Forum

• # 82126
• Fri 20 Apr 2012 03:29 PM

Hello everybody,

I have received an email today from a friend of an existing client.  As I understand it, the person in question has a limited company (possibly one of several directors) and he has asked me to put a set of accounts together reflecting his self-employed income to accompany his tax return to April 2011!  He has provided me with a breakdown of all payments received from the company, this is basically a series of expenses claims and seemingly random drawings with the odd commission payment thrown in.

The first of these payments  was received in December 2010 so this is the date he is using for the start of his self-employment although the Company seems to have been set up prior to this.  He goes on to say that he wants to make use of the 'FYE' in his tax planning and would like some advice.

So, where to begin?  I obviously cannot prepare final accounts for his Company, or offer advice on his tax affairs.  In fact, it all looks a bit vague (not to mention overdue) to me and I am tempted to say 'No Thanks'.


Any thoughts anybody?


Phil  


   


  

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• # 82145
• Sat 21 Apr 2012 11:05 AM

Hi Phil,

Not going to be much help here, but I think it sounds a little complicated/fishy to me.  I would want to know a lot more about it first I think.

As you quite rightly said I don't think you would be able (allowed) to prepare final accounts or give him tax advice, but you could put together income and expenditure.  

I would arrange a meeting to discuss further...don't forget all the MLR checks you'd have to do...and if you don't like the sound of it, then go with your gut instinct and walk away.  

Of course, it all may be perfectly legit, but bit worrying that he still hasn't done his tax return for April 2011, you'd have to explain to him about fines etc!!

Sorry can't be of more help.

Pauline 

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• # 82148
• Sat 21 Apr 2012 11:26 AM

Hi Phil,

It seems to me he is not asking for final accounts for the limited company, just his self-employment income and I believe you can do final accounts as he himself is effectively a sole trader.  He may well have become a director of the company in Dec 2010 or became a self-employed director in Dec 2010 but the company had started before this. A check on Companies House should reveal this.

Yes he is overdue with the tax return, but usually people will seek out a bookkeeper at the last minute or when they are being chased by the taxman! It is a good idea to explain the fines/interest etc. to him but he has propbably had a number of letters from HMRC so he may well know.

As Pauline suggested, do take extra care when doing the MLR checks on him, IR35 may be another thing to consider here. 

I would suggest having a brief look through his accounts, sorting his receipts/expenses and checking the income he has received through his bank statements and all other source documents. You will definitely need to ask him more questions about his affairs and if he is legit he shouldn't mind answering them, if he's holding back a little then I would walk away.


Hope this helps!  


Meena

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• # 82151
• Sat 21 Apr 2012 12:40 PM

Hi Phil 

As a moderator could I ask you to contact the ICB techinical helpline ,   as this might come under the IR35 rules .

My Personal Advice would be to advise him to go to a qualified accountant and pay for the services he needs.  He or she maybe trying to get advice on the cheap with out paying the going rate for a tax advisor. There also new rules about producing figures and you could be held liable in the future. 

 As there are very strict taxes  rules about Directors receiving income  through Ltd Companies .   I would also worry why they have left it so long and why they have not contacted anyone before.  








Edited at 21 Apr 2012 12:45 PM GMT

• Sarah Douglas C.FICB

  HouseTree Business Ltd 

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