I have a client who tells me her previous accountant estimated her mileage for her so that she doesn't have to keep records. I have told her that she has to keep records from now on but for the last tax year I have fuel receipts for about £1500 and she wants me to estimate the mileage from that. I am not happy to do that given my lack of knowledge of cars etc. What would you do with such a client. Would you insist that they provide a mileage figure? Do you do that sort of estimate for your clients? I had thought to suggest that she check the mileage on her last 2 MOT certificates to work out her annual mileage and then let me know what percentage is personal use.
Tell her to go back through her appointments book and each one that she visited record who she was visiting, the date, mileage there and back and reason for the visit.
Any other approach is you making up figures on behalf of the client which makes gives you equal share of the problem and any ensuing fine.
It is not your role to make figures up for the client.
If she complains ask her how much she makes an hour.
I bet it's a lot less than the hour that she spends recreating her mileage log.
Yes, it will seem like doing lines but lets use some very rough figures, say that the full £1500 is business miles and she does about 35 to the gallon. At £6 per gallon thats 250 gallons at 35 miles equates to 8750 miles which at 45p a mile is £3937.50.
Wish that I made £3937.50 for an hour sitting down doing some documentation.
Amazing isn't it how clients will spend stupid time chasing £20 but lose site of the loss of thousands as too much bother.
Go get her princess.
kind regards,
Shaun.
-- Edited by Shamus on Tuesday 3rd of June 2014 11:46:15 AM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks. I have emailed her to say she has to give me a figure and that I can't just make it up. I haven't got a clue about cars even if I wanted to! I should stick up for myself more when these people tell me "Well my previous accountant used to do it for me...."
Heard that line so many times princess and on occassion looking at some of the scenario's I've been faced with I've been left wondering whether the previous accountant was even qualified.
Of course, we can never slate other accountants as that would be unethical.
I remember with one client the encumbent accountant had made a real hash of the capital allowances and the line that I used was that they had "given us the opportunity to reduce this years tax" Rather than going in with the obvious issue that they had paid way too much the previous two years.
One I quite often come accross is clients believing that entertaining is tax allowable because it's in the accounts and reduces the profit figure.
Imagine how they laugh (not) when I point out that the entertaining like depreciation is added back into the tax calculation so they are actually being taxed on their generosity.
So, it's not just prior accountants and bookkeepers getting things wrong but also getting things right but not explaining things to the client which in some ways is just as bad (although with less risk of HMRC turning up on the clients doorstep with the latex gloves on and telling them to bend over!).
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Just because everyone else jumps off the cliff it must be a good idea for us to do the same!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I have the 'mileage debate' with my two brothers-in-law on a regular basis! I don't do any of their books as I would rather not fall out with family but trust me, people can be very short sighted on this one.
Two suggestions. Given most of us walk around with a smart phone if your client takes photos or records a note of the car mileage as she enters and leaves the vehicle on her phone she can use that info to quickly build a mileage log each month.
Second idea is have a notebook in the car - then every time she is driving on business she can, again, record everything!
Neither will go down well I suspect, but the alternative is not recording any mileage and therefore not claiming any! The knock on effect is lower expenses and possible higher tax.
Only issue you might have is that if recording has been actual cost estimation from fuel and other expenses you still need to use that method until the vehicle is changed. You can't change method to exact mileage half way through, consistency and all that jazz.
If she won't listen to reason then ask her:
1. How much of the £1500 was business related
2. How many miles to the litre does she get from her car
Then very quickly calculate the business miles from that and send her a detailed email on how you got your answer and does she consider this a reasonable estimate of business mileage? Will she be able to corroborate those figures if she receives an enquiry and that very often the risk of receiving enquiries is multiplied when you put estimates/round sums in the return and that motor expenses/mileage are looked at in particular. Go on to explain that she must keep a mileage log going forward.
Thanks for all your replies. I've said pretty much all of the above to her. Silence followed. I will see how she is when I speak to her in a week or two.
