What is a subscription?

[ladymuck]

Having spent hours collating evidence as to why their depreciation adjustment was wrong, why their assumptions about some of the costs were wrong (literally made an assumption rather than asking for clarification), and why I disagree with their stance on subscriptions, I send all the gubbins off and get an automated response advising the person no longer works for the firm!

Swiftly forwarded to the owner for him to assign to another person...

My understanding is that statutory fees are outside of the scope of UK VAT (different from exempt, different from zero rated) and that is how I treat the CH ACS in FreeAgent. It shouldn't appear on your VAT return at all. However, if it's paid by your accountant on your behalf, it will depend on whether they add a profit margin, else it's a disbursement, I think. Also, it should be tax deductible and that's how I treat it, so curious to hear the reasoning behind a contrary opinion on that (FWIW )...

I don't do anything with the VAT for statutory fees, but tend to flag as Exempt as there's not an 'out of scope' option and 0% implies a rate has been applied which is also wrong.

[jamesbrown]

My understanding is that statutory fees are outside of the scope of UK VAT (different from exempt, different from zero rated) and that is how I treat the CH ACS in FreeAgent. It shouldn't appear on your VAT return at all. However, if it's paid by your accountant on your behalf, it will depend on whether they add a profit margin, else it's a disbursement, I think. Also, it should be tax deductible and that's how I treat it, so curious to hear the reasoning behind a contrary opinion on that (FWIW )...

[hobnob]

CH fee not being CT deductible is new one to me. I wonder how my accountant has treated it in the past, considering it's always been lumped in with General Expenses and I'm only occasionally asked to provide details. However, I expect it's commonly known that the fee has to be paid each year so it's not difficult to add it back in.

Yeah, that's news to me as well!

When I was with Crunch, they added that fee to my monthly bill, so I categorised it as "Accountancy fees" but it was on a separate line because of 0% VAT.

When I moved to Maslins (FreeAgent), I paid the fee directly to Companies House myself, so I asked the accountants which category I should use. They said that it should be "Legal & Professional Fees", but it needs to be 0% VAT.

When I've checked the figures for my year-end returns, both accountants have treated that payment as CT deductible.

[ladymuck]

ICO to Legal and professional fees.
CH confirmation statement fee to Sundries/General Expenses which is added back as not CT deductible.
National Geographic magazine, FT etc = Subscriptions
Freeagent/Xero etc = Subscriptions
Registered Office Service = Can be argued as subscriptions or professional fees. It's down to dealer's choice. At the end of the day, you sign off the accounts so if you want it under prof. fees, get them to put it under that.

CH fee not being CT deductible is new one to me. I wonder how my accountant has treated it in the past, considering it's always been lumped in with General Expenses and I'm only occasionally asked to provide details. However, I expect it's commonly known that the fee has to be paid each year so it's not difficult to add it back in.

[Craig@Clarity]

ICO to Legal and professional fees.
CH confirmation statement fee to Sundries/General Expenses which is added back as not CT deductible.
National Geographic magazine, FT etc = Subscriptions
Freeagent/Xero etc = Subscriptions
Registered Office Service = Can be argued as subscriptions or professional fees. It's down to dealer's choice. At the end of the day, you sign off the accounts so if you want it under prof. fees, get them to put it under that.

[jamesbrown]

You mean special tax treatment as in it's not deductible from your profits for corp tax?

Yep.

[northernladuk]

I’d probably go ahead and add one, then. I have a bunch like that, either to keep things organised or because they have special tax treatment, such as the IPSE sub.

You mean special tax treatment as in it's not deductible from your profits for corp tax?

[jamesbrown]

Xero doesn't have a dedicated account for CH Annual Confirmation.

I’d probably go ahead and add one, then. I have a bunch like that, either to keep things organised or because they have special tax treatment, such as the IPSE sub.

[northernladuk]

What say the learned people of the internet?

I say ask for their supervisor and get hold of a proper accountant and then ask them

[ladymuck]

That's the point I'm trying to make.

I just chucked them in General Expenses as I didn't really see it as a legal fee either. Xero doesn't have a dedicated account for CH Annual Confirmation.

Occasionally my accountant gets a trainee in and they like to go through account transactions and recode stuff. I think it makes them feel like they're adding value. I get why he chooses my books for the trainees to look at as there's nothing very challenging to have to deal with.

[Andy2022]

My accountants told me to classify them under Legal and Professional Fees

Subscription implies some thing is voluntary whereas the ICO and CH fees aren't

[jamesbrown]

Weird argument

Most modern accounting software should have a separate category for the CH Annual Confirmation Statement, at least.

Can't see how it's a subscription, though.

[ladymuck]

Currently having an argument with my accountant (or, more accurately, what feels like an over enthusiastic trainee) about subscriptions.

I say the annual fee to ICO and Companies House is not a subscription. They say it is.

They say the annual fee for a registered office service is NOT a subscription, which I agree with but I don't understand why they think that is different.

What say the learned people of the internet?