"Additional Info" and CT600s/Company Accounts

"Additional Info" and CT600s/Company Accounts

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The situation in front of me is that of a ltd company that has seen it's turnover fall to about a third of the previous year, and profits almost eliminated as a result.

There is a specific reason for this deterioration in performance (from the company losing a significant customer contract in the year and having to redeploy resources to find other work). Activity in the post year-end period is back on a positive trend and results in the current year will be nearer to the previous "norms".

However, the accounts covering the period of transition look very odd compared the previous year and the tax payable is negligible which I'm sure will flag things up to the Inland Revenue. Whilst there is a valid and provable reason for the decline in turnover/profits, it seems to me that it would make sense to provide background info along with the submission to the Inland Revenue to provide context.
There is no facility to record this kind of information on a CT600 and I would be reluctant to include it in the accounts, as it may be prejudicial where accounts are circulated in the public domain (eg. with Companies House, or where requested by financial agents).

Would it be appropriate to put this in a covering letter?
SoL

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By User deleted
25th Oct 2007 01:18

why not
Certainly send a covering letter. I've always found it helpful to explain the reason for variations from the norm in a covering letter sent with the accounts. A covering letter has the potential to head off an enquiry, saves a lot of time later dealing with Revenue queries that could have been avoided and prevents phone calls/letters from unhappy clients who've just received enquiry notifications. I do it with sole traders too. There's no concrete evidence that it helps but I feel sure it does.

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By User deleted
25th Oct 2007 13:51

Directors' report
Surely this is explained in the directors' report in line with the requirements of the Companies Act.

If HMRC queries it just tell them to read that.

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By AnonymousUser
25th Oct 2007 14:26

Actually I wouldn't put this in a covering letter

I am not sure that the covering letter will not become separated from the return. Might be better to put it in the tax computation which is attached to the return. Our Iris software has the facility to put notes in computations but, if yours doesn't, you can always staple an extra page into the return/accounts/computations pack.

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