I am in the process of setting up my own bookkeepping business and have one client so far and all is going well.
I also have a friend that has his own construction / maintenance business. He is CIS registered and operates as both a contractor and subcontractor but never submits returns, does not provide invoices or proof of payment to his subbies, keeps no records or documentation and just thinks of a number to deduct for tax, with no method or calculation at all.
I have tried to advise him that he needs to get everything in order as he is facing a hefty fine but he is questioning me saying his friend only submits once a year and his accountant supposedly says that is ok.
I'm very tempted to just walk away and not get involved as i think he is trying to get out of it all.
It sounds like another "The bloke down the pub says..."
I'd be surprised if an accountant advised like that, but you don't know the situation and they vary.
HMRC and tax doesn't run on 'guess-work' so what your friend is doing will only get him in trouble, or cost him and cause problems.
As with any potential client, if they aren't willing to take your advice and help on serious matters - walk away. It's just too much headache to deal with... expecially if he is questioning you on something like this!
The other option, if you think everything else can be easily managed and you do want the client, is to possibly have them agree in writing on your advice and take the client on - being very cautious on receiving payment for your work as most like this are on a downwards spiral. The reason he operates like this might simply be because his books are in a mess and you can sort it out to get him on track... just cover yourself.
I take it you have the experience from previous work to manage sorting it out, and possibly dealing with the HMRC?
I'm recently ACCA qualified but have only worked for the big multi nationals and have no experience of CIS or tax really but am working hard to correct that! I've done so much reading and web surfing over the past few weeks!!
I think I will walk away as apart from this CIS issue I know he has never paid his NI, keeps no records and has no accounts so guesses the numbers for his tax return and his turnover is now over £67k so he should register for VAT, all of which I have pointed out to him but he's more interested in the cash in his pocket at the end of the day.
There's a big part of me that doesn't want to see him get into trouble but I have to separate business from friendship here!! What do you think the overall consequences of his actions could be if he doesn't sort this all out?
