Reporting reforms: Accountants fight back

what winds me up most is how well the government are managing NOT to reduce red tape, even though they acknowledged how important this is.  That they don't understand accounting is OK with me, but putting this out under the heading of "reducing the administrative burden" makes my blood boil.  Not to mention introducing yet another term for small companies.

Reducing the burden of "micro entities" or whatever buzz word they want to use makes sense. However, the 12 week time limit is crazy and looks like just another excuse to hit them with more "penalties".

The real issue to me seems to be that these "micro entities" simply ought not to be limited companies in the first place, and that is driven by two factors:

1. Successive governments bribing people to form companies over sole traders through considerable tax incentives (the 1% drop in the CT rate with 1% increase in the NI rate for self employed in the last budget widening this by 2% in one year alone)

2. It being just too easy to form a limited company - formation agents fall over themselves to make people believe they need a limited company to be in business, it is as if the sole trader option doesn't exist.

For any business big enough to be a proper limited company then the reporting to CH is trivial, it probably adds no more than £25 to our fees, probably much less.

The whole proposal is just laughable. When will these silly civil servants and MPs just realise that they know nothing about accountancy and stop fobbing us off with £X billions of savings. They really are off the mark with these so called savings. My recommendation which I am sending to the m is "leave things alone as you do not know enough"

No doubt some will say, of us accountants, that "they would say that wouldn't they", but with the FRSSE, financial reporting is one area for small/micro business where the admin. burden was reduced many years ago.

Surely there are lower hanging fruits elsewhere in the state's regulatory regime that could be picked? They could go further with scaling back employment regulation (without hitting core employee rights). How about the myriad of box-ticking, seen-to-be-doing-something registration and inspection systems do little to protect anyone other than the jobs of the bureaucrats operating them?

Who knows, with the savings then generated in government, we could have some funded tax cuts....

I think not.

THe Govt should spend move of its time getting out into the real world.  Perhaps they should all be made to become self-employed and made to operate thru a Ltd company.  THen they can see the beauty of IR35 etc.

If they really want to reduce burden make the rules the same for Income Tax Corp Tax and VAT.

"Clearly turnover will be reduced as debtors will not be accounted for, and costs will also be understated due to the fact that creditors won’t be brought into the trading statement. "

It will be even worse than that for HMRC ... just as with VAT Cash Accounting, companies will pay their suppliers on the last day of the period, so the profit and hence tax will go down by 1 to 2 months' credit sales.  Good news for the micro-companies, surely.

On the other hand, has anyone considered the software problems?  If they want accruals-based balances, but a R&P P&L, most accounting software won't do this.  So lots MORE adjustments for the accountant to do - far more than the 2 minutes it takes me to click a switch and get Abbreviated Accounts.

It would be, in fact, like the Charities Commissioners' format for R&P accounts for small charities.  I find these tedious to produce, because, by definition, the "Assets and Liabilities" statement doesn't balance, and reconciliation has to be done outside the accounts rather than within them.  As the article says, what price "true and fair"?

Over my  16+ years of trading I have had quite  a few clients who have already been charged by unscrupulous accountants for setting them up as a limited company; these are clients who use their business bank account as a private account - especially  during the period of free banking, keep very few  receipts (except possibly the ones from the indian takeaway) , leave their (£10 per time) fuel receipts in the window of the van to bleach etc etc.  and who have never been instructed by the initial accountant how they need to keep proper records, what being a limited company means in terms of the law or even that the accountant will make an ongoing  charge for  the RO address being at their office address.   One man bands think that  signing the presented forms   will get them out of any mess they may get themselves into and that the accountant will keep the piper from ever having to be paid.  What they fail to realise is that the accountant is the piper and will not release any records until copious further amounts of money is paid to him leaving the client right in the proverbial.    There are several accountancy firms in my area which do this -  in fact most of them. 

Whilst I am certain that there is no accountant on AW who  trades in the way  described above(;-),  I think the lower end of the scale really needs cleaning up.  There are so many who should not be running a limited company, especially as it encourages the smarter ones to set up a company and close it down as soon as there are bills to be paid having started another company to keep their business running et al .  We have personally just been turned over to the tune of approx £350  in the past  month  in this way via our  china  retail business - by a carrier.   I think the reduction to the one director company was a mistake, perhaps if the directorship number was increased to, say, 3 or more then there would be more responsibility to actually make a micro company a proper business, especially if each director was truly culpable.  Start from the bottom up.

...by abolishing the sort of QUANGOs that dream up this gibberish.

There's far too much government & not enough productiveness going on.

#weaversmith

Wonderfull / sums it all/ the Co Law changes made it too easy for the "moomlighters" to take the public and HMRC for 
a ride.

I would even go so far as to remove Abbriviated accounts rule/ make everyone file full a/cs so public can see.
and with modern systems it really costs nothing extra/ just press a key.

Get rid of:

 - PAYE/NI

 - VAT

 - any obligation to produce a balance sheet

 - any need to prepare an income statement on the basis of UK GAAP!

Then perhaps microbusinesses could prepare their own tax returns with no recourse to an external accountant?

That would reduce the burdens. But what would be the result?

This has to have been produced by the same advisors who suggested the previous administration have a £10,000 nil rate CT band & were then surprised that so many people utilised it! All sound bites & no common sense.

I believe that my job is to keep (at least) an annual check on my client's business affairs by checking the bank balances, sales & purchase ledgers make sense, VAT & PAYE balance, stock & WIP (I know, it usually isn't called that now but you all know what I mean!) are kept under control by forcing them to think about it, etc. It seems that we wouldn't need to do any of this under the new rules, allowing small companies to get more out of control than they do now.

I'd turn it around the other way. Instead of exempting small companies from the non-existent accounting burden, let's stop small companies from existing. Have a minimum share capital of say £25,000 so that, in order to get the advantages of limited liability and potential NIC savings on divis, a small business owner has to risk his own money, not his suppliers & the government's. This may not stop all of the conmen who stop & start businesses, walking away from huge debts, but it should discourage a large number of them.

I know - cloud cuckoo land!!!

Surely, this so called reduction in red tape only increases the burden on a whole host of small businesses - namely accountants who will have to introduce new procedures for cash reporting and no doubt buy more software add ons not to mention doing 12 months of work in 3.Like every other accountant out there, my training was based around certain principles; double entry book-keeping, balance sheets that fitted together with a P& L account and the accruals concept - cash reporting means nothing to anyone. You may as well do away with any reporting requirement as introduced this.

Incorporating a business comes with a bundle of burdens and responsibilities - another core plank of my training - if small entities feel this is too burdensome then don't incorporate.

If the Government really want to help small businesses reduce red -tape they should look at Money Laundering Regs, Data Protection, employment regulation and health and safety requirements. And don't get me started on the new PAYE burdens  - online filing, and coming soon NEST and real-time information. Clueless..

idiotic or just insane they may look to any poor schmuck attempting to carve a living in the real world, but the totalitarian, Kremlinesque paradigm feathers those zombies living within its circles very well indeed.

Probably when HMRC implodes under its own hubris with the introduction of RTI, the old model will be finally discredited and we can start again with something more appropriate to the next credit cycle upwave.

Cloud cuckoo land ?  not quite/  check German regulations  company formation.
As they now rule Europe (with an ex communist as leader ?)(I thought they lost 2 world wars trying to do that- as Northern Ireland proved to war mongers-Politics must easier way to win control)

we might as well follow anything good that comes from that area.