Any practitioners going to revert to sole traders?

I don't want clients and competitioners seeing my P&L

Didn't find your answer?

Is anyone else going to revert to being a sole trader after the Economic Crime and Corporate Transparency Act was passed?

I really dont want clients and competitors seeing my P&L.

For anyone who is how are you valuing goodwill?

Replies (41)

Please login or register to join the discussion.

By JCresswellTax
06th Nov 2023 12:20

Surely it will just be a stat P&L, so what's the problem?

Thanks (0)
Replying to JCresswellTax:
By Charlie Carne
13th Nov 2023 18:48

The P&L would still reveal turnover and profit which, for an incorporated sole trader, would reveal similar information to the self-employment pages of an income tax return and we don't tend to think that should be published for public scrutiny. I've already had clients asking me about disincorporation to avoid friends and neighbours (and customers) knowing what they earn once this takes effect.

However, it appears that there has been a last-minute change and s56 of the Act includes provisions allowing the Registrar to make the profit-and-loss accounts of small or micro-entities (or parts of them) unavailable for public inspection. (albeit that the P&L will still need to be filed so that Companies House can use its new powers to verify them).

Thanks (3)
Replying to charliecarne:
Giraffe
By Luke
14th Nov 2023 09:46

Very interesting, thanks for highlighting that.

Awaiting the ICAEW webinar on 23rd so will ask about that if they don't bring it up.

Thanks (0)
Replying to Luke:
avatar
By rmillaree
14th Nov 2023 12:48

whats the odds that that particular exemption will only be made an option for members of parliament and their family.

Thanks (0)
paddle steamer
By DJKL
06th Nov 2023 12:44

https://www.accountingweb.co.uk/any-answers/strange-goodwill-llp-tax-pla...

Have a look at this case and then decide if there is any goodwill within the company !!!!!

(not that I personally would rely on it to argue the goodwill is personal, but it is still an interesting take on internally generated goodwill)

Thanks (0)
avatar
By Leywood
06th Nov 2023 13:05

No

Thanks (0)
avatar
By paul.benny
06th Nov 2023 13:15

How many people do you think will look at your financial statements? And what do you think they can learn from them that might disadvantage you?

Thanks (1)
Replying to paul.benny:
avatar
By rmillaree
06th Nov 2023 13:35

If someone is making 300k pa profits i would expect clients will use that against the accountant to say my fees are too high. What happens if someone who has particulalry odeous ex partner of some sort - giving them this highly personal info can create all sort of unecessary grief -if they are a troublemaker.

Being frank how much profit someone earns if no one elses business unless they ask and company is happy to provide that info. If we are goig to release this info wjy not put everyones perosnal tax returns out there for teh world to see.

Seems alot of peeps on here who wont concede that there is no compelling reason to supply profit loss/dividend details to all and sundry and say ahhhh it doesnt matter - well it does matter to plenty and the accountancy profession as a whole should be complaining en masse about this stupid abhorent rule.

There is already mechanism for relevant peeps to get that info who need it - i dont understand any of the logic of the new rules. A compromise would be the information is uploaded but not made public to all and sundry - so the relevant powers that be could access the info as appropriate but normal joe public cany unless they have ben authorised.

Thanks (3)
Replying to rmillaree:
paddle steamer
By DJKL
06th Nov 2023 13:57

Price of limited liability, it is not as if modified/abbreviated /abridged accounts have always existed.(cannot remember but think we lodged full accounts in the 80s, was it the 1985 CA that introduced them or later??)

Thanks (2)
Replying to DJKL:
avatar
By rmillaree
06th Nov 2023 15:49

The fact the status quo has existed "happily" for decent period of time now without the requirement is there any reason to change? - answer = no.

Thanks (0)
Replying to rmillaree:
Danny Kent
By Viciuno
06th Nov 2023 14:59

rmillaree wrote:

If we are goig to release this info wjy not put everyones perosnal tax returns out there for teh world to see.

Personally I think this is the way to go. Alot of people living their life trying to "keep up with the Jones'".

Would be great for society as a whole (well-being wise); probably not economically as people wouldn't be pi$$ing their wages up the wall on the newest car leases/fancy clothes/holidays when all and sundry can see they can barely scrape by. But that is another discussion altogether.

Thanks (0)
Replying to rmillaree:
avatar
By paul.benny
06th Nov 2023 15:42

rmillaree wrote:
If someone is making 300k pa profits i would expect clients will use that against the accountant to say my fees are too high.

True. If your fee income is £350k.

But probably not if your fee income is £10m.

rmillaree wrote:
What happens if someone who has particulalry odeous ex partner of some sort...

I would imagine that ex-partners, whether business or life will know enough without having to rely on a filed P&L that is at least 9 months old.

rmillaree wrote:
Being frank how much profit someone earns...

You mean how much profit the *company* earns. Which of course isn't personal at all, even for a one member company.

rmillaree wrote:
There is already mechanism for relevant peeps to get that info who need it

Pray tell what this mechanism is. If I'm potentially going to advance your company trade credit and I ask for your P&L, will you provide it? How many companies submit their P&L to credit reference agencies?

Thanks (3)
Replying to paul.benny:
avatar
By rmillaree
06th Nov 2023 15:54

Pray tell what this mechanism is.

You simply ask for it. If company doesnt supply detailed p&l then that company doesnt get the credit on the contract it could have got.

"You mean how much profit the *company* earns - Which of course isn't personal at all"

Well for any one man band company its one and the same isnt it- i am presuming dividend info and directors loan will both be obvious. for a two director/owner company it wont take a rocket scientist to guess what splits might be

Thanks (1)
Replying to rmillaree:
avatar
By paul.benny
07th Nov 2023 11:00

So you'll provide a P&L to any prospective customer or supplier that requests it?

Thought not.

Thanks (1)
Replying to paul.benny:
avatar
By adam.arca
06th Nov 2023 18:45

paul.benny wrote:

rmillaree wrote: Being frank how much profit someone earns...

You mean how much profit the *company* earns. Which of course isn't personal at all, even for a one member company.

Yes, indeed. For an accountancy forum, there have been an awful lot of egregious comments totally swerving the veil of incorporation.

Thanks (2)
Intercity
By Mr Hankey
06th Nov 2023 15:22

I'm thinking about setting up a new second limited company, with an unrelated name, at an unrelated address, and issuing a management recharge between the new second limited company and the existing accountancy limited company.

So my profit will still be available for people to view, it's just that it will be in a place where the average Joe probably wouldn't know to look.

I can't see anything unlawful about that, although I've not long come up with the idea so that may change! I can't see HMRC being interested as there is no tax loss. Possibly the opposite in fact, as I'd hit marginal rates at £25k instead of £50k.

Thanks (0)
Replying to Mr Hankey:
avatar
By Justin Bryant
06th Nov 2023 15:41

A bit dangerous to assume you will automatically get a CT deduction for the mgt charge. I would want a very robust opinion on that from someone very respectable (a very good KC basically) and who I could successfully sue if they were wrong.

Thanks (6)
Replying to Justin Bryant:
By ireallyshouldknowthisbut
06th Nov 2023 15:57

Justin Bryant wrote:

A bit dangerous to assume you will automatically get a CT deduction for the mgt charge. I would want a very robust opinion on that from someone very respectable (a very good KC basically) and who I could successfully sue if they were wrong.

Since when you can sue a KC if their opinions are bobbins?

Thanks (1)
Replying to ireallyshouldknowthisbut:
avatar
By Justin Bryant
06th Nov 2023 16:01

Have a look on Google.

Thanks (1)
Replying to Justin Bryant:
paddle steamer
By DJKL
06th Nov 2023 15:57

Agreed, the W & E bit needs confirmed otherwise issues may be created, also vat if over threshold will also need considered.

Never seen the point of all the hiding, if I want to check on someone I can usually see what their house last sold for(if a home owner) , whether a mortgage lender and which lender ,on the Register of Scotland website and all for £3 plus vat(My snooping website of choice these days)

Thanks (2)
Replying to Justin Bryant:
Avatar
By I'msorryIhaven'taclue
09th Nov 2023 08:22

Justin Bryant wrote:

A bit dangerous to assume you will automatically get a CT deduction for the mgt charge. I would want a very robust opinion on that from someone very respectable (a very good KC basically) and who I could successfully sue if they were wrong.

If you didn't get a CT deduction for said management charge then would a KC not tell you to go cancel the invoices the following year(s) to rescind matters? Not much point in suing if there's no financial loss.

Thanks (0)
Replying to I'msorryIhaven'taclue:
avatar
By Justin Bryant
10th Nov 2023 11:49

But a credit note has to be issued (by the associated company that bills) and that can be potentially messy (it's never a good look with HMRC to cancel an invoice on the basis it was only justified in the 1st place to save tax - especially if you are a regulated professional), especially if it has to be done 4 years or more later (as the original CT600 cannot be amended nor any funny reliefs claimed and the W&E issue shifts to the company issuing the c/n).

Thanks (0)
Replying to Mr Hankey:
avatar
By rmillaree
06th Nov 2023 15:58

to be honest - if someone can be bothered to go to companies house to find the data for company one - they can probably bother themselves to click on the link for your other company that will be present and fill in the blanks from there to find info for that company.

Thanks (1)
Replying to rmillaree:
avatar
By Justin Bryant
06th Nov 2023 16:04

Yes; and there's also this to consider: https://en.wikipedia.org/wiki/Streisand_effect

Thanks (0)
Replying to rmillaree:
paddle steamer
By DJKL
06th Nov 2023 17:21

Drop a middle name and they often do not link, so DJKL is one person on Co Hse, DL is another distinct person per Co Hse notwithstanding they are one and the same.

I can spend a lot of time digging out all entities someone has an interest in as say a director and very often the companies are not linked on Co Hse but are found via inter company or related party notes to the accounts that are found. (Individuals in property development seem to breed companies like rabbits)

Thanks (0)
Replying to DJKL:
avatar
By rmillaree
06th Nov 2023 17:46

I did gloss over that fact a bit - companies house should start by aligning these records if they want everything to be less spivvy - if the game is going to be upped ref levels of transparency perhaps there may be plans to start linking the ones that should be but arent - so the fcat they are not linked now doesnt say that will always remain the case.

Thanks (0)
Replying to rmillaree:
paddle steamer
By DJKL
06th Nov 2023 17:55

Perhaps all directors could get issued a director number used for all companies with which they are involved, maybe even an NI number would work or a UTR or something that is unique.

Thanks (0)
Replying to DJKL:
avatar
By Mr_awol
10th Nov 2023 10:35

Dont tell everyone - i assumed i was the only one who had (accidentally of course) done this ;)

Thanks (0)
Replying to Mr Hankey:
avatar
By Postingcomments
06th Nov 2023 16:08

That's the sort of "clever" idea that a client would propose to their accountant. Not the sort of idea an accountant would propose to other accountants.

Thanks (1)
Intercity
By Mr Hankey
06th Nov 2023 16:21

It was only an early stage thinking-out-loud idea, not a definite go-ahead & it's absolutely bullet-proof and I won't be told otherwise sort of statement.

It's what I really like about Accounting Web, being able to hear valuable opions of professionals. The comments are appreciated, and I can see setting up a second re-charge company isn't a wise move- thank you.

Thanks (6)
Replying to Mr Hankey:
Avatar
By I'msorryIhaven'taclue
09th Nov 2023 08:29

I actually believe it's good think-tank strategy to think outside the box, if only to eliminate an idea.

What's your Plan B, Mr H?

Thanks (0)
By tonyaustin
07th Nov 2023 11:20

If you want to limit your liability, you should accept full disclosure. Why else do you want a limited company? To reduce tax and NIC?

Thanks (2)
Giraffe
By Luke
07th Nov 2023 12:38

I asked a similar question last year. I am a sole practitioner and would rather my clients didn't know my income. The consensus was that I was being a bit precious and should stop worrying about it.

Has the date for implementation been published?

Thanks (0)
avatar
By Postingcomments
08th Nov 2023 17:56

I don't welcome even more rules and regs but, at the same time, I don't care if anyone wants to know what I'm earning. The sort of people who will care - you don't need them as clients.

If anything, I'd be put off by an accountant if I saw he wasn't earning very much. I'd wonder what his level of work, competence and business acumen was.

I think there are a lot of accountants earning very little. You pick that up sometimes in the disciplinaries when an elderly accountant is being hauled over the coals and has no money to pay the costs. On here recently, someone was getting excited that they might get over the VAT threshold after 10 years in practice. WTF!

If you are working FT and you aren't billing the VAT threshold, you are doing something wrong.

Thanks (0)
Replying to Postingcomments:
avatar
By Mr_awol
10th Nov 2023 13:06

Postingcomments wrote:

I think there are a lot of accountants earning very little. You pick that up sometimes in the disciplinaries when an elderly accountant is being hauled over the coals and has no money to pay the costs. On here recently, someone was getting excited that they might get over the VAT threshold after 10 years in practice. WTF!

I hadn't thought of this. One benefit is that it could expose the LinkedIn braggers (or is that blaggers) who want to buy our practices, want to advise us on selling them to someone else, or want to tell us how to make much more money from them, and constantly post about how they can help us achieve our dreams, but who in fact are far less successful than they would have us believe.

Thanks (2)
boat
By SouthCoastAcc
09th Nov 2023 19:19

oh this will be embarrassing for me

Thanks (0)
avatar
By Dogracer
10th Nov 2023 10:11

You know the profits of your clients

What is wrong with them knowing yours?

Would you take financial advice from someone who cannot make a profit?

Why be ashamed of being profitable?

Thanks (0)
Replying to Dogracer:
avatar
By rmillaree
10th Nov 2023 11:30

its more about the potential issues with friends/family/scammers/theives ex's blah blah blah. If employees and soel traders dont have to make earnings available to all and sundry its clearly discrmiatory forcing company owners to have to if there is no real need. So please peeps stoip saying its not an issue when it clearly will be an issue for soime who should exepct some privacy in their lives . Note i dont have a company and i am not affected buit its clear as day some peeps will unecessarily be put thropugh the wringer here with no real benefit i can see - all imho , iu am slightly gobsmacked at teh amount of peeps who dont seem to think this a problem hey ho.

Thanks (0)
Replying to Dogracer:
avatar
By Mr_awol
10th Nov 2023 13:13

Dogracer wrote:

You know the profits of your clients

What is wrong with them knowing yours?

Um, we need to know in order to advise them. They dont need to know ours. And they can choose not to tell anybody if they want (as long as they can sort their own tax and accounts issues of course).

Try asking your doctor to see his medical history - or your bank manager for his name, address, and annual income - or an online scammer for his bank details and mothers maiden name. If they refuse, say "well you know mine what is wrong with me knowing yours?"

Thanks (2)
avatar
By Mr_awol
10th Nov 2023 13:09

I've got to say I'm pretty anti-this, from a simple privacy aspect and because i dont really think it is necessary for the stated purpose(s).

That said, most of the excuses given against it dont really stack up either.

On the whole it's something I would prefer didn't happen, and i will probably grumble about it, but in the long run it probably wont make that much difference either way.

Thanks (0)
avatar
By GDavidson
10th Nov 2023 13:33

I always look at major supplier accounts. If there aren't any at Companies House I go elsewhere.

Thanks (0)