Business Support
One of our London based clients operates in the building sector. They are a highly profitable business whose turnover exceeds £1 million. They undertake the majority of their work for fellow contractors. In accordance with current legislation, they are a registered contractor in accordance with the construction industry scheme rules.
As with all small businesses, cashflow is critical in order to meet the day to day working capital requirements of the business. In addition, the majority of the company's expenditure relates to payments to their subcontractors.
In 2003, the company lost its Gross Payment Certificate. Therefore, payments from fellow contractors were made after the deduction tax credit. This had an immediate effect on the cashflow position of the business. Their cash inflow was some 20% down as a result of the deduction of the tax credit. Although this tax credit could be relieved against the company's corporation tax liability, this did not assist the business with its day to day working capital requirements.
Since 2003, we have been attending the client's premises two days a month to ensure that their bookkeeping and CIS compliance is maintained to the highest standard. We have ensured that all reports, forms and tax payments have been made on time and that no breaches of the CIS regulations have reoccurred.
In addition, we have worked closely with the business to regain their Gross Payment Certificate and in early 2005, the company was successful in its application.
In the intervening period, we worked closely with the management to ensure their cashflow position was not compromised and also met with the board on a quarterly basis to review the key profit indicators and their cashflow position.
We have and are continuing to work with our client to ensure that they meet their obligations under the CIS scheme and that there is no repetition in losing their Gross Payment Certificate. We continue to meet with the board on a quarterly basis to discuss business performance, key profit indicators and also the cashflow position of the business.
This has enabled the business to grow and also to deal with the ever competitive marketplace in which they operate. They have been able to undertake and fund property development projects and have recently funded the acquisition of their own commercial property.
All of this work has been carried out within a fixed fee agreement giving the client certainty regarding costs.