Let’s recycle an old joke

Burton Accountants- Alexander Accountancy - Making Tax Digital

Business owner “How much profit are the accounts showing?”

Accountant “How much do you want them to show?”

Strangely enough there was a time when that seemed to be how it worked. Since then regulations have eroded the flexibility there used to be in the interpretations and variations available. Today it often appears there is a battle going on so that every time a plan is developed to help businesses or tax payers, new legislation appears to counteract it.

So much so that The Office Of Tax Simplification is a running joke within the accounts profession. With so much new or changing legislation that many professional accountants are struggling to keep up with it, and many older accountants are looking to retire before the next nightmare, Making Tax Digital, is thrust upon them.

Many people would have you believe this will not be a problem as modern technology can take care of all the data entry and allocations. But the software can only make limited analysis decisions and still needs to be monitored to make sure it is making the right distinctions between incomes and liabilities, and costs and assets.

For example, if the business spends £600 on a cooker is this a cost or an asset? And how much VAT can be reclaimed? For most businesses you would assume this is an asset, but what happens when the business is carrying out construction works? Then this could be equally part of the project cost, and in the case of a new build the VAT on white goods cannot be claimed. However if this was part of a site hut at a long term project the treatment changes.

So perhaps the modern take on our opening question will become:

Business owner “How much profit are the accounts showing?”

Tax man “Not enough so we are going to revise it upwards. We are also going to issue penalties for not correcting the software, and charge you interest for believing you had paid enough tax when you hadn’t.”

Business owner “So why did you tell me I didn’t need an accountant?” :)

 

To find out how Alexander Accountancy can help you and your business, please telephone Burton on Trent 01283 743 851 or email info@alexander-accountancy.co.uk