Family payments: deductible or not?

A 2018 tribunal case has ruled that payments a father made to his son for promotional work were not deductible for tax purposes. What went wrong, and what can you take away to advise your clients?

Family employees. Employing family members, including children, is a well established tax planning tool for owner-managed businesses. Provided there’s a business reason for doing so, there shouldn’t be a problem. In Nicholson v HMRC [2018] TC06293, however, the First-tier Tribunal (FTT) decided that HMRC was correct to disallow expenses for “wages” paid to the business owner’s son. So what went wrong?

Case facts. Mr Nicholson (N) claimed that his son (who was at university) helped his business by promoting it online and distributing leaflets. For the payments made to be deductible, they would have to be made wholly and exclusively for the purposes of the trade. Part of the issue was that regular wages were not paid in cash, but rather N paid some cash, and also bought goods, insurance, food and drink, etc. for his son on his credit card. In and of itself this shouldn’t necessarily cause an issue, but the FTT found that there was no way to reconcile the payments with actual work undertaken as there were no proper records regarding them. Possibly more damaging, however, were N’s assertions that if he hadn’t paid his son the money, he may have had to drop out of university. The FTT concluded that at best the payments had a dual purpose, including “parental affection”, and could not therefore be allowable.

Get it right. Ensure your clients keep robust records to allow payments to be reconciled and linked to work done. Make sure that amounts paid don’t exceed what a third party would charge for the same work, and ensure that the work is actually necessary and is done.

Pro advice. If your client has a company rather than being a sole trader, consider making adult children directors instead of employees, as they can be paid for carrying out less frequent fiduciary duties.

The payments were held to be made out of parental affection. Your clients need a business motive for paying family members, must ensure payments aren’t excessive and can be reconciled to work.

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IAAF warns members to be ‘GDPR ready’ at Glasgow’s Industry Briefing Session

The second Industry Briefing of the year, hosted by the Independent Automotive Aftermarket Federation (IAAF), took place at the cutting-edge premises of The Turbo Guy in Glasgow on Thursday 17 May, with a strong attendance.

Members were welcomed by Managing Director of The Turbo Guy Allan Mitchell, before IAAF Membership Development Manager Mike Smallbone updated members on the latest industry developments including Type Approval legislation and the ongoing fight for equal access to in-vehicle data and resources, where IAAF has recently voiced its support for a manifesto urging the EU Commission to “act now” for fair digitalisation opportunities.

Smallbone also brought to delegates’ attention the IAAF’s latest news and planned activity for the rest of the year, which included the announcement that its Annual Conference and Awards Dinner 2018 will return to DoubleTree by Hilton in Milton Keynes on Thursday 6 December 2018, one of the annual highlights on the IAAF calendar. There was also news of 2018’s Golf Challenge, held in aid of BEN, to take place at two venues, the first on 10 July at Worsley Park, Nr Manchester, and the Midlands event taking place on 15 August at The Abbey Hotel & Golf Course, Redditch, Worcestershire. With the IAAF also appearing on stand at Automechanika Birmingham next month to promote its Right2Choose campaign, 2018 is building up to be a busy, productive year for the federation.

Guest speaker Nona Bowkis from Lawgistics, who gave a presentation on General Data Protection Regulation (GDPR) at the last session in Coventry, was again in attendance to raise awareness and remind members of the importance of being ‘GDPR ready’ when the new legislation comes into effect on 25 May.

Mike Smallbone updated Glasgow attendees on the changes around the corner for both the aftermarket and motorists alike, addressing the threats to the aftermarket and what the future holds.

To wrap up proceedings, members were given a tour of The Turbo Guy’s impressive manufacturing facility based on Shawbridge Industrial Estate to the south of the city, where the company has heavily invested in the latest VSR and VNT flow equipment for the benefit of its wide aftermarket customer base across Scotland and the UK.

IAAF Membership Development Manager Mike Smallbone said: “With such pivotal issues that are currently ongoing, with each outcome to affect the industry for years to come – such as GDPR, Type Approval, access to in-vehicle data and hybrid electric vehicle technology – it’s so important that the aftermarket is kept abreast of these major developments.

Our industry briefing sessions enable this, so the more businesses that join the IAAF, the more that will benefit from it.

“The Glasgow session has been fantastic, and what better backdrop to hold it in than The Turbo Guy’s impressive facilities. We’d like to say a big thank you to Allan and his team for welcoming us.”

The session then finished at 1.15 pm with lunch, where delegates had the opportunity to network with fellow members.

Details of the next Industry Briefing Session will be released shortly.

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IAAF Golf Challenge makes summer return to raise money for BEN

Independent Automotive Aftermarket Federation (IAAF) has announced it will once again be hosting its Team Golf Challenge, which will take place on two dates over the summer in aid of automotive trade charity, BEN. The first event will take place on 10 July at Worsley Park, Nr Manchester, and the Midlands event takes place on 15 August at The Abbey Hotel & Golf Course, Redditch, Worcestershire, with places for both filling up fast.

Guests attending the federation’s annual awards dinner, held in December, helped successfully raise a total of almost £10,000, a combination of donations collected on the night and from IAAF’s fundraising golf days which took place last year.

The cost per team (four players) will be £350+vat and will include:

• Bacon Sandwich and coffee / tea on arrival
• 18 holes of golf
• Evening meal or barbecue served after golf
• Presentation of prizes to the winners on the day

Individual entries are also accepted at a cost of £90+vat per player.

The Company Team Challenge will be a fourball format whereby the best two scores on each hole will score, and on all par three holes all four scores will count. The overall winning team across the two days’ play will be invited to the IAAF’s Annual Dinner and will be presented with their prizes. There will also be a special ‘Putting’ competition on the green at both venues.

There are various sponsorship opportunities available at both venues, to find out more please contact IAAF below.

BEN is a charity exclusively available to those who work, or have worked, in the automotive industry, as well as their family dependents.
As in previous years, spaces on both events are in demand, and those interested are encouraged to waste no time in signing up by contacting the IAAF head office:

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Government launches consultation on new road tax regime for vans

The Government wants vehicle excise duty (VED) for vans to be graduated according to their emissions in the same way it is for cars.

Currently, VED for vans remains at a flat rate of £250 no matter what the type of vehicle. The consultation, launched by the Treasury today, will look at changing this duty to encourage drivers to choose cleaner vans when purchasing a new van.

It will explore creating a graduated first year road tax rate for vans, as is already in place for cars. Most van purchases would pay less tax in the first year as a result of the change, says the Treasury

Around 75% of vans purchased in 2016-2017 emitted over 150g/km of CO2, while less than one in every 200 vans purchased that same year were ultra-low emission vehicles.

Environment secretary Michael Gove said: “Businesses have a crucial role in this. That’s why today we are setting out plans to make low emission vans more affordable and asking businesses how we can help them break down the barriers to the use of lower emission machinery.”

A separate call for evidence is looking at whether the reduced duty rate for red diesel is holding back the use of cleaner fuels by non-road vehicles and machinery in towns and cities – for example cranes or generators used on construction sites.

Red diesel, which accounts for 15% of all diesel consumption in the UK, currently benefits from a reduced rate of 11.14p per litre compared to the standard charge of 57.95p. The call for evidence excludes red diesel used for agricultural purposes and for fishing vessels.

Exchequer secretary to the Treasury, Robert Jenrick, said: “We want to be the first government to leave the environment in a better state that we found it. One of the ways we can do this is by using the tax system to help drivers afford greener choices.

“We want to help ‘white van man’ go green. We appreciate that buying a new van is a major investment for small businessmen and women and want to help make environmentally friendly choices more affordable.

“Public health is at risk due to the use of red diesel in towns and cities. So we are looking at how we can level the playing field on red diesel and exploring how we can encourage users to ditch it.”

The consultation on reforming van VED to incentivise van operators to make the cleanest choices when purchasing a new van closes on July 20.

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GDPR deadline approaches

GDPR, or the General Data Protection Regulation, comes into force on May 25th 2018 and applies to all businesses that have control over personal data. It updates the current data protection legislation which has been in place since 1998. There is a further update on the way in the form of a new UK Data Protection Act but this will largely replace what is in the GDPR.

The objective of the legislation is to strengthen the rights of individuals and this may result in changes in the way that companies collect, store and use information. In order to be compliant with the new legislation all businesses, large and small, will need to review their processes, review the personal information they hold, identify where that information came from and where it goes, and finally ensure that information is secure either in a digital format or with physical copies. Customer records are a good example of the type of information that will now be in scope.

Failure to comply with this legislation could result in a fine of 4% of your turnover or 20 million euros whichever is the greater.

The IAAF has produced guidance for IAAF members to explain the broad requirements and what preparations can be undertaken by businesses. To download the document, members should log into the Members Only area of the website. If any member experiences any difficulty or needs to register to access the Members Only area, they should contact the IAAF Office.

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Lawgistics new software makes managing HR simple… and it’s FREE

Lawgistics are proud to announce that they are launching and demonstrating their beta software ‘HR Manager’ at this year’s CarDealer Expo CDX2018, Manchester 21st – 22nd May.

HR Manager is a digital compliance portal designed to assist employers manage their legal obligations, responsibilities and duties, in relation to HR, Employment Law, GDPR and Health and Safety.

This portal is FREE to all their Small Business and Professional Members, allowing them to take part in shaping HR Manager by test-driving pre-release versions and letting us know how best to develop it further.

Anyone visiting the CarDealer Expo CDX2018 should see Lawgistics in the Employment Matters Zone, stand A39 as will be demonstrating how HR Manager can help businesses manage employee matters and highlight the savings to be made with this in-house solution supported by the Lawgistics legal helpline.

HR Manager gives business owners the power to delegate employment law, health & safety, GDPR and HR responsibilities to designated people within their company.

The portal will demonstrate best practice, assist in the meeting of legal obligations and show due diligence. Allowing the business owner to monitor and record the performance of employees within their roles. Holiday entitlement, absences, appraisals and disciplinaries can be managed simply, with the help of automated tasks and reminders. Personalised contracts, company handbooks, policies, reports and letters can be created and updated in an instant. Real-time reports can be easily produced and used to make informed decisions.

HR Manager will not be available to non-members or businesses outside the Motor Trade until 2019 although Lawgistics will be releasing a lite version for preferred associations this August and will inform associate members of this nearer the time.

However, the portal will always be free as part of the Small Business and Professional Membership Packages. Lawgistics believes using HR Manager within a business will not only be beneficial but will also ensure all the relevant information required to deal with any employment issues that may arise is available.

HR Manager – Key Features
Employee Database – Add employee profiles, record history and upload relevant documents. All your employee records held in one place giving you better control and security.

Define Responsibilities and Duties – Allocate HR, GDPR and Health & Safety roles (HR Manager, Data Controller, Designated Person, First Aid Administrator) delegate tasks and create records.

Personalised Dashboard – Each role is given an individual online account with personalised dashboard.

Training Modules – Specific e-learning modules for HR, GDPR and Health & Safety roles explaining responsibilities and duties, including guidance notes for essential tasks or reports.

Contracts, Company Handbook and Policies – Employment contracts are automatically generated when completing employee profiles and a company handbook or policies can be easily created.

Holidays and Absences – Track and manage employee holidays, lateness and absences. Record notes on employee profiles, upload doctor notes and schedule notifications for when they expire. HR Manager also uses an automated Bradford Factor to identify trends and prompt reviews.

Appraisals and Disciplinaries – Track and manage employee appraisals, grievances and disciplinaries. Guidance notes and template letters are provided and reminders can be scheduled for follow up procedures.

Health & Safety – Manage and monitor both personnel and company Health & Safety duties and responsibilities. Create a company handbook and policies. Complete weekly/monthly reports including risk assessments, fire safety, RIDDOR, COSH and much more.

GDPR – Complete your data audit and manage your GDPR duties and responsibilities. Carry out a data audit, issue data controller contracts and create privacy notices.

Telephone Advice and Online Support from Experts – Any questions you have, you can call the telephone helpline or ask a question online using the ‘contact us’ button within the portal.

For anyone not make the Cardealer Expo CDX2018 in Manchester Lawgistics will also be showcasing the HR Manager at the AutoMechanika Show, Birmingham 5th-7th June on The Independent Automotive Aftermarket Federation’s stand (H57).

Following the launch, Lawgistics will be writing to all eligible Members inviting them to request access to HR Manager but if there are any questions regarding the beta software please email or call 01480 455500.

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Automechanika Birmingham announces Garage of the Year shortlist and best seminar programme yet

Winner to be announced next month at UK’s leading industry trade show
A seminar for every business, as wide-ranging programme unveiled

Automechanika Birmingham has revealed the shortlist for its Garage of the Year 2018 award, in partnership with Garage Wire, featuring some of the UK’s top independent garages all vying to win the prestigious accolade.

With this year’s competition receiving a record number of entries, voting has now closed and the shortlist has now been drawn up for each of the six categories of Best Small Garage, Best Large Garage, Best Community Initiative, Auto-Mechanik of the Year, Technology Innovation and Business Innovation.
The judging panel of James Onions (Garage Wire), Andy Savva (The Garage Inspector), Stuart James (IGA) and Simon Albert (Automechanika Birmingham) will announce the winners from each category at a special evening dinner to be held in the Director’s Lounge, Aston Villa Football Club on 5 June, with guest speaker, Fuzz Townshend. The finalist will get to find out who has been crowned overall Garage of the Year winner at the event itself on 6 June.

James Onions, director of Garage Wire, said: “We’ve received an extremely high amount of entries this year and we’ve got a fantastic group of garages in the mix, reflecting the diversity of UK garage businesses.

“For the very first time this year, the award ceremony will get its own venue and is recognised as an event in its own right, underlining just how important the competition has become. We’re very much looking forward to a fantastic evening planned to run in the same week as Automechanika Birmingham.”

Automechanika Birmingham’s seminar programme looks set to be the most comprehensive yet with a number of wide ranging topics discussed and technical advice available to visitors.

The event, which takes place from 5 to 7 June at Birmingham NEC is specifically geared towards meeting the needs of garages, motor factors, retailers and suppliers / manufacturers and the seminar programme reflects just that.

There are four main seminar areas at this year’s event including: Aftermarket Seminars, Technical Talks Theatre, Vehicle Production Seminars and a new Keynote Theatre.

The Aftermarket Seminar theatre will feature key talks from MANN + HUMMEL, SMMT, DVSA and The Motor Ombudsman along with IMI looking at changes to the MOT. IAAFs Wendy Williamson will also return this year and give a much-anticipated seminar on the future of the automotive aftermarket.

Meanwhile, the Technical Talks Theatre will feature talks on Hybrid & Electric vehicles, mechanical systems and chassis diagnosis, ADAS awareness and dual mass flywheels. The Technical Talks Theatre will also feature presentations on how to remain profitable while offering technically complex services and tackle the long-standing debate of garage labour rates.

Over at the Keynote Theatre, there will be wide ranging discussions hosted by SMMT, Motorsport Industry Association (MIA) looking at innovation and, Innovate UK who will host a forum on “tomorrow’s mobility”.

The full Automechanilka Seminar Programme can be accessed here.

This year’s event at the NEC Birmingham, running from 5-7 June 2018, will welcome vehicle production exhibitors in Hall 6, aftermarket suppliers in Halls 19 & 20 and a dedicated Garage Quarter in Hall 19.

Visitors looking to sign up can register for their free ticket here.

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TecAlliance strengthens automotive electronics and repair solutions with NGK SPARK PLUG and bilstein group on board as shareholders in May 2018

TecAlliance, a global market leader in automotive data management and integrated management solutions for manufacturers, dealers and workshops, is pleased to welcome two more important shareholders. In May 2018, ignition and sensor specialist NGK SPARK PLUG and replacement parts supplier and manufacturer the bilstein group joined TecAlliance. This helps the company to further strengthen its reputation for quality and excellence in data management and as a driver of digitalisation in the automotive aftermarket.

The TecAlliance TecDoc catalogue is recognised as the largest and leading database for vehicle replacement parts data worldwide. However, in addition to current vehicle and OEM quality replacement parts data (TecDoc standard), TecAlliance also provides integrated solutions and consulting services for electronic order processing (including invoicing) in the automotive aftermarket, as well as being the principal shareholder in Caruso, the neutral and open data marketplace for telematics data. (

NGK SPARK PLUG and the bilstein group find themselves in good company at TecAlliance: the current shareholders’ list now includes a total of 35 partners, all of them leading vehicle parts manufacturers and traders in the automotive aftermarket. “The investments by two more renowned companies will help us in our challenge to promote the digitalisation of our sector and to continue to set new standards in terms of data quality,” explained Jürgen Buchert, TecAlliance CEO (above). “This expertise will flow into the further development of our solutions and therefore into the improved competitiveness of our portfolio.”

For many years these new shareholders have held strong positions in the international automotive aftermarket. NGK SPARK PLUG is a leader in the worldwide aftermarket. Its product portfolio includes spark plugs, glow plugs, ignition coils and ignition leads, as well as sensors, such as lambda probes, exhaust gas temperature probes, NOx, manifold/boost pressure sensors and air flow meters. In Europe, the Japanese ignition and sensor specialist considerably strengthened its logistics offering by opening a state-of-the-art distribution centre in Duisburg, Germany. The highly automated centre quickly and reliably delivers replacement parts to customers in 44 countries. “The step we’re making by taking a share in TecAlliance will make NGK SPARK PLUG one of the key suppliers for the high-quality data and information services that TecAlliance provides to the replacement parts trade and workshops around the world,” said Damien Germès, Senior Vice President EMEA at NGK SPARK PLUG Europe GmbH. “We are optimally positioned to support TecAlliance in delivering digital excellence in the automotive aftermarket.”

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GS Yuasa Battery Sales UK Ltd. welcomes new General Manager – Sales and Marketing

GS Yuasa Battery Sales UK Ltd, UK market leader for vehicle and industrial batteries is pleased to announce the appointment of Jonathan Pritchard as General Manager – Sales and Marketing.

Jonathan brings with him over 15 years of management experience and strong knowledge of the automotive aftermarket. He joins GS Yuasa having held sales and management positions at Unipart Autoparts and Sogefi

Commenting on Jonathan’s appointment, James Hylton, Managing Director of GS Yuasa Battery Sales UK Ltd said: “We are looking forward to welcoming Jonathan to GS Yuasa and working with him as we continue to develop our business. He has a wealth of experience, and will play a key role in helping us to meet our ambitious growth goals across automotive, motorcycle and industrial markets.”

Jonathan Pritchard said: “I am delighted to be joining GS Yuasa and I view this as a positive move given the future in batteries. The company has a strong reputation as the world’s leading battery manufacturer. The quality and reliability of its products and service is well known throughout the industry.

“I am looking forward to working with an established team and helping to drive sales growth in the UK and Ireland, as well as developing business in the Nordics, Baltics and the CIS region.”

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HELLA expands its aftermarket team

Renowned original equipment (OE) manufacturer and system supplier HELLA, has strengthened its UK aftermarket team with the recruitment of Martin McGreevy as the company’s new national sales manager.

Martin has considerable aftermarket experience, both from a distribution and product supplier perspective, having worked for several influential companies including The Parts Alliance and, most recently, ECOBAT Battery Technologies.

“Following an internal review, we concluded that to continue to develop the business and maintain its growth trajectory, there was a need to focus greater attention on our national accounts,” explained Managing Director, Matthew Say. “We quickly identified Martin as the ideal candidate to enable us to implement the plan and I am delighted to be able to announce his appointment as a welcome addition to our exceptional sales team.”

Commenting on his move, Martin said: “Having spent several years with one of HELLA’s key product suppliers, it is great to join another highly respected business, but one with such a broad product portfolio and enviable OE pedigree. As the market has evolved, key account management is an increasingly important element and I relish the prospect of playing my part in the continuing growth of HELLA in the UK.”

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