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Reply to: Accounts and expenses accuracy
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Previously on "Accounts and expenses accuracy"
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That sounds like the sort of thing I would have done too. It's funny how you feel self-conscious doing the right thing, but I do prefer to go with my instinct. I was at the supermarket the other week and fetched a trolley before going in. I found that whoever had used it before me had left their pound coin and a posh pizza in it (upright against the back of the trolley, so they must have missed it when unloading their shopping). I handed the pizza in when I went inside, then did my shop, unloaded into the car and then went back into the shop with the pound coin and asked them to give it to its rightful owner if they happened to come back for their pizza. The shop assistant looked at me like I was nuts, but put it to one side anyway. I imagine there's a fair chance it ended up in his pocket instead, but I just felt more comfortable doing that than walking off with it!
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I had a £15 pound expense which for reasons I forget, I paid personally, just before the end of my company year. The expense was properly reported in that year as an expense and a directors loan.
It was reimbursed to me by the company the following month. When they prepared my accounts for the following year, they treated the 15 quid payment to me as an expense. I told them the accounts needed changed before I could sign it.
Was chatting with my accountant a couple weeks later and told him he probably thought it was strange to be picky about 15 quid one way or another (over £400K turnover). Said he'd told his colleague about it who said he wished he had clients who were that careful, and that if HMRC ever come calling he should tell them that story and say they are chasing the wrong company.
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Glad you're feeling more comfortable about things. Never be afraid to challenge your accountant if they do something you don't understand.
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Update - things are starting to make more sense and it seems what I hadn't understood is that they can use estimates as a placeholder if they're lacking the full details, but I then have to review them. I should have been prompted for up-to-date figures and dates and for some reason that didn't happen and the copies were sent to me prematurely. I think that approach can be improved anyway but I accept it's up to me to ensure the accounts are finalised correctly before signing them off, so I'm glad I queried it (though it's also a lesson to me not to fall behind in logging expenses). I can see how this would be so much easier if we used some kind of shared solution like FreeAgent, but it seems the onus is on me to set that up so that's now on my to do list and hopefully things will be smoother next time.
Incidentally, as a new user my replies are moderated so there's a bit of a lag before they show up, so apologies if any replies are disjointed.
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Originally posted by Sintra View Post...To cut a long story short, I had a chat with my accountant as some of the figures and dates were approximate, and notably he was estimating some of my expenses and I was concerned they may be higher than actually incurred. It seems though that it's common for them to estimate such things with a standard approach taking into account the type and size of company, and I understand that higher expenses means lower profit and thus lower tax so I'm not looking to pare back those figures for the sake of it, but nor do I want to risk future trouble because things weren't quite right...
AFAIAC all expenses should receipted and none should be estimated*.
FYI: all accountants will use some form of words that underlines that it is the director who is responsible for the accuracy of the information provided in the accounts. Is this where you are getting confused?
*Yes, I am aware that some people estimate incidentals and per diems; I don't.
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Originally posted by simes View PostFrankly, with MTD fully in place, and with expenses being fully itemised and tracked monthly, what Could have been estimated? (I am loosely aware of £5/day to cover 'newspapers and calls home' being something but otherwise...?)
I think before a response to your questions can be answered, it might be worth letting us know where you are with MTD.
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What sort of expenses are we talking about here? Are we talking a few hundred £ with a turnover of £100K+, or are we talking £ thousands?
What sort of expenses do these estimates cover?
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Morning all, thanks for your replies.
Originally posted by ladymuck View PostWas there anything particularly challenging about getting receipts, or tracking the cost of the expenses you incurred in the course of running your business?
On the other questions, I've not had anything to do with MTD, being nowhere near the VAT threshold, and no we don't have FreeAgent, just old-fashioned spreadsheets, but given the recommendations here I will look into that.
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Originally posted by Sintra View PostMy accountant has just prepared my first set of annual accounts and company tax return, and sent it to me for signing (along with a nice disclaimer telling me 'on my head be it', *nervous laugh*). This is all new to me, and I bet many contractors (I have a few I know in mind just trust their accountant and sign on the dotted line, but seeing as the buck stops here I felt compelled to go through and try to make sense of it all.
To cut a long story short, I had a chat with my accountant as some of the figures and dates were approximate, and notably he was estimating some of my expenses and I was concerned they may be higher than actually incurred. It seems though that it's common for them to estimate such things with a standard approach taking into account the type and size of company, and I understand that higher expenses means lower profit and thus lower tax so I'm not looking to pare back those figures for the sake of it, but nor do I want to risk future trouble because things weren't quite right.
So my question is whether this approach is normal practice, or otherwise are we expected to aim for complete accuracy with a paper trail to prove it all? I can well imagine some folk playing very fast and loose with the rules but that's not the way I generally do things! My accountant's view though seemed to be that I shouldn't worry and should just trust them as the experts, especially where everything is within the typical ranges for a company of relatively small value (and where it owes money to me as director rather than vice versa).
The accountants came highly recommended and I'm happy that they have plenty of experience so I'm not questioning that - it's probably just beginner's nerves really as I don't like the thought of being clobbered with a big bill (or worse) later down the line if it turns out something was incorrect or deemed to be misrepresented. Hence, any views from the worldy wise contractors out there would be welcome, so that I can perhaps feel justified in either signing or raking things up further as appropriate.
Thanks in advance...
If your accountant isn't using FA I'd personally be lookig for another one that does regardless of of experience and recommendations..
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Originally posted by simes View PostFrankly, with MTD fully in place, and with expenses being fully itemised and tracked monthly, what Could have been estimated? (I am loosely aware of £5/day to cover 'newspapers and calls home' being something but otherwise...?)
I think before a response to your questions can be answered, it might be worth letting us know where you are with MTD.
And you are right, you are responsible for ensuring the answers given to HMRC are totally correct. Accountants crunch numbers, fill out forms and advise on all matters of taxation and related law, but they have no responsibility for the results. If you're not happy, make them do it properly. If you're still not happy, get a better accountant.
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Frankly, with MTD fully in place, and with expenses being fully itemised and tracked monthly, what Could have been estimated? (I am loosely aware of £5/day to cover 'newspapers and calls home' being something but otherwise...?)
I think before a response to your questions can be answered, it might be worth letting us know where you are with MTD.
Leave a comment:
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I wouldn't be happy with estimated expenses, personally. They may be using the scale rate for expenses, which was the topic of another thread which I'm too lazy to look for right now, but I thought that was for travel outside the UK.
Was there anything particularly challenging about getting receipts, or tracking the cost of the expenses you incurred in the course of running your business?
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Accounts and expenses accuracy
My accountant has just prepared my first set of annual accounts and company tax return, and sent it to me for signing (along with a nice disclaimer telling me 'on my head be it', *nervous laugh*). This is all new to me, and I bet many contractors (I have a few I know in mind just trust their accountant and sign on the dotted line, but seeing as the buck stops here I felt compelled to go through and try to make sense of it all.
To cut a long story short, I had a chat with my accountant as some of the figures and dates were approximate, and notably he was estimating some of my expenses and I was concerned they may be higher than actually incurred. It seems though that it's common for them to estimate such things with a standard approach taking into account the type and size of company, and I understand that higher expenses means lower profit and thus lower tax so I'm not looking to pare back those figures for the sake of it, but nor do I want to risk future trouble because things weren't quite right.
So my question is whether this approach is normal practice, or otherwise are we expected to aim for complete accuracy with a paper trail to prove it all? I can well imagine some folk playing very fast and loose with the rules but that's not the way I generally do things! My accountant's view though seemed to be that I shouldn't worry and should just trust them as the experts, especially where everything is within the typical ranges for a company of relatively small value (and where it owes money to me as director rather than vice versa).
The accountants came highly recommended and I'm happy that they have plenty of experience so I'm not questioning that - it's probably just beginner's nerves really as I don't like the thought of being clobbered with a big bill (or worse) later down the line if it turns out something was incorrect or deemed to be misrepresented. Hence, any views from the worldy wise contractors out there would be welcome, so that I can perhaps feel justified in either signing or raking things up further as appropriate.
Thanks in advance...
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