Understanding the Recent Companies House Fee Increase.


Company House has announced a major cost hike on various services, which will be applied from May 1st, 2024. This major fee hike for the UK company filing will impact various services, including forming a new company and filing annual confirmation statements. These fee changes are primarily made to mitigate financial crimes and fund investigative capabilities. In this blog, you will get a comprehensive view of all the fee changes and the importance of iXBRL filing. 

What Does the Fee Change Involve?

All the Company House services are affected by the fee increase. The majorly impacted services are mentioned below:

  • Registration and Incorporation of Companies: With more than 400% increase, the fee for incorporating a new business will change from £12 to £50.
  • Confirmation Statements: The cost of annual confirmation statements, which are an essential compliance requirement, will increase from £13 to £34.
  • Name Changes: Previously, the fee was £8, but changing the name of your business will now cost £20 for online filings.
  • Voluntary Strike-off: The previous £8 cost has increased to a £33 fee when a firm dissolves voluntarily.

 Additional Reasons:

  • Long-Term Benefits: Companies House may see long-term advantages due to the fee rise, including improved productivity, quicker processing times, and an easier-to-use online filing system.
  • Government Funding: The fee increase will minimise the government funding that will eventually free up some funds for other crucial projects.

 

Companies House Fee Increase Summary (Effective May 1st, 2024)

Service

Old Fee

New Fee

Company Incorporation & Registration

   

Incorporation (Digital)

£12

£50

Incorporation (Same Day)

£30

£78

Incorporation (Software)

£50

Incorporation (Paper)

£71

 

Service

Old Fee

New Fee

Registration under s1040 (Part 33 Chapter 1) CA06 (Paper)

£71

Re-registration of a company (Paper)

£71

 

Service

Old Fee

New Fee

Confirmation Statement

   

Confirmation Statement (Digital)

£13

£34

Confirmation Statement (Software)

£34

Confirmation Statement (Paper)

£62

 

Service

Old Fee

New Fee

Change of Name

   

Change of Name (Paper)

£8

£30

Change of Name (Same Day)

£30

£83

Change of Name (Digital)

£20

 

Service

Old Fee

New Fee

Registration of a Charge

   

Registration of a Charge (Paper)

£24

£15

Registration of a Charge (Digital)

£15

 

Service

Old Fee

New Fee

Voluntary Strike-off

   

Voluntary Strike-off (Paper)

£8

£44

Voluntary Strike-off (Digital)

£33

 

Service

Old Fee

New Fee

Reduction of Share Capital

   

Reduction of Share Capital (Same Day) (Digital)

£136

Reduction of Share Capital (Paper)

£33

Reduction of Share Capital (Digital)

£33

 

Service

Old Fee

New Fee

Administrative Restoration (Paper)

£468

Application to Make Address Unavailable (Paper)

   

 

Service

Old Fee

New Fee

Limited Liability Partnerships (LLPs)

   

Registration of LLP (Digital)

£35

£50

Registration of LLP (Same Day)

£78

Registration of LLP (Paper)

£71

LLP Confirmation Statement (Paper)

£62

LLP Confirmation Statement (Digital)

£34

LLP Change of Name (Paper)

£8

£30

LLP Change of Name (Same Day)

£30

£83

LLP Change of Name (Digital)

£20

Registration of a Charge by an LLP (Paper)

£24

£15

Registration of a Charge by an LLP (Digital)

£15

LLP Voluntary Strike-off (Paper)

£8

£44

LLP Voluntary Strike-off (Digital)

£33

Administrative Restoration of an LLP (Paper)

£468

Application to Make Address Unavailable (Paper)

£30

 

Service

Old Fee

New Fee

Overseas Companies

   

Registration (Paper)

£71

Change of Name (Paper)

£8

£30

Registration of Annual Accounts (Paper)

£62

 

Service

Old Fee

New Fee

Limited Partnerships & Scottish Qualifying Partnerships

   

Registration (Paper)

£71

Annual Fee (Paper)

£62

Annual Fee (Digital)

£62

 

Service

Old Fee

New Fee

UK Economic Interest Groupings (EEIG) & UK Societas

   

Registration of an EEIG Establishment (Paper)

£71

Registration of Change of Name (Paper)

£8

£30

Registration of a Charge (Paper)

£24

£24

Registration of Public Company (Paper)

£71

 

Service

Old Fee

New Fee

Overseas Entities

   

Registration (Digital)

£234

Update Fee (Digital)

£234

Application for Removal (Digital)

£706

 

Reasons to Consider the iXBRL Format

Inline Extensible Business Reporting Language, or iXBRL, is a mandated format for filing financial statements. iXBRL filing is more necessary than ever as it offers effortless data extraction and analysis. From streamlined processes to minimised errors and quicker processing times, the entire filing procedure is accelerated with iXBRL. It will prove to be a strategic approach for the business to outsource iXBRL conversions to a proficient company and enjoy increased productivity.     

 

How DataTracks Will Be Your Partner?

When it comes to financial reporting solutions, DataTracks is the leading assistance to navigate Company House’s recent adjustment in filing. We will ensure that your financial statements are filed accurately and effectively, complying with the recent laws. With our iXBRL tagging process, you can save a significant amount of time and money as we have the most intuitive software on the market. Connect with DataTracks to discuss your iXBRL requirements today.

 



Finance

Digital Company Account Filing: Simplified


 

The UK businesses filing their annual accounts to Companies House are undergoing a significant transformation. Moving towards complete digitalisation, Companies House will mandate a full software-only filing approach. This article will underline the key aspects of this transition and how it will benefit UK companies in the coming years.

 

What Happens In The Software-Only Filing?

The software-only filing format will make the process seamless for companies by eliminating the option for web-based or manual filing options. All companies must use dedicated software to create and submit their annual accounts in a standardised format. This change will apply to companies filing accounts independently or seeking assistance from third-party agencies for the annual filing process.

According to reports, this change will be applied in phases over 2-3 years. A detailed timeline will be released to announce the implementation of the modification. While the date for the software-only filing is yet to be confirmed, many companies are already embracing the change and applying it across their accounts.

It is significant to mention that the software solutions will address various accounting needs. This will not only allow them to file electronically but also minimise the efforts incurred in the filing process. It also addresses the current complexities involved in paper filing. Companies House has also been collaborating with many accounting software providers to develop customised solutions for different scenarios, providing a smooth transition.

 

Why Does This Change Matters To UK Companies?

The radical shift to software-only filing is a step towards seamless and centralised financial reporting. There are plenty of reasons why this change is requisite for UK businesses; a few are mentioned below:

● Maximised Security: Software-only filing will make the process seamless by saving businesses time and effort. Compared to manual submissions, it will also strengthen data security.

● Better Data Quality: A standardised format for annual filing will increase the accuracy of business data. Automated checks will ensure that data submitted by businesses is error-free, leading to reliability.

● Sustainability and Cost-Effectiveness: Software-only filing will eliminate the need for printing and physical storage, making the entire filing process cost-effective and sustainable for businesses in the UK.

● Enhanced Transparency and Traceability: It will become much easier for businesses to showcase transparency in their accounts. The electronic submission will foster traceable audits for all the financial accounts, bringing accountability to the business data.

 

What Edges Will The Change Bring?

UK businesses are looking forward to the positive changes the software-only filing approach will bring. Companies can indeed enjoy several advantages from this transaction. The following are some evident benefits:

● Simplified Compliance : Generally, these accounting software come with built-in compliance features, making it much easier to file compliant reports. This will ensure proper adherence to all the latest reporting regulations by Companies House and HMRC.

● Minimised Errors : The automated data feature minimises errors. The data validation function further helps reduce the errors generally encountered in manual filing.

● Better Collaboration : With manual filing, there is a limit to collaborating with different departments. However, software-only filing will provide seamless collaboration with various teams for accurate and up-to-date data filing.

● Enhanced Accessibility: Accounting software’s user-friendly interface makes every feature and data accessible to everyone on the team.

 

Why iXBRL Matters More Than Ever?

Inline Xtensible Business Reporting Language, or iXBRL, will be pivotal in the software-only filing process. As a widely accepted filing format, businesses must ensure that software generates data in this format. With iXBRL, embedding data tags will become more effortless than ever. This will allow Companies House to allow automated analysis.

Companies accustomed to manual filing may encounter some complexities. Hence, switching to the iXBRL format is advised to blend in with the software-only filing. The benefits of iXBRL outweigh the challenges, and businesses of all sizes should adopt to file accounts in digital format while the transition happens.

 

How Will DataTracks Help?

DataTracks, as a leading provider of regulatory reporting solutions, facilitates businesses with seamless iXBRL accounts preperation enabling smooth company tax retun filing with HMRC.

Our services range from company accounts tagging, tax computation tagging to CT600 filing, so you never have to switch between agencies. Additionally, DataTracks supports iXBRL tagging for Companies House for an easy transition to software-only filing.

Get in touch with our experts today to convert your company accounts into iXBRL reports for smooth filing with Companies House and HMRC.

 



Finance

Explore New UK Company Law on Office Addresses


The Economic Crime and Corporate Transparency Act is all set to transform the UK’s business landscape and enhance transparency. The act introduces changes to alleviate economic crime and establish trust. The most significant transitions made through the act are changes in registered office addresses. This article will further discuss these changes and explain their importance for UK businesses.

 

What are These Changes?

Maintaining a proper registered office address is essential. It serves as the official point of contact for Companies House and HMRC and establishes the legitimacy of the business.

Additionally, this address delivers all critical documents, such as legal notices, tax information, shareholder communications, etc. Any discrepancy in the address may lead to delayed responses, miscommunications, and legal consequences.  

Moreover, having an appropriate physical address helps build trust among the stakeholders. It also clearly denotes a commitment to complying with the regulations.

 

New Rules For Registered Office Addresses

The ECCT Act 2023 has introduced crucial changes in registered office addresses. According to these rules, the addresses must fulfil the following legal requirements:

 

  1. Same Jurisdiction as the Company: Under UK company law, the registered office address must be in the same area as where the company is registered. This address is not just a logistical detail. It signifies the legal rules that apply to the company.
  1. Physical Address Mandatory: Earlier, PO boxes were sufficient for address purposes. The change mandates that any company with a registered office address should have a physical location in the UK region. This is primarily designed to ensure the appropriate delivery of documents to the concerned people.
  1. Ease of Change When in the Same Jurisdiction: You can change the address to another one within the same UK region at any time while your business is operational. To update the address with Companies House, submit form AD01 or use your WebFiling account. If the new address meets the guidelines, the change will be approved. The public record will be updated within 24 hours.
  1. Publicly Available Through Companies House: The registered office address in the UK is publicly available through the Companies House Search Service. Therefore, using a home address is not always advised if you want to maintain privacy and security.
  1. Residential Property as Registered Office Address: If privacy and security are not an issue, you can use your home address. However, if the property is not yours, you will need the landlord’s permission to receive mail. Other addresses that can be used include:
  • Virtual office address
  • A company formation agent’s address
  • A secretarial service provider’s address
  • The solicitor’s address
  • The commercial property where the business is located
  • Any residential or non-residential address you are allowed to use
  1. Communication and Accessibility: It is made clear that the address should be a place where the post is received by someone acting on behalf of the company. This enables seamless communication and reduces missed notifications. Businesses that fail to adhere to this requirement can be removed from the register.

 

Registered Addresses Required During Company Formation

Besides the registered company address, businesses are also required to provide the following addresses at the time of company formation:

  1. SAIL Address (Single Alternative Inspection Location): This is an optional address where a company keeps its statutory registers.
  2. Director Service Address: Each director must provide this address to receive mail related to their role as a company director.
  3. Trading or Business Address: This is used for business mail from suppliers, clients, and banks.
  4. Residential Address: Company officers must provide their home addresses, which are not available to the public.

 

 

Looking for converting your company accounts into iXBRL reports?

Seamlessly tag the financial statements into iXBRL reports for submission with Companies House and HMRC. Contact our experts today and get started!



Finance

How to Set Up a Limited Liability Partnership in the UK: A Comprehensive Guide


 

Starting a Limited Liability Partnership (LLP) in the UK provides business owners with a blend of flexibility and protection. An LLP enables two or more members, whether individuals or companies, to run a business while minimising personal liability for business debts. Members share profits and tax liabilities similarly to a traditional partnership. 

If you want to set up an LLP that aligns with your business objectives, make sure to check out the legal requirements beforehand. This is because it differs from other business structures like ordinary partnerships or private limited companies. 

The following blog offers a step-by-step guide for setting up an LLP. Continue reading to find out. 

Step 1: Choose a Name

Choosing the right name for a limited liability partnership requires some careful consideration: 

  • The LLP’s name should end with ‘Limited Liability Partnership’ or ‘LLP’. 
  • It should not be too similar to other existing business names. For instance, if the name ‘Bakers LLP’ is already taken, registering ‘Baker’s LLP’ would be too close.
  • The name should not include offensive language. Furthermore, unless you have the relevant authorisation, your LLP name should not suggest a connection with the government. For example, to include a term like ‘Accredited’ in your name, you would need approval from the relevant authorities.
  • You can do business under a different name from your registered LLP name. However, this business name should not include terms like ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’. Moreover, it should not be the same as an already existing trade mark. 
  • All official documents, such as invoices and letters, should display your registered LLP name and list all partners’ names.

Step 2: Get a Registered Office Address and Email Address 

When forming an LLP in the UK, you must give a valid registered office address and an email address. The physical address must be in the UK and within the same country where your LLP is registered. The address should be one where any documents submitted to the LLP are typically observed and handled by someone representing the LLP. It should also be a location where document deliveries can be officially recorded and evidence of receipt issued. 

Please Note: Companies cannot use a PO Box as the registered office address. 

Step 3: Register the Limited Liability Partnership 

There are two alternatives to registering your Limited Liability Partnership (LLP): registering yourself or hiring a formation agent to handle the procedure. After registration, you will receive a certificate of incorporation from Companies House.

  • Third-party software can be used for digital registration, which generally allows for faster processing. 
  • Alternatively, you can register by post by completing the required application forms. This approach often takes longer to process than digital submissions.

Step 4: Establish Members’ Responsibilities 

An LLP in the UK requires at least two designated members in addition to other ordinary members. It is important to draft an LLP agreement that specifies how the LLP will work, such as profit sharing, decision-making processes, member roles, and guidelines for joining or leaving the organisation.

All members must perform the tasks stipulated in the LLP agreement and register for self-assessment with HMRC. Designated members have additional responsibilities, such as: 

  • Registering the partnership for VAT if the annual sales exceed £90,000
  • Appointing an auditor
  • Keeping accounting records
  • Ensuring that all necessary documents, such as annual accounts and confirmation statements, are submitted to Companies House
  • Notifying Companies House of changes to the company’s name or address
  • Acting on behalf of the LLP during the dissolution

Step 5: Report Changes to the LLP 

You must notify Companies House of any changes to your LLP, such as updates to the registered or alternative address, the LLP’s name, or member details. This can be accomplished through their web service, which is useful for registering changes and notifying which records are stored at a different address. 

Alternatively, you can use paper forms to change the registration address of the LLP, where you maintain your records, or to update the information of members. 

Bottom Line 

Setting up an LLP in the UK involves a number of important steps, ranging from selecting a unique name to informing Companies House of any changes. By carefully following these guidelines, you may ensure that your LLP runs efficiently and complies with legal requirements.

Once your business is up and running, the professionals at DataTracks can help you prepare error-free iXBRL reports for HMRC filing. You can contact our experts at [email protected] or +44 (20) 3608 8035.



Finance

Mastering the UK Company Tax Return: An In-Depth Guide


 

Filing a corporation tax return in the UK is critical for businesses to maintain compliance with legal obligations and avoid penalties. A company tax return (including form CT600 and other supporting documents) is a report that companies must submit to HMRC to declare their income, expenses, and taxes.

The following blog offers a detailed guide on how to complete a CT600 company tax return form for corporation tax. Keep reading to find out.

 

Company Information

Before completing the CT600 return form, it is important to fill out some basic company information, which includes the following:

  • Registered name of the company
  • Company registration number at Companies House
  • Unique taxpayer reference
  • Type of company: Enter the number that corresponds to your company (enter 0 if none of these types apply):
  1. Unit trust or open-ended investment company
  2. Close-investment holding company
  3. Company in the second or later year of liquidation
  4. Qualifying asset holding company
  5. Insurance
  6. Members’ club or voluntary association
  7. Property management company
  8. Charity or owned by a charity
  9. Real estate investment trust C: residual company
  10. Real estate investment trust C: tax-exempt company

 

About the CT600 Return Form

The CT600 form includes sections for income, expenses, and tax calculations. Individuals should ensure that all parts of this form are filled out. Enter the following information in these parts as follows:

  1. The beginning date of the period return (box 30) and end date (box 35). This period cannot begin before 1st April 2015.
  2. X if a repayment is due for this period (40). Entering bank or building society details in boxes 920 to 940 can speed up this process.
  3. X if a claim is made to reduce corporation tax liability for an earlier period (45).
  4. X if more than one return for a company is made at the same time (50).
  5. X if estimated figures are used in the returns (55).
  6. X if the company is a part of a group that is not small (60).
  7. X if the company needs to disclose the use of avoidance schemes or has been notified by an HMRC-monitored promoter (65).
  8. X if the company needs to adjust its profits or losses due to a transfer pricing adjustment for a UK-to-UK transaction with a connected business. The other business can make a compensating adjustment to align its profits and losses (70).
  9. X to confirm that your business is a small or medium-sized enterprise that is eligible for exemption from transfer pricing rules (75).
  10. X to indicate the submission of accounts for the period of the return (80) or to indicate a different period (85). If you are not submitting the accounts and iXBRL computations, explain the reasons in box 90.
  11. The total trading turnover from any source (145).
  12. X if the company is a bank, building society, insurance company, or other financial concern with no recognised turnover figure (150).
  13. The total of all trading profits in box 155 and the total of all losses in box 780 or 790.
  14. Unrelieved trading losses for earlier periods set against trade profits in box 155 (160).
  15. The company’s non-trading profits with respect to its loan relationships (170). The non-trading deficit from the loan deficit for the period is entered in box 795. Enter X in box 172 if the amount in box 170 includes carrying back a deficit from a later accounting period.
  16. The amount of annual payments not subject to Corporation Tax and from which Income Tax has not been deducted (175).
  17. The non-exempt dividends or distributions of a non-UK resident company (180).
  18. The gross amount before tax, excluding the amount in box 170 (185). A non-UK resident company landlord with tax withheld under the Non-residents Landlord Scheme should enter income in box 190 and tax withheld in box 515.
  19. Income from a property business (190).
  20. The non-trading gains on intangible fixed assets (195). A non-trading loss in boxes 265, 830, and 835.
  21. The tonnage tax profits from box F70 from supplementary page CT600F (200).
  22. Profits or gains not included under any other heading (205).
  23. The total gains in the period (210). Enter allowable losses for the period in box 825.
  24. Allowable losses, including losses brought forward (215). Make an entry only if you entered a figure in box 210.
  25. Amount of losses brought forward against certain investment income (225).
  26. Deficit carried forward from previous periods and offset against the non-trading profits of this period (230).
  27. Amount of loss on unquoted shares (240).
  28. Management expenses (245).
  29. Losses of a UK property business for the current or previous accounting period (250).
  30. Capital allowances for business management (255).
  31. Deficit of non-trading loan relationship against the profits of the same accounting period (260).
  32. Non-trade deficits from loan relationships carried forward against the profits of this accounting period (263).
  33. Trading losses of the current or a later accounting period (275).
  34. X if amounts carried back from later periods are included in box 275 (280).
  35. Total trading losses carried forward and settled against trading losses (285).
  36. Non-trade capital allowances (290).
  37. Qualifying donations to charities and community amateur sports clubs (305).
  38. Group relief claim (310).
  39. Group relief for carried forward losses (312).
  40. Amount of taxable total profits (315).
  41. Number of associated companies (326,327,328).
  42. X if the company is entitled to a small profit rate or marginal relief (329).
  43. Tax calculation (330 to 440).
  44. Community investment relief (445).
  45. Double taxation relief claimed against corporation tax (450).
  46. X in box 455 if box 450 includes an underlying rate relief claim.
  47. X in box 460 if box 450 includes the amount carried back from a later period.
  48. Advance corporation tax (465).
  49. Energy levies (986 and 987).
  50. Calculation of tax outstanding or overpaid (475 to 528).
  51. Research and developmental credit that was given in box L20 on the supplementary page CT600L Research and Development (530).
  52. Total of creatives tax credits (540).
  53. Land remediation tax credit (550).
  54. Life assurance company tax credit (555).
  55. Amount of first-year tax credit (565).
  56. Tax already paid and not repaid by HMRC (595).
  57. Group tax refunds surrendered to your company by another group company (610).
  58. Research and Development expenditure credits surrendered to your company by another group company (615).
  59. Optional exporter information (616 to 618).
  60. Exempt ABGH distributions that the company has received (620).
  61. Total number of companies in a 51% group, including your company (625).
  62. X if the company was a large company for quarterly instalments (630).
  63. X if the company was a very large company for quarterly instalments (631).
  64. X if the company is a part of the Group Payment Arrangement (635).
  65. X if the company has written down or sold intangible assets (640).
  66. X if the company has made cross-border royalty payments (645).
  67. Research and Development or creatives enhanced expenditure and tax reliefs (650 to 680).
  68. Land remediation enhanced expenditure (685).
  69. Capital allowances and balancing charges or disposal values (688 to 727).
  70. Allowances and charges are not included in trading profits and losses (733 to 752).
  71. Total expenditure on machinery and plant on which first-year allowance is claimed (760).
  72. Qualifying expenditure (760 to 775).
  73. Losses, deficits, and excess amounts (785 to 855).
  74. Complete box 860 if you do not want HMRC to make repayments less than a fixed amount.
  75. Complete boxes 900 to 915 if you want to surrender a tax refund to another group company.
  76. Repayment for the period covered by this return (865 to 895).

 

Bank Details

The quickest and safest option to receive a repayment is by a direct transfer from HMRC to your designated bank or Building Society account. If you are submitting numerous returns at the same time, make sure to include the account information on each.

  1. Name of the bank or building society of the person to be repaid (920).
  2. The 6-digit branch sort code of the person (925).
  3. Account number (930).
  4. Name of the account (935).
  5. Building society reference, if applicable (940).

Enter details in boxes 945 to 970 to nominate someone other than the company to receive a non-R&D credit repayment.

 

Declaration

Every return must include a declaration:

  1. Name of the person making the declaration (975).
  2. The date on which the declaration is made (980).
  3. Status of the person making the declaration (985).

 

 

“Looking for assistance to file your company tax return (CT600)?

 

Our experts can help you to tag the financial statements and tax computations and file them along with the company tax (CT600) with HMRC. Enquire now!



Finance

Operational Transfer Pricing: Principles and Best Practices


The first comprehensive restrictions were introduced by US tax authorities in the 1960s, marking the beginning of transfer pricing. Still, there has been a dramatic change in the terrain. The current complexity of transfer pricing is largely a result of increased competitiveness in the global arena, changing company models, and mounting pressure on corporation tax rates. Ensuring accurate transfer pricing is crucial in today’s globalised market with intricate supply chains.

Operational Transfer Pricing (OTP): What is it?

OTP is the process of correctly integrating transfer pricing policies into the daily financial and accounting processes of a multinational enterprise group. The main concern is ensuring that the agreed-upon rules result in actual financial outcomes that meet the arm’s length criterion.

Using the Transfer Pricing Lifecycle to Understand OTP

OTP concentrates on the implementation phases of the transfer pricing lifecycle. One aspect is setting transfer prices, the basis for business dealings between related firms. These prices are established by arm’s length principles as they are derived from the transfer pricing policy that has been set.

Monitoring involves tracking financial results to ensure they comply with regulations. Periodic true-ups are called adjustments, and they are done to make sure the results fall within an arm’s length range.

Why Is OTP More Important Than Ever Right Now?

Although operational transfer pricing (OTP) has always been important, its significance has grown in today’s complicated transfer pricing environment. Some important causes explain this increased importance.

BEPS 1.0

Launched in 2015, the OECD’s Base Erosion and Profit Shifting (BEPS) project imposed a slew of new paperwork and reporting requirements on transfer pricing. The BEPS Action 13 report developed the three-tiered approach to TP documentation: the Master File, Local File, and Country-by-Country Report (CbCR). Due to these new regulations, tax authorities’ scrutiny and compliance burden for MNEs have significantly grown.

Enhanced Tax Authority Examination

Multinational corporations (MNEs) are under pressure in transfer pricing. Tax authorities are using new tools: sophisticated data analytics that closely examine transfer pricing information and Country-by-Country Reports (CbCR). There is also a trend in collaboration through information sharing and collaborative audits. Robust Operational Transfer Pricing (OTP) processes are now essential for MNEs to manage risks and successfully defend their transfer pricing positions in this changing market.

Complexity of Operations

Due to their global expansion and adoption of novel business strategies, Multinational Enterprises (MNEs) engage in more complex and frequent intercompany transactions. Export/Import are becoming digital networks with moving elements that are always changing. The increasing significance of services and intangible assets adds to the overall complexity. As a result, it is harder to create and maintain explicit transfer pricing (TP) norms. Operational Transfer Pricing (OTP) cannot keep up with technological advances. It is a manual process.

BEPS Version 2.0

With its two pillars (global minimum tax and tax rights reallocation), the OECD/G20’s BEPS 2.0 framework promises a major revision of international tax laws. Specifically, Pillar One will use a formula-based strategy to transfer a percentage of the worldwide income of multinational corporations (MNEs) to market jurisdictions.

Technology’s Place in OTP

The massive volume of financial and operational data that multinational enterprises (MNEs) produce for transfer pricing is too much for old manual techniques in today’s data-driven environment. The outdated ERP systems lack the depth required for TP analysis as they were intended for broad reporting. However, technology can be your saving grace.

A TP-specific data model, which unifies and standardises data throughout the company, offers a clear basis for OTP. Using this data architecture as a foundation, advanced analytics and automation may accelerate processes like tracking transactions and producing paperwork. At the same time, thanks to real-time dashboards, tax professionals can take proactive advantage of TP possibilities and risks.

How DataTracks Can Help?

Effortlessly convert your CbC data into XML reports. Our CbCR XML services are utilised by 350 MNEs to prepare their company’s CbC reports in XML format, which are then submitted to over 20 tax authorities worldwide. For more details, please contact us at [email protected].



Finance

Mastering HMRC-Approved Taxonomies


 

Taxonomies are an important part of financial reporting. By acting as a blueprint for organising and sharing information electronically, they help ensure consistency and accuracy. HM Revenue and Customs (HMRC) of the UK has specific taxonomies for electronic report submissions. This blog discusses these taxonomies and explains why they are important.

What are Taxonomies?

Taxonomies are the dictionaries of financial reporting. They include terms and elements that help classify and define data. By using these taxonomies, businesses can tag their financial information consistently and make automatic analysis easier. This uniformity helps regulators, investors, and other stakeholders to compare and understand financial reports easily. Taxonomies are regularly updated to reflect changes in the accounting standards.

HMRC and UK Taxonomies

HMRC, the UK’s tax authority, requires businesses to use certain taxonomies when submitting financial statements electronically. These taxonomies are part of the Inline eXtensible Business Reporting Language (iXBRL) framework.

Since 1 April 2011, companies in the UK have been mandated to submit their company tax returns using the iXBRL format. The list of XBRL taxonomy accepted by HMRC is as follows:

Corporation Tax Computational Taxonomies

These taxonomies help businesses tag and report their financial data specifically for corporation tax calculations.

 

Taxonomy Version

Accounting Period Start Date

Accounting Period End Date

Corporation Tax Computational 2014

1 April 2012

31 March 2016

Corporation Tax Computational 2015

1 April 2015

31 March 2017

Corporation Tax Computational 2016

1 April 2015

31 March 2018

Corporation Tax Computational 2017

1 April 2015

31 March 2019

Corporation Tax Computational 2018

1 April 2015

31 March 2020

Corporation Tax Computational 2019

1 April 2015

31 March 2021

Corporation Tax Computational 2020

1 April 2015

31 March 2022

Corporation Tax Computational 2021

1 April 2015

31 March 2024

Corporation Tax Computational 2023

1 April 2015

31 March 2025

Corporation Tax Computational 2024

1 April 2015

To be advised

 

Financial Reporting Council (FRC) Accounts Taxonomies

The FRC accounts taxonomies assist businesses in preparing and submitting financial statements.

 

Taxonomy Version

Accounting Period Start Date

Accounting Period End Date

FRC 2014 Taxonomy

1 April 2008

31 March 2021

FRC 2018 Taxonomy

1 April 2008

31 March 2021

FRC 2019 Taxonomy

1 April 2015

31 March 2022

FRC 2019 SECR Taxonomy

1 April 2019

31 March 2022

FRC 2021 Taxonomy

1 April 2015

31 March 2024

FRC 2021 SECR Taxonomy

1 April 2019

31 March 2024

FRC 2022 Taxonomy

1 April 2015

31 March 2025

FRC 2023 Taxonomy

1 April 2015

To be advised

FRC 2024 Taxonomy

1 April 2015

To be advised

 

Detailed Profit and Loss Section Taxonomies

These taxonomies focus on the details of profit and loss statements. They provide a clear way to tag items like revenue, expenses, and net profit.

 

Taxonomy Version

Accounting Period Start Date

Accounting Period End Date

FRC DPL

1 April 2008

31 March 2021

FRC 2018 DPL

1 April 2015

31 March 2021

FRC 2019 DPL

1 April 2015

31 March 2022

FRC 2021 DPL

1 April 2015

31 March 2024

 

Non-UK Taxonomies Accepted by HMRC

Currently, HMRC only accepts accounts tagged with a non-UK taxonomy if it is US GAAP. However, they may add more taxonomies in the future. If there is no matching taxonomy for the accounting standard used, or if HMRC’s online service does not accept the taxonomy, companies must submit the accounts as a PDF file.

The taxonomy versions accepted for all sectors include the following:

  1. US GAAP 2015
  2. US GAAP 2016
  3. US GAAP 2017
  4. US GAAP 2018
  5. US GAAP 2021
  6. US GAAP 2022
  7. US GAAP 2023

Bottom Line

iXBRL makes financial reporting easier and more accurate by combining human-readable and machine-readable data into one document. It streamlines the submission process, improves data accuracy, and boosts transparency.

Looking for a trusted partner to navigate this process seamlessly? DataTracks can be your right choice! With expertise in  iXBRL tagging, we ensure your financial reports comply with HMRC standards. Our team has 19+ years of experience in preparing over 400,000 error-free reports for more than 28,000 clients. So what are you waiting for? Contact us [email protected] or +44 (20) 3608 8035.

 

 

 

 



Finance

General election 2024: What SMEs need to know


Major change is predicted, so make sure your business is ready for upheaval.

The business environment has been buffeted by change in the last few years: Covid and remote working, digital transformation and supply chain issues, Brexit, cost of living and volatile interest rates… Businesses that have survived through the last five years are businesses that can accommodate radical change.

Often change comes with little or no warnings. The impending election, however, may be one change that has been flagged clearly in advance. With so many poll predictions of a landslide for Labour, a win for the incumbent Conservatives would be the least-predicted change of all. 

With a majority Labour government predicted with 99 percent probability by Electoral Calculus at the time of writing, this is the most likely outcome of the general election. 

What will a Labour government mean for your business?

Tax burdens and breaks

Incoming governments will always mean a mixed bag of pros and cons for SMEs but there are reasons to be optimistic. 

SMEs which suffer from slow or late payers could be about to get new legislation which will help them fight against unpaid invoices. 

Labour has also said they will replace business rates with a fairer system which will rebalance the advantage of online businesses. 

And after accusations of cronyism during Covid, Labour has promised SMEs will have a fairer chance of winning lucrative public contracts with shortlisting guaranteed for smaller firms. 

The big question is around Brexit: Labour says that they will “remove the barriers to export”, but without a seat at the table with the EU which sets the rules, it’s unclear how this will be achieved. Expect to see a big effort to renegotiate terms with our nearest trading partners. 

Cost of employing staff 

Employment legislation may be one of the big downsides for SMEs as employing staff could become more expensive. Labour has published a Green Paper on employment rights and said that they will be introducing legislation on “making work pay” within their first 100 days of government. Here’s what the Green Paper has outlined: 

  • New staff rights: Employees will have protection against unfair dismissal from their very first day on the job, not after two years. Employers will have to provide more for things such as maternity leave, sick pay and bereavement, plus employees will be entitled to statutory sick pay and parental leave from day one.
  • Fairness and transparency: Employers can still let staff go for performance, conduct, or downsizing, but they’ll need to be more upfront about the rules during the probation period.
  • Conflict resolution: Employees will have six months to make a claim, instead of three. 
  • Minimum wage increase: It’s likely that there will be an increase in the minimum wage. This may have long-term impact on inflation but in the short term, your wage bill may go up. 
  • Work-Life Balance: Employers will be expected to have a policy about contacting staff outside work hours. 
  • Zero hours contracts: After 12 weeks, employees will have the right to a contract that reflects the hours they actually work.

Labour plans to introduce a new enforcement body to make sure everyone’s rights are respected, including minimum wage and protection from discrimination.

What will happen to RLS?

The government has already wound down the old RLS (recovery loan scheme) which proved to be one of the most effective and successful ways of helping businesses recover from the Covid pandemic. The intention is to replace the RLS with the Growth Guarantee Scheme from 1 July. 

Hopefully, the GGS – or something much like it – will survive into a Labour government. Labour have long promised that they will deliver “better access to finance” specifically for SMEs. Government-backed loans have been so effective at providing this, with the government able to target industries and sectors most in need of help, at Swoop we think restrictive changes to the existing scheme are unlikely.  

Conclusion

Labour will be very cautious about what they say before the election if they think it will lose them votes. We should expect major changes to happen in the early days of government, however, as the incoming team puts their stamp on things (and gets any potentially unpopular legislation in early). 

Broadly, SMEs which employ a large number of people will have to be ready for a hefty wage bill. Businesses which have run into problems with late payments will have more power in negotiations. And there may be more opportunities for SMEs with public contracts and exports – though how this will be achieved is still open to question.

If you want to find out how this affects your business get in touch today or read more in the article written by our CEO, Andrea Reynolds



Finance

Commercial mortgage landscape in 2024: What to expect?


How commercial mortgages have changed compared to 2023

Successful moves in business are tough to call: for every example of the wisdom of following the crowd, there is another story of the benefits that come when you buck a trend. 

If you’ve been put off purchasing property because financial news from the last 12-18 months have been all about the turmoil in the financial markets, you’re not alone. But if you have been deliberately keeping your powder dry, there may be real benefits to getting back to the property market before the rest of the pack wakes up and rushes in. 

It’s not just that interest rates are coming down (though that will be a major factor for many business owners); signs are that a new period of stability is upon us – and that means more confidence from borrowers and lenders alike.

In this blog, we are going to look at the factors that should affect your decision about whether or not to get a commercial mortgage. While property ownership is a long-term good idea for most businesses, the exact time of entry to the market could be crucial – and this will help you decide. 

High street banks

In the last six months, we’ve seen the lending appetite of high street banks bounce back: we’ve heard that one of the largest lenders in the SME market is aiming to increase lending volumes by 20 percent in 2024.

Yes, the big banks are naturally more conservative than challenger banks in the market, but we are finding that, even among the biggest names, competition is hotting up. This competition means that margins are coming down – Swoop recently secured outline terms for a commercial mortgage at just 1.09% above base rate.

Does this mean that great deals on commercial mortgages are growing on trees? Not necessarily, as there is high demand from SMEs and the banks will be offering the most favourable terms to the lowest risk deals. 

How can you turn this situation to your advantage? By engaging a finance broker, you will improve your position as we will seek to de-risk your deal and create the strongest possible narrative for your business. Result? You get the best deal available – whoever the lender may be. 

Lender appetite

In terms of appetite, the big banks lag behind challenger banks and specialist lenders which are armed with AI-powered risk assessment and nimble business models. But the big banks have been learning from the upstarts and many have implemented a more enthusiastic attitude towards lending. 

While the divide between traditional and challenger banks has blurred, in general these are the advantages the more modern lenders have: 

  • Faster response times, faster underwriting
  • More flexible, especially for early-stage businesses, and those who require higher loan-to-asset ratios (in some cases, up to 75 percent)
  • A better choice of structures, including interest only mortgages

While these loans have often been more expensive, challengers have reduced their margins in recent months in response to renewed pricing on offer from high street banks.

Brokers seeking funding on behalf of their clients are able to add a great deal of value. Swoop has entry points to the market that customers may not have themselves. Even if you have a good relationship with your bank, you may not be able to access deals as favourable as those available to brokers, whether this be in respect of the terms available or the level of borrowing

Rather than settle for what is available, your broker should put you in a position where lenders are vying for your business.

Interest rates

The cost of borrowing associated with a commercial mortgage will typically be made up of the base rate (Bank of England base rate currently 5.25 percent) plus the lender’s margin. The margin has tended to be higher for commercial mortgages (compared to personal mortgages) and typical ranges are between 2.25 percent and 4 percent. 

In the short term, renewed competition from the banks, is putting a squeeze on the margin and in the medium term Bank of England Base Rate is widely speculated to begin falling later in 2024

At Swoop, we have already been able to negotiate much lower fixed rates as lenders are passing on a fall in the cost of wholesale funds. We have been particularly successful with five year fixed-term mortgages. So, if you don’t want to wait for a gradual easing of pricing in most cases we can secure a competitive fixed rate today.

The variable factor in most cases is the lender margin: lower rates are typically available to borrowers depending on risk factors.If you have a strong trading history and well managed cashflow, your broker will be able to negotiate a better deal.

By using Swoop, you will be able to check your options as not all rates will be open to all customers. As a Swoop customer, you would have full visibility of your options and have a strong team of negotiators able to deploy a number of funding approaches that will add up to the right choice for your business. 

With the right broker on your side, now could be the perfect time to make a property purchase. 

Is now the time to get a commercial mortgage?

Despite a slow down in the market, Swoop has grown our commercial mortgage team over the last few years, simply because for some businesses, owning property makes sense – whatever the rest of the world is doing. In a challenging market, Swoop has been able to add a huge amount of value to our customers. 

A commercial mortgage can do more than buy your property: it can also consolidate your business’s existing debts into a lower-interest product. This frees up cashflow that you can reinvest, allowing you to expand your operations, hire new employees, or invest in new equipment.

In an inflationary environment, owning real estate can act as a hedge against rising costs. On a fixed rate, your monthly mortgage payment will stay the same, while the value of your property is likely to increase.

Owning your own property gives you greater control over your business space. You can make renovations, decorate as you please, and even sublet unused space to generate additional income.

The commercial real estate market is improving in many areas. If you purchase property now, you could see its value increase significantly over time, building equity for your business in the long term.

With more lenders looking for your business, you’re likely to get more favourable terms and conditions on your loan. This means you can potentially secure a lower interest rate, longer loan term, or lower fees.

Start your application with Swoop

The award-winning commercial mortgage team at Swoop is ready to help you make the next step in property. Get in touch now to speak to our team about your options and join our delighted customers. 



Finance

Interest rates are coming down: Time to refinance?


Getting the right deal could free up more cash where you need it

For many businesses, their borrowing is a patchwork of products. Interest rates have been high which makes borrowing expensive, and prudent business owners have been careful not to overstretch themselves by borrowing more than they need. 

At Swoop, we also advocate looking at some of the niche and specialist borrowing products on the market which could suit the needs of businesses better than a traditional unsecured loan. 

With interest rates falling, however, consolidating all those debts into one loan at a lower rate can achieve two things: first, it can simplify your outgoings by putting all your debts onto a single line of the accounts; second, it could save you money and free up capital for other projects. 

Ed Brown, Commercial Funding Manager at Swoop, says that consolidating outstanding debt within a property purchase (or remortgage) is becoming more attractive as the market shifts: 

“Lender appetite has really bounced back recently with some banks pledging to increase the number of commercial mortgages they agree by as much as 20 percent. Even during the uncertainty of the last couple of years, property ownership has made sense for some, but as interest rates go down, we are likely to see more businesses exploring this as an affordable and desirable option.”

Lower interest rates affect the whole market, not just commercial mortgages. And with the boom in challenger banks and digital first products, the battle for market share is getting more fierce – with lenders often prepared to squeeze their margin rather than lose a potential customer. For businesses wishing to consolidate existing borrowing into a single loan product, this is good news: there are lenders willing to be flexible and offer competitive prices to customers.

What are the advantages of restructuring your debt?

First, see much more clearly how much debt is costing your business. This enables you to make plans, much more easily, knowing exactly how much money he will have in your account.

Restructuring your debt with a lower interest rate will also enable you to save money, or you might opt to repay over a longer term – which will give you better cash flow day-to-day. 

If you make the right decision, you can find yourself with simplified accounts, and more money in your pocket.

Ed Brown says:

“It pays to know your options. The fact is that there are more lenders looking for your business than ever before. You can leverage their appetite to push for a lower interest rate, longer loan term, or reduced fees.”

If you are thinking about restructuring your borrowing but aren’t sure where to start, get in touch: Swoop’s friendly experts will help you reduce your costs, get the best deal possible and achieve your financial goals.



Finance