Sets of accounts

Sets of accounts

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Just wondering, will accountants generally produce a couple of sets of accounts.

One which includes depreciation, based on companies accounting policies and including all expenses.

And another which is based on a tax computation. So depreciation removed and capital allowances calculated. Disallowed expenses removed etc.

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By Paul Scholes
02nd Jan 2014 09:33

Never have before

Might be old fashioned, or have missed an announcement somewhere, but it's usual to produce one set of accounts that properly reflect the activities of the business, regardless of who is reading them.

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By johngroganjga
02nd Jan 2014 09:46

Never heard of such a practice.  The difference between accounting treatments and tax treatments is conventionally dealt with in corporation tax computations.

Of course clients can have as many different versions of their accounts as they want if they are willing to pay for them.   

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By ShirleyM
02nd Jan 2014 09:49

Is it for the client, or someone else?

We give our clients reports to show the capital allowance calc's, and the adjustments from trading profits to taxable profits. I have never been asked for anything more.

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Replying to filmltddirector:
Euan's picture
By Euan MacLennan
02nd Jan 2014 10:01

That would be the tax computation

ShirleyM wrote:

We give our clients reports to show the capital allowance calc's, and the adjustments from trading profits to taxable profits. I have never been asked for anything more.

That would be the tax computation.  The whole point of tax computations is to explain the difference between the profit shown in the one and only set of accounts and the taxable profit.  Most of our clients wouldn't understand them, so we don't give them to clients.  Do you also give them your deferred tax computations?

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By ShirleyM
02nd Jan 2014 10:06


I was thinking more along the lines of sole traders, but yes, we give our limited company clients a copy of the tax computation, and we talk them through it at sign off. Some clients are interested, some aren't. We don't give a copy of deferred tax calc's unless they ask for them, but we do explain it at sign off.

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By User deleted
02nd Jan 2014 11:12

I've seen this before

A small practice I used to work adopted something similar to what 'arcon5' is suggesting for sole traders where we only produced a P&L account.

We would produce the usual P&L down to net profit and then show any add backs, capital allowances etc to give a tax adjusted profit or loss figure which would agree to the tax computations.



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By Marion Hayes
02nd Jan 2014 11:39

Horses for Courses

Paul is right - if you are preparing a full set of accounts there is only one version. Any changes to identify tax calculations are a separate document .

However, there are also individuals who are not required to prepare full accounts unless requested, maybe by their bank or HMRC. For those persons I would prepare an Income & Expenditure account on the same principles as the full accounts but exclude depreciation. Again this would be the starting point of the tax calulations. If asked for at a later date these could be expanded into a full set of accounts.

I cannot envisage the need to prepare both at the same time - the idea of the slimmed down version is to save clients money and my time.


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Euan's picture
By Euan MacLennan
02nd Jan 2014 11:59

It occurs to me ...

... that this is what IRIS does in its schedule of the details making up the tax return.  For sole traders, the proper P&L is listed with a side column for 'disallowed' in which the figures for depreciation, entertainment, etc., appear.  The total disallowed is then added back to the profit in the P&L and capital allowances are then deducted to arrive at the taxable profit.

We always give this schedule of tax return details to our clients.  Whether they understand them or even look at them is a different matter!

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By marks
02nd Jan 2014 12:12

what i give

I give limited company clients a pdf of the final full and abbreviated accounts plus a copy of the CT600 to which I attach the tax comp.

For sole traders give them the accounts (whether profit and loss only or profit and loss and balance sheet) together with personal tax return and tax comp. 

Though as said above most people arent really interested in how the tax liabilty is arrived just what it is and what if anything can be done to reduce it further.

Have never had a query from a client along the lines "you have disallowed xxxx in the tax comp what is the reason for this?"

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