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Case Studies
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So. We know, from our Testimonials, that clients are happy with what we do, but just what, exactly, is that?
What do we do for our existing clients, and what, therefore, might we be able to do for you?
Below are a few genuine case studies, using actual figures, to give an indication of the nature of the assistance given.
It is, also, worth noting that these may help to answer that most common of questions; "Do I need an accountant to do my Accounts / tax for me, or can I do it, myself"?
Unfortunately, they, also, confirm that it can be equally painful to employ the wrong accountant to represent you, and deal with your taxation affairs.
Self Employed Sole Contractor
AB was a self employed contractor, working in the construction industry, under the CIS taxation system. As a result, he was suffering tax at source, on his income received from the main contractor.
Each year, the client went to his local tax office, armed with a box of receipts, where he spent the entire day, with an HMRC employee, completing his Self Assessment Tax Return.
Of course, in this situation, the Revenue employee can only work with what they are given,, and within fairly tight time constraints. As a result, even though he had suffered tax in advance, under CIS, the client still came away with a tax bill of 1,487.
Following on from a recommendation, by one of his fellow contractors, who already used us to complete his Accounts and returns, the client approached us to do the following year's work for him.
In that year, coincidently, the business turnover was just 25 different from the previous one. In spite of this, because we were able to claim everything the client was entitled to, we were able to secure a refund of 842.
The client was 2,329 better off, tax wise, through having used our services. We only charged him 250 for this, which he paid us out of his refund! In addition, the client saved a whole day of his time, previously spent sitting around the local Tax Office.
Small Self Employed One Man Band Business
MB came to us with a pretty extreme tax situation.
He was a relatively small, one man band, business, and, since April of that year, he had been paying 1,000 a MONTH standing order to HMRC, to cover his tax liability.
We advised him to cease his sole trader business, and transfer it to a new limited company, with immediate effect. We, also, completed his last year's Accounts, in order to rationalise his tax liability.
The client worked, substantially from home, but his accountant was only claiming a small, monthly, round sum allowance to cover this. At that time, you were able to apportion household expenses, based on the area of the house dedicated to business use. Claiming the correct amount resulted in an additional 2,300 of allowable expenses to be deducted from his profit.
Due to the claiming of additional expenses, such as this, we were able to reduce the client's overall tax liability for the year, however, the key saving arose from the transfer of the business to limited company status. Also, as Self Assessment tax is paid in advance, in six monthly installments, whereas Corporation Tax is payable in arrears, this resulted in a payment 'holiday' period for the client.
The client's tax liability was reduced to some 5,000 (due to payments on account no longer being required for the following year. As he chose to continue his standing order, he was able to settle his debt, in full, within three months, with no further tax to pay for another eighteen months, at which point, his annual Corporation Tax liability was reduced to around 4,500.
Our fee for these services? Less than 10% of the tax we saved him, AND, no more than he was charged by the previous accountant, who gave him the inadequate advice in the first place.
Larger Self Employed Business
WW was a larger business, run on a self employed basis, from home, with approximately 25 employees.
The client was, originally, recommended to us by her mortgage broker, as he felt that her taxation liability was totally disproportionate to her level of income. (She had asked him to arrange a remortgage for her, so that she could pay her 45,000 tax bill for that year).
Although the client was some 200 miles away from our offices, we attended the premises and performed a full review of the accounting records, for the current year, and three previous years, from commencement of trade, to establish the nature of the problem.
Our findings were as follows:
Following our initial visit, the client received an immediate refund of a little over 15,000, followed, shortly after, by a further refund of approximately 28,000.
The previous accountants had submitted estimated returns for the first two years, which had resulted in an HMRC compliance investigation.
During the investigation, they had provided misleading information, which resulted in an HMRC determination, estimating 85,000 profit, when the actual result was closer to 25,000.
The main reason for the problem was that (due to low profit levels in the startup years, and high short term overheads (particularly wages)) the client had substantially remortgaged one of her properties, in order to provide a series of cash injections into the business. The accountants had treated this as taxable income.
In spite of the above, the accountants had the audacity to write to the client to advise her that they could not complete the year three accounts, as there were a number of small items they couldn't tie up.
Self Employed Veterinary Practioner
AL was a self employed veterinary locum, working for a number of local practices.
As a new business, she was looking at a number of options, including that of going VAT registered. All of her clients were VAT registered veterinary practices, so her VAT registration would make no difference to the cost, to them, of her services.
Although she was considerably below the VAT registration threshold, at the time, we advised her to register, under the VAT Flat Rate Scheme.
Under prevailing rates, at the time, she would charge VAT at the standard rate of 20%, however, she was only required, under the scheme, to pay VAT to HMRC, at the rate of 11% on gross income.
We advised her to register, on this basis, to take advantage of the cash flow benefits afforded by this scheme.
Through the operation of the VAT Flat Rate Scheme, this client was better off to the tune of approximately 3,500 per annum, compared to not registering, or using the Standard VAT Accounting Scheme. Just another example of how a little lateral thinking can help clients to benefit in the long term.
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