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Case studies

A tax problem solved

A small retail service client, with a very poor compliance record – last 4 years accounts not submitted and determined tax assessments being demanded for payment, plus a poor VAT compliance record which meant a cycle of surcharges, interest, bailiffs calling, etc….basically, the client was in a continual crisis management mode, which was affecting their health and could have ultimately led the business to be closed down....

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We were instructed once their existing accountant “disappeared”…. a recommendation from another client. Accounting records had disappeared with the accountant. We opened up dialogue with the Inland Revenue, and using details of past VAT Returns (obtained from Customs & Excise), PAYE records (obtained from the Inland Revenue), other details e.g. rates, utility bills, etc., from other sources, reconstructed a profit profile for each of the past years. These were approved by the client and were submitted to the Inland Revenue with a detailed “basis of preparation” explanation, and got the determined assessments re-opened and dismissed. At the same time Link negotiated hard with Customs & Excise to ensure that the client paid ongoing VAT liabilities and all old liabilities were restructured and paid over time, breaking the vicious circle that had meant ongoing surcharges and bailiffs’ visits etc., therefore removing the clients from the stress of the crisis management that they had been living with. In addition, to this, and directly as a result of Link’s involvement, enforcement tactics adopted by Customs & Excise and the Inland Revenue, subsequently were more sympathetic.

Consultancy services

A renowned figure in the City and the fashion business with many interests including a joint venture with a major supermarket chain and a catalogue company, was suffering from inadequacies in their finance department and the catalogue business was losing money. Their normal accountants were a top 5 firm...

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This client was introduced to our practice by a mutual connection, with a brief, initially, to review the operations of the catalogue business and the supply side of the joint venture business. We were also required to prop-up the financial function of the overall operation, until a more effective finance team could be put together.

Reporting deadlines were agreed and the review commenced. Within three weeks, decisions directly attributed to Link, saved this client £500,000. The organisation of the supply side of the organisation was changed, purchasing decision structures were introduced and a system designed to save an overall 5% (or more) of all purchase cost was put into effect. The monetary implication of this was a potential saving of £5m per year.

Direct creditors arrangement

A new pet food wholesale business owned by our client suffered a bad debt of some £10,000. The client operated on tight funding - mainly because, in spite of advice, he expanded too quickly. As a result of the debt, he had to cease trading. He was left with stock worth less than he paid for it and debts with a number of suppliers, Customs & Excise, the Inland Revenue, credit cards, the bank, and he owed us money. Potentially, our client could have lost his house and have been made bankrupt...

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He could not afford the fees of an Insolvency Practitioner to help. In an effort to stop this calamitous effect on his life, we suggested, without prospect of any fees, to help formulate a credible proposal to the creditors, that would settle 25% of the debts in full and final settlement within three years, by quarterly instalments, from resources that our client could summon. The arrangement was to be supported administratively by Link throughout.

Link obtained agreement from all the creditors and saw the arrangement through. We proceeded to prepare cessation accounts, filed these, obtained a significant tax refund to our client, which covered our costs of assistance to that point! The client was “over the moon,” and through his solicitor, who Link had never met, recommended an Inland Revenue investigation case. (refer case study (a) above), which we also dealt with.

Inland revenue inquiry

A wholesale soft drinks proprietorship business had specific inquiries on certain expenses in the accounts, particularly, vehicle expenses… with the Inland Revenue asking for detailed information including original vouchers. The case was carried on for two years by Link’s predecessors who had, in the meantime, filed another tax return with the next year’s accounts. As a consequence, both years were under inquiry...

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The case was brought to Link, who settled the first year by correspondence, despite missing information and contentious issues pertaining to the use of the proprietor’s and his wife’s car in the business.

The second year’s accounts were also swiftly agreed, the whole process taking less than three months, even allowing for the initial gathering of information and correspondence. The overall additional tax liability was less than £750 per year. Our client was delighted with the outcome. In his words we were "simply the best!"

Inland revenue investigation

A car mechanic with a grocery off-licence business run by his wife, had amassed nearly £250,000 held in bank/building society...

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Unfortunately, he could not prove the source of the majority of this. The allegation was that he had been moonlighting or not declaring the full extent of the business takings.

Our client’s contention was that the bulk of the money had come from his family in India, particularly his father’s Estate, but these funds had not come through official channels Link put forward a convincing case on his behalf and reached a very acceptable overall settlement with the Inland Revenue. The inquiry covered 8 years and very complex personal circumstances.

Joint shadow economy team inquiry

A Beauty Salon was under inquiry, at first by undercover observations from August by the Joint Shadow Economy Team (JOSET), who amassed substantial observational evidence...

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They raided the premises in November of the same year and took further evidence by interviewing staff. They also obtained strong forensic evidence from the company records to support their allegations of a substantial suppression of income, which indicated that the business should have been VAT registered, as well as having filed incorrect income tax returns.

The proprietor had traded in her name for over four years before the first observations in August but had been a partner in the business for in excess of 9 years before that and it was alleged that the fraud had been perpetrated over a long period.

Link were instructed to act after the inquiry was formally commenced. After some correspondence, gleaned the crux of the JOSET case by telephone conversation and following detailed fact finding and planning, we arranged a meeting with the Inland Revenue and Customs officers, which was not attended by the client. During the course of this meeting we reached an agreed settlement, which was subsequently accepted by our client.

The settlement was restricted to the period under current ownership and VAT registration was back-dated to 18 months from the commencement of business. Our client was satisfied that the settlement was very fair and was tremendously relieved that the matter was resolved. She remains a loyal and appreciative client.