Share this content

Does the detailed P&L really have to be sent to HMRC?

Does the detailed P&L really have to be sent to HM

Didn't find your answer?

Does the detailed P&L really have to be sent to HMRC?  I know that if it is sent, then it must be tagged, but my question is does it have to be sent?  For the purposes of the question, assume that a detailed P&L is prepared for the information of the directors.

The reason I ask is that I often include detailed information in the detailed P&L that for legitimate and perfectly legal reasons the company would prefer not to release outside of their company.

I have researched this (again) and I am still unclear!  Many professional consultants (with far more knowledge in this area than me) now state categorically on their websites that the detailed P&L has to be sent to HMRC for every company.  However, HMRC's own guidance in CTM93180 states:

Note: The Companies Act requirement does not extend to the preparation of a detailed trading and profit and loss account. It follows from Paragraph 11 that the notice to deliver a return does not require the company to prepare or deliver a detailed trading and profit and loss account. Most companies, however, include such an account as part of their computations (CTM93210).

This has been my own understanding (and agrees to the explanation on VT's website http://www.vtsoftware.co.uk/support/detailedpl.htm) but if they don't have to be submitted then why do the likes of BDO (http://www.bdo.co.uk/services/tax/business-edge-2014/ixbrl-tagging-detai...) for example say "For accounting periods ending after 31 March 2014, HMRC requires an iXBRL tagged detailed profit and loss account (DPL) to support the electronically filed corporation tax return.they do."

I know that some will say you should or you shouldn't but I am hoping that somebody will be able to provide the definitive answer as to whether you have to or not have to!

A definitive answer will make my weekend!! :)

Replies (41)

Please login or register to join the discussion.

RLI
By lionofludesch
11th Jun 2016 18:02

Well, not the detailed P+L itself as such, but all the information on it has to be tagged and sent in the format specified by HMRC. Strange question, if you don't mind me saying so.

Companies Act regs are one thing. But they don't prevent HMRC asking for what they want to see.

What have your directors got to hide ?

Thanks (0)
By petersaxton
11th Jun 2016 18:12

https://www.gov.uk/annual-accounts
"Your company’s annual accounts - called ‘statutory accounts’ - are prepared from the company’s financial records at the end of your company’s financial year.

You must always send copies of the statutory accounts to:

all shareholders
people who can go to the company’s general meetings
Companies House (unless you send abbreviated accounts)
HM Revenue and Customs (HMRC) as part of your Company Tax Return
You have different deadlines for sending your accounts to Companies House and your tax return to HMRC, but you may be able send them at the same time.

How to put together statutory accounts
Statutory accounts must include:

a ‘balance sheet’, which shows the value of everything the company owns, owes and is owed on the last day of the financial year
a ‘profit and loss account’, which shows the company’s sales, running costs and the profit or loss it has made over the financial year
notes about the accounts
a director’s report
You might have to include an auditor’s report - this depends on the size of your company.

The balance sheet must have the name of a director printed on it and must be signed by a director.

Accounting standards

Your statutory accounts must meet either:

International Financial Reporting Standards
UK Generally Accepted Accounting Practice"

Thanks (1)
avatar
By taxguru
11th Jun 2016 18:35

Not too sure if this will make your weekend!

Well, the legislation requiring filing CT return is FA/98 Sch.18, para 11 of which reads as follows:

11 (1) In the case of a company which— (a) is required to deliver a company tax return for a period, (b) is resident in the United Kingdom throughout that period, and (c) is required under the Companies Act to prepare accounts for a period consisting of or including the whole of that period, the power to require the delivery of accounts as part of the return is limited to such accounts, containing such information and having annexed to them such documents, as are required to be prepared under that Act.

That Act means the Companies Act.

Now the form and content of the accounts are as prescribed under these regulations http://www.legislation.gov.uk/uksi/2008/409/contents/made

as amended by these regulations http://www.legislation.gov.uk/ukdsi/2015/9780111127896

Sch 1 of these regulations doesn't require you to prepare detailed P&L.

On that basis there is no need to provide detailed P&L with the CT return. Ofcourse, detailed P&L items are analysed whilst computing the tax liability.

Thanks (2)
Replying to taxguru:
By Tim Vane
11th Jun 2016 19:56

taxguru wrote:

On that basis there is no need to provide detailed P&L with the CT return. Ofcourse, detailed P&L items are analysed whilst computing the tax liability.

I can't agree with that interpretation at all.

On the basis that HMRC can request any information that they want to request that (a) backs up the tax computation and (b) is reasonable for them to request, and on the basis that (from 2013) they can demand that any such detailed information be tagged, if tagging is appropriate, then (a) yes you have to provide a detailed tagged P&L if they ask for it (which they now check for as part of their return review process) and (b) these technically form part of the computation, and not the accounts.

The fact that (for convenience) the detailed P&L is usually submitted with the accounts does not make them part of the accounts - HMRC have previously expressed their preference that the DPL is part of the computation, but they cannot mandate that.

Thanks (2)
Replying to Tim Vane:
avatar
By taxguru
11th Jun 2016 21:03

Tim Vane wrote:

taxguru wrote: U

On that basis there is no need to provide detailed P&L with the CT return. Ofcourse, detailed P&L items are analysed whilst computing the tax liability.

I can't agree with that interpretation at all.

On the basis that HMRC can request any information that they want to request that (a) backs up the tax computation and (b) is reasonable for them to request, and on the basis that (from 2013) they can demand that any such detailed information be tagged, if tagging is appropriate, then (a) yes you have to provide a detailed tagged P&L if they ask for it (which they now check for as part of their return review process) and (b) these technically form part of the computation, and not the accounts.

The fact that (for convenience) the detailed P&L is usually submitted with the accounts does not make them part of the accounts - HMRC have previously expressed their preference that the DPL is part of the computation, but they cannot mandate that.

What HMRC can or can't demand is not disputed. A tax return is submitted after HMRC have issued a notice to deliver a tax return under Sch 18 FA/98. When you file a tax return in compliance with that notice you ought send them the accounts too. Accounts, in the case of a company, means those prepared under the CA which does NOT include itemised P&L account. Full stop. HMRC can request anything invoking their information seeking powers under FA 2008 Sch 36, FA 2011 Sch 23 or otherwise.

Thanks (1)
Replying to taxguru:
avatar
By zebaa
12th Jun 2016 09:39

If you submit micro company accounts - which is a modified balance sheet, in effect, HMRC will accept them. So, no, you do not need to submit detailed P&L.

Thanks (0)
Replying to Tim Vane:
RLI
By lionofludesch
12th Jun 2016 11:09

Tim Vane wrote:

taxguru wrote:

On that basis there is no need to provide detailed P&L with the CT return. Ofcourse, detailed P&L items are analysed whilst computing the tax liability.

I can't agree with that interpretation at all.

On the basis that HMRC can request any information that they want to request that (a) backs up the tax computation and (b) is reasonable for them to request, and on the basis that (from 2013) they can demand that any such detailed information be tagged, if tagging is appropriate, then (a) yes you have to provide a detailed tagged P&L if they ask for it (which they now check for as part of their return review process) and (b) these technically form part of the computation, and not the accounts.

The fact that (for convenience) the detailed P&L is usually submitted with the accounts does not make them part of the accounts - HMRC have previously expressed their preference that the DPL is part of the computation, but they cannot mandate that.

Agree. If you submit accounts using HMRC software, it's very clear that there are three parts.

1. The statutory accounts (members' version)
2. Computations, which includes the detailed P+L, capital allowances, add-backs etc.
3. The CT600, which is a repro of the official paper form.

This demarcation doesn't seem to be so clear on commercial software.

Thanks (0)
By petersaxton
12th Jun 2016 10:33

What is the point of this question? You have to produce the accounts anyway. Dont you trust HMRC to confidentiality?

Thanks (0)
RLI
By lionofludesch
12th Jun 2016 10:36

Am I missing something here ? Micro-entity accounts aren't just a balance sheet - though that might be all that's filed at Companies House. And, in any case, I've always thought submission of the P+L is pointless for HMRC, when they have much more detailed information in the CT600 and supporting documents.

My answer to the querist is yes, you do need to submit a detailed P+L but in the form specified by HMRC. What you do for the directors is between them and you.

I often do extra stuff for the directors - either at their request or just because I think it will be useful. I don't feel obliged to submit it to HMRC.

I'm surprised by some of the responses here - the OP is asking whether he has to submit the Detailed P+L he's prepared. I say no, but he does have to submit P+L details in the form HMRC require.

Thanks (1)
avatar
By MC1
12th Jun 2016 12:21

Thank you all for comments so far.

So is the consensus that you don't have to submit the detailed P&L but you do have to provide analysis "of some form" to support the CT computation?

If this is the consensus then where are the regulations detailing the "of some form"?

Thanks (2)
Replying to MC1:
By petersaxton
12th Jun 2016 13:22

What is it that you are terrified of HMRC seeing?

Thanks (0)
Replying to petersaxton:
avatar
By MC1
12th Jun 2016 14:26

petersaxton wrote:

What is it that you are terrified of HMRC seeing?

Nothing at all. I am trying to establish the correct position. I am of course fully aware that I am entitled to over-disclose to any extent that I so wish but that doesn't stop me wanting to understand the extent to which I am over-disclosing (and nor should it).

Thanks (1)
Replying to MC1:
RLI
By lionofludesch
12th Jun 2016 17:05

MC1 wrote:

Thank you all for comments so far.

So is the consensus that you don't have to submit the detailed P&L but you do have to provide analysis "of some form" to support the CT computation?

If this is the consensus then where are the regulations detailing the "of some form"?

Do you really need to see the regulations ?

Just fill in the form on your software.

Thanks (1)
boxfile
By spilly
12th Jun 2016 18:06

We don't include the detailed P&Ls and never have. However, if HMRC requested sight of them, we would comply. I have always understood that the detailed P&Ls are for directors and shareholders use only, and so do not form part of the company accounts.
Why give HMRC anything they do not need?

Thanks (1)
Replying to spilly:
RLI
By lionofludesch
12th Jun 2016 18:18

Are you sure it's not in the CT600 submission somewhere in a SAI format ?

I'm astonished by your assertion.

Thanks (0)
avatar
By SJRUK
13th Jun 2016 09:39

I've not sent in a detailed profit and loss account for a number of years (especially now that I file Micro accounts) and have never had HMRC ask for one, yet. Of course the information is there is needed/requested, we have nothing to hide but why give them more than they require.

Thanks (1)
Replying to SJRUK:
RLI
By lionofludesch
13th Jun 2016 12:05

Sure your software isn't sending it behind your back ?

Thanks (0)
avatar
By MC1
14th Jun 2016 09:59

This didn't make my weekend unfortunately!!

Seems to me that there may be a whole lotta voluntary disclosure going on.

Where are the rules about the the level of detail in which the P&L items HAVE to be declared to HMRC?

A definitive answer will make my Tuesday! :)

Thanks (0)
Replying to MC1:
By Tim Vane
14th Jun 2016 10:20

As has already been stated, the rule is that you must submit the information that HMRC ask for. What they ask for is a tagged DPL. So, despite those who have stated above that they have had CT600s accepted without a DPL, my experience is that,where accounts and computation are due to be attached, the computation must be accompanied by a DPL. HMRC would prefer the DPL to be part of the computation, but cannot mandate HOW the information is recieved so many, perhaps most, submissions include the DPL with the accounts, since that is the easiest place to produce it.

Of course, occasionally accounts are not submitted with a return (e.g. when dormant or for the second AP of a long period of account) but in these cases a computation is usually still required. However, when accounts are not submitted HMRC seem not to insist on a DPL. In addition, some commercial software presumably submits the DPL or a similar detailed breakdown as part of the tagged computations.

I have to say that given HMRCs rigidity on insisting on a DPL I take with a pinch of salt the claims of those who say they never submit them. On those odd occasions when they have been inadvertently left off a submission, I find the returns are invariably reviewed and eventually rejected by HMRC, but perhaps there is a lower de-minimis turnover limit under which HMRC don't bother with the details, and so firms with a lot of very small clients may not experience this.

I very much suspect that HMRC are using the DPL to create benchmarking data for risk analysis.

Thanks (1)
Replying to MC1:
RLI
By lionofludesch
14th Jun 2016 12:11

MC1 wrote:

This didn't make my weekend unfortunately!!

Seems to me that there may be a whole lotta voluntary disclosure going on.

Where are the rules about the the level of detail in which the P&L items HAVE to be declared to HMRC?

A definitive answer will make my Tuesday! :)

Don't enter any P+L details into your software and see what happens.

Those who think the details aren't submitted to HMRC, just because they don't physically type in the numbers are deluded.

In my humble opinion.

Thanks (1)
avatar
By MC1
14th Jun 2016 19:13

Thank you to all for their contributions so far.

Without wishing to frustrate anybody any further what I don't understand is:

(i) If the filing of a DPL is a mandatory requirement then why do HMRC say this?

Note: The Companies Act requirement does not extend to the preparation of a detailed trading and profit and loss account. It follows from Paragraph 11 that the notice to deliver a return does not require the company to prepare or deliver a detailed trading and profit and loss account. Most companies, however, include such an account as part of their computations (CTM93210)

and
(ii) What are the regulations that govern the amount of detailed analysis of the P&L that has to be provided? For example, in a simple set of small company accounts prepared under CA and FRSSE , if there are no tax adjustments whatsoever then does the following P&L satisfy the statutory requirements? (forget about HMRC wishes for the moment):

Turnover x
Cost of sales X
Gross profit X
Administrative expenses X
Operating profit X
Interest payable X
Profit on ordinary activities before taxation X
Tax on profit on ordinary activities X
Profit for the financial year X

Can't believe there is such a difference of opinion on this!

Thanks (0)
Replying to MC1:
By petersaxton
15th Jun 2016 03:40

One figure for administrative expenses? Have you gone mad?

Thanks (1)
Replying to petersaxton:
avatar
By MC1
16th Jun 2016 13:02

petersaxton wrote:

One figure for administrative expenses? Have you gone mad?


Probably but that's just what the job has done to me.
Judging by other comments here I am not alone though.
Thanks (0)
Replying to MC1:
RLI
By lionofludesch
15th Jun 2016 08:55

MC1 wrote:

Thank you to all for their contributions so far.

Without wishing to frustrate anybody any further what I don't understand is:

(i) If the filing of a DPL is a mandatory requirement then why do HMRC say this?

Note: The Companies Act requirement does not extend to the preparation of a detailed trading and profit and loss account. It follows from Paragraph 11 that the notice to deliver a return does not require the company to prepare or deliver a detailed trading and profit and loss account. Most companies, however, include such an account as part of their computations (CTM93210)

and
(ii) What are the regulations that govern the amount of detailed analysis of the P&L that has to be provided? For example, in a simple set of small company accounts prepared under CA and FRSSE , if there are no tax adjustments whatsoever then does the following P&L satisfy the statutory requirements? (forget about HMRC wishes for the moment):

Turnover x
Cost of sales X
Gross profit X
Administrative expenses X
Operating profit X
Interest payable X
Profit on ordinary activities before taxation X
Tax on profit on ordinary activities X
Profit for the financial year X

Can't believe there is such a difference of opinion on this!

I get the feeling that you're trying to bully folk round to your way of thinking.

Thanks (1)
Replying to lionofludesch:
avatar
By MC1
16th Jun 2016 13:05

I apologise if that's how I come across but that's not my intention at all. I am trying to stay open minded until somebody comes up with the correct answer that they can prove is correct. So far there are lots of what you should or could do and not enough what you must do.

Thanks (0)
avatar
By Brian Gooch
15th Jun 2016 11:38

I looked into this when tagging requirements changed a couple of years ago.

The requirement is that _if_ a detailed P&L is submitted with the tax return then it should be tagged, but there is no requirement to submit a detailed P&L.

Clearly, if it means that less information is available to HMRC when reviewing comps and accounts it may make an enquiry more likely so that they can get that information, but there is no obligation to submit a DP&L.

Thanks (0)
avatar
By Watson Associates
15th Jun 2016 13:56

When submitting using the HMRC CT software, it gives you the option of not breaking down Cost of Sales, so if chosen they won't receive a detailed P&L.

Thanks (0)
Replying to Watson Associates:
RLI
By lionofludesch
15th Jun 2016 15:07

Watson Associates wrote:

When submitting using the HMRC CT software, it gives you the option of not breaking down Cost of Sales, so if chosen they won't receive a detailed P&L.

Breakdown of cost of sales means showing changes in stocks so I can't support this interpretation.

Thanks (0)
avatar
By petestar1969
15th Jun 2016 15:05

I was always taught doing my training days that you don't need to file the detailed P&L but you do anyway as it reduces the certainty that HMRC will launch an enquiry and ask for it.

I always submit the detailed P&L.

Thanks (0)
avatar
By gforce1059
15th Jun 2016 17:34

You should have nothing to hide from HMRC. I work for a fairly large company which pays in excess of £6m corporation tax per year and our tax comp contains a detail breakdown of the expenditure which is summarised in our filed annual financial statements in 'cost of sales' and 'administrative expenses'.
Below is an index of our tax comp and all items in section D are broken down in detail. Based on this, we never have any enquiries from HMRC.

XXX
year ended 31 December 2014
INDEX
A Adjustment of profit and tax payable
A2 Loan relationships
B Plant pool
B21 Short life assets
B22 Special rate assets pool
B23 Annual Investment Allowance
C Fixed assets
C1 Summary of fixed assets movements
C2 Fixed assets additions analysis
C3 Fixed asset disposals
C4 Pension adjustments
C5 Pension contributions deductible on paid basis
C6 Charitable donations
C7 Capital assets expensed
C10 Unpaid remuneration adjustments - Wages and salaries
D Profit and loss account
D1 Turnover
D2 Cost of sales and administrative expenses
D3 Professional services
D4 Car lease rental restriction
D5 Legal charges
D6 Miscellaneous vehicle costs
D7 Miscellaneous services
D8 Interest payable and similar charges
D9 Interest receivable and similar income
D10 Loss on disposal of fixed asset
P7 Amounts claimed as group relief
X Accounts totals

Thanks (0)
avatar
By Michael C Feltham
15th Jun 2016 17:43

If you look at any set of Statutory Accounts, properly prepared, a detailed P and & L account is included, normally.

However it carries the statement:

"This page does not form part of the Statutory Financial Statements."

Never! Provide any more information than the law demands.

(The was the advice given me, years ago, by a senior Tax Inspector!)

In any case, Micro-Entity Accounts only have very limited information.

http://www.mercia-group.co.uk/Downloads/Micro-entities%20Q%20and%20A%20a...

Thanks (2)
avatar
By MC1
17th Jun 2016 11:08

So, still no definitive answer to this.

It seems to me that some think DPL is a must (although cannot cite exactly why) whilst others say no, not even in the tax comps!

With the greatest of respect to all here, do the ayes submitting DPL info not know exactly why? Only the researchers here seem to say you don't have to.

Thanks (0)
Replying to MC1:
RLI
By lionofludesch
17th Jun 2016 12:35

MC1 wrote:

So, still no definitive answer to this.

It seems to me that some think DPL is a must (although cannot cite exactly why) whilst others say no, not even in the tax comps!

With the greatest of respect to all here, do the ayes submitting DPL info not know exactly why? Only the researchers here seem to say you don't have to.

If you used the HMRC version of CT600 up to last year, you wouldn't have been able to submit the return without completing the SAI information. That's not necessarily exactly the same as the DPL the directors get, obviously, but it's a variation of it.

Submitting by commercial software, I attach some accounts. In those accounts is enough information to produce a DPL. I haven't checked what's tagged so I don't know whether the software fills in the SAI or not. But I suspect it does.

Thanks (0)
Replying to lionofludesch:
avatar
By MC1
17th Jun 2016 13:45

lionofludesch wrote:

MC1 wrote:

So, still no definitive answer to this.

It seems to me that some think DPL is a must (although cannot cite exactly why) whilst others say no, not even in the tax comps!

With the greatest of respect to all here, do the ayes submitting DPL info not know exactly why? Only the researchers here seem to say you don't have to.

If you used the HMRC version of CT600 up to last year, you wouldn't have been able to submit the return without completing the SAI information. That's not necessarily exactly the same as the DPL the directors get, obviously, but it's a variation of it.

Submitting by commercial software, I attach some accounts. In those accounts is enough information to produce a DPL. I haven't checked what's tagged so I don't know whether the software fills in the SAI or not. But I suspect it does.

Absolutely Not! Last year I used Drummohr Tax Assitant attaching a set of accounts prepared in VT Final accounts and like others have said here, this did not require a DPL either in the accounts or in the tax comps and this was accepted by HMRC. This year I can again prepare a set of accounts in VT Final accounts and ixbrl them without the DPL and attach them to Taxcalc without a DPL.
So yes you can do it and yes they are accepted by HMRC . Fact.

Thanks (1)
Replying to MC1:
RLI
By lionofludesch
17th Jun 2016 14:18

MC1 wrote:

Absolutely Not! Last year I used Drummohr Tax Assitant attaching a set of accounts prepared in VT Final accounts and like others have said here, this did not require a DPL either in the accounts or in the tax comps and this was accepted by HMRC. This year I can again prepare a set of accounts in VT Final accounts and ixbrl them without the DPL and attach them to Taxcalc without a DPL.
So yes you can do it and yes they are accepted by HMRC . Fact.

So, you can definitely say that the software doesn't pick out the information from your VT accounts, tag it, and include it in the submission to HMRC ?

I'm impressed. I wouldn't have such a detailed knowledge of the way software works.

OK - I've changed my mind. Based on that new and startling information, I don't submit a DPL to HMRC. In fact, I'm not sure how I would.

Thanks (0)
By Ruddles
17th Jun 2016 13:01

Surely the obvious question is - do you want to risk an HMRC enquiry? Our software tags the DPL as part of the computation. It would be very easy for us just to include all costs as sundry operating expenditure, but how do you think HMRC would react to that? The issue is not about a specific need to file a DPL but sufficient info to tie in the accounts to the tax comp. So if you don't provide that detail either as a tagged part of the comp or the accounts then you're simply inviting an unnecessary enquiry.

Thanks (0)
Replying to Ruddles:
avatar
By MC1
17th Jun 2016 13:59

Ruddles wrote:

Surely the obvious question is - do you want to risk an HMRC enquiry? Our software tags the DPL as part of the computation. It would be very easy for us just to include all costs as sundry operating expenditure, but how do you think HMRC would react to that? The issue is not about a specific need to file a DPL but sufficient info to tie in the accounts to the tax comp. So if you don't provide that detail either as a tagged part of the comp or the accounts then you're simply inviting an unnecessary enquiry.

Thanks Ruddles. I really do appreciate that point but that is not what I am trying to ascertain here.

There are professionals here saying that you MUST submit DPL info and other professionals saying you DON'T have to.

Are you saying that there is no statutory obligation to submit DPL info?

Thanks (0)
Replying to MC1:
RLI
By lionofludesch
17th Jun 2016 15:03

MC1 wrote:
<

Are you saying that there is no statutory obligation to submit DPL info?

With all due respect, you say you don't. So there can't be.

It was an interesting debate but I'm losing interest in the repetitive posts.

Thanks (0)
RLI
By lionofludesch
20th Jun 2016 13:16

"So, you can definitely say that the software doesn't pick out the information from your VT accounts, tag it, and include it in the submission to HMRC ?"

No response, so I'm guessing the answer is no ......

Thanks (0)
Replying to lionofludesch:
avatar
By SJRUK
20th Jun 2016 15:54

I'm pretty sure it doesn't. VT highlights all the tagging entries for us and the detailed items certainly aren't highlighted - for instance the totals such as "other charges" on the summary P&L are highlighted and therefore tagged but not the entries that make this up such as rent, rates, telephone etc are not. So this is why I'm assuming the detail is not tagged.
I suspect you are no longer getting a response as everyone has got bored with the subject and moved on !

Thanks (0)
Replying to SJRUK:
RLI
By lionofludesch
20th Jun 2016 18:02

OK.

Thanks (0)
Share this content