MMDTPS - “My Mate Down the Pub” Syndrome
Do you have a mate down the pub that makes about the same amount of money as you do, in the same sort of industry as you, but his accountant “sorts it out for him not to have to pay any tax”? And this leaves you wondering why your tax bill’s so high?
Many accountants are familiar with this type of story, told by their clients.
Let’s take a look at the reality of this….
Does your mate declare all his earnings to his accountant, (and hence to the Taxman)?
Perhaps there is a large amount of cash takings that don’t go through his books. The accountant may say “any cash takings must go into your accounts”, so your mate doesn’t let on about cash-in-hand jobs.
Do you have other income that your mate doesn’t have (rental income, savings income etc.) which may effect your overall tax calculation?
Is your tax code different to his?
Is your mate being entirely truthful about how much money he earns? After all, as a general rule if you earn less money, you pay less tax and vice versa!
Either way, the figure of earnings and the individual circumstances the accountant is working with is very different to yours, so your tax position will be very different as well.
This has nothing to do with the skill of the accountant. Your mate may be unaware of the differences between people’s tax positions, or even worse, by not being entirely honest with his accountant he could be exposing himself to the risk of a tax investigation; a process known to have triggered heart attacks, depression and nervous breakdowns! You don’t want this.
Finally, many people like to brag about their accountant. After all, it’s a reflection of the good choice they made. After a few pints, don’t believe everything you’re told.
Remember, every single person in the UK has a different tax position and the advice we give is based on what we know about you and your circumstances. In the same way that a tummy ache can have many different causes, so can a tax bill! If in doubt, always ask us but please don’t assume you’ll have exactly the same advice or tax bill as your mate down the pub!
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