Years ago, the contents of the Chancellor’s red box were top secret: nothing was disclosed or discussed in advance. These days, the tax rates and allowances are announced in the Autumn Statement, policies are put out for consultation, and the Chancellor appears on television to discuss some of his proposals the weekend before the March Budget. So it is unusual for a speech to spring genuine surprises – but this one contained significant announcements that no one anticipated.

The most striking proposals concerned the relaxation of the rules for taking pension benefits: there will be consultation on the details, but it seems that from April 2015, people who have saved up a fund in a defined contribution scheme will be allowed to choose how much they take out and when they take it. They will pay income tax on what they draw, after the existing 25% tax-free lump sum, but they will not have to sign up for an annuity. Other less radical relaxations take effect before the end of this month.

Another big change that will affect many people is the relaxation of the rules on tax-free Individual Savings Accounts: from July, the annual investment limit will be increased, and for the first time it will be permitted to invest the whole amount in cash funds.

There were big cheers in the House for a penny off beer and the halving of bingo duty, but more cheers from business for a doubling of the Annual Investment Allowance for purchase of plant and machinery – unfortunately, whenever they change that limit, convoluted calculations are required for periods straddling the change.

As has become the custom, the Budget speech was much shorter than it used to be – less than an hour – but the volume of paper setting out the detail gets longer and longer. There is confirmation of changes that have already been announced, new announcements of changes to take effect now, changes to come in future years, and proposals and consultations which may lead to new policies or to nothing. Shortly after next year’s Budget, there will be a general election: Mr Osborne has a long planning horizon, but is that over-optimistic?

We have gone through the papers and sorted out the important information from the rest – ‘this year and next year’ from ‘sometime and never’. Our booklet on the March Budget 2014 summarises the most significant changes and outlines their likely impact on the average taxpayer.

Significant points

• Personal allowances and thresholds announced for 2015/16 – election year

• Tax system starts to gear up for separate Scottish income tax rate

• Flexibility of taking pension benefits increased from March 2014

• Further significant relaxation of pension rules to come in 2015

• Individual Savings Account limits increased, rules simplified

• Seed Enterprise Investment Scheme reliefs made ‘permanent’

• Reduction in CGT main residence exemption confirmed

• Annual Investment Allowance increased to £500,000 from April 2014

• Tax charges on ‘enveloped dwellings’ to be extended to lower values

• Users of tax avoidance schemes to be required to pay tax upfront before arguing about it in court

• Confirmation of measures to close down perceived tax avoidance using partnership structures

Alongside our text we have included tips and traps which you may want to consider. At the back of the Summary you will find a calendar of the tax year with important deadline dates shown.

We recommend that you review your financial plans regularly as some aspects of the March Budget will not be implemented until later in the tax year.

We will, of course, be happy to discuss with you any of the points covered in this report, and help you adapt and reassess your plans in the light of any legislative changes.

CONTACT US ABOUT THIS REPORT

The Partners of Anderson Anderson & Brown LLP, one of Scotland’s largest independent firms of Chartered Accountants, are delighted to announce the appointment of Partner Graeme Allan to the new role of Deputy Managing Partner on 1 April 2014.

Managing Partner, Mike Brown commented “We are delighted to announce Graeme’s appointment as Deputy Managing Partner which is richly deserved and recognised as such by both clients and fellow colleagues alike. We are committed to providing top quality services to our clients and Graeme has made a significant and valued contribution to the management of the business since he joined us seven years ago. The firm’s succession development plan is a huge project and this is one of a number of steps which will follow to ensure the firm’s continued success and progression – we wish Graeme well in what will be a new and challenging role.”

Graeme, a tax specialist for over 15 years, particular areas of expertise fall within the entrepreneurial owner managed business sector including advising on the acquisition & disposal of business, tax efficient investment in start ups, capital gains tax planning and corporate structuring. Graeme also leads the firm’s specialist Expertise to Entrepreneurs division in delivering innovative investment structures which provide the firm’s entrepreneurial client base a greater return on their investment.

Anderson Anderson & Brown was formed in 1990 and has 12 Partners, 7 Directors and over 200 staff. The firm has 6 key service areas namely; audit & accounting, taxation (personal, corporate, international and VAT), accounting and payroll outsourcing, corporate finance, management information solutions and wealth management.

AAB Wealth, Chartered Financial Planners, has announced three significant new appointments.

Jonathan Gibson, one of the founders of AAB Wealth, moves from Dundee to assume the full-time role of Director of Wealth Services. Carole Innes, Business Development Manager, joins the Wealth team in this newly created position and has extensive experience in the financial services arena and a proven track record in business development in the North East of Scotland. Rhianne Stephenson, Client Services Support, joins from Punter Southall and her experience lies in Defined Contribution Pensions and Auto Enrolment.

Mike Brown, Managing Partner of Anderson Anderson & Brown LLP commented “This is a time of great opportunity for quality financial planning and corporate benefits and we are committed to providing specialist advice and excellent service to our clients. With Jonathan’s leadership, Carole’s knowledge of the local market and Rhianne’s sector knowledge, we are confident that these new appointments will strengthen and complement our excellent Wealth team”.

We are delighted to announce that AAB has been recognised by the Scottish Business Insider as the top dealmakers in Scotland in 2013, both in terms of deals initiated and deals completed. This is the 9th consecutive year (2005-2013) the firm has been awarded this prestigious accolade.

Douglas Martin, Corporate Finance Partner said: “It is fantastic to achieve this double dealmaking award for the 9th consecutive year which is great credit to the energy and drive of our team to deliver this success every year over such a prolonged time period. Each year offers up different challenges but our success is based on delivering results for our clients time and time again. We look forward to bringing many more deals to fruition during 2014.”

AAB to talk at Norwegian Oil & Gas event

INTSOK and Scottish Enterprise’s international development arm, Scottish Development International (SDI) are to jointly host a Scotland – Norway network meeting in Stavanger on 18 February. The main purpose of the event, which will host around sixty Norwegian and UK companies, is to introduce a network of support and provide information to Norwegian companies who may be looking to enter the Scottish Oil & Gas market. Topics including project opportunities, market trends and how to do business in Scotland will be covered on the day and those attending will be able to meet some of the oil and gas industry’s key players.

Representatives from INTSOK, SDI, Statoil, BP, Wood Group, Aker Solutions and Innovation Norway will be speaking at the event and Anderson Anderson & Brown LLP (AAB), one of Aberdeen’s leading independent firms of Chartered Accountants, has announced that they have also been invited to present by SDI and will provide an overview of the UK taxation system to the delegates during the day’s presentations.

Phil Stirling, SDI, commented “This event is a marvellous opportunity to showcase Scotland’s oil and gas industry and to encourage our Norwegian neighbours to come to Scotland and do business here and we are delighted to have attracted so many representatives from top class Scottish companies to present on the day. We invited AAB to present as we were impressed with their knowledge of international tax matters in general and with their vast experience of the UK and Norwegian tax systems in particular.”

Kevin Mann, International Tax Partner at AAB who will be presenting at the event, added “We were delighted to be invited by SDI to present at the Scotland-Norway event. International expansion by businesses, whether performing one-off projects overseas or setting up a permanent office in a foreign country, poses significant tax issues and uncertainties that must be resolved. We are very flattered to have been given the opportunity to present at the Stavanger event and to introduce AAB and the support which our experienced international tax team can provide to any Norwegian companies who may be looking to enter the Scottish Oil & Gas market.”

Anderson Anderson & Brown LLP (AAB), Chartered Accountants, are delighted to announce that the firm has reached a new milestone by hitting a headcount of over 200 employees for the first time.

The 200th employee, Brian Pirie, a graduate, is one of eighteen trainees who have joined AAB over the past few months. 2013 saw the firm’s highest trainee intake to date with 6 placement students and 12 graduate trainees coming on board. Karen Stewart, HR Director, said “we see the potential in student work placements and graduate recruitment and recognise that both training programmes are an excellent opportunity for us as well as for the students. The continuing high standard of applicants and those recruited has led to us keep increasing ourintake year on year.”

The firm’s commitment to both graduate and placement training programmes is nothing new having participated in the RGU Placement programme since 1990 and recruiting graduate trainees since 1994. Three of the firm’s twelve Partners all started as either graduates or placement students along with many other members of staff at manager, senior manager and director level.

Managing Partner, Mike Brown, commented “we continue to invest heavily in the development of our people and we are proud of the fact that our people train with us, and stay with us, developing their careers with one of the top independent firms of Chartered Accountants in Aberdeen and Scotland.

When we started this firm 23 years ago we could have never anticipated the extraordinary growth which we have achieved. It is because of the work of our experienced and committed employees, who provide a fantastic service to all of our clients, that we continue to win more work and, as a result, we continue to recruit on an ongoing basis to meet this increasing client demand. Reaching this milestone has been a tremendous way to end 2013 which was an outstanding year for our firm.”

AAB’s Corporate Finance Team 2013 Deals Review

We have had another fantastic year in 2013 and remain the top dealmakers in Scotland* both in terms of deals initiated and deals completed (by accountancy firms).

We completed 45 deals during 2013 with a combined deal value in excess of $500million. Included within our review is a selection of deals we completed during 2013. We continue to be heavily involved in deal initiation activities and we are delighted that of the 45 deals completed during 2013 we initiated 18 (40%) of those transactions.

Our disposal mandates in the oilfield services sector in 2013 included the disposal of Enovate Systems to Aker Solutions, the disposal of K&L Ross to Red Wing, the disposal of Gibb Tools to Clarkson plc, the disposal of EPC Offshore to Costain Group and the disposal of a majority stake in C.R. Encapsulation to FrontRow Energy Partners.

We also supported a number of clients in fund-raising and investment activities in the oilfield services sector, including the acquisition of a majority stake in Oteac by Lonsdale Capital Partners, the raising of growth capital from Bank of Scotland by Survivex, the investment in Petrotechnics by Business Growth Fund and the raising of further growth capital from Maven and RBS by Fletcher Shipping.

We continue to be involved in a significant number of deals in other industry sectors, including most notably the property/construction and support services sectors in 2013. Transactions completed last year included the disposal of Vacman Cleaning to VPS, the disposal of Plant Shifters to GCSS and several debt and mezzanine fund-raising projects for house builders and property development companies.

We would like to thank our many clients and contacts who continue to support AAB. Whilst we are extremely pleased with our success in 2013, we continue to strive to do even better in 2014. We look forward to working with you in the year ahead.

* Based on us being top of the Scottish Business Insider deal tables each year from 2005-2013 (latest available figures to end of Q3 for 2013).

2013 Autumn Statement

We’re all in this together… according to the Chancellor when he set out the painful measures he considered necessary to gain control of the country’s deficit back in 2010. it is a sign of how bad things have been that the 2013 Autumn Statement was the Chancellor’s most optimistic so far, and still admit that the ratio of national debt to national income will continue to rise for another two years, and the government will only return to surplus in 2018/19. Of course, that is a long the Chancellor must persuade the electorate in 2015 that he is the best person to still be in charge when that forecast is tested against the facts.

An even longer-term measure announced is a plan to raise the State pension age earlier than previously planned. For women, it is being brought up to equality with men – moving from 60 to 65 has already started. Then the 65 will become 66, 67 and 68. The Chancellor established a new principle: one-third of the average adult life should be spent in retirement, and the other two-thirds in work. With life expectancy increasing, the move to 66 will happen in 2020 and 67 in 2028; the Chancellor expects the age to rise to 68 in the mid-2030s and 69 in the late 2040s. People starting in the workforce now wil have longer to save for their retirement, and will have to worry more about the lifetime allowance for tax-favoured pension funds.

This Autumn Statement did not contain any big surprises, and that may be the best thing about it. But 116 pages of notes were supplied on the internet after Mr Osborne sat down; they contained many details that will make a difference to the tax liabilities and reporting responsibilities of individuals and some now, some in April 2014, and some a year later.

Further details will be announced next week and in March; this summary is based on what was released on 5 December.

For more information, don’t hesitate to contact us.

A2+B LLP’s payroll team has won both the “Payroll Team Award – Bureau/Service Provider”, which they have retained having won the same award last year, and the “Specialist Payroll Provider Award” in the annual Payroll World Awards 2013.

Whilst the payroll team award is recognition for excellent service delivery of solely the A2+B payroll team, the specialist payroll provider award acknowledged the success of innovative client solutions for specialist or niche markets and for A2+B this included a number of significant projects undertaken by the firms ‘Employer Solutions’ team, which provides integrated solutions bringing together Management Information Solutions (MIS), Employer & Expatriate Tax Solutions (EETS), UK & International tax, Wealth Management and Accounting Services departments as well as Payroll. Both of these prestigious awards were achieved against strong competition from a number of long-established payroll service providers throughout the UK.

In addition to winning both of these awards, the Payroll Team was also shortlisted as a finalist in the ‘Payroll Provider’ category.

A2+B LLP’s payroll team has only been in existence for a little over three years. But, in that time, it has established itself as a valued service provider in what is an extremely competitive market.

Commenting on the award, Kevin Mann, a Tax Partner at Anderson Anderson & Brown, said “Retaining the Payroll Team Award is a truly wonderful achievement for the team, and we are equally delighted to also have won the Specialist Payroll Provider Award. Both of these awards recognise the dedication and hard work by our people to deliver innovative solutions and exceptional service to our clients. We are very proud to have won these awards which, hopefully, will drive us on to even greater success”.

Offshore Employment Intermediaries – latest Government proposals

The original consultation document “Offshore Employment Intermediaries” was published on 30 May 2013 and following HM Revenue & Customs (“HMRC”) review, the Government’s latest proposals were published in a “Summary of Responses”
document dated 14 October 2013.

Latest position – general overview

Generally, under the revised proposals drawn up, where the offshore employer contracts to provide services of UK based staff to an UK intermediary company that in turn has a contract with an end user client, the employer’s obligations to account under PAYE for tax and NICs will be given to the UK intermediary company. HMRC has amended its original proposal that would have made the end user of any labour potentially responsible for meeting these PAYE real time reporting obligations, if both the offshore employer and intermediary defaulted. However, where there is no UK intermediary company, the end user of the labour will be responsible for accounting for and paying UK employment tax and NIC.

A separate proposal has been developed for the oil and gas sector, involving a certification scheme for offshore employers and this is discussed further below.

The main winners from these amendments are the end users as under the previous proposals, they were faced with considerable uncertainty as to whether and when they might become liable to account for tax and NICs, whilst often lacking the information needed to assess the risk and meet these compliance obligations.

This latest HMRC document on Offshore Employment Intermediaries does give some indication as to where the PAYE and NIC liabilities will lie, but relevant parties will only be able to finalise their arrangements and determine how any increased costs should be apportioned going forward once the full detail of all relevant regulation is published over the coming
months.

Oil & gas sector activities

Separate proposals have been made for the oil and gas sector, due to the particular complexity of chains of contracts and sub-contracts and confusion as to the status of oilfield licensees under Joint Operating Agreements (JOAs). Under the proposal, responsibility for PAYE and NICs will depend on whether the offshore employer has an associated company, body or agency based in the UK. If so, that UK entity will become responsible for accounting for those taxes.

If there is no associated UK company the oilfield licensee will become responsible. However where the offshore employer properly accounts for PAYE and NIC, it will be eligible to obtain a certificate to that effect from HMRC. If such a certificate is obtained by the offshore employer, then it will continue to have responsibility for accounting for UK PAYE and NIC and, in the case of any default by the offshore employer, HMRC will be unable to pursue the oilfield licensee for any underpaid duties, unless the certificate is revoked.

Overall, oilfield licensees may retain a PAYE and NICs liability risk in some circumstances, but the introduction of the proposed certification scheme will mitigate the risks and the need for due diligence in some cases. Where the offshore employer has no association with a UK entity, oilfield licensee companies operating on the UK Continental Shelf will no doubt want to ensure that where possible any offshore employers, with whom they contract with directly, do have this certification and that robust contractual indemnities are in place.

Mariners

The Government intends that existing arrangements in respect of “mariners” will largely remain with the exception of workers on fixed and floating platforms. HMRC comments that the forthcoming NIC regulations will be carefully drafted to exclude “recognised mariners” from its effects. In particular, those employees working on vessels wholly for the transport of supplies or safety purposes are to be entirely excluded from the revised legislation.

Secondary (employer) NIC – cost implications

It is apparent that the forthcoming changes to existing legislation will create a position whereby secondary NIC will become payable in many circumstances where none is properly due currently under certain existing offshore employment arrangements. By inference, this will include situations involving employees who are not “recognised mariners” and who are working on fixed and floating platforms.

Next steps – legislative changes

HMRC is now embarking on amending and strengthening existing legislation to “make it clearer and more effective”, in time to apply from 6 April 2014. It will not be until all of the relevant tax and NIC regulation changes are published that employers and intermediaries will have absolute certainty as to who is responsible for exactly what in PAYE and NIC compliance terms.

Employer Solutions at AAB

Our experienced Employer Solutions team of tax and payroll professionals is well equipped to support businesses in a number of ways including: making payroll preparations to deal with the changing PAYE and NIC default positions needed from 6 April 2014, obtaining certification from HMRC or in addressing historic PAYE compliance investigations by HMRC that relate to offshore employment arrangements in operation to date.

For more information on Offshore Employment Intermediaries contact Gordon Robertson, Tax Senior Manager Gordon.robertson@aab.co.uk