Hi!
I have just started work for a guy that runs burger vans (exciting times!). He has handed me 6 folders, FULL of 2010-11 receipts. There is no previous years books/trial balances/anything to pick up from. There are also no bank statements, although he has told me after all expenditure he earns around £300 a week, however, in his line of work there are not receipts issued and sales are not individually recorded.
I have spoken with my client and as a typical burger seller would, he has just said he wants the receipts put in order, on readable spreadsheets and his tax return completed. He does not want TP&L or balance sheets etc.
What I want to know is can I just start the books from a blank, even though he has traded pre 2010? Can I input the income that he tells me without seeing the evidence? And are TP&L and Balance Sheets a must do/have or only if requested?
Any help would be much appreciated!
Thank you!
Oooh rather you than me !! - you could always walk away ? if that's not an option then do you know who did the year before ? then you could write and ask for professional clearance and ask for a copy of the last accounts/tax return etc. I bet they're not doing it anymore for precisely the same reasosn you're now concerned !! I'd also be printing off the scariest HMRC legislation you can to try and make him keep better records for this year !! You can prepare an Income & Expenditure account with no balance sheet provided he's a sole trader.
I think my approach would be to start with the expenses and work backwards for the income. He's told you £300 per week - but I bet that's what he takes home after paying all his expenses rather than what his actual takings are. You will need to show a net income commensurate with his lifestyle so make sure you overestimate rather than under - paying more tax than he'd like might focus his mind on keeping better records as well !
Once it's all done and you're happy (ier) with it write to him with your assumptions and pointing out that he needs to keep proper records - and get him to sign the I&E with a note on the bottom about having prepared it from the records and information supplied by the client
Not sure what else you can do really other than cover your own back at all times and nag him to death !! Good luck
What I want to know is can I just start the books from a blank, even though he has traded pre 2010? If he's not declared his income from this period, you should insist that he does. To not do so would be tax EVASION. If he refuses, I think you need to resign. This is a money laundering issue.
Can I input the income that he tells me without seeing the evidence? What choice do you have? At the end of the day, you can tell him what records he needs to keep to protect himself in the event of an investigation.
And are TP&L and Balance Sheets a must do/have or only if requested? Not a must, but bear in mind the disclosure on his SATR.
Hi, I find a balance sheet reassures me that I have done everything I can to arrive at a plausible turnover. It also offers the client some protection as it looks like you will tick the estimates box on the tax return.
it is inevitable that you have some balances: bank, cash introduced, drawings and it is essential that the cash account is not overdrawn.
I would also analyse any loan accounts so that you don't end up estimating an undue amount of sales. In short, you should end up with a draft balance sheet whether he has requested one or not.
Have a chat with him about his price list as the mark-ups can offer some verification from goods for resale.
Hr has traded and declared for previous years, his accountant had now retired and I am unable to contact, adding fuel to the fire.
I am just worried that if I do he accounts from nil this will boy be a true figure. But in the oher sense, as long as there is proof of expenditure etc there is no big difficulty there? Although income will need to be calculated each month after expenditure, that really is the only thing... I think?!
I think, putting the receipts into a ledger format, estimating the income and also putting in ledgers, obviously trial balance and then the figures are ready for SA surely?
Oh dear :(
Get him to sign a 64-8 to give you authority to deal with his tax affairs and then write to the Revenue asking for copy tax returns - explain that the previous accountant has retired and is not contactable. This would then give you some comfort that you're not suddenly under or over declaring his income. There is absolutely no reason why you can't request that he keeps a record of his takings daily now that you've taken over. Give him a notebook or an Excel spreadsheet - anything that he'll actually use
Is he a sole trader or a limited company? If he's a sole trader you don't need (albeit it would be nice to see) any previous history. Just start from scratch.
If he's a limited company you could start by downloading the last set of accounts from Companies House.
Stacey, I feel your pain! I worked for a Bookkeeper for a few months at the start of the year, they had a habit of 'dumping' a bag of reciepts etc on me too! I read somewhere (may have been on here) they nickname these sorts of accounts 'Shoebox' accounts as its a complete mess and in one box/plastic bag!
Anyway, What you could do, for the future, is come up with some sort of 'proforma' for him so he can enter the opening balance in the till and then the closing balance. He has bound to have kept a record of what he's sold as otherwise how would he order new stock? This way you can keep track of his sales, and the expenses to make it easier for yourself later/next year.
(just all an idea, as im just getting into this myself! lol)
I think th porfoma would be a good start. As for the pile of reciepts I have at home, I think it's just going to be a case of spreadsheeting it all in ledgers and printing and attaching relevant reciepts etc. And as mentioned earlier, getting an I&E signed by my client would also safe guard any input I have on the SA.
Thanks everybody for you help! This forum is always a great support!
Going forward I'd strongly advise your client to keep a diary and write his takings and expenditure in each day. He should also record the weather, as this will help explain changes in turnover.
HMRC will accept this, all other things being equal, given the nature of his trade it could be argued it's impractical for him, to issue a paper receipt to every customer. One of my clients runs fruit stalls and it's physically impossible for him to operate a till or a receipt book, so on the advice of HMRC keeps a diary.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Anyway, What you could do, for the future, is come up with some sort of 'proforma' for him so he can enter the opening balance in the till and then the closing balance. He has bound to have kept a record of what he's sold as otherwise how would he order new stock? This way you can keep track of his sales, and the expenses to make it easier for yourself later/next year.
(just all an idea, as im just getting into this myself! lol)
