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The UK Economy  - in difficult trading conditions, what the economic recession could mean - Taxation.  

Generally, in the short term, at a time when, due to the recession, profits are lower, businesses are likely to have to pay tax based upon previous normal profits. Fore-warned, early establishment of tax liability will help.  If circumstances justify it, payments to be made on account of following years can be reduced.  If there is actually a tax loss, then the new more generous loss relief provisions can be invoked.

Cessation of trade and/or the introduction of a new source of income can cause distortion to tax liabilities. There is more to it all than below, but, in the event that a business might have to be regarded as ceased and/or, a new employment is taken up, this paper is designed to give some basic guidance regarding taxation. The paper cannot be taken as any form of advice regarding any particular reader’s position.  Before action, proper professional advice should be taken.  If financial difficulty looks likely, reference should be made to your accountant. 

For some, paradoxically, the recession could give more opportunity. 

Background

The Greenhow bulletin of 28 May 2008 addressed some of the businessman’s considerations in this environment.  It was all common sense, but added to that was:   1.  Great care should be taken regarding any staff redundancies and  2. As £ Sterling is so weak, there should be  export opportunities.

One can have as many employments, self-employments and partnerships as one can hold, of course.  In the event of financial difficulty, in order to mitigate taxation, there may be options:  Depending upon circumstances, it may be advisable to terminate self-employment and partnership positions (at least for a time - possibly such activity could be re-commenced).  Alternatively, however artificial it may seem, it may be best to continue, maintaining the positions (the business activity can be treated as continuing, so long as the business holds itself out as willing to supply goods, or services, etc. and is capable of doing so). 

Employees  Those who are basically employees, or pensioners, should check their PAYE codes and generally "sharpen-up" on their tax affairs.

For the rest, click on following pages to see more detail regarding possible adverse taxation consequences:

The Self-Employed (sole trader)  including CIS.

Partnerships  

Owner/ Directors of limited companies including taking up a temporary job-like assignment and concern about IR35. 

Lastly:

State Benefits

In the event that the position is such that State Benefit (Jobseeker Allowance, etc.) is sought, as soon as possible, advice from the local Jobcentre should be obtained.  Jobseeker Allowance is taxable as if it were employment income.  

  Docs/Guidance/The UK Economy - updated 7/09/2009, 14/05/2009, 27/04/2009,  28/03/2009, 6/03/2009, 30/12/2008, 27/12/2008, 22/12/2008, 06/12/2008,  05 /08/2008 Created 23/07/08

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