“Tax doesn’t need to be so taxing” or so HMRC’s advertisements claim. But the amount of legislation grows every year and the extra complexity has provided opportunities for accountants to help clients with tax planning. That has been the traditional benefit of having a good accountant – minimising your tax liabilities.
Good business people recognise that tax is a cost like any other in the business and should be treated as such. They minimise it where they can, particularly as it has such an impact on the after-tax income that owners use to fund their lifestyle.
What is lifestyle?
Lifestyle doesn’t mean fast cars, big houses and yachts. It means putting food on the table, paying the mortgage, educating your children, and hopefully having a bit left over to enjoy, given the time, effort and risks you take to get it.
The government has finally managed to close most of the larger loopholes for tax avoidance. Given that they have now introduced retrospective legislation for the first time ever, we wonder if people should be doing too much in this field as it may be unwound in later years with unexpected liabilities appearing. We don’t know – the landscape has changed, so your approach needs to fit the new order.
What can be done now?
You still need to maintain and even improve your lifestyle. So, if the traditional route for accountants has been to minimise tax, what should they be doing now?
As a practice, we have not put all our eggs in the tax planning basket. We do it but we don’t specialise in it. Our main focus is in driving business performance. This has several benefits to business owners.
Benefits to business owners
1. RESILIENCE – It improves profits which can be reinvested to produce a more resilient business, more able to withstand the inevitable shocks that changes in customer behaviour or the economy etcetera can bring.
2. CONTROL The business owner gets more control over their destiny, which almost all business people want and is one of the main reasons why they go into business. They are driven less by the whims and caprices of outside forces and so can plan better for their future.
3. CAPITAL VALUES Most businesses have two main economic goals – income during the life of the business, and the sales value at the end. Not enough emphasis is given to the second. We track our clients’ business value annually as part of our strategy planning.
4. PEACE OF MIND And an easier more natural way of growing the business so that extra growth does not necessarily bring extra stress and the need for scarce resources.
Enabling growth and peace of mind
We treat tax just like you do – another expense. If it can be minimised easily and simply, we do it. Otherwise, like any other expense we just manage it. We put our time and effort into helping you plan, grow, and achieve your objectives. We have tried and tested ways of achieving this successfully.
Surely your objective is not to minimise tax – it’s to maximise income. Make certain you are clear what you want and what your advisers should be providing for you.