Keeping tax simple – declutter your business


The burden of dealing with HMRC, self-assessment returns, filing information electronically, meeting reporting deadlines, as well as keeping good records means the administrative challenge for businesses can be considerable.

Unnecessarily complex structures and transactions only add to the difficulties and can create uncertainty.

Laurence Field, head of corporate tax at national audit, tax and advisory firm, Crowe Clark Whitehill, provides a list of straightforward ideas to declutter your business, make your life easier and help you get on with making profits.

Review your structure
“In the last four years, anti-avoidance legislation has made complex and contrived structures obsolete. Do more complex groups really need all those subsidiaries? For example, some companies should be asking, why is there a partnership in the structure? Go on a spring clean and work out what you really need, get rid of the rest.”

Understand what the shareholders want
“For many businesses, shareholders want Entrepreneurs’ Relief on exit, but has the company worked out if they will qualify? If not, check. If you’ve checked and don’t qualify, see if you can do something about it. The investors will be pleased.”

Sort out your incentives
“Many companies have a mixture of cash bonus, approved and unapproved option schemes, all with different tax treatments and reporting requirements. Do you really need them all? Are they still fit for purpose? Can you consolidate them? At the very least, timetable what needs to be reported and when.”

Understand the consequences in advance
“Know how you are going to report unusual transactions and costs before you start them. It saves time later on and helps you classify them correctly in the accounting system to make reporting easier.”

Don’t bury your head in the sand
“If you think you’ve got a tax problem deal with it now. The situation rarely becomes better through waiting. Trying to work around a problem complicates the key job of running a business.”

Could it be too good to be true?
“Unless you thrive on stress or really want to ‘stick it’ to HMRC, stay away from tax schemes. They might seem to work now, but they can easily unravel in a few years’ time. Review whether there is anything that feels aggressive that’s been done in the past. It might not be too late to unpick the position.”

All tax planning isn’t bad
“Of course you should be trying to run the business in a tax efficient manner. There is no point in paying more than you need. By decluttering your business you can focus more easily on working out where you pay your taxes and why. If you don’t like the answer, you can do something about it.”

Image: Tax Planning by Shutterstock