What is the point?

What is the point?

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In my view tax compliance and advice is provided to clients so that, among other reasons, if there is a HMRC audit, then the client is protected from enquiry/tax/penalties/litigation/prison etc.

A new client has no bookkeeping system, inadequate records, a Director was paid as self-employed and there are reimbursed expenses but no P11Ds. (All raised as issues but I only do the annual accounts.)

HMRC carried out a PAYE audit, took all the records (mostly bank statements as so disorganised) and have not come back at all. So basically a clean audit. 

So what is the point in warning clients of ramifications of not complying, if, well, there are none?

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Euan's picture
By Euan MacLennan
21st Jul 2015 11:01

Might be OK

For the client to get a PAYE audit, I assume that he has a PAYE scheme which is being used for employees and any other directors apart from the one being paid as self-employed.  Are you saying that there was anything wrong with the payroll calculations?

It is sometimes acceptable for a director to be paid as a self-employed person if he has a trade or profession in which he bills other customers for the same sort of services he provides to the client.  Perhaps, the HMRC inspectors checked that the director was reporting his income from the client on his SA tax returns.

As I have said many times before, no-one was ever criticised, let alone penalised, for failing to submit forms P11D to report the non-taxable reimbursement of business expenses and from 2016/17, the requirement to do so will be abolished.

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By Matrix
21st Jul 2015 14:48

Thanks Euan.  No I don't

Thanks Euan.  No I don't think there was anything wrong with the payroll other than I think this Director should have been on it, she doesn't work for anyone else and works 5 days a week there.  In fact she runs the payroll and met the Inspector.

She has now been removed as a Director and I have more than protected myself by going on about it to the owners (since she also lied and said she had set up a company).  I just don't think HMRC asked the right questions or understood the information. Maybe my client just got lucky that day.

 

 

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Replying to Tax Dragon:
By ireallyshouldknowthisbut
21st Jul 2015 14:54

.

Matrix wrote:

 I just don't think HMRC asked the right questions or understood the information. .

 

Sounds about par. You must remember than often the 'inspectors' have very little knowledge or training. Its luck fo the draw.  However often the er 'less well trained' ones are more hassle as they pick you up on things that you have done right, but they dont understand why. 

I would agree with Euan that P11D's are not seen as an issue as there is no tax due.  Never quite worked out why accountants get so worked up about them. No fines can arise if no tax is due. 

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