Advice needed please

katiemarysia

Hi,

I dont know if this is a bit of a unique situation but I desperately need some advice. My step-dad is self-employed and for a number of years a client of his has done his books for him and sorted out his tax. For some reason over the past few months she has avoided coming in to his shop to see him and keeps saying that she will bring all of his financial information to him. She has not done this and will now only answer the phone if it is from a witheld number. I have absolutely no idea why she is doing this and neither does he. Unfortunately, he has had to acquire the services of another accountant but this person has said that he needs all of the information from the other woman otherwise he will be unable to fill in the required information. My step-dad is so stressed and we have no idea what to do to help him. He has called the tax office but they said that they cant help is he is concerned that he will be lumbered with a huge tax bill as a result of not filing his forms when required. The new accountant has also offered no advice. Surely this must have happened to people before but we do not seem to be able to work out what can be done, i mean we cant force her to give the papers back and we dont know where she lives so now she isnt answering the phone we are really stuck.

Can anyone please give me some advice?

Thank you

McKneff

If she is a client of your fathers, surely he must know where she lives. What kind of work does he do.

pjclar02

Hello there

Is your step-dad attempting to file his 2010/11 return? Does he hold a copy of his tax return or 2009/10?

Does the book-keeper hold all of his records for 2010/11 (i.e. bank statements, invoices etc?) or does your step-dad still have these?

I'm sure there will be a solution to this - but if you can provide the above information we may be better placed to point you in the right direction.

katiemarysia

Hi, he has a hairdressing salon and I have found out tonight what her address is. She does have all of his records at the moment. I am going to contact the new accountant tomorrow to find out the specific items that he needs. I don't think he does have a copy of his last tax return. Thanks for replying

xylophone

I wonder would a letter from the new accountant to the old (sent recorded delivery) requesting the information in question, elicit a response?

chrismac1

Right, here is the plan and prepare for various HMRC posters to jump into this thread and tell you what a rubbish accountant I am:

1. You file a tax return this weekend. You base the income on whatever information you can - last year's adjusted for whether he thinks he's 10% up, 10% down. Takings information if you have it, bankings on the bank statements if you have it. You make it clear on the tax return the basis of how estimated numbers have been arrived at and why. They never read these notes but it gives you some cover in the event of a later enquiry.

2. Your dad should have a good idea of gross margin - i.e. takings less cost of hair products, say 85% to 90% for a hairdresser. He will know his rent and rates exactly and should have a good handle on wages, so that's probably 80% of overheads sorted out.

3. Final sense check before you bang in this return - can your dad understand and explain the difference between the 2010 return numbers and the 2011? If yes, make notes of these. If no, find out! Re-jig the numbers until he can.

4. So you have ticked the "tax return submitted" box before 31 Jan. The next stage is to come up with proper accounts so you can re-submit the return, say by 31 March. If this person your dad has gone to is qualified that will be much easier than if he or she is not, your new accountant can just put lots of pressure on them.

If your dad's accountant is not prepared to follow these guidelines and get you the tick in the box by 31 Jan and the re-submission by 31 March, I can and I will if you want me to. In this context, it is relevant to say that in 2010 I got around 25 new clients from an accountant who suddenly died. She was a good one, but kept many of her records in her garage. Some we could find, some we could not - the place was a jumble, she must have had some kind of system but we could not figure it out.

Every single one of those 25 clients got a sensible set of accounts and a sensible tax return.

I live in Cockermouth, the place which was nearly wiped out by floods in November 2009. Five of my clients were flooded, some of their records were washed down the river. In the worst case all of the records were, and all we had to go one were his notebook, bank statements and corporate card records because in these last two cases we got copies from the bank.

This can be done, and it can be done in time!

heretolearn_2

Yes the new accountant should be able to sort this out, we do it all the time. Like Chrismac each year we get a few panicked newbies without full information - we just submit a 'provisional' return to meet the deadline then go back with the real one later. So your dad needn't panic - but if his accountant didn't know this was possible then really he needs to go to someone else - as that isn't much of an accountant.

agrinnall

katiemarysia wrote: »

Hi, he has a hairdressing salon and I have found out tonight what her address is. She does have all of his records at the moment. I am going to contact the new accountant tomorrow to find out the specific items that he needs. I don't think he does have a copy of his last tax return. Thanks for replying

You shouldn't be requesting specific items, get absolutely everything.

chrismac1

Your accountant is not much of one I am afraid. As per my previous post, this is an easy-peasy business to come up with a pretty accurate estimate of profit compared to most sectors. Only one number should cause any real difficulty - TAKINGS. If your dad has a decent handle on this the rest is a stroll in the park.

This is because gross margin should be pretty steady year on year so even a set of accounts from 2008 or 2009 would be a pretty decent estimate. And typically 80% to 90% of overheads will either be related to the premises or staff, so you can nail those down without too much trouble. If VAT registered, that is one potentially tricky aspect but not a show-stopper.

Takings - Purchases = Gross Margin.

Gross Margin -Overheads = Taxable Profits

For now, unless your dad is absolutely clear on capital items bought, I would not put in anything for capital allowances. This in itself more or less guarantees that the tax bill for the re-submission will be lower than the estimated one, which is the correct direction to move in.

pjclar02

chrismac1 wrote: »

Gross Margin -Overheads = Taxable Profits

Sorry to be captain pedantic, but....

Gross profit - Overheads = net profit

Net profit +/- tax adjustments = taxable profit

Savvy_Sue

What I don't think any of you accountants have mentioned is the need for the OP's s-d to pay some tax by the end of Jan to cover the first half of the current tax year, again by 31st Jan. This again can be guesstimated, but needs to be an overestimate rather than an underestimate, because interest will be charged back to the due date if it's underestimated.

But it can be done!