Many people in the past have been reluctant to use tax planning involving a trust, especially a Discretionary Trust, as they see it as complicated, over-burdening and expensive. However in all reality this is not the case.

There are other types of Trust that can exist, with different legal and tax consequences, but I am concentrating on a Discretionary Trust. This is a Trust where no beneficiary has an entitlement to the income or capital, instead the Trustees choose how much income in the Trust should be distributed to whichever beneficiary they choose. 

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Have you had your Christmas party yet or are you holding yours in January? Whatever you do don't forget the HMRC rules.

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We’re extremely pleased to announce that Alan Sanders (pictured centre) has joined us as our new Audit & Assurance Manager.

It is the second time Exeter University graduate Alan has worked for us, having completed his training here before joining national accountancy firm BDO’s Bristol office three years ago.

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Although the milk price appears to be improving for many dairy farmers, there is often a lag before this shows itself as cash in the bank. A number of farmers are therefore still feeling the consequences of the low prices achieved over many months and are facing pressure on their cash position.

Here are a few potential areas that can be looked at to help improve the cash flow position:

Reduce tax payments on account 

If profits are expected to be lower, then there may be scope to reduce tax payments on account for the following tax year. From April 2016 there is also scope to average profits over five years rather than two. It therefore makes sense to get accounts and tax calculations prepared as soon as possible to give an up to date tax position.

Seek a loan repayment holiday 

It may be possible to agree a period of interest only payments with your lender to reduce the monthly outgoings.

Defer capital expenditure 

You can look to delay expenditure on capital projects and new plant(s) and machinery. You should bear in mind that this will reduce the level of capital allowances claim in the future and so could have a knock on effect on future tax liabilities.

Re-schedule HP payments 

It may be possible to extend the term of HP agreements which will reduce the monthly payments. The term of HP agreements will not be extended beyond the expected life of the asset being financed.

Suspend pension payments 

Payments into pension schemes can be deferred. Pensions can be topped up in the future when cash flow improves.

Realise assets 

You can review whether there are any assets which can be sold. You do need to watch the capital gains tax position on any disposal but, as a result of the write off of milk quota, a number of dairy farmers will have capital losses available to set against capital gains. Trading losses can also be set against capital gains in certain situations.

Draw down pension 

The new pension rules give much more flexibility in accessing pension funds for individuals who are 55 and over and so there may therefore be scope to access funds from personal pension schemes. However you should always review the tax positionand take professional advice before drawing down your pension. 

At Thomas Westcott we have specialist agricultural accountants and consultants and we are happy to discuss this or any other farming matter with you.

We’ve just helped South West-based Longhouse Group to acquire the region’s leading independent roofing supplies merchant, Roofing Supplies (SW) Limited (RSL).

The deal, which involved some of the region’s most respected professional services firms, saw a team of our own experts carry out the completion accounts – essentially verifying that the actual financial position of the target company at completion is what the parties expected when, based on historic financial information, they signed the contracts.

This means our client Longhouse’s stable of South West companies, which includes grounds care machinery specialist MST and light engineering supplier Parkins, now has assets with a combined turnover of £22m employing over 110 people.

The acquisition of RSL, which has premises in Plymouth, Exeter and Newquay, sees the company’s previous directors step out of the business and replaced by new general manager Damion Fearnley.

 

Plymouth-based law firm Wolferstans looked after the legal aspects of the deal for Longhouse Group.

To read more on the story click here: http://www.insidermedia.com/insider/southwest/longhouse-strikes-roofing-supplies-deal 

(Pictured L-R:  Simon Foster & Nigel Godefroy of Longhouse Group)

 

The Winter issue of our Taking Account newsletter is now available to read and download HERE.

We are delighted to announce the appointment of Iain Andrews as a Partner following his three and a half years’ successful leadership of our financial planning business.

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As part of our on-going expansion plans we’re delighted to announce that Andrew Brown, one of the region’s most experienced and well known financial planners, has joined Thomas Westcott as a Partner and as a Director of Thomas Westcott Chartered Financial Planners. 

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Business decision making is all about risk. Without risk there is little profit to be earned. In general the higher the risk the greater the profit potential. How should a farmer manage the risks associated with his enterprise?

There are three risk areas – production, marketing, financial that are considered here. There are ways of managing all of these.

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One cannot help noticing over the past few years the inevitable march towards computer and digital based services.

This ranges from Banking, Insurance, Investment, Retail Spending, and many other areas. Indeed over the next few years we are also going to be faced with the government drive towards "Making Tax Digital" – MTD for short.

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