2019 Results and Tax
Last updated
Last updated
We have been successfully accredited for the Fair Tax Mark for this financial year.
On this page, we'll set out our financial information for the year for full transparency.
In September 2018, our forecast for the year was:
Turnover: £480,000
Profit: £100,000
However, in January 2019 we re-evaluated our business plan as the threat of Brexit began to impact the UK economy. We re-forecasted on the basis that our target market would effectively freeze for a few months around March 2019. The new forecast was:
Turnover: £352,048
Profit (Loss): - £10,482
The final results for the year ending 30 Sept 2019 were:
Turnover: £364,444
Profit after tax: £6,492
We did see a freeze in the market for a few months around the 29th March 2019 original date for Brexit, with very little going on between January and April. By the end of the 2019 financial year we had won some major new business for the following year, and that has set us up for growth in 2020.
The director of the company was paid £52,500 in salary in this financial year, all through PAYE. This represents a multiple of 1.1 of the average salary in the company during the period. The director planned to take a reduced salary for the first 2 years of starting the company, but has extended this twice due to economic uncertainty surrounding Brexit and the pandemic.
No dividend payments were made during this period.
Given our work in the digital sector we undertake research and development projects for ourselves, and our clients.
The government incentivises and rewards R&D to foster innovation using a system of tax credits managed by HMRC. Each year we submit a report on the projects we have done, the R&D elements of those, the staff time spent on them, and any resulting outputs. That report is then assessed and we are awarded a certain level of tax credit, which is calculated as a percentage of the staff time and other costs we have invested in the R&D.
The credit awarded is shown below in the computation for Corporation tax.
The Corporation Tax incurred by the company in this financial year was calculated as:
Tax charge and adjustment details
£
%
Profit (Loss) before tax
-6,385
Corporation tax on profits before tax
-1,213
19.0%
Capital allowances in excess of depreciation
-481
8%
Expenses not deductible for tax purposes
86
-1%
Losses utilised in previous period
7,274
-114%
R&D Enhanced Expenditure
-13,638
214%
R&D Tax Credit
-6,084
95%
Loss surrendered for R&D
7,972
-125%
Adjustment to tax charge in prior year
-7,274
114%
Reported current tax charge
-13,358
209%
Deferred taxation
481
-8%
Taxation as per the financial statements
-12,877
202%
The primary reason for the difference between the expected current tax charge (-£1,213) and the actual current tax charge (-£13,358) is Research and Development (R&D) tax relief. This relief supports companies that work on innovative projects in science and technology. Companies can claim enhanced expenditure for qualifying costs they incur on R&D projects, the deduction can be 230% of the qualifying cost or they can claim a tax credit if the company is making a loss, worth up 14.5% of the surrendered loss.
Other items that are affecting the current tax charge are:
Expenses not deductible for tax - Some expenses incurred may be entirely appropriate charges for inclusion in its financial statements but are not allowed as a deduction against taxable income when calculating tax liability. E.g. Entertaining.
Depreciation in excess/(shortfall) of capital allowances - The accounting treatment of capital assets differs from the tax treatment. For accounting purposes, an annual rate of depreciation is applied to capital assets and charged to the profit and loss account. For tax purposes, the depreciation charge is added back and instead, a tax capital allowance is claimed, a relief provided by law. Over time, however, these differences will equal one another.
Brought forward trading losses utilised – trading losses have been accrued from previous years’ losses. To qualify as trade losses, the trade must be carried out commercial basis and with a view to the making of a profit either in the trade itself or in any larger undertaking of which it formed part. Trading losses may be relieved in the following ways for corporation tax purposes - claimed in the current year and set against total profits including capital gains, a claim to carry back against prior year profits including capital gains or used against future profits of the same trade (no claim needs to be made as this is an automatic relief).
The company and our team paid £87,540.01 of PAYE/NIC to HMRC in this financial year.
The company raised £50,263.90 (net) of VAT on behalf of HMRC in this financial year.
Therefore, the overall contribution in UK taxes generated as a result of our business activities this year was £131,719.91.
Our accounts for this financial year are available on Companies House, and the full unabbreviated accounts are also available here for full transparency: