or perhaps not - got a call yesterday form someone who was trying to diy their tax return using hmrc's system. they had worked out their tax bill as £5000 ... when I did it I got £743! so there will still be a call for experts, ie us accountants, to sort it for them.
Certainly is a bit of a can of worms - by virtue of the agency rules as referenced by taxguru should hallsi's client declare the net income as paye or self-employed? ...and I doubt very much that Priority's end clients in the UK are aware that they have racked up a fairly chunky ni bill and a looming investigation!
From a practical perspective I would think Hallsi's client should declare the income as self-employed income. This also makes sense when HMRC will allow the end client credit for any self-employed tax paid by their 'employees' when they finally catch up with them.
As HMRC also read Accounting Web, and if past actions are any guide, I think we should all wait for them to pay a huge amount of money to an irate member of Priority Accounts staff to gain access to the end client list and then wait for the press release they will undoubtedly issue!
Although it might also be useful to run a search on all your clients accounting systems for Priority Accounts so you can warn them before the HMRC letters arrive on their doorstep!
Probably like lots others I have dealt with loads of different industry types, not to mention charities as well as businesses - and industry type has nothing to do with being a bad client..it is all down to the person you deal with.
For me the worst clients are those who either don't value what you do or don't trust you. So demonstrate value and trust and you can turn underperforming clients into better clients - and if they still insist on saying it is poor value (bad payers or always having fee disputes) or that they don't trust you (questioning your skill and judgement) then get rid of them.
Ask anyone who has done it how liberating it is to sack a rubbish client!
The scheme you are referring to is probably based around an EBT.
EBTs work, but loans from them might not! especially since the December 2010 hmrc announcements and budget 2011 changes. Tread carefully and make sure that this is from a reputable tax planner with a barrister's opinion (dated after 5 April 2011!) and that the scheme includes tax fee protection insurance or similar.
A good question to ask yourself is, do you as a qualified accountant understand the mechanics of the tax planning?
My answer is to stick with Quickbooks. It is what you know and are comfortable with and you won't incur any additional software costs. Also You get to start with a clean sheet as you can simply post the opening balances into Quickbooks.
I know that lots of accountants have favourites, but any decent accountant won't care if you use Quickbooks or Sage as long as your work is good quality! Similarly the client just wants you to sort it and tell him the answers and won't mind which software you use.
Sage has multi-client versions, but you pay extra for them and I wouldn't go there unless the client is prepared to pay extra for you to purchase the software.
its easy and its good for clients I have read the previous posts with disbelief! 1 it is very easy to set up 2 as the practice you get to choose if you take out blanket coverage or if you ask the clients individually to opt in or out. 3 it is fairly inexpensive and therefore available to any size client 4 it is good advice for your client - so tell them even if you recommend they purchase it from another source 5 if you don't offer it then might your client go elsewhere?
In my practice we use IRPC/CCH croner. We send out 1 mailshot to the clients asking for cash if they want to opt in (and CCH provide draft letters, etc), field a few phone calls with queries. Any client who takes it up pays upfront, we sent CCH a list of clients and a cheque and everyone is happy. Setting it up in the first place with CCH was a couple of phonecalls and a meeting. If new clients want to take it up during the year they pay a pro-rata amount and CCH give us a scale to work this out with.
I agree that the chance of any idividual client getting investigated is quite small ... the whole idea of any insurance is that you have it in case! But if you are that client and it costs 100+ hours in professional time to resolve the investigation then it will be a lot of money.
When you look at the finances, the cost of the insurance is probably less than 1 hour's chargeout rate. If all you did was read and aknowledge an enquiry letter and discuss it with your client it would probably take 3 or 4 hours - so even just that much work will produce a reasonable cost saving if they were to take the insurance out.
yes you can be stuffed There is absolutely nothing to prevent anyone from incorporating a limited company or limited liability partnership in the name of an existing business ... so a good protection if you have a brand value that needs protecting is to incorporate -even if you keep the company dormant (which is inexpensive) and continue to trade as an unincorporated business.
Yes you may have remedies in law for passing off - but difficult to enforce, all they have to do is to vary the business name a bit to sidestep this. eg instead of calling it Jim Ltd, they could call it Jym Ltd
If you want to look at incorporation then check out vowles.co.uk as we offer it ... (but then so do lots of people)
enquiry costs are not tax-deductible Sorry, the inspector is correct. The costs of defending your client from a tax investigation are not tax deductible.
However, if you have to do any additional accounts preparation work and invoice that as a separate item from the investigation ... Obviously you have to be able to justify the split so keep good time records!
Incidentally - sell em all some fee protection cover!
remember Taxation doesn't take faith only hard cash! The loan represents a benefit-in-kind whilst it is still a loan - the benefit being the interest forgone by comparison with the taxman's official rate. Whilst it is a loan and is techically capable of repayment (don't have to make repayments but the facility exists) then it can only be a loan and therefore a liability of your client.
Now that it has been written off you have a difficult question to answer. Was it written off in such a way that it can be considered a termination payment (S401 ITEPA says first £30k is tax free) Is it caught as employment income by S62 ITEPA? Obviously the section that the taxman is using at the moment to claim PAYE, which should be operated even though the notional employer is not resident and cannot be forced to do so!
My answers
or perhaps not - got a call yesterday form someone who was trying to diy their tax return using hmrc's system. they had worked out their tax bill as £5000 ... when I did it I got £743! so there will still be a call for experts, ie us accountants, to sort it for them.
I can't get onto the Agent website either!
can of worms
Certainly is a bit of a can of worms - by virtue of the agency rules as referenced by taxguru should hallsi's client declare the net income as paye or self-employed? ...and I doubt very much that Priority's end clients in the UK are aware that they have racked up a fairly chunky ni bill and a looming investigation!
From a practical perspective I would think Hallsi's client should declare the income as self-employed income. This also makes sense when HMRC will allow the end client credit for any self-employed tax paid by their 'employees' when they finally catch up with them.
As HMRC also read Accounting Web, and if past actions are any guide, I think we should all wait for them to pay a huge amount of money to an irate member of Priority Accounts staff to gain access to the end client list and then wait for the press release they will undoubtedly issue!
Although it might also be useful to run a search on all your clients accounting systems for Priority Accounts so you can warn them before the HMRC letters arrive on their doorstep!
it is the individual
Probably like lots others I have dealt with loads of different industry types, not to mention charities as well as businesses - and industry type has nothing to do with being a bad client..it is all down to the person you deal with.
For me the worst clients are those who either don't value what you do or don't trust you. So demonstrate value and trust and you can turn underperforming clients into better clients - and if they still insist on saying it is poor value (bad payers or always having fee disputes) or that they don't trust you (questioning your skill and judgement) then get rid of them.
Ask anyone who has done it how liberating it is to sack a rubbish client!
hmmmm...
The scheme you are referring to is probably based around an EBT.
EBTs work, but loans from them might not! especially since the December 2010 hmrc announcements and budget 2011 changes. Tread carefully and make sure that this is from a reputable tax planner with a barrister's opinion (dated after 5 April 2011!) and that the scheme includes tax fee protection insurance or similar.
A good question to ask yourself is, do you as a qualified accountant understand the mechanics of the tax planning?
stay with quickbooks
Hi there
My answer is to stick with Quickbooks. It is what you know and are comfortable with and you won't incur any additional software costs. Also You get to start with a clean sheet as you can simply post the opening balances into Quickbooks.
I know that lots of accountants have favourites, but any decent accountant won't care if you use Quickbooks or Sage as long as your work is good quality! Similarly the client just wants you to sort it and tell him the answers and won't mind which software you use.
Sage has multi-client versions, but you pay extra for them and I wouldn't go there unless the client is prepared to pay extra for you to purchase the software.
its easy and its good for clients
I have read the previous posts with disbelief!
1 it is very easy to set up
2 as the practice you get to choose if you take out blanket coverage or if you ask the clients individually to opt in or out.
3 it is fairly inexpensive and therefore available to any size client
4 it is good advice for your client - so tell them even if you recommend they purchase it from another source
5 if you don't offer it then might your client go elsewhere?
In my practice we use IRPC/CCH croner. We send out 1 mailshot to the clients asking for cash if they want to opt in (and CCH provide draft letters, etc), field a few phone calls with queries. Any client who takes it up pays upfront, we sent CCH a list of clients and a cheque and everyone is happy. Setting it up in the first place with CCH was a couple of phonecalls and a meeting. If new clients want to take it up during the year they pay a pro-rata amount and CCH give us a scale to work this out with.
I agree that the chance of any idividual client getting investigated is quite small ... the whole idea of any insurance is that you have it in case! But if you are that client and it costs 100+ hours in professional time to resolve the investigation then it will be a lot of money.
When you look at the finances, the cost of the insurance is probably less than 1 hour's chargeout rate. If all you did was read and aknowledge an enquiry letter and discuss it with your client it would probably take 3 or 4 hours - so even just that much work will produce a reasonable cost saving if they were to take the insurance out.
Jonathan
yes you can be stuffed
There is absolutely nothing to prevent anyone from incorporating a limited company or limited liability partnership in the name of an existing business ... so a good protection if you have a brand value that needs protecting is to incorporate -even if you keep the company dormant (which is inexpensive) and continue to trade as an unincorporated business.
Yes you may have remedies in law for passing off - but difficult to enforce, all they have to do is to vary the business name a bit to sidestep this. eg instead of calling it Jim Ltd, they could call it Jym Ltd
If you want to look at incorporation then check out vowles.co.uk as we offer it ... (but then so do lots of people)
Jonathan
enquiry costs are not tax-deductible
Sorry, the inspector is correct. The costs of defending your client from a tax investigation are not tax deductible.
However, if you have to do any additional accounts preparation work and invoice that as a separate item from the investigation ... Obviously you have to be able to justify the split so keep good time records!
Incidentally - sell em all some fee protection cover!
remember Taxation doesn't take faith only hard cash!
The loan represents a benefit-in-kind whilst it is still a loan - the benefit being the interest forgone by comparison with the taxman's official rate.
Whilst it is a loan and is techically capable of repayment (don't have to make repayments but the facility exists) then it can only be a loan and therefore a liability of your client.
Now that it has been written off you have a difficult question to answer. Was it written off in such a way that it can be considered a termination payment (S401 ITEPA says first £30k is tax free) Is it caught as employment income by S62 ITEPA? Obviously the section that the taxman is using at the moment to claim PAYE, which should be operated even though the notional employer is not resident and cannot be forced to do so!
Jonathan