Thompson’s News ‘N’ Foods

John Thompson

Two franchised convenience stores in Southampton, both under the banner of his company Thompson’s News ‘N’ Foods Ltd.

"I am amazed at the impact of going digital to have saved so much in VAT. I am now converted and have complete trust and confidence in Walji & Co to manage my VAT compliance and to provide meaningful information which helps me to make the decisions I need to do in my business.”

– John Thompson

Case Study

John is a local business owner who runs two franchised convenience stores in Southampton, both under the banner of his company Thompson’s News ‘N’ Foods Ltd. The business has been in his family for three generations going back to the 1920’s! He grew up helping his grandmother in the shop and now manages the shops with a view to himself retiring in the near future.

John came to us in November 2017 having been referred by an existing client of ours with a view to helping him gear the business for sale in the next few years. John’s records at the time were in complete paper form on twinlock cash books where he would record all his weekly takings and expenses. This is despite overall turnover in excess of £2million. 

John needed to become digital but no one had taken the time to help him in this process. John only knew the paper cash book system as it was all he’d ever used. He was however motivated to become digital because a) he knew MTD was coming and b) he wanted to sell up in a few years and appreciated that management information would be a fundamental part of the process to help him achieve maximum value. 

It was great to take on a receptive client.

We proceeded to map out a process to digitise his records. QBO was chosen at the software of choice however we had to create an intermediate step to collect the data from John whilst building his custom chart of accounts within QBO. John was open to using an Excel file which was shared via a Dropbox link to at least start inputting electronically. He would still maintain his paper records to do his VAT returns as he needed to have the confidence that the ‘computer’ would be able to do what he has been doing manually. At least with Excel he didn’t have to painstakingly add up the rows of his cash book on a calculator!

Within 4 months we had enough data to be able to work out his VAT liability. This was a (pleasant) shock to John. John was on a Retail Scheme which meant he worked out his VAT every quarter based on a fixed percentage of standard rated sales previously agreed with HMRC. In his case it was 75% and had been for many years. He had no way of knowing what his actual split from the cash book information he kept.

When we worked out the VAT liability based on the actuals it was nearly £10,000 lower for that quarter. John was naturally sceptical. However we proved to him having been able to enter and reconcile all transactions that the ratio of his standard vs zero rated sales was a lot lower than the 75:25 split he had always based his VAT payments upon.

Through the power of proper data and accounting software he saw a reduction in his VAT liability for the next 4 quarters averaging £8,158 PER QUARTER. 

To think that for the previous few decades (John has been running the shops for over 40 years), there would have been substantial amounts of VAT overpaid. 

As a result of the above, the true net profit of the business was never ascertainable or in line with expected profit levels in his sector. 

He has also saved countless hours and wasted weekends on having to write up his books, manually totalling the numbers in his twinlock books.

Furthermore, John has much more insight now into his financials including performance of each shop which he can for the first time now compare. His bespoke management reporting pack also includes provisions for corporation tax so that he is well aware of his future liabilities in good time.

John’s case is a perfect example that accurate financial reporting and management should not just be done to keep the taxman happy but can actually help to save money, give meaningful information on the health of a business and provide warning signs in good time if things aren’t going quite right. 

This is what John had to say about us:

“I am amazed at the impact of going digital to have saved so much in VAT. I am now converted and have complete trust and confidence in Walji & Co to manage my VAT compliance and to provide meaningful information which helps me to make the decisions I need to do in my business. I wish I’d moved to them many years ago! They understand my objectives and are helping me to work towards achieving my goal of retiring in a few years time.”

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