We met with a company director who had been with his existing accountant for five years. He was not looking to change his accountant but took up our suggestion of a Business Health Check.
This process highlighted some very basic compliance issues which had previously been overlooked. We made some suggestions to help him save some tax and also focused on his cashflow, an issue he mentioned early in our meeting.
The one-hour Health Check identified a number of “red alerts” including:
Issue:
The VAT registration certificate was not in the company name.
Outcome:
This was updated for the client with no penalty incurred.
Issue:
The company used traditional VAT accounting.
Outcome:
The company changed to cash accounting and also registered for the Flat rate scheme. This saved £3k in VAT per annum and eased the cash flow significantly due to payment terms with customers being an average of 60 days.
Issue:
Fuel benefit in kind was paid by the Director and the company paid associated employers NIC but there was very little business mileage undertaken.
Outcome:
The Director did very little personal mileage but was paying £1.2k pa in personal tax. Company car usage revisited with HMRC to reduce this tax charge to zero.
Issue:
The company did not always pay its PAYE on time since it was payable monthly.
Outcome:
The company qualified to pay its PAYE quarterly. Due to the cash flow of the company, payments have subsequently been made on time. This reduces penalties and interest and the risk of a HMRC compliance check.
Issue:
R & D tax credits.
Outcome:
The company qualified to make a claim with HMRC – this resulted in a £6k corporation tax repayment and subsequent claims.
Issue:
Cleaning expense was high on the overhead review for an office with just two employees.
Outcome:
The cleaning contract was terminated saving £2.4k pa. Sometimes it just needs someone to ask the question of the business!
Issue:
Nil payment of the Director’s wife.
Outcome:
The Director’s wife genuinely works within the business but was not get paid a wage since the company couldn’t afford to do so. This was changed saving the company corporation tax of £1k pa.
Total savings from addressing these issues – £13.6k from a free Business Health Check
“‘I just wanted to write to you to say a massive thank you for the Business Health Check that you did with myself and Ian. Before the session the future for our company was very unclear; you helped us to find a way forward to ease our cash flow position. The session not only helped us plan for the future but also increased our confidence in taking the business forward with you on board.”
