I was speaking with a landlord yesterday that is really struggling to do their own tax return. I spent some time with them on the phone to try to guide them through. They had a couple of fairly basic questions and I don’t mind spending five minutes helping.
In those five minutes though a few worrying things came out. This person has a company and a partnership as part of a transition of their properties in to the company. It also turns out the company is a member of the partnership which could be fine but is quite unusual. A lot of the schemes that have been hitting the press in recent months use this type of structure to no avail. I didn’t get in to the detail on their structure just yet so it could be absolutely perfect or it could be a disaster.
The issue that presented itself however was that the person I was speaking to had absolutely no idea what structure they had or what it was intending to do. She asked me whether she should be putting dividend income on her tax return from the accounts that had a year end of March 2024 and have already been submitted. Maybe but the time to decide was when the structure was put in place not now.
They were speaking to me because they did not want to pay over £700 for their personal tax return. They also offered up that they had paid a lot of money for the advice and implementation of the structure to transfer the properties. it was £1,500. Right so a lot of info here – what is my point?
I think £700+ for a personal tax return which for her has a single property (the rest were now in the partnership) on and a partnership share is a lot. Probably double what it should be. She has already paid for the company accounts, partnership accounts and tax returns for both.
The £1,500 for the advice on the structure however is significantly less than I would expect. It suggests to me that someone has sold her a template structure and report and not explained it very well at all. Most complex tax advice costs a good few hundred pound an hour and something like this should have had a couple of hours fact find and and the same again explain the structure at the end.
That’s before any actual work is done and determining the best way forward, reviewing all of the assets to be transferred and setting out the options for how income and assets will be taxed in future. I’d estimate maybe £2,000 – £3,000 for initial report and then additional charges for implementation.
The moral of the story is a classic. This person has admitted they will probably need to seek additional advice to get to the bottom of the structure they have in place and has lost all trust in the provider. a classic example of buy cheap buy twice. Unusually the cheap advice on offer didn’t come with reasonably priced compliance works.