Advance tax planning

The question and deliverable

We prepare or update the estimate, reconcile payments already made and explain major assumptions and movements. Scenario analysis can show the effect of changes in profitability or one-off transactions.

Set a review date and separate results already recorded from the remaining-year forecast. Identify the assumptions that most affect the estimate, such as sales timing, margins or a proposed asset disposal. Retain each forecast version so changes in the payment recommendation can be explained.

Evidence to prepare

• Year-to-date accounts
• remaining-year forecast
• tax credits
• prior payments
• expected gains or losses
• deductions and timing differences.

Reconcile prior payments to the taxpayer and period shown on the payment evidence. Keep expected tax credits distinguishable from credits supported by available records. For material one-off items, provide the underlying agreement or calculation rather than adding an unexplained amount to the forecast.

A fact that can change the analysis

A seasonal business may earn most of its profit late in the year. Its estimate should be refreshed as the commercial outlook changes, with assumptions recorded.

For example, a seasonal sales forecast may improve while collections remain slow. Update the profit estimate and show the funding implications separately so the business can plan the payment. Cash available in the bank should not silently replace the income assumptions used in the tax working.

Engagement boundaries

This is an estimate based on supplied facts, not a guarantee against interest or later adjustment. Payment authorisation remains with the taxpayer.

The written proposal confirms the taxpayer, period, deliverables and fees. Identify any payment, response or appeal date at the start.

The handover includes the dated estimate, assumptions, movement from the previous version and payments taken into account. Identify the person authorising payment and the events that should trigger another review. Keep the recommendation, payment instruction and completed payment evidence separately recorded.