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Self-Employed Submissions with tax return

On completion of accounts, I get these signed by client, and myself, and send to tax office together with tax calculation and capital allowance schedule. Is this correct or am I giving them to much info. Or should I send tax return only.

I am concerned because I have just acquired a new client whose previous accountant died. I see he is claiming capital allowance for van 100%, and a car 50%, and he is just a decorator. If I just enter the amount on tax return they would not notice. If I send tax calculation as I normally do, they might query this. He is also claiming car insurance, repairs etc @ 50% for the car. My policy is only to make claims for actual expenses incurred if the van is off the road for some reason.
He is also claiming a number of allowances for tools, cleaning and protective clothing.

My overall concern is that he could be investigated by the Revenue, and more so if I send all the attachments as I usually do with his tax return.For the moment I have completed accounts on the same basis as his last accountant, but I have warned him about my concerns.

Thanks
Tony Lecart
Anthony Lecart

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Well, this is what I do.
First of all I make it a point to ALWAYS submit accounts, tax computations and capital allowances for the reason given earlier: it may avoid an inquiry, whether aspect or in-depth by providing useful analysis of the tax return boxes.

Secondly, I ALWAYS ask my clients about their private use of telephone and vehicles. It is THEIR answers that I use for the tax compuation not my own estimates. For motoring, it is usually enough to ask how many miles each one has done in the period and then enquire how many miles (on average) is private. You may well find that this client uses his van when doing a job and the car when off trawling for new customers. If his spouse has her own car then maybe they use that one for the most part which would explain the high percentage of business use.

Basically, it all boils down to asking the right questions.

And on occasion, where there are itemised fuel receipts, I will segregate them into 4* and unleaded, a good pointer for revealing different vehicles, and by using average prices, as supplied by the DTI (see their website), I can roughly gauge mileage for the year which can be compared to a client's assertions.

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The Times They Are A Changing......
I remember at the outset of SA that the IR were certain that they did not require or have the space to store Accounts and Tax Computations in support of the declarations.

Yes, such data is ignored on submission, but that is not the point. It's when someone in the enquiry section looks at the case you want them to be aware.

My local Area seems to be inundated with supporting data. They are also inundated with practioners who say.....'why didn't you look at the paperwork you already have before asking stupic questions....' So the advice given out by them is put something in the Additional Information box to the extent that Accounts and Computations were submitted (or in the case of Filing By Internet) will be submitted.

They know that the extra data saves them time too. So, in effect, they are now asking for it. The data will be retrieved from store before the Inspector makes his decision to proceed with an examination or to put the file away.

I have always submitted copies, on the basis that I do not want any client to be notified of an enquiry if such could be avoided by the IR simply looking at the data. A happy client, is a good client!

In your particular case, put your advice to the client in writing. You do not want a claim for failing to advise the IR of the facts. Then, of course, it's good old Money Laundering legislation to consider.

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Tax Return only
I do not generally send in accounts or computations for a sole trader, but if anything is not absolutely straightforward, then an explanation in the "additional information" white spaces is required. Of course I always have the accounts and computations available on file, together with the client's agreement that they are correct.

The point is that if you as an experienced professional are not happy that an entry on the tax return is correct or can be supported by the facts you should not complete the form on that basis. You have an obligation to point out to the client that you believe the previous practice was wrong and that you will follow a course based on your own knowledge and experience.

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No accounts with returns
I agree with Jon's comments set out below. I know that the debate will rage on forever about whether or not it is advisable to send a copy of the accounts in with the tax return, but my own policy in my practice is not to. If this matter was critical, then surely the Revenue would have forced taxpayers to submit accounts with their returns. I am extremely doubtful whether they would look at the accounts anyway, when processing the tax return. If they do select the client for an enquiry, then the accounts merely reflect the entries on the self-employed pages anyway, possibly, I suppose, with a little more detail.

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I disagree
My policy has always been to submit accounts and computations with the return and to state in the additional information box, "the annexed accounts and computations constitute an integral part of this return". This is a protection against discovery assessments.
If this has been your ploicy in the past and you now change it for this one client do you think that the Revenue will notice?

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