Partnership tax stuff for non-accountants !!!

sunshinetours

[quote=[Deleted User];39031698]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?[/QUOTE]

How did you register for self employment orginally (you did register didn't you?)

[Deleted User]

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.

Thanks for the great explanation.

The HMRC documents and the forms themselves dont appear too clear on this.

Thing is this first year is for trading from Aug 2009 to April 2010. We didnt have that many transactions for this period to be honest - about £3k turnover (and we made a loss). As such (less than £78K turnover) I understand theres a whole page on the partnership return I dont need to fill in - just the figures bit basically.

I didnt want to pay for accounts etc if I could just do the tax return without them. i.e. cheaper. I do understand, however, that the boxes have to be done correctly.

However, I dont really want the hassle of the HMRC investigating. Like I said, theres probably going to be a loss (and, I understand, tax refund due) of a few £100s. Are likely to trouble me in this instance?

However, would you say accounts are still needed in this circumstance? Best quote I've had so far is £200 - reasonable?

Or is there software packages I could use to do this myself? I'm assuming the tax submission packages such as legatio/easy calc etc just do the forms for you rather than P&L/balance sheet etc?

[Deleted User]

sunshinetours wrote: »

How did you register for self employment orginally (you did register didn't you?)

Cant remember exactly whether I phoned HMRC or did it online? Think I phoned them.

I also registered for NI exemption also.

sunshinetours

They would have asked if you were in partnership or on your own and if in partnership you would have both registered.

Not being rude here but this is basic stuff - not having one may end up costing you more than having one and this is a money saving site after all

Most will offer a free consultation to start

olly300

sunshinetours wrote: »

Not being rude here but this is basic stuff - not having one may end up costing you more than having one and this is a money saving site after all

Most will offer a free consultation to start

That was the point I was trying to make earlier.

OP if you actually went to talk to an accountant (either one recommended or you would have had to meet a few) before you set up your business you would have probably found that your wife would have been advised to set herself up as a sole trader.

I know a few people who have set up their original business in either the wrong structure or a more expensive structure than they needed to, so had to waste time and money closing down the old business and setting up again.