We took on a media client from a larger firm as our client felt they were not receiving the advice they needed and were concerned at the costs. They explained that the partner that looked after them was charming and took them to lunch once a year. Whilst this was always to a good restaurant, they felt it was more about showing them off. Additionally, there was never any professional advice given and any attempt to get advice, they felt, they were being passed from pillar to post.
Having taken on the client we began to understand the problem. The accounts, corporate tax and personal tax departments were all in different locations in the UK, and communication via the partner was difficult as he was not in his office much. The payroll and related returns were handled overseas.
The first area we were able to address was the treatment of beneficial loans to the director. As these were processed overseas the information went from the accounts department to the overseas payroll department. As a result, the dates of entries of dividends and drawings were not considered and the director’s loan account was technically overdrawn. This resulted in an NI bill of about £2,000 and a personal tax bill of about £5,000. Once the dividends were correctly recorded these amounts were reduced to nil.
Other less obvious savings were made that resulted in lower tax bills for our client. Our client was also happy that our fees were about half of the previous accountant and most importantly they did not need to go out for lunch with me!