After i left school i decided that i would work for my self. It was awesome at 17 earning money with little expenses except the pub at weekends and running a business. I'd advertise my skills in the local paper, go price it up, do the work, and get paid, it really was that simple. I'd keep spending and buying more equipment so i could do bigger jobs and get paid more.
Fast forward to about when i'm 24. My business now employs a couple of guys and a secretary and everything is going great; well that is until a brown envelope containing a letter from the tax man comes through the letter box. At first i'm not too worried as 'most' of my money was declared and anyhow, how would he know how much i don't declare?
I'd send in my accounts to him , thinking he will find something wrong (as they always do i guess), i'll get a small penalty to pay and Bobs your uncle i can carry on as usual. And.............. No he was not happy! He wanted more information and he started digging really deep and hell i mean deep into my accounts. My accounts came back looking like i had sat an exam in top set though, really i'm in bottom and i had zero chance of getting a A* mark.
2 years later
No progress has been made - he asks for paper work - I supply - it all goes quiet then he asks for more paper work . It goes round and round like this for a 2 whole years .Im not stressed now as things are going forward and i've not paid any money (so i thought). "We need a meeting" the tax man writes to me. Of course i agree. We agree a date and i go to his tax office. Oh my god within 2 mins of sitting down i know i'm in trouble. I need this, i need that, i need to show this and that. Ok i'm no expert so im thinking "how much do you want and lets get this finished". He finally says "you need to get an accountant and i cannot yet give you a final bill though you currently owe roughly 15K.
Jeez now thats alot of money considering the average weekly wage was around £220 a week. So i asked can he recommend an accountant, on which he did and i still use today.
5 years later
I have to write that again in case you think i miss printed. 5 years later.
Business is still growing and has now amalgamated with another company and there are two owners with myself being one of them. The investigation is still going on and i and my account cannot supply any more information. I have a child on the way and pleased that i had never ever been on any benefits of any kind from the government. I'm now paying alot of taxes as i employ a number of people, and i feel that i successfully contribute to society.
Going Bankrupt
One morning my business partner says to me "i hear your going bankrupt", Of course i ask where did you hear that and he goes on to explain that he has a friend who has a friend that is a tax man. Yep this tax man has a big gop on him and has been telling people about me in his local pub.
Of course as i often am, i'm onto the phone to my accountant and tax man to get this finished. This time it was different as my accountant had that morning received a letter for the final bill to close the investigation. OMG it was bloody 22K and it had to be paid within 14 days other wise i faced going to court.
Smelling of Roses
Let me explain what i had learned at point. It was truly amazing , over these years of the investigation i got to see all my mistakes and all the loop holes that were available. (This is the point where i have a evil laugh a i write this).It also turned out that out of the 22K bill only 7k was actually what i owed , the rest was interest, fines and interest on fines. Fortunalty at his time i had bought and moved into a second home and my first one had just sold that same week with 30k going into my bank account. I can pay the bill :)
I wanted my 22k back.
Even to today i still use the same rules that i learned and i certainly had my money back.
1- use an accountant
2- don't be a sole trader , be a company.
3- Put as much as you can against the company.
4- Pay yourself as little as possible to receive maximum allowances.
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