FAQs

WHY DO WE PAY TAX?

A dangerous question as nobody likes the answer for several reasons. Generally,

  • People do not like paying tax
  • They would rather spend their money themselves
  • They do not agree with how it is spent
  • They don’t agree with those spending it

Unfortunately, our Government needs money to pay for all their expenditure and the Law says we must pay it.

Therefore it is our job to make sure you pay only what you are due under the Law and not a penny more. We do this by either using the laws to plan your tax affairs for the future, or to minimise the tax due on what has already happened.

WHY DO WE KEEP BUSINESS RECORDS – (Also see “what records to keep”)

The law states we must, there are penalties for not doing so and you must submit an accurate Tax Return. Follow this link for H M Revenue & Customs guidance on this matter.

https://www.hmrc.gov.uk/record-keeping/

HOWEVER – we believe you should never see keeping records as an unnecessary expense and headache forced on you by HMRC and the Government.

Good record keeping makes you money. The process should be as simple and quick as possible while meeting all of your legal requirements. You will maintain profit margins, operate efficiently, claim all of the reliefs you are entitled to, and control your overheads.

GOOD RECORDS > ACCURATE INFORMATION > BETTER DECISIONS > GREATER SUCCESS

WHAT DO WE DO FOR YOU

We make the financial side of your business as easy and stress free as possible. We try to ensure you operate as well as you can, then only pay what TAXES you are due under the Law and not a penny more.

We do this by helping you keep your records efficiently so you can spend more time running your business with accurate information. From these records we use tax law to plan your tax affairs for the future, or to minimise the tax due on what has already happened.

We help you be as profitable as possible, and keep as much profit as legally allowed.

WHY DO I HAVE TO PAY VAT?

You don’t, it only feels like it. VAT is paid by people buying goods and services, who are not VAT Registered.

If you normally pay VAT to HMRC, what you are is an unpaid collector of VAT from your customers.

How VAT works is:

  • Your customers buy goods from you at a price, including VAT where applicable, which you collect on behalf of HMRC.
  • You pay your suppliers for goods and services, including VAT where applicable.
  • You pay the difference between these two amounts to HMRC, normally every three months.
  • If you regularly pay VAT you have effectively had an interest free loan because you have held that money as it has accumulated.

With the current payment dates, you will be sitting with at least 1 month and 7 days VAT at all times. This means for every £1,000 of VAT you pay per quarter the amount of free loan you have varies between £400 after you pay the VAT, over up to £1,400 when you pay it.

You can often feel you pay more than you should as major expenses such as Wages, Non-Domestic Rates, Bank Loans, Bank Interest and Charges do not have a VAT element. This means there is no VAT to reclaim and as profit increases it can feel VAT payments are increasing faster than you would expect.

We always run credibility checks to ensure that what you are paying is at the expected level or we look to explain when VAT payments fluctuate.

WHY DO I PAY PAYE

Most of what you pay is Income Tax and National Insurance that you have deducted from your employees, so the majority of what you pay is money you have collected from your employees.

The only part of PAYE you pay personally is the Employer’s National Insurance Contribution. This is currently 13.8% of all wages paid over the ‘Secondary Threshold’ (£148 per week) and is allowable as a business expense for tax purposes.

It is not my place to editorialise but I would like a politician to explain why they increase this tax on jobs then complain about why there are so many part-time jobs available in relation to full-time jobs. The position is:

An employer can employ 1 Full-Time employee on £23,085 per annum and pay Employer’s National Insurance Contributions of £2,123, or employ 3 Part-Time employees on £7,695 per annum and pay ZERO. 

It does not appear difficult to work out why highly paid jobs are much less available than part-time jobs.

You can find all current National Insurance Contributions rates and allowances at

http://www.hmrc.gov.uk/rates/nic.htm