Question: Am I too late to take advantage of the current UK tax amnesty?

David Hill of TaxTroubleshooter.co.uk replies:

A: There are two separate programmes at the moment for disclosing past tax failures. Both relate to undeclared offshore assets, including hidden business profits originally made in the UK.

While neither is strictly an amnesty, they both offer an opportunity to clear up issues from the past at considerably lower cost than usual in terms of penalties and professional fees.

Anyone with undeclared tax from accounts and other assets outside the UK must notify HM Revenue & Customs (HMRC) under the New Disclosure Opportunity (NDO) by Monday that they intend to make a disclosure, so you should take advice immediately if you think this is for you. A NDO settlement will involve tax, interest and just a 10% penalty in most cases.

While the Revenue has made clear that this is definitely the last such general programme for a low-penalty, low-hassle approach to resolving such cases, it is important to say that HMRC usually charges a much lower penalty for voluntary, or unprompted, disclosures than for those which result from HMRC enquiry, so even if the NDO doesn’t apply to you there should still be a significant financial advantage in coming clean compared with a Revenue investigation.

The other current programme is the Liechtenstein Disclosure Facility (LDF) and relates only to those with some or all of their undeclared assets in Liechtenstein.

The LDF is much more complex but has much later deadlines, so if this could apply to your situation the good news is that you have time to take specialist advice, which I would strongly recommend.

Question. I have been invited to become a partner at the dental practice where I work. I am fairly familiar with partnership law but want to know if there is anything new in relation to partnerships, which I should be aware of?

Dawn McKnight associate at Carson McDowell replies:

A: First of all congratulations – I hope your progression to partnership is a successful and happy one!

Yes there have been some new government changes. The Government has now decided to restrict the ability of individual partners to claim sideways loss relief in respect of losses incurred by loss-making partnerships against other income and capital gains, this being the model increasingly adopted by those operating in the wind farm market.

The amount of losses available to an individual partner for sideways loss relief used to be restricted to the amount of capital that individual had contributed to the partnership.

However, it was common practice to manipulate this amount by introducing large amounts of debt at partner level instead. To summarise the new rules:

• They will restrict the amount of losses available even further where the main purpose of the individual making the capital contribution is to have access to losses for which sideways loss relief is available.

• They are only intended to catch non-active partners (those spending less than ten hours per week acting on the partnership’s behalf).

• They will impose an annual limit of £25,000 on the amount of losses in |respect of which a non-active partner in a partnership can claim sideways loss |relief.

• They will apply to capital contributions made on or after March 2, 2007, and losses incurred by partnerships on or after March 2, 2007 respectively.

Question: I run a small profitable manufacturing business which is increasing its customer base and turnover despite the recession but unfortunately my bank says it is unable to extend my overdraft due to a lack of security

Nigel Davidson managing director of Debt Control Limited replies:

A: This is a common problem in the current recessionary climate as the credit crunch has depleted banks’ capital bases and they no longer have an appetite for assisting businesses unless they are fully secured.

One solution is to look at borrowing money from friends and family if it is a short term requirement or seek assistance from an experienced investor or business angel who can add value to your business by improving your manufacturing processes or opening up new customers or markets.

They will want a shareholding in your business and an input in any executive decisions, thereby reducing your control of the business.

Another increasingly popular option is debtor finance where specialist lenders will lend against your debtor book and because they take a charge against your debtors no additional security is required.

This is available through a range of specialist finance companies for businesses with a turnover greater than £150k.

The advantage of this facility is it grows as your turnover increases reducing the risk of overtrading (where your business wins new sales contracts but is unable to finance them). It also enables you to retain control of your business.

There are two costs to this facility, a borrowing cost and an administration fee normally around 1% of turnover to cover the company processing your invoices and collecting your debts (if required).