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Client confidentiality is of the utmost importance to us. That’s why we have omitted company names from the case studies below. To find out more about how we’ve helped these businesses or to arrange to speak to any of them directly, please call our office.

Client: IT Consultancy

The challenge:
To minimise tax liabilities whilst keeping the company and client compliant with HMRC

Background:
In November 2011, we were appointed by an IT Consultancy, referred by an existing client for whom we had saved a significant amount of tax. At the time of our appointment the director had been contracting through his own limited company for a year.

However poor advice received from a previous accountant meant his affairs had not been set up in the most tax efficient way. For example, the client was both paying himself too high a salary, and hadn’t set his wife up as a shareholder or employee, therefore not using up her basic rate band.

To help resolve these issues, we today provide a monthly bookkeeping service (via cloud based bookkeeping ), prepare and submit quarterly VAT returns, year-end accounts, Corporation Tax returns and Personal Tax returns. Additionally, the client has opted to use our payroll bureau, registered office service and dividend and tax planning advice.

Every month, the client uses our cloud bookkeeping software to prepare and submit sales invoices, which in turn automatically updates accounting records. View only access to his online banking system enables us to also upload bank statements and explain each transaction.

Importantly, we ensure only allowable expenses are claimed for. Once the processing is complete, the client simply logs into his account to determine the amount he may withdraw as dividends.

What we have achieved?

  • By issuing shares to his wife, the company was able to start paying her dividends. This reduced the couple’s overall personal tax liability by £14,719.25 in the first year and £9,191.75 in Year 2.
  • By reducing the director’s annual salary down from £8,000 to a more tax efficient amount, we saved him National Insurance contributions (employees’ and employers’) of £195.09 (after Corporation Tax).
  • By paying the director’s wife a salary, in the first year we saved the client personal tax of £2,691 and company Corporation Tax of £538.20. In the second year, these amounts were £1,897.50 and £1,518 respectively.
  • We advised the client to make use of his tax free ‘annual event’ allowance. He was therefore able to take his wife out for dinner on the business as well as saving personal tax of £65.50 and Corporation tax of £52.40.

Summary
In our first year of appointment, we achieved tax savings of £18,261.44 and in the second year, £12,920.24. This figure is representative of the types of savings he can expect each year, amounting to £129,202.40 over a ten year period!