Material errors - 17 % of turnover of current year - do we disclose ?

Material errors - 17 % of turnover of current...

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We have just recently taken over a client whose previous year accounts seem to understate income by 13%. This has been picked up by trying to agree the opening balances which are massively out on debtors and the bank balances. Do not have the back ground detail  sicne previsu accountant refusing to co-operate. We have included  the adjustments  in the current year and the adjustment equates to 17% of the current years income. Do we disclose this on the note to the accounts in abbreviated and full? Do we need to redo the previous years tax return  even though we are out of time to refile - 6 months late?  Thankfully HMRc are not loosing out on any tax being paid due to a loss position.

Any clarity on this issue would be much appreciated.

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By Chris Smail
22nd Oct 2013 01:24

Material? Yes. Incorrect in law? No

So restate opening balances & comparatives for fundamental error with all necessary disclosures but do not resubmit last year accounts or tax comp.

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By johngroganjga
22nd Oct 2013 08:33

Agree with the above.  And in

Agree with the above.  And in your CT computations treat the PYA as an addition to the current year profit.

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By shaun king
22nd Oct 2013 13:06

VAT

Is company registered for VAT and has understated income been declared through submitted returns. If not, you need to consider whether disclosure necessary or whether adjustment can be made to next return.

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