What to consider if you are expanding overseas

Since the UK voted to leave the European Union (EU) in 2016, there has been one thing on the minds of HR professionals and business leaders alike the issue of hiring and maintaining overseas staff.

Business, HR, EU, Around the world
Planning to move or expand your business overseas?

Brexit has cast a question mark over the future of the global workforce and with VISA issues for existing staff looking to be problematic and hiring overseas talent going to become more difficult, businesses need help.

To achieve this, Human Resource (HR) departments and those responsible for recruitment must be aware of the options available to them to enable the business to easily expand and hire the people they want, where they want. This is where organisations should look towards partnering with a direct Employer of Records (EOR) service provider.

With a potential economic slump on the cards, preparation is key. A third party service used by businesses looking to expand and create entities overseas, an EOR takes care of all of the issues traditionally associated with the minefield that is global recruitment. Helping make the transition into new territories more simple, these service providers speed up the process of setting up shop abroad in a cost effective way. So how does it work and how can it really help in a post-Brexit world?

Time saving

Carrying out HR tasks is time intensive and it’s no wonder that companies often wildly misjudge the time it takes to carry out processes which are traditionally the expertise of HR professionals during periods of global expansion.

Sorting out documentation and translations, hiring new staff, and getting to grips with local payroll and tax regulations are all obstacles that can take a relatively long time to work through when setting up a new office abroad. Underestimating the time it takes to establish a business overseas is a key pitfall faced by organisations expanding globally.

But this is where an EOR service provider can help. Taking responsibility for all processes relating to employment contracts, payroll and tax compliance away from HR departments, EORs can save them time and prevent unnecessary stress when it comes to dealing with the nuances in specific regions.

Outgoings

The costs associated with expanding overseas can be crippling, especially for small business wanting to ride the wave of success onto pastures new.

Unforeseen costs can come from multiple sources, depending on the country you are looking to expand into. These include, but are not limited to, recruiting staff, funding health or housing benefits and complying with the legal requirements for annual leave outlined by the host country.

For instance, in China, an employer is required by law to foot the bill for an employee’s housing fund and social healthcare programmes and in Switzerland, those under the age of twenty are entitled to one week more annual leave than the rest of the population. And those are countries that aren’t even in the EU, so add the other twenty seven member states and the nuanced ways they do business into the mix and you can see how complex things get. Especially as the UK does much of its business with EU countries.

It’s factors like these that not only mean business owners are confronted with costs they were not expecting, but also are at risk of legal repercussions should they not comply with these country specific regulations.

EOR service providers can help here too. Setting up an entity abroad no longer needs to be decided on the basis of the financial reserves; time or legal expertise a business has available to it. Instead, this will be the only time that hiring another entity won’t actually cost the company money, but help it make savings.

Legal compliancy

Ensuring the decisions a company makes are above board is paramount to both its financial success and the longevity of its trading. The process of ensuring legal compliancy can be a daunting one and can put companies off recruiting staff and setting up shop in overseas territories altogether, or lead them to cut corners. The principal issue with this is that by bypassing the aforementioned formalities, businesses then run the risk of breaching both employment and tax laws.

EOR service providers can not only save businesses time, money and prevent them from breaching these local laws, but now the once-daunting process of setting up an entity abroad has never been easier. With EOR, companies can embrace the opportunities that lay ahead of them overseas with open arms, rather than confining them to function on a national basis only and HR departments and recruiters can rest assured things will be done correctly without affecting the talent pool.

If you expanding overseas and require help and assistance registering your company and/or employment contracts give us a call on 01612056655 or send us an email info@stanleycarter.co.uk or check our website for further details www.stanleycarter.co.uk

 

Changes to corporation tax loss relief

Corporation Tax
Corporation Tax is changing… and you need to know about it.

The Finance (No. 2) Act 2017 has introduced changes to the corporation tax loss regime. The rules are now more flexible for carried forward losses but restrictions to the amount of losses that can be carried forward have also been introduced. The changes apply to accounting periods beginning on or after 1 April 2017. If an accounting period sits on that date, the periods before and after are treated as separate accounting periods and its profits and losses for that period are time apportioned.

What was the position before the changes?

For periods before 1 April 2017, a company could set losses against profits of any description in the same accounting period and against profits of any description of an accounting period in the 12 months immediately preceding the period of the loss. If a trading loss had not been used in this way then the loss would be automatically carried forward and set against profits of the same trade in future periods.

What has changed?

Now, for trade losses arising in accounting periods beginning on or after 1 April 2017, they can be carried forward and set against a company’s total profits (including capital gains) in the next accounting period, subject to certain conditions being met (for example, that the trade did not become small or negligible in the accounting period in which the loss arose). The claim to set the loss against the total profits needs to be made within two years from the end of the later period. There are also similar changes to the loan relationships non-trading debit rules and the losses on intangible fixed assets rules, where the losses can now be set against total profits where they could not previously. All carried forward losses will also be available for surrender by way of group relief.

The new regime also introduces a restriction so that, from 1 April 2017, companies are only able to set losses against 50% of total profits exceeding an annual deductions allowance of £5 million. There is no restriction if profits are below the deductions allowance, so HMRC expect most small companies or groups to be unaffected. There are specific rules for single companies and groups of companies in relation to how the restriction and deduction are applied.

A targeted anti-avoidance rule (“TAAR”) has also been introduced to prevent abuse of the corporation tax loss rules. The TAAR enables HMRC to make such adjustments as are just and reasonable to prevent a loss related tax advantage arising from relevant tax arrangements.

Furthermore, the various relaxations described above (and indeed, a company’s ability to carry forward losses at all) are subject to particular limitations following a change in ownership of that company. Specialist advice should always be sought in these circumstances.

If you would like more information on how any of the changes or proposals affects you or your business or how they may apply in specific circumstances, please contact a member of our team on info@stanleycarter.co.uk or phone us 0161 205 6655 www.stanleycarter.co.uk

Ways to improve year end processes

 

Business and accounting paperwork
Continuous improvement is the key to success.

As with every New Year, January marks a particularly busy month for two sets of professionals; personal trainers and accountants. Gyms are at their busiest at the beginning of each year, packed with people wishing to stick to their New Year’s resolution to lose weight. Accountants, on the other hand, are spending many hours in the office trying to tie up year end.  As much as any financial controller tries to prepare, year end always ends up being a battle of time versus a multitude of tasks.

We live in the digital age where the importance of big data has become more noticeable than ever. Companies have come to rely on business intelligence to clean through vast data lakes in order to drive business strategy and increase profits. However, this increase in data volume impacts all departments, many of which still rely largely on manual processes. None of these are as critical to success as the financial control function. Heads of Finance will no doubt appreciate that their teams are recipients of data outputs from a variety of sources, which are then consolidated for financial and management reporting purposes; often relying on hours of dedicated data mining and formatting by overqualified accountants.

This juxtaposition between the use of highly automated business intelligence to create strategy and revenue versus the manual, laborious approach taken by the back office could not be more striking in 2018. Often, the real casualties in this scenario are data integrity and financial intelligence. For most companies, the effort required to complete key accounting and finance tasks takes away time that could be used to ensure the integrity of the data and deliver continuous management information that adds value, such as liquidity and budget forecasting.

Gaining financial control means getting ahead of the many period end processes and gaining efficiencies in the routine tasks, such as intercompany or expense management, in order to produce reports that add value to your business.

Without a doubt, gaining control requires automation. It would be easy to suggest that this could mean the end of the trusty old spreadsheet. For many this is not true, and a frightening thought.  But consider this; as data volumes grow, the limitations of spreadsheets becomes all too apparent. For many finance professionals, spreadsheets are the primary tool of choice for ad-hoc scenarios. It goes without saying that most financial controllers are highly adept at using systems such as Excel, Numbers or Lotus 123. But all too often manual processes are initially used as stop gaps which, in time, become strategic and part of the problem. This is particularly true when it comes to reporting. Unfortunately, the reliance on manual processes can, and does, lead to error.

It would be easy to dismiss the importance of spreadsheets. The simple fact is that spreadsheets are irreplaceable and will continue to be a part of every day life in finance. The trick is to limit their importance in any process and seek automation wherever possible.

Financial Control is at its busiest at the beginning of each month. The number of tasks performed during the first 3-10 days (depending on the firm’s policies) of the month to close off the previous month’s books is typically a challenge leading to countless late nights. Adopting a more streamlined, automated approach as outlined above significantly reduces time pressures and leads to a cleaner, more efficient month end close.

If you need any help with your month end accounts send us an email info@stanleycarter.co.uk or check our www.stanleycarter.co.uk

How best to deal with your R&D claims

When it comes to claiming R&D tax credits, many business managers assume that their accountant is best-placed to handle the claim while they provide the technical input.

Tax credits, R&D, Research & Development, small business, tax relief
R&D for small businesses

Furthermore, there’s often an automatic assumption by many accountants that if they have the correct technical information, a claim is fairly straightforward.

Admittedly, the fact that any limited company developing new products, technology or processes may be eligible and can claim for up to two accounting years retrospectively, sounds straightforward enough.

But, even when a business owner or director feels he or she can identify R&D projects better than anyone else, scoping them in the context of the R&D tax criteria is not that simple. It requires technical understanding combined with an in-depth knowledge, without which the numbers might not add up.

Therefore, the reality is that presumptions can fall way short of the need for an in-depth understanding of what potential R&D activity may or may not fit within the context of the current legislation.

Take the meaning of R&D in the context of R&D tax relief; an issue that isn’t simple to handle. R&D in this case is not limited to the R&D department, as HMRC defines it as work that achieves a scientific or technological advance when scientific or technological uncertainty exists.

This can include achieving an increase in overall scientific or technological knowledge or capability; significantly improving products, processes, materials or services through scientific or technological development; or using science or technology to duplicate the effect of an existing product or process in a new or appreciably improved way.

For instance, a whole project might not qualify but the element addressing the technological uncertainty does. That can include planning and managerial activities in some instances.

To be sure a claim is justifiable and as beneficial as it can be, an accountant must fully understand the detail of the HMRC guidelines. That’s a 15-part manual and, once you have read through it all, you will need the technical expertise to define, quantify and support a claim.

This is where a specialist partner that lives and breathes R&D and has extensive experience in supporting companies in funding, resourcing and exploiting R&D would make the process more efficient and more profitable for all parties.

With Stanley Carter R&D, clients often find that the objective, expert evaluation and broader experience in supporting technology companies can fundamentally change the way they look at and approach their R&D strategy going forward.

For more information on how we can help you with your R&D claim send us an email on info@stanleycarter.co.uk or check our website for further details www.stanleycarter.co.uk