End of year accounts with new accountant

[squidlet]

Hi!

I've just received the end of year accounts for my boyfriend's Ltd, and out of about £43,000 in turnover, the corporation tax adds up to about £5,200.

My boyfriend (director) contracts all over Europe, for 2-6 months at a time. This means he has to travel to various locations every few months, and live in temporary accommodation every time.

The accountant only put down about £6,800 in 'other charges', but between the high cost of rent, many miles traveled, and everything else related to having any ltd company, I would've thought we could have claimed more.

We were with a different accountant the previous year (one that was not used to contractors or anything international at all). The ltd turned over much less that year and my boyfriend travelled a lot less for work. We were still able to claim £7,800 in subsistence and other administrative costs. That accountant charged £440 for filing the accounts compared to the £780 of the current accountant - and thats not including the £30 weekly fee for going through their payroll.

I just want to make sure they are doing their job right and would like to hear your opinion.

Does the corporation tax amount sound right to you?

[northernladuk]

They should have provided you with a detailed breakdown of everything that you can match up against your records. If they don't or you don't understand the numbers get on the phone and get our accountant to explain it line for line until you do.

No way we can give you any solid advice with so little information.

[Patrick@Intouch]

AS NLUK points out it would be impossible to provide advice with any real value or substance with such little facts to go on.

You could look for a contractor specialist accountant with a fixed monthly fee (ahem) who you would be able to contact easily and discuss in detail the accounts and what has been claimed etc...

You would need to consider several factors including whether your boyfriend pays for travel himself or if these costs are met for him, level of subsistence claimed, salary taken etc...

[TheFaQQer]

So you had roughly £15000 in legitimate expenses from your £43000 turnover.

What do your records show in terms of expenses incurred? You should have been able to explain these to your accountant when you gave them the books to prepare the accounts from.

Add up the legitimate travel and subsistence costs - how do they compare to the figures in your accounts? Add up the other expenses by cost centre and then ask the accountant where they fit into the accounts that they have prepared.

If you aren't happy with them, don't pay them until they can explain it all.

[northernladuk]

Probably taking the thread off topic but how do you get around the stringent tax rules in some countries like Germany and the like? I thought a contractor that works all over Europe wouldn't just have simple in/out type calculation. Looking at some threads about people contracting abroad it can be pretty complex.

[TheCyclingProgrammer]

From what information did your accountants draw up your accounts? What records do you keep? What system are you using for bookkeeping? Did you enter everything? Do you have a breakdown of the expenses shown in the accounts?

If you have records of expenditure incurred that the accountant has not allowed as tax deductible in your corporation tax calculation for one reason or another, it would still show as an expense in your accounts. Are all the figures accounted for?

[SueEllen]

Probably taking the thread off topic but how do you get around the stringent tax rules in some countries like Germany and the like? I thought a contractor that works all over Europe wouldn't just have simple in/out type calculation. Looking at some threads about people contracting abroad it can be pretty complex.

It's not completely off topic but depending on the answers to TCP questions that could be an additional question to ask the accountant.

[squidlet]

Thank you all for your replies!

I understand you can't give me any advice with so little information, but I didn't know what information to give - it's all pretty new to me and I'm not sure what's relevant and what isn't.

For bookkeeping I basically have an organised filing system and spreadsheets and notes... Not ideal I know but a hundred times better compared to when I first met my boyfriend.

About the tax rules in foreign countries, we've never had an issue, but maybe that has to do with the fact that we often go through agencies? The only times we went direct with a company were in Belgium and Switzerland and we didn't have any tax issues. We might actually be going to Germany for work next month though so I'll definitely have a look into it.
This accountant specialises in motorsport and aviation contractors who work in the UK and in Europe.

TCP you said even the non tax deductible expenditure should show in the accounts? I don't think everything is accounted for in that case (unless I misunderstood).
With rent alone, that was about 5800 of expenses. Even by just adding travel costs (all the back and forth between countries, the ferries, the tolls, the hotels on long journeys...) our 'other charges' should be higher than 6800.
When I added up all the business receipts it was at least 15k I'm sure, but theres no mention of other expenses anywhere. I expected some of the expenses to not be deductible but I know the majority of them were.
Everything is with the accountant right now so I can't go over all the numbers.

We called the accountant and there was a couple of things she wasn't sure about so we might try and pop in tomorrow.
Unfortunately we were asked to pay the fee for their work before we got the accounts.

[northernladuk]

Get yourself a Freeagent account or a decent accountant that offers it as part of their package. It will making tracking expenses and the like a doddle.

Not sure what 'not having any tax issues' means though. You'll only know when it goes wrong. People that don't pay any tax at all don't have any issues either... Until they get caught... But we'll have to leave that with you to look in to as you have all the details.

[squidlet]

I'll definitely take your advice and try FreeAgent.

Yes that makes sense, I'll do a bit of digging around and see what kind of information I can find. Thank you!