Business Matters McCabe Ford Williams Newsletter | Spring 2015
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Welcome to the spring 2015 edition of Business Matters
Trinity Vets
In this issue we are getting close to nature with a client profile featuring the Russell family at Horlands Farm. Like so many of our farming clients the Russells will shortly be gearing up to the immensely busy time that is lambing season. We would, therefore, like to wish all our farming clients well over the next few weeks.
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Our other client profile features veterinarian Mark Rowland who specialises in looking after rather more exotic animals at his practice, Trinity Vets, Maidstone. If you have missed our recent Budget Day reporting then turn to page 4 to see how you can catch up with the latest news prior to the 7th May General Election.
Meet Mark Rowland, the vet with a passion for all creatures great and small.
TAX MATTERS A useful round-up of all the latest tax issues and how these may affect you. Page 05
AGRICULTURAL FOCUS
Down on the Farm We take an in depth look at what goes on at Horlands Farm and meet the Russell family. Page 07 Getting ready for lambing time at Horlands Farm
MFW NEWS
Sad news MFW loses a legend It is with much sadness that we must report the death of our former partner, Victor Grimwood, who passed away on Sunday 8th February. Victor, or more commonly known as Vic to his colleagues, joined the firm as it was then, of C McCabe Ford & Co in early December 1940, starting what would be a very long career with the firm which spanned 50 years. Vic was called away for National Service in 1945 but returned to the firm in 1948 whereupon he completed his professional training to become a qualified accountant and in 1953 was invited to become a partner. Some of his many achievements included establishing the Sittingbourne office in 1962, at which he was later based and thereafter growing that office to the size it is today.
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Business Matters Spring 2015
Victor Grimwood in 2011 with his wife Brenda
Vic was popular with both the staff and clients of MFW. His colleague and former Senior Partner at MFW, George Holdstock, remembers Vic as, “one of the finest people you could ever work with”. Meanwhile, Peter Frowde, another former Senior Partner of the Firm, recalls the work that Victor did to set up the MFW Insolvency Department saying, “Vic was instrumental in establishing a successful insolvency practice at MFW and was highly regarded within the insolvency industry for his professionalism and knowledge. He will be sorely missed by his former colleagues”. Vic was also very active within the local community being a member of the Sittingbourne Round Table and also being involved with many projects such as The Barge Museum, Sittingbourne Christmas lights and the 41 Club.
To celebrate the firm’s 75th anniversary in 2011 Victor made a speech to his former colleagues, in which he talked about working at MFW and the benevolence of the firm he loved. Indeed Victor was a great champion of this with all the voluntary work he himself undertook for the Accountants Benevolent Society and other such organisations. He also acted as an officer of the Kent and High Courts in an advisory capacity and as an arbitrator in dispute cases for the Chartered Institute of Accountants in England and Wales (ICAEW). Victor retired from the firm in 1990 and spent his retirement years enjoying the company of his wife Brenda, his sons Cliff and Paul, and his grandchildren. It is therefore with sorrow that we say goodbye to a much loved colleague who will be greatly missed.
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The property boom of the 1980’s saw many large local buildings converted into flats. In most cases they were sold on 99 year leases, meaning they often now have less than 80 years left to run. If you find yourself in this position when you come to sell your flat, you are likely to find that a buyer will want the lease extended. Extending a shorter lease to a decent length can also add thousands to your property’s marketing value. Fortunately, most residential flat owners now have a right to extend their leases. Provided your lease was granted for more than 21 years and you have owned it for more than two years you will be able to extend your lease. This will involve making a payment to the landlord.
The procedure normally involves obtaining a valuation of the premium to be paid to the landlord for the lease extension and then service of a notice upon the landlord claiming the right to an extension and offering to pay the appropriate price. At that stage the landlord has the right to ask for a deposit payment of 10% of the price offered. The landlord then has two months in which to serve a counter notice agreeing your right to obtain a new lease or denying that right. Normally the landlord admits the right but disputes the price being offered. Matters are then usually settled by negotiation but if agreement cannot be reached upon the price it can be referred to the First Tier Tribunal (formerly known as the Leasehold Valuation Tribunal) who will decide the correct price to be paid. You will have to pay your own legal and surveyor’s costs as well as those of the landlord but not the landlord’s costs involved in any tribunal proceedings. Flat owners have various other rights. Collectively, the tenants of blocks of flats have the right to acquire the freehold of the building. Those who find the existing management of their building unacceptable also have a collective right to take over responsibility for management.
The procedure can be quite time consuming and it is much better to obtain an extension before you want to sell. Otherwise you will run the risk of losing a buyer because you cannot negotiate an extension to your lease quickly enough. If the lease has less than 80 years unexpired when you seek to extend it then, as part of the price, you will have to pay an additional amount known as a marriage value to the landlord. If you exercise your statutory right, your lease will be extended by 90 years in addition to the existing unexpired term. The ground rent will also be reduced to a peppercorn, which means effectively nothing.
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Paul Reeves B.A., is a Partner at Boys & Maughan Solicitors which has branches in Broadstairs, Canterbury, Margate, Birchington and Ramsgate. Paul can be contacted by email at plr@boysandmaughan.co.uk or by telephone on 01843 234000.
Business Matters Spring 2015
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PROPERTY
Don’t leave it too late to extend your flat’s lease
CLIENT PROFILE
Client Profile: Trinity Vets
All creatures great and small at Trinity Vets If you choose a career as a veterinarian then it goes without saying that you should have a prerequisite passion for all types of animals and their welfare. This is most certainly the case with Mark Rowland who has been working as a veterinarian for almost 20 years and who has, during that time, earned an excellent reputation both amongst his clients and his peers. Mark qualified as a vet in 1996 and spent his initial post qualification years building his experience and knowledge by working in general practice for a number of clinics. In one of these practices he worked with a Zimbabwean vet who specialised in the treatment of exotic animals. It was at this particular practice that Mark became fascinated with exotic animals and which ultimately lead him to study for and pass the Certificate in Zoological Medicine in 2007. At this time Mark became one of only a handful of vets in the country with knowledge of zoological medicine. Even today Mark’s knowledge is regularly sought after by his peers and, as a result, often means Mark will be referred cases by vets who possess less experience of treating exotic animals. Mark is, however, keen to share his knowledge and regularly writes in a number of peer reviewed journals including the industry trade publication,
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Business Matters Spring 2015
Mark Rowland the Veterinary Record. In addition to these articles Mark also runs CPD courses for other vets in order to help train them in some of the more unusual techniques which he says are seldom taught at veterinary school. For fellow vets and veterinary students who are unable to attend his classroom he has also developed the mobile APP ‘Veterinary Care of Exotic Pets’ which features training videos, formularies and details of some of the more common conditions that can affect various exotic species. Since Trinity Vets was opened the practice has been a huge success and has grown from zero to over eleven and a half thousand clients in just six and a half years. The Exotic Centre at Trinity Vets has also developed over this time and is now widely recognised both locally and nationally with clients as far afield as Nottingham. Mark explains that it would certainly be feasible now for the practice to specialise only in the treatment of exotic species but as so many exotic pet owners also tend to own a more typical family pet, such as a cat or dog, the practice remains to serve all creatures great and small.
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Whilst it seems Mark can treat any animal that comes through the door at Trinity Vets he does own up to having a favourite species, being particularly passionate about tortoises. It is hardly surprising to learn therefore that he owns a female tortoise called Timmy. Timmy who incidentally was named before becoming Mark’s pet, also has a key role to play at the practice as she is a regular blood donor. She can proudly claim to have saved the lives, of many other pet tortoises taking everything in her stride but as Mark himself would tell you saving lives is all part of the life of being a vet’s pet.
For further details about Trinity Vets and their small animal care and Exotic Pet Centre visit their website at http://www.trinityvetcentre.com/Trinity_ Vet_Centre/Home.html or call them on 01622 726730.
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Our Sittingbourne office was proud to sponsor the Volunteer Team of the Year category at the recent Volunteer Swale Awards organised by Swale Borough Council. The award ceremony took place at the Coniston Hotel in Sittingbourne on Thursday 12th March. Winning Team L-R Clair Rayner, together with the Mayor of Swale, George Bobbing presenting the Team of the Year Award to members of the Event Marshalling Unit, Sheppey.
Partner Clair Rayner who presented the award on behalf of MFW commented, “Through our work with charities we at MFW really understand the value that volunteers make to their local communities and would like to congratulate all the nominees, runners-up and, of course, the winners“.
Budget Day Catch-up Did you catch our recent Budget Day coverage? If not then don’t worry as you can get an update by visiting the news area of our website: http://www.mfw.co.uk/news/article/ budget-day-2015-update
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SNIPPET
Mark is a client of Liam McHugh, Partner at our Sittingbourne office, who has been working with Trinity Vets since 2011. Liam acts as a virtual Finance Director and along with his team provides Mark with access to a virtual finance team. This means that Mark is able to draw on the wide range of experience and expertise which Liam and his team provides and benefits from a cost effective solution to his accounting and taxation needs without the need to add to his own payroll.
MFW sponsor category at Volunteer Swale Awards
CLIENT PROFILE
When you speak with Mark it is abundantly clear that he has extensive knowledge and experience of the treatment of a wide range of animals. Some of his more unusual cases include carrying out Timmy the blood surgery on fish, spaying donating tortoise tortoises and even being requested for help with a client’s coral collection. Mark also specialises in the care of birds of prey and works for a number of wildlife parks where he has also been called upon to treat larger birds such as emus and ostriches.
TAX MATTERS
Tax Matters IR 35 or Personal Service Company or Intermediaries Legislation The IR35 legislation was introduced in 2000 to combat what HMRC referred to as ‘disguised employees’. As far as HMRC are concerned the tax income that this initiative has generated has been disappointing since its launch but this could yet change with the introduction on 1st April 2015 of newer legislation which will have a greater impact on service companies. If you have a personal service company or if you are concerned that this new legislation may affect your situation, contact your MFW partner.
Class 3A National Insurance Contribution People who reach state pension age before 6 April 2016 can make extra contributions to top up their state pension. HMRC has introduced a new class of voluntary contributions to enable you to top up your Government pension income. However, contributions to Class 3A are only available from October 2015 to April 2017. Class 3A voluntary contributions will give existing pensioners and individuals who are entitled to a state pension, and reach state pension age before 6 April 2016, the opportunity to increase their pension.
Annual Investment Allowance deadline As a reminder you still have until the end of this year to take advantage of the unusual increase in the Annual Investment Allowance. This allowance relates to purchase of plant and machinery and, until the end of 2015, you can purchase items up to the value of £500,000 and claim 100 % tax relief. This limit will revert back to the previous rate of £25,000 on 1st January 2016 so it may make sense to accelerate any major plant and machinery purchases.
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Business Matters Spring 2015
PAYE matters Please be aware that new national insurance contribution letters will be issued from 6 April 2015. You need to check your payroll now to ensure you are compliant. Don’t forget the relief for Employers National Insurance of up to £2,000 is continuing for the year 2015/16 so do make sure that you claim it.
Auto Enrolment The law requires all employers to provide a work place pension for all eligible staff. Every employer with at least one member of staff now has new duties. This includes enrolling staff who meet certain criteria into a work place pension scheme and contributing towards it. It is called auto enrolment because it is automatic for your staff, as they don’t have to do anything to be enrolled into your pension scheme. It is not, however, automatic for you as you need to take steps to make sure they are enrolled.
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However, you do need to be aware of what you need to action prior to your staging date and it pays to start the process as soon as possible so you are not caught out.
Over the next few years every small and medium sized employer will have to automatically enrol employees into a workplace pension scheme. The largest 50,000 employers have already done this and during 2015 a further 50,000 employers will start. If you are an employer it will be important to get ready for this early, because in 2016, 750,000 employers will be processing their auto enrolment and we are informed that the pension provider companies are already beginning to struggle.
We will be once again exhibiting at the Kent 20:20 Vision Live event on Wednesday 13th May at the Kent County Showground, Detling.
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MFW NEWS
As a reminder, our guide to how to prepare for auto enrolment can be found on our website http://www. mfw.co.uk/files/MFW_Auto_Enrolment_Guide.pdf.
Kent 20:20 Vision Live
TAX MATTERS
Each employer has a staging date by which they will need to comply with this legislation. If you have checked your staging date and it is some time away you may be forgiven for putting this on the ‘back burner’ whilst you deal with more pressing issues.
Please join us if you can. Further details are available at http://www.kent2020live.co.uk/
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There have already been large fines for companies who are not compliant so do start planning early. Details of your staging date can be found on the Pensions Regulator’s website http://www. thepensionsregulator.gov.uk/employers/tools/ staging-date.aspx If you have any tax enquiries relating to any of the above matters then please do not hesitate to contact your local MFW partner who will be happy to help.
Author Phillip Kearsey, Tax Manager, Herne Bay
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Mobile APP Update Don’t forget our mobile APP which includes a host of features including helpful tax calculators. If you haven’t already downloaded this then click on this code – for the Apple store or visit Google Play for android phone users.
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CLIENT PROFILE
Agricultural Focus
Client Profile: The Russell Family at Horlands Farm, Marden Richard Russell has spent his life living and working on the farm where he was born, so it’s understandable that when you talk with him you gain a real sense just how passionate he is about it and the farming life in general. The farm in question is Horlands Farm in Marden which next year will celebrate its 150 year anniversary and which has been a client of our Maidstone office for over 40 years. Like many other farms, Horlands Farm has had to evolve to survive the often harsh farming environment. However, with the championship of Richard and more recently his son Tristan, Horlands Farm is still very much a success story as the father and son team work hard to diversify to help future proof the farm for generations to come. Richard grew up learning and implementing traditional techniques but in 2010 this was to change somewhat when his youngest son Tristan became a partner of the business, introducing the modern farming techniques that he learned during his studies at Hadlow Agricultural College.
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Business Matters Spring 2015
The Russell Family L-R Elizabeth Russell, Rebecca Callow, Claudine Russell, Dawn Atkinson, Tristan & Richard Russell Whilst the combination of traditional and modern techniques took some time to get used to, it is an approach which Richard and his wife Elizabeth now recognise as having perhaps the biggest impact in the recent development and success of the business. Arguably, one of the biggest decisions father, mother and son made was to move out of commercial fruit growing and concentrate instead on rearing cattle, sheep and pigs as well as selling freezer packs of beef lamb and pork direct to the public along with apple and pear juice.
Cedars Equestrian The farm is also home to Cedars Equestrian, a British Horse Society approved livery yard which is run by Tristan’s wife Claudine. As a keen horsewoman Claudine initially stabled her horse Bluebelle in a spare building on the farm and from this acorn of an idea, a business quickly grew. With the help of her husband who converted an existing building into an American Barn style yard, Claudine set up a livery yard which has proved so successful that Tristan had to build a second yard to deal with the waiting list!
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Conservation The Russells are not only passionate about the farm and all its activities but also about the preservation of its local habitat and wildlife. A key conservation project is the work they have committed to in order to obtain the Natural England Higher Level of Stewardship (HLS). The Russells
are now in their sixth year of a ten year agreement with Natural England and the benefits are evident already. The number of birds which now call Horlands Farm home has increased to over 30 different species at last count. An extensive programme of hedgerow and tree planting has also been undertaken along with establishment of nectar, pollen and wild bird seed mix plots on the farm. The family also run free guided tours at Horlands to small groups which are open to schools and anyone else who wants to get in touch with nature.
Elizabeth’s Traditional Orchard Whilst the days of commercial apple growing may be over at Horlands Farm the Russells still believe in preserving the older apple varieties which are sadly gradually starting to disappear. To protect apples such as the Blenheim Orange and the Beauty of Kent, amongst others, the family established a traditional orchard which was named in honour of Richard’s wife, who is always to be found taking care of the people on the farm.
Working with McCabe Ford Williams
Richard Russell
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The Russells are now looked after by MFW Associate Rebecca Callow who is based in our Maidstone office. Having a BSc (Hons) in Agricultural Business Management herself and also being
CLIENT PROFILE
That’s not surprising when you consider the dedicated work of Claudine and her staff Dawn and Alice and the first class facilities of a floodlit manège and separate lunge pen, cross country course, perfect paddocks and individual tack rooms for each owner. Owners can also take full advantage of their surrounds with on-farm hacking around the many acres at Horlands. Further details about Cedars Equestrian can be found here http://horlands.tripod. com/cedars/index.html
a keen horse woman Rebecca is naturally a great fit for this client. Richard says of his relationship with MFW – “McCabe Ford Williams have been very helpful in their advice since 1975. On numerous occasions Chris Callow and latterly Rebecca have answered queries and worries on farming matters, even a quick phone call gets prompt attention and sets one’s mind at rest”. Horlands is a real family affair, with both of Richard and Elizabeth’s sons and their families living on the farm meaning there is plenty of help on hand at busier times of year including during lambing and hay making when all hands on deck are certainly required. To book a guided walk or simply find our more information on Horlands Farm visit their website at http:// horlandsfarm.tripod.com/ home.html or call the Russells on 01622 831598.
Business Matters Spring 2015
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SAVINGS
An exciting new era for savings and retirement Starting from 6th April 2015 Everyone will be able to take out as much or as little from their private pension pot any time after age 55. However drawing pension benefits through the new flexible rules will often mean that any future pension contributions will be limited to £10,000 per year. On the face of it this restriction might not seem to be an issue but many people now start drawing part of their pension funds while they are still earning and still saving.
Retirement is not what it used to be In the past it was usual for people to work up until a set age and then stop working and start drawing on their pension which usually came in the form of an annuity where you gave up access to your capital in exchange for a guaranteed income for life. These days people are more likely to slowly reduce their hours or change careers later in life. In some cases the tax free cash and parts of their pension fund are used to pursue a hobby or to provide funds for travelling while good health prevails.
Consider your options Aside from deciding whether to take part of your pension savings as a tax free lump sum or not there are many other choices. You have the option of a guaranteed income for life or a myriad of other options that keep your pension fund invested while allowing you to draw an income from it. There is also the option of taking the whole pension fund as a lump sum but this would mean paying all of the income tax on your pension up front in year one rather than spreading this over the next few decades. Obviously this would also push most clients into the higher rate income tax bracket which would be undesirable.
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Business Matters Spring 2015
An election is coming! Proposed changes recently announced by Labour if they are elected: • To reduce the amount you can pay into a pension and get tax relief on over your lifetime from £1.25m to £1m. • To reduce the amount you can pay into a pension and get tax relief on each year from £40,000 to £30,000. To reduce tax relief on higher earners (over £150,000) from 45% to basic rate. If you are thinking of contributing to a pension or are a high earner time is of the essence to benefit from the current rules.
Would the labour proposals affect me? The lifetime and annual contribution caps limits the total amount anyone can pay into a pension scheme and enjoy tax relief on. Reducing the caps means high earners will not obtain as much tax relief as before. A cut in the annual allowance to £30,000 would start to affect those earning above £100,000 a year, particularly people in final salary type schemes. A lifetime allowance of £1m would cap final salary scheme pension at £50,000 a year and money purchase pension at around £32,000 a year (based on an inflation linked annuity).
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People with final salary schemes who receive good pay rises could also be hit by a one-off tax charge. For example, if a person’s pay went up from £60,000 to £65,000 and they are in a 1/60ths scheme, it would in effect boost the final value of their pension and incur a tax charge of around £2,500.
What are your options? Your pension fund is probably one of your largest assets and deciding what to do with it has never been more complicated. Do ensure you seek professional advice from a qualified person before you act.
Author Peter Harris Chartered Financial Planner, County Associates (UK) LLP
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The government has recently announced changes to the levels at which individuals can go bankrupt or become subject to a debt relief order (DRO). Since December 1986 anyone owing £750 or more could be subject to bankruptcy but with effect from 1st October 2015 that sum will increase to £5,000. At the same time the maximum total amount an individual can owe to his creditors to qualify for a DRO will increase from £15,000 to £20,000 although he must not have assets worth more than £1,000 (plus a vehicle worth no more than £1,000) and the maximum monthly surplus income will remain at £50 per month. It is intended that these changes will make it easier for the financially vulnerable to manage problem personal debt and avoid them being precipitated into bankruptcy for low levels of debt. It is anticipated that following these reforms an additional 3,600 people a year will be eligible for a DRO. More than 140,000 DROs have been entered into since they were introduced in 2009.
A survey of those who have used them reveals that 96% would have been unable to deal with their debts without a DRO, and 79% said the process had a positive impact on their lives. The changes to DROs will not disadvantage creditors, because eligibility for a DRO will continue to be restricted to those with very low amounts of realisable assets and very little surplus income and therefore no realistic ability to repay their debts. The Insolvency Service sought views from industry, debt charities and other interested parties on the operation of DROs and the bankruptcy creditor petition limit last year. Evidence showed that DROs help some of the poorest and most vulnerable people in society make a new start and improve their mental well being. Respondents also generally thought that the level of debts that can trigger bankruptcy was much too low. Author Amanda Ireland MIPA, FABRP Partner and Insolvency Practitioner Sittingbourne
Business Matters Spring 2015
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INSOLVENCY
Others it will affect are self-employed people who have fluctuating income and in a good year put more than £30,000 into a pension for the tax benefits.
New debt limit for Bankruptcy
SAVINGS
Obviously many doctors and senior civil servants, already have more than £30,000 a year going into their pensions, so they will be hit by 40% tax on contributions above that level.
This publication is intended for general guidance only. Every case is dependent on its particular facts and circumstances, and whilst it is believed that the content is accurate, the material should not be taken or relied upon as giving specific advice on any particular matter. Neither McCabe Ford Williams (the firm), its partners or employees accept any responsibility for any loss or damage (including but not limited to loss of profit or anticipated profit, damage to reputation or goodwill, loss of business, damages, costs, expenses or tax liabilities) caused or occasioned to any person acting or omitting to act in reliance upon the information contained in this publication. Any person wishing to obtain specific advice on any particular matter should contact a partner of the firm directly, and advice can be provided on a case by case basis.