Going alone in doing annual Company accounts Going alone in doing annual Company accounts
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  1. #1

    Nervous Newbie


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    Default Going alone in doing annual Company accounts

    Hello Everyone.

    I need some advice please and hope you can help!

    I've been a Ltd Co contractor for 7 years and my last contract ended back in February this year and I then took a fill time PAYE job with another company. So really, the Ltd company isn't in use any more but I do owe the company loan money which I will pay back over 4 years with interest do I can claim back my S455 tax.

    During the 4 years in takes me to re-pay the loan, there will be no activity in the Ltd Company apart from me paying in £5000 a year plus interest, plus the bank charges which my bank makes. That is all.

    My current accountant who charge £125 a month have said that they'd reduce my charges to £39 for those 4 years as the company isn't trading. But I have heard that I can opt for "Micro Entity" accounts which are reportedly very simple, and to for me, there are only 3 types of transactions I will ever make:

    1. Loan repayment once a year
    2. Interest payment once a year
    3. Monthly bank charges.

    Oh and the £30 annually to Companies House for filing.

    I believe that i can do the Micro Entity accounts myself. For my company it can't be difficult, so I save the £39+VAT every month for 4 years. My question - has anyone done their own Micro Entity accounts?

    I know some of your may say that accountants study for years and come out with a recognised qualification, but my accountant has made some really bad basic errors which I spotted and had to get corrected, and on a VAT matter, HMRC were on my side and not on the accountants, so I don't really buy into the 'qualified professional' argument.

    If anyone has gone 'alone' to do Micro Entity accounts, I'd be willing to hear.

    Chloe.

  2. #2

    Contractor Among Contractors


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    You can only do micro accounts if you don’t have “non trading income”. I think your loan repayment and interest is non trading income. I’d pay the £38 a month for the first year, then copy whatever the accountants do for subsequent years using an accounts submission app.

  3. #3

    Still gathering requirements...


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    As you are no longer trading, you don’t really need a contractor accountant that charges a monthly fee. Just use a local small firm/sole trader, who will happily prepare and file your accounts for a much smaller annual fee than you pay right now.

    Your annual financial statements going forward would be no more than 2-3 hours of work for an accountant.

  4. #4

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    Could you not wind the company up?

    The money you owe it is an asset. One you can take as capital. There’ll be some balancing to do so that the loan is repaid with the capital distribution, and there’ll be CGT on that repayment. But that may involve less tax than the S455 anyway.

    Surely keeping a company open just so you can pay back a loan is nonsense?

    I’d suggest you talk to a competent professional about options.
    See You Next Tuesday

  5. #5

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    Quote Originally Posted by Archangel View Post
    You can only do micro accounts if you don’t have “non trading income”. I think your loan repayment and interest is non trading income. I’d pay the £38 a month for the first year, then copy whatever the accountants do for subsequent years using an accounts submission app.
    Nope. Micro-entities are likely what most LTD based contractors are classed as and is not the same as being dormant:

    Prepare annual accounts for a private limited company: Micro-entities, small and dormant companies - GOV.UK
    Micro-entities

    Micro-entities are very small companies. Your company will be a micro-entity if it has any 2 of the following:

    a turnover of £632,000 or less
    £316,000 or less on its balance sheet
    10 employees or less

    If your company is a micro-entity, you can:

    prepare simpler accounts that meet statutory minimum requirements
    send only your balance sheet with less information to Companies House
    benefit from the same exemptions available to small companies

    My local accountant (i.e. not a contractor 'specialist' looking to charge relatively high monthlies) charged me £100 to prepare some dormant annual accounts and around £500 for normal operating accounts, so for a simple scenario somewhere inbetween that should be possible.

    Maybe see if there are any accounting made simple style courses online to learn the basics and to see if it really is that simple or worth paying a few hundred a year to ensure the accounts are right.

    Maybe another option is to use some accounting software that can produce the official docs (especially with Making Tax Digital obligations), though not sure any are much cheaper than 30 odd quid a month that some bod is charging.
    Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

  6. #6

    Contractor Among Contractors


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    Quote Originally Posted by Hobosapien View Post
    Nope. Micro-entities are likely what most LTD based contractors are classed as and is not the same as being dormant:

    Prepare annual accounts for a private limited company: Micro-entities, small and dormant companies - GOV.UK



    My local accountant (i.e. not a contractor 'specialist' looking to charge relatively high monthlies) charged me £100 to prepare some dormant annual accounts and around £500 for normal operating accounts, so for a simple scenario somewhere inbetween that should be possible.

    Maybe see if there are any accounting made simple style courses online to learn the basics and to see if it really is that simple or worth paying a few hundred a year to ensure the accounts are right.

    Maybe another option is to use some accounting software that can produce the official docs (especially with Making Tax Digital obligations), though not sure any are much cheaper than 30 odd quid a month that some bod is charging.
    When you try to file micro accounts you get the following question:
    Do you need to report any of the following?

    This will help us provide you with the right type of filing.

    Charity turnover above £6.5 million per year
    Company turnover above £632,000 per year
    Research and Development (R&D) costs
    Income over £1,000 that doesn't come from your organisation's main trade
    Non-trading income (except interest received)
    Gross income from property over £5,200
    Annual Investment Allowance (AIA) above £200,000
    Income from property where expenses are greater than income
    Complex loan relationships
    Leased cars
    Electric vehicle charging points

    If you reply “yes” then you are kicked out of the HMRC system

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