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Taxfiler & Prior Year Adjustment

Is it possible to use the software to create a proper set of accounts with PYA

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Hi guys,

 

I'm just trying to find my way around preparing accounts containing PYA in Taxfiler and I came across an issue - the comparatives are not described as "restated".

Is there a way around it?

The company had expensed fixed assets and posted Director's Loan as Share Capital. I took care of that, I'm not sure how to disclose it.

Can you please advise? One seems to be due to voluntary change in accounting policy and the other is an error. Do I simply make a longer note? Or is it possible for me not the disclose the error, just the change in accounting policy as only the latter affected retained earning, the first was is just movement between two equity accounts? Can you please advise if this is acceptable?

"During the year there was a change in accounting policy - the recognision criteria of fixed assets have been revised to ensure the acounts give fair and true view of the financial position of the business. After having analysed the business turnover figure, it has been established that lower capitalisation limit should be applied for the items to be recognised as fixed assets. 

The change had the following effect on the financial statements: 

                                                                                   2018                                                  2017

Fixed Assets                                                                 £0                                                    £0

Adj for changes in accounting policy                        £2000                                         £2000  

Fixed Assets as restated                                              £2000                                                 £2000

 

Retained Earnings                                                       (£2000)                                          (£2000) 

Adj for changes in accounting policy                         £2000                                      £2000  

Retained Earnings                                                           £0                                                     £0

 

I would really, really appreciate your advice,

Regards,

Barbara

 

 

Replies

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22nd Apr 2019 20:40

Yes - alter the comparatives in the Trial Balance.

Just hand type in the entries you need.

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to lionofludesch
22nd Apr 2019 22:08

Thank you.

I have restated the comparatives and added a note explaining how individual figures are affected on the bottom of the statement of changes in equity. The only thing that's still bugging me is that the comparative column won't clearly say "Restated" above the balances.
But I read a few comments on here and got a feeling people get away with it so I added an extra note to say the comparatives have been restated due to PYA details of which can be found in the notes to the statement of changed in equity. Hope that'll suffice.

Can I have one more question please...

I am in two minds regarding the corporation tax return.

The PYA is in the second year accounts. In the first year the loss arose due to owners putting fixed assets through P/L.

Do I really need to amend the CT600?

As a result of this change, the profit for the previous year is £0 as opposed to £2,000 loss.

To rectify it, I was thinking of simply adding PYA £2,000 to current profits so they are increased and claiming the £2,000 loss from previous year. That should fix the tax position. Then, claiming Writing Down Allowances for the fixed assets, as I suppose AIA can't be claimed year after the asset was acquired.

Do you think anyone at HMRC would mind such treatment? I put the adjustment down to change in accounting policy - decrease in fixed assets recognition limit, so in theory it can be taxed in the current year and there is no tax to pay or refund as a result of the adjustment anyway...

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to BarbaraIA
23rd Apr 2019 10:36

I wouldn't fuss about the "Restated". But if you're toey about it, print out the accounts, type the word at the top of the comparative column and file on paper.

I wouldn't fuss about the AIA either. They were entitled to the allowance and they've just stuck the entries in the wrong box. Technically, it's incorrect, but HMRC are unlikely to challenge it, imho. If they do, the directors will just be drawn to the inevitable conclusion that they should have engaged you earlier.

End of the day - the sum involved is buttons to HMRC.

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to lionofludesch
23rd Apr 2019 13:57

Thank you, I've noticed a lot of accountants is not fussed by the words "Restated" so I guess it's a waste of time trying to file on paper.

Thanks for putting my mind at ease - being employed was easier in terms that I always had someone senior to ask, now it's all on my shoulders!

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