Society Corporation Tax

[houstonceng]

Hi Guys

Short story is that for a number of reasons my MES of which I am the Treasurer decided to become a Private Comany, Limited by Guarantee. Of course, HMRC immediately slapped us with a notice to file a Cirporation Tax return. As we trade by Public Rinning day’s and Parties, as well as getting income from Subscriptions, our Tax could be a little complicated. Add to this the requirement to file accounts in iXBRL.

Has anyone in another club any advice or recommendation of a good accountant familiar with MES type trading. I have found a couple of firms that deal with small businesses, but they would charge about £500 just to file the tax.. XBRL software appears to cost anything up to £80/month and covers areas that we don’t need like payroll and VAT.

[Jock McFarlane]

I would suggest you search for any small firm of chartered accountants and get them to prepare and file the tax returns and also file the annual accounts at Companies House. MES type trading is not really that specialist. They will also be able to advise you on other requirements of Companies house relating to registering directors and officers and the annual confirmation statement.

To give you perspective I know of one society where the Treasurer is a retired chartered accountant and he prepares the accounts and tax computations. The professional accountants then charge £750 inclusive of VAT to pretty up the accounts and file them and they also file the tax returns. They have the specialist software that is required fro filing.  

Regards

JM

[Midland]

Andy
Notice to file a tax return is standard and I get one every year. It is really only a reminder to file the damn thing. I do the tax returns for our society and have done so for a number of years and I know more about model engineering than I do tax, ask Simplyloco and he will tell you I know bugger all!! I also do the accouts and file with the FCA. It is all on line these days and you do not need any special facilities and least of all do you need an accountant, money for old rope!
I see you are in SE England as I am sort of, so we could get together and I can show you my tax return so you see how I do it. And we don't pay tax. PM me for service.
Cheers David

[houstonceng]

Hi Jim

Thanks for the input. Basically, I have no problems preparing accounts, I do that for our MES and three other organisation, one a registered charity. The other three are not subject to Corporation Tax. As you correctly say, it is filing in XBRL that causes the problem. I did approach small accountancy firms all of whom quoted about £500 + VAT.. that would make a big hole in outer income along with the tax.

As far as filing with companies house is concerned, that’s a doddle. CH still accept .pdf - for now at least. I have filed the names of additional directors and it fell to me to prepare the Articles and file the application for the MES as a Limited company, so annual confirmation would pose no problem. There are plenty of examples to copy on the CH list of other MES.

Main concern is that information on the HMRC web-sites is a bit confusing when it comes to members clubs that also trade. Some information appears to say that subs aren’t taxed, some appears to say only when it is a mutual club (incorporated or not).

Basically, if another MES (or individual ME) knows an accountant that doesn’t charge as much as £600 to £700 inc VAT just to file the accounts, I would be very grateful.

[Jock McFarlane]

Andy,

The Society I referred to is in fact a company limited by guarantee same as yours. Sorry, I did not make that clear. You seem to have the Companies House bit under control and I assume you are happy that the accounts you prepare and file comply with the accounting standards. 

The Corporation Tax form you need to fill in is a CT600 which is 11 pages and you also need to compute capital allowances and separate out the activities which are trading from non trading "club" activities. 

If you do plan to do the tax yourself I suggest you start early on so that you can get the advice you need if you run into snags. 

When it comes to buying in advice I tend to follow the maxim of " why keep a dog and bark yourself"

Regards

JM

[uuu]

Intrigued by this thread, I thought I'd do a bit of snooping around. I've not found a way to escape the need to file your CT600 return electronically, but I have been reading about the HMRC's free filing software. If you're eligible to use this, it might enable you to do things yourself. Here's a link to what I've been reading.

www.gov.uk/guidance/corporation-tax-use-hmrcs-free-filing-software

I'm assuming you qualify as a limited company with a turnover of less than £600,000

Wilf

[Roger]

Mar 20, 2020 11:14:40 GMT uuu said:

Intrigued by this thread, I thought I'd do a bit of snooping around. I've not found a way to escape the need to file your CT600 return electronically, but I have been reading about the HMRC's free filing software. If you're eligible to use this, it might enable you to do things yourself. Here's a link to what I've been reading.

www.gov.uk/guidance/corporation-tax-use-hmrcs-free-filing-software

I'm assuming you qualify as a limited company with a turnover of less than £600,000

Wilf

Hi Wilf,
I've recently trodden this path by sacking my accountant because the fees were ludicrous for what they did.
If you go to the gov.uk web site, you can sign up for things like PAYE, Corporation Tax, VAT and Self Assessment, each of which has to go through the process of applying, receiving a code in the post and entering that in the web site login before you can do anything. Once in though, you can fill in whatever forms and do it all yourself.
Be aware that Limited Companies need to file BOTH to HMRC and Companies House. When you go in through the HMRC login, you are asked if you want to submit to both, and you do. I didn't realise this, and ended up getting fined. It's a pretty rubbish system, confusing and worrying, but with a bit of imagination and the patience of a Saint, it IS just possible. VAT and PAYE are a doddle, it's the Tax returns that are painful to complete.
Anyway, even with the odd fine here or there, it's a hell of a lot cheaper than getting a licensed bandit to do it for you.

Just one word of caution though.... the Gov web site is awful. You have the SAME login screen for whatever service you want! It's only the username and password that decides what page you land on! Someone wants hanging for this junk software. Imagine having a common login page for FaceBook, eBay and gmail that looked identical, with only the username and password deciding where you ended up! Absolute junk!

[houstonceng]

Guys

Thanks for the inputs. Firstly, Roger is correct - the Government Gateway log-in and is about as user unfriendly as they could make it - but it is, what it is, and we have to put up with it - for now. I have set-up access for CT (if I require it) and already use it for Self-assessment Income Tax and filing Accounts for a Charity (not my MES) with the Charity Commission, as well as claiming Gift Aid donations.

Dealing with Corporation Tax (CT) and Companies House (CH) filing. The Latter appears to only require a simple balance sheet (since the MES is a micro entity) - submitted, like most documents to CH, in .pdf format and showing Fixed Assets, Current Assets, Prepayments & Accrued Income plus Creditors. The sim of which should give the Total Assets/(Liabilities). This should balance to the Capital and Reserves. The Balance sheet then requires statements about Audit, Exemption as a Micro-entity, etc, and an attestation about approval and submission.

It's the CT and HMRC S'ware that poses a problem. HMRC web-site says that you can use the HMRC software to report for CT "Income up to £1,000 that does not come from your organisation's main trade". It also says that you can use the same software to report to CH "Income over £1,000 that does not come from your organisation's main trade". So the two are mutually exclusive. In any case, does Members' Subscriptions of over £2,000 count as "Income that does not come from your organisation's main trade" if the trade is giving rides to the Public ? There is no clear advice about this.

The HMRC Business Income Manual (BIM) goes into excruciating detail about Golf Clubs that allow visitors to pay for the use of their greens and how to apportion Expenditure and against this taxable Income and appears to say that Members' Subscriptions are not taxed - so would they then be counted as "Income that does not come from your organisation's main trade" ?

Those are the unanswered questions that stop me immediately trying to file using HMRC software.

I agree with JM that the CT600 looks easy, but the underlying accounts and calculations need to be in XBRL format which either requires them to be submitted using HMRC s'ware OR by using commercial s'ware (costly !) OR by hiring an accountant (even more costly !!)

[uuu]

I think the term "trade" implies an activity that is carried out with a view to profit. So subscriptions and the activity supported by them would not be "trade", let alone "main trade". The lack of intent to profit is why they are not taxed. Indeed, it would be foolish for HMRC to try and address them - as most clubs could, after allocating all relevant costs, arrive at a loss! But subscriptions would be "income".

As it happens, I was a Chartered Accountant until retirement a few months ago. But I've not done any tax work in decades - except VAT (I was in corporate finance and then database programming/performance reporting software). So your experience is more recent and relevant than mine.

Feel free to slag off my breed. I'm amazed how expensive work(!) of this kind is - and I've benefitted from this throughout my working life. And how little, in comparison, skilled engineering is valued.

And yes, I agree the government gateway is pants. I found it easy enough for my own self assessment - but I'm sure I could have written a better program.

Wilf

[houstonceng]

Wilf

Far be it for me to “slag off” accountants, especially when they are fellow model engineers, and I don’t want to get into a debate about their salaries and those of Engineers (even though I am a Chartered Engineer and, as part of my engineering, had to understand accounts). As I said, the main concern is that HMRC information appears to say I can’t use its on-line s’ware to report, as the MES has income (ie subscriptions) that isn’t from its trade and exceeds £1000. So HMRC is putting an immediate burden on a micro-entity to either buy commercial s’ware (most of which exceeds the requirement) or hire an accountant. Not really fair as we, the public, also collect taxes like VAT, CT and Income tax - as well as other taxes - as unpaid employees of HMRC.

Of course, if anyone is in the same position with income over £1000 from subs and income from Ride Ticket sakes, and has used HMRC software, i’d Love to hear how.

[Jock McFarlane]

Andy

UUU's idea of using the free software for Corp Tax did look good but the subscription income seems to have scuppered that idea. I imagine the free software was devised to help the numerous small companies that had a straightforward trade and were essentially a one man band. These companies  became popular some years ago when there was a tax advantage (now withdrawn).

I don't think you have much option other than finding a small firm of accountants and getting them to do the tax returns.  It will save you a lot of time and irritation, may save you some tax and may also save fines if you are late.

It need not be that expensive - I mentioned a VAT inclusive fee of £750 for a similar MES where the accountants file at Cos House, prepare and file CT returns and will answer questions throughout the year on financial issues.

I can probably send you a specimen CT600 and tax comp for an MES if it would be of help. The Treasurer is a retired Chartered Accountant but will probably oblige despite his profession being slagged off by other members of this forum.

[Roger]

I've got a copy of MYOB which used to be a popular accounting program but is no longer supported in the UK. I believe it's still available in Australia though, where I think it was written. My accountant wanted me to switch over to one of those that you pay a monthly subscription for, and if I was running a business with a quarter of a million turnover then I would. However, for a tiny business like mine where the turnover is very small, these overheads are not what I'm looking for.

These stand alone packages do become dated and will eventually fail to run on Windows, but hopefully it will see me out. I'm winding down, not winding up!

The key thing is that these cheap accounting packages do provide full reports for any financial period and are excellent for filling in the boxes in the CT600 form. Do be aware that just when you think you're finished with all the stupid questions on the web site, it then starts you all over again to do the Companies House submission. I really don't know how anyone gets out of bed in the morning to do this as a job. It would kill me.

[houstonceng]

Roger

As a Chartered Engineer, and like most Engineers, probably somewhere on the autistic scale (preferring science, numbers and maths with defined correct answers rather than the arts which are subjective) I am very happy with the computation of accounts. What I don’t like is being forced to spend £500 + VAT on top of CorpTax because HMRC can’t be bothered to cater for businesses such as our MES.

I have a couple of offers to meet and discuss account filing with others who have, it seems, managed to satisfy HMRC, without spending an arm and a leg, but with the present lock-down I am afraid that time will run out before I get to the answers.

[houstonceng]

Mar 20, 2020 19:43:59 GMT Jock McFarlane said:

Andy

...................


I can probably send you a specimen CT600 and tax comp for an MES if it would be of help. The Treasurer is a retired Chartered Accountant but will probably oblige despite his profession being slagged off by other members of this forum.

Yes please. PM me for an e-mail address.

[Jock McFarlane]

Mar 20, 2020 20:18:30 GMT Roger said:

I've got a copy of MYOB which used to be a popular accounting program but is no longer supported in the UK. I believe it's still available in Australia though, where I think it was written. My accountant wanted me to switch over to one of those that you pay a monthly subscription for, and if I was running a business with a quarter of a million turnover then I would. However, for a tiny business like mine where the turnover is very small, these overheads are not what I'm looking for.

These stand alone packages do become dated and will eventually fail to run on Windows, but hopefully it will see me out. I'm winding down, not winding up!

The key thing is that these cheap accounting packages do provide full reports for any financial period and are excellent for filling in the boxes in the CT600 form. Do be aware that just when you think you're finished with all the stupid questions on the web site, it then starts you all over again to do the Companies House submission. I really don't know how anyone gets out of bed in the morning to do this as a job. It would kill me.

Roger,

What you are describing is drudge work and is only a tiny part of the accounting profession. I believe accountancy can be very exciting especially when structuring massive financial deals. 

Did you know that the recently departed Mike Hoare was an English Chartered Accountant although I understand he may have been struck off at some stage for conduct unbecoming to the profession.

Perhaps you might consider the accountancy profession in your next life ?

Regards

JM

[Roger]

Initially I was really worried about making mistakes in the tax returns that would result in fines or prosecution. However, having thought through it rationally, as long as you declare everything you earn and everything you spend and you can back that up with paperwork, you're unlikely to fall foul of the Tax man. He's also short staffed and much more interested in larger concerns to chase you down unless you send in something totally implausible. I decided to just stop worrying about it, and trust that being up front and filling it all in as honestly as I can will be all that's required. Even if I get a fine, it won't be as much as what I was paying every year to my accountant.

[Roger]

Mar 20, 2020 21:17:14 GMT Jock McFarlane said:

Mar 20, 2020 20:18:30 GMT Roger said:

I've got a copy of MYOB which used to be a popular accounting program but is no longer supported in the UK. I believe it's still available in Australia though, where I think it was written. My accountant wanted me to switch over to one of those that you pay a monthly subscription for, and if I was running a business with a quarter of a million turnover then I would. However, for a tiny business like mine where the turnover is very small, these overheads are not what I'm looking for.

These stand alone packages do become dated and will eventually fail to run on Windows, but hopefully it will see me out. I'm winding down, not winding up!

The key thing is that these cheap accounting packages do provide full reports for any financial period and are excellent for filling in the boxes in the CT600 form. Do be aware that just when you think you're finished with all the stupid questions on the web site, it then starts you all over again to do the Companies House submission. I really don't know how anyone gets out of bed in the morning to do this as a job. It would kill me.

Roger,

What you are describing is drudge work and is only a tiny part of the accounting profession. I believe accountancy can be very exciting especially when structuring massive financial deals. 

Did you know that the recently departed Mike Hoare was an English Chartered Accountant although I understand he may have been struck off at some stage for conduct unbecoming to the profession.

Perhaps you might consider the accountancy profession in your next life ?

Regards

JM

Hi Jock,
Drudge work is a brilliant description of that task, it's the most tedious and unrewarding thing I've had to do in years.

I'm not a numbers person, I'm not even engaged by the maths of Engineering, even though I have a Degree in Mechanical Engineering. I'm much more a 'gut feel' and experience kind of Engineer, so doing a job like accountancy would make me suicidal. I've spent much of my career in Programming and Electronics which does require at least some maths, but my first and main obsession is designing and making stuff. So no, in another life, I'd never be an accountant. A musician or a stand-up comedian maybe, but I don't have the talents for either of those.

[Jock McFarlane]

Mar 20, 2020 21:18:50 GMT Roger said:

Initially I was really worried about making mistakes in the tax returns that would result in fines or prosecution. However, having thought through it rationally, as long as you declare everything you earn and everything you spend and you can back that up with paperwork, you're unlikely to fall foul of the Tax man. He's also short staffed and much more interested in larger concerns to chase you down unless you send in something totally implausible. I decided to just stop worrying about it, and trust that being up front and filling it all in as honestly as I can will be all that's required. Even if I get a fine, it won't be as much as what I was paying every year to my accountant.

Roger,
Your logic is sound but the only comment I would make is that the paid accountant may be able to minimise your tax bill. Incidentally, I have found that it is the medium sized and big firms that tend to charge the earth and that the smaller firms tend to be more realistic.

[Roger]

Mar 20, 2020 21:43:25 GMT Jock McFarlane said:

Mar 20, 2020 21:18:50 GMT Roger said:

Initially I was really worried about making mistakes in the tax returns that would result in fines or prosecution. However, having thought through it rationally, as long as you declare everything you earn and everything you spend and you can back that up with paperwork, you're unlikely to fall foul of the Tax man. He's also short staffed and much more interested in larger concerns to chase you down unless you send in something totally implausible. I decided to just stop worrying about it, and trust that being up front and filling it all in as honestly as I can will be all that's required. Even if I get a fine, it won't be as much as what I was paying every year to my accountant.

Roger,
Your logic is sound but the only comment I would make is that the paid accountant may be able to minimise your tax bill. Incidentally, I have found that it is the medium sized and big firms that tend to charge the earth and that the smaller firms tend to be more realistic.

I can't see how an accountant could save me over £1000 a year, which is what I was paying for all of my returns. I can claim for things like use of home as office, just like he did. There's no magic in the simple business I have. I just needed the impetus to make me grasp the nettle and take it on myself.

[uuu]

I found tax dull - but nowhere near as dull as auditing. Always looking backwards, never towards the future. Negotiating finance and system design is much more constructive.

Wilf