Accounts and expenses accuracy Accounts and expenses accuracy
Page 1 of 2 12 LastLast
Posts 1 to 10 of 13
  1. #1

    Nervous Newbie


    Join Date
    Sep 2020
    Posts
    4

    Question 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...

  2. #2

    Double Godlike!

    ladymuck's Avatar
    Join Date
    Sep 2005
    Location
    London
    Posts
    11,349

    Default

    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?

  3. #3

    Contractor Among Contractors


    Join Date
    Jul 2005
    Posts
    1,018

    Default

    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.

  4. #4

    Double Godlike!

    malvolio's Avatar
    Join Date
    Jul 2005
    Location
    Walking in the garden, dreaming of Olivia...
    Posts
    12,010

    Default

    Quote Originally Posted by simes View Post
    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.
    Yes, I agree. Your accountant should be working with actuals provided by you through an informed source such as your company bank account records and something like FreeAgent. They should not be interpreting your figures. I would be asking precisely why they are doing so ( you never know, they may be completely correct, but you need to find out).

    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.
    Blog? What blog...?

  5. #5

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    44,264

    Default

    Quote Originally Posted by Sintra View Post
    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.
    You could be right but that's their problem. We see a lot of them on here and although we try answer their questions, they don't get many cuddles. You do absolutely right by checking. Keep it up and forget the others.
    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...
    Are you using FreeAgent? Surely if you are there is no need to estiamate anything? It will be there, in black and white and too the penny.. entered by yourself so you'll know everything about them. Perfect. Sign it off.

    If your accountant isn't using FA I'd personally be lookig for another one that does regardless of of experience and recommendations..
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  6. #6

    Nervous Newbie


    Join Date
    Sep 2020
    Posts
    4

    Default

    Morning all, thanks for your replies.

    Quote Originally Posted by ladymuck View Post
    Was there anything particularly challenging about getting receipts, or tracking the cost of the expenses you incurred in the course of running your business?
    No, I can go through my records but it's just that as I was talking to my accountant it felt a bit like I might be fussing too much as the sums involved are pretty small. And to be fair to him, I was behind with logging expenses when he initially asked for the records (it's been a hell of a year, but that's another story) but have caught up now. In any case, given the responses here, I will speak to my accountant again - it could be that I misunderstood what he said but I can feel justified in seeking clarification and would rather make sure everything is in order.

    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.

  7. #7

    Contractor Among Contractors


    Join Date
    Jul 2019
    Posts
    1,387

    Default

    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?

  8. #8

    Godlike

    Lance's Avatar
    Join Date
    Sep 2013
    Location
    home
    Posts
    5,289

    Default

    Quote Originally Posted by simes View Post
    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.
    have I missed something? Expenses are not related to MTD as far as I know.
    See You Next Tuesday

  9. #9

    Contractor Among Contractors

    wattaj's Avatar
    Join Date
    Aug 2006
    Posts
    1,133

    Default

    Quote 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...
    Ok, I'll bite: which figures were approximate and which were estimates?

    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.
    ---

    Former member of IPSE.


    ---
    Many a mickle makes a muckle.

    ---

  10. #10

    Nervous Newbie


    Join Date
    Sep 2020
    Posts
    4

    Default

    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.

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •