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How to continue from previous Accountant's Mistake

The previous accountant made a mistake, I don't know how to continue from this.

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I'm helping out a friend with their SATR and I'm doing the accounts. They have a HP car. Usually when the car was first purchased I would have claimed WDA on the purchase price and then claim the HP interest as an expense. However the previous accountant has been claiming the HP payments as an expense for the previous 2 years. I am unsure how to continue from this. Do I carry on with what they were doing, claiming HP payments for continuity, or do I take the remaining balance of the car, include it as an asset and do what I would normally do with WDA and HP interest. Any help is much appreciated.

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RLI
By lionofludesch
14th May 2020 13:08

Oh dear.

How long has this been going on ?

Do you have the original HP agreement ?

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Replying to lionofludesch:
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By chloe1994
14th May 2020 14:22

The car was purchased in Feb 2018, so since then up to the start of the 19/20 tax year, which I'm doing.
I don't have the original docs, but on the current statement of account it tells me the duration of the agreement and the original amount of credit and interest.

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Replying to chloe1994:
RLI
By lionofludesch
14th May 2020 14:06

Pity he didn't wait a couple of months and you'd still be in time to amend the return from the date of purchase.

In the circs, I'd do what Duggimon suggests below. Cobble it together as best you can.

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By Duggimon
14th May 2020 13:54

Well you know it's wrong to claim the HP payments as an expense, so don't keep doing it just because some idiot started that way.

I would suggest working out from the start what ought to have been claimed, working out what was claimed then comparing the two. See how much it's out by and take it from there, if it's not by much then just do it right from now on, if it's a lot then maybe consider amending what's still in time to amend and then carry on correctly.

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By chloe1994
14th May 2020 14:02

I'll do this, thank you!

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blue sheep
By Nigel Henshaw
14th May 2020 14:01

Are you sure its HP and not a lease?

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Replying to NH:
By ireallyshouldknowthisbut
14th May 2020 14:14

This. Its not always easy to tell HP from a lease & you say you don't have the original documents.

Id be inclined to get hold of the original documents unless you are 100% sure from the statement you have that its a finance lease and not an operating lease. it SOUNDS like a finance lease from what you say, but obviously I don't know that.

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Replying to ireallyshouldknowthisbut:
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By thacca
25th May 2020 20:35

For tax purposes a finance lease is treated the same as an operating lease.

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Replying to NH:
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By chloe1994
14th May 2020 14:21

Yes I'm sure it's HP, the docs I have say so

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By raj1234
14th May 2020 17:30

This is becoming very common in finance and accountancy in general. So called 'accountants' are preparing accounts incorrectly, and don't understand accounting standards or the double entry system. They just continue to waltz through it without a care in the world. Shocking.

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Replying to raj1234:
By petersaxton
19th May 2020 11:44

Accountants used to spend years getting experience as well as studying before practising as an accountant but now they seem to just do a bit of studying and then set up their practice.

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blue sheep
By Nigel Henshaw
14th May 2020 17:51

You may well find when you run the numbers not much difference between what you would have claimed as CA and what was claimed incorrectly.
You will also most probably be in time to correct 1819 if that was your wish.
If there was not much difference I would probably just treat the opening wdv as the cost less what has been claimed at least overall it would then be right.

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Replying to NH:
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By thacca
25th May 2020 20:37

I would probably do this too.

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By Calculatorboy
15th May 2020 01:22

These type of questions are great for sending me to sleep

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By bernard michael
16th May 2020 09:49

Did your predecessor also claim capital allowances?

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7om
By Tom 7000
19th May 2020 11:24

I'll bet you a shilling its an operating lease?

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