Most entrepreneurs have a basic grasp of tax and some of the expectations imposed upon every level of society as a result of different forms of tax, even if they lack knowledge over how it works and the technicalities associated with each type. In simple terms, tax is an obligatory monetary contribution to state revenue.
Whilst many are aware of Income Tax, there are actually a few different forms of taxation that exist, each of which works in a different way. These sit within four broad headings: Corporate Tax, VAT and Indirect Taxes, Employment Tax, and Personal Tax.
The issue with many of the lesser-known forms of taxation is that their individual intricacies are complex, with statutory requirements that are either overly detailed or too vague for those unfamiliar with the UK’s tax system. This can lead to entrepreneurs being in breach of tax laws without even realising, which can be problematic.
Cording Real Estate Group
In 2019, European real estate investment and asset management giants, Cording Real Estate Group (now named Edmond de Rothschild Real Estate Investment Management), pledged £17.3m to forward fund a construction project in Nottingham’s historic Lace Market. The project included the refurbishment of Grade II Listed buildings and a new build to create 117 studios and apartments to rent privately.
Developers, Abode Nottingham, led the project, with the Group providing additional funds to ensure the project went ahead. When it was announced, the project was viewed as a way to create affordable living spaces for locals, cater to Nottingham’s blended demographic, and funnel money back into the local economy.
Although the project may appear relatively straightforward to the everyday layman, the coalescing of investors and developers in a forward funding arrangement somewhat complicated the whole matter.
Overcoming the challenges
To get development off the ground, the funding party – Cording Real Estate – had to provide interim finances for developers to acquire the land and kickstart construction, as well as to ensure a fixed return on their investment. These funds needed to be agreed between the two parties involved and take into account other forms of taxation, to avoid falling foul of laws and legislation, and incurring additional VAT costs.
When PKF Smith Cooper got involved, their specialist Tax and VAT teams utilised a wealth of knowledge and experience to advise and assist, resolving issues related to the transaction and moulding the deal into a structure that would avoid exposure to VAT costs for either party. The VAT team also helped to negotiate and advise upon optimising the working capital required for the development, aiding both parties in reaching a mutually beneficial agreement.
Gavin West, Head of VAT and Indirect Taxes
How PKF Smith Cooper can help you
Boasting staff that have worked on ‘both sides of the tax fence’, PKF Smith Cooper’s Tax and VAT teams have extensive knowledge of the UK’s complex tax system. So, for those soon-to-be excellent entrepreneurs, as well as those already well-versed in the business world, there’s a lot to be gained from having PKF SC on your side.
Providing guidance to minimise disruptions and penalties, reducing stress and time commitments by actively entering into negotiations with HMRC on your behalf, identifying relevant tax credits or reliefs that are available, and keeping you informed of any hidden taxes are just some of the ways that engaging with our specialist teams can benefit you.
To see how we can help, or to find out a little bit more about the services we offer, get in touch today.