NETWORKING TIPS FOR INTROVERTS

Business networking seems easy and tends to come naturally to extroverts. But what if you are an introvert? What do you do if attending a networking event is your worst nightmare? The good news is you can still master the art of networking.

Arrive early

Arrive early when there are fewer people and it is often easier to engage in meaningful conversation without being interrupted. Making one good connection can be the springboard to building your confidence.

Bring your wingman/woman

Having a colleague or friend with you can make it easier to strike up a conversation with others and perhaps they would be happy to introduce you to other people at the networking event.

Take a break

Networking events can sometimes be overwhelming for anyone. Make sure you take regular breaks. Perhaps you can step outside to check your email or take a call. You could even check the sports scores on your smartphone and use the latest football results as an ice breaker during your next networking chat.

Have a plan

It may help to write out a few ice breakers before attending your next networking event. A quick read of the business section of the newspaper or taking note of a few topical news stories could help you to strike up a conversation with someone new.

Networking is really about relationship building. Consider the people you meet as potential new friends and just explore getting to know them. Set yourself a target of making at least 1 or 2 new contacts at each networking event you attend and don’t feel the need to work your way around the entire room.

Prepare a few questions

It can be useful to prepare a few open questions which can help you get to know new people. General questions such as “Tell me about your business”, or “What trends are you seeing in the market?” can help you to get the other person talking. Remember – business people tend to enjoy talking about their own firms.

Principal Private Residence (PPR) & A Trust

A client has transferred a residential property into a discretionary trust. The value of the property is over the IHT nil rate band. Are there are CGT implications? If the trustees sell the property in the future can they claim principle private residence relief?

A transfer into a discretionary trust is a chargeable lifetime transfer so this would be immediately chargeable to IHT on the amount over the IHT nil rate band (£325,000) and would be taxed at 20%. If the settlor were to die within 7 years of the transfer into the discretionary trust an additional 20% could be payable as the IHT rate on death is 40%.

As far as capital gains tax is concerned a claim under TCGA 1992 s260 could be made to hold over the gain on the way into the trust because this is a chargeable lifetime transfer within the meaning of the Inheritance Tax Act 1984 and is not a potentially exempt transfer.

The trustees could be eligible to claim principle private residence relief under section 225 of TCGA 1992 if they meet the normal qualifying conditions.  The qualifying conditions under TCGA 1992 s225 i.e. a beneficiary is permitted to live in the property under the terms of the trust deed.  Principle private residence relief cannot be claimed when an s260 claim as been made as per s226A TCGA 1992.’    Ie. the trustees cannot claim relief on a disposal (the later disposal) if the acquisition cost of the property has been reduced by a gift hold-over relief claim under s260 made by any person on an earlier disposal.  Special transitional rules may allow some private residence relief to be claimed by the trustees if gift hold-relief under s260 is given in respect of a transfer to the trustees which was made before 10 December 2003.

MAKING TAX DIGITAL FOR BUSINESS DELAYED

The Government has responded to pressure from accountants and other interested parties and announced the delay of Making Tax Digital for Business to 2020 at the earliest.

Quarterly VAT reporting using the new system will be mandatory from 2019.

In a further U-turn, three million small businesses and buy to let landlords below the VAT threshold will now not be required to keep digital accounting records but will be able to move to the new system for keeping tax records at a pace that is right for them.  For such businesses, Making Tax Digital will be voluntary.

Mel Stride, the new Financial Secretary to the Treasury and Paymaster General, announced that the roll out for Making Tax Digital has been amended to ensure businesses have plenty of time to adapt to the changes.  Under the revised timetable:

  • only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records, and initially only for VAT purposes from 2019
  • businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.

All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before the system is mandatory.

APPROPRIATION OF TRADE STOCK

Two sisters inherited a property development business when their father passed away. They continued this business as a partnership renovating and developing properties to sell on at profit. One of the sisters wants to buy one of the properties for herself. She is to pay market value but the partnership will make a loss due to the cost of the improvement.  Could this loss be claimed as a trading loss of the partnership with each partner claiming loss relief accordingly?

As this business is a trading activity and not a property rental business the properties will be shown in trading stock in the accounts.  Trading stock is “trading stock in relation to a trade means anything (whether land or other property) which is sold in the ordinary course of trade.”

If a loss is generated from the sale of trade stock on the open market, then trading loss reliefs would apply and a claim could be made to set the loss off against general income.

However, as one of the sisters wants to buy the property for herself the goods for own use rules would come into effect and the commerciality of the loss needs to be considered.

ITTOIA 2005 s172B applies where the trading stock is appropriated by the trader.   The legislation confirms that when calculating the profits of that trade the market value at the time of the appropriation is brought into account as a receipt.   This is irrespective of any cash consideration paid.  Therefore, the partnership would treat the appropriation by one of the partners as a sale at market value.

The commerciality of the loss must then be considered.  How has a loss been generated?  Was the cost of improvement excessive simply due to the fact that a partner in the business knew she would acquire the property for personal use? Was there use of more expensive materials used to renovate and furnish the property?

If a claim for trade loss relief is made by the partners following the appropriation, then there is a potential restriction to the claim unless it can be shown that the trade is commercial.  ITA 2007 s66 imposes the restriction if the trade is not carried on on a commercial basis and with a view to the realisation of profit.

THINKING OF WINDING UP YOUR COMPANY?

Up until 6 April last year, the distribution of cash to shareholders on the winding up of a trading company by a liquidator, was usually taxed as a capital gain, potentially taxed at just 10% with the benefit of entrepreneurs’ relief.

However, last year’s Finance Act introduced a targeted anti-avoidance rule that may tax such a distribution as a dividend at income tax rates up to 38.1% under certain circumstances.

HM Revenue and Customs have recently issued guidance in an attempt to clarify when the new anti-avoidance rule would apply.

Broadly the anti-avoidance is intended to catch situations where the old company is wound up and a similar business is carried on by a connected business. Note however, the distribution would only be taxed as a dividend at income tax rates if one of the main purposes of the transaction was to avoid tax. This is a complex area so please contact us to discuss your plans so you do not fall foul of the new anti-avoidance rule.

WORKING IN THE “GIG” ECONOMY

The House of Commons Work and Pensions Committee has recently published a report calling on the Government to close the loopholes that allow “bogus” self-employment practices, which burden the welfare state but reduce the tax contributions needed to sustain it.

This follows the “Matthew Taylor” inquiry which took evidence during February and March 2017 from witnesses including representatives of companies such as Uber, Amazon, Hermes and Deliveroo. Most of the people working for such organisations were not on the payroll and have limited workers rights and are paid for each delivery or “gig”. The Committee recommended a default assumption of “worker” status, rather than “self-employed”, and said that the incoming Government should set out a roadmap for equalising the NICs paid by employees and the self-employed.

Mr Taylor was also asked to produce a report on the status of such workers and suggested that a new category of “dependent contractor” should be established, but the report did not conclude on how such a worker should be taxed.

NEW GOVERNMENT CHILDCARE SCHEMES

Working parents can start applying for two new Government childcare schemes launching this year – Tax-Free Childcare which begins immediately and 30 hours free childcare which starts in September.

This means that working parents of children, aged under 4 on 31 August 2017, can now apply through the new digital childcare service for Tax-Free Childcare and receive a Government top-up of £2 for every £8 that they pay into their Tax-Free Childcare account.  This will apply to children under 12 years old but parents of disabled children under 17 will also be able to apply for Tax-Free Childcare.

This new scheme is designed for working families, including the self-employed, in the UK. For every £8 you pay in, the government will add an extra £2, up to £2,000 per child, or £4,000 per year for disabled children under 17 years old. The special account is then used to pay for childcare with an OFSTED registered nursery or childminder.

In addition, parents of 2-3 year olds, who will be eligible for a 30 hours free childcare place in September 2017, can apply through the childcare service and start arranging a place with their childcare provider.