When contracting for work overseas, ensuring companies are aware of the potential taxes they will be faced with is of critical importance, so they can build a contract price which factors in as much additional tax and compliance costs which the business and its personnel may face in that overseas location, as is possible.
The problem with a classic appraisal is that it can often be backward looking. Let’s say you schedule it every six months. It can be demoralising and time-consuming to go over old ground and then file a report…that in reality might not get looked at again for another 6 months!
Are you a UK business with overseas based directors? Are you aware of the compliance obligations?
Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards their tax and national insurance bill. Contractors must register for the scheme, but subcontractors do not have to register, although deductions are taken from their payments at a higher rate (30% rather than 20% or 0%) if they are not registered. Payments made must be declared to HMRC by the contractor filing monthly returns that are submitted online by the 19th of every month.
Finance Secretary Derek Mackay has announced that the Scottish Government intends to reduce the lower rate of Land and Buildings Transaction Tax (“LBTT”) for non-residential property transactions, whilst increasing the cost for higher value property acquisitions.
Finance Secretary Derek Mackay has proposed increasing the rate of ADS from 3% to 4% which, if approved by the Scottish Parliament, will take effect from 25 January 2019.
Finance Secretary Derek Mackay has resisted calls to address the widening tax gap between Scotland and the rest of the UK.
How an individual’s estate should be divided upon death is a complex topic and can be cause for much debate, not to mention family tensions. In Scotland, the law of succession is largely based on legislation dating back to 1964. Scotland’s social landscape has changed significantly in the intervening half century and there is little question that the rules are in need of an update.
A relatively high and much more stable oil price has generated a lot of renewed investor interest in the North Sea upstream E&P sector over the past 12 months or so. Last month, in the UK Government’s 2018 Budget it was announced that the current headline tax rate will continue, therefore demonstrating its assurance to sustain and encourage ongoing economic and fiscal competitiveness and attractiveness in the basin. Under these more favourable economic conditions and with up to 20 billion barrels of oil still to recover in the UKCS, there is undoubtedly a lot of enterprise opportunity still to go after.
With a downturn in the economy and some uncertainty surrounding the UK’s position after Brexit, many companies are turning their attention to tax planning – especially if cashflow is becoming an issue. Here are seven different areas that are worth thinking about and, of course, discussing with your professional advisers.
Whatever size of business you run, payroll is one of those processes that adds zero value to your business. At best, the outcome is neutral, but get it wrong and the effects are always negative. Let’s face it, pay is a very emotive subject and everyone expects to be paid correctly and on time.
For many small businesses, the preparation of year-end accounts can seem like a stressful experience that can drag on and therefore is often put on the back burner for business owners. However, getting yourself ready for your year-end does not need to be a stressful experience, and with more and more businesses undertaking bookkeeping through cloud based accounting software, the process can be straightforward, resulting in less time required by you.
A FIERCE WATCHDOG
When operating in Norwegian territory (including offshore), a British business must fully understand and manage its corporate and personal income tax obligations to avoid any nasty surprises from the Norwegian Central Office for Foreign Tax Affairs (Cofta) – and the resulting reputational harm. Cofta will often pursue cases of non-compliance aggressively and impose stringent financial penalties on infractions such as late tax payments. If you want to appeal against a Cofta assessment that you feel is unreasonable, you must first pay the full amount demanded.
THE 30-DAY RULE
A British company will trigger a personal income tax liability 30 days after it starts trading on Norwegian soil. (If operating offshore in Norwegian waters, its personal income tax liability will apply from day one and its corporate tax liability will apply after 30 days.) But, even if a taxable presence is not created, there may still be a filing requirement with Cofta. Owing to the strict reporting requirements placed on contractors – Cofta has the power to obtain copies of a contractor’s commercial contracts – the tax authority will know about all subcontractors in any given contractor’s supply chain.
THE 12-MILE ZONE
Goods and services supplied by any UK company operating in waters outside Norway’s 12-nautical-mile offshore territorial limit are unlikely to be covered by Norwegian VAT law. But a British firm providing goods and services within Norwegian territory may find that it has a registration requirement in relation to activities that would be covered by the reverse charge in other jurisdictions, as Norway’s reverse-charge rules are more restrictive than the EU’s.
THE POST-BREXIT RELATIONSHIP
The movement of goods between the UK and Norway will continue to require customs declarations on export and import after the UK leaves the EU. But the rules and procedures concerning the preferential status of British goods may not apply from day one. Exactly what duty rates and processes will be necessary will largely be dictated by what kind of trade deal – if any – the UK strikes with the EU27.
The historically close relationship between the UK and Norway will continue to strengthen after Brexit, as both will face similar threats and opportunities. There is a lot to learn and gain from the Norwegian model and the European Free Trade Association. The UK will continue to work closely with Norway as the North Sea oil and gas industry moves into its next phase, regardless of the outcome of Brexit.
All of the above guidance is general. You should seek independent tax advice before signing any contract and starting to trade in Norway, as each case will be different.
For more infortmation please contact Helen Brown (firstname.lastname@example.org) or your usual AAB contact.
To find out more about Helen and the International Tax Team, click here.
As an insolvency practitioner (“IP”), in my dealings with many, many business insolvencies over the years, there is a recurring issue that it is very rare not to encounter – one of the injured parties wants someone to pay for the hurt that has been caused. It is easy to empathise with that feeling; there are always a number of innocent parties that suffer and it is human nature to look to see who is to blame for that.
We have witnessed a steady increase in Merger and Acquisition (“M&A”) activity in the Oil & Gas sector in 2018 with a number of high profile transactions concerning companies and/or asset sales in the upstream exploration & production (E&P) space as well as the energy services sector and supply chain.