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Practitioner's Diary: Who accounts for the accountants?

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3rd Oct 2005
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Mystery Practitioner

Our West Country general practitioner hopes this month end will be a little easier now he has some help.

* * *
30 September - End of the month - again. The new practice administrator is doing a great job, I'm counting on her making my end of month routine a bit easier this time round.

Amazing really, after all these years of struggling to keep our own books and affairs up to date, a bunch of highly qualified and experienced accountants has had to admit that the one thing we don't do very well is ... our own accounts!!

Now we have someone to take over the admin for the practice we're all looking forward to focusing on client work at last. It's just a matter of re-educating ourselves to drop those admin tasks we all love (!) and devote more time to stuff that pays.

* * *
28 September - I am grateful to a reader who emailed me the answer to the bumble bee issue. I'll just quote his reply:

"I can answer your question about why bumble bees are VAT rated though'''.people do breed and sell them '..to horticultural growers with "greenhouse" based crops.

The growers use bumble bees instead of honeybees because they are less aggressive, present in much smaller colonies and numbers (so the there is no need for sophisticated bee infrastructures and the staff are at less risk of stings) the honey crop is not of interest and finally because honey bees are in short supply because they are currently under attack from a parasite (I know the name but can't spell it!) 'which doesn't attack bumble bees just the "honey" variety.

Also funnily enough honey bees tongues aren't long enough to reach the nectar and encourage them to pollinate all flowers (bluebells for example). Bumble bees have longer tongues and thus a wider "taste" in plants!"

So now we all know.

* * *
23 September - I don't regard myself as a VAT expert, but over the years there have been a few areas - VAT, P11Ds and company secretarial forms - that I seem to have been lumbered with. I thought I just about has zero rating and exempt supplies sewn up, but then along came a new client.

He wants to breed alpacas. "Aren't these like sheep," I thought, therefore they'll be zero-rated. Luckily I only thought this to myself and clicked on the HMRC VAT Notices page. Sure enough, VAT Notice 701/15 saved my embarassment:

"Although some unusual meat, for example kangaroo steak, may be sold as food in the shops, kangaroos are not animals of a kind generally reared for food in the United Kingdom. Live kangaroos, therefore, are standard-rated." - as are alpacas and their wool.

But what really caught my eye in this Notice was that honey bees are zero-rated, not unreasonably since they produce honey - but bumble bees are standard-rated! I'm not arguing with Customs logic (although why they don't go on to add that, for example, newts and cockroaches are also standard-rated I don't know). But since VAT is a tax on the supply of goods by a business operating in the UK, why do they need to mention bumle bees at all? Does anyone have a client who sells bumble bees? And are they accounting for VAT correctly?

And what about the tax treatment: Can you elect for the herd basis for bees, for example? The possibilities are endless!

* * *
19 September - I think it used to be called delegation. I must learn to divert the ever increasing flow of boxes of files and clients' records elsewhere or I won't be able to get in - or out of - my office. And I haven't seen the top of my desk for weeks.

It's all very well the rest of my industrious team eating up the accounts work, but someone has to review them and sign off the files. Recent attempts to delegate this to a senior only resulted in draft accounts and incomplete tax returns going out for signature. Of course, with FBI we can't just replace the corrected pages in the tax return or make handwritten corrections as any change to a return revises the computer-generated serial number, so we have to get the client to sign a new return.

Trouble is, I reckon there's as much new work out there as we want to go out and get - but while I'm out there getting it I need someone to review what we've already done! As usual, some time invested in training up someone else should pay dividends in due course, it's just a matter of making that initial investment out of an already over-full daily schedule. Oh well.

* * *
15 September - It's nice to see a client leave with a smile on his face after signing his tax return. He happened to be one of those rare breed of people who had relied on kindly tax office staff to fill in his tax return every year for some time. Luckily for him, a couple of years ago they suggested it was about time he sought proper professional advice. To his amazement, his taxable profits and tax bill have been significantly lower since he came to us - despite a growing turnover!

It seems likely that the tax office just recorded his CIS earnings on the returns and ignored most of his expenses.

Not often I get clients referred to me from the Revenue. Maybe I should send them a pile of my business cards.

Reminds me of a client I had many years ago who claimed he was illiterate and used to take all his recipts to the VAT office every quarter for them to complete his VAT returns. I don't expect they do that any more - well, I suppose they might if anyone could find a VAT office that's open to the public.

* * *
9 September - That was a week! Spent half of it trying to work out where to locate a new company for a client working long term outside the UK. He wanted to use Gibraltar, but after some careful research online I discovered that most formation agents are failing to warn the Gibraltar tax-exempt companies only have a few years left. Goes to show you need to check any advice you pick up online.

Looks like BVI or Isle of Man are the practical options. Waiting for my client to decide. Then I'll have to work out how to incorporate and run a company in one of these juristictions!

Meanwhile I have discovered that CICs (Community Interest Companies) can now be formed. Although they are overseen by Companies House they are not featured very prominently on the CH website. A client has been waiting to form one for months, so I have spent a few hours drafting the memo and arts using the samples provided by the new CIC Regulator. I think it's going to be easy, but we'll see in due course - watch this space!

* * *
7 September - I was right, the town is a happier, calmer place since schools went back:
- I can park the car when I go to the bank.
- I don't have to queue for a hair cut.
- There are still some cakes left at the bakers after 2pm.
- And, of course, we have a full complement of staff again and we're fining a few more Tax Returns at last.

* * *
2 September - Don't get me wrong, I love kids. I have three of my own. But maybe we can have some peace and quiet again now they've all gone back to school, and the holiday-makers have gone home! At last I'll be able to walk the dog on the beach or through the woods and enjoy just my own company.

Looking at the workflow for this month I'm going to need a few quiet walks to keep my stress level under control. We have successfully pulled a lot more Tax Return work in earlier this year. We also all took our holidays earlier this year, so we now have clients screaming for stuff that should have been finished weeks ago.

So deep breath, focus ... let's hit those tax returns!

* * *
Last month our practitioner diarist faced filing deadlines, mad planning regs and appalling English - for the details, read his August 2005 diary.

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Replies (3)

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avatar
By User deleted
21st Sep 2005 14:55

BVI or Isle of Man
If you still require information or advice regarding either Isle of Man or BVI Companies and structures, as an Isle of Man based accountant and corporate service and trust provider, I would be happy to help.

The main obvious point to be aware of is ensuring that the management and control of the company does not fall within the UK thus potentially bringing it back into the UK tax net. It is quite surprising that even these days we do get enquiries from individuals, not normally with an accountancy or tax background, who believe that they can happily run and administer such companies from the UK, and they will be effective for tax planning.

In respect of choosing between the two jurisdictions it should be remembered that provided the directors are offshore it is perfectly feasible to have a BVI company administered from the Isle of Man. It is not obligatory for the company to be run from the BVI, which considering time differences etc is not the most convenient.

Finally, in respect of the two jurisdictions please be aware that, although the Isle of Man is independent, it has its own Customs and Excise authority which, in the main, is identical to that operated in the UK. If VAT is an issue then this is a relevant point, particularly as it is possible to register a company in the Island for VAT, even if all supplies are outside the UK and Isle of Man. This can be very useful in trading with many jurisdictions in which they expect to be provided with a VAT registration number as confirmation the company is an active trading concern.

If you require any more information, I can be contacted at the following:
[email protected]

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Richard Murphy
By Richard Murphy
25th Sep 2005 22:09

What happens when HMRC find a bumble bee's been wrongly charged
Is it a sting?

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avatar
By User deleted
03rd Oct 2005 21:44

Kangaroos. The only people I know who rear kangas
(also in the Wset Country) do so for meat. Maybe the person who drafted the HMRC guidance note thought that these sort of "jumpers" were bred for clothing.

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