Prior Year Adjustment

Adjust Current Year accounts comparatives and last year Corporation Tax Return

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Picked up a new client and about to completed the 31st March 2020 accounts.

There are errors in the 31st March 2019 Accounts and Sales are overstated around 15K so around 3K additional tax paid last year.  Profit is around 150K a year.  

We will have to enter a Prior Year Adustment but for the Corporation tax amendment there are only 5 days left until 31st March but don't think we will be able to meet this deadline.

Would appreciate any inputs.

Replies (6)

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By tom123
26th Mar 2021 14:52

You are not lucky with your clients, are you Sanjay? The accounts should have been done months ago..

Sorry, can't help really - from my 'industry' role, but good luck!

Are you sure you are not under pricing - and therefore getting all the dross!

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Replying to tom123:
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By sanjay100
26th Mar 2021 16:32

Companies house have extended all Ltd companies deadline by three months so they have until 31st March 2020

No I haven't undercharged by much I have quoted a hourly rate for sorting out the Book-keeping which makes up for any shortfall. His previous accountant seemed to have made quite a few errors which I am sorting out

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By frankfx
26th Mar 2021 15:17

Is a prior year adjustment really justified?

Is the 15000 material?

Would your professional supervising body haul you over the coals, for the professional judgement you take on this case.....not to amend.?

Also have the matching cost of sales been reflected in the 2019 accounts?

Risking an error in the 2020 accounts, that you discover , in 2021!

And so on.

There may be other compensating errors, that if you spend enough time scrutinising could give you a zero outcome.

Are the 2018 account's error free , meaning that opening figures for 2019 are safe.

How much £ is your client willing and able to pay for expertise, that has nought added value?

Please share your deliberations .

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By Paul Crowley
26th Mar 2021 15:22

Why bother
Alter it this year
What exactly was the error?
Prior year adjustments are supposed to be rare, and only if material
What were sales? if £1m then £15K is a drop

Is this you or the client deciding

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By Wanderer
26th Mar 2021 15:22

Doubt if I'd bother adjusting past accounts & tax returns for that, would probably just let it flow through to the year you are preparing.

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By Paul Crowley
26th Mar 2021 15:29

For the avoidance of doubt client will not think you are clever for publicly declaring the accounts that directors signed were so wrong that they need correcting
Quite the opposite
They will however appreciate less tax this year
What exactly is the double entry?

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