Advisory Circle - Tax investigations & Share incentive plans


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The first in a series of presentations for smaller accountants

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Advisory Circle - Tax investigations & Share incentive plans

  1. 1. Advisory circle “ Powered by Mazars” 1 February 2012
  2. 2. Agenda <ul><li>Welcome – Tim Ball – Business Restructuring Partner </li></ul><ul><li>Tax Investigations – Gary Brothers – National Director </li></ul><ul><li>Share Schemes – Amy Goold - Tax Director </li></ul><ul><li>Close – Drinks and Canapés </li></ul>
  3. 3. Advisory circle “ Powered by Mazars” HMRC activities including investigations, enquiries and disputes 1 February 2012
  4. 4. Face to face <ul><li>Gary Brothers </li></ul><ul><li>Gary has specialised in tax matters, particularly in handling HMRC activities including investigations, </li></ul><ul><li>enquiries and disputes for 9 years at Deloitte, RSM Tenon and now Mazars LLP. </li></ul><ul><li>Before that, Gary was a senior investigating Inspector of Taxes in HMRC for 16 years, including </li></ul><ul><li>it’s Specialists Units, including general enquiries, tax fraud and evasion and tax planning and avoidance. </li></ul><ul><li>His past and current clients have covered the full HMRC spectrum and he is renowned </li></ul><ul><li>for the “hands on” approach he takes to secure great results for his clients. </li></ul><ul><li>During his time in the profession he has also provided full litigation and Tribunal support and, particularly, </li></ul><ul><li>disclosures, onshore and offshore, dealt with on favourable terms many times. </li></ul><ul><li>Gary is a regular presenter to professional groups and associations. </li></ul><ul><li>Gary is now an avid tweeter, follow him @taxmangaz for up to date tax tweets. </li></ul><ul><li>Please feel free to contact Gary to discuss any matters without obligation on: </li></ul><ul><li>0794 403 1487 or at </li></ul>
  5. 5. Contractual Disclosure Facility <ul><li>Replaces Civil Investigation of Fraud procedure </li></ul><ul><li>Effective from 31 January 2012 </li></ul><ul><li>Policy desire – to introduce a “significant criminal underpin” </li></ul>
  6. 6. Contractual Disclosure Facility <ul><li>“ In cases where a criminal investigation is not commenced, the Commissioners may decide to investigate using the Code of Practice 9 investigation of fraud procedure” </li></ul><ul><li>“ Under the investigation of fraud procedure, the recipient of Code of Practice 9 is given the opportunity to make a complete and accurate disclosure of all irregularities in their tax affairs” </li></ul>
  7. 7. Contractual Disclosure Facility <ul><li>Upon notification of COP9: </li></ul><ul><ul><li>Must deicide – have I conducted a tax fraud? </li></ul></ul><ul><ul><li>Sign contract within 60 days </li></ul></ul><ul><li>What is “fraud”? </li></ul><ul><ul><li>Concealing or withholding relevant facts </li></ul></ul><ul><ul><li>Failing to disclose liability or duty </li></ul></ul><ul><ul><li>Misrepresenting tax affairs </li></ul></ul><ul><ul><li>Always involves intent </li></ul></ul><ul><ul><li>Always deliberate, never accidental </li></ul></ul><ul><li>Based on HMRC information received </li></ul>
  8. 8. Contractual Disclosure Facility <ul><li>If deny or not co-operate </li></ul><ul><ul><li>HMRC conduct investigation, possibly criminal </li></ul></ul><ul><ul><li>Obtain information from third parties </li></ul></ul><ul><ul><li>Take formal action for tax and interest </li></ul></ul><ul><ul><li>Charge significantly higher penalties </li></ul></ul><ul><ul><li>Commence legal action to secure assets </li></ul></ul><ul><ul><li>Require financial security against unpaid taxes and duties </li></ul></ul>
  9. 9. Contractual Disclosure Facility <ul><li>CDF offers chance to disclose tax fraud </li></ul><ul><li>CDF must be taken within 60 days of offer </li></ul><ul><li>If accepted, HMRC will accept non-criminal solution </li></ul><ul><li>Requires full disclosure </li></ul>
  10. 10. Contractual Disclosure Facility <ul><li>HMRC CDF is right for a client who: </li></ul><ul><ul><li>Has committed tax fraud </li></ul></ul><ul><ul><li>Wants to fully disclose those tax frauds </li></ul></ul><ul><ul><li>Will work with HMRC to put those affairs in order, including paying </li></ul></ul><ul><ul><li>Stop any continuing frauds </li></ul></ul>
  11. 11. Contractual Disclosure Facility <ul><li>The process: </li></ul><ul><ul><li>Must make valid outline disclosure within 60 days </li></ul></ul><ul><ul><li>Prepare disclosure report </li></ul></ul><ul><ul><li>If no fraud – deny irregularity within 60 days </li></ul></ul><ul><ul><li>Care needed on denials </li></ul></ul><ul><ul><li>If no co-operation – HMRC commence criminal or civil investigation </li></ul></ul><ul><ul><li>If fraud established – may pass to criminal team </li></ul></ul>
  12. 12. Contractual Disclosure Facility <ul><li>HMRC will actively consider criminal investigation if: </li></ul><ul><ul><li>Non co-operation </li></ul></ul><ul><ul><li>False denial </li></ul></ul><ul><ul><li>Acceptance letter sent but no outline denial </li></ul></ul><ul><ul><li>Making a false statement </li></ul></ul><ul><ul><li>Providing false documents </li></ul></ul>
  13. 13. Contractual Disclosure Facility <ul><li>Outline disclosure: </li></ul><ul><ul><li>Describe the fraud – what was done </li></ul></ul><ul><ul><li>Describe the fraud – how it was done </li></ul></ul><ul><ul><li>Describe the fraud – involvement of other people or entities </li></ul></ul><ul><ul><li>Describe the fraud – how benefit was enjoyed </li></ul></ul><ul><ul><li>Describe the fraud – periods involved </li></ul></ul><ul><ul><li>For each separate tax fraud </li></ul></ul>
  14. 14. Contractual Disclosure Facility <ul><li>Once outline disclosure made, 2 options: </li></ul><ul><ul><li>Straightforward cases </li></ul></ul><ul><ul><li>Dealt with on outline disclosure </li></ul></ul><ul><ul><li>Normal certification </li></ul></ul><ul><ul><li>Complex cases </li></ul></ul><ul><ul><li>Disclosure report, agreed with HMRC </li></ul></ul><ul><ul><li>Longer process, in depth review </li></ul></ul><ul><ul><li>Normal certification </li></ul></ul>
  15. 15. Contractual Disclosure Facility <ul><li>Interaction with </li></ul><ul><ul><li>Publishing details of deliberate defaulters </li></ul></ul><ul><ul><li>Managing deliberate defaulters </li></ul></ul>
  16. 16. Any questions? Gary.brothers 0779 403 1487
  17. 17. Advisory circle “ Powered by Mazars” Share Schemes – tax efficient share schemes to incentivise employees 1 February 2012
  18. 18. <ul><li>Recently joined Mazars as tax director in the Bristol office </li></ul><ul><li>Responsible for tax compliance and advisory across Bristol and the South West region </li></ul><ul><li>Specialism's include share schemes, transactions, corporate restructuring and other complex corporate tax planning </li></ul><ul><li>Focused on tax planning for owner managed businesses, assisting both the shareholders and the directors on tax planning across potentially conflicting responsibilities </li></ul>Amy Goold, Tax director
  19. 19. Agenda <ul><li>Share schemes </li></ul><ul><li>Why options? </li></ul><ul><li>EMI </li></ul><ul><li>CSOP </li></ul><ul><li>Unapproved schemes </li></ul><ul><li>Other considerations </li></ul><ul><li>Why Mazars? </li></ul>
  20. 20. Share schemes Approved <ul><li>Enterprise Management Incentive </li></ul><ul><li>Company Share Option Plan </li></ul><ul><li>Save As You Earn scheme </li></ul>Unapproved <ul><li>Deferred shares </li></ul><ul><li>Flowering shares </li></ul><ul><li>Partition shares </li></ul><ul><li>Split Interest Share plan </li></ul><ul><li>Unapproved options </li></ul>
  21. 21. Why options? <ul><li>Incentivise </li></ul><ul><li>Retention </li></ul><ul><li>Recruitment </li></ul><ul><li>Expected (industry norm) </li></ul><ul><li>Succession planning </li></ul><ul><li>Instead of payrise </li></ul><ul><li>Often a win/win situation! </li></ul>
  22. 22. EMI Value - £10 £1,000 Price paid CGT Exercise & Sale Grant Income tax Unapproved EMI
  23. 23. EMI Excluded trades Qualifying company First choice of share scheme Small companies Qualifying employee £120,000 limit Valuation pre grant CT deduction
  24. 24. EMI <ul><li>Usually no entrepreneurs relief </li></ul><ul><li>Used to get taper relief & therefore 10% </li></ul><ul><li>Planning available to obtain ER </li></ul><ul><li>Works for minority shareholders as well </li></ul><ul><li>Works for a few shareholders </li></ul>
  25. 25. CSOP No excluded trades Can’t exercise for 3 years Second choice No size limit Qualifying employee £30,000 limit Valuation pre grant CT deduction
  26. 26. Unapproved scheme Split Interest Share Plan Joint ownership Employees low value on day 1 Capital & income rights split Employee benefit trust Valuation Shares increase in value
  27. 27. Unapproved schemes Deferred shares Flowering shares Partition shares <ul><li>Partly/nil paid </li></ul><ul><li>Deferred cost </li></ul><ul><li>Owner of the shares </li></ul><ul><li>Can pay dividends </li></ul><ul><li>New class of shares </li></ul><ul><li>Future value only </li></ul><ul><li>No tax on purchase </li></ul><ul><li>Ignores historical value </li></ul><ul><li>Shares relate to specific part of the business </li></ul><ul><li>Frequently used for companies with property </li></ul>
  28. 28. Other considerations <ul><li>FRS 20 accounting for option values </li></ul><ul><li>Dividends for owner managers (new class of shares?) </li></ul><ul><li>Share valuation </li></ul><ul><li>What happens to leavers? </li></ul><ul><li>Do you need a shareholders agreement? </li></ul><ul><li>Is it the right people (will a bonus scheme do?) </li></ul>
  29. 29. Why Mazars? Why Mazars? Experience Don’t have in-house resource Allows you to offer a full service (so clients don’t go elsewhere) Non-poaching agreement Happy clients! Act direct for client or in the background
  30. 30. Clifton Down House Beaufort Buildings Clifton BS8 4AN Tel : 0117 973 4481 Fax: 0117 974 5203 Any questions? a [email_address] 0779 403 1527
  31. 31. Thank you <ul><li>Drinks and Canapés </li></ul>