The Insolvency Service has issued a warning that fraudsters have been contacting investors in insolvent schemes claiming to be from the Official Receiver’s office or to have been appointed by the Official Receiver to help recover funds for a fee.

These approaches are always fraudulent.

Official Receivers or any agent legitimately instructed to act on their behalf will never ask you to pay a fee to get some or all of your investment back.

The Official Receiver can only make a return to you as a creditor in failed schemes if it is possible to identify and sell any remaining assets owned by the liquidated company you bought your investment from. All too often businesses of this nature have few if any, assets left to repay creditors and it can take several years to undertake complex asset recovery work and complete a liquidation.

Paying a fee will not make you a priority creditor, meaning you get paid faster or increase the chance of you getting any money back.

If you are asked to pay a fee to get your money back someone is attempting to scam you.

The Official Receiver does not charge investors a fee to get money back and does not employ anyone else to do this on their behalf.

You should report all fraudulent contact from individuals, stating they can get your lost investments back for a fee, to the Official Receivers. You can also report these approaches to Action Fraud.

If a company makes loans to its employees (including directors) there may be tax consequences. The same may also apply to loans extended to their family members.

For example, the employer will have an obligation to report a beneficial loan to HMRC (and pay Class 1A NIC) and the deemed benefit would be a taxable benefit in kind for the relevant employee.

A beneficial loan is one that is interest free or the rate charged is below the “official rate” and the benefit is the difference between these interest rate charges.

Fortunately, not all loans create a tax problem, certain loans are exempt from this reporting obligation. These could include loans employers provided:

• in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee),
• with a combined outstanding balance due from an employee of less than £10,000 throughout the whole tax year,
• to an employee for a fixed and never changing period, and at a fixed and constant rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out – the current rate is 2.5%,
• under identical terms and conditions as those provided to the public (this mostly applies to commercial lenders),
• that are ‘qualifying loans’, meaning all the interest charged to the loan account qualifies for tax relief.

Loans written off will also create a National Insurance Class 1 charge for the employee. They must be reported on a P11D and the employer has an obligation to deduct and pay Class 1 NIC, from the employee’s salary, on the amount written off for tax purposes.

And finally, loans by a company to its directors or shareholders may create additional corporation tax charges.

If you are contemplating loans to employees (or director/shareholders) or have current loans outstanding can we suggest that we undertake a review to ensure any tax consequences are minimised.

The 31 January has past and we are out of the EU. But what difference does this make and what is the transition period?

The word “transition” is defined as:

A change from one to another or the process by which this happens…

Essentially, until 31 December 2020 – when the transition period ends – the UK will continue to pay into the EU and be subject to its various rules and regulations. The pre-Brexit rules on trade, travel and businesses between the EU and the UK will continue to apply until the end of the year.

During this transition period our government has determined it will negotiate the detailed arrangement that will apply from 1 January 2021.

If these negotiations fail, we may still face the prospect of a “no-deal” scenario next year.

Most political commentators have made the point that a detailed agreement on all issues will be difficult to achieve in 2020; there is an awful lot of ground to cover, and as our Prime Minister has underlined his determination to avoid any extension of the transition period beyond the end of the year, UK businesses face uncertainty yet again: no-deal or a yet to be determined trade agreement.

Our advice to clients is to spend some time during 2020 undertaking a risk assessment based on this uncertainty. It would seem to be sensible to create a plan to cover both extremes.

This makes planning difficult if you buy or sell goods and services to or from EU countries. Unfortunately, even those companies that have no direct trade with the EU will likely find that their suppliers and customers – who do trade in Europe – will be affected and may create disruptions in their supply lines.

Tackling this conundrum – what will be the effects on our businesses from 1 January 2021 – is like playing darts when the board is nailed to the side of a moving bus. As we get closer to the end of the year outcomes will be easier to predict. In the meantime, sensible planning would seem to be appropriate.

Call if you would like our help to set up a formal review of your business prospects once the present transition period has run its course.