Most business owners would shudder at the thought of doing this but, if you think about it, most trade associations and professional bodies are in effect doing this.

A great example is K&H and our membership of accountancy networks such as PROBIZ, which has several hundred accountancy firms as members. By pooling all our resources under the guidance of Feisal Nahaboo who runs the network, sponsorship deals have been done with high-profile sports clubs and film production companies. The most prominent is probably West Brom football club, whose stadium is now covered with PROBIZ branding!

This means that we at K&H, even as a very small local firm, can raise our profile and attract more clients nationally in a way that we could never achieve on our own.

Other benefits are the sharing of ideas, collective training and better ‘buying power’ with the various partners that we work with (such as tax planning specialists).

Businesses that can benefit most are those that operate in a narrow niche. This is because other, less specialised companies in the same industry are more willing to refer work across, and will be less fearful of having the clients ‘poached’ for more general work that they do.

How could you benefit from working with your competitors? If you don’t think you could ever benefit in that way, I’d be happy to brainstorm ideas with you, and perhaps prove you wrong!

Andy Scott qualified as a Chartered Tax Adviser (CTA) in 1994. 
He joined the firm in 2001 to head the taxation services department of the firm and is now tax director, specialising in advance tax planning services for high net worth individuals and highly profitable businesses. 
Andy is also Client Director to many of K&H’s major clients and manages in-house taxation training matters.

You’ve had a Racing Greyhound for quite a while now, haven’t you?
I have 50% of a bitch called Hazel Grove Girl currently running at Swindon. I have owned her for approximately four months but have had other dogs on and off since 1997.

So they are a bit of a hobby, not kept as pets? 
They are working animals and not pets!

But you do have pets at home, don’t you?
We have recently become the proud owners of two Chihuahua puppies who are 11 weeks old. They make very good alarm clocks, especially if you like getting out of bed at quarter past five in the morning.

You raced pigeons at one time, didn’t you?
Yes, in my teens and early 20s I did race pigeons in partnership with my brother.  I would like to do it again but my wife refuses to have flying rats in our garden.

What was the last book you read?
I tend to have several books on the go at one time and often never finish any of them.  I am currently reading the Dick Frances novel Risk, a biography of The Last Kaiser of Germany and a very interesting history book called The Time Travellers Guide to the Middle Ages.  I am an avid reader of the BBC History magazine each month and a Member of the National Trust and English Heritage. 

Do you have a favourite TV programme?
I tend to sleep through more television programmes than I watch. I don’t watch soaps but I do enjoy Holby City. I am not a member of the Tina Holby Fan Club, but I did find out how to join! 

You’ve done quite a bit of travelling over the past few years. Any memorable moments that you’d like to share?
My last holiday destination was Libya! It was an interesting country and I am surprised that they are now in Civil War. An outsider’s impression of the country at the time was that the view of the average person, or rather of those who spoke English, is that they were contented with Gadaffi.

For a pure holiday, Canada would be my favourite destination. For historical sites, Jordan, Egypt and Turkey would be my favourite destinations.

Do you have any favourite place in Britain?
Britain as a holiday destination has some very interesting historical sites. Our last short break was in Scotland when we went in search of the Antonine Wall, ending up becoming lost and thinking we had found it, when in fact we had found the remains of an open cast coal mine. For beauty, Northern Ireland is stunning – especially the drive between Belfast and the Giants Causeway.  It is a pity that you do feel tension from the two communities because it is a beautiful place in which to live.

Have you got any money-making tips that you’d like to share?
Don’t own any pets or racing greyhounds! It is a bottomless pit.

Any short-term – or long-term – plans ahead?
A visit to Syria, subject to the political situation and my wife’s health.

Andy lives in Hungerford with his wife Sarah.

Its Business Barometer found that 81% of business owners think HMRC should be investing more resources on combating tax evasion.

Over half of those surveyed, 53%, believed a simpler tax system would help reduce tax leakage but only 25% would like the introduction of a general anti-avoidance rule (GAAR) to catch successful tax planning.

Gary Ashford, head of tax risk, disputes & investigations at RSM Tenon, said: “It’s rare to see such support for tax policies, but entrepreneurs are clearly pleased that HMRC has made tackling this problem its top priority – British business owners do not like the idea of paying substantial amounts of tax while others are actively avoiding their obligations.”

I do not know how large the sample size of the survey and I do not want to comment on RSM Tenon’s findings but I do believe that anyone or any business should be able to rearrange their tax affairs in such a way as to reduce their own tax bill.

I quite agree with the Revenue diverting resources to stop the black economy as this is pure tax evasion. Being paid in cash, for example, and not declaring your income is fraud.

I also agree that our tax system is too complex and there are too many ‘tax avoidance’ deductions and reliefs.

You are probably avoiding tax at present. Some examples are:

• Making a pension contribution so that you pay a lower amount of income or corporation tax

• Paying money into an ISA so that you receive tax-free interest

• Owning an asset such as a bank deposit account or rental property in joint names with your spouse or civil partner in order to pay less tax

• Transferring an asset into the name of your spouse to use additional capital gains tax exemptions on the sale of an asset

• Providing your staff with a firm’s mobile phone as opposed to a pay rise

• Providing child care vouchers to staff

• Trading as a limited company as opposed to a sole trader to avoid national insurance and to avoid paying tax on retained profit

• Paying dividends as opposed to salary from your personal company

• Sharing dividend income with your spouse from your personal company

• Making a payment to a charity using gift aid

• Rewarding key staff members using Employee Benefit Trusts or Employer Financed Unapproved Retirement Benefit Schemes

It is very difficult to know where to draw the line. Is any tax planning more acceptable than any other? All of the planning achieves the same aim of you paying less in tax. Is that wrong?

My job is to give a client as many tax-planning options as possible. They can then decide on the moral position. I would be interested to know your views – please post a comment.

One of the sticking points was that he thought that if he ceased, the Revenue will immediately ask for any tax due on profits earned in the final trading period.

The normal Corporation Tax payment date is nine months after the end of the annual accounting date.

I was happy to advise that, although ceasing business will create a short final accounting period, any tax due is not payable until nine months from the end of that period. This gives the client time to collect his outstanding debts to pay the tax due.

EBT stands for Employee Benefit Trust. An Employee Benefit Trust is a Discretionary Trust set up by an employer to provide benefits to past, present and future employees and their dependants.

An EBT can provide many benefits.

Typically, EBTs have provided loans to business owners and key team members, enabling them to extract cash from the business in a tax-efficient way.

Where interest-free loans in excess of £5,000 are provided from the EBT, a benefit in kind would arise.

This is currently equal to 1.9% tax per annum for a higher-rate taxpayer. There is no tax charge on the loan recipient if the loan is interest-bearing.

There are also potential Inheritance Tax savings as the loan creates no debt on the estate of the borrower.

When the company contributes to the EBT, it may even be possible to obtain a Corporation Tax deduction for the company contribution into the EBT, again depending on the circumstances.

The trust can be set up onshore or offshore, depending on particular requirements and how the funds are to be applied.

The location of the trust is not relevant to the immediate tax benefits of any planning, but can have a significant bearing in the long term. The key difference will be the ongoing income tax and capital gains tax position of the trust.

If the trust is resident in the UK, any income and gains will be taxable as they arise in the hands of the trustees, whereas a non-resident trust may only be taxable in the UK if there is a UK source.

If the funds are likely to be invested for a significant period, then an offshore trust may allow funds to roll up in a low tax environment.

Contact me to find out more.

This month we look to cycling and gardening for inspiration, show you how to take money from your business tax-free (using EBTs) and give you tips to improve your business credit rating.

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The top rate of tax becomes 50% on incomes above £150,000 from the 6 April 2010, (more if you include National Insurance on earned income and the loss of tax relief on pension contributions).

It is possible to plan for this tax increase, provided any planning is implemented in good time.

Ideas to help avoid the new rate are set out below:

• Personal tax to corporate tax – incorporating your business can reduce the immediate tax on income from 50% to 21%. There are several imaginative ways to extract cash from the company.
• Personal tax to capital gains – By re-categorising income into capital, it is possible to reduce the tax rate from 50% to 18%. There is a range of ideas depending upon individual circumstances.
• Timing – as we have been given advance warning of the change, it is possible to consider the timing of certain events to mitigate the increased tax burden. Can you bring income forward into this tax year?
• Loss planning – there are a number of ideas to obtain a loss carry back for up to three years. They can be aggressive and may require a time input by the individual to achieve the loss relief.
• Emigration – some clients may consider this as a solution. Anyone contemplating this must take advice now.
• Pensions and Employee Benefit Trusts – there are a number of tax effective alternatives to pensions that can be attractive and provide flexible structures for future planning.
• Unincorporated businesses – If you are self employed you may be already earning income potentially taxable at 50%.  A change of accounting date may reduce the overall amount of tax payable but again advice is needed.

Please contact Andy Scott if you would like to discuss your own personal circumstances.

Highlights are

• New tax rate of 50% for earnings above £150,000 starting from 6 April 2010. The tax payable on dividends at this level will increase from the current 25% to 36.11%

• Personal allowances to be gradually reduced for earnings of more than £100,000 per year. The personal allowance is reduced by £1 for every £2 of income above £100,000

• Corporation tax small companies rate to remain at 21% and main rate at 28%, the planned increase has been abandoned.

• In addition to the £50,000 investment allowance for capital allowances a new first year allowance has been introduced for expenditure over £50,000. This will be 40% for the coming twelve months.

• The three year corporation tax loss carry back to apply to periods ending up to 23 November 2010.

• ISA limits increased £10,200 (cash £5100) for over 50’s now and for everybody else from next tax year

• Naming and shaming of tax defaulters (people and companies who try to evade ,more than £25,000 in tax)

• Company car tax changes again from next year, the £80,000 price cap has been abolished. This will be a blow to the luxury car market.

• Changes to tax relief on car lease payments on new agreements from 1.4.2009

• New  fuel scale rates for VAT

• VAT registration threshold increased to £68,000

• VAT goes back to 17.5% on 1^st January 2010

• Increased penalties for late tax returns from 6 April 2010.

You will find all of the budget information broken down into relevant headings on the Directgov website.

For our clients, we will of course be reviewing the relevance of these changes on an individual basis, either at our next accounts review meeting or before if necessary.

Please contact either Andy Scott or Susan Kemish if you have any questions about this.

In the current tax year (2008/09) up to £9,600 in total gains (after reliefs etc) can be made tax free by each individual. This can be quite attractive for higher rate tax payers or even for children whose parents are higher rate tax payers. However financial advice should always be sought before taking action.

Couples - have you considered putting investments that are not tax free into the name of whoever pays the lower rate of tax? If not then it may be worth doing so to reduce your combined tax bill.

 Over 65’s could consider investments which do not count as their taxable income. If taxable income exceeds the annual limit (currently £21,800) then the age related allowance available will be reduced. By taking careful action, personal tax bills can be reduced, without the need for giving away investments.

Please contact Andy Scott on 0118 923 5807 or email if you want to find out more.

• Pensions – The amount you can pay into a pension is based on earnings in the tax year and after the year has ended the allowance is lost. To use the allowance for 2008/09 the pension contribution needs to be paid by 5 April 2009.  If you pay into a pension through your company, the company will get tax relief on this at 21% in the year to 31 March 2009, but will get tax relief at 22% in the year to 31 March 2010.

• ISAs – Make use of your ISA allowance. This is £7,200 for 2008/09. Unused allowances will be lost if they are not used.

• Dividends - could you take a dividend from your company to make sure you maximise your income within the basic rate tax band?   If you have paid yourself a tax-free salary of £5,435 this tax year, then the maximum net cash dividend you can take is £31,800 free of personal income tax. (This assumes that you do not have any other personal income).

• Personal income – if you have income from investments consider splitting the investment with your spouse to maximise use of both your basic rate tax bands.

• Child Trust Fund – Parents and relatives of children born after 31 August 2002 can add up to £1,200 per tax year to the child’s Trust fund account.  Any income or gains are tax free.

• Inheritance tax – Consider making lifetime gifts to reduce your estate on death. There is also an annual exemption amount of £3,000 which can be given away each tax year.  If not used it can only be carried forward for one year before it is lost.

• Charity donations – If you are a higher rate tax payer you can get tax relief on donations to registered charities. To claim the relief for 2008/09 the gift must be made before 5 April 2009.  Make sure you have signed a gift aid declaration form provided by the charity.

Please call your usual contact at K&H if you need more information on any of these areas.