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US tax filing requirements for Americans living abroad

07 September 2021 • US Tax returns

Americans living and working in the UK, under the complex citizenship-based US tax system, must file income taxreturns as well as report their foreign bank accounts.  US-tax-720.jpg

September is now upon us so the six-month extended filing deadline is fast approaching.  “Ideally anyone liable to pay tax in America should start the process early,” notes Damian Talbot, himself a qualified Enrolled Agent and head of the US specialist tax team at Fulham based, Warrener Stewart. 

Many overseas US tax filers are unable to file their income tax returns prior to the April and June deadlines due to added complexities to their returns.  The IRS recognise this and allow individuals to apply for an extension by 15 June each year to extend their deadline to file to 15 October.  

Warrener Stewart now has facilities that allow most clients to be eligible for E Filing, thereby avoiding posting the returns. The IRS currently has a backlog in dealing with postal returns - estimated to be over 35 million returns! 

“We can process and sign IRS returns from our offices in Fulham,” confirms Damian. “We not only employ qualified Enrolled Agents, but also a CPA.  This allows us to handle all types of complexities that arise on behalf of clients.” 

“The most important consideration for anyone with a US tax liability is to seek help from a qualified dual tax advisor - leaving or ignoring deadlines has implications. At Warrener Stewart, as both UK and US tax advisors, we can assist both individuals and companies in remaining compliant.” 

With the 15 October deadline fast approaching it is strongly advised that US tax filers get in touch as soon as possible to allow adequate time to gather the required information and prepare the required filings.  

Warrener Stewart client wins a prestigious Queens Award for Enterprise

22 June 2021 •

Each year a select few British companies are awarded the Queen’s Awards for Enterprise for outstanding achievement by UK business. The scheme, established in 1966, has four distinct categories that companies compete for awards in; innovation, international trade, sustainable development and promoting opportunity through social mobility.

The awards normally coincide with Her Majesty the Queen’s official birthday on 21 April. However this year as the royal family was in a two-week period of official mourning following the death of Prince Philip, Duke of Edinburgh, the announcement was delayed until 29 April.

Amongst the winners for the South East was one of Warrener Stewart’s long standing clients, Percussion Play. They were awarded the Queens Award for International Trade for Outstanding Short Term Growth in overseas sales over three years. This innovative company designs and creates outdoor musical instruments for sensory gardens and community projects.

Commenting on the award win, Percussion Play founder and Managing Director, Jody Ashfield, said: “We feel extremely honoured to win a Queen’s Award and delighted to receive such recognition of our business growth and success. We are very proud to know our outdoor musical instruments, manufactured here in Hampshire, are being enjoyed by communities across the globe. We’ve shipped our instruments to be played in so many different locations, from busy city parks and playgrounds to locations where they are used for music therapy, dementia care, music education and to create interactive community spaces designed to bring people together. On behalf of our amazing team, we will enjoy this moment and continue to work hard to bring a little harmony to the world.”

Part of the entry requirements for the prestigious award include certified evidence of Percussion Play’s sales, turnover and profit. They asked their Fulham Chartered Accountants, Warrener Stewart, to complete an Agreed-upon procedure (AUP) to verify the figures submitted.

Director Jon Last, who has advised Percussion Play for the past ten years, is delighted the company’s hard work has been acknowledged: “Percussion Play founders and directors, Robin and Jody Ashfield and the whole the team have worked tirelessly to create amazing spaces all over the world. This is an extremely prestigious award with such global brand recognition and is well deserved recognition for them.”

Three new recruits join Warrener Stewart

28 May 2021 • Warrener Stewart News

If there is one defining word for how the last fourteen months have gone then it’s resilience.  Faced with incredibly challenging circumstances our lives and working methods have adapted, whilst our economy has recently proved resilient too. The ONS reported only a 1.5% decrease in GDP for the most recent Quarter 1 (Jan to Mar 2021).

Chartered accountants in Fulham, like Warrener Stewart, have continued to provide actionable business intelligence and support helping both existing and new clients navigate their way through the pandemic. At Warrener Stewart the head of their audit department, Gary Chapman notes, “Over the past twelve months we have actually seen an increase in demand for our statutory audit services. Throughout the pandemic businesses have still had to adhere to hard deadlines - having a statutory audit and filing audited accounts at Companies House is one such requirement.”

To cope with the increased demand for statutory audit Warrener Stewart recently welcomed Josh Taylor (pictured above) to the firm as an audit and accounts assistant. Josh joins from BDO, where for the past four years his has he worked within their consumer markets division, assisting with the audit of businesses involved in retail, hospitality and sports.

Josh, who is halfway through his Chartered Accountancy (ACA) exams, wanted to move to a smaller practice where he would be a more integral part of the team, working more closely with clients.

“I’ve really enjoyed working with everyone at Warrener Stewart even though we have not had much time in the office together,” comments Josh. “I am especially looking forward to getting more involved, and physically meeting with, the firm’s clients over the coming months and years!”

The specialist US tax team at Warrener Stewart has also seen a high demand for their US tax services over the past twelve months – this has led to two more tax specialists joining the busy team.

Robyn Davis (pictured above) is both a US Enrolled Agent and an ATT qualified UK tax assistant. As a dual tax agent, she can advise and work across both tax systems.

Following a degree in sociology at Goldsmiths Robyn went travelling before starting work on the technical team at Frank Hirth. From there she trained to become an Enrolled Agent (EA) and worked assisting US citizens and expats working in the UK with their personal tax returns.

Robyn joined Warrener Stewart to work more closely with a range of clients and gain more experience in different areas of tax. Since joining Warrener Stewart, she has predominately worked with many ‘accidental Americans’ helping them with delinquent filing.

“Often it’s only when people open a bank account, or something where they need to state their place of birth or citizenship that they realise they should have been filing a US tax return,” says Robyn.

Like Josh, Robyn joined Warrner Stewart during lockdown back in December 2020 so has mainly been working from home, only going into the Fulham office once a week, so likewise is keen to meet the rest of her colleagues!

The final addition to the firm is Darren Arnold  (pictured above) – who also joined Warrener Stewart from Frank Hirth. Darren has spent the past eleven years progressing his career working most recently as a client service assistant, helping to prepare US tax returns.

Darren wants to become an Enrolled Agent so leapt at the chance to undertake the studying and exams required whilst working in Warrener Stewart’s US tax department. Since joining in December 2020, Darren has been helping prepare US tax returns for delinquent filers.

“I enjoy working with people and helping them. It is really gratifying to hear the relief in their voices when they realise that we can assist them with their US tax filing requirements,” confirmed Darren.

You’ve survived the pandemic – now’s the time to update your business plan

11 May 2021 •

Life and businesses have gone through a rollercoaster in the past 13 months, as we slowly start to come out of this third lockdown, Fulham based chartered accountants, Warrener Stewart takes a look at what comes next. 

“Businesses have gone through some remarkable and challenging times in the last year,” recalls audit manager James Shepherd. “Some have been forced to close due to imposed lockdowns, whilst others have faced changes brought about through Brexit while having to embrace working from home. 

As chartered accountants it is our mission to help clients make better informed business decisions with greater confidence. It is going to be important for businesses to remain resilient – whilst the Bank of England's chief economist " believes there is pent-up financial energy" waiting to be unleashed, small to medium sized businesses will still need to plan. Some business owners may find their old business model needs to be adapted – that’s where we can help ensure that a business fulfils its potential and the owner reaches their personal goals.” 

Adapting your business model 

Over the coming months as the world transitions back to workplace-based life many companies will be forced to adapt. The most obvious change will be our home versus office life with many companies adopting new hybrid working practices giving greater flexibility to work from home for part of the week.  

“Going forward for companies with a hybrid working from home model there may be economies of scale to be made,“ notes James. “For example, consider how much space your business will need. Many others are in the same situation - are you able to make savings by reducing office space or even sub-let part of your building?” 

Review business overheads 

Several businesses reported they saved money in 2020 – largely on ancillary costs such as entertainment, travel, heating and even stationery. Now is the time, James advises to look at your business overheads and examine what other savings could be made.  

“Carrying out a cost cutting exercise is a simple way for a business to manage its finances,” James acknowledges. “Our highly experienced staff can help identify where and how a business can save by reviewing what are realistic costs. Sometimes it can be simple changes like renegotiating with a supplier – especially if your business model may have altered.” 

Embrace technology 

If there is one overriding takeaway from the pandemic it’s technology. Both our personal and business lives were lived over it, through and because of it! Cloud accounting software like Xero and Quickbooks even helped companies continue with tasks such as invoicing and filing business taxes whilst in different locations. Plus, accounting packages are a perfect and safe way to share information with your own accountant. 

“One of the latest developments to some packages includes using AI to populate invoices directly to the purchase ledger,” confirms James. “This way electronic copies of invoices can easily be uploaded and stored centrally. When it’s time to prepare VAT returns having access to the original invoice will help us since we no longer have to wade through paper copies to check the information we submit for VAT returns is correct. Also, it also gives us a current snapshot of the company’s outgoings.” 

As life and businesses start to bounce back Warrener Stewart is preparing to ensure its clients’ businesses get all the advice and support they need to make. If you would like more information about how your business could fulfil its potential then call 020 7731 6163. 

Spring 2021 Budget Highlights

08 March 2021 •

Here is a review of the headline announcements together with a reminder of the measures coming into force immediately, from 6 April 2021 and beyond.

Measures introduced immediately

Temporary Stamp Duty Land Tax (SDLT) cut

The temporary increase in the residential SDLT nil rate band in England and Northern Ireland to £500,000 has been extended until 30 June 2021. The nil rate band will reduce to £250,000 between 1 July 2021 and 30 September 2021 before reverting to £125,000 on 1 October 2021.

Coronavirus Job Retention Scheme (CJRS)

The furlough scheme will be extended until the end of September 2021. Employees will continue to receive 80% of their current salary for hours not worked up to a maximum of £2,500 per month and employer contributions are not required (except for NIC and pension contributions) until June 2021. From July, employers will be required to contribute 10% toward the cost of unworked hours and will increase to 20% in August.

Self-Employment Income Support Scheme (SEISS)

The government announced that the fourth SEISS grant covering February to April will be set at 80% of three months’ average trading profits capped at £7,500. This will be based on the tax return for 2019/20. The fourth grant will be paid in a single instalment and claims can be made from late April. The amount of the fifth and final grant covering May to September will be based on how much turnover reduced in 2020/21. If turnover falls by 30% or more the grant will be 80% of three months’ average trading profits capped at £7,500. If turnover falls by less than 30% the grant will be 30% of three months’ average trading profits capped at £2,850. The fifth grant can be claimed from late July.

Restart Grants

Non-essential retail businesses will be entitled a grant of up to £6,000 per premises and hospitality, accommodation, leisure, personal care and gym business will be entitled to a grant of up to £18,000 per premises.

Business Rates

The government announced that eligible retail, hospitality and leisure properties in England will continue to receive 100% business rates relief until 30 June 2021. The period to 31 March 2022 will see a 66% discount, up to a maximum of £2 million per business, for properties that were required to be closed on 5 January 2021 or £105,000 per business for other eligible properties.

Annual Investment Allowance

This measure will temporarily increase the limit of the Annual Investment allowance (AIA) from £200,000 to £1,000,000 for qualifying expenditure on plant and machinery incurred during the period 1 January 2021 to 31 December 2021.

Temporary VAT reduction for the tourism and hospitality sectors

The temporary reduced 5% rate of VAT for goods and services supplied by the tourism and hospitality sectors has been extended to 30 September 2021. The rate will rise to 12.5% between 1 October 2021 and 31 March 2022 before returning to 20% from 1 April 2022.  

Measures introduced from April 2021

Extended carry back of trading losses

The government will temporarily extend the period for which businesses can carry back trading losses from one to three years. This measure will have effect for company accounting periods ending in the period 1 April 2020 to 31 March 2022 and for tax years 2020/21 and 2021/22 for unincorporated businesses.

Super-deduction for plant and machinery

Additional relief will be available for qualifying expenditure incurred by companies between 1 April 2021 and 31 March 2023. Investments in new main rate assets will qualify for a 130% super deduction whereas investments in new special rate assets will benefit from a 50% first year allowance.

Off-payroll working (IR35)

Changes to the off-payroll rules were due to come into force on 6 April 2020 but this was delayed owing to the coronavirus pandemic. From 6 April 2021 all public sector authorities and medium and large private sector clients will be responsible for deciding if the rules apply and ultimately determining the worker’s employment status.

Inheritance tax nil-rate and residence nil-rate bands

The inheritance nil-rate bands will remain at existing levels until 5 April 2026.

Personal Allowance and basic rate limit

The personal allowance and basic rate limit will increase in line with inflation from 6 April 2021 to £12,570 and £37,700, respectively, but both will be frozen at this level until 5 April 2026.

Standard Lifetime Allowance

The standard lifetime allowance for pensions will be maintained at its current level of £1,073,100 for the tax years 2021/22 to 2025/26.

Taxation of SEISS grants

Future payments from the SEISS are to be taxed as income for the tax year in which they are received. Under the current legislation, a payment from the SEISS is taxed as income for the tax year 2020/21.

Measures introduced from April 2022 

VAT Thresholds

The current VAT registration and deregistration thresholds will remain unchanged for a period of two years from 1 April 2022 at £85,000 and £83,000, respectively.

Annual Exemption for Capital Gains Tax

The Capital Gains Tax annual exempt amount will be maintained at its current amount of £12,300 for individuals and personal representatives and £6,150 for most trustees of settlements between 2021/22 and 2025/26.

In the future

Corporation Tax

The rate of corporation tax will increase to 25% on profits over £250,000 from 1 April 2023. Companies with profits under £50,000 will continue to be taxed at 19%. Taper relief will be available for companies with profits between £50,000 and £250,000.

R&D Schemes

The government will consult to ensure that the UK remains a competitive environment for innovative research. This will include a decision on bringing data and cloud computing expenditure within the scope of the relief.

Interest harmonisation and penalties for late submission and late payment

The penalty regime for VAT and Income Tax Self Assessment (ITSA) will be reformed to target persistent non-compliance while being more lenient on occasional slip-ups. The reforms will come into force for VAT taxpayers from periods starting on or after 1 April 2022. The new regime will take effect for ITSA taxpayers who are required to submit quarterly updates though Making Tax Digital from accounting periods beginning on or after 6 April 2023. The new rules will apply to other ITSA taxpayers from accounting periods beginning on or after 6 April 2024.

Domestic reverse charge for the construction industry

25 February 2021 • HMRC News

If you buy or sell services in the Construction Industry Scheme the way VAT is collected from invoices, is changing from 1 March 2021.

The new domestic 'reverse charge' is an anti-fraud measure that shifts the liability for accounting for output VAT from the supplier (the “Intermediary Supplier”) to the customer (the “End-user). For those working in the construction industry this will now apply to invoices that would normally fall within the scope of CIS.

Who pays the VAT?

In effect intermediary suppliers receiving a service will pay VAT directly to HMRC instead of paying the supplier.

For VAT registered companies paying to receive building or construction services under the new domestic VAT reverse charge their ‘customer’ or ‘end user’ now accounts for the VAT.

Essentially it means a customer will receive an invoice from a supplier net of VAT, however the VAT is still liable to be paid directly to HMRC and not the supplier. The new regulations do not affect the ‘end user’ so normal VAT rules will continue to apply, this is your obligation.

Written Notification 

To ensure all intermediary suppliers understand their status businesses and what supplies are covered needs to be outlined in written documentation. This can be obtained in writing, either via a contract, an email or letter.

Applying the changes

As the new legislation comes into force from 1st March 2021 any projects that include construction services will now be subject to the VAT reverse charge. Below is handy flow chart outlining the process. 
If you would like to discuss how this affects your business we would be happy to discuss this further with you, or you can visit https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services.

For more information, contact us on 020 7731 6163 or email info@warrenerstewart.com.

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“For the past 20 years Warrener Stewart has consistently given good advice... going above and beyond their remit.”
Theo Brehony - London Preparatory School Limited