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Inheritance tax: another day, another government U-turn

Inheritance tax: another day, another government U-turn

Inheritance tax: another day, another government U-turn

IHT treatment of specialty debts

The government has back-pedalled on a controversial decision on inheritance tax after widespread criticism. HMRC came under fire when it decided that a type of debt which had historically been exempt from inheritance tax would now be subject to it – going against centuries of legal precedent.

After discussions with professional bodies, it has now changed its position again – though things still aren’t back to how they were before. Let’s take a look at what’s going on.

What’s the history?

The controversy relates to a type of debt called a ‘specialty debt’, which is one owed to someone who is not domiciled in the UK. It’s a kind of debt created by a deed or a seal, not just a normal contract.

Historically, such debts, when owed to a non-dom, have been exempt from UK inheritance tax if the document recording the debt is held outside the UK. In 2013, however, HMRC decided that specialty debts should usually fall under the country where the debtor lived instead – so if the debtor lived in the UK, the debt would now fall under UK tax law.

Yeah, so what?

Under the Inheritance Tax Act, property outside the UK is not subject to inheritance tax if the person inheriting it is not domiciled in the UK. And although ordinary debts come under the country where the debtor lives for tax purposes, specialty debts are considered to be a special kind of debt, and it is a long-established UK legal principle that their legal location is that of the document recording the debt.

The principle goes back to the Elizabethan ecclesiastical courts, which held that “the debt is where the bond is, being upon a speciality; but debt upon a contract follows the person of the debtor”.

HMRC’s position was widely criticised for seeming to have come out of nowhere and conflicting with these established principles. Taxadvisermagazine.com described its change of mind as “an unexpected U-turn seemingly unsubstantiated by either legal or technical analyses”, adding:

“The practical reality is that specialty debts are an established category of formal contract in common law that has been in existence for many years, and entering such arrangements may not always be a result of only the overwhelming desire to mitigate inheritance tax exposure that HMRC believe has penetrated the non-dom society.”

Legal firm Forsters pointed out that UK resident non-doms often took out life insurance policies in the form of offshore deeds to protect them from inheritance tax.

So what’s the latest position?

HMRC’s new position is that the legal location of specialty debts will now depend on whether the debt is secured or unsecured. Broadly, where the debt is solely secured on land or other tangible property in the UK, the debt will also be in the UK.Where the debt is not secured, it will usually be where the document recording the debt is.

But if the creditor and debtor both live in the UK, but the deed … Read the rest ...

Don’t Forget the Accountant When Starting Your Own Business

Don’t Forget the Accountant When Starting Your Own Business

At some point, somewhere, in someplace, someone you know is thinking about or actually starting a viable business of some kind. Whether they succeed or fail in this endeavor will depend in part on how well they manage the books. The activity of recording business transactions or bookkeeping helps businesses account for what you’re doing now and hope to do in the near the future.

Don’t Forget the Accountant When Starting Your Own Business

Not a numbers person? Don’t let that frighten you. Think of it, instead, as just information about your business. And that means to a large extent, your employees, your customers, your vendors. The total of this aggregate and more are your business’ assets. Let’s say you entered all of this data into a spreadsheet to keep things organized. This would help you better track the businesses expenses. And to make things easier you can use bookkeeping software to simplify the process.

Assets and Liabilities

Here’s the skinny on these two biggies. Your assets would be your business equipment, inventory items, accounts receivable (money owed by customers). Your liabilities would be for example, money YOU owe to others (accounts payable), credit card balances and other balances scheduled for the following year.

What does all of this counting of assets and liabilities mean? Well, once you set everything up right, it will help manage the financial health of your company. People go into business to make a profit, and hopefully reduce their taxes as well. If things get too challenging, there are capable business accounting professionals available to assist you.

Professionals Are Available

Watson & Watt are a small business accountant firm that will make sure your books stay balanced. They use technology strategically to minimize the more boring parts of the number crunching task and show you visually the health of your business.

But what if you have a small business and happen to be the DIY type? No matter, general business accounting is just another skill that can be learned, in time. But fair warning, there will be some required reading on your part.

Here are a few necessities:

  • Register your business
  • Open a bank account
  • Set-up your bookkeeping system (payroll, import tax info)
  • Organize your business’ receipts

As well as know your overall business numbers as well as a good chef knows to the penny his restaurants food cost. Whether you opt to go solo or use a trained professional is your decision. A good rule of thumb though is to keep things simple. Remember, assets are items that add value to your business (e.g., cash on hand, the machines in used in your business, cash). Liabilities are owed credit amounts (i.e., accounts payable).

Take things one step at a time. Enter data carefully. Enter data accurately. Ask questions where appropriate. Back up your data. In time, you will make steady progress. Who knows, you may even begin to enjoy the whole numbers side of your business. Learning can be fun when you’re doing something you enjoy.… Read the rest ...

Ten Recommendations For Selecting The Great Accountant

Ten Recommendations For Selecting The Great Accountant

Small Business AccountantWith the advent of technology, the process of looking for a great paying overseas job has become actually easy. With a franchise, you can nevertheless be your own boss, yet in return for a share of the revenue or organization equity, the franchise business will assistance you with brand advertising, sales, solution provide and other essential matters. A excellent accountant need to be involved in your organization on a normal basis, not just at tax time, and can add considerably to your bottom line by setting up and structuring your small business operations efficiently.

You can seek suggestions from other modest enterprise owners, preferably in an industry equivalent to yours. Each business is distinct, so there is no easy answer as to how substantially an accountant and his or her solutions should expense. If you really feel you happen to be losing control of who owes you money and how significantly, an accountant can aid you get back on track. A new client or a massive project can mean you want to grow your small business more promptly than expected. It can be daunting dealing with government paperwork when you run your personal enterprise.

When you have handed more than your company’s finances to someone far more seasoned in accountancy than you are, you will have far more time to concentrate on other elements of your organization. Anything more than that and you’ll probably have to pay, but having to pay for half an hour with your accountant could save you a stack of dollars. The accountant will have access to the company’s books, records, and other proprietary data, Chamberlain says. You need to have to pick the appropriate accountant and make sure you trust them with your company’s economic data.

You may possibly really feel that no a single can possibly know your company as effectively as you do, as a result no one can deal with any component of your organization as effectively as you can. If you retain your personal books, come across an accountant who will operate for you only on a periodic basis (weekly, month-to-month or quarterly) making statements and evaluating the health of the small business. This will help you monitor the pulse of your business and preserve track of essential factors like cashflow.

Joshua Dubrow, of the New York State Society of Certified Public Accountants Smaller Small business Outreach Committee, mentioned that numerous people’s first instinct when searching for an accountant is turn to the Online. For instance, you may do organization as a sole trader or sole proprietor, functioning on a self-employed basis and invoicing below your own name.… Read the rest ...

The Enterprise Accountant

The Enterprise Accountant

Small Business AccountantAt the moment, there are no Bookkeeper Accountant Small Company jobs available which match this search. Only that altering your accountant isn’t difficult – so don’t more than stress about choosing 1. Get comfy with the firms’ culture and most importantly, the time they will dedicate to service your company in a prompt manner. An accountant can aid right here by managing your payroll and producing graphs so you can see how the ratio modifications more than time. If your organization fails to pay a supplier, defaults on a debt or loses a lawsuit, the creditor could legally come right after your property or other possessions.

They will appear immediately after the detail (payroll, employee tax management, home tax, utility payments and so on), leaving you free to look at the larger picture of the way your enterprise is developing. Even the fact that you have an accountant could sway the bank in your favor, as it implies you are critical about your organization.

Your choice on what qualifications to seek in an accountant need to also take into consideration what services your organization needs from an accountant. You may possibly also want to measure crucial company metrics, such as the ratio of salaries and other employee payments to total income. You can set your own working hours, craft your small business strategy, regulate your workload (at least to some extent) and determine your personal finances. Since the outdoors accountant’s fee grows with the size of the business, the owner may possibly see some price savings by bringing some of the operate in-property. If you never already have an accountant at this point, it really is a excellent time to hire 1.

If your accountant utilizes cloud-based accounting software, they will be capable to share your company accounts with you rapidly and easily. Hold in mind that tiny business can ill afford to make a hiring mistake – especially with an accountant. Costs differ by area and locale, as nicely as no matter whether you pick a regular accountant or a certified public accountant (CPA). Numerous small firms don’t have the volume of financial transactions that necessitate hiring a complete-time – or even component-time – bookkeeper or accountant on employees.

At some point you will have to let go, and discover to trust other individuals to manage some parts of your business so that you can appear soon after the rest. It is become much easier for a layperson to preserve track of a business’ finance with the advent of basic bookkeeping application, such as QuickBooks, Quicken, and Microsoft Office Small Small business Accounting. See who else is on the roster and verify no matter if the accountant is affiliated with a larger national firm that can enable on intricate troubles.… Read the rest ...

The Ideal Little Small business Accounting Software program Of 2016

The Ideal Little Small business Accounting Software program Of 2016

Small Business AccountantUnemployment has been a big situation in the United States for the previous few years. Your choice on what qualifications to seek in an accountant need to also take into consideration what services your enterprise wants from an accountant. You might also want to measure crucial small business metrics, such as the ratio of salaries and other employee payments to total revenue. You can set your own functioning hours, craft your organization approach, regulate your workload (at least to some extent) and determine your personal finances. Due to the fact the outdoors accountant’s charge grows with the size of the enterprise, the owner may see some cost savings by bringing some of the perform in-house. If you don’t already have an accountant at this point, it’s a very good time to hire one.

They will look following the detail (payroll, employee tax management, property tax, utility payments and so on), leaving you cost-free to look at the larger image of the way your organization is increasing. Even the fact that you have an accountant may possibly sway the bank in your favor, as it implies you’re critical about your enterprise.

This is an important choice and the business owner must carry out sufficient due diligence ahead of making a choice. It’s unlikely that you will have run your organization for years without having employing the services of an accountant. Nevertheless, if you get an accountant to take care of time-consuming tasks like taxes, it’s quite likely they will cost significantly less per hour than you would pay yourself.

Chung recommends asking the accountant to share testimonials from consumers, or superior but, if you can meet a present client. Every corporation sale is unique, and a very good accountant will help you get the best outcome when you sell up. As organization analyst and consultant, the accountant will often sit elbow-to-elbow with the owner to talk about not just economic matters but also major-picture questions of company strategy. She started freelancing in 2012 and became a contributing writer for Small business News Every day in 2015.

Then once more, the financial scenario of their business is such that they could benefit from much more normal economic review and planning and up-to-date accounting – alternatively of leaving each invoice, receipt, and ledger to hand off to the tax preparer at the close of the fiscal year. Preparing your tax documents appropriately could save you funds – possibly far more income than your accountant charges you.… Read the rest ...