Corporate Tax Services - Why Business Owners Need Co-ordinated Advice

The problem facing owner managers and private company shareholders is knowing how

to get the best corporate tax advice to minimise the total tax burden of both themselves as individuals and that of the business itself. This is why it is absolutely essential that providers of corporate tax services engage in joined up thinking with whoever is taking care of the personal tax affairs of the individuals involved.

A small accountancy firm will, of course, have little choice in the matter. The likelihood is that the same partner will be looking after both the corporate and personal taxes of companies and their owners. Whether or not one person is capable of knowing sufficient about both areas to give anything like the best advice is a moot point.

If the business proprietor is using a larger firm which, quite sensibly, has specialist departments dealing with smaller, bite sized chunks of the tax labyrinth, then it is imperative that they compare notes and sing from the same hymn sheet. There is nothing worse than a Corporation Tax expert suggesting something that is totally at odds with what the personal tax expert is trying to achieve.

A very simple example might occur when the company tax adviser devises ways of minimising profits and therefore Corporation Tax liabilities while the personal tax specialist is advising the company owner to draw as much income from the business as possible by way of dividends.

The latter is currently a well- known way for business owners to withdraw income in a tax efficient manner but, of course, you cant draw more in dividends than the company earns in net, after tax profits.

In real life, it is most unlikely that this particular faux pas would occur because every accountant worth his or her salt would know this anyway, regardless of which department they were in. However, this example does serve to illustrate what can happen when two separate advisors work at cross purposes without comparing notes.

Maybe the worst scenario of all would be where an owner manager used two completely separate accountants one for his or her personal affairs and another for the business. This is a surefire way of ending up with a total hotch-potch and dont believe for a minute that this doesnt happen. There are plenty of successful businesspeople around who swear by making sure that the left hand doesnt know what the right hand is doing.

by: Brendan Wilde

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