Corporate Tax

Our Corporate Tax Services

Our Corporate Tax team provides tax compliance and advisory services in a proactive, timely and friendly manner.  We work closely with our clients, helping them navigate the ever changing complex tax landscapes, and providing proactive, effective solutions in the process.

Our clients operate across a wide range of sectors and we have the technical expertise and knowledge to help them through every stage of their business from commencement and expansion to planning a sale.

We have the benefit of being able to work with our colleagues in other services within the firm and that of the wider HLB network for any international matters, in order to provide a comprehensive overall service.

Our tax team’s enviable reputation is based on trust that has been fostered, in some cases, over a period of decades. It is our willingness to go that extra mile, to seek to put ourselves in our clients shoes and our in-depth understanding of the commercial aspects of their business that forms the foundation of our enduring client relationships.

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How we can help you

The corporate tax landscape is constantly evolving and unfortunately becoming more complex.  Our objective is to work with our clients to ensure that they meet all relevant filing requirements and deadlines in an efficient and timely manner.  By leveraging our knowledge of the ever changing tax legislation we proactively seek to identify applicable tax reliefs and mitigate our clients corporation tax liabilities wherever possible.

We also use the compliance process as a means of identifying suitable tax planning opportunities for the business and its owners.

We provide our clients with a full range of tax compliance and reporting services including:

  • Provisional calculations and tax reporting for accounting purposes
  • Timely communication of corporation tax liabilities to allow for forecasting
  • Preparation and submission of tax returns and computations

We also offer additional related compliance services including:

  • Pre-year end planning meetings to discuss opportunities to mitigate potential corporation tax liabilities
  • Corporation tax forecasting for cash flow forecasting purposes
  • Corporation tax forecasting for Quarterly Installment Payments purposes
  • Management of HMRC enquiries and compliance checks

Capital allowances are a highly effective way of reducing the profit on which tax is calculated.  However, many businesses do not claim all of the capital allowances or other tax reliefs to which they are entitled.

Capital allowances are available on the cost of buying plant, equipment, fixtures and fittings and acquiring, constructing, fitting out or refurbishing property. Categories of allowance include plant and machinery; integral features; remediation of contaminated land and commercial and industrial buildings allowance.

Our capital allowance specialists work closely with our clients to maximise the claims using our expertise in the application of tax legislation.

This relief is available for companies that incur R&D costs to improve its trading results; while the R&D has to be innovative, relief is available where science or technology is used to solve a scientific or technological problem in a commercial environment.  Many businesses do not realise the full extent and potential of R&D Tax credits available.

Our tax team has particular industry experience on R&D tax credit claims and our support and advice has delivered substantial tax reclaims for a growing number of clients.

Properly structured and implemented share schemes can significantly contribute to a performance of a company and increase shareholder value.  They are also an excellent means for a company to distinguish itself from the competition as an employer and assist in the attraction and retention of key employees.

Conversely, a poorly implemented incentive scheme can have the opposite effect.

The team at French Duncan has considerable experience in advising on all forms of equity incentives including:

  • Approved and tax efficient option plans such as Enterprise Management Incentive options (EMI), Share Incentive Plans or Company Share Option Plans
  • Unapproved option plans. These are quite common but there is no particular tax advantage to an unapproved plan
  • Direct share rewards, including growth shares, forfeitable shares or long term incentive plans
  • Cash bonuses linked to increasing share values, such as phantom share options
  • The complex rules concerning employment related securities and remuneration provided via third parties

The more effective share incentives are those which are closely linked to a company’s short and mid term objectives and business plan. 

EMI options are extremely flexible and options can be exercised, for example:

  • On the sale of a business or the company shares. This allows employees to share in the growth in the value of the company to which they have contributed without having to acquire any shares until the point of sale
  • Based on performance criteria which are pre set. Options can therefore only be exercised where, for example, a profit or turnover target is reached
  • Adopting multiple targets with options being exercisable on the attainment of each

EMI options are normally granted for no consideration, the employee only having to fund the purchase of shares at the point of exercise.

Generally, the value of a small minority shareholding is agreed with HMRC on a discounted basis at the point of grant of the option.  When the employee exercises his option, and pays the amount agreed with HMRC at the time of grant, there is no tax liability and the employee will only suffer capital gains tax when he sells his shares.

It is possible for employees to pay less than the value agreed with HMRC but there will be an income tax and possibly an NIC liability of the difference between the actual price paid and the market value at date of grant. 

On sale, capital gains tax could be at the 10% entrepreneurs relief rate provided that the period from the date of grant of the option to the sale of the share is at least one year.

Company share option plans are much more restrictive than EMI options but both can be targeted on specific employees rather than having to be open to the entire workforce. 

Share incentive plans have to be open to all of a company’s employees with limited exceptions.  They are however a means of incentivising the entire workforce with the number of shares being allocated to employees “on similar terms”.  This can be equally or based on relative salary levels or length of service. 

There is an advantage to an employee being able to acquire shares immediately, as he will be entitled to dividend payments by the company.  He will however have to pay for the shares or be subject to income tax if he pays a lesser amount, albeit that the value of the shares will be calculated on a discounted basis to reflect the value of a minority shareholding. 

HMRC do not disapprove of unapproved share schemes but approved arrangements offer significant tax advantages over an unapproved arrangement.

Selling your business with complete exemption from capital gains tax seems an unlikely scenario. This is however possible where you sell your shares to an employee ownership trust where statute provides that no capital gain arises.

The Government’s objective is to promote employee ownership. The main requirement is for the trust to acquire more than 50% of the shares.

Apart from complete capital gains tax exemption for the vendor, there is an income tax benefit to employees as they can each receive tax free bonuses of up to £3,600 per tax year from the company.

Many sales of private companies are, in part at least, financed by the company itself over a period of years. This is the financing model which will generally be adopted in a sale to an employee ownership trust. If the company has surplus cash at the date of sale then it can make a contribution of this to the trust and the trustees can use the funds received to pay to the vendor shareholders. The balance of consideration due to the vendors can remain outstanding with the vendors receiving payment over a number of years. Each year, the company can make further contributions to the trust which will utilise these funds to pay down the loan.

Case Study
Ray owns the entire issued share capital of a trading company and, at 55 is looking to succession and realising some value from the company. He has thought for a number of years that he would like to get his loyal employees involved in the company and perhaps offer them the opportunity of effecting a management buyout. Ray is not ready to retire yet but anticipates handing over some of the duties which he currently carries out to senior staff over the next five years or so and thereafter he will decide whether to retire completely.

The company has built up a significant amount of surplus cash from trading profits over the years.

Ray decides to consult with the company employees and following these discussions an employee ownership trust is set up. The company makes a substantial cash contribution to the trust which utilises these funds, together with funds borrowed from its bankers, to purchase a 51% shareholding in the company from Ray.

The qualifying conditions are met and Ray realises a significant capital gain on which he pays no capital gains tax.

In future years, the company makes further contributions to the trust from its profits after tax which the trust utilises in paying down the bank loan.

In five years, there is a lot of flexibility in what happens next. For example, both Ray and the trustees could sell their shareholdings to a trade purchaser.

Blog
Read our latest Employee Share Trust blog here.

The Patent Box is an optional regime offering companies an effective 10% rate of corporation tax on income from the exploitation of patents.

Qualifying companies are those which own or licence patents granted by either the UK Intellectual Property Office, the European Patent Office or specified EEA countries. The company must also have undertaken the development of the patent or product incorporating it.

Our tax team understands the importance of this regime and the benefits it can offer. We can advise on how the Patent Box can achieve maximum tax savings for you and assist you in the process from application to corporation tax computation.


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Meet some our Corporate Tax specialists



Stephen  Thom

Stephen Thom
Partner & Head of Corporate Tax
s.thom@frenchduncan.co.uk
0141 221 2984

Stephen  Thom

Stephen Thom

Partner & Head of Corporate Tax

ACA

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0141 221 2984

s.thom@frenchduncan.co.uk


Specialisms include...

Stephen is an experienced tax advisor who has worked in both practice and industry roles during his career. He started his career in London with BDO prior to working with Lloyds Banking Group for three years, where he specialised in providing tax advisory services. Stephen joined French Duncan as a tax director in 2015 from a mid-tier firm in Glasgow and became a Partner in May 2017.

He specialises in advising on a variety of corporation tax matters, including: share reorganisations; group restructuring advice; substantial shareholdings exemption; the taxation of loan relationships and international tax advice. Stephen has gained experience through advising a wide variety of clients, ranging from owner managed businesses to AIM and fully-listed enterprises.

He has developed a reputation for fully understanding the commercial objectives and strategies of businesses prior to providing tax advice, in the process ensuring that the tax outcome is always aligned to the wider business objectives.

Barry  Laurie

Barry Laurie
Partner
b.laurie@frenchduncan.co.uk
0131 225 6366

Barry  Laurie

Barry Laurie

Partner

BSc CA

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0131 225 6366

b.laurie@frenchduncan.co.uk


Specialisms include...

Throughout his extensive career, Barry has worked for HMRC, Arthur Andersen, Coopers and Lybrand and McCabes. He has been a Tax Partner with French Duncan since its merger with McCabes in 2008.

Barry has a wealth of experience in all aspects of tax matters, from corporate to personal and has a particular specialism in maximising capital allowances for clients. Whilst Barry can advise any business on its tax matters, he has particular expertise in the hospitality and property sectors.

He can also advise on tax incentives for investment.

Barry prides himself on taking the initiative to understand his clients’ needs to deliver results.

He enjoys building strong relationships with his clients and continually seeks opportunities which he believes will be to their benefit.

Robert Barrie

Robert Barrie
Corporate Tax Director
r.barrie@frenchduncan.co.uk
0141 221 2984

Robert Barrie

Robert Barrie

Corporate Tax Director

BAcc(Hons) CA

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0141 221 2984

r.barrie@frenchduncan.co.uk


Specialisms include...

Robert started his career at a top 15 accountancy firm, working in both personal and corporate tax, before qualifying as a chartered accountant in 2008.

Robert believes in proactive client engagement and delivering both commercial and tax efficient planning solutions.

In 2012 Robert joined a top 10 accountancy firm, specialising in the provision of business tax advice to SME’s, owner managed businesses and high net worth individuals.

Robert then joined French Duncan in 2014 and has helped to oversee the growth and development of our corporate tax department.

His current role includes advising on a range of projects including corporate restructuring, capital allowance planning, Research and Development claims, due diligence and international tax issues.

Robert also oversees the corporation tax compliance process for a number of our firms largest and most complex clients.

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