Business established outside the EU who store goods in the UK need to register with HMRC by 30 June.
If you are a business storing goods in the UK for sellers established outside the EU, you may need to register for the Fulfilment House Due Diligence Scheme (FHDDS) by 30 June 2018. FHDDS is part of a package of measures intended to disrupt and deter abuse by overseas businesses selling goods to UK customers through an online marketplace and make it more difficult for non-compliant businesses to trade in the UK. It will assist HMRC in identifying and tackling non-compliance and ensure a level playing field for compliant businesses in the UK. HMRC intend to publish a register of compliant fulfilment business.
Who should register?
You must register if you store goods where all of the following apply:
•The goods were imported from outside the EU
•The goods are owned by, or stored on behalf of, someone established outside the EU
•The goods are offered for sale and have not been sold in the UK before
But you do not need to apply if you own the stored goods or your main business is transporting goods and you need to store the goods temporarily as part of the transport service.
The registration process
You can apply online from 1 April and must submit applications using the FHDDS online service by 30 June 2018. To apply, you must have a Government Gateway user ID and password. Late applications may incur a penalty of up to £3,000. If you do not register by 1 April 2019, you will not be allowed to trade as a fulfilment business and risk a £10,000 penalty and criminal conviction.
Once registered, you have an obligation to:
•Hold the names and contact details of overseas customers
•Hold and verify the VAT registration and VAT exemption reference numbers (if applicable) of overseas customers
•Keep a record of the type and quantity of goods stored
•Keep a record of import entry numbers
•Keep a record of the country where the goods are delivered
•Give notices to overseas customers explaining UK tax and duty obligations
Non-retention of records also carries a penalty of £500.
If you suspect that your customer has not met any of its VAT or customs duty obligations, you must work with them to ensure future compliance, notify HMRC and cease work with them until they start to comply. Again, penalties of up to £3,000 will apply if you do not comply with these obligations.
Given the fast approaching and strict deadline, fulfilment businesses should be looking to apply to register as soon as possible. As you can see, FHDDS will potentially result in a significant additional administrative burden for businesses in this sector. Penalties can be severed and there is the added risk of criminal proceedings. In order to reduce the burden and risk, businesses falling within FHDDS need to have robust systems in place to ensure that they are compliant. We would be happy to assist with reviewing processes and procedures prior to any application being made and also guide you through the application process in order to minimise questions from HMRC following submission. Please contact us should you require further information on FHDDS or assistance with registration.
HLB provides insights on US tax reforms affecting the US real estate market.
Two of the largest financial changes affecting the real estate industry as part of the Tax Cuts and Jobs Act in the US are the new interest expense limitation and changes to depreciation for real estate assets and related assets. It is important for taxpayers and practitioners alike to understand the impact and plan for 2018.
As has been widely publicized, the Act requires businesses to limit their interest expense to an amount not to exceed 30% of their adjusted taxable income. However, at a taxpayer’s election, a taxpayer in a real estate trade or business may avoid this interest expense limitation. Real estate trades or businesses are generally businesses that acquire, develop, redevelop, lease or own real property.
In exchange for the ability to fully deduct their interest expense, the Act requires that any real property trade or business that makes this election utilize the alternative depreciation system for their assets. The ADS system generally requires straight-lined depreciation methods over longer useful lives than those available under MACRS.
Prior to passage of the Act, the Senate proposal provided for much shorter depreciable lives for real property assets. Unfortunately for the real estate industry, the new law does not provide for any shorter lives and maintains the original depreciable lives. The new law does provide for an expansion of bonus depreciation, allowing for 100% expensing of eligible assets placed in service after September 27, 2017, and before January 1, 2023. In order to qualify for 100% expensing, assets should have a depreciable life shorter than 20 years. Any taxpayer who takes advantage of the election out of the interest expense limitation and is therefore required to use ADS, will not be able to use 100% expensing.
In addition, the Act streamlines the definition of qualified improvement property. Prior to the Act, there were four separate definitions for qualified leasehold improvement property, qualified retail improvement property, qualified restaurant improvement property, and qualified improvement property. Under the Act, only qualified improvement property remains and applies to improvements made to the interior of non-residential real property. Interestingly enough, the new Act did intend for these qualified improvement property assets to be depreciable over 15 years and to qualify for 100% expensing, however, there needs to be a few technical corrections made to the Act in order for that to actually apply.
Finally, prior to the Act, all real estate under ADS was depreciable over 40 years. The new law shortens the ADS life for residential real property to 30 years. It also intended to shorten the ADS life for qualified improvement property to 20 years, however technical corrections to the legislation will need to be enacted in order for that to take place. These shorter ADS lives will be very important for taxpayers who elect out of the interest expense limitation.
Author: Brian Lovett, CPA, JD - Tax Partner and Real Estate Tax Team Leader at WithumSmith+Brown, PC
The Agricultural Clean Technology (ACT) Program is part of the Government of Canada’s suite of clean technology programs and initiatives
The Canadian government has announced a $25 million investment to help the country’s agricultural sector reduce greenhouse gas emissions through the development and adoption of clean tech.
Lawrence MacAulay, Canadian Minister of Agriculture and Agri-Food says this investment will help Canadian farmers stay on the cutting edge of clean technology by targeting developments in bioproducts and precision agriculture.
“Our government has made both agriculture and clean technology a priority for growth in our economy. This new program will contribute to Canada’s place as a world leader in agricultural clean technology, helping farmers to develop new and efficient uses of energy, while also protecting our environmental resources and mitigating climate change.”
The Agricultural Clean Technology (ACT) Program is part of the Government of Canada’s suite of clean technology programs and initiatives announced in Budget 2017. The ACT Program runs from 1 April 2018 to 31 March 2021.
HLB member firm Millards Chartered Professional Accountants has a close connection to agribusiness.
To be eligible for funding, agribussinesses will need to partner with provincial government. Simon Salole, partner at Millards says “Provinces and territories are eligible to apply for federal funding through this program and are encouraged to work with industry on projects that focus on precision agriculture and/or bioproducts.”
Creating a sustainable future
Salole sees an opportunity for agribusinesses projects and positive benefits for Canada and the world. The Government’s position is that farmers can make important contributions in the fight against climate change by adopting sustainable technologies and practices.
Clean technology permits farmers to undertake efficient uses of energy and the production of renewable energy, while contributing to the protection of the soil, water and air.
The Minister of Agriculture and Agri-Food made the announcement during his recent visit to an innovative agri-tech farm in St-Eugene, ON. Member of Parliament, Francis Drouin, calls the funding a step forward for agribusiness in Canada.
“Today’s announcement provides stable funding to help the agricultural sector move towards more sustainable practices. These funds will help farmers across the country to adopt means of production that are both environmentally friendly and more efficient.”
Bioproducts are renewable products from agricultural waste and outputs. Precision agriculture is a farming practice that uses data gathering technologies to guide targeted farm management actions that improve the sustainability, efficiency and productivity of agricultural operations.
This program will also complement AAFC’s $27 million Agricultural Greenhouse Gases Program, which supports research into greenhouse gas mitigation practices and technologies that can be adopted on the farm.
The Government of Canada is committed to support research, development, demonstration and adoption of clean technologies, because they create good jobs for Canadians and help meet Canada’s climate change goals.
Bitcoin is one of the most popular forms of virtual currency, and the only one most people recognize.
You have probably heard the term Bitcoin and all the media buzz about this new technological evolution of currency, but you may not understand the clamor. Supporters of Bitcoin, particularly the millennial generation that is accustomed to electronic transactions, will tell you it’s a different, some would say better, type of currency, and it’s unique in that it has no physical form, just a digital one. Cryptocurrency, also referred to as virtual currency, is just what it sounds like: digital money, but with one basic difference from the dollars and coins residing in your pocket. While the value of Cryptocurrency may go up or down, that value exists solely with the people that create it and those that accept it as a replacement to the more recognized forms of payment.
Bitcoin is one of the most popular forms of virtual currency, and the only one most people recognize. But it would probably surprise you to know that there are more than 1,000 other cryptocurrencies in circulation.
Taxation in General
In United States, the IRS says that Bitcoin is to be treated as property for federal tax purposes. This means that the same general tax principles that apply to property transactions will apply to any transaction involving cryptocurrencies. Under these principles, taxpayers receiving Bitcoin in exchange for providing goods or services will recognize income equal to the fair market value of the Bitcoin received on the date of receipt. With the volatility of Bitcoin over the last few years, and particularly the last few months, this could indicate a very wide range of values.
Taxpayers must document the cyrptocurrency’s fair market value (in dollars, if a U.S. taxpayer) at the time of receipt, as this value establishes both the taxpayer’s income on the transaction as well as the taxpayer’s basis in the cryptocurrency that will be used to determine the taxpayer’s future gain or loss when the virtual currency is disposed or used.
If a taxpayer mines Bitcoin or other virtual currency as a trade or business, and the mining is not done as an employee, the net earnings from this mining will be subject to self-employment tax. And, any independent contractor who is paid in virtual currency for their services will be subject to self-employment tax on the cryptocurrency’s fair market value as well. In addition, if a company pays its employees’ wages in virtual currency, the fair market value of said wages will be subject to the usual federal income tax withholding, and will need to be reported on their W-2. Note that all of those U.S. taxes due will be paid in U.S. dollars—the IRS does not accept Bitcoin or other cryptocurrencies.
Since cryptocurrencies are not classified as currency for U.S. tax purposes, international taxation can add another layer of complexity.
Bitcoin is still a fairly new technology, which means tax treatment of virtual currency transactions is still being developed. However, with the increase in use and established values, it is likely to gain more interest from the IRS. We will have more articles exploring the various aspects of taxation when using Bitcoin or other cryptocurrencies, as well.
Article by Andrea Mouw, J.D., Principal, EideBailly, An independent member firm of HLB International.
The Chamber of Young Lankan Entrepreneurs (COYLE) announced the appointment of Dinuk Hettiarachchi as its new Chairman
The Chamber of Young Lankan Entrepreneurs (COYLE) announced the appointment of Dinuk Hettiarachchi as its new Chairman, following its 19th anniversary celebrations held on Saturday at the Ballroom of Shangri-La Hotel, Colombo.
Hettiarachchi is the Managing Partner of Nihal Hettiarachchi & Co., a leading auditing and accounting firm in Sri Lanka. He is also the Chairman of 3DH International Group of Companies with a diversified portfolio comprising of oil and gas, power and energy, aviation, real estate, information technology, advertising and marketing, insurance brokers, international trading, travel and tourism and BPO.He is ably assisted by COYLE Senior Vice Chairman Aminda Rodrigo and Vice Chairman Dinesh Jayawardena.
Speaking of his appointment, Hettiarachchi commented: “I’m deeply humbled yet honoured to receive this symbol of leadership and begin a journey that would create numerous success stories and new business opportunities for my fellow entrepreneurs at COYLE. I am even more proud to be given the opportunity to lead this band of highly-dynamic, skilled and engaged members of our business fraternity, Committee members and Secretariat. I am determined to build on the legacy of the last 18 years and take COYLE forward into the future.”
He further elaborated: “My concentrated efforts will hinge on three specific strategic points that will help the chamber set the national standard for fostering economic prosperity. These include: Develop a harmonious environment to generate corporate endeavours and inspire new concepts and proposals that could merge trade and industry between private and Government sectors; create opportunities for COYLE members through various international events organised in Sri Lanka and also by representing Sri Lanka globally; optimising and diversifying Chamber activities to maximise member experience, facilitate greater member-to-member connections and attract new members and ensure that the Chamber achieves the highest standard of operational excellence, enhancing Government, community and business harmony in decision-making processes.”
“We are pleased to have a strong and active leader taking over the reins; and I’m sure that with a group of energetic members who are bound together by a core set of operating values, will dedicate themselves to enhance member value, involvement, calibre and long-term plan and vision for COYLE,” stated outgoing Chairman Kushan Kodituwakku.
COYLE is a leading business chamber providing thought leadership to drive community growth and economic prosperity. With over 120 members comprising of business owners and entrepreneurs, the Chamber has an extensive national and international business network, offering a broad spectrum of activities and services.
Chamber members collaborate with Government officials, policy makers and community organisations to support the community and each other with the mission of building harmony within businesses and communities through its motto, ‘Recognition through Excellence’.
This article was published by The Daily FT, Sri Lanka. 13 March 2018. www.ft.lk