FD's Diary - VAT visits

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Every day has to bring a suprise - and today it's notice of a VAT visit

June 30 - No day is complete without a surprise. This morning was notification of a VAT control visit. I'm sure I should worry about these more than I do. Indeed, when I once worked in a partially exempt company I worried about them a very great deal because the capacity for error seemed so high. Here everything is standard rate, and everything carries it. The vending machine has VAT taken out of the takings. We account for car fuel. What else can I get wrong? Input I suppose. I guess I should call the auditors to see if there's anything they want me to warn me about that's topical right now.

Anyone else spotted current themes in VAT inspections? Oh, I do reconcile VAT turnover to the return by the way. We even account for VAT on fixed asset sales. What other goodies are there?

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June 28 - All going well, except that in a panic (again) I realise I have not registered us for the new BACSTEL scheme that I gather needs our attention before days are out (or not much longer if the message from our bank is to be believed). I'm not sure how I missed this one, but rather like the deadline for filing P35's on line it seemed to shoot way over my head or straight into the bin.

Still it seems remedial action is possible as the changeover is in December, although I gather there's work to do before then. I wonder how many others will miss the boat? It could be embarrassing to have to pay the staff by cheque.

June 23 ' The heat continues to cause problems. Our 'server room' is, if truth be told, a converted store and whilst lots of efforts have been made to keep it cool these seemed to fail yesterday. As a result the email server fell over (metaphorically) and by the end of the day the main system was struggling too. This had massive knock on effects. It looked like we might be delaying staff, for a start, but after a sweaty evening (in every sense) that log jam cleared.

If anyone knows where the thermostat is for the world outside could they turn it down please? It's even beginning to make a cynic like me think about global warming. Perhaps I should recast our project on seeing if we can cut down mileage as a CSR project!

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June 21 ' Hot weather gives rise to all the problems of dress codes, yet again.

AJ has, despite all my requests, adopted her usual minimalist approach to summer. And the traffic into the department has risen in consequence. I know she knows why it's happening. I know she knows I think it's a problem. I know she thinks it isn't, or I guess she wouldn't welcome it.

I've decided to just sweat it out. I just wish it wasn't so distracting.

* * *
June 20 ' Mrs CEO gave consent to a board meeting being held whenever the CEO wanted given she was not going to attend and had made clear she would block any proposal he made, using Ops as her designated alternate to do so. Ops and I agreed after discussion that he had no choice but to do so.

So, the CEO came today and we duly held the meeting, which as expected was a complete farce. In fact, it was such a farce that I wrote the minutes in advance so we could agree them whilst he was present for presentation to her.

He stormed at how unreasonable it was that we were doing such a good job at making money and he should see no benefit from it. He maligned her for everything under the sun. We, tactfully, declined to point out that if he questioned so much about her perhaps he should have done so before marrying her. He even ranted at Ops for his having to vote in accordance with her instructions, and we then pointed out that if he had not done so then either he, the CEO, or I would have been obliged to do so and we could not imagine he would have wanted to vote against himself.

But the very idea that he might have been required to do so under the shareholder agreement shows the ridiculous situation we are in. This is a gridlocked company. Ops and I have lots of power as a result, and none at all in some ways because ultimately big decisions might always be blocked.

That's depressing. Almost as depressing as watching a grown man act as stupidly as the CEO did.

I returned to the sanity of the accounts department and hoped I smiled on everyone benignly. They are really quite a sane bunch, all things considered, which just makes it even more of a shame that they have to work for such a person (or should I say people, because she's no better for winding him up in the first place).

* * *
June 16 ' A last thought on databases (maybe).

I've applied the lesions I've learned. I've thought hard about what I want on some of the reporting issues that have been a problem. I've worked out if we have the data we want somewhere. And I've now identified the limited holes we need to plug. I've realised that it will take me forever to learn how to firstly change systems to fill those gaps and secondly to get the skills to pull out the reports I want.

But, having done all the thinking (and having read more about how databases work) I've gone with my conclusions to our IT chap and said 'this is what I want, and this is how I want it to look, and I'd really like to be able to dump this output into Excel whenever I need it, because I know how to use Excel'.

'No problem' he said, 'Why didn't you ask before?'

Because, I wanted to say, when I asked you before you looked blank and didn't appear able to help, but I'm (slightly) more tactful than that.

But I have learned my lessons. They are, I think, to work out what I want, to work out what data is needed to deliver what I want, to see if we have it already, to design how I want the information to look and in what format, and to then ask someone else to deliver it. All but the last bit seem to be the skills we accountants should have. The last bit seems to be the techy bit.

And I never wanted to be a techy anyway.

* * *
June 14 ' I've been amused to see McKinsey's corporate philosophy reported widely over the last few days. It is, apparently something like 'Everything can be measured and what gets measured gets managed."

Well, I know they get paid a lot, but it's clear they've not worked anywhere that I have. Let's take the CEO for start. How do you a measure a pain in the proverbial, let alone manage him when I know I can't get rid of him?

I reckon I've spent most of the last 2 days sorting out the agenda for a meeting which Mrs CEO won't attend and which, therefore cannot decide anything because he has nit picked everything (except, I think, the font I typed it in ' but I don't rule that out, yet).

And whilst that might be extreme, I think that is management consultancy (let alone accountancy) speak gone mad. The most important thing to the success of this business right now, Ops and I agree, is that we survive the stress the shareholders put on us and keep it going forward.

How do you measure that? Any suggestions and I'll build it into my bonus, but I have a strong suspicion that is not a management outcome that will be agreed.

* * *
June 9 ' Guess what? The CEO's not a happy bunny. He insists we must have a board meeting whether or not Mrs CEO turns up or not. I pointed out that this is futile. Nothing can be added to the agenda if she does not agree it. Ops and I can't, and won't overturn her intention. We're not allowed to on the issue of a dividend under the shareholder agreement. So wouldn't he just like to sign a copy minute and agree it's been done?

No, he says. He wants a meeting to prove she didn't come. I think he believes that somehow he can force her out if she doesn't turn up for a while. But that's not true. She need never come under the terms of the shareholder agreement and he still can't sack her.

Most of the time I don't regret having engineered the departure of these two from the day to day life of the company. But there are occasions, and today is one of them, when it peeves me deeply that we pay them so much to be petty.

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June 8 - I've still been thinking about Access and following some of the debate on it. It's curious that having done so I really don't see lots of uses for it for me. Now, don't get me wrong. I think databases are fantastic. I love our accounts system (well, that might overstate it, but it works, pretty much). The CRM system integrates with it pretty well (but it took quite a lot of effort, an issue on which I have commented little although I have been involved with it). Payroll is database-driven. Between this lot I can query vast amounts of data, often. So why do I need more databases?

I don't want to be contrary, but as far as I can see the issue if you've got accounts, stock, CRM, fixed assets, payroll and all the rest databased is not how to create more databases, but how to get the data out of them.

I do think there are two issues here. The first is learning how to dump the data into Excel and then use it (pivot tables here we come again) and the second how to write queries to get the reports we want.

The last is quite interesting, because it seems to be more than just learning to access all the reports in your system or to specify a new one. One of the "value added" products I think we might supply to clients is a written report based on our findings on our control visits and on the data our new kit might be able to report from site. But this has to be in clear English with nice pretty graphs. I've not really tried to do this before, and have been told to look at Crystal Report Writer. Anyone got any experience?

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June 6 - I promise not to say it again (until the next time). I hate coming back from holiday. There's always the lurking fear that something serious has happened whilst you're away and someone decided not to tell you for fear of spoiling your break.

I'm sure I'm exasperating upon my return. This time it didn't help that #3 was away as well, which is the half term problem for you. So AJ really got grilled this morning. How much cash had come in? Had any one refused to pay? Had any supplier disputes arisen? How many staff had quit (we can almost guarantee that in any week at least one will, so to be perverse none had this week). And on, and on. Poor woman. Still, by 10.00 #3 had taken over the relatively minor problems that had come in and I'd reported all was reasonably OK with Ops.

Then he gave me the news that Mrs CEO was refusing to come to the board meeting. She's sent a formal letter saying that as far as she can see we only need to discuss three issues, which are agreeing the accounts, approving the director's remuneration and deciding on a dividend. So, she approved the accounts, she left Ops to agree the audit fee in consultation with me and she refused to agree any additional dividend, as expected. She just doesn't seem to have the guts to turn up and say so herself.

As Ops put it, her letter was obviously drafted by an accountant for her. So he gave me the job of writing the missive to tell the CEO this on his behalf. He'd known about this since last Thursday and done nothing. I'm not sure who is the biggest coward here, him or Mrs. CEO but either way it seems like it's me who has to tell the CEO there are no more funds coming his way to keep his girlfriend in the style to which she'd like to be accustomed.

In between dealing with the auditors and reviewing the maintenance operation, the FD spent some time in June getting to grips with Microsoft Access.

For previous installments of the FD's Diary, see:


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VAT visits
In my experienece VAT visits have changed over the years from ploughing through mountains of paperwork in order to identify a few pounds reclaimed in error to reconciling both outputs and inputs to the accounts, which they may require a bit of help with particularly the inputs. Overall it seems a much more sensible approach to me.

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VAT Visits, phones and extra comfort
HMRC are looking very closely at private use of mobile phones at the moment. Make sure you've disallowed input VAT relating to private use or accounted for output VAT on a charge for private use to the employees.

For that extra peace of mind VATease can carry out a mock VAT visit / healthcheck to identify any risk areas / exposure. Contact me and I'm sure we can sort one out at a reasonable rate ;-).

Paul Taylor
VATease - VAT Advice
0121 778 4299

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Potential VAT problems
We were subjet to a VAT visit and had a problem with VAT on imports where I used to work. An American supplier had a UK sales office where we would place orders. The goods would then be delivered and the import VAT/duty would be charged via the freight company. Unfortunately the VAT number documented by said freight company was not ours but that of the UK sales office we ordered from. On that technicality we had to repay about £5k of import VAT plus interest. HMC&E advised that we could in fact ask the UK office of the supplier to refund the VAT which they could then reclaim. However due to their difficulties/inadequacies we decided it best to write off and draw a line.

Another interesting angle they looked at was the exchange rates used on invoices raised as well as received. Our sales invoices were ok but the company outlined above (yes they were quite troublesome) used vastly different exchange rates for their invoices and credit notes as they billed in dollars. Strangely enough it was always in their favour. This was before the requirement to show the exchange rate used or VAT element in sterling but we used published rates whereas they seemed to make it up. The upshot was that the supplier got themselves an inspection and a hefty VAT bill.

Routine checks involved cars, fuel scale charges, entertainment costs and purchase invoices unpaid after six months.

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Don't forget VAT on gifts
Have you bought any fancy gifts to give to customers? Good quality pens with logo, desk clocks etc - items with unit cost over the limit - not sure if it is £15 or £50 now. In these cases, you either have to restrict the input tax or pay the output tax - same thing, the VAT becomes a cost to you.

I had an occasion when I worked in the UK that the VAT officer arrived with a file of relevant invoices from a promotional gifts supplier and asked to see how we had accounted for the ones relating to us. Obviously easy pickings for them.

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VAT Inspections
Don't forget the VAT Act 26A (came in about 18 months/2 years ago where input & output VAT must be reversed off the VAT return if invoices have been outstanding for more than 6 months.

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If your servers are failing because of heat it would be beneficial to get some decent cooling from the likes of Daikin or Denco.

If you need 20kW get three 10kW's to allow for maintenance and down time.

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AJ's attire
I think it would be useful for the users of the site to see a picture of AJ in her summer clothes in order that we may give an informed opinion of the appropriateness or otherwise ;)

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it is the kerb crawlers that get nicked nowadays...

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Crystal Reports
Crystal reports is a popular report writer; has the benefit that there is a wide base of IT techies who you could contract/employ to write in it.

On the other hand it is another database tool - why would you go down this route, and incur more training and licence cost, when you could go down your preferred route of Excel and Pivot tables? If you need to write queries, then in my experience (I have used Access and Crystal) you would get more out of using Access to create the queries, and Excel to report them. Often developers overcome the limitations of Crystal by writing queries in SQL and then reporting that in Crystal.

If you are going to look at Crystal, then it would not take long to come up with a list of 20 or so competing products you should also look at.

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Advantages of Access for reporting
While Crystal appears to be a good reporting tool, it does require a much more extensive knowledge of SQL to produce its reports.

If Access is used and the tables of the accounting system, CRM system and payroll are linked into Access then you can query the data using the Access Query Grid, which will produce the SQL for you. (Please be certain that you have read only access to the back end data, otherwise you might break your audit trail, by accident.)

You will also probably find that the same piece of data is held in different formats in the 3 systems, eg today's date could be held as 09 Jun 2005, 20050609 or 38512 or something else entirely. Performing the conversions of these all into a consistent format is very simple to do on the fly in Access.

You are also able to drop the data into temporary tables to allow grouping or filtering or merging.

To sum up, using Access as a front end to get the required data out of other databases, either to report, or to drop into Excel makes a lot of sense, because it is a database.

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Crystal every time for me
I'd go for Crystal. I have looked at Access a few times and worked out that it's going to take man days to acquire the knowledge I need to get decent reports out of our Access-based products. And I'm not that desperate for CPD hours at the moment - I'm just trying to run a business!

Using Crystal I can just point and click and get a quick answer without needing to understand databases! It works for me. You can also use Crystal to quickly extract selected data from a database and then export it into Excel if you want to play around with it. I'm sure the Access experts can do this direct from Access itself, but like I said, I don't want to be an Access expert!

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Learn SQL
If you want to be able to extract info from any SQL database then imho you need to know the underlying principles - therefore you need to know SQL and how to write queries correctly. Access and other visual query builders are usually no substitute for doing things the hard way - especially if the schema is complex and the info is spread accross svereral linked tables. Just my two cents....

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FD or programmer?
Why on earth would any FD want to or feel the need to learn SQL? He might as well take a plumbing qualification - if you need queries in SQL (and I personally would include Access in this list) employ a programmer to set up the routines. Concentrate on spending your time where you can add value

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Access/Crystal Reports Debate
I've been following your musings and the resultant postings with interest. I have used and taught both in both practice and commercial environments and found them to be powerful tools. BUT both have a long learning curve to achieve the type of reports that you seem to desire. Certainly the take up from courses I have run has been minimal and very basic because of the ongoing effort and time required by users.
Most accounting/CRM systems have restrictions on what information their own reporting systems can relate between different parts of their data sets and time periods and have limits in their filtering and sorting capabilities. Many businesses find important reporting needs that cannot be adequately met by their "standard" systems. The big advantage of Access is the ability to extract and retain the data in a separate data warehouse for subsequent reporting using whatever tools you are most comfortable with.
As an adhoc user one thing you can be certain of when writing databases and reports is that whatever time you budget to the job it will take 3 or 4 times longer. Unless you have plenty of spare time on your hands I would suggest it would be quicker and certainly more cost effective to define the requirements and use a 3rd party to do the donkey work. Perhaps your IT guy can help.

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Report Program Generators (RPG)
As an IT professional with 39 years experience and having used a host of RPG's on IBM mainframe and midrange, as well as HP midrange, I'm interested in this debate. I must admit I've had little to do with SQL based RPG's, although I have delved into the mysteries of SQL type access to proprietry non relational data bases. It seems to me that those PC based RPG's which depend on using SQL to retrieve data are not true RPG's.

First and foremost, except for the very first statement identifying the name of the RPG, no other statements should be positional. Page numbering and date display should be automatic, unless specifically over-ridden.

Headings and field positions on the report again should be automatically positioned, the headings being retrieved from a dictionary or over-ridden as required.

Totals on control breaks should be created by control statements, and no "adding" up should be necessary, i.e. no totalling logic should have to be coded.

Selection code should allow "selection" and "rejection" of records. multiple data base access should be allowed, with access by key where the values are the same, but when key names are different.

I could go on, but I suspect that SQL based reporting tools like Crystal do not support the features as described above. However, there are many products for mainframe and mid range machines which do support these features.

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how to manage CEO and Mrs CEO
What you need is an interface. Or to put it another way, someone to act as a buffer. I guess this is the same approach to take with problem suppliers and customers, and employees. They can divert lots of your valuable time to no real benefit - so employ someone to take on that role. "Company Secretary" might be a good title, and does not have to be a full time role to be effective.

Re the techie comments - I think you have got this spot on - although good techies with an appropriate understanding of financial matters do not come cheap. The important point about this is that you understand the importance of getting information in the right form at the right time, and also that this does not happen on its own. Many businesses of all shapes and sizes do not understand this, and as a result fail. But don't forget that there is a cost to information, as well as a benefit that derives from it. The skill for the FD is to get the balance right.

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YOU are looking at AJ from the wrong angle!
it is not her that is the problem it is the staff that come in and look st her, approach the problem from that angle!

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Thanks Peter, I thought it was me for a while.

I use both Access and SQL server and have used Dbase and DataEase in the past and when I have had to try and amend an existing report someone else has written in Crystal found myself struggling as much as I did when I started with, for example, Access.

I'm glad to hear someone else confirm that both have quite a learning curve.

I was also glad to see another contributor's comment about why would an FD want to learn these tools.

Save money, get the appropriate consultant in for a day or 2. Independents are cheaper than dealers as we don't have salesment to support ;-)

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on the other hand...
Nicholas - I suspect the the trouble is that is you could see AJ from that angle you'd probably understand why the staff keep coming in to gawp!

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Fear of the unknown
I can sympathise with the (irrational) fear surrounding the return after a holiday. Even though no-one is indispensable it is always worrying to think what may have happened in your absence. I get round this these days by having my iPAQ and mobile phone with me - this means that you don't return to a mountainous inbox requiring days to sift through.

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