Accountants and IR35

[roger rabbit]

Re: In all cases?

I am truly sorry for the omission darren, I have been a little poorly of late.

I hope to be able to resume my normal high standards asap

[JoelHarding]

You're showing your age Roger...

Prudence is no longer a fundamental accounting concept.

[xoggoth]

Re: You're showing your age Roger...

"Unless he can be persuaded that IR35 treatment is remote, prudence convention dictates that he has to take account of possible cost in the accounts"

What are you blethering about Rodger? IR35 has no effect on possible or actual company costs or liability. A deemed payment is not a real one so has no effect on either the P&L or balance sheets. Only if a payment or a definite decision to pay one has been made would it be correct to show appropriate make up of creditors in notes to the accounts and employer's NI on it in the trading and P&L sheet. Neither is mandatory.

I think what is actually being referred to here is submission of the end of year PAYE returns, P35 and P14, and specifically, ticking the box on the P35. This the only route whereby the IR has any information about IR35 status, nothing to do with the company accounts at all.

NAA but on that pauldack, unless you would rather consider yourself caught and make due payment by the 19th May, I would suggest that you TELL your accountant to do nothing of the sort. If you do turn out be caught, or if even if you think you are, there are no obligations on you to tick the box and no penalties if you do not. If you tell them yourself that you are caught and pay very little income tax/NI they may come enquiring?

[antell]

Proceeds of Crime Act 2002

Accountants work within the framework of the Proceeds of Crime Act 2002 which requires them to make a confidential report to the National Criminal Intelligence Service if they suspect that money is the "proceeds of crime".

"Proceeds of crime" is now defined very widely and extends beyond what most people would think of as the proceeds of crime. It can include money obtained legitimately but on which the correct amount of tax may not been paid. (I say "may" because the accountant has an obligation to make a report to NCIS if he "suspects" that it may be the "proceeds of crime").

Specifically with regard to IR35, the guidance issued by the Institute of Chartered Accountants in England and Wales states:


"Q18.&nbsp &nbsp &nbsp &nbsp I have taken on a new client who I believe comes within the IR35 regime but his previous accountants have advised him that is not the case. What should I do?

A. You must not assist a client in preparing an incorrect return. If you are convinced that IR35 applies and the client refuses to go along with your view you should refuse to act for him. If you reasonably suspect that tax has been underpaid because earlier returns are incorrect you need to tell NCIS. However, bearing in mind that the distinction between employment and self-employment depends on the precise facts of a particular assignment and in most cases involves a fine balancing act, it is hard to see on what basis you can suspect tax evasion in an earlier year if you do not have full knowledge of the facts."

[Bradley]

Re:Accounts

What are you blethering about Rodger? IR35 has no effect on possible or actual company costs or liability. A deemed payment is not a real one so has no effect on either the P&L or balance sheets.

Wrong! Affects the corporation tax payable and the PAYE payable both of which affect the P&L and balance sheet.

[nexxy2]

Re

pauldack - you might want to ask your accountant if the IR35 issue could by entered as a note to the acounts (contingent liability) rather than as a provision.

Still surprised that can be so certain. As things stand my accountant is happy that my accounts are prepared this year as if I am outside IR35 - and I know he is good because we both qualified as chartered in the same year!