Harry Monk:
I’ll give you another example of the difference between a good accountant and a bad accountant. My brother runs a property renovation company, he paints and decorates Post Offices, prisons, Ministry buildings, that sort of thing. It’s a bigger firm than mine, I think he employs four people, he also uses subbies.
About six months ago, he said to me “I’m going to change my accountant, he’s absolutely crap, all he seems interested in is raising as much money as possible for HMRC”. He did change his accountant, and his new accountant rechecked and resubmitted his last year’s accounts. Shortly afterwards he received a tax rebate of £13,000.
Showing profit, showing loss or breaking even has absolutely no connection with whether you are making money or not, it’s entirely down to the ability and skill of the person who prepares and submits the accounts. In my experience, the greatest false economy an owner driver can make is to choose an accountant based solely on cost because as with everything else, you get what you pay for.
There are a finite number of deductions you can make, once you use all of them you have to pay tax. It’s as simple as that.
In our game if you own/lease/rent equipment/property then those deductions are enough to cover most of your liabilities to the tax man, but there will come a time where your profits overcome the deductions (hopefully) and you have no choice but to write that cheque.
Before I finished up in Britain I had my 6 lorries working almost 24/7, apart from a night trunk to S.Wales, which was loaded both ways (both on round trip rates) I was doing local work, so my outgoings were reasonably low. I owned a couple of the lorries and trailers outright and financed the remainder, plus a few hired trailers here and there.
I was making a decent living, on the surface I should’ve been given HMRC a tidy sum, but the cost of doing business as worked out by my accountant, meant that I gave them SFA and of course I was very pleased about that. I also got a refund off the VAT man every quarter as one of my jobs (the outbound leg of the night trunk) was for a Belgian company. There were no shenanigans committed by my accountant, he just played the game.
But, and this is my point, I had pretty much exhausted all my deductions, if I had got a rate increase I would have had to start paying taxes on the increased profits, but even so, I would’ve still been making more money even though the tax man was now having his share.
Personally, that’s the point I want to reach, my ultimate goal is to make as much money as possible and if I have to give a bit to the tax man in order to have more myself then I’m more than happy with that arrangement.
Although I would be extremely ■■■■■■ off if the tax man got a single penny more than was absolutely necessary.
