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Inheriting a tax dodging company

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I have 'inherited' a small company. It's a limited company, and only has about three products which are sold b2b to the haulage industry. It functions as a mail order business in the main.

 

What I am discovering is that the company, and its director, has been using the company and company account largely as a personal piggy bank. Salaries are all under the tax threshold, and larger sums have been paid out as director's loans and written off.

 

I have a bank mandate, and can become a director if need be.

Historically, the annual accounts have been a frantic period of receipt finding and trying to write off as much profit as possible against company expenditures. Much of it seemingly fiction.

 

Now, I am not an accountant - the company already has one, and forks out 3-4k a year (on less than 150k turnover) - and I need to be able to (as much as possible) draw a line under the shady shenanigans of the past and put the company on a legitimate, transparent and compliant footing.

What do I, in your opinion, need to do next?

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Find an accountant who isn't rinsing you for £4k a year for starters. And register for Make Tax Digital sharpish too. Are they using any accounts software?

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24 minutes ago, Mordant said:

I have 'inherited' a small company. It's a limited company, and only has about three products which are sold b2b to the haulage industry. It functions as a mail order business in the main.

 

What I am discovering is that the company, and its director, has been using the company and company account largely as a personal piggy bank. Salaries are all under the tax threshold, and larger sums have been paid out as director's loans and written off.

 

I have a bank mandate, and can become a director if need be.

Historically, the annual accounts have been a frantic period of receipt finding and trying to write off as much profit as possible against company expenditures. Much of it seemingly fiction.

 

Now, I am not an accountant - the company already has one, and forks out 3-4k a year (on less than 150k turnover) - and I need to be able to (as much as possible) draw a line under the shady shenanigans of the past and put the company on a legitimate, transparent and compliant footing.

What do I, in your opinion, need to do next?

I think you just need to understand the difference between tax avoidance and tax evasion and then adhere from thereon.

 

Some of the practices you mention above fall into the latter and some into the former. £4k a year is also way over the top as Tinfoilhat said.

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I have opened a QuickFile account, and at the moment am just logging sales through it. Once my bank mandate has gone through I will be able to link it to the company accounts.
 
Thanks for your advice. Yeah - I know the accountants are rinsing us, so that's a big factor.

 

So - new accountant, follow their advice and counsel?

Any recommendations in Sheff?

 

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If I were the OP I would onto an internet forum and solicit opinions from a variety of people who - likely - have absolutely no idea of the legal liabilities you face, and - more importantly - don't care.

 

Then I would come to my senses and talk to a proper lawyer.

 

But I'm irresponsible that way.

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11 minutes ago, bendix said:

If I were the OP I would onto an internet forum and solicit opinions from a variety of people who - likely - have absolutely no idea of the legal liabilities you face, and - more importantly - don't care.

 

Then I would come to my senses and talk to a proper lawyer.

 

But I'm irresponsible that way.

Any idea what a run of the mill solicitor in tax law costs?

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1 hour ago, Mordant said:

What do I, in your opinion, need to do next?

Run away.  It all stinks, including the company accountant.

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1 hour ago, alchresearch said:

Run away.  It all stinks, including the company accountant.

Sadly I don't have that option.

 

1 hour ago, bendix said:

If I were the OP I would onto an internet forum and solicit opinions from a variety of people who - likely - have absolutely no idea of the legal liabilities you face, and - more importantly - don't care.

 

Yeah, I'm actually soliciting opinions, experiences & informal advice rather than snarky comments, but thanks all the same.

For the record, one of the directors reported himself and the others to the SFO - but no action was taken (action would be taken if "it was in the public interest" apparently) - This was in 2013.

But we think a good accountant that won't cost the earth could help me sort the mess out and find a better way forward?

It's a profitable business with no debt and half a million quids worth of stock, would be a shame to throw it all away.

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1 hour ago, tinfoilhat said:

Any idea what a run of the mill solicitor in tax law costs?

Significantly less than the OP might lose if he relies on advice from the internet from people who don't know what they are doing and have no skin in the game.

 

A top partner in a top firm in Sheffield can be had for £300 an hour.  An associate for half that.  And invariably the firms will do a deal with you where the cap the fee.

 

In smaller firms, lawyers fees are considerably less.

11 minutes ago, Mordant said:

 

 

Yeah, I'm actually soliciting opinions, experiences & informal advice rather than snarky comments, but thanks all the same.

 

All of which are interesting but ultimately worthless, and if they lead you down the wrong path, MUCH worse than worthless.

 

There is only one piece of advice worth listening to:  talk to a professional.   Any decent one will meet with you for free for an hour while you talk through the issues, before giving you an assessment of likely costs and processes.

 

 

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3 minutes ago, bendix said:

 

There is only one piece of advice worth listening to:  talk to a professional.   Any decent one will meet with you for free for an hour while you talk through the issues, before giving you an assessment of likely costs and processes.

 

 

 

2 hours ago, Mordant said:

So - new accountant, follow their advice and counsel?

Any recommendations in Sheff?

 

 

 

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Personally - and given there is a lot of money at stake - i would want to talk to a high quality local firm (no need to go to the international firms in the city.

 

For an accountant that would be Shaws (just off Eccie Road, near Nuffields) or Hawsons on Glossop Road.  For a law firm, someone like Keeble Hawson.

 

You only need one or the other.  If both accounting and legal work is required, whoever you go to will draw the right people in.

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19 hours ago, bendix said:

Significantly less than the OP might lose if he relies on advice from the internet from people who don't know what they are doing and have no skin in the game.

 

You're assuming quite a lot there. It's almost as if you think the only people that post on forums have no skills or a profession and are incapable of doing anything or being able to offer perfectly valid advice that is often based on experience.

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