Tax Saving Case Studies

The issue: A client sold a property and HMRC opened a Capital Gains Tax enquiry based on an assumed gain, with a potential CGT exposure of almost £140,000. HMRC were also proceeding on the basis that a 60-day UK property return should have been filed.

What we did: We reviewed the full ownership and occupation history in detail. While the client had not occupied the property for the entire ownership period, part of the period qualified for Private Residence Relief, and the periods of non-occupation were covered by the deemed occupation rules. We sent HMRC a concise, technically precise response explaining that full main residence relief applied, and that, as no CGT was due, no 60-day reporting obligation arose either.

The outcome: HMRC closed the enquiry without requesting any further evidence. The client avoided a substantial CGT charge and unnecessary reporting, and saw first-hand how strong technical analysis, presented clearly, carries real weight with HMRC. This is exactly where our inside knowledge of how HMRC builds and tests a case makes the difference.

The issue: A group with both profit-making and loss-making companies had a previous accountant who surrendered losses with no real planning, simply wiping out profits wherever they appeared. The result was inefficient: some companies still paid corporation tax at the higher rates and were pushed into the quarterly instalment payments regime, while losses were over-used elsewhere, wasting the benefit of the lower-profit thresholds that could have been preserved.

What we did: We stepped back and looked at the group as a whole, then reworked the use of group relief tactically rather than mechanically. We advised on how losses should be allocated across the group to improve the overall result, keeping profit-making companies out of the higher corporation tax bands where possible, helping prevent companies from crossing into the threshold for quarterly instalment payments, and making sure losses weren’t used in a way that wasted valuable lower-rate profit capacity.

The outcome: By using group relief carefully and strategically, the group achieved a far better overall corporation tax position. The planning reduced the risk of paying higher rates unnecessarily, helped keep companies outside the quarterly payment regime, and preserved lower-rate profit capacity across the group. It’s a clear example of how proper corporation tax planning across a group structure beats simply offsetting losses without seeing the wider picture.

The issue: A trading company realised a gain of £1.6 million on the disposal of a business property, with a commercial intention to reinvest in another qualifying business asset within the wider group. Without careful structuring, the gain could have triggered an immediate corporation tax cost at exactly the point the cash was needed for reinvestment.

What we did: We reviewed the factual and legislative position, confirmed that the replacement-asset strategy could be aligned with group rollover relief, and helped structure the reinvestment so the gain could be deferred into the cost of the replacement asset within the group.

The outcome: Instead of an immediate tax hit, the client deferred the charge and preserved cash for commercial reinvestment. It’s a strong example of tax planning supporting business growth rather than getting in the way of it, the kind of advice that comes naturally to a team that has run and grown businesses of its own.

The issue: An owner-managed company was extracting profit in a way that left unnecessary tax leakage. The directors defaulted to the familiar salary-and-dividend route, even though employer pension funding would have been more efficient for part of the extraction.

What we did: We reviewed the company’s profit position, the directors’ personal circumstances and the commercial affordability of contributions, then recommended using employer pension contributions as part of the extraction strategy rather than taking all surplus profit personally.

The outcome: A more tax-efficient structure all round: the company secured corporation tax relief on the contribution, employer’s NIC was avoided on the amount redirected to pension, and the need for additional dividend extraction was reduced. This kind of joined-up thinking across company and personal tax routinely produces a better combined outcome for owner-managed businesses.

The issue: A single-director company assumed it could not claim the Employment Allowance because the director was the only person on the payroll. As a result, it was missing a valuable employer NIC saving.

What we did: We reviewed the payroll position and explained that the company could qualify for Employment Allowance if a second employee was added to the payroll and the eligibility conditions were met. We recommended employing one additional person, for example the director’s spouse or adult child, for a short period at an appropriate level of pay, so the company became entitled to claim.

The outcome: This straightforward piece of planning gave the company entitlement to the full annual Employment Allowance of £10,500 for the year, a significant employer NIC saving from a very small payroll adjustment. It’s a good example of how attention to detail unlocks savings that many business owners would otherwise miss entirely.

The issue: A director-shareholder was drawing income in a way that was easy administratively but not especially tax-efficient once corporation tax, dividend tax, personal allowances, NIC and wider extraction planning were considered together.

What we did: We modelled the combined tax impact of salary, dividends and pension contributions, then recommended a more balanced remuneration strategy, designed not just to minimise tax in one place, but to optimise the overall result across both company and personal taxes.

The outcome: The revised mix reduced unnecessary tax leakage while still meeting the client’s cash-flow needs and protecting the right long-term position for allowances and benefits. This is a common area where proactive advice makes a measurable difference year after year.

The issue: This restaurant chain collected tips and a discretionary service charge from customers and distributed them to staff through its main payroll. Because the payments ran through the normal payroll, they were being treated as ordinary earnings and subjected to National Insurance — an avoidable cost for both the business and its people. Separately, the previous accountant had treated the discretionary service charge as VATable income, charging VAT on amounts that should never have been within the scope of VAT at all.

What we did: We tackled both problems. First, we advised the client to set up a separate tronc PAYE scheme, run independently by a troncmaster rather than by the employer. When tips and discretionary service charges are allocated through a properly constituted tronc, with the troncmaster, not the company, deciding how they are shared, the payments fall outside the National Insurance net. Second, we corrected the VAT position: a discretionary service charge, provided certain conditions are met, is not consideration for a supply and is therefore outside the scope of VAT. We reviewed the arrangements, established that the charge had been genuinely discretionary, and submitted a claim to recover the overpaid VAT, going back the full four years permitted.

The outcome: The new tronc arrangement removed the National Insurance charge on tips and service charges, generating an overall saving in the region of £42,000 to £45,000 a year, a recurring benefit for as long as the scheme is in place. The VAT correction recovered approximately £260,000 of overpaid VAT across the four years under review. It’s a clear example of why hospitality businesses need advisers who understand the sector’s specific tax rules, and how the right technical knowledge, properly applied, can turn two inherited mistakes into substantial, lasting savings.