The new Community Amateur Sports Club (CASC) rules – does your club continue to qualify? HMRC are now actively reviewing CASC clubs’ qualifying status

HMRC have recently announced that they are starting the process of writing to registered CASCs to ask clubs to self assess whether they continue to qualify under the revised rules which were introduced with effect from 1 April 2015.

To briefly recap, the CASC rules are very beneficial for sports clubs because they provide mandatory reliefs from business rates, can provide corporation tax exemptions and can also enable clubs to claim Gift Aid on donations from individuals. The CASC rules are intended to provide a range of tax benefits which provide a funding boost to clubs across a broad range of sports.

However, the CASC rules were changed on 1 April 2015 and so now have additional criteria which will require many clubs who want to remain within the CASC scheme to alter either their membership packages, heir club structure, or potentially both.

What are HMRC doing now to check Clubs’ status?

HMRC have indicated that they are writing to CASCs in June/July 2015 to ask that the clubs “self assess” whether they meet the new rules and the self assessment will give the clubs three options:

1.     If the club is confident that it still qualifies under the new conditions without need for action, then the club can complete the self-assessment checklist and return the checklist to HMRC.

2.     If the club considers that it no longer qualifies under the new conditions then either,

(a)    complete the self-assessment checklist and return it to HMRC indicating that the club does not wish to remain a CASC (and so the club will voluntarily deregister from CASC status) or;

(b)   complete the self-assessment checklist and return it to HMRC explaining that the club does not meet the requirements to meet the new CASC rules but wishes to make changes to remain in the scheme. The club will need to then make the necessary changes before the 1 April 2016, after which HMRC will write to you to check that you have made the required changes.

Why is it important that clubs consider this letter carefully when it is received?

Firstly, the letter should not be ignored! The letter is giving the club a prompt that the CASC rules are beneficial and that clubs should seek to stay within the regime if possible. The additional business rates cost alone which would arise from ceasing to be a CASC can be substantial! However, if the club ignores the letter it will indicate to HMRC that the club will not meet the requirements from April 2016 (and so ignoring the letter may lead to a club being deregistered erroneously).

Secondly, the club should carefully consider whether they continue to meet the rules, but if the conclusion is that the new rules are not met, for what reasons? Typically where a club cannot meet the new rules this is due to having membership packages that do not meet the new requirements, having too much income from non-members, or not having enough “participating” members. In each of these scenarios the issues can normally be resolved by the club, for example by changing the clubs membership fee structure or creating a trading subsidiary.

The transitional period to April 2016 is intended to allow clubs to make the changes they need to qualify. As the CASC provisions are intended to help clubs, not hinder them, clubs should aim to stay within the rules if possible.

If your club has received a CASC self assessment letter from HMRC, we offer a no-obligation review process to enable you to understand how you should respond.  If you would like a free review for your club, please contact sara.andrews@taitwalker.co.uk or alastair.wilson@taitwalker.co.uk or call 0191 285 0321.
http://www.taitwalker.co.uk/wp-content/uploads/2015/02/CASCs-Are-you-Ready-for-the-Changes.pdf

Energy Saving Opportunity Scheme (ESOS) – what you need to know

The Energy Saving Opportunity Scheme (ESOS) is the UK implementation of new EU legislation, requiring a mandatory programme of energy audits for “large enterprises”. This blog post will provide answers to some key questions about the new legislation.

Who does it apply to?

ESOS applies to any “large enterprise”, which is a business with more than 250 employees, a turnover exceeding 50m euros and a balance sheet exceeding 43m euros (these criteria should be met from 31st December, 2014).

It is also important to be aware that companies viewed as standalone SMEs can also be applicable if they are part of a UK or EU group containing other UK entities which are large.

What do you have to do to comply with ESOS?

You must perform an audit of 90% of total energy use for a one year period and identify/evaluate efficiency opportunities, informing the Environment Agency of these.

Your first energy audit must be conducted by 5th December,2015. The approximate cost to each business will be £6,600 over a four-year cycle.

You will also need to appoint a ‘Lead Energy Assessor’ – this person will need to be registered through an approved professional body.

What will happen if you do not undertake an ESOS assessment?

Failure to notify the Environment Agency of compliance will result in a penalty of up to £50,000 and/or an additional daily penalty of £500 for each day that your business remains non-compliant. These details may also be publicised.

Important points:

  • Plan ahead – there is a greater risk of penalty if you leave it until the last minute and it will also be more difficult to find and book in a lead assessor. Use your assessor early in the process to find out the best way to save time and money.
  • The penalty is final – failure to comply will result in the penalty as outlined above. You cannot simply pay a fine to void non-compliance.

For further advice regarding ESOS, please contact us on 0191 285 0321.

Calling all manufacturers – it’s almost time for the 2015 MHA Manufacturing Survey

Next week we will open our annual Manufacturing Survey. This year’s survey is sponsored by Lloyds Bank and will focus on 7 core areas; the business as a whole, your post-election wish list and views concerning the EU referendum, recruitment and skills, funding, energy & sustainability.

The survey will be sent to thousands of manufacturers and engineers across the UK. Along with our colleagues in the Manufacturing Group of our national association MHA, we will look at the anonymised data and use it to summarise trends, identify opportunities and threats for manufacturers and look at other ways in which we can help our manufacturing clients. Where appropriate, we will also be putting pressure on the government to take more action to support manufacturers and engineers.

We want to understand your view of the upcoming year so we’re asking you to help us by completing a brief online survey which we will be sending to you next week. The survey will take you no longer than 10-15 minutes and once the data has been analysed we will provide you with a full report detailing the findings with commentary from the prestigious WMG – the Manufacturing Group at the University of Warwick and from Philippa Oldham CEng MIMechE, Head of Transport and Manufacturing at the Institution of Mechanical Engineers.

Amongst other things, last year’s survey showed respondents predicting that they would see growth in 2015 but having concerns over a developing skills gap. You can read the full 2014 Survey report here.

If you have any queries about the manufacturing survey or would like to know more about the services MHA members provide, please contact us on 0191 285 0321.

NECC Business Tips Book Released

NECC

As part of its 200th anniversary celebrations, the North East Chamber of Commerce (NECC) has worked with Activ Technology and Microsoft to compile and publish a book of their top 200 business tips.

With tips and insights in a wide range of business areas including leadership, strategy, recruitment, marketing, HR and finance, you can find some expert advice which may prove to be very useful for your business.

Click here to access the book.

Selling your company or business: are your commercial contracts in order?

Landscape LLP Logo White - 300 dpi

Today’s guest blog post from leading law firm Watson Burton focuses on how to make sure your commercial contracts are in order before selling your business…

When looking to sell your company, any serious buyer will undertake in-depth due diligence, analysing every aspect of your business to ensure it is worth the price you think it is. This involves reviews of all aspects of the business, including disputes, legal compliance, property, financing arrangements, workforce, pensions, technology and commercial contracts.

Sam Jardine, head of commercial at law firm Watson Burton sets out his top 10 key facts to consider in relation to your commercial contracts, from both supplier / customer perspectives. If your contracts contain any of the below, it is worth considering renegotiating with customers / suppliers before the sale process commences.

Jardine Sam

Contracts where you are the customer

1) No minimum volumes
A buyer will often be wary of contracts where there are strict purchase obligations, failure to meet which results in either (a) an obligation to compensate financially for any shortfall; or (b) could result in an actionable breach of contract.

2) No exclusivity
Being tied to one supplier is sometimes a commercial reality, but this can look unattractive to buyers unless there is a quid pro quo in terms of guaranteed levels of supply on favourable commercial terms.

3) Payments terms
The buyer will look for long payment terms (e.g. 60 days), the ability to withhold disputed payments and low interest rates in the event of late payment.

4) Intellectual property (IP)
Have you acquired any IP during the performance of the contract? This may be important to the buyer, depending on the nature of your company’s business. How is IP ownership documented?

5) Termination
It is useful if you can terminate a contract for convenience so you are not tied in to a long-term contract, but be mindful of early termination charges. This will give a buyer more flexibility.

Contracts where you are the supplier

6) Change of control/non-assignment
The buyer will want to know that none of your customers are able to terminate the contract on a change of control of your business and any income-generating contracts will still be enforceable post-completion.

7) Standards of service
Ensure that the obligations to provide services are not too onerous, for example with reference to using ‘reasonable’ endeavours rather than ‘best’ endeavours. A buyer will want to ensure any monetary remedies (such as liquidated damages or service credits) are not onerous in the event of a failure in service provision.

8) Price increases
It is important for you to be able to increase your prices as part of a long-term contract, to ensure they remain commercially viable. Consider whether increases are only inflation-related, or if they factor in increases in your own supply chain, to ensure you protect against margin erosion.

9) Intellectual property (IP)
The buyer will want to see that IP created or arising is capable of your exploitation, whether you retain ownership or grant licences, as opposed to assigning it upon creation.

10) Liability
Your liability should also be capped to prevent the risk of unlimited liability. Although there are certain things for which your liability can never be excluded, there are certain things which you can exclude liability for. Should you be liable for the customer’s loss of profits, loss of data, etc?

For an informal discussion about your commercial contracts, or any of the issues covered in this post, contact Sam Jardine, head of commercial at Watson Burton at sam.jardine@watsonburton.com, or call 0845 901 0966.

This material is provided as a guide only, and is not a substitute for legal advice. Whilst every effort is made to ensure that the information is correct at the time of issue, Watson Burton LLP can accept no responsibility for actions taken based on this information. 

Click here to visit the Watson Burton website.

For any of your other corporate finance needs, please contact the Tait Walker Corporate Finance team on 0191 285 0321. 

Could you get caught out by the July Budget?

Our Head of Investment Services, Nick Swinhoe shares his thoughts on what the Chancellor may announce in regards to tax relief in his July Budget…

Financial commentators are expecting a change in respect of the tax relief available on pension contributions. The outcome could be a cut to the annual allowance in respect of pension contributions for the highest earning individuals (those who earn over £150,000 per annum).

In doing this, the chancellor would limit the level of tax relief available to those within that earnings band, thus saving the treasury millions, which could then be used to fund the other pre-election promises that he made.

In the past when similar changes have been made, anti-forestalling legislation has been used to close the window of opportunity between the budget and the proposed changes becoming law. It is unlikely that it will be different this time.

If you could be caught by this change you should consider making your annual pension contribution before 8th July rather than waiting until after the budget. Remember, you can also carry forward any unused allowances from the previous 3 years meaning that you could invest up to £180,000 and get tax relief of up to £81,000.

For further advice, please contact Nick Swinhoe on 0191 285 0321 or email nick.swinhoe@taitwalker.co.uk

 

 

This blog represents my interpretation of current and proposed legislation and HMRC practice as at the date of publication.  This may be subject to change in the future.  The purpose of this blog is to inform and should not be interpreted as a personal recommendation or advice.

Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.

Mini Budget Predictions

Our Tax Associate, Chris Hodgson, give his predictions for the mini Budget on 8th July…

Due to the short timetable that was available to enact Budget announcements into a Finance Act prior to the election, a number of matters had to be set aside. Having now been re-elected, we can expect some of those matters to be reintroduced. Largely they were technical changes and so will not be grabbing headlines any time soon.

This Budget will give the Chancellor the chance to remind us of the promises made in the party’s manifesto and to look to introduce some of them now as a clear statement of intent for the next five years. There will be talk of the bill that will prohibit any increase in tax rates. This has the benefit of creating a feeling of stability but, in reality, if a Chancellor wants to increase taxes there are many ways to do so other than raising the rate of tax.

Welfare reforms

One of the main areas of content is likely to be in terms of proposed welfare reforms. In the run up to the election, the Conservative Party said that the reforms would produce savings of £12 billion, but there was no detail on the specific areas of reform. The mini Budget may be the platform for George Osborne to now give that detail.

Inheritance Tax

Another proposal is to introduce a new nil rate band for Inheritance Tax. Where the family home is to be passed to the children, this can allow a further amount of up to £350,000 to avoid Inheritance Tax, giving a tax saving of up to £140,000. The benefit of this saving will very much be felt in the South East.

The change is also to be focused so that the nil rate band will be gradually reduced, if a person’s estate is more than £2 million. We will only find out on Budget day if the proposals are to be introduced in their original form, but if so a person with an estate of at least £2.7 million will have to pay more Inheritance Tax than under the current regime.

Overall this Inheritance Tax change will reduce the tax take and to balance this tax reduction, the government is looking to restrict tax relief on pension contributions for persons earning over £150,000. We can all put up to £40,000 per annum into a pension, as that is the annual allowance. Under the proposals, where a person has income from all sources of more than £150,000, the annual allowance will be gradually tapered down to a minimum of £10,000 for any person with income of more than £210,000.

Where a business owner has the ability to control their income levels from year to year and they want to put money into pension, if the measure is introduced, an income level of just under £150,000 may be attractive.

Annual Investment Allowance

The final point which we would like to see in the Budget is a glaring omission from the March Budget. At that time George Osborne said that the level of the annual investment allowance, applicable from 1 January 2016, on which a business can claim a 100% deduction for plant and machinery, would be announced in due course. This announcement could be as late as December 2015, when the Autumn Statement is presented to the House of Commons.

Given the need for businesses to have forward plans for capital expenditure, forward knowledge of the tax position is vital. We are told that the country benefits from the government having a long term economic plan. It is to be hoped that the government will understand that forward visibility of the tax position will be of benefit to UK industry.

For further advice, please contact Chris Hodson on 0191 285 0321 or email chris.hodgson@taitwalker.co.uk

Tech businesses can benefit from Barclays new fund

Today’s guest blog post comes from Barclays, who are launching an innovative finance product providing businesses loans of up to £5m…

As a global hub, the UK is second only to Silicon Valley, with specialist and sector-agnostic finance houses pouring millions of pounds into early-stage businesses to drive growth.  Fast growth businesses are emerging as a result and entrepreneurship is beginning to flourish.

For instance in the North East the volume of high-growth companies rose by 25.5% in the year to March 2014 – the only region in the UK to report a rise bar Northern Ireland and the overall number of enterprises rose by 5.3% (Source: Barclays and Business Growth Fund Entrepreneurs Index)

Within the UK, fast-growth companies have traditionally relied on equity investment to fund growth. However, there are a growing number of companies for which a modest amount of debt financing at this critical stage in their life cycle would be beneficial.

Businesses typically take 15 years to go through the growth cycle from start-up to large corporate; however a fast-growth technology business for instance can often achieve this in a much shorter time frame with financing rounds occurring at shorter intervals providing Barclays with debt opportunities at earlier stages.

No bank today offers a tailored proposition that attempts to seamlessly deliver a joined-up “micro to IPO” service.  However we intend to change that…

Barclays is launching a fast-growth innovation finance product, providing businesses loans of up to £5m, repayable over a variety of terms provided private equity, venture, or angel capital has already been secured.

The main advantage of bank debt over equity investment is that it supports growth ambitions without having any particular control over the way the company is run, allowing the business to concentrate on its accelerated growth trajectory. It is also a cheaper method of financing (as opposed to equity) which also leads to dilution of share ownership for existing management.

The historic approach for cash flow lending to any business at this stage in the life cycle has been to look for a history of positive EBITDA and strong cash generation. However, rapidly expanding technology companies will reach profitability at the operating line and choose to reinvest this cash back into the business leaving them deliberately running off low EBITDA in order to feed top-line growth.

Typically, they will invest in research and development and sales and marketing, in order to quickly grow their customer base and take market share from competitors. However, this has left conventional European lenders, unable to get comfortable with the risks involved, out of the market, and leaving fast-growing technology companies with a debt funding gap at a critical point in their cycle.

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Aaron Clark, Relationship Director
07775 555 413
Aaron.clark@barclays.com

How to succeed with Public Relations: 5 top tips from Horizonworks

Today we welcome a guest blog post from Horizonworks, a full service strategic marketing company based in Newcastle upon Tyne…

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Regardless of whether you’re a start-up or a multi-national company, PR is an essential tool for building credibility, engaging with customers and reaching new markets in the manufacturing sector. Here, we provide our five top tips for great public relations:

Establish key messages

Before engaging in any PR activity, consider what key messages to convey to your customers and prospects. Ensure that your unique selling point and product or service benefits are explained and that these messages are informed by a focused, tailor-made marketing strategy

Tell your story

Don’t be shy! Your company is brimming with fascinating, engaging stories. A good PR practitioner will help you identify these stories and use them to create impact: whether it’s the challenges overcome during the launch of your company, your ground-breaking products and services or the charity and community work you’re engaged in.

Know your customers

What do your customers and prospective customers read, listen to or watch? Where do they go for advice, leads or industry news? Regional press, trade press and national consumer press – including newspapers and magazines – plus radio, TV and online platforms all have something to offer, and a tailored PR strategy will help you get your message out in the right places.

Identify your expert

Identify a spokesperson within your business with a strong knowledge of your company and crucially, your sector – someone with their finger on the pulse. A good PR company can help to position them in the press as an industry expert and can brief them on dealing with media enquiries.

Picture perfect

Rather than grabbing a last minute snap on a smart phone or digging out a photo from an old press shoot, invest in professional photography. A press release with a high quality image is much more likely to get picked up by journalists, and the more eye catching the image, the higher the chances are of securing major coverage.

For information on how Horizonworks can help your business, call 0845 075 5955, email: hello@horizonworks.co.uk or visit www.horizonworks.co.uk

Directors’ responsibilities before and after insolvency

As company director, there are a number of duties that apply in your role during the normal course of the company conducting its business. These include the following:

  • Keeping accurate companies books and records including accounting records
  • Preparing and filing accounts or making returns to Companies House
  • Submitting tax returns and paying on a timely basis
  • Ensuring that you are not trading at a time when the company could be deemed to be insolvent
  • Ensuring that you are not trading at the expense of creditors

Your duties as a director must continue in the event of the company entering any form of insolvency procedure. Your integrity and conduct may be questioned if you fail to do so.

The following is a list of responsibilities which should not be taken as being exhaustive:-

  • In the period prior to the formal insolvency taking place, the Directors remain responsible for the Company and must continue to comply with all government and other statutory regulations.
  • Immediately prior to insolvency, any acquisition of assets of the company or any proposed transactions in which a director or party is connected may require disclosure to the board under the Companies Act 2006.
  • Following insolvency, the Directors may be required to identify any assets belonging to the company and may possibly be required to assist the “Official Receiver” (OR) or “Insolvency Practitioner” (IP) to dispose of and collect in assets. The Directors have an ongoing duty to cooperate and to provide information to the OR/IP.
  • There is an overriding obligation for directors to act in the best interests of creditors. Failure to do so may expose Directors to a claim for misfeasance or breach of duty.
  • If you are a Director of the company and the company enters liquidation you will be prohibited from using any name by which the company was known or similar names suggesting an association with the company. However, it is possible to use such a name if the correct procedure is followed.
  • Directors will be required to deliver a complete record of the company’s accounting records.
  • Directors should be aware that any personal guarantees given on behalf of the company may be called in.
  • You can act as a Director of another company unless you are disqualified from doing so.
    If you have misapplied or misappropriated company funds at the expense of creditors, this could result in disqualification proceedings being taken.

For further information regarding the director’s role during insolvency, please contact Lynn Marshall on 0191 285 0321 or email lynn.marshall@taitwalker.co.uk

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