A meeting with an old friend left me a little disappointed and disillusioned.
Three years ago he and his wife were in pretty dire straits. Friend was made redundant and his wife hadn't undertaken paid employment since the birth of their 12 year old daughter. They'd lived life up to the max of their income, were (are) mortgaged up to the hilt and their daughter attends one of the best independent schools in the country.. They called on the advice of a mutual friend to ensure they received all the benefits they were entitled to and I helped them to create a workable budget; one that ensured they lived within their means, but allowed for a treat/night out now and again.
Six months on and with no job offers on the horizon friend set up his own business and a further six months down the line his wife started a degree course at a good university. I admire both of them for taking control of their own future, so why am I disappointed? Because they spent most of the evening gloating about how little tax they paid last year; He runs his office from home and, like many others I know, thought it a matter of congratulation that they put everything possible through the books: all motor expenses – RFL, insurance, repairs, petrol etc: meals out (entertaining) phone bills (including top ups for daughters mobile) digital camera and laptop for daughter - depreciation can be charged to the p/l – and needless to say spares and accessories They think they can get away with charging all decorating and soft furnishing expenses to the office accounts - not to mention cleaning material, the daily help and the window cleaner.
I could go on.
Now I can claim to be au fait with the concepts and conventions of accountancy – in particular the concept of prudence – maximise expenses, minimise profit – but HMRC are not fools. I pointed out, gently I hope, that a good accountant does not put his/her reputation on the line by filing dodgy accounts. He/she will come to an agreement with HMRC as to the portion of expenses that can be considered busness or private My friend scoffed; clearly he thinks he's more clever than me – so I let him think so.
The final straw was when his wife pointed out that she would not need to repay her student loan until her salary exceeds £21.000 and said she'll ensure she won't earn more than the repayment threshhold. I pointed out that if, in the bad times they were happy to take, then surely in the good times they should give.
Silence reigned.
