The most relevant tax issues to consider will depend largely on the growth stage, profitability and nature of your business.
For loss-making or early-stage businesses, we tend to find the focus is on cash preservation. From a tax perspective that often means R&D tax claims, VAT and payroll taxes are priority areas as these either represent opportunities to generate positive cash flows or real cash/tax leakage.
For larger, profitable fintechs, the focus shifts towards tax risk management and tax governance. As the business grows and teams expand, it becomes more and more important to have strong controls and processes in place to manage tax risk. Often this is a challenging transition as fintech culture often promotes flexibility, innovation and empowerment of all staff to make decisions on for example new products, services or markets. Making sure the tax or finance teams have an early awareness of these plans is key to managing the business’ tax risk, both in the UK and internationally.
Key tax considerations may include:
R&D tax relief – ensuring claims are maximised but robust, minimising risk of HMRC enquiry which can be costly and delay repayment of any tax credits.
VAT recovery – ensuring an appropriate VAT recovery method is agreed with HMRC (if necessary) and applied correctly.
International tax – managing the business tax residence and international presence, along with ensuring compliance with local tax rules and reporting requirements.
Transfer pricing and profit fragmentation - ensuring appropriate policies and documentation are in place to justify an arm’s length price for any related party transactions.
We help fintechs at all stages of growth to identify and maximise tax opportunities, as well as manage and mitigate tax risks across all areas of tax. Find out more about our Business tax services.