At this time of year, we spend a lot of time doing management figures to estimate profits to the end of the financial year, to help with tax planning.  This year some businesses have been less than prepared for the size of their tax bill, due to poor cashflow in the year ending 31st March 2016.  This has led them not to make any investment for capital allowance purposes.  Because of previous investments being 100% written off in the year of purchase, some large tax bills have been received, as taxable profit is considerably more than profit before depreciation.

The better planned businesses have met with their accountants early in the year and with good information, have been able to plan to mitigate these situations, including making changes to business structure, payments to individuals, treatment of costs and in some cases, changes to payments on account, due to forecast profits for this year.

If you are typically finding yourself meeting with your accountant in January, ask your consultant to organise a team meeting with the accountant, consultant and yourselves early in the year, so proactive tax planning and cashflow management can be put in place.  This is important as banks get tighter on working capital requirement and overdrafts, in the unsecured sector, where cashflow is becoming more difficult.

Contact Max at maxsealy@fcgagric.com to discuss this further or your local FCG office.