Reply to: Calculating Corporation Tax (Penalty - Non deductable expense for Tax purpose)

[TheCyclingProgrammer]

Only if you remember to click the button.

Calendar. Reminder.

FreeAgent also displays it in their timeline on your dashboard. I log in at least once a week.

FreeAgent doesn't do everything though, as I've recently discovered - turns out I haven't been applying to reverse charge to things I should have been (things like web hosting and other services I get from US suppliers). Doesn't appear to affect my VAT calculations but still...looks like I may not be able to continue using FreeAgent's VAT return feature anymore until they support this.

[northernladuk]

My apologies if you felt that way. It was more of precaution than a cure as I have seen many forums spammed by advertisers. But I must confess, I have not seen any advertise here yet. Good work everyone.

Advertising is against the T&C's of this forum and is well policed by the mods. I don't know how that works with PM's though. The effort our regulars put in speaks volumes for their companies so they don't really need to advertise.

[VectraMan]

If you're going to do your own accounts, then at least get yourself up and running with something like FreeAgent (Online Accounting Software: Small Business and Freelancers - FreeAgent will get your 10% off) or Xero. I use FreeAgent (and have used Xero in the past) and it does my quarterly VAT returns at the click of a button - so no reason to ever get a VAT penalty again.

Only if you remember to click the button. My £100 CT fine was for forgetting and missing the deadline. Okay so an accountant would have reminded me, but then so would a free calendar app.

Frankly if you can't work out your VAT returns you shouldn't be allowed to be a company director.

[a1979raj]

If you're going to do your own accounts, then at least get yourself up and running with something like FreeAgent (Online Accounting Software: Small Business and Freelancers - FreeAgent will get your 10% off) or Xero. I use FreeAgent (and have used Xero in the past) and it does my quarterly VAT returns at the click of a button - so no reason to ever get a VAT penalty again.

It also does your bookkeeping, PAYE and gives you a decent self-assessment and corporation tax calculation although you'll still need to submit this yourself.

Thank you. I will surely look into it.

[a1979raj]

OP is getting touchy, please don't?

I think that you have been given all the advice that is available, for free. I can't seem to have found any Accountants advertising there services, but I may be wrong?

This is the Accounting / Legal part of the Forum, and they do hang out here, with the best intention of assisting and not advertising. Hopefully you will have obtained the best advice and you may choose to engage their services based upon your judgement?

My apologies if you felt that way. It was more of precaution than a cure as I have seen many forums spammed by advertisers. But I must confess, I have not seen any advertise here yet. Good work everyone.

[TheCyclingProgrammer]

One more thing. for those thinking I am trying to save accountant fees.

I paid a fortune to an accountancy firm last year. I thought they would be good as they have an office near Canary Wharf. After they (their trainee did all data entry in accounting package) completed my accounts, I asked how did you decide which number to round up and which number to round down. And the answer I got was - "Software does it and I need not worry about it. its all automatic.". So my understanding for this year is - its still cheaper to pay 100 VAT Penalty then an accountant who charges an arm and a leg for their underpaid trainees to do my accounts.

And please... If you are an accountant please do not advertise yourself in reply here as I am NOT looking for an accountant. If I was looking for one, I would have asked.

Thank you once again.

If you're going to do your own accounts, then at least get yourself up and running with something like FreeAgent (Online Accounting Software: Small Business and Freelancers - FreeAgent will get your 10% off) or Xero. I use FreeAgent (and have used Xero in the past) and it does my quarterly VAT returns at the click of a button - so no reason to ever get a VAT penalty again.

It also does your bookkeeping, PAYE and gives you a decent self-assessment and corporation tax calculation although you'll still need to submit this yourself.

[Scruff]

OP is getting touchy, please don't?

I think that you have been given all the advice that is available, for free. I can't seem to have found any Accountants advertising there services, but I may be wrong?

This is the Accounting / Legal part of the Forum, and they do hang out here, with the best intention of assisting and not advertising. Hopefully you will have obtained the best advice and you may choose to engage their services based upon your judgement?

[aoxomoxoa]

One more thing. for those thinking I am trying to save accountant fees.

I paid a fortune to an accountancy firm last year. I thought they would be good as they have an office near Canary Wharf.

Ah. So that's what people mean by due diligence. Now I understand.

[a1979raj]

One more thing. for those thinking I am trying to save accountant fees.

I paid a fortune to an accountancy firm last year. I thought they would be good as they have an office near Canary Wharf. After they (their trainee did all data entry in accounting package) completed my accounts, I asked how did you decide which number to round up and which number to round down. And the answer I got was - "Software does it and I need not worry about it. its all automatic.". So my understanding for this year is - its still cheaper to pay 100 VAT Penalty then an accountant who charges an arm and a leg for their underpaid trainees to do my accounts.

And please... If you are an accountant please do not advertise yourself in reply here as I am NOT looking for an accountant. If I was looking for one, I would have asked.

Thank you once again.

Oh, just in-case there are any curious souls who would rather invest their precious time and dignity asking me to learn basic math. let me clarify - It was not straight forward mathematical round up or down. It was rounding up or down values that would nornally be rounded down or up in that order - if you get the drift.

[a1979raj]

Thank you.

One more thing. for those thinking I am trying to save accountant fees.

I paid a fortune to an accountancy firm last year. I thought they would be good as they have an office near Canary Wharf. After they (their trainee did all data entry in accounting package) completed my accounts, I asked how did you decide which number to round up and which number to round down. And the answer I got was - "Software does it and I need not worry about it. its all automatic.". So my understanding for this year is - its still cheaper to pay 100 VAT Penalty then an accountant who charges an arm and a leg for their underpaid trainees to do my accounts.

And please... If you are an accountant please do not advertise yourself in reply here as I am NOT looking for an accountant. If I was looking for one, I would have asked.

Thank you once again.

[a1979raj]

Thank you.

Thank you to everyone trying to help.

[a1979raj]

Quite agree. If people are only going to say "ask an accountant" what's the point? In any case, said it before, but anyone who totally trusts an accountant and does not attempt to understand enough to check his accounts are reasonably correct is an idiot. Some accountants are utter crap.

Anyway, in the accounts to companies house, you count penalties, fines etc as an expense and deduct from profit as any other. However, they are not allowable as corporation tax deductions, so you add the amount back to the profit for CT600.

Your taxable profit can't be greater than turnover! Presumably you have not deducted this fine when arriving at your original profit. Sounds like your profit (in accounts) should be £900. Add back in CT500 to get £1000 for tax purposes.

Thank you very much. Much appreciated.

[a1979raj]

The question is whether your CT is based on £1000 or £900, and it's £1000. I had the same with a £100 CT penalty, but unfortunately I can't remember what I did. I do remember I was using the paper form, which is considerably easier and doesn't refuse to let you continue because something doesn't add up without telling you what's meant to add up.

If your taxable profit is coming out at £1100 that suggests you're putting in £1000 where you should be putting in £900 - i.e. £900 is the profit from the balance sheet/P&L statement and you add on the £100 non deductable expense.

Don't let the "ask your accountant" trolls bother you.

Thank you very much. Much appreciated.

[a1979raj]

£1000. Gross profit = £900 (turnover less expense). Taxable profit = Gross profit + add back any non-allowable expenses = £1000 (this is obviously simplified - there are other things that can impact your tax calculation).



I can't say for certain as my accountant always does my CT return for me, but I would have thought you'd simply exclude the £100 entirely when entering your deductions into the CT600 calculator. It's an expense as far as your company accounts are concerned but for the purposes of the CT600 it just doesn't figure (i.e. the expense comes out of your post-tax profits).

Thank you. Much Appreciated.

[xoggoth]

Add back in CT500 to get £1000 for tax purposes

I meant CT600. I assume you have submitted your CT100, CT200, CT300, CT400 and CT500 already.