B4’s Matt Wright went along to talk to Wenn Townsend’s Tony Haines about what exactly accountants can do for your business and about the common misconceptions people hold.
WRITTEN BY: MATT WRIGHT PHOTOGRAPHY BY: STUDIO8
The common perception of accountants is that they are a limiting factor; a group who impose restrictions and ensure conformity, be it for the purposes of compliance with tax or company legislation.
However, accountants can be far more creative (and not in an Enron-type way!), the only caveat being that they need to be engaged early on. For the non-financially minded, think of it like stopping a fire at source before it’s got going, rather than tackling it once it’s turned into a raging inferno complete with fire trucks, hoses, personnel….in short, a huge amount of resource.
I sat down with Tony Haines, partner at Wenn Townsend to quiz him on his firm’s fire fighting skills, and to illustrate this by way of practical Case Studies.
I hope this illustrates how accountants can be ‘enablers’, and help people to structure their finances to save money. For some clients, finance will always be about tax saving and compliance, and that is all they require from their accountants.
However, for any professional advisor to be successful over the medium to long term, they need to know their clients, which means knowing what they want now, and knowing what they are aiming for in the future.
Hopefully, these Case Studies illustrate how Wenn Townsend puts itself in its clients’ shoes. After all, this firm is about longevity – we’ve been around for a long time, as have lots of our clients, and we hope to be stopping fires from starting for many years to come!
CASE STUDY 1:
Industry: Farming Issue:
• An elderly farmer coming up to retirement age, with 2 children neither of whom are interested in carrying on farming.
• The farmland has been ring-fenced for possible housing development, which if granted could be worth in excess of £50m Problem: Capital gains tax ‘CGT’, Inheritance Tax ‘IHT’
• The difference between farmland at Agricultural value versus Land Development value can be huge, up to £1m per acre.
• This would create an immediate massive CGT liability, and a deferred IHT liability, plus the elderly farmer would have to survive 7 years for any lifetime bequests. Solution: Set up a company beforehand to offset liabilities
• Transfer the land into a Property Development Company at Agricultural v Land Development value i.e. before planning permission is granted
• Issue shares to the family
• The Agricultural value of the shares will revert to the farmer • The potential uplift in the land value will be reflected in the share values held by the other shareholders
• The potential building value is now out of his estate into the company / can have various shareholders / most of the gain held in the value of shares held by people other than him £’s saved : based on estimated values + IHT at 40% = >£20m
CASE STUDY 2:
Industry: UK subsidiary of a German parent company
Issue: Provision of Financial Controllers
• Owing to the structure of the company, most of the group’s transactions were passed through the UK subsidiary
• However, German Head Office management kept having to fly over on a weekly basis to sort out finance and personnel problems at the UK end
• The 2 people in the UK finance department subsequently resigned Solution: Wenn Townsend ‘WT’ stepped in temporarily to cover their roles on a short-term basis
• The German management were delighted; “I don’t think they’ve had to come back over to the UK in the past 18 months for financial reasons”
• All of the responsibility for the production of management accounts, payroll and filing of returns (VAT…etc) was devolved to WT
• As well as the direct cost saving on x2 salaries, there was now no downtime for holidays, sickness…etc, and no need for the German management to travel over as regularly
£’s saved: 50% cost of 2 salaries = £40k + opportunity management costs
CASE STUDY 3:
Industry: Sole Trader Issue: Volatility of income and high PAYE payments limit their tax liability; e.g. increasing pension contributions • This is further complicated if profits are above the higher rate threshold • Income varied greatly from year to year Solution: Creation of limited company and crystallization of goodwill • A goodwill valuation was agreed with HMRC • The ensuing valuation crystallised into a tax-free balance on the directors’ current account (after CGT of 10% had been paid) • The sole trader (now the director) could now manage his ongoing trading income to produce a regular salary & tax-efficient dividends. £’s saved: £15k pa on an £80k income
About Wenn Townsend
Wenn Townsend offer a complete portfolio of professional financial services to our clients whether as commercial businesses or other, not for profit, organisations. From audit, accounting, taxation, financial valuations and management consultancy through to client support services we have a highly experienced team available at your disposal.
Founded in 1876, Wenn Townsend is one of the longest established firms of accountants in this country. Our continuity underlines the firm’s ability to adapt to meet the changing needs of our clients.
The quality service and advice we give to our clients is secured on a base of expert technical resources, particularly our highly trained and motivated personnel, using the latest information and communication technology.
Our success is derived from the high level of care and commitment we provide to our clients.
Tony Haines Biography
The youngest of four brothers, Tony was born and brought up in North Oxford before studying a degree in Microbiology at the University of Sheffield. He still retains a keen interest in the world of life science.
After completing his degree he came back to Oxford and joined Wenn Townsend as a trainee Chartered Accountant, qualifying in 1991. Since then Tony has remained at Wenn Townsend joining the partnership in 1997 initially as the training partner and latterly as the partner responsible for the development of the firm’s client base.
“The firm’s wide range of owner-managed businesses, extending to almost every conceivable industry is the reason we have, within the partnership, the experience and expertise to deliver the level of service to our clients expected by a modern firm of Chartered Accountants”, says Tony.
Tony lives in West Oxfordshire and has always been an enthusiastic cricketer and golfer enjoying both the sport and the after match socialising.
Tony is also a supporter of the Arts and is a regular attendee at the Oxford Playhouse. BerkshireBuckinghamshireOxfordshire Wenn Townsend AccountingAdviceBusiness AdviceBusiness ServicesFinance accountancyaccountantsaccountingB4 Issue 35FinanceFinance & Accounting