling you should consider it before the year end. If you have already used this year’s exemption consider deferring the transaction until after 5 April 2012.

Married couples should consider transferring assets into joint ownership with their partner or spouse to avail of both annual exemptions.

• Dividends and Salary

It is important to review dividends, salary and bonuses before the year end to ensure that these have been recorded correctly and you are making the most of your tax allowances. Bonuses must be paid within 9 months of the company’s year end to ensure tax relief for the company in that period.

• Individual Savings Accounts

An individual can invest up to £10,680 tax free in an ISA for 2011/12 and with top rate of 50% applying, the attraction of investing in an ISA is increased.

• Inheritance Tax

The annual Inheritance tax gift exemption is £3,000 per individual. If you did not use the 2011/12 exemption, you can carry it forward to next year. In addition each individual can make any number of small gifts up to £250 per person.

As with all taxation matters, we recommend that professional advice be sought.

If you would like to discuss this please contact one of our offices or e-mail us at info@mbmcgrady.co.uk .