haysmacintyre: Is your structure fit for purpose? Property investment or trading

There are a number of factors to consider in determining whether a property is held as an investment or for trading but the starting point is the original intention when buying the property. The distinction is usually relatively straightforward: a person buying property to let out long term will be making a property investment, whereas someone buying a property to refurbish and sell will most likely be trading as a property trader.

The tax treatment can however sometimes be less clear in practice and, as there is no statutory definition of what constitutes a trade, it will be necessary to consider case law established by the Courts. HM Revenue & Customs use the ‘badges of trade’ to identify whether a trade exists. There are nine badges of trade that have developed from case law and it is important to look at these in the round. Some of the badges that carry greater weight for property businesses are profit seeking motive, frequency of transactions, length of ownership, nature and modification to the property and source of financing.

Why does it matter if the property is held as investment or trading?
  • For individuals – property traders will be liable to income tax and Class 4 national insurance (NIC) on profits arising on property disposals at an income tax rate of up to 45% (40% after April 2023) and NIC at 2% (from November 2022) for an additional rate taxpayer. An investor, on the other hand, will be subject to capital gains tax (‘CGT’) on the same disposal of the property at 20% or 28% depending on whether it is a residential property. Accordingly, there could be a considerable difference in the tax liability between the two
  • For companies – Although corporation tax applies at the same rate, which is currently 19%, on a chargeable gain arising on the disposal of an investment property or trading profits arising on the disposal of trading stock, the method of calculation of the chargeable gain or trading profits, utilisation of losses and reliefs available can lead to different tax outcomes
  • There are some favourable tax reliefs and exemptions that can apply on the sale of shares in a trading company, such as:
    • Substantial Shareholding Exemption (“SSE”), which can exempt a company from corporation tax on the chargeable gain arising on the disposal of an interest in a trading company; and
    • Business Asset Disposal Relief (“BADR”), which can reduce the CGT rate payable by an individual to 10% on the capital gain, up to a lifetime limit of £1m, arising on the disposal of shares in a trading company.

SSE and BADR only apply where certain conditions are met and will be covered in future articles in this series.

One key thing to do is to keep good documentary evidence (such as Board Minutes) as this is the clearest way of showing intent. Such evidence should be put in place at the time the property is acquired and every time there is a change in the circumstance which may lead or cause someone to question the nature of the activity. A change in the circumstance can, in some scenarios give rise to a tax charge e.g. where there is an appropriation of a property from trading stock to investment so it is important to obtain advice from your tax advisor.

Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • Her Majesty Queen Elizabeth II
  • Referees’ tax: entering extra time
  • FRC reviews EPS
  • HMRC hails 4,000 taxi drivers
  • Scotland announces rent freeze
  • FRC researches the PIE audit market
  • Mini Budget expected this week
  • And finally…Companies House encouraging
    online filing

Click the button below to download this week’s edition, or read our previous editions here.

Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • Prospects of a September Budget?
  • Fuel advisory rates increase
  • Companies House to extend web filing
  • OTS reviewing working practices
  • ICAEW finds business confidence falling
  • MTD guidance issued
  • Naming and shaming tax avoiders
  • And finally… send accountants to jail

Click the button below to download this week’s edition, or read our previous editions here.

Recruitment & Onboarding Coordinator

The role
Supporting the Talent Acquisition Manager with all aspects of attraction, interviewing and
onboarding of new staff:

1. Recruitment
• Ensure vacancy list is always up to date in all appropriate places, including internal People data
• Ensure Job Descriptions are listed in the appropriate places, internally and externally, and removed as appropriate
• Support Talent Acquisition Manager with agency liaison, ensuring they have all necessary information at all times
• Monitor the Recruitment Inbox, responding to applications (reject/filled vacancies) and ensuring a positive experience for all interested applicants
• Monitor the HR Inbox with the Team Administrator to ensure all queries are managed effectively, many of which will be from joiners
• Manage recruitment tracker/log, saving CVs and keeping up to date with developments
• Manage the interview process i.e. schedule interviews, book rooms/Teams meetings
ensuring all parties have all relevant information in good time
• Ensure all invoices are received, collated, logged and sent to Finance within appropriate timeframe
• Hold any initial screening calls with candidates as and when requested and feedback in the appropriate timeframe.
• Liaise with external agencies to ensure a positive candidate experience for all areas of the process.

2. Offer Process
• When appropriate, create the contracts of employment and offer letter within agreed SLA for approval via internal channels
• On approval, send out contract and letter with all appropriate documentation and liaise with candidate if there are questions arising
• On receipt of acceptance letter inform Hiring Manager and People Team of acceptance and commence on-boarding process

3. Onboarding
• Ensure a Welcome Pack is ordered for every new joiner ahead of their start date
• Ensure future employees receive all relevant onboarding documentation and manage subsequent return of information in good time
• Initiate and manage the new joiner referencing process keeping People Team informed of any issues
• Set up individual induction schedule with Hiring Manager, ensuring all specifically appropriate for the joiner
• Liaise with all internal teams as needed to ensure Day One runs smoothly, meetings are diarised, etc
• Meet joiners on Day One in advance of formal induction, on Teams or in person, to check all is well

4. Joiner Administration
• Input new joiners onto Open HR and set up a personnel file for the individual
• Ensure all relevant IT equipment is ordered and organised for Day/Week One
• File all documentation into the individual personnel file for future reference
• Manage the Joiner & Leaver spreadsheet for internal use
• Input new joiners onto the Astute E-Learning platform and register them for the mandatory learning modules.
• Calculate holiday entitlements for new joiners
• Complete and circulate weekly ‘Starter & Leaver’ schedule for the Firm
• Ensure Team Data is inputted and kept updated for relevant departments
• Include joiners skills and specialisms into OpenHR upon starting
• Support the People Operations Manager with the People section of the new joiner Induction
• Manage the quarterly Induction for new joiners
• Attend regular meetings with the IT Department to ensure communication of new joiners is kept up to date

5. Compensation and Benefits
• Maintaining the Firm’s benefit platform and healthcare cashplan, monitoring starters.
• Ensuring key benefit changes or updates are circulated to all staff and actioning queries where necessary.
• Ensure new joiner details are updated in OpenHR and run monthly joiner payroll report for the People Operations Manager
• Supporting other team members on the annual salary review and trainee regrading, running reports and importing to the database, notifying relevant departments such as IT and updating payroll.

6. Data reporting
• Support team members in collating the People Dashboard report weekly including new joiners, graduates, turnover & retention data
• Create regular reports on recruitment to include various points of recruitment process (e.g. numbers of CV’s submitted, offer to acceptance ratio)
• Support Talent Acquisition Manager with salary benchmark data
• Support the People Operations Manager with data requests and ensure the data in OpenHR is kept up to date at all times.

7. Idea Generation
At all times, your ideas will be welcome as to how we can improve, be more efficient, save time, enhance compliance etc. so please listen, research and share ideas as you wish. Laws change,
market practices develop, and generations want different things so keeping an eye out for interesting developments is very wise and ever so useful.

You will have:
• Experience of working in an HR/People Team, specifically in a recruitment support role – we welcome applications from those with more experience but highlight that this role is as described above
• Working within a professional services environment would be beneficial
• A working knowledge of the People processes within a corporate environment
• Direct recruitment experience may be helpful
• Good understanding and experience of key legal requirements relating to legislation particularly with regards to discrimination and immigration regulations

What you’ll need to succeed:
• Strong attention to detail
• Ability to multi-task completing priorities
• Being pro-active and enthusiastic to support the business
• Knowledge of the basics of good HR/People practice and how to add value
• Great ideas and ability to communicate them
• Strong organisational skills
• Strong communication skills
• Capacity to establish professional credibility quickly
• PC literate
• Adaptable and flexible with great ideas for improvement
• Able to maintain confidentiality
• Creativity, curiosity and a sense of humour!

Business Tax Supervisor

Essential Job Functions

Duties and responsibilities would include the following:

• Corporation tax compliance work on a portfolio of clients including both standalone companies and groups
• Reviewing computations prepared by junior staff and taking responsibility for the timely delivery of a high quality service to clients
• Liaising with HMRC on queries into tax returns
• Some tax advisory work, under the supervision of managers, to partners and clients including:
– research and development tax relief
– group tax planning
– venture capital tax reliefs
– share schemes and valuations
• Preparation of the tax sections of due diligence reports
• Completion of EMI and EIS/SEIS documentation
• Assisting in the developing and training of junior staff in the department
• Assisting managers with billing and managing work in progress on portfolio of clients
Person Specification

Work Based Competencies

• Has previously managed a client portfolio of corporate clients
• Some involvement with providing advisory work is preferred but not essential.
• Good Microsoft skills, outlook, excel, word
• Knowledge of Alphatax preferred but not essential

Behavioural Competencies

• Deliver work to a high standard and meet deadlines
• Able to demonstrate good client focused skills, ability to work unsupervised, work within a team, influence and negotiate.
• Good communication skills essential, being able to communicate with all levels externally and internally

Corporate and Private Client eNews

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • Register of Overseas Entities arrives
  • HMRC One to Many letters
  • HMRC is looking for more data
  • HMRC increases interest rates
  • CJRS enquiries
  • AAT calls for proper qualifications
  • Tax avoidance promoter fined
  • FRC sets new records
  • FRC publishes PIE register regulations
  • And finally… farewell Companies House London

Click the button below to download this week’s edition, or read our previous editions here.

 

haysmacintyre launches its newest property campaign: Is your structure fit for purpose?

There is no defined method for how you should structure your property investment, this will largely depend on your individual circumstances and strategy as an investor. Structuring your investment in UK property is all about finding the best fit to ensure that the structure meets your commercial requirements and is tax efficient.

We are therefore delighted to announce the launch of our ‘is your structure fit for purpose’ series. The series will include a collection of articles discussing current tax legislation and the implications on various property holding structures. Over the course of the coming months, we will address a number of key topics and considerations when thinking about your structure, including:

  • Holding property in a company vs personally
  • Property trading vs property investment
  • VAT considerations of your structure
  • Tax relief for interest
  • Stamp duty land tax
  • Capital allowances
  • Group restructuring
  • Annual Tax on Enveloped Dwellings
  • Exit planning

Business Tax Assistant Manager

The Role

Duties and responsibilities would include the following:

• Managing a portfolio of clients including both standalone companies and groups;
• Reviewing computations prepared by other members of staff and taking responsibility for the timely delivery of a high-quality service to clients;
• Reviewing letters and computations prepared by other members of staff;
• Liaising with HMRC on queries into tax returns;
• Tax advisory with managers and partners to clients including:
– research and development tax relief;
– structures – company, LLP, etc.;
– restructuring;
– group tax planning;
– international matters;
– share schemes and valuations;
– venture capital tax reliefs; and
– tax due diligence reports.
• Completion of EMI and EIS/SEIS documentation.

Person Specification

• Deliver work to a high standard and meet deadlines;
• Able to demonstrate good client focused skills, ability to work unsupervised, work within a team, influence and negotiate; and
• Excellent communication skills essential, being able to communicate with all levels externally and internally.

Work-Based Competencies

• Has previously managed a client portfolio including groups;
• Will already had some involvement with providing advisory work;
• Good Microsoft skills, outlook, excel, word; and
• Alpha tax knowledge preferred

Business Tax Senior Manager

The role includes the following:

• Tax advisory projects with partners and clients including:
o Corporate restructuring and demergers
o Research and development tax relief
o International matters
o Venture capital tax reliefs
o Share schemes and valuations
o Corporate and property acquisitions and disposals
o Tax sections due diligence reports

Training will be provided to develop your knowledge in any of these areas with limited experience.

• Managing a small portfolio of large corporate clients including both standalone clients and
groups across sectors. Responsible for:
o Review of corporate tax compliance on these jobs including advising on areas such as loss utilisation and group matters including the corporate interest restriction rules
o Tax advisory work arising on this portfolio
o Liaising and assisting engagement partners
o Identifying tax efficient opportunities for clients and liaising with partners on implementing those opportunities
o Responsible for managing billing and work in progress
o Assisting partners and the business tax team on tax technical queries
o Opportunities to get involved in the firm’s sector-based business development activities
o Opportunity to assist with team responsibilities in corporate team including line management and assisting in development, training and the appraisal process

Overall the business tax team headcount is 35 – this role will be working with a sub team of 10, being a combination of Managers, Supervisors, Seniors and Trainees

Systems Accountant

Responsibilities:

Systems Administration and Development (Practice Engine, Xero, Power BI)

  • Leading on the administration and systems performance and development for Practice Engine, Xero and Power BI including updating roles and security, maintenance of system users, document templates, finance codes, ledger set ups, reporting and dashboards.
  • Working with the business to understand reporting requirements and to design, develop and improve financial reports and dashboards, supporting self-service reporting where appropriate.
  • Use of SQL queries and a thorough understanding of reporting through Power BI to support the understanding of data and financial and client reporting in the firm.
  • Maintaining control of time recording and billing by fee earners and trouble shooting issues as they arise.
  • Review the current use of technology and integration of finance systems to help streamline and reduce manual intervention.
  • Reviewing systems performance and identifying and resolving system issues.
  • Working with the IT department on system upgrades and systems development.
  • Working with the Finance team to deliver a prompt monthly and year end closedown and reconciliation process for finance systems, to the agreed timetable.
  • Resolving all IT servicedesk queries relating to all of our financial systems in a timely manner and liaising with the internal IT section and suppliers as required.
  • Providing expert technical support to the Finance team to plan and manage major financial processes, including budgeting, forecasting and monthly reporting, providing input and advice in relation to the use of Practice Engine data.
  • Providing additional and ad hoc financial support and analysis, as required.

Training and support

  • To be proactive in supporting and encouraging users at all levels in the firm to achieve the most useful output from financial systems.
  • Training and supporting financial and non-financial staff in the use of Practice Engine, Power BI and other financial systems and procedures.
  • Production and regular updating of system user guides.

 

The Systems Accountant will also:

  • Live our firm values in their behaviour and work
  • Understand excellent client service and work with the Finance Team to challenge ‘the way it has always been done’ and be ambitious to achieve high standards of delivery
  • Enjoying working creatively to solve problems and deliver results
  • Act with diplomacy to build relationships and achieve the best results
  • Facilitate good working relationships and be able to offer effective support at Partner level
  • Enjoy working in a team and be able to successfully support others in meeting team goals
  • Have strong organisational skills and the ability to prioritise key work and meet deadlines

 

Required Skills and Experience

  • Experience of managing, operating and improving financial systems and working with third party providers to ensure the system is working to its optimum capacity
  • Advanced IT skills, including SQL and Excel
  • Experience of effective presentation of financial information to finance and non-finance staff
  • An understanding of financial controls and reflecting these through workflows and controls on financial systems
  • Strong analytical, numeric and critical reasoning skills capable of delivering practical solutions to complex problems
  • Experience of training and supporting staff with the use of a financial management system
  • Experience of working in a partnership or professional services environment

 

Get in touch