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  • FIRST POST
    • jellybeantinker1
    • By jellybeantinker1 13th Aug 19, 10:41 AM
    • 35Posts
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    jellybeantinker1
    Accountants- Expenses Analysis - is this required?
    • #1
    • 13th Aug 19, 10:41 AM
    Accountants- Expenses Analysis - is this required? 13th Aug 19 at 10:41 AM
    Any advice appreciated, thank you.

    Started a business 2 years ago, Furnished Holiday Lets, which I have now closed due to personal circumstances.Cottages were on the site of the property lived in.

    First year accountants done by accountant (recommended by family member, though not impressed).

    I kept all records, put all expenses in relevant columns/type of expenses, etc. I am a bit ocd about being organised when handing this type of thing over to someone else, I like to have an idea of what the outcome should be.

    Accountant asked if I had done an expenses analysis - no clue as to what they were talking about.

    Accountant carried out expenses analysis.

    Figures for actual business I agreed with, but looking at the expenses analysis sheet, I can understand parts, but for each section there are various expenses missing, so it doesn't tally with what is actually within my full expenses totals on my spreadsheet. From what i can gather on reading about this analysis, is that a proportion of expenses are noted, not all of them.

    Basically, I didn't request for this expenses analysis to be carried out on my accounts, nor do I/did I understand the need for this analysis as I was only a small business starting from scratch, and I could clearly see where my main expenses were going.

    I ended up with a much larger bill from the accountant than expected.
    Now doing the second year accounts, but needing to know whether this expenses analysis is a legal requirement of an accountant to do, or if it is an actual necessity of a small start up business, as I cannot see that I actually required it?
    Mortgage Free since 2013 (18 years early!)!
    2019 - Simpler Living[CENTER]
Page 1
    • BoGoF
    • By BoGoF 13th Aug 19, 11:05 AM
    • 4,843 Posts
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    BoGoF
    • #2
    • 13th Aug 19, 11:05 AM
    • #2
    • 13th Aug 19, 11:05 AM
    Sounds like your accountant thought that some expenses were wholly and exclusively for business use and therefore not allowable. Just because you record something on a spreadsheet (or whatever you made) doesn't mean it is an allowable deduction in your accounts. For example some expenses may be capital.

    Do you know the difference between capital and revenue expenditure?
    • jellybeantinker1
    • By jellybeantinker1 13th Aug 19, 11:32 AM
    • 35 Posts
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    jellybeantinker1
    • #3
    • 13th Aug 19, 11:32 AM
    • #3
    • 13th Aug 19, 11:32 AM
    Yes I understand the capital/revenue, but just wondered about the expenses analysis
    Mortgage Free since 2013 (18 years early!)!
    2019 - Simpler Living[CENTER]
    • BoGoF
    • By BoGoF 13th Aug 19, 11:54 AM
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    BoGoF
    • #4
    • 13th Aug 19, 11:54 AM
    • #4
    • 13th Aug 19, 11:54 AM
    As we can't see what was produced it's difficult to say. Could be accruals/prepayments.......or any number of reasons.
    • jellybeantinker1
    • By jellybeantinker1 13th Aug 19, 12:32 PM
    • 35 Posts
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    jellybeantinker1
    • #5
    • 13th Aug 19, 12:32 PM
    • #5
    • 13th Aug 19, 12:32 PM
    Pre-payments have been mentioned, but there is nothing in the analysis regarding these
    Mortgage Free since 2013 (18 years early!)!
    2019 - Simpler Living[CENTER]
    • 00ec25
    • By 00ec25 13th Aug 19, 2:44 PM
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    00ec25
    • #6
    • 13th Aug 19, 2:44 PM
    • #6
    • 13th Aug 19, 2:44 PM
    your accounts must have been prepared on the accruals and prepayments basis - hence you only see a portion of some of them

    from 17/18 tax year the default basis is the cash basis

    if you don't understand the above jargon then you need to do a lot more reading

    https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1092
    • Carl31
    • By Carl31 13th Aug 19, 3:20 PM
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    Carl31
    • #7
    • 13th Aug 19, 3:20 PM
    • #7
    • 13th Aug 19, 3:20 PM
    Does your accountant do your tax return? or do you self assess? you would need it for that
    • jellybeantinker1
    • By jellybeantinker1 13th Aug 19, 3:39 PM
    • 35 Posts
    • 195 Thanks
    jellybeantinker1
    • #8
    • 13th Aug 19, 3:39 PM
    • #8
    • 13th Aug 19, 3:39 PM
    Accountant did it, and the business started in 2017/18 and cash basis was mentioned to me. Now reading the link given it would appear that both have been used due to pre-payments and amount being apportioned into the tax year 2018/19, very confusing to me!
    Mortgage Free since 2013 (18 years early!)!
    2019 - Simpler Living[CENTER]
    • 00ec25
    • By 00ec25 13th Aug 19, 6:11 PM
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    00ec25
    • #9
    • 13th Aug 19, 6:11 PM
    • #9
    • 13th Aug 19, 6:11 PM
    Accountant did it, and the business started in 2017/18 and cash basis was mentioned to me. Now reading the link given it would appear that both have been used due to pre-payments and amount being apportioned into the tax year 2018/19, very confusing to me!
    Originally posted by jellybeantinker1
    then it would appear the "expenses analysis" is your accountants wording for how the accruals and prepayments have been calculated.

    It is not a report that is legally required for accounts purposes, but the calculation must be done if the accounts are filed using the accruals method, not the cash basis .

    why your accountant did not use the cash basis is a question you should ask them
    • jellybeantinker1
    • By jellybeantinker1 13th Aug 19, 9:46 PM
    • 35 Posts
    • 195 Thanks
    jellybeantinker1
    Thanks for your help. Having read the link it mentions that FHL's for new start ups for 2017/18 tax year, are done on a cash basis, unless the other option is opted for, so I do wonder why it wasn't all done on a cash basis. I shall contact them, thanks again
    Mortgage Free since 2013 (18 years early!)!
    2019 - Simpler Living[CENTER]
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