Ever wondered what makes a tax specialist?
Well let’s start with some dictionary definitions from Dictionary.com
1 – a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.
2 – a burdensome charge, obligation, duty, or demand
Specialist – noun
1 – a person who devotes himself or herself to one subject or to one particular branch of a subject or pursuit.
Sometimes the specialism comes as a result of studying for a series of specific exams, other times that specialist knowledge comes from practical experience and on the job training and the repetition of an activity.
When it comes to tax there are many branches of tax, in 2016 there were over 17,000 pages and over 10 million words in the UK tax code. So to try and maintain a level of competency over all 17,000 pages is practically impossible. It is probably the most complex tax system in the world. That is why people specialise.
It is also why “Avoidance” is a hot topic when it comes to tax in the UK, with all the calls for large blue chip companies to do the right thing when it comes to their tax bill. The reason why the tax code is so long is that successive governments have wanted to add their stamp to tax legislation, but instead of repealing existing laws and publishing new ones they have just continued to add their own list of tax requirements to the tax code. It is this practice that leads to “loop holes” that the biggest companies able to afford the best tax advice in the country that they can use to reduce their tax bill. Fortunately when it comes to PAYE and National Insurance and now Pension Contributions, there are less loop holes and it is why these are the greatest generator of tax income to the UK Treasury.
Let us be perfectly clear, “Tax Avoidance” is the legal use of the tax code to reduce your tax liability to the smallest amount possible. “Tax Evasion” is the illegal non-payment or underpayment of tax.
One of the most obvious cases where a small company can find itself on a level playing field with their blue chip counterparts is when it comes to using legislated for tax reliefs for Innovation and the purchase of Capital Assets.
The former is an area that can make a significant difference to a company tax bill. The more you Innovate with your products and services, the more Research and Development you undertake and the more risks you are prepared to take both with your research and development activity and in the protection of the findings of that activity by actively protecting it with a UK or EU patent the more you can reduce your tax bill, or to put it bluntly, the more you can engage in perfectly legal Tax Avoidance and what is more, by working with the right specialist the cost is not disproportionate to the benefits and the risks and be greatly reduced.
When it comes to the purchase of Capital Assets, whether that be vehicles, machines, fixtures and fittings or buildings there are Capital Allowances that can be claimed. Over the last 20 years governments have tried to incentivise companies to invest in capital items by allowing companies to take advantage of specific enhanced Capital Allowances for environmentally beneficial assets and also larger Annual Investment Allowances which offer, at the current rate a £1m Investment Allowance. Both schemes allow for a company to get the entire tax benefit in the year of purchase rather than receive the benefit over around 20 years through a normal writing down allowance.
So in summary whatever the tax, you really should be talking to a specialist to make sure that you are paying the right amount of tax at any given time and in any given situation.
We are specialists in Tax Reliefs for Innovation, and whilst we aren’t specialists for Capital Allowances, we do know people that are! If you want to talk to a specialist about your innovations in the Food and Drink Industry specifically or in any other industry, we’d be very happy to talk to you. We offer a free, no obligation, initial 15 minute phone call to determine whether you might have the potential to claim, you can arrange that by calling us on 01424 225345 or booking on www.calendly.com/simon-bulteel or sending us an e-mail to info@Coodentaxconsulting.co.uk.
Just remember, Tax Avoidance is perfectly legal and the Government are desperate for you to continue innovating because it will help to increase UK Gross Domestic Product and improve our overall levels of productivity, therefore making us all better off. So to all intents and purposes, a little bit of the right sort of Tax Avoidance is good for everyone!