Don’t let taxes drain away your valuable cash reserves. So are you sitting on a part of cash in your limited company and not sure what to do with it? Many entrepreneurs holding onto their company’s cash reserves because withdrawing it as a dividend would, or even salary would result in a large income tax payment.
So they’re possibly struggling to work out how Jesus money in the best way and how to invest this money maybe in property or other assets. So one option they may not be aware of is to structure their companies so that they can transfer cash tax free as a dividend or inter-company loan to another company within their corporate group.
For example, this could be a special purpose vehicle to invest in. . So that would mean their property portfolio would just grow a lot faster cuz there’s no income tax leaks. So alternatively, they could use the money to just grow their existing business faster, maybe investing it in more marketing or inventory or something like that.
However, setting up a formal corporate group with h. Has to be done properly. So it’s recommended that you seek the advice of a good accountant before making any decisions regarding your cash distribution. There’s just, there’s so many different ways of doing it and some are much more tax efficient than others.
What do you think about using your company’s cash in this, in a tax efficient way like this?
Do not give HMRC a red flag to investigate you play safe. It’s absolutely essential to be aware of the common triggers that can prompt a HMRC investigation. So these investigations can just waste a lot of your time. They can incur a lot of cost in getting someone to help you, and they can also lead to a substantial penalty.
So it’s very important to know about these five triggers and make sure you avoid them at all. One failure to include income on your self-assessment tax return. So the first thing HMRC looks for is if you have failed to include any sources of income or your tax return. This could include rental properties, foreign income from gains.
Crypto gains and and many more types of income. Two Undeclared bank accounts and investments. HMRC has access to vast amounts of information and can easily crosscheck if you have undeclared bank accounts, even if they only have small amounts of interest. The same goes for foreign accounts and investment portfolios and also crypto assets.
Three. Overstated expenses for self-employed or property business. So if you’re self-employed or have a property business, HMRC can compare the expenses you’ve claimed in one year against another year. So if there’s a significant difference or a loss this could trigger an investigation. Also, if things just look a bit unreasonable.
Four incorrect claims for business asset disposable relief. So claiming business asset disposable relief in the wrong way, such as not including the necessary notes or ticking the right boxes can also prompt an investigation. Five late tax returns or reclaiming refunds. So if your tax returns are late or you reclaiming a refund, this can open up an investigation.
HMRC typically starts with one area and then uses that as a basis to examine the rest of the. . So in conclusion, it’s absolutely crucial to stay on top of your tax affairs and have a good accountant helping you. So please follow in like this video to get my latest tax tips and also get in touch with me via the website in my profile if you’ve got any questions.
So, or if you need any help with anything. So, have you ever received a nudge letter or investigation from HMRC, and how did you handle it and how did it go? Please share your experience in the. That’s all for now. Bye.