Tax Health Check

A Proper Tax Health Check for Agencies

A Tax Health Check is a comprehensive review of your agency’s tax position — designed to identify risks, missed reliefs, and potential savings.

  • Keep digital records
  • Use approved MTD software
  • Submit updates every quarter

What you need to know:

Business Structure Review

  • Is the agency set up in the most tax-efficient way (Ltd vs LLP vs sole trader)?
  • Are directors’ salaries/dividends optimised?

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VAT Position Check

  • Correct VAT treatment on UK vs overseas clients.
  • Any opportunity for Flat Rate Scheme or VAT grouping?
  • Reviewing media spend, subcontractors, and zero-rated/exempt items.

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Allowable Expenses

  • Spotting agency-specific costs that often get missed (home office, client entertaining rules, software, freelancers).
  • Ensuring staff benefits aren’t triggering unnecessary tax charges.

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R&D and Creative Tax Reliefs

  • Eligibility check for R&D Tax Credits (common with digital/creative work).
  • Reviewing if creative sector reliefs apply.

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Director/Shareholder Remuneration

  • Salary vs dividend mix.
  • Use of allowances (e.g. pension).

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Corporation Tax & Cash Extraction

  • Reviewing timing of expenses/investments.
  • Checking if you’re using all available reliefs (e.g. Annual Investment Allowance).

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Personal Tax Alignment

  • Ensuring agency profits, dividends, and personal tax planning fit together.
  • Payments on account planned to avoid surprises.
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Quick Wins Report

  • A simple summary of missed opportunities, risk areas, and 2–3 actions that could save money straight away

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Approach
Pros
Cons

Internal Reviews

Low cost (£0-£5k/year, staff time); quick (weekly checks); strong adherence to UK tax rules, value-added tax (VAT), and financial reporting standards (FRS 102)using in-house knowledge.

Limited  objectivity; time-intensive for complex media buys; potential bias in client  fund tracking.

External Audits by Certified Accountants

High adherence to financial reporting standards (FRS 102), UK tax rules, and value-added tax (VAT) directives (e.g., quarterly filings); thorough for trust accounts.

High cost (£10k-£50k annually); lengthy (months per cycle); disrupts operations.

Automated Compliance Software (e.g., Xero or Sage)

Affordable (£500-£5k/year); fast real-time monitoring of value-added tax (VAT) and UK tax rules compliance; integrates financial reporting standards (FRS 102) reporting.

Initial set-up time (1-2 weeks); relies on accurate data input; less nuanced for bespoke agency finances.