JNHogis
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Basic questions on filling in HMRC form

Corporation Tax Query

Hi there, I started a Ltd Company over a year ago that I've not had much chance to work on. Its made just a few sales & now the corporation Tax return is due. I appreciate most people hire accountants, but the business isn't moving yet & the cost of it doesn't make sense currently for me.

So wondering if anyone could help with a couple basic questions reg the HMRC forms?

1: The company made a loss of -£21 in total, shipping costs & expenses (Paypal/Ebay fee's) taking it into a loss. On the Profit & Loss page I have shipping as Distribution costs, would the above fee's come under Administrative expenses? There's no where else I can put it to get an operating profit/loss of -21, unless I include the fee's in cost of sales. Just trying to label things correctly.

2: Where would the distribution costs fall under Expenses? I've seen mention of Vehicle expenses but unsure if anyone knows better.

Appreciate any advice given. Thanks.

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18th Aug 2017 14:07

If you weren't really going to work on the business, why did you set up as a limited company in the first place? As a sole trader, this would have been a lot simpler.

But you haven't done that, and now you need help for the more difficult situation you've put yourself in. However, whilst you need that help, paying someone for the help you need "doesn't make sense" to you. This is because, despite that fact you don't know the answers, you're sure the questions you are asking are "basic".

Good luck. I think you'll need it.

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By JNHogis
18th Aug 2017 14:32

Is that form of reply necessary? I set up as a limited company on the understanding that it may give me more status when attempting to deal with suppliers in the business I wanted to go into. Life then got in the way.

The company is currently making a loss & accountants go into the hundreds. Which may be viable in the future but not currently.

You seem to have taken me labelling the questions as "basic" personally. I was assuming I hadn't ended up with anything too complicated.

I think the person spending their time trying to bring others down on a forum needs more help than I. If you don't think I'm deserving feel free to ignore the Q. Massing an ego online isn't impressive.

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to JNHogis
18th Aug 2017 14:45

You've come to a forum where accountants ask one another for advice on the nuances of the profession and asked for us to do what we do for a job, for you, for free. You might get an answer, you might not but you will always get a response along the lines of "hire an accountant you freeloader, you've already made enough mistakes without forging on and making more".

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By JNHogis
to Duggimon
18th Aug 2017 14:55

Yes I can appreciate that, maybe I've not judged the audience perfectly!

Still though it's not a bad thing to help people. Giving out good advice often leads to future business & is only likely to show someone like me that its worth using someone who can simplify the process.

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to JNHogis
18th Aug 2017 15:08

JNHogis wrote:

Is that form of reply necessary?

Yes, it is.

You set up as a company without understanding the additional responsibilities that came with it. If you had, perhaps you would have realised that you did not have the knowledge to deal with them. You then had the choice to seek paid for help from someone who did have that knowledge, or adopt a structure you could handle on your own.

You did neither, that was a mistake. However, rather than taking responsibility for that mistake, you are now asking others to bail you out for free. It's not our fault paying for the advice you need is not "viable".

As for taking the term "basic" personally, I repeat, you do not know the answer, so how do you know if it is basic or not? By assuming it is basic anyway, you are effectively cheapening what accountants do (even the stuff you don't know must be basic). Would you not be offended by that?

Here's some advice for free though. If you don't know whether an expense is cost of sale or administrative expenses, you haven't prepared your accounts yet. Because you've chosen to use a company, you are required to prepare accounts in a highly specific format. I think the tax return may be the least of your troubles.

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By JNHogis
to stepurhan
18th Aug 2017 15:24

Maybe I started the company with the intention to create a foundation of knowledge as I went that no longer became viable due to shifts in available time?

I'm not asking people to "bail me out" for free, I was seeing if anyone was kind enough to offer advice just because. Those people do exist you know? I am one of them. I had already contacted HMRC and I am waiting on a return call from a "technical advisor" to the same questions. I asked on here just to see if people were kind enough to help. If it turns out I have to pay for where I'm at, then I will have to do so & that's OK.

I labelled it as basic because I was being self deprecating actually, assuming that I would know far less than most on here so it was very likely I had hit the first hurdle at a fairly basic step for the majority who have worked to gain knowledge in this area. So your reply is more about your interpretation & perception.

I'll take on board your advice & offer you the same I offered previously. You take things too personally. I am perfectly fine with being told i'm missing something, it's not an offence to point someone in the right direction.

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to JNHogis
18th Aug 2017 15:39

So, instead of arguing about how people should help you, can you explain how you've prepared the accounts but are still asking about how to prepare the accounts ?

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to JNHogis
18th Aug 2017 16:33

JNHogis wrote:

Maybe I started the company with the intention to create a foundation of knowledge as I went that no longer became viable due to shifts in available time?

Maybe you did. Your point being?

You've just joined today. This means two things.

The first is that you will have no idea how often "I can't afford an accountant, give me these answers for free" queries come up. If we handed out advice to free personalisd advice to everyone that asked for it we'd soon be out of business. That being the case, what makes you any different from all those others? Why should we answer your query and not theirs?

Secondly, and possibly more importantly, you have no history here. The only thing we know for sure about you is that you want advice for free. Anything else you tell us could be the unvarnished truth or a complete pack of lies. Again, repeated experience of people proved to have told complete packs of lies (and become abusive to boot) makes leaning towards the latter the logical choice. The company could be tiny and making a loss as you say, or it could be huge and profitable and the figures you've presented simply a fabrication to seek sympathy and a free answer.

The right direction is to seek paid for advice, however "unviable" you find that. If the accounts are genuinely as simple as you make out, you can probably get a cheap price (shop around). Alternatively you can, as suggested, try striking the company off. But unless you can convince HMRC there is nothing in it for them, they are likely to object and you'll just be back to square one.

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18th Aug 2017 14:38

What does it say in the accounts ?

If you've not done the accounts yet, you'll need to do those before you start the Corporation Tax Return.

There's a lot more to it than you imply.

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By JNHogis
18th Aug 2017 14:47

Yes I have done the accounts, putting things in the right boxes is what i'm trying to make sure of.

Turnover £301
Cost of Sales £206 (Cost of buying the product sold)
Distribution costs £66 (Shipping & Packaging)
Administrative costs £50 (Paypal/Ebay fee's & Donations)

The latter is my first question. Whether its correct to label them as administrative costs or if I should put them under COS which having read around isn't suggested. Then latterly where to put Distribution so it shows up in detailed profit & loss.

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to JNHogis
18th Aug 2017 15:17

If you've done the accounts, it's whatever you've put in the accounts. Should be the same.

You've filed them at Companies House, I take it ?

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to JNHogis
18th Aug 2017 16:00

Assuming you are not talking round thousands and that is actual pounds, you are so small as to be irrelevant and also quite handily insolvent.

Which is a good thing.

If you rang me up for help I would suggest your best option would be to file form DS01 with companies house and trade as a sole trader until you get to about £20-30k profit and then give me a call then, remembering to file a personal tax return in the interim period.

ie chuck this company in the bin, start up again properly.

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to ireallyshouldknowthisbut
19th Aug 2017 09:11

ireallyshouldknowthisbut wrote:

Assuming you are not talking round thousands and that is actual pounds, you are so small as to be irrelevant and also quite handily insolvent.

Which is a good thing.

If you rang me up for help I would suggest your best option would be to file form DS01 with companies house and trade as a sole trader until you get to about £20-30k profit and then give me a call then, remembering to file a personal tax return in the interim period.

ie chuck this company in the bin, start up again properly.

This is the best advice on the thread.

Close the company down and start a new one when you're ready.

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18th Aug 2017 15:01

Basic question.
Basic answer: get an accountant.

It's deja vu all over again.

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18th Aug 2017 15:34

Why don't you set up your own accountancy business, sounds like you have got the hang of it.

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18th Aug 2017 16:24

I sympathise with your dilemma but the reason accountants exist is because it's a skilled profession and a lot of time and effort has been spent, not to say money, in getting where they are.

The real problem is not so much preparing the accounts, (and as Lion says, if you've put them as administrative costs in the accounts, why aren't you copying this into the CT600? ) but in completing the CT600 correctly. Not a job for the faint hearted when using the HMRC online version.

Just out of curiosity why are you claiming for donations?

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By zebaa
18th Aug 2017 16:55

Sigh. I think the answers you have generally have, are giving you a hard time. So, I will try and be helpful. If your company has only a turnover of £300, with a loss of £21, HMRC are not going to be battering your door down whatever you put. At this level you decide, because it does not really matter.

When it comes to the CT600, if you use the HMRC offering, I think you will find it surprisingly easy. It is in a different universe to that offered only a few years ago, which was a pain because it involved altering computer settings and other oddities.

A lot of the contributors to the site rely on compliance work, like drawing up accounts and filing tax information with HMRC, hence the response. In my opinion, for SME’s, this work is likely to come under price pressure and / or go the way of horse and carts. New technology is coming & it is going to change everything. OK, soap box bit over & back to you.

As other have suggested for a tiny eBay business a company may not be the best vehicle, unless you want limited liability. This latter point seems be be under-valued by many on this site, but you need to decide yourself. You should consider closing the company IMO.

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