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Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

Blog

Don’t take Entrepreneurs Relief for granted

The sale of shares in an unquoted trading company will generally give rise to a capital gain which may qualify for entrepreneurs relief, that is a capital gains tax rate of 10% on the first £10 million of gain rather than the normal 20% rate of capital gains tax.

It is necessary for three main conditions to be met:

• The company must not be carrying on activities, other than trading activities to a substantial extent.
• The vendor must have been an officer or employee of the company throughout the 12 months to the date of sale.
• The vendor must have owned at least 5% of the ordinary share capital and controlled at least 5% of the voting rights throughout the 12 months to date of sale.

In practice, each of these can cause problems.

Many companies have traded profitably and have amassed sums of cash which they have either retained in a bank account, or invested in other areas such as rental properties or shares quoted on the stock market. Generally cash sitting in a bank account will not affect the trading status of a company but substantial property or stock market investments could jeopardise entrepreneurs relief. It may be possible to restructure the company in advance of a possible sale in order that the qualifying conditions are met throughout the 12 months to the date of sale.

Sometimes shares in a company are owned by spouses but only one of them is a director or employee. All is not necessarily lost and, depending upon the level of the gain, the non-working spouse can perhaps transfer their shares to the working spouse so that entrepreneurs relief is available on the total gain.

Where shares are more widely held, there are many circumstances where individuals hold just under 5% of the ordinary shares or hold a class of shares with restricted voting rights thereby denying the availability of entrepreneurs relief.

It is worth carrying out a review of all three of the major criteria noted above, well in advance of a possible sale as not all purchasers are willing to wait for a year until the vendor gets the business sorted out.

In the summertime…how to deal with hot weather in the workplace

With headlines stating “Scotland records it’s highest ever temperature”, how do you ensure you are providing safe and cool conditions for your employees to work during this unusually hot spell?

1. The Temperature
Contrary to popular belief, there is no maximum temperature set by the Health and Safety Executive that allows employees to be sent home from work when the thermometer starts rising.

However, this does not mean that as an employer you shouldn’t be mindful of the temperature in your workplace. The Health and Safety Regulations require ‘reasonable’ temperatures in a workplace. We can all agree that what is reasonable to one person, may not be reasonable to another and that is where you may wish to enlist the help of some expert guidance. We would recommend that you ensure air conditioning is in place where possible, and if not, that you have fans in place and windows opened where permitted by health and safety regulations. You may also wish to have a general conversation with staff and work with them on what the majority view of the term “reasonable”. It is widely thought that a “reasonable” temperature would sit between 16 and 30 degrees.


2. Dress Codes
Dress code will be dependent on the type of business you run. If employees are expected to wear Personal Protective Equipment (PPE) due to the nature of their role, this doesn’t change if is a couple of degrees warmer outside. However, there may be solutions available to provide the same level of protection which is geared more towards this kind of weather – it would be best to speak with your PPE supplier on this.

If you have employees who are client facing or work within an office environment you could create a “Summer Dress Code” policy. This ensures that in the warmer weather, staff aren’t coming into the office ready to explode due to the temperature in their three piece suit or waltzing in like they are ready to go and spend the day in a beach bar with board shorts and a vest top! A “Summer Dress Code” gives the organisation an opportunity to relax the dress code and allow staff to feel more comfortable but still be dressed appropriately for their working environment.


3. Working Outdoors
During the warmer weather, if you have employees who work outside you must take into consideration Sun Protection. Fit for Work have stated that people who work outside including construction workers, farmers, postal workers and sports people are particularly vulnerable to skin cancer. Therefore, it is advised by Cancer Research UK that employers encourage employees to apply a high factor sunscreen (minimum factor 30), wear sunglasses, broad brimmed hats and particularly to encourage people to cover any freckles and moles. Although, by law, you are not required to provide the sunscreen etc., it may be a helpful employee engagement exercise to do so.

Contractors still on uncertain ground as IR35 rumbles on

This blog was previously published on LinkedIn on 12th June 2018.

If you work as a contractor, or employ them, the ongoing uncertainty around the relevant tax rules may be confusing. The government has now published a consultation paper looking at the application of the off-payroll working rules (also known as IR35) in the private sector.

The aim of the latest consultation is to tackle non-compliance, as the government estimate only 10% of people are applying the rules correctly. It will also look at whether rules applied to the public sector in 2017 should be extended to the private sector.

Under the public sector rules, the public sector body makes the decision of whether a contractor should be classified under IR35 and takes responsibility for deducting tax. Various criticisms have been levelled at this arrangement, including causing delays in projects, failing to raise any extra tax, or driving contractor costs up. However, the government has responded to these issues, saying they are not reflected by the evidence.

The consultation will not look at the underlying principles for off-payroll working, which means the employment status test to determine if a worker should be taxed as an employee or not is not being reviewed.

Meanwhile, a ruling made in January 2017, but which has only now come to light, has cast further doubt on HMRC’s online employment status tool (CEST). The ruling went in the contractor’s favour over a £68,000 tax bill. More importantly, the judge refused HMRC’s position on mutuality of obligation (MOO). Despite HMRC’s insistence on the importance of MOO as one of the three essential tests for IR35, it is not included in CEST.

This could cause problems as HMRC promises to stand by any decision made by CEST, and the tool was used over 575,000 times between March and October 2017. Public sector bodies have also ignored results from CEST and charged tax and national insurance contributions to contractors incorrectly.

The consultation is open until 10 August 2018, and you can read the complete documents, and submit your own response, here - https://www.gov.uk/government/consultations/off-payroll-working-in-the-private-sector

If you are, or soon will be, working off-payroll, we can help with your assessment.

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