A Bunch of Interesting Case Studies


Case 1

A meeting with young, dynamic entrepreneurs who operate in an IT orientated activity.

Their turn-over has grown rapidly and now exceeds the threshold for requiring an audit – an issue not noticed by their existing unqualified accountant.

We explain the rules, but more importantly we explain how, with suitable training on their bookkeeping package, their even-less-qualified in-house bookkeeper can learn how to produce accurate monthly management accounts, which is what their bankers require.

Sensibly, they like that idea.  They have a dispute with a shareholder to whom they rather rashly offered shares, even though it soon became apparent that he was a liability of, rather than an asset to, their business.

Proper legal advice will be required to bring this matter to a conclusion and we offer to introduce them to someone suitable who will speak their language.

They want us to provide technical support in this process, which we are willing and able to do.

Another growing new client with issues that require our proactivity!

A good start to the week.

Case 2

A dentist hears of our expertise in this field and comes in for a meeting.

He wants to consider incorporating his practice but his existing accountant seems unable or unwilling to provide guidance and technical support.

This is meat and drink to us so we spend a couple of hours explaining the process and the tax advantages that can arise as high rates of income tax and NICs can be avoided and replaced by low rates of corporation tax and even lower rates of capital gains tax.

The dentist is advised that the tax and accountancy is one thing, but as he has a large NHS practice, the reaction of his local Primary Care Trust to the proposals is something else.

PCTs have recently been refusing to transfer dental contracts to limited companies as they fear a loss of overall control!

The dentist says that he has received the “green light” from his PCT, which is good, but he is advised to get that agreement in writing before undertaking any transactions in this regard.  A matter pending, watch this space…

Case 3

It’s Budget Day!

An historic event – the first Budget by a Coalition Government in my life-time.

Some of my predictions from the previous week come true; VAT to rise to 20% (but not until 4 January 2011) and corporation tax rates to fall.

We knew that CGT was to be meddled with (again) but I had not predicted that the change would be effective from 23 June, nor that the changes would result in three rates of CGT depending on circumstances (10%, 18% and 28%).

The Budget offers many planning opportunities, especially as regards the “arbitrage” between the very high rates of income tax and NICs and the much lower rates of corporation tax and CGT.

I prepare my Budget presentation, which I deliver the following day – happily it seems to be well received!

Case 4

Another day, another meeting.

This time a client is (a) concerned about the large amount of income tax he seems now to be paying; and (b) wants to discuss a rather complex share transaction that he undertook a couple of years ago in respect of which he is now nursing a sizeable loss.

Question (a) is straightforward enough – as his salary and benefits exceed £150k per annum, the tax changes from 6 April 2010 are clobbering him – no personal allowance and 51% tax and NICs on the top slice of his income.

As he is not a controlling shareholder his options are extremely limited.

As he would not contemplate accumulating income within the company with the intention of extracting it later at lower tax rates (possibly CGT rates) he will have to grin and bear it!

But the share deal loss could be useful.

He will obtain the documentation, but it seems that he subscribed for shares in an unlisted company that trades in the UK.

A “negligible value” claim will trigger the loss, which will be available to offset against his income.

A good result seems to be on the cards!

Case 5

A dash to Hertfordshire to meet a large client, the directors of which would like to hear about the Budget first hand.

Reducing corporation tax rates are very good news for them, but high income tax and NICs rates are less-than welcome.  An idea!

The shares in the company are owned by a family trust for the potential benefit of a wide-range of beneficiaries.

If we create a large number of revocable interests in possession, we will be able to spread dividend income very widely round the family.

There will be no NICs on such dividends and if everybody’s income is kept below £100k, no-one will lose their personal allowances and no-one will fall foul of the 50% tax band.

It’s a runner!

Case 6

Up to central London to meet clients who want to form a property fund attracting investment from mostly non-UK domiciled and non-UK resident investors, who believe that there are numerous world-wide property investment opportunities.

Structuring such a fund presents legal and technical difficulties as there are numerous cross-border issues.  However, we have a good deal of experience in such matters and know lawyers who can draft the various agreements that will be required.

A structure is agreed in principle and we are instructed to take matters to the next level in conjunction with our lawyer friends.

Friday night is Summer Ball night, to be held at a suitably glitzy venue in the City of London.

The team have worked well over the last year and this will be a way of showing our gratitude.

I need to write my speech!  Something about the complimentary skills that a well organised team requires – perhaps Senor Capello could give me a few pointers.

And so to bed…

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