How to keep a healthy business in 2012

ACCOUNTANCY firm Clive Owen & Co LLP is advising how to get businesses in tip top shape for 2012 as the festivities die down and the nation looks to getting fit and healthy.

The firm, which has offices in Darlington, Durham and York, has produced its Top Ten Tax Tips for a healthy business in 2012 – from making the most of tax breaks to paying employees in the most tax efficient way.

Simon Briton, Senior Tax Manager with the firm, said: “The start of a new year is an ideal time to look at our businesses and work out how we can ensure they keep in top shape in 2012.

“It pays to take time out now to see how things like maximising tax breaks and identifying tax benefits can make a real difference to the health and future success of a business.”

Clive Owen & Co’s Top Ten Tax Tips for a healthy business are:

1 Replace salary with benefits

Asking employees to replace part of their salary with childcare vouchers, car parking, subsistence payments (for those working away from the office), etc can all reduce the tax cost to the business while keeping the overall package value the same. Share options are also a good incentive for employees and often cost the employer nothing.

2 Spot research and development opportunities

Businesses that carry out product development or trouble-shooting can often get tax benefits. Where a technological hurdle is tackled the costs (usually salary costs) of doing so get tax relief at 200/225%.

3 VAT’s better

Most businesses work out how much VAT they can recover by splitting VAT paid on overheads in proportion to their VATable turnover and their VAT exempt turnover. The proportion of VAT recovered can often be increased by agreeing a different basis for the apportionment with HMRC, such as the staff / floor space involved in each part of the business.

4 Delay buying plant and machinery

Tax relief on the cost of plant and machinery is spread over a long period, but there is a new tax break available from April next year which will allow relief on the full cost of new equipment in the year that it is bought if you’re in a qualifying Enterprise Zone. It will cover businesses in the Tees Valley EZ and North Eastern EZ.

5 Take a patent where possible

A new tax break is about to be launched which will reduce tax on profits to 10% if it can be shown that those profits come about because the business has patent protection over some of its products or processes. This is known as the ‘patent box’.

6 Speak to an angel

Attracting investment from a business angel can be a great way of raising working capital or funding development of the business. Many businesses find it easier to attract investment from business angels who can benefit from tax breaks rather than looking to traditional sources of funding, such as banks.

7 Give your business structure

There are all manner of tax planning structures available to businesses and these can be used to save tax in many different areas. The right structures can often help reduce tax charges on overdrawn directors’ loan accounts, corporation tax charges, etc.

8 Be super efficient

Taking dividends is more tax-efficient than taking salary payments. Similarly, putting money into pensions is tax efficient as the business saves tax on the payments to the pension and no tax is paid on money going into the pension.

9 Put property first

If you’ve spent money buying a building, parts of it will attract tax relief. But the time limit around tax relief claims is due to change soon and so it should be looked at as a priority for businesses – particularly those with qualifying assets such as hotels, student accommodation, leisure facilities, pubs and restaurants.

10 Keep on top of paperwork

HMRC now places great weight on a business’s risk profile. If a business has robust systems in place it is less likely to be looked at than a badly organised business. Ensure robust business records and accounting systems are in place.

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