Mistake on company accounts.
Discussion
I made a small mistake on the accounts submitted to companies house last year. It's not the case I didn't pay enough tax - HMRC owes me a small amount of money in fact but I'm willing to write it off.
My question is, if I rectify it is that going to open me up to unnecessary hassle. Or best to leave it.
My question is, if I rectify it is that going to open me up to unnecessary hassle. Or best to leave it.
Edited by fast diesel boy on Monday 25th February 19:17
If it will risk,
- Mis-statement of tax payment
- Impact on obtaining credit
- Any other dependancies, decisions from a statutory perspective
Then I would be tempted to get them re-stated.
If it's a small disclosure, error or otherwise that won't impact anyone, then I would leave it.
That said, as a director you do have a fiduciary duty to the company and it's records to ensure they are correct.
- Mis-statement of tax payment
- Impact on obtaining credit
- Any other dependancies, decisions from a statutory perspective
Then I would be tempted to get them re-stated.
If it's a small disclosure, error or otherwise that won't impact anyone, then I would leave it.
That said, as a director you do have a fiduciary duty to the company and it's records to ensure they are correct.
the_g_ster said:
If it will risk,
- Mis-statement of tax payment
- Impact on obtaining credit
- Any other dependancies, decisions from a statutory perspective
Then I would be tempted to get them re-stated.
If it's a small disclosure, error or otherwise that won't impact anyone, then I would leave it.
That said, as a director you do have a fiduciary duty to the company and it's records to ensure they are correct.
I might just re-submit it for the fact HRMC owes me circa 320 quid.- Mis-statement of tax payment
- Impact on obtaining credit
- Any other dependancies, decisions from a statutory perspective
Then I would be tempted to get them re-stated.
If it's a small disclosure, error or otherwise that won't impact anyone, then I would leave it.
That said, as a director you do have a fiduciary duty to the company and it's records to ensure they are correct.
Was the mistake material i.e did it mean that the assets and/or liabilities of the company or significantly under or overstated. Was the profit or loss materially under or over stated?
If the answer to the above is "yes" then the accounts can be corrected OR the following year's accounts can contain an adjustments under the heading "Prior Year Adjustment" and a note stating what the error was and its impact.
If the answer to the above is "yes" then the accounts can be corrected OR the following year's accounts can contain an adjustments under the heading "Prior Year Adjustment" and a note stating what the error was and its impact.
Eric Mc said:
Was the mistake material i.e did it mean that the assets and/or liabilities of the company or significantly under or overstated. Was the profit or loss materially under or over stated?
If the answer to the above is "yes" then the accounts can be corrected OR the following year's accounts can contain an adjustments under the heading "Prior Year Adjustment" and a note stating what the error was and its impact.
As I'm not an accountant I'm not sure I can answer those questions. But I'll try and explain the situation.If the answer to the above is "yes" then the accounts can be corrected OR the following year's accounts can contain an adjustments under the heading "Prior Year Adjustment" and a note stating what the error was and its impact.
The first year my LTD was incorporated I only completed one short contract then I became an employee for another company. My company's turnover for its first year was consequently small, so once expenses were settled, there would have been 324GBP payable on net profits in corporation tax. To complicate matters I'd been paid for the contract through the construction industry scheme (CIS) which deducted 652GBP from source - the rest of the companies retained profits were drew down in dividends which didn't incur any dividend tax - so I've overpaid by 328GBP.
To be honest I wasn't sure how to account for the tax over payment. I'm assuming the 328GBP would be accounted for under assets in the creditors section, with 324GBP accounted for under liabilities as corporation tax? The balance sheet balances in that case. That said as there were no funds left in the company account on the day I drew up the accounts and constructed the balance sheet - as I'd decided to write off the over payment and didn't owe any money to HMRC, I decided that as the balance sheet is a snapshot in time, there were zero assets, zero liabilities and zero retained capital because that'd be drew down in dividends. I stated as such on my account submission to companies house and told HMRC I didn't own them any money. Grateful if you could confirm my logic and actions are correct or not.
Year two's been more straight forward (gross payment), I'm pretty confident with the accounts and I'm ready to complete the CT return and pay what's owed. No idea how to reclaim the CIS over payment from year one and it's probably more hassle than it's worth.
My current train of thought is to leave year one as it is, and continue with year two as normal.
Edited by fast diesel boy on Tuesday 26th February 11:24
Edited by fast diesel boy on Tuesday 26th February 11:26
Eric Mc said:
Not surprised to hear that, to be honest.
Preparing company accounts that properly comply with accounting standards and HMRC rules is not as straightforward as people think.
OK so what I've suggested is partially incorrect with respect to the CIS - it complicates the account. One still has to pay CT on the accounts already deducted via CIS, then reclaim the CIS via PAYE. Which defies logic. Anyway I will correct the accounts, resubmit them, pay the CT and reclaim the CIS. Preparing company accounts that properly comply with accounting standards and HMRC rules is not as straightforward as people think.
I've slugged out two SA CT returns, submitted the 17-18 accounts, and claimed back the owed CIS. Considered updating the confirmation statement but it's not due for another two months. Didn't bother updating the erroneous account because the latest set of accounts record them so I left it.
Made sense and must have saved 2kGBP in accountancy fees.
Thank god it's out the way.
Made sense and must have saved 2kGBP in accountancy fees.
Thank god it's out the way.
Why did you incorporate in the first place? Requirement? Do you have income from other sources? Married? Wife/Partner working, what's going to happen this financial year or next? Long term goals.
If you haven't sought out speaking to an accountant first hand, then I suspect what you're 'bumbling along" doing will ultimately cost you in the long run.
See it all the time. 9/10 it's a false economy, plus the time you spend pissing around trying to sort it could actually be spent earning the money and net effect is you've got it done properly with peace of mind too.
It's why I get someone who knows what they're doing to install my new boiler or change the head on my car or calculate the load rating for a steel in my house.
If you haven't sought out speaking to an accountant first hand, then I suspect what you're 'bumbling along" doing will ultimately cost you in the long run.
See it all the time. 9/10 it's a false economy, plus the time you spend pissing around trying to sort it could actually be spent earning the money and net effect is you've got it done properly with peace of mind too.
It's why I get someone who knows what they're doing to install my new boiler or change the head on my car or calculate the load rating for a steel in my house.
>Why did you incorporate
I'm self employed, I chose to work through a LTD company. Perhaps there are better options but working through a LTD is common practice amongst those in my area of work.
>If you haven't sought out speaking to an accountant first hand, then I suspect what you're 'bumbling along" doing will ultimately cost you in the long run.
I like to be in control, both with respect to my ultimate tax liability and with the general process. For example I choose my salary so as to negate NIC's yet still qualify for the SP, saved 860 off the bat. Having settled my tax bills over the past two financial years I've paid what I feel is an acceptable amount, CT and IT inclusive. I've learned the basics of accounting - gained a new skill - and I've saved money on accountancy services. I think at this point I'm saving. I've used my own personal time to complete the task when I could have been working, but I see this as the initial investment.
>It's why I get someone who knows what they're doing to install my new boiler or change the head on my car or calculate the load rating for a steel in my house.
How do you know your mechanic's going to refit the head correctly? How do you know your structural engineer's calculations are correct and he's prescribed the correct steel? Unless you're informed you don't; and from my POV that means potential for further spending.
I'm self employed, I chose to work through a LTD company. Perhaps there are better options but working through a LTD is common practice amongst those in my area of work.
>If you haven't sought out speaking to an accountant first hand, then I suspect what you're 'bumbling along" doing will ultimately cost you in the long run.
I like to be in control, both with respect to my ultimate tax liability and with the general process. For example I choose my salary so as to negate NIC's yet still qualify for the SP, saved 860 off the bat. Having settled my tax bills over the past two financial years I've paid what I feel is an acceptable amount, CT and IT inclusive. I've learned the basics of accounting - gained a new skill - and I've saved money on accountancy services. I think at this point I'm saving. I've used my own personal time to complete the task when I could have been working, but I see this as the initial investment.
>It's why I get someone who knows what they're doing to install my new boiler or change the head on my car or calculate the load rating for a steel in my house.
How do you know your mechanic's going to refit the head correctly? How do you know your structural engineer's calculations are correct and he's prescribed the correct steel? Unless you're informed you don't; and from my POV that means potential for further spending.
What you DO know for certainty is that you are not a qualified accountant who has trained for at least four or five years (most likely longer) to obtain expertise in the area of accounts and tax. It is the utmost arrogance for someone to assume that even if they have not trained properly in an area is going to be just as knowledgeable, if not more knowledgeable, than someone who has.
It's a classic case of the Dunning-Kruger Effect at work i.e. someone being so lacking in knowledge that they don't realise how ignorant of the subject they truly are.
It's a classic case of the Dunning-Kruger Effect at work i.e. someone being so lacking in knowledge that they don't realise how ignorant of the subject they truly are.
Eric Mc said:
What you DO know for certainty is that you are not a qualified accountant who has trained for at least four or five years (most likely longer) to obtain expertise in the area of accounts and tax. It is the utmost arrogance for someone to assume that even if they have not trained properly in an area is going to be just as knowledgeable, if not more knowledgeable, than someone who has.
I don't consider myself skilled at this in any way or believe my knowledge exceeds that of a trained professional. I'm sorry if I gave that impression.Gassing Station | Business | Top of Page | What's New | My Stuff