A taxing reason to forecast

I have been working all year with clients, helping them with their forecasts and projections, preparing and reviewing them. We have been using them to help monitor performance and for discussing facilities with bankers and other lenders. 

Today though another benefit of having a good robust forecast appeared. As we approach the end of October we get closer to the end of the year and therefore it is the time to start to talk about tax planning with clients who have December year ends. 

Today I was able to use a profit forecast to estimate tax liabilities for 5 April 2010. We identified that there were possibilities to reduce payments on account in January which enabled the team to discuss whether they could use the available cash in other ways. 

By scrutinizing the forecast and business plan we decided to bring forward the purchase of some capital equipment planned for 2010 to make better use of the spare capacity within the Annual Investment Allowance therefore making the best of available allowances and reducing the tax liability further. 

My client will be flexing their forecast to account for the financial implications of these decisions which will enable them to move forward with certainty from a cash flow perspective.