Business Tax & VAT

kayak83

Sorry if this is not in the correct place.

My friend started a business last year and is rather behind on his tax and VAT returns to say the least. He started trading in April 2010 and has not yet submitted any returns.

I said that I would have a look at everything and try to get it in order. I have started looking and it seems like a bigger job than expected. I don't really have the time required.
I have sorted through everything and separated into categories and put things in date order and have managed to get 2010 invoices and expenses into a spreadsheet.

I am thinking it will just be best to find an accountant - but what is the cost?
I know that business is still quite slow and I do not want to go back to him saying he need s to pay a large accountant fee.

any advice would be much appreciated.

Has anyone had experience of this and have any idea of accountant fees?

Many thanks

chrismac1

Note that he only needs to register once his Taxable Supplies have exceeded £73k in the preceding 12 months. For most small businesses - for example corner shops - my advice is do NOT go above £71k unless you are confident you can hit £80k and stay there, because the marginal rate of tax on going from £72,999 to £73,000 is massive. The best thing your friend can do is shop around locally for a decent accountant he can trust to do a good job, not just pick the first one he sees and not necessarily the cheapest one either.

FatAndy

If your friend started trading in April 2010 he could prepare his first accounts to 31st March 2011. Any profits would need to be declared on his tax return for the year ended 5th April 2011 which needs to be sumbmitted by 31st January 2012 so he's still got time but the clock is ticking.

Accountants will issue two bills, one for the business accounts and one for the personal tax return (you can reclaim VAT from the business one if you're VAT registered but not from the personal one). When I last worked for an accountant, and this was about 3-4 years ago, the average bill was around £300-£500 for business accounts and £80-£100 for a personal tax return, plus VAT, so it's not cheap. Obviously the bill will reflect the amount of time spent on the job so the more you can do sorting out the records in advance the cheaper it should be.

Many accountants will offer free initial consultations so as Chris Mac suggested shop around, visit a few to check them out and get a few quotes, but bear in mind the tax return deadline is looming so you'll need to act fast.

antonic

Your friend is in serious trouble !

kayak83 wrote: »

Sorry if this is not in the correct place.

My friend started a business last year and is rather behind on his tax and VAT returns to say the least. He started trading in April 2010 and has not yet submitted any returns.

If he hasnt submitted the returns has he paid the centrally issued VAT Assessments ?
If he hasnt then I wouldnt be surprised if he hasnt had a visit from a Field Force Agent to obtain payment OR collect the outstanding Returns.
Without the returns being submitted HMRC wont consider an isnstalment arrangement and continued non-compliance *may* lead to a number of possible outcomes listed below
1) Distraint (levy & removal of goods to pay any debt) or if insufficient assets then EITHER
2) County Court Proceedings OR
3) Bankruptcy (if an individual) or Winding UP (if a Company).

Even if he has paid the Central Assessments he is still legally obliged to submit the returns he may still get an Officers Assessment to recover the VAT that is due AND be charged interest on the VAT due as well as getting Civil Penalties for not submitting the returns.
Also even when he submits his returns and they are LESS than the Central Asessments they can be REJECTED and the higher amounts in the Officers Assessments stand.

Tell your friend he is in a world of hurt !

I said that I would have a look at everything and try to get it in order. I have started looking and it seems like a bigger job than expected. I don't really have the time required.
I have sorted through everything and separated into categories and put things in date order and have managed to get 2010 invoices and expenses into a spreadsheet.

I am thinking it will just be best to find an accountant - but what is the cost?
I know that business is still quite slow and I do not want to go back to him saying he need s to pay a large accountant fee.

any advice would be much appreciated.

Has anyone had experience of this and have any idea of accountant fees?

Many thanks

chrismac1

Your friend is not in serious trouble! If it makes him feel better, I have one client who runs a very profitable shop with circa £200k in sales and he last submitted accounts to March 06, last VAT return we don't know for sure but at best early 2007. And you know what, not only are HMRC not really chasing him, they are showing no sense of urgency whatsoever in helping me to speed up signing up as his VAT agent. If I could sign up quickly today that's £20k plus in VAT and £10k in tax ready to go for this guy, but the silly jobsworthy processes are more important to them so I guess the country will just have to wait a few more months for the money.

Due to the recession, accountancy is a buyer's market. if your friend shops around the free consultations he can get sorted at a decent price quite quickly. Whatever happens, if he has not already registered for self-assessment he should do so pronto and then at the very least submit an estimated tax return for 10-11 unless he finds an accountant who can sort things out by 31 Jan. the new fining system really hits late filers hard, so I have been advising everyone to file estimates before 31 Jan!

antonic

You are yin to my yang Chrismac1 !

chrismac1 wrote: »

Your friend is not in serious trouble! If it makes him feel better, I have one client who runs a very profitable shop with circa £200k in sales and he last submitted accounts to March 06, last VAT return we don't know for sure but at best early 2007. And you know what, not only are HMRC not really chasing him, they are showing no sense of urgency whatsoever in helping me to speed up signing up as his VAT agent. If I could sign up quickly today that's £20k plus in VAT and £10k in tax ready to go for this guy, but the silly jobsworthy processes are you referring to demanding a 64-8 BEFORE discussing anything with you ? - I wouldnt be happy knowing HMRC was discussing MY details with anyone - would you ?

are more important to them so I guess the country will just have to wait a few more months for the money.

If he knows he owes the money why doesnt he pay ? - or is he relishing a visit from a Field Force Agent ?

Due to the recession, accountancy is a buyer's market. if your friend shops around the free consultations he can get sorted at a decent price quite quickly. Whatever happens, if he has not already registered for self-assessment he should do so pronto and then at the very least submit an estimated tax return for 10-11 unless he finds an accountant who can sort things out by 31 Jan. the new fining system really hits late filers hard, so I have been advising everyone to file estimates before 31 Jan!

pjclar02

I fully agree with Chrismac1 - please do not tell your friend he is "in a whole world of hurt". This may cause potentially unnecessary concern and anxiety.

We have still not established whether there is a VAT registration in place, or whether there is a need for a VAT registration to be in place.

If the business is not actually registered for VAT and the turnover has not reached the registration threshold, then as far as I can see there are no filing deadlines missed as yet, and therefore no issues.

We should await confirmation of the VAT registraton status and level of turnvoer from the OP before worrying people unnecessarily.

antonic

I would refer you to the original poster`s first paragraph

"My friend started a business last year and is rather behind on his tax and VAT returns to say the least. He started trading in April 2010 and has not yet submitted any returns."

To me this suggests he is VAT registered as you dont get a VAT return without having registered for VAT first (I know thats a bit obvious !)

pjclar02 wrote: »

I fully agree with Chrismac1 - please do not tell your friend he is "in a whole world of hurt". This may cause potentially unnecessary concern and anxiety.

We have still not established whether there is a VAT registration in place, or whether there is a need for a VAT registration to be in place.

If the business is not actually registered for VAT and the turnover has not reached the registration threshold, then as far as I can see there are no filing deadlines missed as yet, and therefore no issues.

We should await confirmation of the VAT registraton status and level of turnvoer from the OP before worrying people unnecessarily.

sunshinetours

Is your friend a sole trader or limited company?

Have they actually completed their VAT registration?

Find an accountant by recommendation or go via ICAEW or ACCA website to at least find a properly qualified accountant

Chrismac1's comments re the new penalty system is also worth noting as its far more penal than previously for many. If your friend know they owe tax (VAT) already then paying something on account would be good advice generally ASAP to help mitigate any penalty (if there are any due of course)