Impactful Client Success Story Revealed How we helped our client going beyond conventional ways.    

Objective

Presenting an in-depth analysis of a significant accounting win-over we accomplished in the second week of June, 2024. The study delves into the client’s cashflow management background, tax compliance, time to pay arrangements (TTPA), interest on the payment overdue, the methodology employed for the easy payment of tax liability, road map for efficient cashflow, and the subsequent findings about HMRC.  

The Problem

One of our clients approached us with a tax liability of £60,000. We helped him get the instalments of his tax liability so he could pay smoothly without burdening his business, focus more on the internal matters, and save his organisation from any legal action from HMRC. Client thought he could pay in one month we helped him spread the liability over the span of four months. Because the tax liability was taken care of, the clients was able to make other payments of his business. We combined forensic accounting techniques with a thorough review of their accounting processes, outlining the roadmap to an easy payment of tax liability (four instalments from HMRC), recalculating their liability after incorporating interest, and implementing enhanced control for effective cashflow management.  

Findings

The findings from this case study have been instrumental in refining our own accounting practices. Not only did we propose an impact-worthy solution to a severe problem, we also led to the development of more robust financial planning for the client’s business, taking preventive measures to avoid heavy tax liabilities in the future. The conclusion contains recommendations now integral to the client’s cash flow management. 

Our Role

Effective financial planning is more critical than ever for tax compliance and to maintain corporate integrity in the rapidly evolving economic landscape of the UK. Our client’s organization’s significant tax compliance issue led us to emphasising the importance of time-to-pay arrangements, cashflow forecast, and the importance of connecting with an accountancy firm that treats you not only as a client but your friend-in-need. We achieved the following for our clients: 

1. How to pay your liabilities smoothly if you have cashflow issues.  
2. How to save your organization from any legal action from HMRC.  
3. HMRC emphasises on debt collection via third party if you don’t make timely payments arrangements with HMRC and, we can help you make payment arrangements. 
4. You can reach out to HMRC at (phone number for corporation tax=03002003840) with cashflow forecast and your managements accounts so you can assure HMRC of your instalments plan.  

Historical Context

 Our company has been an industry leader for 17 years-we take immense pleasure in partnering with our clients on their unique ventures. In line with our growth strategy, we decided to invest in new, state-of-the-art accounting and business advisory solutions, helping our clients through their challenges.  

Financial Details

The tax liability (payable to HMRC) amounted £60,000. We helped client get an instalment plan from HMRC, spreading this amount over the span of four months. However, the client still has to pay the interest. 

Industry Context

In the manufacturing sector where a heavy cashflow is common, accurate classification of expenses is essential for presenting a true and fair view of a company’s financial health. 

Forensic Accounting Review

 A detailed forensic analysis was undertaken to trace the origin of mismanagement of cashflow. This involved scrutinizing transaction records, ledger entries, and associated documentation. 

Process Analysis

An in-depth review of accounting processes and controls was performed to identify how the mismanagement bypassed their existing checks and balances. 

Stakeholder Interviews

Discussions with client was conducted to gather insights into the operational practices and decision-making processes. 

Compliance with GAAP

The Generally Accepted Accounting Principles (GAAP) were referenced extensively to ensure that the instalment plan and revised practices adhered to standard accounting norms and regulations. 

Our Services

1. Sole Traders 
2. Partnerships 
3. Limited Companies 
4. VAT Returns 
5. Payroll 
6. Startups 
7. Auto Enrolment & Pension 
8. Family Business 
9. Contractor 
10. Tax Planning 
11. HMRC Tax Investigations 
12. Virtual Finance Director 
13. Self-Assessments 
14. Accounting for Immigrants  
15. Bookkeeping 
16. Accounting Services for Overseas Pakistanis 
17. Estate Planning & Wills 
18. Landlords 
19. Xero Online Accounting 
20. Inheritance Tax Planning 
21. Worldwide Disclosure Facility 
22. Let Property Campaign 
23. R&D Tax Credits 

Identification of Key Trends/Patterns

1. Trend in Expense Reporting: A pattern of inefficient operational expense reporting was observed. 
2. Training and Knowledge Gaps: Indications of gaps in the client’s accounting team’s understanding of tax consequences of huge tax liability.  

Recommendations

Based on our findings and analysis, the following recommendations are proposed: 

1. Enhanced Training Programs:  Implement regular training for the accounting team on GAAP standards and the nuances of financial classification, with a focus tax compliance and management of cashflow nd operational expenses. 
2. Review and Strengthen Internal Controls:  Conduct a comprehensive review of existing financial processes and internal controls, especially in expense classification and capitalization policies. 
3. Regular Audits:  Schedule frequent internal and external audits to ensure compliance with accounting standards and to identify any discrepancies promptly. 
4. Improved Documentation:  Mandate detailed documentation for all significant expenditures, providing clear justifications for their classification as either capital or operational expenses. 
5. Cross-Functional Communication:  Foster better communication between the accounting department and other departments (such as procurement and operations) to ensure a holistic understanding of expenditures and their financial implications. 
6. Invest in Accounting Software: Upgrade or invest in accounting software that includes checks and alerts for potential mismanagement based on predefined rules.