Getting ready for Brexit

When it comes to Brexit, business owners are split into two camps.

One group believes that the impact of Brexit is minimal to their businesses, which range from providing consultancy to logistic services, to multi-disciplinary companies spread across the UK. Their size ranges from two people to teams of several hundred.

The other group believes the opposite. To them, the impact of Brexit is enormous, potentially disastrous even though they may not necessarily rely on any EU supply chain. They can also range from individuals providing consultancy services to business owners who offer local transport services and other services across the UK.

The common attribute both groups face is uncertainty and under this circumstance, the best thing to do is to prepare as best as you can while continuing to deliver an excellent service to your clients. As preparation is key, we aim to discuss a few points in this post which you can do now to prepare your business, either way.

EU workers

Many EU workers are keen to remain in the UK and we have seen plenty of business owners actively encourage them to do so. The first thing EU workers need to do is to apply for “settled status” (aka Indefinite Leave to Remain) with the Home Office if they have been here for five years or more. Alternatively, they can apply for “pre-settled” status (aka temporary residence) if they have been here less than five years but longer than six months.

A weaker pound

The pound has dropped in value following the Brexit referendum, currently sitting at around 1.15 Euros at the time of writing. A weaker pound has challenges and advantages depending on how you look at it. One clear advantage of a weak currency is that it can help to boost the UK’s export, as the goods will be less expensive to foreign buyers.

A weaker pound will also attract foreign investments, as their money will buy more. The UK’s economy is still the fifth largest in the world (if we don’t count California as a ‘country’) and there are overseas companies looking to get a foothold in this market, giving businesses in the UK a chance to forge some profitable partnerships with foreign investors.

Having said that, a weaker pound will have its disadvantages – imported goods will be more expensive for consumers and it will be harder for the Government to pay back debt issued to foreign investors.

If you haven’t done so, it’s wise to start creating a business plan to see how a weak pound could affect your business.

Operations and supply chain

At the time of writing, we don’t know what the tax implications will be when it comes to importing goods from EU countries to the UK, but if you haven’t taken a precautionary initiative to source for non-EU suppliers, do it now. Also, don’t forget to factor the impact of costs and the potential delay in the movement of goods on your operations.

Consider a new sales and marketing plan

Regardless of Brexit, it pays to revise your sales and marketing plan and make sure what you’re selling still meets the needs of your clients, local and overseas. If you deal with goods, make eCommerce one of your key sales strategies because it is an area that will continue to grow and allow you to reach customers all over the world.

Brexit and financial planning

Cash-flow planning is vital in any situation and can help your decision- making process. The reason is simple; it makes you go through the best and the worst scenarios and allows you to see your options without bias or prejudice.

VAT will continue after Brexit, but the rates may move should the Government wish to help the economy a little. At present, UK businesses selling to EU clients can claim VAT refund online, this may change.

How Tax Agility can help contractors and small businesses in London

At Tax Agility, we have a team of chartered accountants working with businesses across London. We excel at handling accounts & bookkeeping, payroll, VAT, management consultancy and giving solid, no-nonsense tax advice.

We also help contractors and small businesses to grow, providing realistic business guidance and advice. If you’re interested to know how a solid business plan with realistic financial KPIs can benefit your business, give us a call on 020 8108 0090 and book a free, no-obligation meeting.

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 

Guide to setting up a gastropub in Central London

If you consider yourself to have the temperament required to be both a pub owner and a restauranteur, then the life of a gastropub owner may appeal to you. The term gastropub entered the culinary vocabulary in the 1990s to describe a bar cum restaurant that elegantly balances a classic pub aesthetic with high-end food and drink – one of the many reasons as to why gastropubs have become a worldwide phenomenon. London’s accountant Tax Agility provides some tips to consider before opening your very own gastropub in Central London.

Why Central London

London leads the charge as the gastropub capital of the world. Home to many cultural attractions, shopping districts, as well as a vibrant nightlife scene and decorated dining establishments, Central London is a bustling hive of activity – and the perfect setting for a quaint gastropub. While the city has cultivated a reputation as a hub for finance and business, it is rapidly becoming the place-to-be for independent start-ups and budding small businesses like gastropubs too.

Choosing a business model

There are typically a few traditional routes into the pub trade, with varying degrees of freedom and financial cost for the proprietor. These are:

  • Pub tenancy: The pub operator takes on a tenancy, which is a short-term lease of two to five years from a pub company or brewery. In this case, the pub company offers support by way of maintaining the property. Often there is a requirement to sell the lessor’s beers. This is the lowest cost avenue for new pub operators, albeit with the least freedom.
  • Tied or free-of-tie leasehold: This is a longer lease, usually around 20 years, with the licensee enjoying some degree of support from the lessor. Under a tied leasehold, the licensee is required to purchase a large portion of the pub company or brewery’s drinks, though this mightn’t be a constraint if your gastropub focuses on food. A free-of-tie leasehold has no such restriction, meaning you’re able to tailor your drink selection specifically for your food, however, this is more expensive.
  • Freehold: This is the most expensive route to acquiring a pub, but the operator owns the property outright and has complete control over the business and its operation.

For a gastropub, a tenancy is usually not ideal as they are not assignable, meaning the agreement cannot be sold for a profit later to another party despite any improvement you have made to the pub and its business. Likewise, good quality freehold options can be hard to find, as not all of them are suitable for conversion into food-based establishments or conducive to fine dining. Tied and free-of-tie leases are becoming increasingly popular for new pub owners due to their greater freedom and flexibility, however, it is recommended that you have some experience in the industry before committing to such a substantial agreement. Whichever option you choose, the pros and cons of each arrangement will need to be weighed.

Capital and business plan

A gastropub start-up incurs considerable initial costs, whichever business model you choose. Operating costs like mortgage, utilities, wages, food and beverages, rent and property upkeep will also take up a hefty portion of your cash-flow. Moreover, a refurbishment or refit might be required to convert your property into a functioning gastropub, which could demand considerable investment, not to mention the task of marketing your new venue and building the pub’s brand. To secure financing for the business, the gastropub owner will need to outline projected costs and revenues realistically, and then write a business plan. Typically, any necessary start-up capital can be borrowed from a reputable bank, however, you should always consult a specialist lawyer or accountant before borrowing or investing.

Pub start-up costs: What does it cost to start a gastropub?

Your costs will vary according to the specific business model you choose, but as a rule, they can be broken down into the following:

  • Premises: These include but are not limited to, rent or lease costs, service charges, business rates, waste management, pest control, buildings insurance, not to mention the initial purchase investment for a freehold.
  • Food and drink costs: As a general rule of thumb, the cost of food is 35% of the sale price and 15-20% on drink prices.
  • Staff wages: Staff costs are fixed and likely to be the largest part of your business’s overheads. You should try and keep this to less than 50% of the total overheads.
  • Legal and compliance: As the licensee and proprietor of the business, you will be responsible for public and employee liability insurance, stock insurance, as well as buildings and contents insurance. On top of this, there will also be alcohol licenses and an A3 planning licence in order to serve hot food on the premises.
  • Refurbishment and refit: For a gastropub, your priority should be the front of house, including the façade and dining area, as well as toilet facilities and back of house, which includes the kitchen, arguably the most important aspect of a gastropub, and any equipment required.

Rules and regulations of the pub business

Under the 2003 Licensing Act, the responsibility for issuing personal and premises licences rests with local authorities, typically the local council, and is overseen by the Home Office. Businesses such as pubs and gastropubs that sell alcohol are required by law to hold a premises licence. In addition, the owner of the business authorising the sale of alcohol must also apply for a personal licence, alongside the premises licence. This is where the term ‘licensee’ comes from.

A licenced pub must meet the four objectives set out in the Licensing Act 2003: to prevent crime and disorder, protect children, ensure public safety, and prevent public nuisance.

In order to apply for a premises licence your business will need to meet certain requirements. Upon application, you will need to provide: your details, details of the premises supervisor, a comprehensive plan of the premises as well as an operating schedule documenting the licensable activities of the business, opening hours and how your business will meet the aforementioned licensing objectives.

Likewise, when applying for a personal licence, the following conditions must be met: you must be at least 18 years old, complete an accredited training course on licensing laws and the service of alcohol, apply for a DBS check and also have the right to work in the UK.

As well as submitting your application to the local council, you will be required to provide copies to ‘responsible bodies’ for approving your applications. Apart from the local police, these can include:

  • Local fire and rescue services
  • The primary care trust (PCT) or local health board (LHB)
  • The environmental health authority
  • The health and safety authority
  • The local planning authority
  • Local trading standards officers
  • Any other licensing authority in whose area part of the premises is located.

A qualified chartered accountant for start-ups such as Tax Agility can advise you on all the regulations you will need to meet when starting your gastropub in London.

Revenue and cash-flow

When it comes to your initial start-up, restauranteurs advise having enough cash to cover the initial cash-flow, as this is the major challenge for most licensees. While operators on a leasehold enjoy a level of security with a longer agreement, there is a risk further down the road with reassignment. This is because many leases hold the original lessee responsible if the replacement licensee fails and breaks the lease, even if they are no longer involved and/ or have sold the lease.

While many gastropub operators thrive when it comes to providing an outstanding food and drink service, they can often fall short at managing the financial aspect which could result in unnecessarily high costs and poor cash flow. As it’s essential to at least break even in the first year of business, it’s vital to have a qualified accountant for start-ups like us to assist.

How Tax Agility can help your gastropub in Central London

As an experienced London-based chartered accountant for restaurants, Tax Agility can offer the new gastropub operator these essential services:

  • Assessment of your financial requirements, including advice on finance sources, introductions to banks and helping with the necessary proposals.
  • Advice on the most suitable structure for your business – sole trader, partnership or limited company.
  • Advice on getting your capital through tax efficient investment structures such as the Enterprise Investment Scheme (“EIS”) and the Seed Enterprise Investment Scheme (“SEIS”).
  • Preparation of your business plan, cash-flow projections, budgets, and trading forecasts.
  • Completion of registration with Companies House and HMRC.
  • Management of company secretarial services.
  • Advice on setting-up financial, management and record-keeping systems in compliance with statutory requirements.

Call us today on 020 8108 0090 or use our Online Form to set up a no-obligation meeting.

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances.

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Guide to setting up a medical practice in Central London

London is one of the world’s leading commercial and financial centres, and has historically attracted a high concentration of medical practices. Harley Street in Central London for instance, has been a notable area for medicine and surgery since the 19th century. Today, quality care can be found beyond Harley Street and throughout London, including around Cavendish Square Gardens, a stone’s throw away from the Royal Society of Medicine.

There are both benefits and drawbacks to opening a medical practice in Central London. On one hand, it represents a large, growing market and possesses a convenient central location, easy access to transport, a deep talent pool for recruitment and well-developed infrastructure. On the other hand, London is renowned for high property prices and high wages. Let Tax Agility, the London chartered accountants for start-ups walk you through some of the considerations for setting up a medical practice in Central London.

Funding options

There are a number of costs to consider when setting up a medical practice, such as utilities, wages and stock purchase, as well as rent or mortgage payments. While it is commonplace to borrow the necessary capital from a reputable bank and spread the cost over a longer term, there are now other lenders that also can cater to small businesses.

In addition, you may qualify for the Enterprise Investment Scheme (EIS) or the Seed Enterprise Investment Scheme (SEIS) - two UK government initiatives that encourage innovation by granting private investors significant tax breaks when investing in companies.‍ Our accountants are happy to discuss funding options available to set up your medical practice.

Choice of business structure

You need to decide on the most suitable structure to incorporate your practice, with Partnership, Limited Liability Partnership (LLP) or Private Limited Company being the popular choices.

The suitability of the structure depends on the type of practice you will be running. These have an impact on the ways you manage your liability, pay your tax and how profits are distributed. It is best to engage our specialist accountants in discussing the best structure for your medical practice.

Business plan, cash-flow projections, budgets, and trading forecasts

Initially, you should draw up a business plan that stipulates your operation plans, your team, customer analysis, competitive analysis, marketing plan and financial plan. Ideally, the financial section should comprehensively outline the costs from setting-up to on-going, as well as how your medical practice plan to generate revenues and your goals.

Consider setting financial Key Performance Indicators (KPIs) and use the data to help spot short-term problems and long-term trends. While there are no rules for which KPIs to use, a few worth considering include net profit margin, current ratio, working capital and debt ratio. At Tax Agility, we have been helping small businesses across London setting up their financial KPIs and we would be happy to work with you too.

Once you get the business going, cash-flow is key and keep a look out for cash-flow gap (when your cash inflows and outflows don’t line up). Again, this is an area which we’re happy to assist in.

Buying or leasing your premises

Unlike most other commercial properties, medical practice premises have to comply with a number of strict regulations. They are categorised as “D1” properties under the Town & Country Planning Act 1987, with some being purpose-built clinic and healthcare spaces that can be immediately set up for practice. These are usually available for lease, however, can also be purchased outright. Our local chartered accountants can advise on the best strategy for your practice, as well as any rental reimbursements that you may be entitled to.

Register with private health insurance companies

While the National Health Service (NHS) covers the majority of the healthcare sector in the UK, there is now a growing trend for private healthcare. There are quite a few top private medical insurance providers that are responsible for covering in-patient and day-patient costs - provided that your practice is registered with them.

Legal checks

Your medical practice will need to comply with numerous registration and licensing requirements, including the General Medical Council, Companies House and HM Revenue & Customs, Care Quality Commission (CQC), Data Protection Act and Disclosure and Barring Service.

Practice Insurance

Practice insurance is a necessity for all medical practitioners as it protects the physical building and the contents within; as well as your revenue in the event of a material damage claim. In addition, a policy covers your liabilities to the public and your employees as part of meeting your legal obligations as an employer. An all-encompassing practice insurance policy is recommended and provides peace of mind.

Setting-up financial, management and record-keeping systems

Once the practice is established and running, you will need a system of checks for accountability. Our accountants for start-ups, located in Cavendish Square, have the experience to monitor medical practices and review your operations.

How Tax Agility can help your medical practice in Central London

Private medical practice in the UK is ever evolving, and changes in regulations and the insurance market can also affect the industry. For a start-up practice like yours, our experienced start-up accountants in London can be a source of trusted financial and legal advice.

Simply call us today on 020 8108 0090 or use our Online Form for more information on how we can help you.

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances.

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Universal Credit

Introduced in 2013, Universal Credit aims to reform the benefits system by replacing existing income-related benefits, namely:

  • Housing Benefit
  • Income Support
  • Child Tax Credits
  • Working Tax Credits
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related employment and support allowance (ESA)

Under this scheme, recipients who are out of work or on a low income will receive a single monthly payment to assist with living costs.

The objective of Universal Credit is to simplify the welfare system, help get people back into work, reduce in-work poverty and help detect fraud and error. However, it isn’t without controversy. The Government has made a vague promise that existing tax credit recipients will not lose out through Universal Credit, and the Secretary of State for Work and Pensions announced that the Department of Work and Pensions (DWP) had succeeded in helping 3.4 million people find employment since 2010.

But other institutions are less optimistic. The Institute of Chartered Accountants in England and Wales (ICAEW) said that ‘by and large, the new system will be less generous to claimants than tax credits’.

What’s the difference between Universal Credit and the existing Tax Credit system?

There are some key differences between the systems:

  • Claimants will now receive a single monthly payment
  • More people will be able to manage their claim online
  • It will be available to those who are in work but have a low income

The amount of the single monthly payment will depend on an individual’s circumstances. It is made up of a single monthly allowance, supplemented by additional elements for childcare, limited capability for work, housing and carers.

The single monthly payment is supposedly designed to reflect the salary system of the vast majority of employed people receiving wages monthly. According to the government, Universal Credit will thus encourage claimants to take more responsibility for their finances and also prepare people for the transition into work.

What do you need to do if you currently receive Tax Credits?

The short answer is nothing. HMRC has made it clear that the Tax Credit Office will contact those affected by the changes. At present, there are more than one million people on universal credit and the government’s plan is to roll it out for almost seven million people by 2023. To find out if you’re eligible to receive Universal Credit, see this step-by-step guide on the site.

Will Universal Credit affect child maintenance payments?

Universal Credit will not replace Child Benefit, which recipients will still receive in addition to Universal Credit. This will also not affect the amount of Universal Credit that claimants are entitled to. In addition, Universal Credit will not affect Bereavement Allowance, Carers Allowance, Disability Living Allowance, Maternity Allowance, among others.

Is Universal Credit taxable?

Universal Credit is a tax-free state benefit, which means the monthly payments are not considered taxable income. While other benefits may be taxable, the government supports Universal Credit recipients through this state-benefits system.

For more information, the DWP has produced an FAQ document which is useful. Alternatively, you can contact our tax accountants to if you have any questions.

Published on 09 Jan 2013 and updated on 06 Feb 2019, this blog is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances.

HMRC tax investigation

HMRC Legal Powers

HMRC tax investigationMany people remain unaware that in an age where data protection and privacy are big issues, such rights do not always exist when it comes to tax affairs.

In this area, HMRC has very wide powers to conduct surveillance and intrusively snoop on suspected tax dodgers.

Most would agree that tax evasion is a very serious issue, which should be investigated by HMRC if there’s a suspicion of fraud and criminal activity. But not everyone agrees when HMRC uses its power to collect more tax from innocent workers in order to minimise its tax gap, raising concerns on privacy infringement.

The power of HMRC comes from Schedule 36 of the Finance Act 2008, which allows HMRC to obtain information and documents from taxpayers and gives them the power to inspect businesses. According to HMRC, their criminal investigation powers allow them to:

  • Apply for orders requiring information to be produced
  • Apply for search warrants
  • Make arrests
  • Search suspects and premises following arrest

In July 2018, HMRC published a consultation proposing reforms to the existing legislation. Among other suggestions, they proposed to remove tribunal approval for third-party notices and create separate rules for third-party information requests.

While HMRC claims the reforms are meant to cut costs and improve efficiency, many businesses and taxpayers are concerned that this may remove some of the necessary checks and balances in place, which are particularly important when the requests relate to banking information.

How far can HMRC go in investigating?

While future changes are yet to be determined, at present, HMRC has the following powers to catch tax dodgers:

Their powers include:

  • The ability to track a suspected tax evader’s web browsing.
  • The ability to intercept and read private emails or eavesdrop on telephone calls, only permitted with a warrant.
  • The potential to bug an office, house or car.
  • The power to access credit reference information in order to compare alleged levels of income, information and documents given to credit companies and spending habits which may not match the information given in tax returns.
  • The right to visit third parties.
  • The ability to pass on any other relevant information regarding tax issues to other arms of the organisation.

What HMRC are not authorised to do

Be aware of your rights:

  • HMRC cannot force entry or physically search by hand, they can only inspect by eye.
  • They cannot make an unannounced visit without it being authorised by a senior officer.
  • They cannot visit domestic premises.
  • They cannot compel a taxpayer to answer questions.
  • They must make it clear why a taxpayer is being investigated. They cannot investigate any other matter that they haven’t provided notice about.

While HMRC officers have clear restrictions under Schedule 36, it has also been disputed that these officers can take advantage if a taxpayer voluntarily waives their rights.

Tax investigations

If you’re being investigated by HMRC, contact our experienced team of accountants and tax advisors today. Our tax investigations services include:

  • Liaising with the local tax office
  • Compliance reviews of PAYE and NI
  • Investigations of VAT issues

Get in touch today on 020 8108 0090 or contact us via our Online Form to arrange a complimentary, no obligation meeting.

This post was first published on 10 02 2013 and updated on 06 02 2019.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.