Accountancy question??

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harcourtv57
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Accountancy question??

Post by harcourtv57 »

Hi all

We are experiencing some problems with our accounts and wondered if anyone had any advice. It seems to us that our accountant requires far too much information - for example, we provide a welcome pack which is always the same, but must provide a receipt for every single one. He also says we have to provide full details of each guest, even down to their contact details (data protection??). When we had only one property it wasn't too bad but now with four its becoming a nightmare! We have lettings system software which produces reports for income tax purposes and my view would be that this information should be sufficient, it should be enough to provide details of income from each guest and running expenses - and for example if you provide a 100 welcome packs at £5 at time, why should you have to provide a receipt for every single one - or am I oversimplifying it??! Also the security/breakages deposit is 'dead' money - they pay £100 and get £100 back so its not income but we have to account for every single one of these transactions as well. We both have day jobs as well as the holiday rental business and its becoming difficult to find the time to provide the level of info the accountant is asking for. We recently stayed in a B&B in France and on talking to the owners, they don't have to provide a receipt for every cost down to washing powder like we do - or is this because their tax law is different? Any advice gratefully received . . .
Nightowl
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Post by Nightowl »

That sounds like a nightmare.

Our accountant didn't ask for receipts for every little thing last year (when we only had the spanish house to declare) and he is ex inland revenue.

Sounds like you need someone who is a bit less pernicketty - I know they have to cover their ar*e a bit in case there is an investigation but that's ridiculous. From what I can gather there are plenty of occasions where Inland Rev will accept figures that are not backed up by paperwork - as long as they are reasonable for the sort of business being run.

This year I have to put accounts in for 2 properties which we started off this year and which were completely gutted and renovated and absolutely everything from new kitchens to toilet roll holders and towels x 24 of everything, bed linen x 24 etc, etc. As I did a lot of it piecemeal and am quite badly organised sometimes, I havent got receipts for everything. Also a lot of the builders/garden people would only take cash and half of them didnt give us receipt so I'm hoping I won't need receipts because I don't have them. But I'm certainly not expecting to have to give receipts for a pack of croissants and a bit of washing up liquid every time....
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harcourtv57
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Post by harcourtv57 »

Thanks Nightowl thats useful

We did the same, our last two properties we bought as renovations and did them up, so having to provide every builders merchant receipt and receipt for bits of copper pipe and sundries. . . . . as well as receipts for toilet roll and washing up liquid . . . well you can imagine - OH is tearing his hair out! I can imagine you would need every receipt should you be investigated but would assume that if your income and outgoings seem normal for the business you are running then thats not likely to happen . . . .
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apexblue
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Post by apexblue »

Just doing our accounts now but only have to provide figures for our accountant - think I'd look at changing if I were you


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Marks
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Post by Marks »

Time to find a new accountant methinks. You should be able to account for every bit of expenditure with receipts and also provide an invoice for each guest. If you bank your security deposit, whilst not subject to tax, you will need to show it coming in and going out and be able to balance them at the end of the tax year. As for getting contact details for each guest, you should of course have those but your accountant does not need them.

A simple Excel spreadsheet would suffice showing rental income and security deposits on one side as they occur and expenditure and security deposits returned on the other side suitably broken down. All entries should tie up with your bank statements. That is all my accountant has had for the last five years without any problem whatsoever.
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pete
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Post by pete »

harcourtv57

are you in the VAT threshold ?

This would make a difference on the information that you will need to provide and an increase in properties would maybe get you near that income level.

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mpprh
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Post by mpprh »

It is 30+ years since I passed my UK taxation exams - so not exactly up to date !

However, the situation was that all costs, deductions and allowances were based on actual costs backed up by invoices unless they had been agreed with the revenue in advance. Such items could be professional fees, and costs negotiated by unions etc which had already been agreed.

As an example, employed staff could not be paid expenses on the basis of a Round Sum Allowance (RSA). Such expenses were not deductible by the employer and taxed as income for the employee.

And maybe a fixed amount per welcome pack could be seen as a RSA ?

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Leo
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Post by Leo »

As an accountant I agree with Marks's comments. Your accountant should not need all this information to prepare all your accounts so long as your records are clear for him to follow. But you do need to keep the receipts otherwise if you do get investigated these costs could be disallowed ( I can't claim I am perfect).

On the deposits I think it is wise to keep the audit trail of the deposits in and out, not just for the accounts but for your own records and in case of queries later on.

On the round sum amounts you need to get agreement with the Revenue before doing this - this normally relates to employees away from the office being able to claim a small allowance to cover lunch / incidentals without having to provide a receipt and to make sure the allowance is not treated as taxable income
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Windy
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Post by Windy »

If your total property income in the year, including furnished holiday letting income, before expenses is less than £15,000 annually, you do not have to list expenses separately. Instead, put total expenses in box 5.7.
http://www.hmrc.gov.uk/worksheets/2007/sa105notes.pdf

So if it is, then you do, presumably.

My accountant accepted a list broken down into headings like "Marketing", "Maintenance" etc last year even though the income was above that threshold. Then again he knows from my other life that I keep receipts meticulously and can back it all up if required.

I would say it's not unreasonable to be asked to account for welcome packs - after all you might SAY you provide them but not actually do so. As far as the tax man is concerned not everyone is as honest as you are :?

It doesn't take THAT long - I too run my own business but manage two properties as well and I wouldn't say the accounting is a headache. (Touch wood :lol: )
harcourtv57
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Post by harcourtv57 »

Dear All

Thanks all for your advice and sorry about the delay in getting back - been off LMH for a while - lots going on!

I probably didn't explain it very well - we do off course keep all our receipts as proof if required, and can also account for all received and returned deposits. And if any guest pays cash (only for late bookings) we provide them with a receipt and keep a copy. We are not making enough money to be VT registered.

it was the fact that we were being asked to account (no pun intended) for every expense and reconcile before submitting to the accountant - it seemed it was us doing all the work for him! We have now let the accountant go, we have registered with Inland Revenue for an online return and are using both the reports from our lettings system (which are designed for Inland revenue retuns) and 'Quickbooks' software. Probably will get another accountant to look over our books before submission in any event.
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