We do not know how this arose so are impotent to comment objectively.
As has been said supermarkets are not simple "pile it high - sell it cheap" operations any more. The price of goods to the supermarket is dependent on complex sales performance calculations which can only be finally determined after quite lengthy periods of trading. Long-term construction contracts are capable of having an objective profit assessment at a point in time during the term of the contract so determining the profit on selling baked beans part way through a promotion should be a doddle.
I cannot help thinking that there was deliberate subterfuge here and negligence by directors in knowing what was going on. The amount involved is £250M not £250k! That represents approx. 1 months total group profits. Tesco must have very sophisticated computerised accounting systems to produce massive amounts of data that are right up to date. It is the interpretations put on that which has been flawed. It is beyond comprehension that the directors do not know the level of profits to within an overall error rate of some 20%
Deloites seem to have enough financial problems of their own with their exposure to the Icebreaker tax fraud scams. Interesting that they have senior enough personnel to pass an opinion on Tesco's financial sheenanigans.
It will be interesting to see if FRC, ICAEW or any other regulatory body has anything but praise for Tesco and PWc.
It would seem that HMRC is not minded to accept this due, at least in part, to Mr. Roper still fighting this 3 years later. On that basis we have probably all got some form of terminal illness.
A client of mine instructed me to review the investment opportunity offered by Harlequin and I was not impressed with what I saw. They were selling individual room chalets on a hotel that wasn't built. The returns were based on high occupancy levels in an area of the Caribbean which has a short season. The main part of the hotel was to be leased to a management company. Obviously, there would be a risk they would fill their own rooms before selling time in a chalet.
The impressive pictures of a hotel building site were of a different hotel! I advised my client that I wouldn’t touch it with a bargepole. It is difficult to contemplate how a respected firm like Wilkins Kennedy had anything to do with this.
Al these comments illustrate how complicated or ill defined this is. Bank interest etc. is still included for purpose of computing total turnover and determining eligibility for staying in FRS but it not liable to VAT.
However, the fundamental problem is as illustrated in the 1st paragraph in comparing the % to be applied.
12% of 120 is, correctly computed at 14.4%
BUT on the normal basis VAT would be £20 which = 16.67% of 120 NOT 20%.
The comparison is therefore;
of gross t/o
Flat rate scheme 12% = £14.40
Normal basis 16.67% = £20
Accounting - we have many clients who use FRS and we instruct then to account for VAT in the normal way and then compute VAT to pay on FRS and show the difference as "VAT flat rate difference". That will clearly show the gain or loss on using FRS and enable usage of FRS to be monitored.
I had always thought that their first gig in essentially their line up under which they became famous was at the Station Hotel, Richmond - now an Irish bar. The Marquee Club was a famous venue then so it does seem highly unlikely that they played their first gig there.
I always like to look at the past for persuasive arguments on current events. I remember some years ago that Norman Tebbitt said after some IRA chaps had been found not guilty in, I think Birmngham, that;
just because a Court found them innocent does not mean that they didn't do it.
Quite so Norman.
Harry's now famous "slush fund" bank account "Rosie 47" was, apparently named after his dog, Rosie, and "47" is Harry's year of birth. Need to keep these complicated codes to secret bank accounts simple enough for a football manager to remember. It was much simpler just having cash in briefcases.
This has provided an enormous amount of humorous entertainment for tax practitioners - not something our profession normally benefits from .
My answers
Tesco
We do not know how this arose so are impotent to comment objectively.
As has been said supermarkets are not simple "pile it high - sell it cheap" operations any more. The price of goods to the supermarket is dependent on complex sales performance calculations which can only be finally determined after quite lengthy periods of trading. Long-term construction contracts are capable of having an objective profit assessment at a point in time during the term of the contract so determining the profit on selling baked beans part way through a promotion should be a doddle.
I cannot help thinking that there was deliberate subterfuge here and negligence by directors in knowing what was going on. The amount involved is £250M not £250k! That represents approx. 1 months total group profits. Tesco must have very sophisticated computerised accounting systems to produce massive amounts of data that are right up to date. It is the interpretations put on that which has been flawed. It is beyond comprehension that the directors do not know the level of profits to within an overall error rate of some 20%
Deloites seem to have enough financial problems of their own with their exposure to the Icebreaker tax fraud scams. Interesting that they have senior enough personnel to pass an opinion on Tesco's financial sheenanigans.
It will be interesting to see if FRC, ICAEW or any other regulatory body has anything but praise for Tesco and PWc.
new style audit reports
This all sounds excellent news - making annual accounts easier to be understood by non-accountants.
Some examples would be very useful!
Lack of anyone knowing whats going on
If they can mis-state £250M then how accurate are the rest of the numbers? What are directors using to assess performance?
MDs resigning suddenly always causes massive disruption - as clearly illustrated here.
Rudderless ship going off course.
A share price fall of 42% is hugely disconcerting to institutional investors.
When you are at the top the only way is down!
Peter Lashmar
Lashmars Tax Accountants
Sage
Having been a Sage user for many years this is typical of their customer relationship policy that The Customer does not Matter.
Terminal illness as an excuse
It would seem that HMRC is not minded to accept this due, at least in part, to Mr. Roper still fighting this 3 years later. On that basis we have probably all got some form of terminal illness.
Whilst having every sympathy with Mr. roper I feel that he is overdoing the terminal illness bit a as he is here 3 years later.
On that basis we could all claim to have a terminal illness.
BUT - it seems that he did not pay because he did not have the funds due to not being able to work which is a very different situation.
It is important to always get the facts right before a Tribunal.
A client of mine instructed me to review the investment opportunity offered by Harlequin and I was not impressed with what I saw. They were selling individual room chalets on a hotel that wasn't built. The returns were based on high occupancy levels in an area of the Caribbean which has a short season. The main part of the hotel was to be leased to a management company. Obviously, there would be a risk they would fill their own rooms before selling time in a chalet.
The impressive pictures of a hotel building site were of a different hotel! I advised my client that I wouldn’t touch it with a bargepole. It is difficult to contemplate how a respected firm like Wilkins Kennedy had anything to do with this.
VAT flat rate %
Al these comments illustrate how complicated or ill defined this is. Bank interest etc. is still included for purpose of computing total turnover and determining eligibility for staying in FRS but it not liable to VAT.
However, the fundamental problem is as illustrated in the 1st paragraph in comparing the % to be applied.
12% of 120 is, correctly computed at 14.4%
BUT on the normal basis VAT would be £20 which = 16.67% of 120 NOT 20%.
The comparison is therefore;
of gross t/o
Flat rate scheme 12% = £14.40
Normal basis 16.67% = £20
Accounting - we have many clients who use FRS and we instruct then to account for VAT in the normal way and then compute VAT to pay on FRS and show the difference as "VAT flat rate difference". That will clearly show the gain or loss on using FRS and enable usage of FRS to be monitored.
Another minefield for businesses.
Peter Lashmar
Lashmars tax Accountants
Tel 01590-688838
e [email protected]
Rolling Stones
I had always thought that their first gig in essentially their line up under which they became famous was at the Station Hotel, Richmond - now an Irish bar. The Marquee Club was a famous venue then so it does seem highly unlikely that they played their first gig there.
Harry Redknapp
I always like to look at the past for persuasive arguments on current events. I remember some years ago that Norman Tebbitt said after some IRA chaps had been found not guilty in, I think Birmngham, that;
just because a Court found them innocent does not mean that they didn't do it.
Quite so Norman.
Harry's now famous "slush fund" bank account "Rosie 47" was, apparently named after his dog, Rosie, and "47" is Harry's year of birth. Need to keep these complicated codes to secret bank accounts simple enough for a football manager to remember. It was much simpler just having cash in briefcases.
This has provided an enormous amount of humorous entertainment for tax practitioners - not something our profession normally benefits from .
Peter J Lashmar
Lashmars Tax Accountants
tel 01590-688838
e [email protected]