Year end books/tax return

[sjewart]

So I'm asking for a friend who has a self employed agricultural contracting business.

His accountant has just provided his profit figure and he thinks she hasn't deducted all the things she could to make the figures more realistic (eg a loan for a work vehicle is being classed as drawings).

He would like to get a second opinion and get some help to run his business more figure friendly in the future but doesn't know who to contact.

Does he need to make an appt to see another accountant or perhaps a financial adviser?

 

[Great In Grass]

He can always speak to someone at the tax office they are very helpful.

 

[Flat 10]

So I'm asking for a friend who has a self employed agricultural contracting business.

His accountant has just provided his profit figure and he thinks she hasn't deducted all the things she could to make the figures more realistic (eg a loan for a work vehicle is being classed as drawings).

He would like to get a second opinion and get some help to run his business more figure friendly in the future but doesn't know who to contact.

Does he need to make an appt to see another accountant or perhaps a financial adviser?

He needs to tell her he isn't entirely happy and she needs to sit down and explain the figures to him.

 

[marcot]

So what is this "profit" word and what does it mean? Not something I've come across before :-(

 

[wasted years]

Up here in Cumbria there are several excellent accointants that handle hundreds of farmers books.
Find one near you similar, they are always delighted to nab more work.

 

[Goweresque]

His accountant has just provided his profit figure and he thinks she hasn't deducted all the things she could to make the figures more realistic (eg a loan for a work vehicle is being classed as drawings).

I assume you mean that he's paying a loan for a vehicle off with money drawn from the business? If so then it depends on whether she considers that vehicle is a business asset or not. If not then it would indeed be personal drawings from the business. Even if a vehicle is used 100% for business use it does NOT mean that a loan on it can necessarily be claimed as a business expense. They have to be proper 'commercial' vehicles to be able to be claimed. For example I purchased a Mercedes ML320 which I use solely to deliver my hay as part of my business, but I was not able to claim it on capital allowances as its considered a non-commercial vehicle. I paid cash for it, but I assume that if I had taken a loan, the loan payments would also not be allowable as business expenses. So its entirely possible that if your friend is driving around in a non-commercial vehicle thats he's paying for from his business then the accountant would be entirely correct to say the loan payments are a personal drawing.

Also bear in mind that just because another accountant will agree to claim all manner of slightly 'iffy' expenses on your behalf does not mean they are legit - the taxpayer signs the tax return not the accountant, so the person in the cross hairs if HMRC come calling is you, not the accountant.

 

[sjewart]

Thank you all for your invaluabe input. I will pass this info to him. I think there are a few issues - one of the major ones is that he lives 6.5 hours from his accountant and phone discussions are good but not the same as face to face. His other main objective was to make sure that all that could be claimed for him was being claimed for him - I think because of the distance involved he has doubts whether his current accountant fully understanding his complex business.

 

[sjewart]

I assume you mean that he's paying a loan for a vehicle off with money drawn from the business? If so then it depends on whether she considers that vehicle is a business asset or not. If not then it would indeed be personal drawings from the business. Even if a vehicle is used 100% for business use it does NOT mean that a loan on it can necessarily be claimed as a business expense. They have to be proper 'commercial' vehicles to be able to be claimed. For example I purchased a Mercedes ML320 which I use solely to deliver my hay as part of my business, but I was not able to claim it on capital allowances as its considered a non-commercial vehicle. I paid cash for it, but I assume that if I had taken a loan, the loan payments would also not be allowable as business expenses. So its entirely possible that if your friend is driving around in a non-commercial vehicle thats he's paying for from his business then the accountant would be entirely correct to say the loan payments are a personal drawing.

Also bear in mind that just because another accountant will agree to claim all manner of slightly 'iffy' expenses on your behalf does not mean they are legit - the taxpayer signs the tax return not the accountant, so the person in the cross hairs if HMRC come calling is you, not the accountant.

Thank you I think this is the exact situation. He has 2 Isuzu pick ups used solely for business which have loans on them. I think he has to accept the situation this time but I know he's keen to obtain advice from an expert who could advise him what is the best tax efficienct way to purchase stuff (equipment/machinery) for his self employed business in future so at year end it doesn't show too much profit etc.

Just not sure if he needs to seek another accountant or a differenct type of expert. I must admit it's not my forte.

 

[Goweresque]

Thank you I think this is the exact situation. He has 2 Isuzu pick ups used solely for business which have loans on them. I think he has to accept the situation this time but I know he's keen to obtain advice from an expert who could advise him what is the best tax efficienct way to purchase stuff (equipment/machinery) for his self employed business in future so at year end it doesn't show too much profit etc.

Just not sure if he needs to seek another accountant or a differenct type of expert. I must admit it's not my forte.

If they are pickups then the cost of them should be allowable as commercials, assuming they are solely for his business use. If he's said he uses them for some private use, then I'm not so sure, maybe thats why she's has put one down as personal drawings? Does he have any other vehicles? A private car for example? If not no-one is going to believe that he has 2 vehicles used solely for business but gets the bus for his private mileage. He'd have better luck claiming that they were both 100% business use if he had a little runaround private car that he kept for private mileage (in theory at least).

 

[sjewart]

If they are pickups then the cost of them should be allowable as commercials, assuming they are solely for his business use. If he's said he uses them for some private use, then I'm not so sure, maybe thats why she's has put one down as personal drawings? Does he have any other vehicles? A private car for example? If not no-one is going to believe that he has 2 vehicles used solely for business but gets the bus for his private mileage. He'd have better luck claiming that they were both 100% business use if he had a little runaround private car that he kept for private mileage (in theory at least).

Yes they are both exclusively business use (covered in signage and everything). He doesn't have a private vehicle of his own but has the use of his partner's family vehicle - for which he is a named driver on the insurance.

 

[Goweresque]

Yes they are both exclusively business use (covered in signage and everything). He doesn't have a private vehicle of his own but has the use of his partner's family vehicle - for which he is a named driver on the insurance.

That may be the sticking point - in this day and age who is going to believe that someone has two work vehicles and NEVER uses them for private use one bit, and has no private mileage of his own apart from occasional use of his partners car? Who presumably uses it a fair bit herself, so its often not available? No-one is going to believe that I'm afraid (I certainly wouldn't), it doesn't pass the smell test, and the accountant would be wrong (and foolish) to try and tell HMRC something that she didn't believe herself.

Is the accountant claiming the loan on one vehicle as a legitimate business expense but putting the other down as personal drawing?

 

[sjewart]

That may be the sticking point - in this day and age who is going to believe that someone has two work vehicles and NEVER uses them for private use one bit, and has no private mileage of his own apart from occasional use of his partners car? Who presumably uses it a fair bit herself, so its often not available? No-one is going to believe that I'm afraid (I certainly wouldn't), it doesn't pass the smell test, and the accountant would be wrong (and foolish) to try and tell HMRC something that she didn't believe herself.

Is the accountant claiming the loan on one vehicle as a legitimate business expense but putting the other down as personal drawing?

Thank you goweresque. That I dont know. He doesn't have a copy of his accounts yet but il ask him to check when they arrive in the post. What I do know is he works 6.5 days a week so wouldn't have time to clock up many personal miles but thanks for clarifying the situation - what u write does make perfect sense to me.

 

[Oscar]

I would think that having someone closer would be an advantage while he gets up and running as with a new buisness and operator all sort of questions arise and being able to pop in face to face would be helpful. I wonder why he is using someone so far away ? , [6.5 hrs is half the country in length of journey ! ]
I use my accountant more than just an end of year tax report and he may find it helpful if he had someone to bounce ideas off.


Just a word of warning for him and everyone, but the new legislation that was proposed ref having computer records for tax and VAT which were put on hold earlier due to the election have now been updated. It seems that from 2019 ,VAT returns will require proper computer "mini" accounts to support the figures that you submit on the form rather than as now just the form with your own figures. Then in 2020 , the tax office will need quarterly accounts submitted as they proposed earlier this year. So basically, the timeline has moved and they are doing the VAT first, then all accounts year after.

Thats my take on it from a talk to my accountant yesterday but please check your own.

 

[kill]

I would think that having someone closer would be an advantage while he gets up and running as with a new buisness and operator all sort of questions arise and being able to pop in face to face would be helpful. I wonder why he is using someone so far away ? , [6.5 hrs is half the country in length of journey ! ]
I use my accountant more than just an end of year tax report and he may find it helpful if he had someone to bounce ideas off.


Just a word of warning for him and everyone, but the new legislation that was proposed ref having computer records for tax and VAT which were put on hold earlier due to the election have now been updated. It seems that from 2019 ,VAT returns will require proper computer "mini" accounts to support the figures that you submit on the form rather than as now just the form with your own figures. Then in 2020 , the tax office will need quarterly accounts submitted as they proposed earlier this year. So basically, the timeline has moved and they are doing the VAT first, then all accounts year after.

Thats my take on it from a talk to my accountant yesterday but please check your own.

The 6.5hours away sounds an awfully lot like a firm at Taunton that works all over the country and if so without doubt one of the best firms of accountant's there is as we have used them and went away for sour green grass that wasn't so good and cheaper for but for service no where as good so will probably go back for the next set of accounts!

 

[sjewart]

Thank you Oscar for the info on new procedures. My own accountant I'm sure will be familiar with this but il let him know so he can check with his accountant.

Kill I doubt it's the same lot. The only reason for the 6.5 hour distance is that he used to live close to where his accountant is based but moved to Scotland and kept her on.