In 2011, the ICAEW issued Tech 03/11, which told us that we'd all been wrong in the way we'd been accounting for Residential Management Companies. They'd had advice from a bloke down the Trendy Wine Bar in Moorgate Place and he'd said that these companies don't have transactions of their own, they just look after Other Peoples' Money for them.
Come 2014, and we have FRED50, which tells us that we've all been wrong in the way we've been accounting for Residential Management Companies since 2011. Another bloke in the Trendy Wine Bar had seen Tech 03/11 and had a good laugh and said it was all nonsense and we were all doing it right in the first place.
Is it just me - or are we being led by people who will just agree with the last thing somebody tells them ?
Apart from appearing slightly foolish in having to go cap in hand to the company and tell the directors that what I told them was rubbish, changing the format of the accounts isn't without cost to the company.
Frankly, I'm not sure that I want to change back on the basis of one man's legal opinion. It's just an opinion.
Any thoughts ?
Replies (7)
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I think Tech 03/11 makes sense - but I'm not applying it until there is an actual accounting standard. Meanwhile, I'm just informing relevant clients about it and telling them about the potential tax implications. I'd avoid trendy wine bars if I were you.
Tax situation
I agree, Lion. The tax bit to which I was referring is that, in a trust situation (as is envisaged here), income tax is due on interest received, so, if this is not deducted at source (which I think it would be on a trust account), then a Trust and Estate Self Assessment tax return will need to be completed. We’d need to contact HMRC to explain the company’s status, as no corporation tax returns should be needed any more.
Tax situation
I agree, Lion. The tax bit to which I was referring is that, in a trust situation (as is envisaged here), income tax is due on interest received, so, if this is not deducted at source (which I think it would be on a trust account), then a Trust and Estate Self Assessment tax return will need to be completed. We’d need to contact HMRC to explain the company’s status, as no corporation tax returns should be needed any more.
Agree
I used tech 03/11 for the last couple of years for the one residental management company I deal with and now I have to go and tell them that all of the upheaval a couple of years ago was unnecessary and we need to change back. Result - I look stupid (no comments on that one please). Will client be impressed? No.