Mike Tombs's Blog

This blog provides information about tax, accounting and other issues affecting small owner-managed businesses in the UK. It is intended as a general source of information but you should not assume that everything applies to your specific circumstances. We are always happy to discuss providing tailor-made solutions to suit your individul needs. Visit www.tlaservices.co.uk to sign up for our free monthly Tax Tips and News newsletter.

Monthly Archives: July 2012

Going for Gold with TLA

As 17,000 athletes finally get to deliver their ultimate performances at the London Olympics, it occurred to me that there is a business parallel here. Like any business, athletes have to compete to succeed. But how many do you know, who would even consider competing without training and without a plan? It is perfectly possible, of course, to go for a run because you enjoy it and without the slightest intention of competing. But isn’t that called jogging?

So, here’s a question you can ask yourself. “Is my business competing? Am I going for gold? Or am I just jogging along?”

The difference is down to planning and preparation. Most small businesses probably do have a plan, somewhere. It was drawn up reluctantly when asking the bank for money, and the chances are it was never referred to again. Without a plan, you’re running your business on gut-feel and historic data. Can you imagine an athlete playing it by ear? Turning up at the track or the pool every day, doing their laps and never considering a strategy, never setting targets, never looking at other competitors or how to beat them? And can you imagine them basing their objectives on the times they achieved a year ago?

If you are going to drive your business ahead, beat the competition and create a success, then you must have (and actively use) a plan. The basics are simple. Decide what the long term goals are for your business and set out a road map to get you there. That process will force you to consider the obstacles that lie in your path, how to overcome them, how best to capitalise on your strengths and avoid your weaknesses.

Set targets so that you compare your actual results with what you expected to achieve. There’ll be a lot of guesswork involved to begin with but once you start working with your plan you’ll learn how to revise it to keep moving towards your goal.

And don’t forget, we’re always just a phone call away. For short term forecasts we can help you with tips on improving your cash flow and profits, whereas for longer term planning we have a range of tools, including a full-day programme that helps you align your personal goals with your business goals.

Of course, you could always just carry on jogging. As Sir John Harvey-Jones famously said: “The nice thing about not planning is that failure comes as a total surprise and is not preceded by a period of worry or depression.”

To discuss how we can help you develop a robust plan for your business or even just a simple cash flow projection for the next year ahead, email enquiries@tlaservices.co.uk or call 01905 21411 today.

Tax Planning

I don’t expect Jimmy Carr saw the funny side when Prime Minister David Cameron denounced as immoral his use of a tax avoidance scheme that reportedly cut his tax bill to just 1%. He wasn’t breaking the law and his use of the “K2” scheme had been fully disclosed to HMRC. But the tide of moral indignation swamped the cheeky chappy and forced him to admit a “terrible error of judgement.”

The scheme had been recommended by his financial advisor and that got me thinking about our role in advising clients on the best ways to manage their tax affairs.

If the tax system was straightforward, black and white, with no exceptions and no allowances, then life would be simple and I would probably be looking for a job! But the truth is that taxes and tax law have evolved into a complex system which presents individuals and businesses with an equally complex set of choices.

I am quite clear about our role in this. It is to advise our clients which tax mitigation strategies are available to them, making sure that they understand if any, although totally within the law in the opinion of the senior tax counsel who advise us, are likely to be strongly challenged by HMRC. We would be guilty of unprofessional behaviour if we did less. Only our clients can make a moral distinction between them.

We all agree that driving at 40 mph on the motorway causes less damage to the environment than driving at 70 mph. But as long as the law allows the higher speed, we can all decide, within the legal range, what we are comfortable with.

If you want to arrange a meeting to discuss how we can help you manage your tax affairs effectively but still remain within your comfort zone then fill in the contact form on http://www.tlaservices.co.uk or call 01905 21411.

…and what not to do if your bank says “No!”

If your bank is still not saying “Yes”, don’t reach for the stocking mask and swag bag because it’s now been statistically proven that bank robbery doesn’t pay as well as you might think.

Three leading economists from the Universities of Sussex and Surrey have shown that the average return on a bank heist in the UK is £12,706.60 per person per raid. To achieve a near-average income, you would have to rob two banks a year. But every additional robbery increases your chance of getting caught by a probability of 0.8.  After four raids the odds are that you will be banged up with consequent impact on your earning potential. On balance, say the economists, robbing a bank is a poor economic decision.

So, if your bank is proving a tough nut to crack, don’t reach for a stocking, reach for the phone and call me. I can’t guarantee to bring home the swag, but I can promise that your odds will improve greatly.

You can read all about the economics of the bank heist here.