My client incorporated in April 2012. Company has been trading since Oct 2012. Nothing has been done. The partnership accounts up to 30/09/2012 haven't been completed as far as I'm aware yet the partnership tax return has been submitted up to 05/04/2014 (by the previous agent). Previous agent hasn't responded to letters/phone calls from me or the client for information. (Non qualified so no recourse with ICAEW etc).
2 directors have been withdrawing £1500 per mth since Oct 2012. Does anyone know if it would be better to register a PAYE scheme from now and put previous withdrawals to the directors loan and deal with the S455 tax or take the hit with penalties but have the CT relief on the salaries? Where do I find out the penalty regime?
Thanks
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Replies (8)
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Involve the client
It seems to me you are not in the best position to advise on a course of action when you have been deprived of information necessary to make an informed decision.
Tell the client that time is of the essence and enlist their help in acquiring information from the old accountant. Assuming the old accountant is local suggest a meeting, book a time at their office and turn up!
If the client isn't interested in helping, well, you know sooner than planned what kind of relationship you will have with them.
Ltd company or Partnership?
Is it a limited company or a partnership? Both are very different to deal with with regards to PAYE schemes and returns/accounts.
Agree with the above, but with respect your post is full of contradictions.
You say client "incorporated" then that "partnership" accounts have not been prepared but a "partnership" tax return has been submitted.
Then you refer to "directors" and "S455 tax" and "CT relief on salaries".
You will see the obvious factual inconsistencies that need to be clarified.
A little confused
If the partnership ceased in Sept 2012 then why the need for a 2013/2014 partnership tax return, surely 2012/2013? The 2013/2014 return would surely be nil, or is the date of incorporation in the first post out by a year?
Re the return being prepared without accounts, does appear somewhat strange.
My advice
I assume that the partnership ceased trading on 30.09.2012, after which the trade was conducted through the company. Any Partnership Tax Return for 2013/14 must surely have been a nil return - probably submitted by the previous accountant only because it had been issued, in order to avoid any arguments about late filing penalties.
If the company was incorporated in April 2012, its first accounts should have been made up to 30.04.2013 (unless the date was changed which seems unlikely as nothing else appears to have been done) and filed by 31.01.2014. If the accounts are filed at Companies House by the end of July, a late filing penalty of £750 will be levied - after that, it will be £1,500. Similarly, any corporation tax should have been paid by 01.02.2014 and the CT return filed by 30.04.2014, so there will be penalties and perhaps interest charged by HMRC.
My advice is:
start a new company and get it right from the start of trading on (say) 01.07.2014change the 30.04.2014 accounting date of the old company to 30.06.2014prepare two sets of accounts for the old company for the year and few days from incorporation to 30.04.2013 and for the 14 months to 30.06.2014, file the appropriate three CT returns and get the company to pay the taxdo NOT file the 30.04.2013 accounts at Companies House, thus avoiding their late filing penaltieson 01.10.2014, 3 months after the cessation of trading, send form DS01 to Companies House to apply for the old company to be struck off
A few more questions...
Can I get a copy of the partnership return from HMRC? What if this was filed without my clients consent? ( as they seem to know nothing about it - 2013/14 was filed on 30/04/14)
If I started a new co, could I sell the assets of the partnership to new co and do it properly?
Surely this would mess up any goodwill adjustment as the partnership accts would (probably) show no sales from Oct 2012 onwards. (as these were in the Ltd Co).
Is there any way to get the goodwill adjustment?
Many thanks
TR cancelled?
Can I get a copy of the partnership return from HMRC? What if this was filed without my clients consent? ( as they seem to know nothing about it - 2013/14 was filed on 30/04/14)
HMRC tends to enter a date submitted when they just want to cancel the requirement for a tax return. It tells their system not to penalise a late or no return. It could well be that HMRC realised that the 2012/13 Partnership TR disclosed that the partnership had ceased trading sometime after issuing the notice to file a 2013/14 return. Perhaps, the old accountant called them or wrote to them.