Death taxes are set to double to a massive £10bn by 2030, according to recent new analysis – almost double the Inheritance Tax (IHT) receipts for the 2018/19 tax year

The prediction by financial services firm Canada Life came as it was revealed the Treasury benefitted from record IHT receipts of £5.2bn in 2018 – which were also up £200m on the previous year.

However, while IHT receipts are on the rise in a big way, it appears that people’s understanding of the system and how it could help them pass wealth onto their beneficiaries isn’t so high.

Take the survey last month from wealth management specialist Quilter, which revealed that only 37 per cent of those asked were aware of IHT rules.

And under half of those quizzed knew about basic IHT rules around gifting or the nil rate band.

However, 60 per cent thought the rules likely to be important when it came to how they could pass wealth on.

And those percentages really highlight a big disconnect between the information available and understanding the practical implications for individuals and their families.

It is also why the forthcoming review of IHT regulations from the Office of Tax Simplification (OTS) can’t come soon enough.

The OTS is the independent adviser to government on simplifying the UK tax system, to make it easier for the taxpayer.

It is set to deliver the second part of its review of IHT regulations shortly, following an initial report in January that looked largely at administrative issues.

The exercise is aimed at simplifying how IHT is implemented, with the upcoming report expected to focus on specific areas of change.

With additional complications like the residence nil rate band still focusing on the nuclear family, the IHT regime appears out of step with modern families and concerns about inter-generational wealth.

A House of Lords committee on intergenerational fairness has already reported across a range of issues from housing to pension credits and estate tax.

Among a raft of recommendations, they called IHT “capricious and not fit for purpose”. Going back to fundamentals, the Lords report questions why and how assets should be taxed at death or on transfer to the next generation.

The report suggested options such as a capital receipts tax payable on income received by beneficiaries or exempting certain assets from IHT if earmarked for first home purchase by a family member.

Whether any of these ideas come to fruition, and whatever the awaited OTS report recommends, there are ways in which the existing IHT regime can currently benefit your own estate planning and ensure a fairer distribution of your assets through your family.

The £3,000 a year annual gift allowance is good place to start. So is reviewing your will and making sure your assets will be dispersed the way you wish.

The first question you should be asking is: “Is my estate planning up to date?”

To discuss any issues around IHT or other tax issues please contact me on 01772 430000.

Here is a stark statistic. An estimated 88 per cent of spreadsheets include mistakes, and half of those used by big businesses have “material defects,” according to a recent report.

And those errors are costing businesses billions. JP Morgan’s so-called “London whale” fiasco, which led to a $6 billion loss, involved a spreadsheet mistake.

Canada’s Canopy Growth and Societe Generale are two other big names that have suffered big losses. The spreadsheet horror stories keep on coming and it’s not just the big businesses that are at risk.

The serious operational risk businesses are facing because of lack of control over their spreadsheets, or end-user computing (EUC) tools, has been highlighted in a new study by cloud-based application EUCPlus.

More than half the businesses polled admitted to not having a comprehensive policy governing the use of EUC applications, ultimately opening them up to significant risk.

Over 47 per cent of respondents said their organisation used over 1,000 spreadsheets for day-to-day functioning, and 30 per cent admitted that more than a quarter of the spreadsheets used were critical to the running of their organisation.

Little wonder that businesses are being encouraged to switch to accounting software as they grow and develop, in order to avoid potentially costly spreadsheet errors.

Also, when your spreadsheet template isn’t working, you’re on your own. Finding and fixing errors can be time consuming when you’re trying to get on with running your business.

There are other compelling reasons to ditch the spreadsheets, no matter how comfortable you may feel with them.

The bottom line is that spreadsheets lack the power that modern small business accounting requires.

The right accountancy software, linked to the cloud, can help you see the bigger picture when it comes to your business, aiding you in developing your strategy.

We can help businesses implement the right software solutions for them – which will allow them to work much more effectively.

To discuss what software will work best for your business please call me on 01772 430000.

A new project has been launched to support Lancashire SMEs in increasing the skills and capability of their employees.

The UpSkilling Lancashire project team will help businesses identify, design, develop and implement workforce education training programmes in response to the needs of the company.

WNJ is looking to make its clients aware of the benefits of the programme, which was officially launched last month, and how they can use it to develop the skills of their workers.

Charlotte Duffell (pictured), project manager of UpSkilling Lancashire, says the project, funded by the European Social Fund, will support businesses to become more competitive and to achieve their strategic goals.

She said: “The programme has been launched to support SMEs bridge skills gaps through, among other initiatives, workplace training, an important aspect of workforce development.

“Every business has different needs, which is why the team works closely with the employer to gain an understanding of the business objectives to determine exactly the level and type of support they require.

“It will assist SMEs in gaining the competitive edge required to be able to achieve growth and success, providing a vital boost to Lancashire and helping to promote the county as a place where businesses can thrive.”

UpSkilling Lancashire is led by the University of Central Lancashire (UCLan), in partnership with Burnley College, Edge Hill University, Forest of Bowland (Area of Outstanding Beauty) Project, Lancaster and Morecambe College, Myerscough College and Preston’s College.

There are many services available through the programme, including
• Suggested pathways to training opportunities, workshops and courses
• Guidance on the Lancashire apprenticeship offer up to degree level
• Utilising current student knowledge and skills via placements and internships
• Connecting businesses who can benefit from working together whilst supporting the local economy

To qualify for free support through Upskilling Lancashire, businesses must be based in Lancashire and employ 250 employees or less.

For more information on the programme, contact 01772 895500.

As figures reveal, HMRC’s investigative work is more focused and better targeted than ever before. In 2017-18 the taxman collected £30.3bn through compliance activity.

There are now many more trained investigation specialists – and they are using the latest technology and information at their disposal to launch campaigns and set up taskforces designed to maximise tax revenues.

HMRC’s ‘Connect System’ currently selects nine out of every ten enquiries. It is designed specifically to identify those who may have paid to little tax.

Even if you have done nothing wrong, you can be selected – and that means that no-one is immune to scrutiny.

No business is too small or too large for HMRC to challenge and those targeted include cash businesses, tradespeople, farmers, medical professionals and solicitors.

There is no doubt that tax investigations can be massively disruptive for businesses. They can also be lengthy affairs, enquires can take years to conclude.

Small businesses in particular may have fewer resources to cope with the exercise. There is the time that needs to be spent managing an inquiry and co-operating with the inspectors, not to mention the potential cost in terms of professional fees.

Here is just one example. HMRC opened a full enquiry into a self-employed caterer. The Inspector requested all of the books and records at the outset and subsequently made further enquiries about the expenses claimed.

The practice managed to close the enquiry through correspondence alone, with no adjustments required to the return. Yet the fees still amounted to £2,000.

In another recent case a law firm was subject to an employer compliance review with the taxman specifically considering the status of self-employed workers.

The accountant challenged HMRC’s view that the workers should have been employees.

After a four year enquiry a successful outcome was achieved. However, accountancy costs in respect of the investigation came to £10,000.

These cases, and many others, highlight why it is as important as ever for you to protect against these costs.

Tax Enquiry Fee Protection Insurance schemes, like the one operated by WNJ, can give people piece of mind and help protect them.

For a small yearly cost, professional fees for defending clients in tax enquiries can be claimed under this insurance policy.

Clients in the scheme are also able to obtain helpful advice about the complex areas of Health and Safety and Employment Law, with access to a team of qualified solicitors and barristers.

We can’t take away the stress and anxiety of being under investigation. But we can remove the cost and work to achieve the best outcome.

If you would like to discuss any aspect of this article, want more information about protection from HMRC investigation, or have any tax queries or concerns please contact me on 01772 430000