How One Company Saved Over £39k in Tax with a Few Simple Steps
Posted on 19th January 2022 at 08:00
John & Elaine, the owner-managers of an engineering business were referred by another client because they were unhappy with their existing accountant. They had been with him for 10 years. For the last 3 years they had been asked to accept and sign off their accounts a matter of days before the filing deadline to avoid a penalty. Their accountant had been given the books some 6 months earlier.
Fed up, they called us to arrange a meeting.
Prior to meeting them we knew the problem was not just to do with late filing. A quick check at Companies House revealed that Elaine was not a shareholder, so we suspected they were paying too much tax.
The First Meeting
After initial introductions our opening question was “when did you typically meet with your accountant – before or after the year end?” Their response that it was only after the year end accounts were completed did not surprise us at all. This is fairly typical amongst most traditional accountancy firms.
Their answer confirmed to us that they did no pre year-end tax planning.
They were paying too much tax and it had been going on for years.
Tax Planning and Tax Saved!
In the few days and weeks that followed, John & Elaine switched accountants and signed up with us. Elaine was allocated shares so she could benefit from both dividends and a more tax efficient salary. During their first year with us, we managed to save them over £39k by proactively looking at their accounts and business forecasts and making a few tax efficient changes. The tax savings paid for our services and left more money in the business.
We now hold quarterly review meetings to help advise on the profitability of the business and ways to save tax both for the company and them personally.
How we can help
It is impossible to save tax after the year end has passed. The tax planning meeting with your accountant is the best investment of time you can make, often paying for the accountancy fees many times over like this example shows.
To arrange your tax planning meeting, contact a member of the Moulds Accountants team on 01937 584188.
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