Tom, who runs construction projects in central London, asked me to help with the VAT audit conducted by HM Revenue & Customs.
Tomek came to me stressed and said that it turned out that he had exceeded the mandatory VAT registration threshold, and his previous advisor did not register him until
VAT.
To my horror, I also heard a story about how his advisor informed him that he did not have to register for VAT because his company generates high costs!
After a preliminary check of bank statements and invoices, it became clear that Tomek should have registered for VAT many months earlier.
The company did not have a record of transactions. Tomek found out that if monthly books called management accounts were made on an ongoing basis,
would avoid the problems associated with exceeding the threshold for mandatory VAT registration and not submitting a VAT declaration.
What did we start with? From an accurate record of transactions to determine the moment of entry into VAT, to calculate sales, purchases, VAT on sales, VAT on
purchases and VAT due to the tax office. On sales during the period at £180,655, there was a tax payable of £26,457.
A company in England, especially active in the construction sector, come not only, should keep a register and make a reserve for taxes due on an ongoing basis.
Without this, without current bookkeeping and knowledge of the law and timely registrations, the consequences of tax negligence can be devastating for companies of this type.
Apart from the problem of urgent payment of VAT to the office, the risk of VAT tax penalty for non-compliance continued to weigh on the company like a damocles sword
obligation on time and failure to complete timely VAT registration in the UK.
After a few weeks of work, we already had the first results:
1/ we have determined the moment of entry of the company for VAT and completed the formalities of the VAT declaration
2/ we prepared the customer's VAT settlement and sent it to the office
3/ we calculated the VAT due in the amount of £26,457
4/ we avoided a tax penalty for late filing of VAT registration in the amount of £2,645.70
Fortunately, we were able to avoid a tax penalty for not reporting VAT registration on time.
But the client had to face the payment of a high amount of overdue VAT.
Remember! If you are involved in construction projects, you mustt kept record of sales, purchases and bank transactions on an ongoing basis, and reports generated systematically and
create reserves.
Further analysis of the client's business led me to the conclusion that he should change the legal form of his business as soon as possible, instead of self-employment
Register a Limited Company in England. The benefits of having a LTD company in the UK are disproportionate to those of self-employment, starting with
the most spectacular in the form of better methods of tax optimisation and consequently lower UK taxes, to the legal protection of personal property,
name of the company and even prestige.
My client sells his services to those clients for whom not money but prestige, credibility of the company and opinions about the company are crucial. Company books and
data on the people involved are publicly available, and transparency for such a clientele is a big plus.
I am writing this case study on March 25, 2020 and it has been over 3 years since we met. The client registered the company Emitom Design and Build Ltd. I met
with Tom and his wife Emilka at the beginning of March this year on business matters and they agreed that I would gladly prepare a case study on them. Emily, who
is the chief architect in the company told me that for over 3 years they have not had any problems with the British authorities, including the UK tax office.
Do you think I helped Tom and Emily well? Do you have a business in the UK? Need help with your business?
Welcome to WiseTax Kontakt
I am Magda Mikulska, since 2004 I have helped several thousand companies in the UK.
You can check the benefits of cooperation with a licensed WiseTax law firm in the Case study section and how customers evaluate WiseTax help you can find out on Facebook and
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Magda Mikulska
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