Taxing times

As I write this, the end of financial year is now fast approaching and I’m sitting here waiting for a woman representative to turn up from the bank I’ve been using for the last 25 years.

And for some weird unknown reason, she now needs me to prove I am exactly who I say I am. I mean really? … if I was going to pretend to be anyone else, it would probably be someone far more good looking, richer and much more famous wouldn’t it? It sure as hell wouldn’t be me.

Anyway, she rang yesterday because in trying to do the right thing, I want to open up a new account for my self administered pension fund. And despite the fact that I’ve been doing business with them for years now, and they’re currently holding more of my money than it would take to solve the debt problems of a third world country (and if you believe that, you’re even dafter than I am), they’re still demanding to see my passport and driving licence before opening the new account for me.

Apparently it’s now the law… something to do with countering terrorism and anti-money laundering regulations… or so they say. Every time you do anything new with your money these days, especially if what happens in the UK is anything to go by, they’re legally obliged to check you out – all over again.

And this is becoming something of a regular occurrence over here too.

At the end of last week, I got a call from a solicitor who is handling the purchase of a property I’m partially financing for a third party (yeah right!).

Now bearing in mind, the ‘my bank account’ in the following conversation, is actually a business bank account with copious amounts of book-keeping backing it up for tax purposes and all the cash within it is more than fully accounted for. Here’s how the conversation went…

Solicitor:  Can you tell me where the funds are coming from?

Me:  From ‘my bank account’.

Solicitor:  But what’s the actual source of the funds?

Me:  As I said, it will be coming out of ‘my bank account’. Do you want my bank details?

Solicitor:  No, I just need to determine the original source.

Me:  Sorry, I don’t understand what you’re saying.

Solicitor:  Well where did the money come from? Is it all legal? I need to establish a paper trail.

Me:  What?

Solicitor:  I need to establish that the funds are legitimate and not the proceeds of crime or drug sales.

Me:  No, that would be from ‘my other account’ that would.

Solicitor:  (Silence)

Me:  Sigh… Just tell me what you need.

Solicitor:  Sorry, it’s anti-money laundering regulations.

That’s how things have been in Britain since the GFC in 2008 and I’m pretty sure that things like this will soon be happening here too.

You can’t even move, spend or invest your own money without the government forcing companies, banks and solicitors (under threat of imprisonment) to investigate every last detail about you and the ‘dubious until proven otherwise’ transaction you’re making.

If they’re in any doubt at all that you’re not who you say you are, or you can’t (or won’t) account for exactly how you came by the money you’re trying to spend, then they’re legally obliged to shop you to the authorities. And if they fail in this role of ‘unpaid state snoop’, they face swapping their comfortable office for a jail cell themselves.

But that’s okay I guess, because it’s all for our own good (again)… to help fight against crime, terrorism, drug dealing and the like… isn’t it?

Now then… let me just contrast what I’ve just told you, with another ‘transaction’ I would regularly have to make…

While back in England, twice a year, I would receive a demand from the Inland Revenue for a depressingly large sum of money. I won’t tell you how much because I don’t want you feeling sorry for me, but it was an awful lot.

And here’s the thing… for some unknown reason, Her Majesty’s Revenue and Customs  (HMRC) never felt the need to check that I was who I said I was whenever I paid that particular bill. Neither did they ever feel the need to establish a ‘paper trail’… to find out where the money had come from for it. They just didn’t seem to care about stuff like that.

All they ever wanted was the bloody money. And they didn’t even send me a receipt or any other form of acknowledgement for it either, for goodness sake.

So what that tells me, is that when I’m buying or investing for myself, the fight against crime is of paramount importance. But when I’m giving my money to them, they just don’t give a stuff.

Strange that isn’t it? And there’s only one reason I can think of for this…

It’s because all of these aforementioned unpaid state snoopers aren’t in any real place to actually prevent any kind of money laundering – they’re just there to prevent good old-fashioned tax evasion…

And there’s not much danger of you evading your taxes while you’re actually paying off a tax bill now is there?

But that’s enough about that…

This isn’t supposed to be a post about a whingeing old pom crying over his latest tax liabilities, it’s supposed to be more about the ‘end of financial year’ and all of the unsung benefits of using a good book keeping system to help record said liabilities.

Now without going too far into balance sheets, profit and loss statements and the like, I’d prefer instead, to shine a light on all the other information I can easily glean from my book keeping system in this, my current year of trading. Things like cash flow, profitability, goal setting, progress indicators, and how many billable hours I managed to perform against the hours I actually put in to perform them.

You see without any of the above, running a healthy business would be an extremely hap-hazard and messy affair.

For one, budgetting would be impossible. How would I ever know whether or not I could afford that shiny new table saw I want? How would I know whether I was actually solvent or deeper in debt than a previously mentioned third world country? Without any form of cash flow charting and forcasting, I simply wouldn’t.

So how would I know when to push forward and grow the company, or hold back or even throw the towel in completely without any of the above indicators to reference?

How would I know what my conversion rates are for the numerous jobs I have quoted on? Or whether or not I need to improve on them without any form of records to look back on?

Without proper book keeping… How would I know… How would I know anything?

What I do know, is that despite a couple of minor setbacks along the way, I’m still here, still enjoying steady growth, I’m still covering my liabilities, I can still afford to live and am still showing a tidy profit for all my efforts.

And saving the best news til last…

I can also happily announce that this year alone, I have to date, raised 142 seperate invoices to only 28 individual customers, three quarters of which are return customers, returning an average of just under six and a half times each. A little bit of information I can be truly proud of.

I guess that shows me I must be doing something right, don’t you think? 🙂

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