Welcome to BPU's 2019 Summer Newsletter

BPU Staff News

BPU Raise Over £1000 at Charity Quiz Night for Kidney Wales

BPU have raised £1,306 for Kidney Wales as part of the fund raising for their Cardiff 10K run in September. BPU organised a charity quiz night on the 18th July at the Village Hotel Cardiff, that saw over 85 clients, friends and associates attend. The evening was a huge success and BPU smashed their £1,000 fund raising target so are now going to try and raise £2,000!

Fourteen BPU staff are in training and will run the Cardiff 10K on 1st September 2019 to raise funds for Kidney Wales Foundation. Training is going well and staff in the office are training hard and running together at lunchtime.

Kidney Wales Fundraising and Operations Director Nic Clarke said: “We were delighted to be able to attend the BPU Quiz night! BPU have been brilliant and active supporters of Kidney Wales and we cannot thank you enough for your support. Fundraising over £1,300 is amazing and we are so grateful. Raising money at events like this helps us continue the work we do supporting patients and their families as they learn to live with a life changing diagnosis like kidney disease. None of our work would be possible without the continued support of individuals and companies like BPU.”

If you would like to sponsor us for the Cardiff 10K please donate at Just Giving:https://www.justgiving.com/fundraising/bpu-cardiff10k

The firm will be holding a number of fundraising events this year to help hit an annual
target of £5,000 for local charities. We will keep you up to date on events coming up as well as progress on our overall target. Wish us luck - come on team BPU!

Quizards: BPU Managing Director Huw Palin (left) with Nic Clarke Operations Director Kidney Wales Foundation at the BPU Charity Quiz Night.

Client News

BPU Achieve Valuable Investment for Next Generation Sinclair Inventor

BPU has advised inventor, Grant Sinclair, to accelerate his company’s growth and help build solid foundations for future development.

Grant Sinclair Design Ltd was founded in 2016 by Grant Sinclair for the sole purpose of marketing his own inventions. Following in his uncle, Sir Clive Sinclair’s footsteps, Grant has a wealth of experience within the technology industry and a natural flair for creating innovative hit products.

Martin Knight, BPU Director (left) with Grant Sinclair CEO of Grant Sinclair Design

Grant Sinclair, CEO of Grant Sinclair Design Ltd said: “We have established Grant Sinclair Design Ltd operating from Barclays Eagle Lab Cardiff to develop self-build hardware for the global gamer, maker and education communities together with AI focused hardware suitable for autonomous vehicles and smart home development.

“Our POCO™ - Pocket Raspberry Pi Gaming Kit has been fully developed in South Wales and uses the Raspberry Pi® Zero which is made at Sony Wales. Pilot manufacturing for POCO™ is in Wales in advance of us starting additional manufacturing in the Far East.”

“We are supported by the Welsh Assembly Government’s AGP programme for High Growth businesses and have benefited enormously from the additional expert support from BPU Accountants, Cardiff.”

Based in South Wales, BPU Accountants has offices in Cardiff Gate and Llantwit Major. BPU is a 37 strong team with over 50 years trading experience, with clients ranging from individuals to large organisations and international businesses.

Following the formation of the Welsh start-up, the Cardiff based accountants have helped Sinclair source VAT funding via research and development tax reliefs.

Sinclair added: “Working with BPU on applying for R&D Tax Credits has allowed us a valuable source of cash to reinvest in our innovative product roadmap, accelerating our company growth and helping us build solid foundations for future expansion. BPUs actionable foresight smoothly interprets our ideas into an application HMRC understands.'

The tax department of BPU Accountants advises both corporate and personal clients in the private, public and charity sectors with one aim of helping clients increase their wealth and achieve their business goals.

Ten BPU staff are currently studying for qualifications through various training schemes. BPU believes in training the accountants and tax advisors of the future and growing a strong technical team. The recent expansion has proved invaluable to the growing BPU team, and they are looking to grow their tax department.

Director of BPU Accountants, Martin Knight commented: “We are proud to have provided Grant Sinclair Design Ltd with our specialist tax advice. This is a fantastic business that above anything, delivers technology that is radically evolving. The team and management at BPU are passionate about going the extra mile to give clients quality service, and that’s why they remain with us throughout their growth.”

“We are more than just accountants and offer a wide range of services to help businesses and individuals unleash their business potential. This has been an exciting year for all involved and we aim to continue this success.”

BPU Bake Off for Jax Journey

Well done to the BPU team for a fantastic bake off in July. The BPU chefs dusted down their aprons and made homemade cakes, quiches, sausages rolls, and pakoras. The team raised £110 for three year old Jax from Cardiff . The charity 'Jax Journey' aims to raise £85,000 to fund a life changing operation for Jax to enable him to walk again - please support and donatehere.

Hot Topics

If your quarter end is 31st July 2019 don't forget to submit your VAT return by the 7th September-you should be doing this through Making Tax Digital (MTD). If you have not registered for MTD don't panic you can still submit your return via the old HMRC gateway portal. Make sure you register for MTD in time to file your next VAT return. If you need any advice speak to Dawn Bevan BPU MTD Specialist.

Advice for Employers - Be Aware Pension Re-Enrolment has Started

Every three years employers must put certain staff who have left the company pension scheme back into it. This is called re-enrolment. For many large employers this process has already started and your re-enrolment date will depend on when you originally auto-enrolled your staff into the company pension scheme.

Whether you have staff to put back into your scheme or not, you must complete a re-declaration of compliance to show the Pension Regulator how you have complied. Re-enrolment and re-declaration is a legal requirement and failing to submit the correct information could lead to a fine.

Depending on your circumstances, re-enrolment and re-declaration may be a two-stage process.

For further information on this matter please visit the Pension Regulator website for more details:https://www.thepensionsregulator.gov.uk/en/employers/re-enrolment

BPU offer a full payroll service and can deal with pension re-enrolment, for more information or general advice contact:
Andrew Miller Director at BPU

Tax Advice

Martin Knight, BPU Director

New VAT Rules

Reverse Charge for Building & Construction Services

From the 1st October 2019, the way in which VAT is collected and paid to HMRC will change. These changes are known as the Construction Reverse Charge or the Domestic Reverse Charge.

The changes have been introduced as a tool to prevent the VAT losses that arise when suppliers fail to pay to HMRC the VAT which has been collected. The new rules are not supposed to create any VAT losses for contractors but as with any changes to VAT rules, there are adverse and perhaps unexpected consequences. The impact on a sub contractors cash flow position is the main disadvantage anticipated to arise from the changes.

The reverse charge applies to all supplies of building or construction services which to date have been subject to standard (20%) or reduced (5%) rates and are reportable under the Construction Industry (CIS) reporting requirements.

Broadly, the new rules require a sub-contractor who makes a construction related supply to a VAT registered business to issue an invoice, but without charging or collecting VAT at the usual rates noted above. The main contractor will in return, notionally charge the VAT on that supply to itself, recovering this as input tax in accordance with the usual rules for input tax recovery. When the contractor raises an invoice to the end customer, it will charge VAT as normal.

A general list of activities that fall within the new VAT rules has been provided within HMRC's guidance. Although a sweeping statement, any activities that fall within the CIS rules should be considered to fall within the new VAT reverse charge rules. There is a full list of services that have been expressly excluded that I have listed in my full detailed article on this subject. To view thisclick here.

If you need help and support preparing for this change or further advice on any of the above please contact me.

Tax Changes to Off-payroll Working

Next April will see HMRC apply changes to the way off-payroll workers of medium and large organisations in the private sector are taxed. This move is an extension of the changes to off-payroll working rules that were applied to the public sector in 2017. Here, we take a look at the regulations.

The 'Intermediaries Regulations', also known as IR35

The Intermediaries Regulations, also known as IR35, apply to individuals who provide their personal services via an 'intermediary'. An intermediary may be another individual, a partnership, an unincorporated association or a company; however, the most common structure is a worker providing their services via their own company – known as 'personal service companies' (PSCs).

The rules are specifically designed to prevent the avoidance of tax and national insurance contributions (NICs) by those using PSCs and partnerships. The rules do not stop individuals selling their services through either their own PSC or a partnership. However, they do seek to remove any possible tax advantages from doing so. Instead of allowing contractors to extract taxable profits as dividends, thereby avoiding income tax and NICs, they would need to be paid as if the payment is a salary.

Introduction to public sector contractors

In 2017, HMRC took aim at 20,000 public sector contractors with the intention of raising £400 million by requiring some workers to pay income tax and NICs.

Those changes saw some contractors' net income cut significantly. HMRC also shifted the responsibility for compliance from the individual contractor to a public body or recruitment agency. The effect of these rules, if they apply, will be:

  • the medium or large business (or an agency paying the PSC) will calculate a 'deemed payment' based on the fees the PSC has charged for the services of the individual
  • generally, the entity that pays the PSC for the services must deduct Pay as You Earn (PAYE) and employee NICs as if the deemed payment is a salary paid to an employee
  • the paying entity will have to pay to HMRC not only the PAYE and NICs deducted from the deemed payment, but also employer NICs on the deemed payment
  • the net amount received by the PSC can be passed on to the individual without the company deducting any further PAYE and NICs.

The IR35 rules apply to individuals who would be classed as employees, rather than self-employed, if they supplied their services as an individual rather than through their PSC. So, an individual operating through a PSC but with only one customer for whom he/she effectively works full-time is likely to be caught by the rules. On the other hand, an individual providing similar services to many customers is far less likely to get caught in the net.

HMRC has made a tool known as the 'check employment status for tax' (CEST) tool. This is available for organisations that need to determine who IR35 applies to.

Extension to the private sector

HMRC intends to extend the off-payroll working changes to private sector contractors in April 2020, but the path to this deadline has proved to be a rocky one.

Following two consultations, the government has finally published draft legislation, which will, subject to further consultation, be included in the next Finance Bill. HMRC has also promised to keep working on the CEST tool, which has been heavily criticised for not being fit for purpose.

Next year's reforms will use the off-payroll working rules in the public sector as a starting point. The onus will be on organisations to make a determination of a worker's employment status and communicate the decision in a Status Determination Statement (SDS). The PSC worker may request the reasons for the determination, and if they disagree with the decision, the CEST tool can be used to check whether it was correct. However, the efficacy of the CEST tool is being questioned by many who consider that the law on status is too complicated to allow a simple yes/no checklist to provide the right answer in all cases.

The government will introduce a 'client-led status disagreement process' where the worker can make a representation to the medium or large business if they believe that the conclusion mentioned in the SDS is incorrect. The medium or large business has 45 days, from when the representation is received, to review the decision and either confirm the decision or give the worker a new SDS with a different conclusion. If the business confirms the decision, it must give its reasons for deciding that the conclusion is correct.

For further information on any of the above tax topics please contact Martin Knight email:martink@bpuaccountants.co.uk.

Gifting and Inheritance Tax: Considering the Rules

Research published recently by the Institute for Fiscal Studies (IFS) and the National Centre for Social Research (NCSR) suggested that just 45% of individuals seeking to make a financial gift are aware of the inheritance tax (IHT) rules and exemptions. This article provides a brief outline of some of the issues to consider when giving gifts, click here.

There may be scope for additional savings when factoring giving gifts into your estate planning – for further information contact our in-house Financial Adviser Ian Sinclair email:ians@bpufinancialsolutions.co.uk.

In the News

Government set to implement 'plastic packaging tax' in 2022 - read more.

Many working parents eligible for tax-free childcare this summer - read more.

HMRC introduces new system to tackle scam phone calls - read more.

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