09 Dec 2017 | 09.08 am
Interview: Gordon Hayden, Smith & Williamson
09 Dec 2017 | 09.08 am
Gordon Hayden, Head of Business Tax, has 20 years’ experience working in the taxation departments of Big Four and a middle-tier firms. He takes a hands-on approach in terms of implementation to ensure the overall objectives of the tax strategy are achieved.
In your dealings with business clients, what tax planning or tax resolution issues are of most concern to them?
Given that underlying business values are starting to rise, clients are assessing their situation in terms of their exit plan. This can take the form of a third party sale or a transfer within family. We assist clients in identifying the optimum structure to assist in tax minimisation. This can involve a holding company structure or perhaps a reorganisation to streamline parts of the business to be sold or retained. In many cases we assist our clients in passing the business to the next generation. There are generous tax reliefs available in terms of Retirement Relief and Business Asset Relief that can reduce the tax cost of passing the business to the next generation. Of course tax efficiency is not the only consideration – for many clients they require assistance in identifying the correct family members to pass the business on to whilst maintaining an equitable distribution of value between all family members. This can be an emotive, once in a lifetime experience for clients.
A recent ITI survey found that of companies availing of the R&D tax credit, almost half found it difficult to prepare and administer. What are the main pitfalls you encounter with clients, and how can your firm help?
In our experience, companies can have initial difficulties with understanding how the R&D tax credit operates. Revenue’s guidelines run to 48 pages, but companies require a summary of the relief, what the company needs to demonstrate and how to present that information. We provide this service by meeting with and explaining the relief and process. We then assist the company with preparing the supporting information and the report that sets out how the company meets the requirements and quantifies the claim.
A new CAI book describes VAT as a ‘high risk tax’. In your experience, how common is it for businesses to come unstuck on VAT issues?
The two most common pitfalls for businesses in relation to VAT matters tend to be cross-border VAT compliance and VAT on property issues. Often, with cross-border VAT compliance, the key is to put good systems in place from the start. Difficulties can arise where businesses defer getting advice and assistance on this, thereby allow unnoticed errors to accumulate, which come to light as a result of a Revenue audit or enquiry.
VAT on property is one of the more complicated areas of VAT. Given the value of these types of transactions, any errors in the VAT treatment can be very costly for a business. We’ve found that businesses that invest in obtaining VAT advice from the outset save money in the long run by avoiding these types of issues.
A business owners five years out from projected retirement – what are the important tax issues to plan for?
In our view, tax considerations follow the commercial rationale. Accordingly, we encourage our clients to really think about what future they envisage for their businesses well in advance of their retirement. For example, is it envisaged that the company could be sold to a competitor or perhaps taken over by the next generation? Is the nature of the business such that it might cease to be viable once the founder has exited? In all of these scenarios, there are then tax implications to be considered and planned for.
If a business is to be sold to a competitor, it may be worth considering a tax health check for the business so that any issues can be dealt with and resolved prior to any third party becoming involved. If the business is to be wound up or passed onto the next generation, it will be necessary to plan for the retirement so that the company has sufficient reserves to finance the exit of shareholders etc.