Is the detailed P&L required for HMRC?

Is the detailed P&L required for HMRC?

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HMRC have just rejected a CT600 submission for an SME client because it did not include the "detailed profit and loss accounts, showing a breakdiown of the administrative expenses". I sent the full statutory accounts including P&L, but not the detailed management P&L (the non statutory page that normally goes to clients for their information only). Has any one else encountered this because it has never occurred to me before?

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By Chris Smail
28th Sep 2010 10:18

Yes

We always include detailed P&L

Staute allows HMRC to ask for information to support the return and in our experience they always expect the detailed P&L.

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By GaryMc
28th Sep 2010 10:22

Yes and No

Statute - FA98 Sch 18 doesn't require the Detailed P&L as part of the accounts

11  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 2006 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.

But it does have a catch all that can result in them asking for it

3(1)  An officer of Revenue and Customs may by notice require a company to deliver a return (a “company tax return”) of such information, accounts, statements and reports–

(a)relevant to the tax liability of the company, or

(b)otherwise relevant to the application of the Corporation Tax Acts to the company,

as may reasonably be required by the notice.

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By sallyhayes
28th Sep 2010 10:23

Thanks Chris. We will include in future. I just wanted to check it was not out of the ordinary.

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By PennyC
28th Sep 2010 10:28

No

While Chris is correct in that HMRC require information linking the accounts to the return, they cannot insist on submission of that particular schedule, as it is not a legal requirement to include such a statement in accounts.

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By andypartridge
28th Sep 2010 10:29

No

We have never (repeat, never) supplied such a breakdown and equally never had a request by HMRC to supply. Maybe we have just been lucky, but my view is (like the principle with abbreviated accounts to Companies House) to supply no more than is required by statute but be prepared to make available detailed information if there is any comeback

-- Kind regards Andy

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By David Franks
28th Sep 2010 10:44

We had this issue when our local office was merged with another

We had never supplied this but when our tax office merged with another all our accounts got rejected and we were told by the new office they required it. There were people on here who said it was not required, and maybe its not, but for a quiet life we now include it. It seems each office makes up their own rules.

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Should Be Working ... not playing with the car
By should_be_working
28th Sep 2010 10:49

No, but yes

If you're confident in the veracity of the figures, when why not?

We take the view that we don't give HMRC anything more than they actually need/ask for, unless supplying said information will reduce the risk of comeback/enquiry. The detailed P&L would be an example of the latter.

 

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By Chris Smail
28th Sep 2010 10:50

I have heard it varies by office

but our local office always requests the detailed P&L if not supplied.

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By daveforbes
28th Sep 2010 10:53

Filling the gap

A CT return consists of the accounts, the CT600 and "workings" as to how the figures on the CT600 can be derived from the accounts.

There is no prescription as to what form these "workings" take, but they are normally a detailed P&L, a statement of capital allowances, an adjusted profit computation and a liability computation. From the HMRC perspective the detailed P&L is not part of the accounts but part of the "computation".

From an XBRL point of view the detailed P&L is not part of the minimum tagging set and so does not need to be tagged until 2013 (or later).

David Forbes

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By Figurate
28th Sep 2010 11:10

Computations

I had this discussion recently with HMRC, (following a local office merger).  As per the previous poster, Dave Forbes, HMRC seem to view it as part of the computations, rather than the accounts.

I haven't yet used HMRC software to actually file the comps (or indeed, the accounts), but having checked, I notice that if their software is used, it takes the user through supplying a more detailed P&L (than the accounts would otherwise have) as part of submitting the comps.

As more people use the HMRC software to file their accounts & comps with their CT return (as opposed to uploading pdfs), perhaps those local offices that don't currently request a detailed P&L will now notice and start requesting it.

Louise

 

www.figurate.co.uk
www.happyaccountant.com

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By MBK
28th Sep 2010 13:05

Surely the local offices won't change.....

...... given that all company accounts will be filed by iXBRL a year from now.

I doubt that the supplementary P&L will ever be tagged because it doesn't form part of GAAP. Tags are only appied to GAAP headings.

Of course, the supplementary P&L account can always be supplied as part the HTML file that gets filed as part of the return - but the only way HMRC will be able to look at the figures is to load the HTML file rather than electronically interrogate the tagged data.

It will be interesting to see if the accounts production software vendors build sufficient flexibility into their products to allow accountants to file or not file the supplementary P&L according to their particular choice.

 

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By Big Ade
29th Sep 2010 16:53

Detailed P & L account - always

There were comprehensive notes published by HMRC in Agent Update 19 published in July 2010 - see http://www.hmrc.gov.uk/ct/company-accounts.pdf

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By GaryMc
29th Sep 2010 20:17

Still no specific requirement for a detailed profit and loss

I can't see anything there that specifically states that a detailed P&L is required

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By daveforbes
05th Oct 2010 11:45

ixbrl and detailed P&L

The UK-GAAP xbrl taxonomy does includes elements for tagging the detailed P&L (and we do so in our software). It is not in the minum tagging list (tags reqd in 2011). In 2013 if you include a detailed P&L it will need to be tagged.

David Forbes

Forbes Computer Systems

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By Ermintrude
06th Oct 2010 11:05

Directors' Report

I've been sending Abbreviated Accounts with detailed P&L.  But some tax offices around the country, and now, too, my local one, apparently, have rejected these, and asked for them to be returned with a director's report.  At least with a detailed P&L, you can understand they can make use of it.  But not the directors' report, that I can see.

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By petestar1969
06th Oct 2010 11:06

In my experience...

....if you don't file the detailed P&L you'll most likely get an aspect enquiry asking for it, so just send it in...

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By andypartridge
06th Oct 2010 11:11

But in my experience

....if you don't file the detailed P&L you won't get an aspect enquiry. Clearly our experience is different. I wonder if there is an element of urban myth surrounding this?

-- Kind regards Andy

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By Batty Girl
06th Oct 2010 11:38

Never have

We never file the detailed P&L and have never been asked for it.

I wonder if it depends whether it's shown in the contents page.  We produce a seperate PDF set of accounts for HMRC without the detailed P&L and with it removed from the contents page, maybe if you leave it on the contents page they consider that you haven't sent them the full document and ask for it.  I have no idea if that's correct, it's just a suggestion!  Our computation document just shows how we get from the profit/loss on the accounts to the taxable profit/loss and the calculation of tax due.  We don't provide detailed information of CA's either.

Always interesting to know how other do it though, maybe I'll think about sending a bit more in future.

BG

 

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David Ross
By davidross
06th Oct 2010 12:49

I can also report a mixed picture

I use spreadsheets to prepare Company Accounts and built in a P and L Report based on the Inland Revenue's Standard Accounting Information (SAI) for Self Assessment. I print out the Balance Sheet as sent to Companies House, and a separate Directors Report. It is easiest just to print out all the Reports and I feel that the SAI is what HMRC decided it wanted - it gives them a reasonable breakdown without being ultra-specific.

One CT Inspector had never heard of the SAI format! Seems she had only ever dealt with Companies - how do they train their people these days? Sussex Area who took over from Bournemouth seem satisfied with what I send them.

They are still having to type in the data themselves - since HMRC "improved" its online filing I have gone back to paper submissions, like a few others here.

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By rkpgreen
06th Oct 2010 14:19

Full Statutory Accounts ?

Dundee HMRC office - who now deal with most of the CT work in Scotland - have recently started insisting on "full statutory accounts" rather than management accounts when these are submitted with an CT600 in suppport of an ESC C16 strikeoff application.  These are now rejected with the request for "full statutory accounts (including a directors report) as required to be prepared by the Companies Act".  No mention is made to the fact that these accounts are not public documents.

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By gsgordon
06th Oct 2010 16:52

Is this mainly about capital allowances and non-allowable expens

HMRC instructions include the line -

"Computations showing how entries on the return have been calculated from the relevant figures in the accounts."

To my simple mind, this means at least that you have to show how expenses allowable for tax purposes were calculated from the expenses in your accounts, i.e. that depreciation was replaced by capital allowances and non-allowable (e.g. entertainment) expenses were removed.

Presumably you could just show those specific computations rather than including the complete detailed P&L?

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By MBK
07th Oct 2010 07:55

All of this changes next April ......

..... when we go to iXBRL. The various "customs" around the country will cease.

If you look at the HMRC CT Computation taxonomy (available at www.bigfoot.corefiling.com) you will see that there are certain mandatory items. Amongst those mandatory items is a section on "Supporting Statements", which essentially is a P&L analysis along roughly the same lines as the P&L summary we are all used to doing for SA returns for unincorporated businesses.

What it thus looks like is that we are all going to have to summarise limited company P&L's in a different way to the way in which we presently prepare them and get that summarised data across as part of the CT Computation filing.

So far as I am aware this has not been trailed anywhere in the professional press - so I'm seeking clarification via the ICAEW tax faculty. Will report back once I get an answer. Unless, of course, somebody out there is is already in the know!

 

 

 

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By GaryMc
07th Oct 2010 08:02

Mandatory only if they are provided

If you don't provide a detailed P&L as part of the CT comp then you do not need to do anything regarding tagging.  The minimum tag list is only applied to items that actually appear in the computation

I agree that HMRC seem to be imposing their own expense categories but wonder how they will be able to police the use of them given the massive increase in CT returns that they will have to deal with.  There is no validation on submission to say whether a tag is correctly applied or not and do HMRC have the resources to contact every single company that tags something incorrectly?  Given that they can't open post at a reasonable rate, I would say no.

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By MBK
07th Oct 2010 08:34

Gary - I'm not so sure

The submission that will be required from April next consists of three parts - accounts, CT computations, and the CT Return.

The minimum tagging list you refer to applies only to the accounts - it is specifically a cut down version of the UK GAAP taxonomy.

Of course, if you don't submit a detailed P&L as part of the accounts then it clearly can't be tagged. But that doesn't absolve you from what is required for the computations part of the submission.

There is a completely separate taxonomy for the CT computations element of the submission which includes the summarised P&L account in the "Mandatory Items" area. HMRC's version of the minimum tagging list for their taxonomy is at http://www.hmrc.gov.uk/ebu/ct_techpack/2010-comp-min-tag-req.xls. This is just an excel file - but if you go to row 1354 you will see the P&L analysis that is required as a minimum.

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By GaryMc
07th Oct 2010 09:02

Minimum does not equal mandatory

In terms of how the taxonomies are described, the terms minimum and mandatory are being confused.  For accounts and CT comps there are both full and minimum tagging lists.  For some reason, they have called the minimum CT list 'mandatory' in the taxonomy document on Yeti.

http://www.hmrc.gov.uk/ebu/ct_techpack/min-tag-req.htm

Items only need to be tagged if they are in the computation and are represented in the minimum tagging list.  Therefore, if you do not provide a detailed P&L in the computation, you have nothing to tag.

 

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