38. 'Our Company never pays Tax'

Warning 38
Many taxpayers find this a comforting thought, but it is because they don’t appreciate the workings of the tax system. A company can make nil profits year after year, for many reasons. For example, if all the profits are being paid by way of salaries and directors fees to the owners, then they pay the tax personally. Other firms invest heavily in assets in order to claim high depreciation and thus wipe out any profit.

The proprietor may mistakenly believe that tax –wise he is doing very well. But is he? Have a look at all the factors. The opposite may be the true state of affairs.