Member Since: 12th Jun 2015
Director of All Paul Limited, a modern, proactive firm of accountants based in north Leeds that focuses on helping smaller businesses and their owners manage their accounting, business and taxation.
Director All Paul Limited
13th Nov 2021
I do not think, generally, there is any requirement to keep digital records, only to keep the defined records.
There is no requirement to keep all past records online i.e. immediately available. They can be archived. You need both software programs / platforms to restore archived data records.
With changes in Apps and platforms this can prove problematic, though they can be archived e.g. to an audit trail or PDFed etc.
Overall, most documents a business will create are covered by Section 5 of the Limitations Act 1980 and should be kept for six years after they expire. This ensures that the documents are available if a civil case is brought against the company.
The main UK legislation regulating statutory retention periods is summarised below.
Statutory retention period: 3 years for private companies, 6 years for public limited companies.
Statutory authority: Section 221 of the Companies Act 1985 as modified by the Companies Acts 1989 and 2006.
Income tax and NI returns, income tax records and correspondence with HMRC
Statutory retention period: Not less than 3 years after the end of the financial year to which they relate. Statutory authority: The Income Tax (Employments) Regulations 1993 (SI 1993/744) as amended, for example by The Income Tax (Employments) (Amendment No. 6) Regulations 1996 (SI 1996/2631).
Payroll wage/salary records (also overtime, bonuses, expenses)
Statutory retention period: 6 years from the end of the tax year to which they relate. Statutory authority: Taxes Management Act 1970.
13th Nov 2021
If you are paid to maintain the accounting records of the business then those records belong to the business. That is what they have bought from you. Just because they are on software or in the cloud does not change the position.
The only time that you would not provide the accounting records is possibly where they are your working papers. However, bear in mind that any journal entries that you do on top of the client’s own accounting records causes those journal entries to become part of the business accounting records.
I would therefore expect to hand over to any new advisor/bookkeeper/client their accounting records so they can continue to maintain/use them.
This may necessitate the provision of journal entries which would link the clients accounting records to the annual Financial Statements. In that case your journal entries, are not simply your working papers, but they become link papers and therefore accounting records of the client.
If you are dealing with a limited company, then under Companies Act 2006, the accounting records that you have been paid to maintain/create become the accounting records of the company. You therefore cannot hold on to them.
The big problem once we talk about digital records and cloud accounting is that whilst the client may own the accounting records they do not necessarily own the software or platform that holds the accounting records.
There are however provisions under GDPR that ensures ‘The right to data portability’.
The right to data portability allows individuals to obtain their personal data for reuse. It allows them to securely move, copy or transfer personal data easily from one IT environment to another commonly used and machine readable form e.g. CSV files. The data must be provided free of charge and without undue delay, at least within one month. Accounting practices may be required to provide client data electronically to the new advisor when they move.
There is absolutely no point in giving a new advisor/company/bookkeeper photocopies of copious accounting records or sending them in PDF format. The data must be provided in a machine readable format.
They should therefore be relatively easy to extract as an audit trail from one piece of software, via say a csv or Excel file, and pass this to a new advisor/company/bookkeeper.
In fact, on a very practical level this is what you would have to do if you were changing accounting packages and where there was not the ability, as is the case generally, to import directly the data from one software package to another.
Even giving a csv or Excel file may not be particularly helpful. Whilst the new advisor/company/bookkeeper could, with some work, reconstruct the accounting records, it fails to address a number of other key issues e.g. which transactions have been reconciled for VAT, on the bank and which sales and purchase invoices are outstanding or have not been matched to payments/invoices?
When I contact a new accountant, I may be happy to accept PDF or posted photocopies of accountants’ working papers to help me set up balances brought forward and for comparatives.
However, if there are lengthy lists of debtors, creditors, and stock etc, and particularly where these have been extracted or created by the accountant in order to ascertain the year end position, they become link papers, and therefore the accounting records of the business. As such, I would always request them in digital format.
My client does not want me to spend hours re-keying a considerable amount of data, when this data is already in digital format with the former accountant, and which most probably will be printed/PDFed before transfer to me. If the client has paid for this information to be produced by the belongs to the client.
Therefore, in summary, whilst the accounting data will most probably belong to the client, the software platform of software programs, that manages the data, may belong to the accountant.
There is probably no real reason why the accountant should not transfer the licence. You don’t actually own the license, you only have the ability to access the data or use the software through the license. Therefore, the transfer of the license should not cause any loss to the accountant. I can’t see any real reason why an accountant would block the transfer of a license.
It is almost akin to saying that a builder has built a house, which our client has paid for, to only then offer the client a pile of brick, timber and concrete. The house includes the constituent materials, just like the accounting software or platform holds the data.
There may become occasions where the client wants the data, but does not have the right to the software platform, or there is no have the ability to transfer the software program or platform. In these cases, the only practical alternative is to transfer the data, and not necessarily just dates and amounts, but also what has being reconciled and matched with what.
We have to start thinking in modern terms. We wouldn’t separate the ink in a set of books from the actual book. We therefore have to consider the accounting data (the business’s accounting records) and the underlying software platform/programmes when transferring accounting records.
In my own firm’s engagement letter, I do say that the client must request copies or backups themselves within a reasonable/agreed time frame from when I have performed the work. Furthermore, we should not be seen as an unpaid data back-up service.
27th Oct 2021
Talking about letters received from new accountants being out of date; I still receive letters asking for a copy of the last P35 and P14s.
I simply reply that I have never prepared any of those forms for the client and have no ideas when the last P35 and P14s were prepared.
If I’m feeling annoyed, I may even say that the forms haven’t been used for many year and ‘are they seriously asking for them and why do they want a form that was submitted many years ago’
15th Sep 2021
They need to register as a CIS contractor.
See s74(2) FA2004 and subjections (a) and (b) 'repair, extension, demolition or dismantling of buildings or structures (whether permanent or not)' and 'construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land'
The place to start is the legislation in relation to what is within the meaning of construction operations. The legislation is found at s74(2) FA2004 (https://www.legislation.gov.uk/ukpga/2004/12/section/74/2004-12-02) and there are six subsections: (a) to (f).
Section (2) say the following operations are, subject to subsection (3), construction operations for the purposes of this Chapter—
a) construction, alteration, repair, extension, demolition or dismantling of buildings or structures (whether permanent or not), including offshore installations;
b) construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including (in particular) walls, roadworks, power-lines, electronic communications apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipe-lines, reservoirs, water-mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence;
c) installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection;
d) internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration;
e) painting or decorating the internal or external surfaces of any building or structure;
f) operations which form an integral part of, or are preparatory to, or are for rendering complete, such operations as are previously described in this subsection, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.
Section (3)provides a list of exceptions.
30th Jul 2021
Nothing wrong with bringing forward expenditure. It's accepted tax planning in arranging your affairs to reduce tax.
The amount of the repair is not a reason to make it capital.
It's the nature of the expenditure that is important.
It's a repair.
You don't have to wait until something is broken to repair/maintain it.
24th Jul 2021
Further to my reply of 16th Jul 2021 (above), I raised a complaint. This was directly through the agent helpline though I could have used the normal Self Assessment helpline.
Once I asked to raise the matter, it was passed to a manager who had to pass me to somebody else to make a formal complaint.
I received a phone call back within a couple of days. I clarified the complaint.
Two days later, I received a reply from the complaints handler by telephone who confirmed that they had pulled my client’s Tax Return out of the queue of uncaptured tax returns, had processed it, (it then appeared on the normal agent portal as processed) and the return repayment is now waiting to be processed in a few days’ time.
I even agreed that they would cover 1 hours wasted time at my usual charge out rate for me continuously ringing them being told various states which in turn will put back. I have to bill my client and the fee charged will go to the client who'll have to pay me.
16th Jul 2021
I was told that they hoped to do this now by 31 October and NOT to ring back for an update before then.
I submitted a Self Employed CIS labourer including SEISS grant on a tax return on 12 May 2021.
I rang HMRC on 2 June to ask why the Tax Return was not showing as processed.
I was told that the Tax Return had not been 'captured' due to an 'HMRC IT problem'.
I was told that HMRC would review the position by 9 June and then they would process the tax refund.
The client rang HMRC himself on 22 June and was told that it would be dealt with by 5 July.
I rang HMRC on 16 July to ask why the Tax Return had still not been processed.
I was told that HMRC needed to check 'every submitted Tax Return to check that the SEISS grant had been correct processed'. I was told that they hoped to do this by 31 October and NOT to ring back for an update before then.
I protested and explained that the tax refund amounts to £1,699 and this amounted to more than a month’s net pay for this individual. It also amounted to nearly two of the SEISS grant amounts
I was told that the operator at H M Revenue & Customs could do nothing more for me.
I asked for the matter to be prioritised due to severe cash flow issues by the client, through no fault of my client.
I explained that I was aware that some unrepresented taxpayers had incorrectly completed their tax returns. They had put the grant in the wrong box or combined it with total business turnover. This is a widely reported issue.
However, I explained that I was a qualified accountant who had correctly completed the tax return on behalf of the client and that this return should be processed. With Self Assessment, it is a submit Tax Return now and check any issues later.
In my opinion, H M Revenue & Customs should process all tax returns submitted by authorised tax agents (accountants) as these should have been correctly processed by experienced accountants and tax advisers. HMRC know who has submitted a tax return i.e. a client through their own online account or through an agent account.
I asked the operator to speak to a manager to make a complaint. The operator was not able to put me through to anybody as everybody was engaged. I was told that I would have to wait until the following Tuesday (today being Friday) before anybody at H M Revenue & Customs would ring me back.
13th Jul 2021
The 'personal guarantee' can be drafted as a novation clause.
I have a clause in my T&C and specifically draw attention to this in the covering letter. This isn't a PG but the ability to legally transfer the debt of the limited company to a named person on a particular event e.g. non-payment of company invoice.
I've had solicitor quote this novation clause in letters before action with Co clients.
I understand that a well written novation clause does work
4th Jul 2021
I fully understand your issue.
The agent ASA/portal does not give you the facility to set up a DD.
Client could make an online bank payment, if they can manage this. I have clients, not good on computers, who go into their bank with sort code/account number/payment ref and they arrange the payment for them over the counter.
Why don't you just set up a BTA for the client and keep the username/password details.
I know some professional bodies get 'excited' about an accountant accessing the BTA, rather than their ASA/agent portal.
To me, so long as the client is happy for you to do this, I really do not see the problem.
25th May 2021
I am new in practice in the UK market. Will we automatically receive "Accounts Office reference"?
If you are working in practice and don't understand the difference between registering a limited company and registering for a PAYE scheme, and don't know what an Accounts Office reference is, I would ask if you should even be thinking about being in practice. You have an awful lot to learn!
This a very basic matter. What else do you know / not know if you cannot address this simple matter.