Its not what you do its the way that you do it
I was sitting down with a client, we’ll call her Jo, discussing selling her business. “Well Jo if you do it this way the tax will be £1.2 million and if you do it that way the tax will be £400,000.” The difference was £800,000!!! Jo’s jaw dropped, she had no idea that the way that she did it made such a difference for tax.
That’s how tax advice should go, accountant and client sit down and discuss a plan in advance. Too often business owners go ahead and do something, then ask for advice to get the tax bill down. Imagine the conversation could have been “Well Jo, your tax bill is £1.2 million, which is £800,000 more than if you’d done ABC, its a shame that you didn’t ask us about it beforehand.”
The moral of the story is simple, find a good accountant and discuss any plans in advance. Plans that should be discussed include:
• Starting/ending a business
• Expanding/shrinking an existing business
• Buying/selling assets
• Taking more/less money from the business
• Buying/selling a business
You would be amazed at how small changes can dramatically alter the tax position. The example above is the difference between selling shares in a company and selling the business out of a company and then getting the cash out. This can’t be changed afterwards as all the contracts will have been signed and the details of the deal will be a matter of fact.