The TV adverts for various accounting products make all sorts of claims – Spend less time on accounting – press a few buttons and your VAT return is filed – accounts are done in an instant!
This does lead many to question
“Why pay an accountant when I can do it all myself?”
Unfortunately, we see far too many instances where people decide that perhaps things may not be as easy as the software adverts appear to indicate. Yes – it is true that you can press a couple of buttons and file a VAT return -once you have registered with HMRC in the first place and set up the online filing too. Yes – a profit and loss account can be produced with a couple of clicks too – but do the underlying figures actually make “sense”?
Here are just a handful of “issues” we have come across in recent times: –
“Wages” paid to a sole trader or partners should not appear in the profit and loss account under “wages” – they are personal monies taken out of the business as “drawings”.
No-you cannot claim VAT on train fares despite the travel code probably having a default 20% rate set to automatically extract VAT.
Yes – you must show the total sales and the charges incurred separately when selling on various platforms; your “sales” are not the amount paid into the bank
…the list of potential errors goes on and on.
Sorting out computerised records where there are significant issues is time consuming and can be expensive –unfortunately in some instances the best option is to start again from scratch.
So…if you are in this position, or know anyone that is, we strongly recommend our “health check” service, where we can review the accounting entries and report on any potential “issues” or provide recommendations.
If you do not have systems in place yet, you will need to take action very soon, as the Making Tax Digital reporting spreads further to Income tax as well as all VAT registered businesses.
Contact us to discuss in more detail.
