Setting up my own tax returns business: advice needed

ClimbingTheLadder

Hi Everyone.

Was wondering if you could help me.

My girlfriend and I are looking into starting up our own business from home.

Essentially we will charge people to complete their tax returns for them. Neither of us are accountants but we have experience in the field and the resources to complete the often arduous task.

My question is, is this legal? and if so what do we need be aware of when setting it up?

Any advice on the topic would be most grateful, please reply below or to my personal inbox.

Many Thanks in Advance

jo_b_2

Hi ClimbingTheLadder

I think you might get more relevant responses over on the Cutting Tax board (as people who are familiar with tax returns etc are more likely to visit that board) so I've moved your post over there for you.

Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL]

CLAPTON

Just to say... and I say it with the best of intentions.

But if you want to start such a business you will need to inspire confidence in your abilities with your potential clients.
They will certainly want to be re assured about qualities like accuracy and attention to detail.
Your post with several spelling mistakes would not inspire such confidence in me.

ClimbingTheLadder

Ha! i do agree, and as such have made the corrections.

johnllew

It is legal AFAIAA. Out of curiousity, what is "your experience in the field"?

mrsS_2

if you are going to be submitting tax returns to the Revenue on behalf of clients then you will need professional indemnity insurance- in case you get it wrong/they sue you. I believe this is cheaper if you have a recognised tax or accountancy qualification.

Pennywise

Unless you are a member of a designated professional body under the money laundering regulations, you must register as an accountancy services provider with HMRC - their fee is £95 and you'll also probably need to apply for the "fit and proper" test for both of you doing the work at £50 each - just go to their website http://www.hmrc.gov.uk/mlr/register.htm to read about the requirements. You'll have to comply with things like obtaining proof of the clients' identity and address, and comply with the reporting requirements for suspicious transactions.

You'll also need to register under the data protection act.

As well as needing professional indemnity insurance to protect yourself against being sued for negligence, you should also undergo continuing professional education to keep your skills up to date, especially as tax laws are constantly changing at the moment. There are many providers such as Mercia, Smart Training, offering courses throughout the UK and plenty of others offering online courses.

You may wish to consider joining a professional body, such as the ICPA that offer a package which includes online CPE, PI insurance and other resources - it is aimed at people who are "qualified by experience" rather than those who are members of the main professional bodies.

To be efficient, you'll need some decent software to prepare clients tax returns and then electronically submit them to HMRC. You won't get far using the HMRCs own software as it is slow, prone to system crashes and crazily enough has limitations that makes it unusable for many types of client. Look at https://www.drummohr.co.uk or https://www.taxcalc.co.uk for a couple of well regarded but low cost systems.

When you say "experience in the field", I presume you mean that you've both worked in accountancy practice, in which case, things like PI insurance, CPE, money laundering regulations, etc will be well known to you as your employers would have had to ensure all their staff were au fait with all the various laws and regulations.

If you havn't worked in accountancy practice, then I would strongly consider whether you have enough experience to offer services to the general public. I've worked in practice for over 20 years and took a couple of years off to work in industry. After just 2 years away from practice, things had changed so much and I was, quite literally, dangerous to be let near clients tax returns as I was simply out of date and was quite likely to give wrong advice - it took a couple of years working full time under supervision again to get back up to speed.

ClimbingTheLadder

Thank you for all the information there, very informative.

My Girlfriend works for the inland revenue. I work as an analyst in a leading financial body. It would be myself who produced the tax returns under the tutorage of my girlfriend.

Does this make a difference.

Cheers

Stuball_2

ClimbingTheLadder wrote: »

My Girlfriend works for the inland revenue.

Does this make a difference.

Cheers

I guess thay depends on what she does there

Velja

I am not sure if your girlfriend will be allowed to do this.
I don't know but she will need to be careful.

All it would take is one disgruntled client whose tax return is picked up for enquiry to say to HMRC that their employee completed his tax return and she can get into a lot of trouble.

but then again, as Stuball said it depends what job she does for HMRC?

Pennywise

ClimbingTheLadder wrote: »

My Girlfriend works for the inland revenue. I work as an analyst in a leading financial body. It would be myself who produced the tax returns under the tutorage of my girlfriend.

Does this make a difference.

YES. Firstly, there is a clear conflict of interest as your girlfriend will be on both sides of the fence. She could easily find herself working in the HMRC office on a person's tax affairs, for whom she prepared the tax return wearing her other hat. She would need to inform her employers who would probably prohibit her from her self employment as otherwise they'd have to put in "chinese walls" to prevent a conflict of interest which they simply wouldn't do because they don't have to - it will be a condition of her employment not to start up self employment.

The HMRC link I gave above spells out who has to get the "fit and proper" test and it includes "a person who effectively directs or will direct the business" - even if your girlriend isn't officially self employed or a partner in this business, she can't hide the work she will do for you. If you don't have experience in preparing tax returns, then she is clearly the person who directs the business - simply because you can't until you are trainede/experienced.

Unless your girlfriend intends to leave HMRC, then your idea is a non starter unless you want your girlfiend to get sacked when HMRC find out what she is up to!