I may be wrong but it is my understanding that qualified book-keepers are able to produce a trial balance, at the very least a set of simple financial statements and are able to display a modicum of understanding of those statements. So why the lack of respect for their profession? Accountancy has many disciplines contained within it and most can only be learnt through the the route of a lifetime of study and practical experience. In my career I have come across many experienced and qualified individuals who have dropped howlers, usually whilst under stress to meet deadlines etc. so I would be inclined to suggest less judgement and more understanding and training.
I would be inclined to agree that your treatment is correct. IAS 1 specifically requires the accrual basis of accounting and prohibits offsetting unless permitted by another standard. That would rather suggest that your German HQ must be applying a local standard rather than a UK or International one as another commentator has pointed out. As long as the accounts used in the UK comply with UK requirements then providing Germany with accounts per their requirements is their responsibility not yours. Had a similar problem myself many years ago with the US parent of the company I worked for. They deferred to me on local requirements but I had to meet their SEC requirements.
I personally would be inclined to include it under the prudence convention. Better to disclose all than have it come back and bite later on. Also those reading the report will have in it black and white that there are commitments that will impact future cash flows.
What happened to the HMRC mantra that tax is simple and we can all do it? Although this question and the answers all suggest that the response that you need degree level understanding to actually complete a return suggests HMRC may have got it wrong. Navigating your way around legislation is not for the faint hearted. Just to complicate matters further, the position since 1 April 2017 altered matters with regard to how losses may be set off against future profits.
It needs to be adapted, but I use Trello. Free to start with and can be upgraded. Has the advantage that as cloud based can be used on your smartphone or tablet and enables team management as well as work management. Time deadlines can be added and monitored as needed. Another piece of software that can be used is Drop Task. This one has the advantage that it can email your time dependent tasks on a daily basis so you are alerted to anything critical at the start of the day.
Judging from the recent discussions going on in Tory circles and the Brexit bash I should think the odds on a change in government must be narrowing. Chances are therefore that Hammond will do all he can to avoid rocking the boat in case a general election suddenly appears on the horizon. So I think I will just wait to see what happens. Any changes to IR35 will take time to feed through and there's every possibility that HMRC will have collapsed under the weight of Brexit implementation before anything happens anyway. But seriously, when undergoing my tax training I was advised to never guess at what might happen because for one thing you will more than likely get it wrong. For another our role is to act and advise on what is there, not on what might be there.
I take the inference that size suggests greater resources and a greater likelihood of getting it right but, a word of caution. I can still remember from my training, many many moons ago, where we had to review the accounts of Plcs to find the errors in their published accounts and how frequently we found them. What applies to accounts can also apply to tax etc.
Just as a point of interest I googled my full name and was surprised at the number of different people that came up with the same name as mine. To identify me would have required other information to whittle down the choices. So unless your name is highly unusual and as a result rare I don't think google is necessarily going to be a danger.
It sounds like a fishing trip to me but I would be inclined to look hard at the figures, draw up some comparisons and see if any unusual patterns emerge. As you seem to do a large number then you should have the potential for a meaningful database that could warn you of any deviations that might give cause for concern. The fact that they have approached it from the agent point of view would caution me to be very careful in my response and to test the water before saying or doing anything that might confirm their suspicions. If some clients have chosen to suppress income it doesn't mean all have, so I would want more information from the enquirer and I would expect them to follow the rules.
I suspect the Revenue will soldier on as always convinced that they are in control and can respond within the given time period only to find as crunch time approaches that they have institutionally over committed and can no longer comply with their own time frames. This will most probably be further complicated by the political chaos that ensues when government realises that negotiations with the EU are not going as smoothly as they are convinced and that the whole of HMRC will need to be re-assigned to customs check duties as the M20 parking lot extends onto the M25.
My answers
I may be wrong but it is my understanding that qualified book-keepers are able to produce a trial balance, at the very least a set of simple financial statements and are able to display a modicum of understanding of those statements. So why the lack of respect for their profession? Accountancy has many disciplines contained within it and most can only be learnt through the the route of a lifetime of study and practical experience. In my career I have come across many experienced and qualified individuals who have dropped howlers, usually whilst under stress to meet deadlines etc. so I would be inclined to suggest less judgement and more understanding and training.
I would be inclined to agree that your treatment is correct. IAS 1 specifically requires the accrual basis of accounting and prohibits offsetting unless permitted by another standard. That would rather suggest that your German HQ must be applying a local standard rather than a UK or International one as another commentator has pointed out. As long as the accounts used in the UK comply with UK requirements then providing Germany with accounts per their requirements is their responsibility not yours. Had a similar problem myself many years ago with the US parent of the company I worked for. They deferred to me on local requirements but I had to meet their SEC requirements.
I personally would be inclined to include it under the prudence convention. Better to disclose all than have it come back and bite later on. Also those reading the report will have in it black and white that there are commitments that will impact future cash flows.
What happened to the HMRC mantra that tax is simple and we can all do it? Although this question and the answers all suggest that the response that you need degree level understanding to actually complete a return suggests HMRC may have got it wrong. Navigating your way around legislation is not for the faint hearted. Just to complicate matters further, the position since 1 April 2017 altered matters with regard to how losses may be set off against future profits.
It needs to be adapted, but I use Trello. Free to start with and can be upgraded. Has the advantage that as cloud based can be used on your smartphone or tablet and enables team management as well as work management. Time deadlines can be added and monitored as needed. Another piece of software that can be used is Drop Task. This one has the advantage that it can email your time dependent tasks on a daily basis so you are alerted to anything critical at the start of the day.
Judging from the recent discussions going on in Tory circles and the Brexit bash I should think the odds on a change in government must be narrowing. Chances are therefore that Hammond will do all he can to avoid rocking the boat in case a general election suddenly appears on the horizon. So I think I will just wait to see what happens. Any changes to IR35 will take time to feed through and there's every possibility that HMRC will have collapsed under the weight of Brexit implementation before anything happens anyway. But seriously, when undergoing my tax training I was advised to never guess at what might happen because for one thing you will more than likely get it wrong. For another our role is to act and advise on what is there, not on what might be there.
I take the inference that size suggests greater resources and a greater likelihood of getting it right but, a word of caution. I can still remember from my training, many many moons ago, where we had to review the accounts of Plcs to find the errors in their published accounts and how frequently we found them. What applies to accounts can also apply to tax etc.
Just as a point of interest I googled my full name and was surprised at the number of different people that came up with the same name as mine. To identify me would have required other information to whittle down the choices. So unless your name is highly unusual and as a result rare I don't think google is necessarily going to be a danger.
It sounds like a fishing trip to me but I would be inclined to look hard at the figures, draw up some comparisons and see if any unusual patterns emerge. As you seem to do a large number then you should have the potential for a meaningful database that could warn you of any deviations that might give cause for concern. The fact that they have approached it from the agent point of view would caution me to be very careful in my response and to test the water before saying or doing anything that might confirm their suspicions. If some clients have chosen to suppress income it doesn't mean all have, so I would want more information from the enquirer and I would expect them to follow the rules.
I suspect the Revenue will soldier on as always convinced that they are in control and can respond within the given time period only to find as crunch time approaches that they have institutionally over committed and can no longer comply with their own time frames. This will most probably be further complicated by the political chaos that ensues when government realises that negotiations with the EU are not going as smoothly as they are convinced and that the whole of HMRC will need to be re-assigned to customs check duties as the M20 parking lot extends onto the M25.