Gazette Business

AC Mole: Don't try this at home

By Paul Aplin

8:00am Thursday 2nd September 2010

Paul Aplin, of AC Mole and Sons, says: “Don’t try this at home.”

THE busiest time for Accident and Emergency units is, apparently, the weekend, thanks to sporting injuries and DIY accidents.

Now, if you don’t associate DIY accidents with tax returns, read on.

I was recently asked to act for a newly formed IT company and to prepare the company accounts together with the company tax return. The director decided to do his own personal tax return to save money and “because it was straightforward”. When he received the tax demand, however, he nearly ended up at A & E with heart failure.

I asked him to send me a copy of his tax return and when I looked at it, I saw that he had entered as self employed income all the figures the company had already paid tax on. This made sense to him as he had always filled in the self employed pages in the past - why should it be any different just because he now had a limited company?

All he actually needed to record on his personal tax return was the amount he had taken out of the company in salary and dividends. The damage was relatively easy to undo, but the shock – and the cost of putting things right - could have been avoided. We have now done a deal: when I want IT advice, I call my client. When he wants tax advice, he calls me. In fact, by seeing his tax return I was able to suggest ways of significantly reducing his tax bill. The basic tax return guide issued by H M Revenue & Customs is the size of the Taunton Yellow Pages: my firm’s tax library is many times bigger and there is something new to know about tax almost every day.

Over the years, I have found that individuals and businesses who keep their tax advisers at arm’s length and tell them only what they think they need to know often lose out. Only last week another new client told me all that he thought I needed to know about his tax affairs, but as he was leaving he mentioned a family trust. We began the conversation again and came to some very different conclusions.

It is more important than ever to minimise your tax bill. Treat your tax adviser as you would your GP: be completely open and you’ll end up in better financial health. A & E is best avoided.

Paul Aplin OBE is a tax partner with A C Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty. He can be contacted on 01823-624450, email paulaplin@acmole.co.uk. Bridgwater based tax partner Paul Kingdom can be contacted on 01278-446088, email paulkingdom@acmole.co.uk.

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