New instructions from HMRC not to fila Abbreviated Accounts with CT600?

New instructions from HMRC not to fila...

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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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DougScott
By Dougscott
21st Jul 2006 08:31

Red tape
I guess red tape gives us accountants a living so maybe we should be encouraging more of it? The trouble is this government trusts no one.

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By martinfoley07
20th Jul 2006 11:24

...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 !!)

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By deanshepherd
08th Jul 2006 01:00


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.

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By AnonymousUser
09th Jul 2006 13:16

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.

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DougScott
By Dougscott
10th Jul 2006 10:12

Red tape
I am just of the opinion that it's about time this government started being genuine about reducing red tape, and HMRC in particular.

Producing a full set of accounts for one-man companies is red tape because it is not required to be filed at Companies House, wasn't required by HMRC until just now, and isn't required by the director - but it is still a legal requirement of Company Law even though no one actually uses them (although HMRC apparently now do).

It's a bit like having a turnover of less than £15000 - you don't have to give any details on your self-assessment return but in fact you do because if you don't chances are HMRC will send you one of their little letters saying we don't believe you and we may open an enquiry into your return. Effectively you need to fill in the whole lot to stop them treating you with suspicion.

I'd just be interested to know why HMRC have suddenly changed their mind now, it's not a huge issue but just seems symptomatic of their recent behaviour of doing things without informing us accountants. Or maybe they have informed us but I can't see anything in "Working Together".....as others have said HMRC may like to pretend to "work together" but actually don't.

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By flurrymc
07th Jul 2006 12:58

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.

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DougScott
By Dougscott
07th Jul 2006 12:36

Not much but....
Not much extra work but I'll have to buy some software - any recommendations?

My main question though really is are HMRC correct in their iterpretation of the law? And why suddenly insist on it now after years of not insisting on it?

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By AnonymousUser
07th Jul 2006 11:38

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?

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DougScott
By Dougscott
07th Jul 2006 13:42

I'm being pedantic.
I may be being pedantic but I can see nothing in there that says we can't send them abbreviated accounts plus further necessary information. Nowhere does it say we have to file a full set of accounts.

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By ThornyIssues
20th Sep 2010 16:42

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.

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