How we reduced an £80,000 tax bill to £51

How we reduced an £80,000 tax bill to £51

The importance of effective, timely accounting and bookkeeping practices are highlighted in this real-world example.
A client approached me after a year of running a construction business, enjoying the success of lucrative contracts my client paid his subcontractors without registering as a CIS CONTRACTOR (CIS – a tax deduction scheme which involves tax being deducted at source from payments which relate to construction work) and went over the VAT threshold.
I completed his tax return and re-registered for VAT as well as managed to recover the VAT from his contractors.
Unfortunately, the client failed to submit all the required documents to HMRC. Expenses and receipts were not kept or recorded correctly, they failed to keep subcontractor records, no CIS payments were deducted, and CIS monthly returns were never filed.
HMRC can only go from the information you send them, the result:
HMRC sent the decision for the client to pay nearly £80,000 in tax and over £7000 in penalties!

The process we used to reduce the tax bill

As you can appreciate, we had some work to do! But this is exactly the kind of challenge we love!
The clients bookkeeping that was being done by staff was never fit for purpose. I took on the case and verified every single transaction the business made, we analysed bank statements, CIS records, recalculated all-cash bills, re-checked every payment from the bank account, checked every sales invoice and verified all contractors payments.
The result was a 12-page excel spreadsheet which explained every penny in and out of the bank account!
This thorough investigation also allowed us to spot a mistake made by a contractor that falsely increased the turnover.
After 2 appeals and many phones calls with HRMC they accepted our findings, the final decision: £51 tax bill and £1800 penalty.

Trust is key
Taking the time, care and attention to understand every transaction in the business we established that we are reliable advisors to both the client and HMRC. By working with HMRC and presenting the information in a clear and concise manner which left no room for interpretation, they trusted our calculations.
Being a professional help’s but being a compassionate human being, help’s more. We go the extra mile because we view ourselves as business partners to our clients, not just a service provider, your success ensures our success!

Call Now