Jack the Lad
Member Since: 17th Mar 2008
Dinsdale Young Consultants Ltd
Qualified as Chartered Accountant in 1966. Left ICAEW 1992 upon sale of practice (first time). Disenamoured with ICAEW due to treatment of small practices and inability to recognise difference from large practices. Now semi-retired, but still interested...just...
Dinsdale Young Consultants
2nd Oct 2018
Sorry, I do NOT agree with #3, satisfying though that may be!
I agree with Andy Partridge: approval of the accounts is implied, so you should have filed. You can chase for signed accounts afterwards -- at least your hands will be clean.
14th Aug 2018
Section 9A TMA 1970 Enquiries can arise for a number of reasons, none of them from a "random" inspection, whatever HMRC may say. It will not necessarily be your fault.
I have many years' experience in dealing with investigations and enquiries, including (in the "old days") attending Commissioners' Hearings, and recently conducted my first First-tier Tribunal Hearing.
Here are some of the things you should be doing:
1. I agree with slipknot08: you should ask HMRC to provide you with the precise reasons for their enquiry.
2. You should carefully review the accounts and return submitted to see if there are any obvious errors or omissions.
3. Having regard to the client's business, which presumably receives cash in hand, you should carry out a full and detailed cash review and ensure that you can adequately account for all cash expenditure from available cash income and bank withdrawals.
4. You should question the client very carefully about their modus operandi, and how they record income.
5. Check the expenditure claims carefully to ensure they are all wholly and exclusively incurred for the operation of the business, and have not slipped in any directors' personal expenses.
These are just the start. Other actions may be necessary BEFORE you give anything to HMRC, or attend an interview if requested. If they do request a meeting, do NOT allow the client to attend alone, and ensure that he is properly briefed beforehand, especially if you find errors or omissions. If there are any you have found, it is better to admit them beforehand, but ascertain the effects on the client's liabilities, in terms of interest etc. Penalties may be reduced or avoided by early admission as well as co-operation.
As regards your fees, as long as you have not made any mistakes, you are perfectly entitled to charge for your time, and should tell the client.
With reference to one of the comments above, HMRC used to have a "black book" of dodgy accountants on who they could not rely, and a "white book" of reliable accountants. The accounts etc submitted by the former attracted the most enquiries, obviously. This enquiry could have been started because it is a cash business, or because it is related to another business which had been the subject of a successful enquiry.
1st Aug 2018
In addition to the excellent comments above, I would add the following from my own experience many years ago.
A local HMRC Office (when they had such places!) had been investigating a Cabbie (black cab in Greater London/Surrey) and his wife who shared the cab, who had been dealing with the investigation themselves. They came to me, and it was immediately clear that the somewhat over-zealous tax officer was applying so-called "average" factors, instead of looking at their own circumstances. The Inspector provided her own cash calculations, and it was only after I had destroyed them 3 times using her own logic, that I complained to a senior officer, who not only agreed the original accounts, but accepted my claim for previously unclaimed expenses.
Some tips for contention:
1. Look very carefully yourself at the ratio of fuel to mileage, and ascertain the reasons for high consumption, compared with any averages.
2. Look carefully at the ratio of mileage to income, and ascertain the reasons for lower income, compared with any averages.
3. Ensure that all allowable business expenditure has been claimed.
4. Do a very careful cash account, ensuring that all personal expenditure is included, including smoking, drinking and other leisure activities such as holidays, as well as living costs, etc. This will often reveal a "shortage" of cash income, ie undisclosed turnover, which should of course be adjusted in the accounts, BEFORE they are submitted!
My case took about two years, and I persuaded the senior Inspector to allow my costs retrospectively, so the total tax repayment covered my fees.
13th Jul 2018
This is what is commonly known as "low balling", and used often by larger firms to get work. I would advise the client to look very carefully at the other firm's expertise regarding that particular one-off job, as well as the contract and quote for regarding future recurring work.
Similarly, many years ago, I had a client company whose turnover was projected to increase substantially. Their bank (HSBC) recommended that they move to one of the "Big Five" firms, which the client did. The clients never stopped moaning about them afterwards: only junior inexperienced staff available; very high fees; inadequate and unsatisfactory advice.
You may be better off without them!
15th Jun 2018
Some years ago, in the good old days of preceding year basis of assessment for self employed, I spent nearly two years arguing with HMRC about a client, and eventually he conceded, thus saving my client a few thousand pounds. Client was by then working in South America, but he sent me a Fortnum & Mason's hamper, with a note saying "Jack the Lad walks on water" ! Persistence pays!
31st May 2018
I have dealt with a few merger, acquisitions and sales over the years.
You don't state your company's trade or turnover, but here are some preliminary observations:
1. Invoice discounting/factoring is a good source of ready funds, especially at the level of debtors you mention (too high?). Add to that improved credit control, if possible!
2. Stock control may also be necessary, and could improve cash flow -- consider "just in time" ordering if practicable.
3. You will no doubt need a comprehensive purchase/sale agreement, with detailed warranties etc, to include a delayed purchase payment, depending upon turnover/profit targets, etc. This will reduce the initial funding requirement.
4. Consider a share exchange, which will necessitate realistic valuations of both companies.
5. Consider going outside for investors, eg Private Equity company,EIS investment, etc.
There will no doubt be much more, but with limited information, that is enough to be getting on with! As stated, your accountants should help, and you will need a good corporate lawyer.
26th Apr 2018
Sounds like an Ex Gratia payment to me, so tax exempt -- surely?
20th Apr 2018
Yes, it is Theft under the Theft Act.
However, it appears that the customer and his bank have been "squared" so are not out of pocket.
That means that it is the client's bank who are out of pocket. Apart from what has been done already, perhaps the client should register a complaint with their bank, setting out the costs of trying to sort out their mess. The bank may then correct it and pay compensation to the client for their troubles.
They may do nothing, in which case, I believe they would be entitled to assume that the bank are happy with the payment, in which case I would carry it forward as a creditor for 6 years, then credit the P & L Account, pay the tax, and move on!
20th Dec 2017
I always told clients that if information is received after 30th September:
a) I couldn't guarantee their tax return/accounts would be completed and filed by 31st January.
b) There would be an additional charge.
It worked for most clients!
5th Dec 2017
How long is a piece of string? Also how much are your hourly rates?
Some services may be quantifiable in terms of time, so easy to calculate a fixed rate, monthly or quarterly, which is reasonable for you and the client.
Others could well take many unquantifiable hours. For those services, I always charged at my "special" hourly rate, sending regular detailed bills, always with a covering letter setting out what had been done, and the benefits to the client.