Ok, where should I start? You probably already know what Tax is and the complexity of it.
Small business, medium business, large business, national, international, sole trader, limited company, corporation, etc – all MUST PAY some form of TAX.
The tax is, in crude terms, the percentage (%) charged on the sum of your annual profits. There are many forms and shapes of Tax you might be liable to pay.
The most commonly referred name is CORPORATION TAX (which currently stands at 19% in UK) (there is currently an exemption for Small Business with profits below £300K)
Subject to the size and complexity of your trade, my advice is to use the official accountancy firm which is able to deliver professional advice, guidance and service on your bookkeeping (recording of your typical transactions) and tax returns, as well as quarterly VAT returns.
I find the legislation governing Tax Law rather complex and there are so many ins and outs which an average person woud not know. A successful business usually hires an advisory company along with their accountants. Some form of Money Saving experts alike Moneyadvisor, Financial Gurus, etc. You will be amazed in return benefit of such an investment. If you are on boost-strip where profits are looming year-on-year, hiring a professional will mean more of your revenue will be reinvested back into the growth.
I am not by any chance talking about tax evasion – IT IS ILLEGAL and IMMORAL.
But I am talking about working smart around your money. The government offers plenty of opportunities for businesses to grow and prosper, it is in the interest of the state and the consumer (through the strengthening of the market and healthy competition)
Her Majesty Revenue and Customs, is the UK government department looking after all your incomes, losses and taxation matters. They are strict to those who abuse the system but can be lenient to those willing to co-operate and are genuinely struggling with repayments. DON’T PANIC! See below:
For instance: Your business opportunities been thriving year-on-year and you have recently invested cash-lumps into the renovation. Your accountants, however, have not recorded it accordingly as a legitimate business expense but on the contrary, put it down as sales figure and it increased your annual profit in the report (when in fact you physically spent the money). Well, you pay corporation (business tax) in the UK on *usually* 2 occasions during the year. The start (January) and some month in the Summer (June/July). You are in the situation where your tax (which is retrospective by a year) has to be paid in two lumps but you know you won’t be able to afford. Well, simply talking to HMRC over the phone might put you on the entitlement of smaller instalment payments spread evenly across the number of months, for as long as you can prove that you struggle is genuine and you are able to repay the outstanding amount in time before the next lot comes in.
HMRC people, however, might get cringy over it, as their argument will be: “The amount you are due to pay is tax on your last year profits, and because you were made aware of it long in advance (usually with a good accountant you will know about it at least 6 months in advance) you should have ensured that you have the relevant funds to pay the liability. (and it is quite right, but sadly business does not always work that way, especially when you are engulfed in expansion process or trade perishible goods)…
There are many forms of Tax liability and Corporation Tax is just the one most common. There are also VAT, Insurance Premium Tax, Investment Tax, Landfil Tax, etc – etc -etc along with numerous levies.
To get it right and to avoid experiencing hefty fine my advice – find yourselv a good ACCOUNTANT who will understand the Law and your business needs. If you don’t get on with your accountant – you might go bankrupt. (just a tip)