In the past my local office have been happy with a set of abbreviated accounts, a detailed P&L and disclosures of any other relevant information. Now they have had instruction from HMRC head office to comply with Para 3 Sch 18 ICTA 1998 that the company is "...required by company law to prepare....including a copy of the directors and auditors report similarily required". Head office HMRC say this means a full set of statutory accounts must be provided. I don't have a copy of ICTA1998 but are they correct. OK I know I should prepare a full set of statutory accounts for all one-man companies anyway but there's red tape that's sensible and there's red tape that isn't of much practical use.
Doug Scott
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...interested....
...that HMRC ever accepted abbreviated accounts - I had no idea they did and am amazed they did!! As pointed out, since legally the company is required to produce "full" accounts, HMRC would simply say we are not asking for anything extra anyway.
I do understand and sympathise with point about small business and red tape, but incorporation is a business decision with consequences, beneficial and otherwise. Personall/politically/socially I can't get worked up about need to produce "full" accounts. Dare I say it, I agree with policy decision to scrap abbreviated accounts for companies full stop (see below). If business wants limited liability protection, it should have some acountability / transparency. It is not as if a small business is forced to incorporate - it is a rational cost/benefit decision.
For a number of reasons, incorporation has been used (totally legitimately) by thousands of folk in last few years in order (quite properly) to save tax. An excellent tax saving deal for the small business person.
But "joint stock companies" were not created as a business vehicle for this purpose!! Therefore the fact that company law places extra burdens is not surprising. What is surprising (to me) is that HMRC used to have policy of not requiring "full" accounts!
Abbreviated accounts as a concept is to be scrapped in next Companies Act anyway (or it was going to be - perhaps someone can update me if that has chaged), so it's not a debate that will run and run.
So Doug, compnay law rather than HMRC will require you to get software and checklists and.....
I'd suggest you have a look at Digita accounts pro - user friendly and good helpline (albeit not as good as it used to be !!)
Unless I am missing the point..
Directors are required by law to produce a full set of statutory accounts.
Providing they comply with this requirement then your problem falls by the wayside.
I agree with Dean
The directors are required to prepare full accounts and are required to submit their accounts to HMRC with the CT600. Submission of abbreviated accounts is a concession allowed by Companies House and has nothing to do with HMRC.
I'm a bit concerned if Doug feels the preparation of full accounts is "red tape" but hopefully I misunderstood that comment.
I think you mean the Finance Act 1998
http://www.opsi.gov.uk/acts/acts1998/80036-bd.htm#sch18ptII
Company tax return
3. - (1) The Inland Revenue may by notice require a company to deliver a return (a "company tax return") of such information, accounts, statements and reports-
(a) relevant to the tax liability of the company, or
(b) otherwise relevant to the application of the Corporation Tax Acts to the company,
as may reasonably be required by the notice.
(2) Different information, accounts, statements and reports may be required from different descriptions of company.
(3) A company tax return must include a declaration by the person making the return that the return is to the best of his knowledge correct and complete.
(4) The return must be delivered to the officer of the Board by whom the notice was issued not later than the filing date.
not much extra work?
with the software I use (caseware) the difference between a full set and an abbreviated set of accounts is the click of one check box.
obviously you'd have to check the additional disclosures but as you are talking about one man companies, I don't think these would be too more work if any at all?
Forced incorporation
In answer to "..... It is not as if a small business is forced to incorporate ...... " that is strictly not true because S134 (can't remember the ICTA reference) forces clients to only use LtdCos for fear of being held liable for non-payment of SE tax. So, although not forced to incorportate through direct law, it is enforced indirectly as it is impossible to do business.
This is a prime example of the burden of "red-tape" on small businesses, both financial and cost in terms of time.