I feel so bloody grown up
Out of context: Reply #4
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I sailed on for years without an accountant, and without filling out tax returns properly. I thought I knew what I was doing. I kept receipts, I kept an accurate record of income and expenditure, and I filed every year.
I had a few years of insanely profitable business and made a fortune in a very short space of time. I then learned, 12 months later, that you have an obligation to register for VAT at the exact moment your earnings go over the VAT threshold.
I had exceeded the vat threshold fourfold and had not charged anyone any VAT. So I suddenly discovered, in a blind panic, that I had a huge VAT bill to pay, and that it was payable immediately with no possible room for time or payment negotiation.
I had to go to an accountant. In trying to sort the mess out, the accountant had to go back over all my previous years tax returns. It transpired that I had not done them correctly at all and the whole lot had to be re-done. It was painful and terrifying. It felt like a tight knot of string that could never be undone.
It was eventually unravelled and put straight but I would not want to ever go through that again. It nearly sent me over the edge.
I was lucky that all of my clients agreed to retrospectively pay me all of the VAT I should have charged them all along, but they would have been quite within their rights to tell me to go forth. I'm talking about many tens of thousands of pounds. Even my ex-business partner who I was no longer in regular contact with very kindly paid me about 20k in VAT that I should have invoiced due to the way we had set the company up.
Prior to the VAT issue I was convinced, utterly convinced, that my tax affairs were all in order and above board. My accountant worked out that I had in fact been over-paying tax because I hadn't made use of various tax benefits. Its a complicated procedure and for anyone to be doing properly on their own they would probably have to spend as much time keeping up to date about tax affairs as they spend doing their work.
I understand the tax system very well, but I would never ever attempt to work without an accountant again. Its crazy to do that. They know about stuff that is financially in your interest that you could not possibly know about, and as a result they can save you a small fortune in tax... not through any high risk semi-ethical practices, just via knowledge of the ever changing tax procedure and the many things out there that can be offset or deducted.
Get an accountant Boobs. I guarantee you that the decrease in your tax bill will more than compensate for the nominal fee you have to pay them. Plus, it cuts the time you have to spend dealing with your taxes and paperwork down to about 5% of what you're probably spending right now if you're really doing it correctly.
- Just woken up, got your eem, will respond later on when I've awoken properly, old boy
xdetritus - Well, I'm in US, and we don't have VAT here.boobs
- jesus sounds like some pain in the ass orbit! insane that your old clients happily paid all that vat! I wonder would they be as happy to fork out the vat at the moment? hehejimzy
- ...happy to fork out the vat at the moment? hehejimzy
- Well the odd thing about VAT is that as long as they are registered, they can just claim it back...********
- so thankfully it didn't cost them anything, but the could still have refused to pay me to save themselves the added hassle.********
- ah i see so no real cost to them then. cool enough. but what a headache for you i can imagine!jimzy
- Just woken up, got your eem, will respond later on when I've awoken properly, old boy