No Accountants and HMRC

[hgllgh]

I registered online to do my own VAT and PAYE (one man ltd co) after "issues" with my accountant. I plan on finding an accountant to do my corporate and year end accounts when they are due.

Is it true that HMRC are more likely to target me for investigation as I don't have an accountant? Things is, how do they know I don't have an accountant?

[malvolio]

I registered online to do my own VAT and PAYE (one man ltd co) after "issues" with my accountant. I plan on finding an accountant to do my corporate and year end accounts when they are due.

Is it true that HMRC are more likely to target me for investigation as I don't have an accountant? Things is, how do they know I don't have an accountant?

Because you'll make mistakes and be late with your returns?

[chris79]

Yeah but this is the thing I don't get.

People seem scared that they will be 'targeted' by HMRC for trying etc, I don't share this view. At the end of the day a 1 man contractors books should be quite simple, and if there are mistakes just hold your hands up and say "ok, tell me what I owe". You would have had to pay this anyway so it's no loss?

I personally refuse to operate a different way to what I 'want do do' simply through fear of the tax man, I welcome them to come and check me out if this is what they want to do as it's my honest belief that I'm doing everything correct and within guidelines / the law. What's there to be scared of?

Just for the record I pay a small premium for legal insurance in the event anything does ever kick off, this also covers IR35 issues etc, costs me about £75 a year.

[malvolio]

So why are you asking the question then? Do you need vindication of your position? It looks entirely reasonable to me

There appear to be two points to kick of the aspect inquiries that lead to IR35 trawls. One is your name comes out of a hat, since they will check a certain number of random companies anyway. The other is an anomaly between one return and the next, a history of poor accuracy or late returns or both, apparent mismatches betwen SA and P35 and very occasionally between SA and company records. If you can do things 100% right and on time every time then no problem. If you can't, though, then you need to think of the options.

[xoggoth]

Most accounts include a director's report that is basically the profit and loss in much more detail. Accountant's fees £0 tends to give it away.

It is not part of the statutory requirement and you do not have to include it but if HMRC can see what you are spending by way of expenses, salary etc. and they look reasonable it probably lessens chances of investigation.

[Clippy]

Yeah but this is the thing I don't get.

People seem scared that they will be 'targeted' by HMRC for trying etc, I don't share this view. At the end of the day a 1 man contractors books should be quite simple, and if there are mistakes just hold your hands up and say "ok, tell me what I owe". You would have had to pay this anyway so it's no loss?

I personally refuse to operate a different way to what I 'want do do' simply through fear of the tax man, I welcome them to come and check me out if this is what they want to do as it's my honest belief that I'm doing everything correct and within guidelines / the law. What's there to be scared of?

Just for the record I pay a small premium for legal insurance in the event anything does ever kick off, this also covers IR35 issues etc, costs me about £75 a year.

Chris - could you post a link to these insurances please. TIA.

[chris79]

Yes certainly.

I use www.caunceohara.co.uk for my PI and employers/public liability cover. Part of their package offers the following cover for an extra £75 which I think is worth it for peace of mind it offers (I've been with them a year, if anyone knows a better deal then please tell me as I'm about to renew very soon):-




The Freelance Contractors Legal Expenses policy gives you the power, through its level of cover upto £50,000 of legal costs per claim, access to a 24-hour helpline and to professional advice through a nationwide panel of specialist solicitors.

This policy provides cover for, amongst others:-

IR35 Investigations

Inland Revenue Investigations

Employment Disputes

Legal Defence

Property Protection and Bodily Injury

Debt Recovery

Tax Protection

Helpline Access – counselling etc

[malvolio]

You need to be careful to compare like-for-like. While the £75 on top looks (and is) good, the PI/PLE/ELI package is actually a banker for the insurance company since it is rarely if ever paid out. Given they've now done all the admin side, adding the IR35 cover at cost is easy.

Also, is it just IR35 or any tax-related aspect enquiry, are there any preconditions or exclusions, how many contracts does it cover, how long after contract end does it apply...

Not saying it's a bad deal, it's just that the other packages cost much the same as each other for a reason.

[dude69]

A lot of people have the impression that HMRC exist to catch tiny mistakes by businesses and to grind those businesses into the dust and make their owners bankrupt.

This is not the case.

The medium-sized (£5 million) company I worked for made some a fairly basic error (VAT on disbursements) due to an accountant with lack of knowledge. HMRC pointed this out, changes were made, that was all. No big deal.

They have lots of helplines to help new businesses, and they actually do want to help (i.e they want you to understand the rules and obviously comply with them).

They have made the capital allowance changes expressly to reduce the complexity of small companies' accounts.

They recognise that businesses are in many cases going to be run by people less numerate and able than the typical IT contractor. And they are prepared for some mistakes.

The idea perpetuated by accountants that a company earning less than £100k with very simple p+l is horribly complicated and you'd be mad to do things yourself, and if you make so much as one error on your returns they'll come down on you like a tonne of bricks is mad.

The only real catch is IR35 - most contractors who say they are outside of it are at risk of HMRC deciding otherwise, and this is the real reason for avoiding any scrutiny.

[NotAllThere]

Accountant's fees £0 tends to give it away.

So don't put that line in. Anymore than you'd put in a line about R&D costs if you don't do any R&D.

Or if you really want to put a line in, put it as an internal cross-charge.

Even when I had an accountant, the P&L that went off to HMRC didn't include detail of that level.