business or personal bank account
Denis
which bank is best for my business. In a recent seminar at my local
tax office i was told that it is not necessary to have a Business bank
account for the business and that a personal one can be used.
So my question is:
1) Do you think that this is true?
2) If a personal account can be used then why sole traders user
business bank accounts who involve being charged for transactons?
3) Are there any benefits from having a business bank account?
Martin
"Denis" <k9ko...@hotmail.com> wrote in message
news:1131543515.8...@g14g2000cwa.googlegroups.com...
>I am a sole trader (no VAT) and I am doing some research to try and see
> which bank is best for my business. In a recent seminar at my local
> tax office i was told that it is not necessary to have a Business bank
> account for the business and that a personal one can be used.
>
> So my question is:
> 1) Do you think that this is true?
Yes - from a legal & HMRC point of view.
> 2) If a personal account can be used then why sole traders user
> business bank accounts who involve being charged for transactons?
Because it "looks better", cos chqs can be payable to your trading name, and
cos when/if bank discovers you're using private a/c for business, they'll
get grumpy and ask you to open business a/c and start charging you.
> 3) Are there any benefits from having a business bank account?
Apart from cosmetic reasons (see above), it can be easier to control and any
charges / interest are exclusively business, and hence potentially tax
deductible.
HTH
--
Martin
[Remove barrier to reply]
Denis
I think I wouild not be interested in the "looks better" side of things
really, if that's the only benefit.
Sounds like i should go for a personal account.
Troy Steadman
Denis wrote:
You should go for a business account. There is nothing more foolish
than having 2000 personal transactions to wade through when you want to
verify 200 business transactions. It will cost you dear in the long run
and, as Martin has said, you'll be switched into a business account
anyway when your bank manager latches on.
Denis
personal account. I was referring to creating a NEW personal account
which i will use for business.
Do you all guys agree that in the long term a business acocunt is
better? Any suggestions for which banks are good?
Troy Steadman
Steer wide of Alliance & Leicester. Nationwide, Nat West and HSBC I've
always found good.
This scheme of yours to use a private account for your business hasn't
been thought through. Your trading name will have to be identical to
your own name, and unless you are a painter/decorator that is going to
look amateurish. How are you going to prove that cheques made out to
you in your private account aren't business income?
Martin
>I was not referring to putting my business transaction in my existing
> personal account. I was referring to creating a NEW personal account
> which i will use for business.
That may prove difficult. Banks offering free personal accounts generally
expect to see regular income - to the point where they may expect to see a
salary going in regularly. If you expect an income stream quickly, then may
be OK. But read the small print before you sign up for such an account, and
expect to get spotted when you set up NI2 Direct Debits etc.
> Do you all guys agree that in the long term a business acocunt is
> better?
Not necessarily. An issue, inter alia, is frequency the number of
transactions rather than how long you're in business.
> Any suggestions for which banks are good?
Troy's suggestions are ok - if you don't need a business chq book, look at
the offerings from b.socs for small businesses - free of charge. All banks
should offer you 12 to 18 months free banking, BTW.
Troy asked "How are you going to prove that cheques made out to you in your
private account aren't business income?" Bear in mind this is an issue
anyway, and keep a record of private stuff as well as business - even if
held in quite separate accounts.
Ronald Raygun
> Denis wrote:
>
>> I was not referring to putting my business transaction in my existing
>> personal account. I was referring to creating a NEW personal account
>> which i will use for business.
>>
>> Do you all guys agree that in the long term a business acocunt is
>> better?
In the long term, yes, if it's a serious business. If it's a small
part-time business run on a more-or-less amateur basis, then using
a personal account (even an existing one) is perfectly adequate.
> This scheme of yours to use a private account for your business hasn't
> been thought through. Your trading name will have to be identical to
> your own name,
Huh? Your trading name need not be the same as the bank account name.
"Eastern Meals on Wheels" (please make cheques payable to Abdul Khan).
> and unless you are a painter/decorator that is going to
> look amateurish.
That's true, but may not be a problem.
> How are you going to prove that cheques made out to
> you in your private account aren't business income?
The same way as with any other non-business payments, by
keeping notes of what all your private pay-ins were for.
Ronald Raygun
> But read the small print before you sign up for such an account,
> and expect to get spotted when you set up NI2 Direct Debits etc.
You could always (and should in any case) set those up on your
main personal account, even if you have separate business accounts,
especially if your business accounts involve per-transaction charges.
David
Denis <k9ko...@hotmail.com> spake thus :
Just to put in my 2p ....
I opened a standard personal account with the Halifax specifically for one
my business interests some 6 years ago - the business trades in my own name
so no conflicts there. It has approx 100 transactions per month and a
turnover of £55k.
No problems - no queries - no charges - interest on credit balance (albeit
only 2.5%) - overdraft facility (unused) without asking -
Why pay bank charges if they can be avoided ?
--
David
Troy Steadman
I don't suppose it's particularly crucial one way or the other, but if
you are using an accountant I would suggest it is generally best to put
all the information that he will need - NI and Tax included - in one
place.
One letter asking for clarification or one hour spent looking for it
will undo hundreds of transaction charges.
Ronald Raygun
> I don't suppose it's particularly crucial one way or the other, but if
> you are using an accountant I would suggest it is generally best to put
> all the information that he will need - NI and Tax included - in one
> place.
>
> One letter asking for clarification or one hour spent looking for it
> will undo hundreds of transaction charges.
The sort of person who'd worry about wasting money on bank charges would
hardly be likely to waste money hiring an accountant. :-)
Peter Saxton
<troyst...@yahoo.co.uk> wrote:
NI2 DDs are best not in the business account. I just ensure that new
clients have registered as self-employed and set them up and then I
dont bother about them.
--
Peter Saxton from London
pe...@petersaxton.co.uk
Troy Steadman
Okay. And to square the circle I've worked in firms which insist on
Sole Traders bringing in *all* their private bank, building society and
credit card statments. The residual movements are posted into the
system and if they don't pretty much net off there is something else
going on.
Doug Ramage
"Peter Saxton" <pe...@petersaxton.co.uk> wrote in message
news:m3j4n19b57ltt1ser...@4ax.com...
Any particular reason, Peter, why not to have the NI2 DDS going through the
business account?
--
Doug Ramage
[Watch Spam Trap]
Tim
> ... I've worked in firms which insist on Sole
> Traders bringing in *all* their private bank,
> building society and credit card statments.
So - they'd prefer to lose a client, rather than accept that irrelevant
account statements aren't produced?
Why do they want to turn good business away?!
Alan Ferris
How do you know it is irrelevant unless you know what has passed
through it? If he has not been declaring all his takings and they are
going into that account you would be unaware of it unless you saw that
account.
--
Alan "Ferrit" Ferris
()'.'.'()
( (T) )
( ) . ( )
(")_(")
Troy Steadman
Exactly. Wherever cash is involved there will be a fiddle. If you buy
fish and chips or cigarettes over the counter, some of that money will
not reach the till. If you want your car repaired, your roof repaired,
your house redecorated, you can always get these jobs done for "cash".
Think your clients are honest because they never do "cash in hand"?
It's just as easy to argue that they are foolish because the rewards
are very high and the chance of Simon catching them are not great.
To properly look after his client then the good accountant pretends to
be the tax man and sees how the figures will stack up in an
investigation.
Drawings £10,000? Impossible to live on £10,000. Simon has him!
Drawings £30,000? Fine...
...until you look at the bank/BS/credit card total and see it is up
£40,000. Again Simon wins.
I bet the last journal in most sole trader accounts is without any
narrative and in the style:
CR: Sales £XX,000
DR: Drawings £XX,000
...or in the construction industry where you have to *pay* cash in hand
to get a decent subbie:
DR: Subcontractors £XX,000
CR: Drawings £XX,000
Then you muddy the waters with WIP and hope nobody inspects the CIS
returns!
Tim
> > >> ... I've worked in firms which insist on Sole
> > >> Traders bringing in *all* their private bank,
> > >> building society and credit card statments.
> > >
> > "Tim" wrote:
> > >So - they'd prefer to lose a client, rather than accept that irrelevant
> > >account statements aren't produced?
> > >Why do they want to turn good business away?!
> >
> > How do you know it is irrelevant unless
> > you know what has passed through it?
The point is, that the *client* knows it is irrelevant -- and wants some
privacy! Whats wrong with that?
There is no reason for the accountant to need details of those accounts when
the client is simply asking him to produce his accounts based on the
records provided. We're not talking about an audit here!
> Alan Ferris wrote:
> > If he has not been declaring all his takings and
> > they are going into that account you would
> > be unaware of it unless you saw that account.
So what? The client simply wants a set of accounts drawn up; he isn't
asking for an audit nor for a "legality check".
"Troy Steadman" wrote
> Exactly.
See above.
"Troy Steadman" wrote
> It's just as easy to argue that they are foolish because the rewards
> are very high and the chance of Simon catching them are not great.
Don't be silly. In the same way, you could argue that: "it is foolish not
to drink&drive because if all goes well, you get home safely - and the
chance of being in an accident or getting caught by police is not great".
That's an abhorrent philosophy.
"Troy Steadman" wrote
> To properly look after his client then the good
> accountant pretends to be the tax man and sees
> how the figures will stack up in an investigation.
He can do that with just the account details that have been provided! If
the client is correct that the other accounts are irrelevant, then there
won't be any problem shown up by any of your suggestions...
Ronald Raygun
> "Troy Steadman" wrote
>> It's just as easy to argue that they are foolish because the rewards
>> are very high and the chance of Simon catching them are not great.
>
> Don't be silly. In the same way, you could argue that: "it is foolish not
> to drink&drive because if all goes well, you get home safely - and the
> chance of being in an accident or getting caught by police is not great".
> That's an abhorrent philosophy.
>
> "Troy Steadman" wrote
>> To properly look after his client then the good
>> accountant pretends to be the tax man and sees
>> how the figures will stack up in an investigation.
>
> He can do that with just the account details that have been provided! If
> the client is correct that the other accounts are irrelevant, then there
> won't be any problem shown up by any of your suggestions...
Ah, but your "if the client is correct" caveat is just as much of a cop-out
as the "if all goes well" in your "abhorrent" scenario. The client might
well think he's correct, but could be mistaken.
Tim
> >> To properly look after his client then the good
> >> accountant pretends to be the tax man and sees
> >> how the figures will stack up in an investigation.
> >
> > He can do that with just the account details that
> > have been provided! If the client is correct that the
> > other accounts are irrelevant, then there won't be
> > any problem shown up by any of your suggestions...
>
> Ah, but your "if the client is correct"
> The client might well think he's correct, but could be mistaken.
So what? That's not a problem - if the client is wrong, then it's his
fault. The accountant couldn't be blamed.
There is no reason why the accounts produced have to reflect the absolute
truth, is there? - Just as long as the accounts produced reflect the records
provided, then the accountant did his job (unless the records were obviously
incomplete, or false, in which case the accounts could be qualified in that
way).
Ronald Raygun
> "Ronald Raygun" wrote
>> Ah, but your "if the client is correct"
>> caveat is just as much of a cop-out ...
>> The client might well think he's correct, but could be mistaken.
>
> So what? That's not a problem - if the client is wrong, then it's his
> fault. The accountant couldn't be blamed.
>
> There is no reason why the accounts produced have to reflect the absolute
> truth, is there? - Just as long as the accounts produced reflect the
> records provided, then the accountant did his job (unless the records were
> obviously incomplete, or false, in which case the accounts could be
> qualified in that way).
Sure, but what does the client want? A set of tax returns which will
stand up to scrutiny? Then they had better be prepared from all the
sources which a scrutiny would, er, scrutinise. It's not about who is
going to be blamed, it's about avoiding the need to blame anyone.
What does the accountant want? A client who pays him more money for
a more thorough service? Or a cut-price service full of E&OEs?
It's a matter of choice, and some accountants can choose to provide
only thorough jobs, and if clients don't like it, they can go find
others who specialise in doing a basic job.
Troy Steadman
That's it. A reputable accountant owes it to his reputable clients not
to lose his reputation. If he goes down they all - (theoretically) - to
a greater or lesser extent - go down.
To answer Tim it *isn't* an audit. An audit consists largely of going
through the motions. You take a few samples and you find nothing. This
is about finding the *truth*. If the figures don't stack up they
*cannot* be defended. Besides Tim, think of all those Private bank and
credit card charges you're not getting tax relief on [winks].
Tim
> >> Ah, but your "if the client is correct"
> >> caveat is just as much of a cop-out ...
> >> The client might well think he's correct, but could be mistaken.
> >
> > So what? That's not a problem - if the client is wrong,
> > then it's his fault. The accountant couldn't be blamed.
> >
> > There is no reason why the accounts produced have to reflect
> > the absolute truth, is there? - Just as long as the accounts
> > produced reflect the records provided, then the accountant
> > did his job (unless the records were obviously incomplete, or
> > false, in which case the accounts could be qualified in that way).
>
> Sure, but what does the client want?
Quite obviously (because stated before), he wants a set of accounts prepared
based on the records he's provided to the accountant. He wants to keep the
other records (which he is sure are irrelevant), *private*.
He's willing to take the very slight risk of problems if the other records
actually turn out to be relevant (because he is so sure that they are
irrelevant!).
"Ronald Raygun" wrote
> A set of tax returns which will stand up to scrutiny?
> Then they had better be prepared from all the
> sources which a scrutiny would, er, scrutinise.
"Ronald Raygun" wrote
Not necessary at all. If HMR&C start an enquiry, then the client can
provide them with the other records and their scrutiny will show that they
are, indeed, irrelevant.
But the client doesn't want any "Joe Bloggs Accountant" or their
assistant(s) nosing around in their (irrelevant) private affairs.
"Ronald Raygun" wrote
> It's not about who is going to be blamed, it's
> about avoiding the need to blame anyone.
The client is happy that no-one will be blamed. So why can't the accountant
cope with that?
"Ronald Raygun" wrote
> What does the accountant want? A client who pays him more money
> for a more thorough service? Or a cut-price service full of E&OEs?
>
> It's a matter of choice, and some accountants can choose
> to provide only thorough jobs, and if clients don't like it,
> they can go find others who specialise in doing a basic job.
Exactly. Which is where we started - I asked: "Why do they want to turn
good business away?"
Of course they can do that. I'd just like to know why they'd want to?
Tim
> This is about finding the *truth*. If the figures
> don't stack up they *cannot* be defended.
Of course, But, as I've said all along - the figures *will* stack up.
Because the "missing" account records are actually **irrelevant** to the
Sole Trader's business!
"Troy Steadman" wrote
> Besides Tim, think of all those Private bank and credit
> card charges you're not getting tax relief on [winks].
Are you now suggesting that the Sole Trader should claim tax relief on
non-business expenditure? Shame on you!
Troy Steadman
A Sole Trader and his business are the same thing.
Troy Steadman
By which I mean things are rarely clear cut. A businessman thinks
certain things are allowable, 20 accountants would have 20 differing
views, and the Tax Man may bring himself in to adjudicate.
A BUILDER BUSINESS ACCOUNT
Cement £100
Diesel £80
Travelcard £25
Xmas present for wife £40
Charges/Interest £25
A BUILDER PRIVATE ACCOUNT
Ladder £200
Petrol £25
Xmas present for daughter £25
Charges/Interest £15
Which charges and interest would you allow Tim?
Peter Saxton
I try to get my clients not to put non-business expenses through the
business bank account because it reduces the amount of work. NI2 DDs
fall in the same category.
Ronald Raygun
> "Ronald Raygun" wrote
>> Sure, but what does the client want?
>
> Quite obviously (because stated before), he wants a set of accounts
> prepared based on the records he's provided to the accountant.
Stated before by whom? You? That doesn't count. The main reason
most sole traders who use an accountant do so is to deal with their
overall tax affairs, not just to prepare their business's P&L and BS.
> He wants to keep
> the other records (which he is sure are irrelevant), *private*.
> He's willing to take the very slight risk of problems if the other records
> actually turn out to be relevant (because he is so sure that they are
> irrelevant!).
Well, fine, and most accountants will be happy to operate on that basis.
> But the client doesn't want any "Joe Bloggs Accountant" or their
> assistant(s) nosing around in their (irrelevant) private affairs.
Everything you reveal to your accountant is strictly confidential.
Kinky underwear for mistresses? Mum's the word.
>> It's not about who is going to be blamed, it's
>> about avoiding the need to blame anyone.
>
> The client is happy that no-one will be blamed. So why can't the
> accountant cope with that?
He can. It's just that a few prefer not to.
>> It's a matter of choice, and some accountants can choose
>> to provide only thorough jobs, and if clients don't like it,
>> they can go find others who specialise in doing a basic job.
>
> Exactly. Which is where we started - I asked: "Why do they want to turn
> good business away?"
> Of course they can do that. I'd just like to know why they'd want to?
For the reasons Troy mentioned. Reputation, reputation, reputation.
And an easy life. If they've already reached the pinnacle of
achievement, they can afford to turn away picky clients.
Ronald Raygun
> "Troy Steadman" wrote
>> This is about finding the *truth*. If the figures
>> don't stack up they *cannot* be defended.
>
> Of course, But, as I've said all along - the figures *will* stack up.
> Because the "missing" account records are actually **irrelevant** to the
> Sole Trader's business!
But not necessarily irrelevant to the client's overall tax position.
Jonathan Bryce
> Okay. And to square the circle I've worked in firms which insist on
> Sole Traders bringing in *all* their private bank, building society and
> credit card statments. The residual movements are posted into the
> system and if they don't pretty much net off there is something else
> going on.
Well you certainly need the bank interest received for the tax return.
Can't think why you would want credit cards though.
Troy Steadman
Surely the most crucial figure in any Sole Trader accounts is that of
Drawings. The comfortable-looking £40,000 or uncomfortable-looking
£10,000 is an illusion unless you know the overall savings/borrowings
situation during the year.
Here's one I was saving for Tim but he seems to have gone away:
Morning: Buy clothes on credit card £100
Afternoon: Buy ladder cash £100
...or...
Morning: Buy clothes cash £100
Afternoon: Buy ladder on credit card £100
The Tims of this world will have you believe it is clear cut which
charges and interest are allowable. "Telephone 75%" is an everyday
mantra which has paid many an accountant's fee via the back door.
Doug Ramage
> On Thu, 10 Nov 2005 09:54:51 -0000, "Doug Ramage"
> <ram...@XXukaccountant.net> wrote:
>
>>
>>"Peter Saxton" <pe...@petersaxton.co.uk> wrote in message
>>news:m3j4n19b57ltt1ser...@4ax.com...
>>> On 9 Nov 2005 08:05:16 -0800, "Troy Steadman"
>>> <troyst...@yahoo.co.uk> wrote:
>>>
>>>>Ronald Raygun wrote:
>>>>> Martin wrote:
>>>
>>> NI2 DDs are best not in the business account. I just ensure that new
>>> clients have registered as self-employed and set them up and then I
>>> dont bother about them.
>>>
>>> --
>>> Peter Saxton from London
>>> pe...@petersaxton.co.uk
>>
>>Any particular reason, Peter, why not to have the NI2 DDS going through
>>the
>>business account?
>
> I try to get my clients not to put non-business expenses through the
> business bank account because it reduces the amount of work. NI2 DDs
> fall in the same category.
>
> --
> Peter Saxton from London
> pe...@petersaxton.co.uk
Peter, I agree, in principle. Although 1 extra item does not make much
difference, and, at least, you know it's being paid.
Tim
> > Quite obviously (because stated before), he wants a set of accounts
> > prepared based on the records he's provided to the accountant.
>
> Stated before by whom? You? That doesn't count. The main reason
> most sole traders who use an accountant do so is to deal with their
> overall tax affairs, not just to prepare their business's P&L and BS.
We're considering the client that hands over their business records (only),
and asks "please just look at the business; I've excluded irrelevant
private accounts". S/he NECESSARILY doesn't want the "full job".
So this type of client (ie one who doesn't want to have to provide
non-business accounts) is not the "main" type of client which you talk of
above.
> "Tim" wrote:
> > But the client doesn't want any "Joe Bloggs Accountant" or their
> > assistant(s) nosing around in their (irrelevant) private affairs.
>
"Ronald Raygun" wrote
> Everything you reveal to your accountant is strictly confidential.
So what? If a million people would all keep your private info "strictly
confidential", does that mean that you should be happy to give it to all of
them?
You might not particularly want *anyone* else to see the records (including
the accountant) - let alone the people that the accountant could pass them
to, if s/he didn't keep them "strictly confidential".
> "Tim" wrote:
> > Exactly. Which is where we started - I asked:
> > "Why do they want to turn good business away?"
> > Of course they can do that. I'd just like to know why they'd want to?
>
"Ronald Raygun" wrote
> For the reasons Troy mentioned. Reputation, reputation, reputation.
PLEASE explain *how* their reputation would suffer, just because they
provided a thorough "business-only" service rather than a "business+private"
service.
"Ronald Raygun" wrote
> And an easy life. If they've already reached the pinnacle of
> achievement, they can afford to turn away picky clients.
It's hardly "picky" just to want an accountant to work on your business!
It'd hardly "picky" just to provide the statements of the *single* credit
card used for business transactions, even though you happen to have
half-a-dozen other credit cards solely for *personal* use!
It's hardly "picky" to not want to waste your time copying & providing
statements of a dozen savings a/c's, investment a/c's etc that have *no*
transactions related to the sole trader's business!
It's hardly "picky" that you have a joint a/c with the wife, say just used
for general household expenses, details of which she doesn't want passed on
to others (including accountants)!
Tim
> >> This is about finding the *truth*. If the figures
> >> don't stack up they *cannot* be defended.
> >
> > Of course, But, as I've said all along - the figures *will* stack up.
> > Because the "missing" account records are actually
> > **irrelevant** to the Sole Trader's business!
>
> But not necessarily irrelevant to the client's overall tax position.
Agreed. But that's not the issue here!
If the client doesn't want full tax accounts from the accountant, then any
savings a/c's etc *are* irrelevant.
[But even in that case, the "personal-use" credit cards *would* still be
irrelevant.]
If the client *does* want tax accounts from the accountant, then the savings
a/c's etc wouldn't fall into the "irrelevant" category, and so we have no
argument.
Tim
> > > Are you now suggesting that the Sole Trader should claim
> > > tax relief on non-business expenditure? Shame on you!
> >
> > A Sole Trader and his business are the same thing.
>
> By which I mean things are rarely clear cut. A businessman thinks
> certain things are allowable, 20 accountants would have 20
> differing views, and the Tax Man may bring himself in to adjudicate.
>
> A BUILDER BUSINESS ACCOUNT
> Cement £100
> Diesel £80
> Travelcard £25
> Xmas present for wife £40
> Charges/Interest £25
>
> A BUILDER PRIVATE ACCOUNT
> Ladder £200
> Petrol £25
> Xmas present for daughter £25
> Charges/Interest £15
>
> Which charges and interest would you allow Tim?
Do you think there is enough information there to answer that?
Eg : For what purpose is the ladder used?....
Peter Saxton
<ram...@XXukaccountant.net> wrote:
One extra item a month is 12 a year for each partner if it's a
partnership. 4 partners would be 48 transactions which would have to
be analysed as drawings to each partner. I prefer to keep it simple if
possible. There's other things that are important to a clients
financial wellbeing and if you put them through the business account
to be sure they are being paid you'd be left with a nightmare.
Peter Saxton
Troy doesnt work like that. If something COULD be used in a business
it IS treated as business expenses!
Ronald Raygun
>> > "Troy Steadman" wrote
>> >> This is about finding the *truth*. If the figures
>> >> don't stack up they *cannot* be defended.
>> >
>> "Tim" wrote:
>> > Of course, But, as I've said all along - the figures *will* stack up.
>> > Because the "missing" account records are actually
>> > **irrelevant** to the Sole Trader's business!
>>
> "Ronald Raygun" wrote
>> But not necessarily irrelevant to the client's overall tax position.
>
> Agreed. But that's not the issue here!
I thought it was.
> If the client doesn't want full tax accounts from the accountant, then any
> savings a/c's etc *are* irrelevant.
Agreed, but the subtopic was accountants who "insisted" on seeing *all*
the client's records. Clearly no accountant would ask for these unless
he was going to look at the client's whole tax position, i.e. with a view
to completing his tax return for him, as opposed to merely producing
P&L/BS for his business.
> [But even in that case, the "personal-use" credit cards *would* still be
> irrelevant.]
Agreed, but I think you mean "even in the case where he does want full tax
accounts". But often people will find it convenient to use a personal
card to pay for business expenditure, and so a card will be mixed-use.
There would need to be enough transparency to show funds flowing from
the business account into the otherwise personal card account. Mind you,
it would usually be enough to have an invoice for the expenditure in
question, and it could show up in the accounts as balancing "capital
introduced" if there is no corresponding transaction on the business
bank account.
Ronald Raygun
>> "Tim" wrote:
>> > Quite obviously (because stated before), he wants a set of accounts
>> > prepared based on the records he's provided to the accountant.
>>
> "Ronald Raygun" wrote
>> Stated before by whom? You? That doesn't count. The main reason
>> most sole traders who use an accountant do so is to deal with their
>> overall tax affairs, not just to prepare their business's P&L and BS.
>
> We're considering the client that hands over their business records
> (only), and asks "please just look at the business; I've excluded
> irrelevant private accounts".
No, that may be what *you*'re considering. Please don't include me
in that "we".
> S/he NECESSARILY doesn't want the "full job".
> So this type of client (ie one who doesn't want to have to provide
> non-business accounts) is not the "main" type of client which you talk of
> above.
Oh yes it is! :-)
>> Everything you reveal to your accountant is strictly confidential.
>
> So what? If a million people would all keep your private info "strictly
> confidential", does that mean that you should be happy to give it to all
> of them?
> You might not particularly want *anyone* else to see the records
> (including the accountant) - let alone the people that the accountant
> could pass them to, if s/he didn't keep them "strictly confidential".
In that case I would choose not to use an accountant at all.
>> "Tim" wrote:
>> > Exactly. Which is where we started - I asked:
>> > "Why do they want to turn good business away?"
>> > Of course they can do that. I'd just like to know why they'd want to?
>>
> "Ronald Raygun" wrote
>> For the reasons Troy mentioned. Reputation, reputation, reputation.
>
> PLEASE explain *how* their reputation would suffer, just because they
> provided a thorough "business-only" service rather than a
> "business+private" service.
I believe Troy has already explained this.
Fred
"David" <news-n...@hotCOLDmail.com> wrote in message
news:3tekofF...@individual.net...
> In news:1131548416.9...@g43g2000cwa.googlegroups.com,
> Denis <k9ko...@hotmail.com> spake thus :
> | I was not referring to putting my business transaction in my existing
> | personal account. I was referring to creating a NEW personal account
> | which i will use for business.
> |
> | Do you all guys agree that in the long term a business acocunt is
> | better? Any suggestions for which banks are good?
>
> Just to put in my 2p ....
>
> I opened a standard personal account with the Halifax specifically for one
> my business interests some 6 years ago - the business trades in my own
> name
> so no conflicts there. It has approx 100 transactions per month and a
> turnover of £55k.
>
> No problems - no queries - no charges - interest on credit balance (albeit
> only 2.5%) - overdraft facility (unused) without asking -
>
> Why pay bank charges if they can be avoided ?
>
> --
> David
>
There a number of business accounts which give free banking. It's much
easier to verify all your ins and outs when they're all business
transactions rather than a mixture. In one case a few years ago IR was
investigating someone who did this and he had to verify personal items he'd
bought using the a/c as well.
Tim
> >> ... the Tax Man may bring himself in to adjudicate.
> >> ...
> >> Which charges and interest would you allow Tim?
> >
> >Do you think there is enough information there to answer that?
> >
> >Eg : For what purpose is the ladder used?....
> >
> Troy doesnt work like that. If something COULD be
> used in a business it IS treated as business expenses!
And when the Tax Man is "brought in to adjudicate" ... ???!!
Troy Steadman
Huh? For what purpose is any ladder used? For what purpose is petrol
used?
DoobieDo
trolls...@yahoo.co.uk cleared their throat and muttered...
> > > >
> > "Peter Sextoy" wrote
> > > Troll doesnt work like that. If something COULD be
> > > used in a business it IS treated as business expenses!
>
> Huh? For what purpose is any ladder used?
ladder in a ladies stocking: stairway to heaven?
> For what purpose is petrol used?
making fire bombs?
--
Doobie Doobie Do, da da di da da
Troy Steadman
Peter must have very exacting standards. I wouldn't disallow "a ladder"
to "A Builder" but maybe they all "in da bungalow" at Colliers Wood.
Troy Steadman
I don't understand. If they were personal items they should not have
been in his accounts. If they were in his accounts they were not
personal items.
I know someone who spent a year "clearing his name" over numerous
Rotary expense reimbursements which he'd forgotten to mark as such.
Doug Ramage
I have clients who have NI2 DDs in their business accounts and it poses no
problems for me. However, if I was asked before the DDs were set up, I would
suggest that the personal account was the better option.
Tim
> I wouldn't disallow "a ladder" to "A Builder" ...
Even one that isn't used for the business? Shame on you!
Tim
> > If the client doesn't want full tax accounts from the
> > accountant, then any savings a/c's etc *are* irrelevant.
>
> Agreed, but the subtopic was accountants who "insisted" on seeing
> *all* the client's records. Clearly no accountant would ask for
Isn't it a bit presumptious (& perhaps arrogant) for an accountant to decide
(unilaterally!) to "look at the whole picture" - without the client having
requested it, and actually against the client's wishes?!
"Ronald Raygun" wrote
> But often people will find it convenient to use a personal card to
> pay for business expenditure, and so a card will be mixed-use.
That's fine - but in that case the card statement would *not* be irrelevant,
and so I wouldn't argue that it was. When I said "irrelevant accounts", I
actually meant ones that were irrelevant!
[Perhaps you thought I didn't mean "irrelevant" when I said "irrelevant"?
;-) ]
Tim
> > We're considering the client that hands over their
> > business records (only), and asks "please just look at
> > the business; I've excluded irrelevant private accounts".
>
> No, that may be what *you*'re considering.
> Please don't include me in that "we".
If you didn't want to talk about what I'm considering, then perhaps you
shouldn't have replied to it? ;-)
> "Tim" wrote:
> > PLEASE explain *how* their reputation would suffer,
> > just because they provided a thorough "business-only"
> > service rather than a "business+private" service.
>
"Ronald Raygun" wrote
> I believe Troy has already explained this.
I must say I didn't notice. Can you point it out?
Ronald Raygun
>> "Tim" wrote:
>> > PLEASE explain *how* their reputation would suffer,
>> > just because they provided a thorough "business-only"
>> > service rather than a "business+private" service.
>>
> "Ronald Raygun" wrote
>> I believe Troy has already explained this.
>
> I must say I didn't notice. Can you point it out?
I think I meant this:
- Message-ID: <1131643665.6...@g43g2000cwa.googlegroups.com>
- Thursday 10 November 2005 5:27:45 pm
-
- That's it. A reputable accountant owes it to his reputable clients not
- to lose his reputation. If he goes down they all - (theoretically) - to
- a greater or lesser extent - go down.
It doesn't actually explain it explicitly, but there can't be much
doubt over what he has in mind: Client is investigated and found
to have been on the fiddle. Rumour goes round that one of Acme
Accountants Partnership's clients has been found with a "dirty"
tax return.
It doesn't matter that Acme were only retained to prepare the
client's painting and decorating accounts, and were not actually
involved in the detailed preparation of their tax return.
Mud still sticks, and Acme's reputation can go in one of two
directions: Being insufficiently thorough to have forestalled
the client's problem. Becoming known as a firm frequented by
dodgy dealers.
Ronald Raygun
>> "Tim" wrote:
>> > If the client doesn't want full tax accounts from the
>> > accountant, then any savings a/c's etc *are* irrelevant.
>>
> "Ronald Raygun" wrote
>> Agreed, but the subtopic was accountants who "insisted" on seeing
>> *all* the client's records. Clearly no accountant would ask for
>> these unless he was going to look at the client's whole tax position ...
>
> Isn't it a bit presumptious (& perhaps arrogant) for an accountant to
> decide (unilaterally!) to "look at the whole picture" - without the client
> having requested it, and actually against the client's wishes?!
It could be considered negligent of them to fail to point out to the
client the importance of looking at the whole picture, but if the
client, having had this explained to them, decides they really do just
want the half-picture job, the accountant should either respect the
client's wishes or explain to them that they have a policy of not
dealing with that type of client. There is nothing arrogant about
taking such an attitude, odd though it might be, but it can go some
way to keeping genuinely dodgy characters out of their clientele.
> "Ronald Raygun" wrote
>> But often people will find it convenient to use a personal card to
>> pay for business expenditure, and so a card will be mixed-use.
>
> That's fine - but in that case the card statement would *not* be
> irrelevant,
> and so I wouldn't argue that it was. When I said "irrelevant accounts", I
> actually meant ones that were irrelevant!
>
> [Perhaps you thought I didn't mean "irrelevant" when I said "irrelevant"?
> ;-) ]
Well, the crux is that sometimes the accountant will think something
the client thinks is irrelevant is relevant.
Tim
> >> > PLEASE explain *how* their reputation would suffer,
> >> > just because they provided a thorough "business-only"
> >> > service rather than a "business+private" service.
> >>
> > "Ronald Raygun" wrote
> >> I believe Troy has already explained this.
> >
> > I must say I didn't notice. Can you point it out?
>
> I think I meant this:
>
> - Message-ID: <1131643665.6...@g43g2000cwa.googlegroups.com>
> - Thursday 10 November 2005 5:27:45 pm
> -
> - That's it. A reputable accountant owes it to his reputable
> clients not - to lose his reputation. If he goes down they all
> - (theoretically) - to - a greater or lesser extent - go down.
>
Agreed!
"Ronald Raygun" wrote
> ... but there can't be much doubt over what he
> has in mind: Client is investigated and found to
> have been on the fiddle. Rumour goes round
> that one of Acme Accountants Partnership's
> clients has been found with a "dirty" tax return.
Surely the real "fiddlers" would simply *lie* to the accountant & say that
they don't have any other accounts? And that any payments to/from the
accounts seen, from/to the missing accounts, were just personal expenditure?
Asking for *all* accounts would only affect the Honest Joe sole-trader...
Tim
> Well, the crux is that sometimes the accountant will
> think something the client thinks is irrelevant is relevant.
In which case - when the issue is obviously not "clear-cut" - the client may
be happier ignoring that "something" and paying slightly higher tax. This
may avoid any possibility of a tax enquiry causing lots of hassle later!
To take Troy's example of a builder's ladder purchased just for home use (no
business use involved) - even though the accountant might try to get tax
relief on that, the client may prefer to avoid possible awkward questions
from the tax man by simply not claiming relief for the (private-use) ladder.
Are you saying that it is not arrogant for the accountant to "force" this
interpretation on the client, when it could cause the client hassle later?
Ronald Raygun
> "Ronald Raygun" wrote
>> Well, the crux is that sometimes the accountant will
>> think something the client thinks is irrelevant is relevant.
>
> In which case - when the issue is obviously not "clear-cut" - the client
> may
> be happier ignoring that "something" and paying slightly higher tax. This
> may avoid any possibility of a tax enquiry causing lots of hassle later!
That's not what I meant.
> To take Troy's example of a builder's ladder purchased just for home use
> (no business use involved) - even though the accountant might try to get
> tax relief on that, the client may prefer to avoid possible awkward
> questions from the tax man by simply not claiming relief for the
> (private-use) ladder.
Don't even go there. Bearing in mind that reputation has been
mentioned, I don't think it germane to consider the possibility of
an accountant being guilty of inciting his client to commit fraud
by trying to set personal spending against business income.
I had considered the purpose of asking for "all records" (in the
case of preparing the whole tax return, not just the accounts for
one business) would mainly be not in order to see what expenditure
could be turned into allowable expenses, but rather to make sure
there is no hidden undeclared income. For instance, if a credit
card bill is paid, and no mirror of the payment is found in the
chap's personal or business current account, or savings, it would
be important to ask where the money had come from.
Cash from an under-the-counter job?
Troy Steadman
> Tim wrote:
>
> > "Ronald Raygun" wrote
> >> Well, the crux is that sometimes the accountant will
> >> think something the client thinks is irrelevant is relevant.
> >
> > In which case - when the issue is obviously not "clear-cut" - the client
> > may
> > be happier ignoring that "something" and paying slightly higher tax. This
> > may avoid any possibility of a tax enquiry causing lots of hassle later!
>
> That's not what I meant.
>
> > To take Troy's example of a builder's ladder purchased just for home use
> > (no business use involved) - even though the accountant might try to get
> > tax relief on that, the client may prefer to avoid possible awkward
> > questions from the tax man by simply not claiming relief for the
> > (private-use) ladder.
This is pretty much the silliest example Tim could have chosen. A
builder often has "private use" bricks, tiles, scaffolding, subbies and
windows, because he often puts his extension through the books (as
Simon has noted here earlier) but a £100 ladder?
Come on Tim!
> Don't even go there. Bearing in mind that reputation has been
> mentioned, I don't think it germane to consider the possibility of
> an accountant being guilty of inciting his client to commit fraud
> by trying to set personal spending against business income.
>
> I had considered the purpose of asking for "all records" (in the
> case of preparing the whole tax return, not just the accounts for
> one business) would mainly be not in order to see what expenditure
> could be turned into allowable expenses, but rather to make sure
> there is no hidden undeclared income. For instance, if a credit
> card bill is paid, and no mirror of the payment is found in the
> chap's personal or business current account, or savings, it would
> be important to ask where the money had come from.
>
> Cash from an under-the-counter job?
It's both isn't it. We have seen long ago at the top of this thread
that you don't *need* a business bank account. If that is the case then
a proportion of private bank charges and interest is allowable.
Anything that is allowable you want your accountant to utilise.
If 90% Telephone is allowable (no one knows or can know how much
business Telephone any given Sole Trader uses) ie if Simon and his
antecedents have not bothered to attack 90% in the past, then 90% it
is.
Tim
> > To take Troy's example of a builder's ladder purchased just for home use
> > (no business use involved) - even though the accountant might try to get
> > tax relief on that, the client may prefer to avoid possible awkward
> > questions from the tax man by simply not claiming relief for the
> > (private-use) ladder.
>
> Don't even go there. Bearing in mind that reputation has been
> mentioned, I don't think it germane to consider the possibility of
> an accountant being guilty of inciting his client to commit fraud
> by trying to set personal spending against business income.
OK, but what about "grey" areas? It could go either way - but the
accountant says "go for it!" and the client says "I'd rather be safe!" ...
"Ronald Raygun" wrote
> I had considered the purpose of asking for "all records" (in the
> case of preparing the whole tax return, not just the accounts
> for one business) would mainly be not in order to see what
> expenditure could be turned into allowable expenses, but
> rather to make sure there is no hidden undeclared income.
Income on a credit card?!
If you're just making sure there's no hidden undeclared income, then why do
you need all the credit card statements?
And why won't you accept the figure for "income on other a/c's" provided by
the client - why do you *need* the full statements?
"Ronald Raygun" wrote
> For instance, if a credit card bill is paid, and no
> mirror of the payment is found in the chap's personal
> or business current account, or savings, it would be
> important to ask where the money had come from.
So what you mean is, you don't trust the client - and you want to check up
on him?
"Ronald Raygun" wrote
> Cash from an under-the-counter job?
Again, if the client was really a rogue, then he'd simply use his
"under-the-counter cash" to pay off credit cards that he doesn't tell the
accountant about. Now what?
Ronald Raygun
> "Ronald Raygun" wrote
>> I had considered the purpose of asking for "all records" (in the
>> case of preparing the whole tax return, not just the accounts
>> for one business) would mainly be not in order to see what
>> expenditure could be turned into allowable expenses, but
>> rather to make sure there is no hidden undeclared income.
>
> Income on a credit card?!
Yes. A card account statement is just another kind of bank statement,
which shows money going out (to pay for stuff) and coming in (to
reduce the debt balance). Most people are employed and receive a
regular salary income directly into their current account, but a
current account can receive income from other sources. These items,
if real "income", must be taxed as such, or have been, or be shown to
be exempt. In this respect a card account is no different. Anything
which reduces your card debt is income unless it's otherwise "legit",
such as if it's a transfer from other funds you already own. So if a
payment-in on your card account corresponds to a payment-out on your
personal current account, then all is fine and well, or even if it came
out of a business account (counted as drawings), but if not, then it
needs to be explained if it's not to be treated as taxable income.
> If you're just making sure there's no hidden undeclared income, then why
> do you need all the credit card statements?
Because any one of them could have been used to hide untaxed income.
> And why won't you accept the figure for "income on other a/c's" provided
> by the client - why do you *need* the full statements?
Credibility. The clever accountant, so Troy will say, knows how the
tax man thinks, and knows what things will start the tax man's
involuntary twitch. If the accountant sees it as part of his job to
minimise the risk of a tax enquiry, and to maximise the chances of
one being satisfactorily concluded with a minimum of fuss even if it
should happen, that has got to be a good thing. But of course this
should all be explained to the client beforehand.
> "Ronald Raygun" wrote
>> For instance, if a credit card bill is paid, and no
>> mirror of the payment is found in the chap's personal
>> or business current account, or savings, it would be
>> important to ask where the money had come from.
>
> So what you mean is, you don't trust the client - and you want to
> check up on him?
Not quite, but almost. The tax man won't trust the client, and the
accountant should be one step ahead of the tax man, and should make
sure there is nothing there to arouse the tax man's suspicions or
to reinforce them at the second-glance stage. The third glance is
better staved off.
> "Ronald Raygun" wrote
>> Cash from an under-the-counter job?
>
> Again, if the client was really a rogue, then he'd simply use his
> "under-the-counter cash" to pay off credit cards that he doesn't tell the
> accountant about. Now what?
Well, tough. If the client doesn't trust his accountant, he might as
well not hire one. And just because he's managed to hide the card
account on which those leather sofas were bought, the taxman, when he
invites himself round for a friendly chat, will notice the sofas when
he sits on them, and will wonder what they were bought with.
If all the client says is "talk to my accountant", and the taxman says
to the accountant "what about those sofas?", and the accountant says
"what sofas?", THEN WHAT?
Alan Ferris
If I thought the agent was truly ignorant of the offence I would
simply consider the agent lacking in due care rather than dodgy. Sadly
I have dealt with many that have shown lack of care.
--
Alan "Ferrit" Ferris
()'.'.'()
( (T) )
( ) . ( )
(")_(")
Peter Saxton
<troyst...@yahoo.co.uk> wrote:
He's talking about bank accounts not annual accounts.
Peter Saxton
The people who think like this don't like to stop after one fraudulent
entry. It becomes an obsession and pretty soon they're grabbing
discarded train tickets and eventually having to explain why they were
taking two train journeys at the same time at different ends of the
country!
Peter Saxton
I don't know any client who would want an accountant to check how his
private credit cards have been paid.
I treat my clients as adults whether they act like it or not. I
explain what they have to do. I ask them if it's worth doing
investigations to uncover information from other than the usual
business transactions. If they say no I don't.
If the accounts don't look right I will ask questions and sometimes
more work is agreed.
Peter Saxton
<no....@localhost.localdomain> wrote:
>Well, tough. If the client doesn't trust his accountant, he might as
>well not hire one. And just because he's managed to hide the card
>account on which those leather sofas were bought, the taxman, when he
>invites himself round for a friendly chat, will notice the sofas when
>he sits on them, and will wonder what they were bought with.
>
>If all the client says is "talk to my accountant", and the taxman says
>to the accountant "what about those sofas?", and the accountant says
>"what sofas?", THEN WHAT?
THEN WHAT? The client explains about the sofas to the accountant and
the accountant tells the taxman. This charade will continue until the
client sees sense.
Peter Saxton
<ram...@XXukaccountant.net> wrote:
Why not put personal mortgage payments through the business account as
well? I assume that wouldn't be a problem for you either. In fact I'm
sure it wouldn't be a problem for you if there was lots of private
transactions that were easily identifiable. My preference is to not do
unnecessary work, whether it is one minute, one hour, one day or one
week. I'm not talking about whether it is a problem I'm talking about
what is better and you think it's better too!
Ronald Raygun
Would you not say that "lacking in care" is dodgy? Dodgy enough to
make you consider, erm, dodging them?
Who wants to use a careless accountant?
Ronald Raygun
It's a damned shame that accountants don't enjoy the same privileges
as priests. The secret of the confessional is sacrosanct, but you
can't tell your accountant anything in confidence.
Simon
"Ronald Raygun" <no....@localhost.localdomain> wrote in message
news:mb2df.5697$Lw5....@text.news.blueyonder.co.uk...
From a taxman's point of view, one bad client, does not a bad accountant
make.
One is an accident,
Two, careless
Three might be a policy
Four, he's at it and ALL his clients need a look.
I don't know if you guys are aware but there is a review of revenue powers,
the penalty regimes and whether the penalties are Criminal or Civil.
So, if the omissions of the client are deemed Criminal, the accountant did
not know but only suspected that this was the case, he still has a
responsibility under the Proceeds of Crime Act to report that submission and
MUST NOT ADVISE THE CLIENT.
So much for confidentiality of the accountant/client relationship. Mind you,
I had not heard of this as I thought this restricted to solicitors and
doctors. Even solicitors are not protected unless they are being consulted
in respect of charges made.
For instance, say a restaurateur consults with a solicitor to set up a
tronc, sets out the rules and then imposes this regime on the staff. If
HMR&C question this arrangement he cannot rely upon the client/solicitor
confidentiality as this consultation was not in respect of any criminal
charges and S20 can be used to gain access to the papers.
Simon
"Troy Steadman" <troyst...@yahoo.co.uk> wrote in message
news:1131712655....@f14g2000cwb.googlegroups.com...
To create charges to NIC, setting out the rules on a pecuniary liability as
in the Overdrive Case.
Simon
Cant recall any bungalows in Colliers wood, plenty of builders though with
new hotels and shopping complex going up.
Simon
Very true Peter, it was only a few months ago, I had a director defending
expenses claims when the petrol receipts for the same car put it in
Southampton at 9am and Northampton at 10am the same day. The car was a
BMW320i but even they are not that quick.
This is a very common wheeze used by Salesmen, collecting receipts of
neighbours and friends to con employer and taxman alike.
Peter Saxton
Hopefully to be followed by house prices going up!
Troy Steadman
Which people? What fraudulent entry?
I have never noticed the train ticket fiddle, although the "all travel
goes through the business including my holidays" is common enough. The
giveaway tends to be two adults and a child on the ticket! The builder
who puts his extenson through the books is easily spotted: deliveries
to 20 Acacia Avenue but no sales invoice to match.
I have never suggested that any accountant I ever worked for was
interested in how credit cards were being paid off (that is Tim's
invention). But "criminal lifestyle" can be suggested just by driving
past a person's house. Summing up their net "cash at bank" takes only a
few minutes. The bank manager is doing it. If you aren't and it all
blows up isn't there a chance someone will say you are complicit?
I've left that for Martin.
Tim
> I treat my clients as adults whether they act like it or not.
> I explain what they have to do. I ask them if it's worth
> doing investigations to uncover information from other
> than the usual business transactions. If they say no I don't.
>
> If the accounts don't look right I will ask
> questions and sometimes more work is agreed.
A voice of reason!
Tim
> So, if the omissions of the client are deemed Criminal, the accountant
> did not know but only suspected that this was the case, he
> still has a responsibility under the Proceeds of Crime Act to
> report that submission and MUST NOT ADVISE THE CLIENT.
Surely if the client had accidentally forgotten something, and the
accountant suspected that it was missing, then it would be much better for
the accountant to simply mention it to the client so that the missing data
can be provided?
The procedure you mention seems to assume that ALL forgetful clients must
actually be criminally-minded!!
Tim
> > >> I wouldn't disallow "a ladder" to "A Builder" ...
> > >
> > "Tim" wrote:
> > >Even one that isn't used for the business? Shame on you!
> > >
> Peter Saxton wrote:
> > The people who think like this don't like to stop after one fraudulent
> > entry. It becomes an obsession and pretty soon they're grabbing
> > discarded train tickets and eventually having to explain why they were
> > taking two train journeys at the same time at different ends of the
> > country!
>
> What fraudulent entry?
The privately-used ladder as a business expense in the builder's tax
returns?
"Troy Steadman" wrote
> I have never suggested that any accountant I
> ever worked for was interested in how credit
> cards were being paid off (that is Tim's invention).
No, actually - that is Ronald's baby.
"Troy Steadman" wrote
> But "criminal lifestyle" can be suggested
> just by driving past a person's house.
Eh? Explain?
Tim
> We have seen long ago at the top of this thread
> that you don't *need* a business bank account.
Agreed so far...
"Troy Steadman" wrote
> If that is the case then a proportion of
> private bank charges and interest is allowable.
Where does this come from? It does not follow from the first statement at
all!
Alan Ferris
<no....@localhost.localdomain> wrote:
>Not quite, but almost. The tax man won't trust the client, and the
>accountant should be one step ahead of the tax man, and should make
>sure there is nothing there to arouse the tax man's suspicions or
>to reinforce them at the second-glance stage. The third glance is
>better staved off.
To be fair, I try never to distrust tp's, even when I have risks. I
know that there can be explanations that can account for those risks.
Also I know that tp's some times make honest mistakes. I only
distrust a tp when they give me reason to distrust them, like an
explanation not fitting the facts, changing their story of what they
do when they realise something is wrong.
But before the trolls jump in, even in those events where I may
believe the tp is lying or a cheat, I treat them the same way as I
treat any other case.
Alan Ferris
<no....@localhost.localdomain> wrote:
Possibly, but sadly some people prefer cheap accountants and are not
bothering to check on the quality of the work done for them.
Alan Ferris
I doubt a simple oversight would be considered criminal, lets say he
has forgot to tell you about interest on an account, this would not be
criminal, but would be negligent. But what if the omission was
extracting £100,000 per year by forging invoices? I had this once,
the agent was aware the invoices had been forged and yet did nothing
about it, lucky for him it was before the new act came in.
Troy Steadman
> > > >"Troy Steadman" wrote
> > > >> I wouldn't disallow "a ladder" to "A Builder" ...
> > > >
> > > "Tim" wrote:
> > > >Even one that isn't used for the business? Shame on you!
> > > >
> > Peter Saxton wrote:
> > > The people who think like this don't like to stop after one fraudulent
> > > entry. It becomes an obsession and pretty soon they're grabbing
> > > discarded train tickets and eventually having to explain why they were
> > > taking two train journeys at the same time at different ends of the
> > > country!
> >
> "Troy Steadman" wrote
> > What fraudulent entry?
>
> The privately-used ladder as a business expense in the builder's tax
> returns?
Using "ladder" in its normal sense, I do not think any builder can have
a "privately-used" one. Do you envisage an ornamental "do not climb on
this ladder" ladder?
> "Troy Steadman" wrote
> > I have never suggested that any accountant I
> > ever worked for was interested in how credit
> > cards were being paid off (that is Tim's invention).
>
> No, actually - that is Ronald's baby.
>
> "Troy Steadman" wrote
> > But "criminal lifestyle" can be suggested
> > just by driving past a person's house.
>
> Eh? Explain?
Suppose your client has a £4,000,000 House (which you can see on the
Internet they bought 5 years ago for £2,000,000). You look over the
gate and see a Ferrari, a couple of other cars, a pony, a power boat.
Suppose you surmise they might need £100,000 a year to live that
lifestyle?
The question is: Where did your client get £2,500,000 in 5 years? His
business? No.
Mortgage? Inheritance? Wife works? Credit cards? Savings? - most of
that information is at your fingertips if you have his statements.
Or do you advocate: "It's none of my business where my client's money
comes from. I'm just his accountant"?
Tim
> > Income on a credit card?!
>
> Yes. A card account statement is just another kind of bank
> statement, which shows money going out (to pay for stuff) and
> reduces your card debt is income unless it's otherwise "legit",
> such as if it's a transfer from other funds you already own.
Ermmm - even the "under-the counter cash" is "funds you already own"!
It's just a *transfer* from cash in your pocket, to a reduced CC balance.
> "Tim" wrote:
> > And why won't you accept the figure for "income on other a/c's"
> > provided by the client - why do you *need* the full statements?
>
"Ronald Raygun" wrote
> Credibility. The clever accountant, so Troy will say, knows
> how the tax man thinks, and knows what things will start
> the tax man's involuntary twitch. If the accountant sees
> it as part of his job to minimise the risk of a tax enquiry...
But this is the crux of the matter. The accountant is (arrogantly) creating
unnecessary extra work that the client doesn't want. There is no reason why
"minimising the risk of a tax enquiry" *needs* to be part of the job - and,
indeed, it doesn't even help the accountant in any way, does it? Minimising
the risk of an enquiry would only help the client - so it should be up to
the client to weigh-up the risks and make the decision.
So, the client can be told the risks, and if s/he still prefers not to
provide the irrelevant records then there shouldn't be any reason why the
accountant couldn't still do the job - professionally & correctly.
> "Tim" wrote:
> > So what you mean is, you don't trust the
> > client - and you want to check up on him?
>
"Ronald Raygun" wrote
> Not quite, but almost. The tax man won't trust the client...
That's fair enough. The taxman has statutory rights to see certain records,
so the client would provide them to him.
But the accountant doesn't have those statutory rights, is acting as a
service provider for the client, and can do the job without them - so s/he
is just being nosy & arrogant to impose those requirements.
"Ronald Raygun" wrote
> If the client doesn't trust his accountant,
> he might as well not hire one.
Are you saying that it is a requirement to *completely* trust someone, in
order to do business with them?
That could seriously reduce the pool of resources which you were able to
tap!
"Ronald Raygun" wrote
> And just because he's managed to hide the card account on
> which those leather sofas were bought, the taxman, when he
> invites himself round for a friendly chat, will notice the sofas when
> he sits on them, and will wonder what they were bought with.
If he asks, then the answer may be "I used this credit card here" - or "I
bought them 8 years ago" - or "they were bought by the wife" - or "they were
a present from Aunty More-money-than-can-spend-herself" -- just as easily as
"from under-the-counter cash".
So there's no reason for the taxman to be overly suspicious without asking!
"Ronald Raygun" wrote
> If all the client says is "talk to my accountant"...
That's got to look suspicious in itself! Why can't the client simply answer
the question himself?
"Ronald Raygun" wrote
> ... and the taxman says to the accountant "what about those
> sofas?", and the accountant says "what sofas?", THEN WHAT?
Well, THEN the taxman ought to be incredibly suspicious. What he does might
depend on a number of factors, but I'd have thought that the chances of him
wanting to do more scrutiny would have increased, not decreased.
Tim
> > > > >> I wouldn't disallow "a ladder" to "A Builder" ...
"Troy Steadman" wrote
> Using "ladder" in its normal sense, I do not think any
> builder can have a "privately-used" one. Do you envisage
> an ornamental "do not climb on this ladder" ladder?
No, simply one that he keeps at home to do all the domestic jobs with.
It might even be an indoor ladder that his wife wants to be kept much
cleaner than his "work ladders"!
> > "Troy Steadman" wrote
> > > But "criminal lifestyle" can be suggested
> > > just by driving past a person's house.
> >
> "Tim" wrote:
> > Eh? Explain?
>
"Troy Steadman" wrote
> Suppose your client has a £4,000,000 House (which
> you can see on the Internet they bought 5 years ago for
> £2,000,000). You look over the gate and see a Ferrari, a
> couple of other cars, a pony, a power boat. Suppose you
> surmise they might need £100,000 a year to live that lifestyle?
>
> The question is: Where did your client get
> £2,500,000 in 5 years? His business? No.
>
> Mortgage? Inheritance? Wife works? Credit cards? Savings? - most
> of that information is at your fingertips if you have his statements.
But you'd need much more than just the last tax year's statements for that.
Do you ask for the last 10 years statements?
"Troy Steadman" wrote
> Or do you advocate: "It's none of my business where
> my client's money comes from. I'm just his accountant"?
If there is nothing to suggest any criminality, why do you think the
accountant should go looking for it?
Tim
> >> So, if the omissions of the client are deemed Criminal, the accountant
> >> did not know but only suspected that this was the case, he
> >> still has a responsibility under the Proceeds of Crime Act to
> >> report that submission and MUST NOT ADVISE THE CLIENT.
> >
> >Surely if the client had accidentally forgotten something,
> >and the accountant suspected that it was missing, then it
> >would be much better for the accountant to simply mention
> >it to the client so that the missing data can be provided?
> >
> >The procedure you mention seems to assume that ALL
> >forgetful clients must actually be criminally-minded!!
>
> I doubt a simple oversight would be considered criminal...
> ... But what if the omission was extracting
> £100,000 per year by forging invoices?
Oh, I had assumed that Simon meant that the "ommission" was deemed criminal,
rather than the thing that was "omitted".
I was considering something which was actually legal, but which the client
happened to forgot to pass to the accountant - but which had a large effect
on the tax calculated.
Would it never be deemed criminal to substantially under-declare the tax to
be paid?
Simon
"Tim" <m...@home.uk> wrote in message
news:dl4bcl$nla$1...@nwrdmz03.dmz.ncs.ea.ibs-infra.bt.com...
As Alan says, there a forgetful clients and there are FORGETFUL clients.
The POCA does need a criminal act to kick in, or at least, the suspicion of
a criminal act.
The government doesn't just want business accounts, it wants honest business
accounts, but does not want to pay to police it. So it brings in legislation
that makes the country's accountancy profession to help keep their clients
honest, or be held accountable for their actions.
Simon
demonstrate that the tax loss is a result of an action that had the specific
purpose of denying the state of its appropriate slice of the cake.
In the old days, charges were brought for Common Law Cheat but this needed
to prove fraud. Many schemes in use don't involve false accounting or theft,
just imaginative accounting practices.
Now, if it can be demonstrated that paying less tax than was legally due was
a driving force, then a criminal act has been committed.
Simon
Hopefully, but with all the schools being converted to flats Gatton Road and
Garrat Lane in Earlsfield, , along with the petrol stations at Amen Corner
and Garrat Lane along with an old pub being treated the same, every thing is
just getting crowded.
When they changed the Roundabout at the bottom of merauntun way to traffic
lights and cross roads, this improved the traffic flow by quite a bit, but
with the new works in Savercentre, the shopping area and the old Wandle
market area, its slowed to a crawl again.
Oh well, that's progress.
Tim
> >> >> So, if the omissions of the client are deemed Criminal, the
accountant
> >> >> did not know but only suspected that this was the case, he
> >> >> still has a responsibility under the Proceeds of Crime Act to
> >> >> report that submission and MUST NOT ADVISE THE CLIENT.
> >> >
> >> "Tim" wrote:
> >> >Surely if the client had accidentally forgotten something,
> >> >and the accountant suspected that it was missing, then it
> >> >would be much better for the accountant to simply mention
> >> >it to the client so that the missing data can be provided?
> >> >
> >
"Simon" wrote
> Now, if it can be demonstrated that paying less tax than was legally
> due was a driving force, then a criminal act has been committed.
But the point is, that the accountant might *SUSPECT* that even though it
wasn't true. In which case, s/he "MUST NOT ADVISE THE CLIENT"!
Suppose the client just happens to forget to provide some records (which he
fully intended to provide), and the accountant *suspects* that this might be
a "driving force" (and hence that a criminal act might have been committed -
not that it *has*, simply that s/he *suspects* it might have).
In this situation, what would be the best solution? Probably that the
accountant asks the client for the missing records, the client says
"Whooops! - here they are" and everything works out fine.
But under the POCA to which you refer, the accountant is not allowed to do
that. So s/he reports the suspicion, and doesn't let on to the client.
Meanwhile, the (honest) client thinks he has provided the necessary records
and so doesn't "give them again".
The accounts are prepared without the missing records....
Do you see what I mean? If the accountant thinks something is missing but
doesn't know whether it is dodgy or forgetfulness, then s/he must at least
suspect possible dodgyness. So s/he cannot ask the client, and so the
problem cannot be resolved at this early opportunity. Bad news all round!
Tim
> The government doesn't just want business accounts, it wants honest
> business accounts, but does not want to pay to police it. So it brings
> in legislation that makes the country's accountancy profession to help
> keep their clients honest, or be held accountable for their actions.
But this "regulation" fails at the first hurdle - there is no compulsion for
anyone to use an accountant!
Martin
<snip>
>
> But the point is, that the accountant might *SUSPECT* that even though it
> wasn't true. In which case, s/he "MUST NOT ADVISE THE CLIENT"!
>
I would argue that suspicion wouldn't reasonably arise unless the accountant
asked for something extra, and then the client declined to provide or
explain it.
Beyond that, my understanding is that the POCA / AML rules require that you
don't tell the client if you make a report. Not that you can't tell the
client you suspect something... Or have I got that wrong?
--
Martin
[Remove barrier to reply]
Tim
> > But the point is, that the accountant might *SUSPECT* that even though
it
> > wasn't true. In which case, s/he "MUST NOT ADVISE THE CLIENT"!
>
> I would argue that suspicion wouldn't reasonably
> arise unless the accountant asked for something extra,
> and then the client declined to provide or explain it.
But why would the accountant ever ask for something, unless s/he suspected
something was missing?
"Martin" wrote
> Beyond that, my understanding is that the POCA / AML rules require
> that you don't tell the client if you make a report. Not that you can't
> tell the client you suspect something... Or have I got that wrong?
IANAL - but I thought Simon was right, that the rule is that you can't tell
the client of suspicions (which would effectively tip him off).
Ronald Raygun
Why should it follow from the first statement? If it's true,
it can follow from something else.
I'm not sure it even is true. Doesn't it fall foul of the dual-use
rules? At least with car mileage, or phone usage, heat/light, etc,
you can apportion on a tangible basis (this mile or kilowatthour or
phone minute was personal, that one was for business), but how can
you say this penny of bank charge was personal and that one wasn't?
There is no way you can tell them apart, and indeed charges may be
part of a fixed package and (like standing charges for phone line
rental) therefore incapable of being apportioned. Bank interest is
different, since you can calculate which part of overall borrowing
was personal and which not.
Ronald Raygun
>> "Tim" wrote:
>> > Income on a credit card?!
>>
> "Ronald Raygun" wrote
>> Yes. A card account statement is just another kind of bank
>> statement, which shows money going out (to pay for stuff) and
>> coming in (to reduce the debt balance). ... Anything which
>> reduces your card debt is income unless it's otherwise "legit",
>> such as if it's a transfer from other funds you already own.
>
> Ermmm - even the "under-the counter cash" is "funds you already own"!
> It's just a *transfer* from cash in your pocket, to a reduced CC balance.
No, your under-the-counter cash is undeclared income, hence only partly
yours, because some of it belongs to the tax man.
>> "Tim" wrote:
>> > And why won't you accept the figure for "income on other a/c's"
>> > provided by the client - why do you *need* the full statements?
>>
> "Ronald Raygun" wrote
>> Credibility. The clever accountant, so Troy will say, knows
>> how the tax man thinks, and knows what things will start
>> the tax man's involuntary twitch. If the accountant sees
>> it as part of his job to minimise the risk of a tax enquiry...
>
> But this is the crux of the matter. The accountant is (arrogantly)
> creating unnecessary extra work that the client doesn't want.
Accountant and client will need to agree just what work is to be
done. An accountant is free to decline "half-measure" business
and can tell the client if that's what he wants he can go to the
other chap down the road.
> There is no reason
> why "minimising the risk of a tax enquiry" *needs* to be part of the job -
> and,
> indeed, it doesn't even help the accountant in any way, does it?
It helps the accountant's reputation if he can easily and quickly field
any questions from the tax man on behalf of his clients, without any
hint of trouble ever arising.
> Minimising the risk of an enquiry would only help the client - so it
> should be up to the client to weigh-up the risks and make the decision.
The practitioner need not offer the choice if he doesn't want to.
He can say "I'll do everything or nothing. If you want anything
inbetween, find someone else.".
> So, the client can be told the risks, and if s/he still prefers not to
> provide the irrelevant records then there shouldn't be any reason why the
> accountant couldn't still do the job - professionally & correctly.
Indeed not, apart from his own preference.
>> "Tim" wrote:
>> > So what you mean is, you don't trust the
>> > client - and you want to check up on him?
>
> "Ronald Raygun" wrote
>> Not quite, but almost. The tax man won't trust the client...
>
> That's fair enough. The taxman has statutory rights to see certain
> records, so the client would provide them to him.
> But the accountant doesn't have those statutory rights, is acting as a
> service provider for the client, and can do the job without them - so s/he
> is just being nosy & arrogant to impose those requirements.
No, it's not nosy and arrogant, it's just being over-careful. He simply
wants to be prepared for the event, unlikely though it may be, of the
taxman exercising his statutory rights, and to make sure there are no
nasty surprises a-lurking.
> "Ronald Raygun" wrote
>> If the client doesn't trust his accountant,
>> he might as well not hire one.
>
> Are you saying that it is a requirement to *completely* trust someone, in
> order to do business with them?
No, I'm saying that you should be able to trust your accountant,
and if you don't, then you might be better off learning how to do
the job yourself.
> "Ronald Raygun" wrote
>> And just because he's managed to hide the card account on
>> which those leather sofas were bought, the taxman, when he
>> invites himself round for a friendly chat, will notice the sofas when
>> he sits on them, and will wonder what they were bought with.
>
> If he asks, then the answer may be "I used this credit card here" - or "I
> bought them 8 years ago" - or "they were bought by the wife" - or "they
> were a present from Aunty More-money-than-can-spend-herself" -- just as
> easily as "from under-the-counter cash".
> So there's no reason for the taxman to be overly suspicious without
> asking!
But one hears stories of the taxman taking a "guilty until proven
innocent" position, leaving you to *prove* they were a gift from
Aunty (even though she can't confirm it herself because she died
last year). Does this happen or not?
Tim
> >> We have seen long ago at the top of this thread
> >> that you don't *need* a business bank account.
> >
> > Agreed so far...
> >
> > "Troy Steadman" wrote
> >> If that is the case then a proportion of
> >> private bank charges and interest is allowable.
> >
> > Where does this come from? It does
> > not follow from the first statement at all!
>
> Why should it follow from the first statement?
Troy said "If that is the case then...", implying that the former leads to
the latter.
"Ronald Raygun" wrote
> I'm not sure it even is true.
That's what I was trying to point out.
Ronald Raygun
>> > "Troy Steadman" wrote
>> >> We have seen long ago at the top of this thread
>> >> that you don't *need* a business bank account.
>> >
>> "Tim" wrote:
>> > Agreed so far...
>> >
>> > "Troy Steadman" wrote
>> >> If that is the case then a proportion of
>> >> private bank charges and interest is allowable.
>> >
>> "Tim" wrote:
>> > Where does this come from? It does
>> > not follow from the first statement at all!
>>
> "Ronald Raygun" wrote
>> Why should it follow from the first statement?
>
> Troy said "If that is the case then...", implying that the former leads to
> the latter.
I think you're wrong to infer such implication. He probably merely meant
that whereas in the case of an account used exclusively for business, all
charges would be allowable, in the case of a mixed account only a
proportion would be. "We have seen that you don't need a business bank
account" would imply that (unless you're not using any bank account) you
would be using a private one for both personal and business purposes (*),
and he reckoned (quite possibly in error) that any charges could be
split in some way.
(*) Another possibility is that you would use an account not marketed
as "for business", i.e. you'd use a "private" account, but nevertheless
exclusively for the business, and of course in that case all the charges
would be allowable.
> "Ronald Raygun" wrote
>> I'm not sure it even is true.
>
> That's what I was trying to point out.
What? That it isn't true or that you're not sure? :-)
Tim
> >> I'm not sure it even is true.
> >
> > That's what I was trying to point out.
>
> What? That it isn't true or that you're not sure? :-)
No - [I was trying to point out] that *you* weren't sure! ;-))
[[["Ronald Raygun" wrote: "I'm not sure..."]]]
Simon
Yes, I do but the accountant has doubts and suspects that a criminal act has
been committed. He makes the report to the relevant authorities and they
look into it. If an honest error has been made then the only consequence is
that the error will be corrected. If the error occurred because a criminal
act has been committed, the offender is not alerted and the proper
authorities get the opportunity to catch the culprit and the accountant
avoids becoming a conspirator before and after the fact. Good news all
round.
Is your glass half full or half empty!
Simon
Its true that you have to have a turnover above a certain level to have a
auditor, but even then, the majority use some form of service to prepare or
assist in the preparation of accounts. Its not just accountants caught by
this, solicitors, bankers and the rest are having to take the necessary
precautions.
I have to say that most seem reasonably content with this legislation, I
have taken a few calls where info is provided, a bank officer raised
concerns on an account being used to receive Tax Credits for over forty
different names was a very good tip and stopped a wholesale theft against
the state. Its unlikely that this would have been found out quite so early,
if at all without this report.
So I don't think it fails, there are some it wont catch, as you point out,
some keep every thing close to their chest and don't reveal their dealings
with anybody, but it will catch many others. This has to be better for the
public who, for the most party are honest, hard working people.
Peter Saxton
<troyst...@yahoo.co.uk> wrote:
>Peter Saxton wrote:
>> On Fri, 11 Nov 2005 14:05:14 +0000 (UTC), "Tim" <m...@home.uk> wrote:
>>
>> >"Troy Steadman" wrote
>> >> I wouldn't disallow "a ladder" to "A Builder" ...
>> >
>> >Even one that isn't used for the business? Shame on you!
>> >
>> The people who think like this don't like to stop after one fraudulent
>> entry. It becomes an obsession and pretty soon they're grabbing
>> discarded train tickets and eventually having to explain why they were
>> taking two train journeys at the same time at different ends of the
>> country!
>
>Which people? What fraudulent entry?
>
>I have never noticed the train ticket fiddle, although the "all travel
>goes through the business including my holidays" is common enough. The
>giveaway tends to be two adults and a child on the ticket! The builder
>who puts his extenson through the books is easily spotted: deliveries
>to 20 Acacia Avenue but no sales invoice to match.
>
>I have never suggested that any accountant I ever worked for was
>interested in how credit cards were being paid off (that is Tim's
>invention). But "criminal lifestyle" can be suggested just by driving
>past a person's house. Summing up their net "cash at bank" takes only a
>few minutes. The bank manager is doing it. If you aren't and it all
>blows up isn't there a chance someone will say you are complicit?
>
What's the point of summing up cash at bank?
Peter Saxton
<troyst...@yahoo.co.uk> wrote:
I think we are talking about the average client. I've certainly asked
clients where their money has come from after doing their accounts. I
don't have to analyse all their personal papers to know if their
answer is reasonable.
Peter Saxton
I think you'll find that they prefer to have more control over the
timing of the traffic lights and that's what slows things down.