A Capital Investment!
Treaslake Farm and Holiday Cottages, set in pretty rolling countryside near Honiton, is a collection of seven holiday homes including a Grade II listed thatched farmhouse, converted barns and thatched cottages. Bought by Sophie and Martin Goodall in 2015 as part of a career and lifestyle change, the pair, who worked in Bristol but holidayed with their young family each year in East Devon, took on the major task of refurbishing and renovating the cottages for the holiday home rental market.
Set in 14 acres of land, Sophie and Martin knew that the business was their opportunity to step away from highpressured corporate careers to focus on a better work-life balance. On top of masterminding the renovation to upgrade the properties and provide excellent onsite facilities, including a heated indoor pool, gardens, a games room and children’s play park, Sophie and Martin had to fund the work that would bring the cottages up to a high standard.
Simpkins Edwards was recommended to the couple by their solicitors, Everys. Their goal was to maximise capital allowances on expenditure, and to optimise tax efficiency on both the purchase of the properties and their refurbishment.
Working closely with IFA Aquila Financial Management Ltd, who provided high level financial advice, Simpkins Edwards ensured that the funding of the project, which was structured to minimise the impact on Martin’s pension and share options, made the most of tax allowances and was in line with FSA rulings. Lynn Woodward, Senior Partner at Simpkins Edwards, played a key role in advising the Goodalls on their trading options as a business, guiding Martin in particular through a complicated corporate exit. Simpkins Edwards completed the Goodalls VAT registration and, as the threshold was reached in June 2016, advised on making a claim for pre-registration VAT on expenses linked to both legal and professional services, as well as goods bought for the cottages prior to registration. This alone helped save the couple thousands of pounds on their first VAT return.
A little over two years after Sophie and Martin bought Treaslake Farm and Holiday Cottages, Simpkins Edwards continues to offer advice to the couple. This includes helping Sophie navigate QuickBooks Online so that they are in a good position for the introduction of quarterly digital accounting under Making Tax Digital For Business, which comes into effect for VAT purposes from April 2019. Treaslake Farm, like many holiday cottage businesses, has a turnover in excess of the current £85,000 VAT threshold.
Sophie handles the VAT with guidance from Katie Greet at Simpkins Edwards, who has provided training on QuickBooks Online and has played a vital role in bringing the books and VAT up to date.
“When we started out, we used a spreadsheet to record all income and expenses for the first year”, says Sophie. “It was hard to see how the individual properties were performing. So, on Simpkins Edwards’ advice, and with Katie’s help, we started using QuickBooks Online.
“It makes bookkeeping far easier and more accurate. Now, we can see sales per cottage, up to date figures and expenses, making for better reporting. This gives us a clearer view on how best to invest capital for return; we can draw down useful management data, which helps us plan for the future in terms of investment in the cottages, the pool, the grounds, marketing and so on.
“With QuickBooks Online we can see past spend and forecast impact on profit and pricing. We can also submit VAT directly to HMRC saving time, reducing errors and providing us with an approved audit trail. It’s been a revelation.” She continues: “The team at Simpkins Edwards go the extra mile and consistently offer sound advice that helps us to be as tax efficient as possible. They are a trusted advisor and an authoritative voice on complex tax scenarios.
“Katie and Lynn are superb and deliver a professional service with a local face; we love the fact that we can visit them in Honiton. It’s comforting to deal with someone that knows and understands you and your business, yet has immediate access to a network of colleagues with specialist knowledge.
“With their guidance, we are fully compliant with Making Tax Digital for Businesses, our accounts are up to date, we are tax efficient and we continue to make the very most of our capital allowances. It makes the running of the business far less stressful, and that enables us to concentrate on what we do best, which is making memorable holidays for our guests.”