Self Assessment - Payment On Account?? - The Book-keepers Forum (UK)

lor · Guru

Self Assessment - Payment On Account??

lor · Guru

1

-- Edited by lor on Thursday 15th of November 2012 05:44:01 PM

Don Tax · Expert

Hi Lor, the payments on account for Jan and July 2012 ought to be entered on the 2012 Return.
kind regards
Tim

MarkS · Expert

Hi Lor

Sorry for sounding critical but if you dont know how payments on account work and how they should be shown on a tax return should you really be offering the service of preparing self assessment tax returns in the first place?

This is the one of the fundamentals in preparing a tax return.

Would understand a student asking the question but not someone who is actively out in practice offering their services.

Regards

Mark

Elaine R · Senior Member

Hi Mark,

I have just read Lorraine's post and whilst I don't offer any services for Tax returns I intend to going forward once I have learnt how to do them.

Where should I go for information on how to do them?

Is the best place on HMRC site?

I have done 1 assessment for my nephew and it seemed straight forward. He owed no Tax in fact he had Tax repaid to him which is usual. I also did it FOC as basically he gave me the figures to put in. He usually does his own but didn't have access to a computer.
This is currently the only experience I have of SA's.

Regards,

Elaine

Shamus · Forum Moderator & Expert

Hi Elaine,

the issue really has to be that you need to know what you are looking for in order to go to the HMRC site which should be used only to fill out the details of what you already know.

To gain an overview of UK tax system purchase these four items and curl up in a corner for six months :

- BPP I_Learn course for ACCA paper P6 for the latest Finance Act (FA12 at the moment)

- Melville Taxation FA12

- Kaplan Study text for ACCA paper P6 (FA12)

- Kaplan exam kit for paper P6 (FA12)

Thankfully I'm now at the stage where I still purchase those four every year but at least it's become more skim reading than start from scratch which is considerably faster.

I read them and I regard tax as my weak point. The key though is that when I am looking at a CT600 / SA100 I know what can and cannot be done to help a client (although people such as Mark and Tim would know much more).

If I was not confident then I would not offer the service as bad advice gets you sued and to sue a professional can be on the basis of :

What you knew
What you ought to have known
What you ought to have done about it.

So, if you offer tax services by definition one ought to know how to advise the client.

I think that Marks comment was a little sharp but as he has spent many years studying tax to get where he is I can understand why he answered the way that he did as this is a minefield that takes a lot of study and a lot of money to become able to navigate and many offer advice without perception as to the fact that such advice could be flawed.

I certainly with quite a lot of experience and an awful lot of study am still very aware of how much I do not know.

Also note that PII only covers people for what you are trained to do so offering tax advice without a sound tax qualification and / or considerable relevant experience could render the PII null and void.

sorry to be a stick in the mud but when it comes to tax matters it is I fear an area best left to qualified and experienced accountants.

For AAT people one way to go could be to gain an ATT qualification as CPD which would prove technician level tax proficiency before perhaps moving onto CTA in order to be able to offer tax advice.

Its certainly something that I'm considering for my CPD after ACCA (I can go straight to CTA study without ATT first.

kind regards,

Shaun.

MarkS · Expert

Elaine

To get experience you could maybe sit ICB exam on self assessment (not sure if you can sit this as a one off or not - others will be able to advise).

You could also approach a local accounting practice and see if they will give you some work experience (even free of charge). As this is the best way to pick up experience by actually doing some but without the responsibility if anything wrong

Lor

Note that this is your first one but your website offers the service. That being the case and if I was a client I would expect you to know this as it is very much a basic understanding of how tax returns work. Sorry if sounds critical, as said fair enough question if you are student trying to learn but you shouldnt be offering your services to the general public while trying to learn at the same time. Will only end in something being done wrong somewhere down the line and a claim being made against you.

Regards

Mark

Spamkebab · Expert

Is ATT a route into CTA then? I was looking at the CTA website the other day, i know they accept ACCA. My first impression was 'wow, you have got to know your onions before these people let you study with them'

My second impression is the same as the first, in fact i wrote a wee puter program

10 PRINT "wow,you have got to know your onions before these people let you study with them"
20 GOTO 10

MarkS · Expert

Hi Shaun

As i said in my post apologise if sounded critical but I just had to point it out.

Dont have any problems with students or such asking such a question as we all have to start somewhere and hopefully those with more experience on here can help them along the way.

But given was such a basic question of how the tax return cycle works then someone who offers the service of preparing tax returns must know this. eg if the liability was say £1k and they had already paid say £800 on account then appears that Lor advise would be to pay £1k in January rather than the balance of £200. How would you feel if you were the client? As we agree only would end up with an angry client and legal action.

By no means am I a self assessment tax expert as my experience is in accounts preparation, audit and corporate tax.

But I know enough to cover most general personal tax situations or like you say know where to look if I dont.

Regards

Mark

Shamus · Forum Moderator & Expert

Hi Neil,

yes, passing ATT will allow you to study CTA. (Its the lowest qualification that will get you considered).

With the ACCA route you must pass paper P6 as one of your options in order to be considered (P6 is a bitch!).

Tax is huge. Fortunately the CTA (unlike the ACCA) break the subject down in a similar way to the ATT and to a lesser extent AAT so you can do specific parts rather than the lot at once.

kind regards,

Shaun.

p.s. your program needs a counter and escape parameter. :)

Spamkebab · Expert

No wonder none of my games that i spent til 4 oclock in the morning typing from the back of computer mags into my trusty BBC never worked lol.

I like tax, it is fascinating but as you say, it is huge. It is definitely a specialist area (one worth leaving well alone for now)

Elaine R · Senior Member

Hi Mark,

I'ts like anything that's new to you. You have to start somewhere and you gain experience over time.
When you have been shown how to do something and then you don't do it for a while you start to ask yourself if you are doing it right. Once you have done it a few times your confidence grows and so does your knowledge.
It surprises me that HMRC expect self employed people to fill in their own tax returns then.
I am newly self employed and will have to fill one in but to be honest I think I will be ok but if not I will ask someone.
Mine should be relatively basic but will read up about what I can and can't claim for between now and tax return time.

Sometimes you just need a little reassurance. I think that was what Lorraine was looking for.

There is always going to be an occasion when something pops up that you are not 100% sure of and I am sure that is going to happen to me soon as I am new to this.

Elaine

Shamus · Forum Moderator & Expert

Elaine R wrote:
It surprises me that HMRC expect self employed people to fill in their own tax returns then.

- Penalties

- Interest

- Surcharges

Why would HMRC want professionals filling tax returns in when they can get a few hundred percent more return by letting amateurs have a go. lol

MarkS · Expert

Hi Elaine

Sorry but have to disagree. If you are new to it then go and work for someone and get experience or go and sit some exam on the topic.

If it was something like how to treat script dividends, or treatment of foreign income then would agree is fair enough to ask a question as that is something out of the ordinary.

But someone who is offering to the general public to do their tax return and has to ask how to treat payments on account really should assess if they are competent to offer the service.

As Shaun as hinted the idea of self assessment is to put the onus of proof onto the individual. This can then result in rich pickings for the tax man if the individual has done themselves and werent sure how to do. Equally it saves HMRC costs in having to hire staff to assessment individuals as used to be the case before self assessment.

Regards

Mark

alfie · Veteran Member

Shamus wrote:
Elaine R wrote:
It surprises me that HMRC expect self employed people to fill in their own tax returns then.
- Penalties
- Interest
- Surcharges
Why would HMRC want professionals filling tax returns in when they can get a few hundred percent more return by letting amateurs have a go. lol

Oh Shamus all those pro's pas tax as well !

Shamus · Forum Moderator & Expert

alfie wrote:
Oh Shamus all those pro's pas tax as well !

Sorry Alfie, I'm probably being thick but I don't understand what you mean?

Shamus · Forum Moderator & Expert

MarkS wrote:
Hi Shaun
As i said in my post apologise if sounded critical but I just had to point it out.
Dont have any problems with students or such asking such a question as we all have to start somewhere and hopefully those with more experience on here can help them along the way.

Hi Mark,

oops, missed this one as it slipped in between Neils post and my reply.

no problems at all. Your experience and qualifications give you the right to be critical when the situation warrants.

I've found that sometimes, not often, but sometimes, one needs to be brutal with the truth to make people sit up and listen.

I hope the thread went away from the initial question as Lorraines question was meant quite innocently. But beneath it there is a far wider issue at play here of the fact that many bookkeepers are offering tax advice that they do not appreciate is incorrect and so are exposing themselves to compensation claims that their PII is unlikely to cover them for.

I would have hoped that discussions on the site where even simple tax questions become debates should make many realise how complex offering clients tax advice is.

Then again, as has been commented on the site by Bob Harper people need to move from straight bookkeeping to offering the full accountancy service in order to survive and accountants handle tax matters. Therefore by implication bookkeepers moving to offer a wider range of services must be able to handle tax.

I'm going out on a limb here and I'm sure that many will disagree with me but to my mind even where one takes the tax options papers AAT is not good enough to prepare one to offer tax advice.

Its a great start but the reality to my mind is that it's an introduction rather than an end in itself.... Which is I assume why so many MAAT's also have ATT qualifications.

Maybe it's one of those areas where unless you study it at the higher levels you don't realise the danger... A little like walking a tightrope accross a crocodile infested gorge is probably fine unless you think to look down.

Oops, went off on one again. Sorry.

kind regards,

Shaun.

Amanda · Expert

I have to say I don't do Tax returns, only my own which I am ok with, although next year I will have 2 rental houses to add to mine, so I will be asking a friend who is a chartered accountant to help me as want to make sure its done correctly!

Regarding the OP, I actually new the answer to it, but I wasn't going to answer as I am not an expert and I'd rather leave it to the experts (Mark and Shaun). I have a client who always has to pay on account and the accountant a few years ago went through it with me so thats how I knew about it.

I agree you need to get experience in Tax but there is so much to learn, and I haven't even got to that part of the AAT L4 yet so I am leaving well alone, and I tell my clients I leave well alone, and they then ring their accountants if they have a tax question. I had a client once who really wanted to know stuff to do with Tax and although I knew the answers I told him I didn't know and told him to contact his accountant which he did. Also like you said its the PII as well to consider. With Tax you will need to do it more than a few times to get the hang of it as there is so much and so many different scenarios.

Thats my take on it anyway.

Elaine R · Senior Member

Hi All,

I've looked online at the ICB self assessment book as they do Self Assessment exams but you have to be up to that level to sit the exam.
I may look at buying the book so that I can read up and learn a bit about it.
I have an accountant whom I have got my first client through to help guide me when I come to doing basic SA's.

I wouldn't attempt them unless I knew about them other than my nephews very basic one.

Elaine

YLB-HO · Guru

Hi Lor,

I've not been on this forum for a while as I been too busy with the students I have taking their IAB tax exams in January 2013. (Sorry if this looks like a plug, but its actually true!)

The FA12 which Shuan refers is for doing tax returns for the 2012/13 tax year. So if you are doing 2011/12 tax returns you need to get information on the FA2011.

-- Edited by YLB-HO on Sunday 18th of November 2012 11:40:32 AM

lor · Guru

Hi all, I have deleted my comments because I panicked as thought it looked bad. I will refrain from asking silly questions in the future and will speak to my accountant, who helps me when I am stuck and this was my 1st return where there was a poa, so how was I automatically mean't to know. Also niavely thought that stupid questions would help others, and also a bit lazy on my part and I should have endeavour to contact my accountant. You suggest I do everything, no, I do everything I feel confident to do and anything further then this my accountant does, my website offers more so I can offer lots to clients and it gets clients in and if I'm stuck then my accountant helps with the stuff I can t do or aren't covered to do, thanks for making me feel crap. But I am thick skinned so it doesn't matter!.

MarkS · Expert

lor wrote:
this was my 1st return where there was a poa, so how was I automatically mean't to know.

Hi lor go back to my original point in that if you were a student studying the topic then I wouldnt have any problem with the question. As you say we all need to start somewhere.

My issue is if you are offering the service to the general public of preparation of self assessment then you must know how POA are treated otherwise in my opinion you arent competent to offer the service.

Sorry if critical but I am of strong belief that it had to be said.

It is the equivalent of someone who offers bookkeeping services asking "what a bank reconciliation is"

Dont worry, we all make mistakes, I made a massive one a few years ago, which I am still paying for it.

Regards

MarkS

YLB-HO · Guru

I know how you feel MarkS, having said something simular before myself with other posters.

I do remember being told by an Recruitment Agency that I could not know how to do a Bank Reconcilation if I did not know what a Bank Reconcilation was. At the time I had been worked in the Acccounts Department of an international bank for 3 years, having balanced all the bank ledgers including suspense, foreign currency accounts etc. No-one had every told me that what I was doing was "reconciling" the accounts. I thought I was just balancing them! It was only when I started studying book-keeping for my Banking exams, that I learn't all the terminology for what I had been doing.

Just Fascinating · Veteran Member

Hi

My thoughts on this are I believed that this forum was a bookkeeper's resource and a place of 'no question was silly' and every question was welcomed, no matter who you are. That if one has uncertainty it is best to ask others for guidance without feeling you're going to be judged or put down for asking it and that many others would have a learning experience from the question raised. The readers' learning experience can be numerous, such as technical, revision, seeing a different perspective, etc..

Surely it is better to ask for guidance and from the answer if one feels that it is an area that still puts you out of your depth you can go back to your prospect / customer and explain that xyz would be better to help them with that particular issue, then to go in blindly and hope for the best because you felt you had no one to turn to.

Sometimes we have to ask because of time constraints because of business and/or personal issues in the background and this is the quickest route to give our customers the best service.

We all have different learning styles. Some can remember everything they read and learn, others need a reminder of how things are done if it's something they don't do often and the more they do it the more it's ingrained and that's how confidence and experience is gained.

In this economic climate gaining the experience by shadowing or other means is not always a possibility for a variety of reasons.

In managing a finance department I always had an open door policy and that if there was the slightest uncertainty to come and ask and have the confidence to go ahead. Fixing errors are far more costly and can be soul destroying.

Going from industry to being in practice will raise many uncertainties as the scenarios can be so diverse and one might not have put something into practice something that they've learned until that scenario crops up.

Being comfortable to ask any question however silly it might sound to some is invaluable. Even if after getting guidance you kick yourself as you realise you did know it.

So I hope we can all feel free to ask...

Brigitte

Don Tax · Expert

Hi Brigitte,

I'm sure you'd acknowledge, criticism can be constructive and I'd certainly thank Mark or anyone for pointing it out if I was on the edge of a precipice.

It's a shame to just delete the post because it wasn't especially clear the workings of the POA system were unknown which is why my reply was short. Lor, enter the individual years instead of "this year" or "last year" and you may be pleasantly surprised that you'd have figured out some or all of the answer, or at least made the question clearer.

kind regards,
Tim

lor · Guru

I think I was being completely thick that day also. I should have thought about it a bit more, and also queried it with my contact, who in the end pointed me in the right direction. I just found it strange that HMRC automatically calcs the amount owed less previous payments on account made. It shows correct amount on clients statement, but when you look on the calc for the tax return it looks wrong.

I really should have thought a lot harder on this one, and spent more time researching. Tail between legs!.I have been doing my business for 4 years now and sometimes still feel new to some bits. 4 years ago it was acceptable for me to ask silly questions as I was just starting, but I am honestly still going to get these moments, I'm human, and panick sometimes and get confused. But I will not be asking any silly questions on here anymore (well I'll try). Although the only questions I have are silly as i don't mess with complex accounts, only deal with very small businesses. :)!. I will continue on here if I may :)! but may not have any questions as my questions are normally simple ones!

Just Fascinating · Veteran Member

Hi Tim

Sure being advised on something to avoid making a mistake or worse is always good and valuable and you're forever thankful.

I believe in 'constructive feedback' which there has been a lot of as opposed to 'constructive criticism', and I felt for Lorraine and whoever else might feel daunted (including me) to ask a question.

Kind regards

Brigitte