Partnership tax stuff for non-accountants !!!

[Deleted User]

sunshinetours wrote: »

Try a couple more quotes for sole trader accountants (possibly non VAT registered ones with small turnover themselves) but can't see you getting it vastly cheaper than that

Alternative is to read read and more read on forums such as these and HMRC website and DIY

Best of luck

Yeh. Apparently thats about the right price. Bit of an eye-opener.

Looks like its DIY. Anyone know any good tax help small business forums?

[Deleted User]

Confused now. Do I need to include accounts with my partnership return?

I thought not but an accountant has told me I have to. Hmmm...

olly300

[quote=[Deleted User];39014960]Confused now. Do I need to include accounts with my partnership return?

I thought not but an accountant has told me I have to. Hmmm...[/QUOTE]

That's why you been told to use an accountant.

You can ask on tax forums but your questions need to make sense. For that you need to do some basic research like read and attempt to decipher the various tax rules and regulations by HMRC.

However as you haven't even looked up the mileage allowances which are actually one of the easiest things to understand, I suggest you use an accountant until you have an idea of what you are doing. Getting it wrong with HMRC can cost a lot as the onus is entirely on you to do everything correctly.

I should make a point that you can use an accountant that you never physically visit i.e. contact them by email, fax, post and phone if it's cheaper.

BTW lots of small businesses use a bookkeeper but then they don't have complicated structures like a partnership.

sunshinetours

[quote=[Deleted User];39014960]Confused now. Do I need to include accounts with my partnership return?

I thought not but an accountant has told me I have to. Hmmm...[/QUOTE]

No - are you sure it was an Accountant who told you or an "accountant"

[Deleted User]

olly300 wrote: »

That's why you been told to use an accountant.

You can ask on tax forums but your questions need to make sense. For that you need to do some basic research like read and attempt to decipher the various tax rules and regulations by HMRC.

However as you haven't even looked up the mileage allowances which are actually one of the easiest things to understand, I suggest you use an accountant until you have an idea of what you are doing. Getting it wrong with HMRC can cost a lot as the onus is entirely on you to do everything correctly.

I should make a point that you can use an accountant that you never physically visit i.e. contact them by email, fax, post and phone if it's cheaper.

BTW lots of small businesses use a bookkeeper but then they don't have complicated structures like a partnership.

Where did I say I havent looked up the mileage allowances? I have and use these.

And yes I have been wading through the HMRC tax stuff...

Serious question - why is a partnership a complicated structure?
I just set it up this way because it was easier for wife to do the work and me to do the admin side.

[Deleted User]

sunshinetours wrote: »

No - are you sure it was an Accountant who told you or an "accountant"

LOL. dunno....:rotfl:

Pennywise

[quote=[Deleted User];39014960]Confused now. Do I need to include accounts with my partnership return?

I thought not but an accountant has told me I have to. Hmmm...[/QUOTE]

Some accountants include the P&L and balance sheet as an attachment to tax returns as a standard practice. There is lots of debate about this. Some say that it provides "full disclosure" which helps avoid penalties etc further down the line, some say that it doesn't. There is no wrong or right way. There's nothing to say you must include them, and nothing to say you musn't. The "boxes" in the tax return aren't particularly well drafted - some accountants would argue that a full set of accounts gives a far clearer picture and held head off an enquiry being opened. Any decent accountant will be working from their accumulated experience.

I, for one, don't have a policy on this. Sometimes I attach the accounts, sometimes I don't - sometimes I'll fill the "further information" box with loads of information, sometimes I won't - I make a judgement call based on how the tax return "looks" as it stands and will provide whatever else I feel will help avoid an enquiry in the future. For example, once a few years ago when the new return came in, I didn't include any accounts nor any narrative on the return (which was the professional "advice" back then to simply declare the bare minimum) - the tax inspector opened an enquiry to primarily ask about the rather large figure entered in "advertising and entertaining" which, looking back, did look rather suspect as he must have thought there was a lot of entertaining going on (which isn't allowable for tax). Although I could easily send a full analysis showing it was all for allowable advertising, the inspector also had a feel around in other areas which, although they found nothing, did cause a few hours of extra work and therefore a few hundred pounds extra cost to the client. Looking back, and experience used for the future, I should have attached the full accounts which would have shown it was all advertising and no entertaining and therefore would probably have avoided the enquiry. I now do that as and when necessary and have had no such enquiries for spurious reasons ever since.

I tell clients that the way I work is to prepare the full accounts, comprising P&L and balance sheet, and then use my discretion as to whether to send to HMRC or what explanations to put on the return. I would simply refuse to complete a tax return without having done the full accounts if a client wanted a cheap job done just filling in the boxes on the tax return, but I would explain why. You still have to deal with accruals, stock, depreciation, prepayments, creditors, debtors, etc - once you've done all that, if you're using a proper nominal ledger based accounting system, the P&L and Balance sheet pop out in seconds anyway - you have to do the work to arrive at the figures for the simple tax return - why not print off the proper accounts and finish the job for virtually no extra time.

Pennywise

[quote=[Deleted User];39028486]Serious question - why is a partnership a complicated structure? [/QUOTE]

Ask the lawyers, politicians, civil servants and HMRC officials who have contributed to it being made so. If you were in a partnership with someone other than your wife, then you may be glad of the law and regulation surrounding it which may help protect you. Trouble is that there is no difference in law between a "husband/wife" partnership or, say, a doctor's surgery with several GPs as partners, so in all cases, there are rules and regulations, tax and otherwise, to deal with. Tax laws have evolved to stop people taking unfair advantage. Would you have gone into a partnership with anyone else other than your wife, without having taking proper advice as to the implications etc? Presumably not, but you've made a false assumption that there are exceptions and exemptions for a husband/wife situation - perhaps you should have checked before you adopted a partnership structure.

sunshinetours

Pennywise wrote: »

Some accountants include the P&L and balance sheet as an attachment to tax returns as a standard practice. There is lots of debate about this. Some say that it provides "full disclosure" which helps avoid penalties etc further down the line, some say that it doesn't. There is no wrong or right way. There's nothing to say you must include them, and nothing to say you musn't. The "boxes" in the tax return aren't particularly well drafted - some accountants would argue that a full set of accounts gives a far clearer picture and held head off an enquiry being opened. Any decent accountant will be working from their accumulated experience.

I, for one, don't have a policy on this. Sometimes I attach the accounts, sometimes I don't - sometimes I'll fill the "further information" box with loads of information, sometimes I won't - I make a judgement call based on how the tax return "looks" as it stands and will provide whatever else I feel will help avoid an enquiry in the future. For example, once a few years ago when the new return came in, I didn't include any accounts nor any narrative on the return (which was the professional "advice" back then to simply declare the bare minimum) - the tax inspector opened an enquiry to primarily ask about the rather large figure entered in "advertising and entertaining" which, looking back, did look rather suspect as he must have thought there was a lot of entertaining going on (which isn't allowable for tax). Although I could easily send a full analysis showing it was all for allowable advertising, the inspector also had a feel around in other areas which, although they found nothing, did cause a few hours of extra work and therefore a few hundred pounds extra cost to the client. Looking back, and experience used for the future, I should have attached the full accounts which would have shown it was all advertising and no entertaining and therefore would probably have avoided the enquiry. I now do that as and when necessary and have had no such enquiries for spurious reasons ever since.

I tell clients that the way I work is to prepare the full accounts, comprising P&L and balance sheet, and then use my discretion as to whether to send to HMRC or what explanations to put on the return. I would simply refuse to complete a tax return without having done the full accounts if a client wanted a cheap job done just filling in the boxes on the tax return, but I would explain why. You still have to deal with accruals, stock, depreciation, prepayments, creditors, debtors, etc - once you've done all that, if you're using a proper nominal ledger based accounting system, the P&L and Balance sheet pop out in seconds anyway - you have to do the work to arrive at the figures for the simple tax return - why not print off the proper accounts and finish the job for virtually no extra time.

Yes tend to agree with most of this. The answer to the OP's question is still "no" though you do not need to attach accounts.

We also would never prepare a return without preparing accounts for a partnership (or any trading entity) as this is the main "end product" you give to the client for their fees.

Unfortunately many accountancy firms do not have such a great reputation with local tax offices and that is generally not something a potential client would know I guess. We have a lower than average enquiry rate for firms in our tier but not sure clients always believe thet when we tell them!

[Deleted User]

Pennywise wrote: »

Ask the lawyers, politicians, civil servants and HMRC officials who have contributed to it being made so. If you were in a partnership with someone other than your wife, then you may be glad of the law and regulation surrounding it which may help protect you. Trouble is that there is no difference in law between a "husband/wife" partnership or, say, a doctor's surgery with several GPs as partners, so in all cases, there are rules and regulations, tax and otherwise, to deal with. Tax laws have evolved to stop people taking unfair advantage. Would you have gone into a partnership with anyone else other than your wife, without having taking proper advice as to the implications etc? Presumably not, but you've made a false assumption that there are exceptions and exemptions for a husband/wife situation - perhaps you should have checked before you adopted a partnership structure.

I see. I just set it up this way because I thought it would be easier giving me full legal access rather than asking wife to sign everything/speak to people etc.

Is it too late to change? I'm guessing any change takes place from today though - I cant suddenly decide for tax year ending april 2010 wife was a sole trader?