In a moment of weakness I agreed to help a friend with their UK Self Assessment Return for 17/18.
They became Self Employed as a Plaster (formerly PAYE) during 17/18, however the record keeping is terrible, they have been mixing business and personal transactions in their bank account also not raising sales invoices for jobs done (although a lost of income appears to be direct into the bank) and the keeping of receipts is shocking.
I have been able to get a good idea from the bank account what is business and what is personal (eg ASDA) however where I am missing receipts, for example fuel/materials will I be able to claim as expense based on bank statements or will I have to omit them?
How's about an intro before we start- we always ask newbies. Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, are you a bookkeeper or accountant, what qualifications, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? Who is your MLR cover with? That sort of thing. Helps get to know you but also how best to pitch answers.
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
sorry about that, I normally do not do forums so not quiet up to speed on the etiquette.
Anyway hear goes
I started out many moons ago studying AAT as I was working in the back office of a small Equity Firm (Penny Shares as they were known), sales ledger, cash book, debtors etc. Qualified with the AAT in 2001.
I then moved into the pharmaceutical manufacturing industry, initially as an Accounts Assistant looking after various aspects of P&L and BS. Eventually I was persuaded to study CIMA, which I did part time in the evenings, I qualified in 2010.
I held various Productions/Management Accounting Roles, MI, Forecasting Budgeting, Costing, Inventory Control, Statutory Accounts Production, all the good stuff. As well as this I did several SAP implementations for the company I worked for.
I am currently between roles and have decided to study ATT to fill in the gaps in Tax from my CIMA studies.
I would eventually like to work for myself as a Management Accountant, but I expect to be asked Tax questions as part of this hence the ATT.
I hope this cover off most of what you were asking but feel free to ask anything else.
Excuse my ignorance but could you elaborate on MLR?
Hi Dave, my name is Doug (Artois just the username)
MLR is Money Laundering Regulations and anyone self-employed offering accounting/bookkeeping services must be supervised in this by their governing body (AAT, ATT, ACCA etc etc) or by HMRC, it is a legal requirement to have this.
If you are just helping a friend for no remuneration then you might not need this but you would have to check.
As far as the expenses on the bank statements go, if they are for materials from well known Building firms I usually include them because I know that duplicates can be obtained and I still ask my clients to try and get the copies for their records, with fuel I do not allow without a receipt, to easy to spend money in a garage for things other than fuel.
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Hi again
Just to add to Doug's comments. You can lose your liberty and a lot of cash in huge fines without having Money laundering cover.
You are, as far as I recall as well, fine if no fee/other consideration is involved.
In my practice, no paperwork then no business expense. I would go so far as to say he should get those builders invoices before I do any futher work on it. It's a good way to teach a lesson that needs learning fast. Given its nowhere near SA deadline day then now is the time to do it and whilst you have leverage. That said I get where Doug is coming from, as in the ipthe event of an inspection he would have to have them available. Let's face it he is in pole position sector wise for such an inspection. Bear in mind also you will be expected to assist him in such an investigation and maybe justify why you have included something that shouldn't have been.
Small receipts are out. But even spend at Asda could be in....eg he could've bought stationery. So a stern talking yo is required.
On th missed income- if he disputes any you add and cannot prove why you are wrong, then refuses to report his full income, you have a duty under money laundering regs to report him (to the NCA in your case).
Other issues- do CIMA allow you to practic, even for free, beyond TB without a practising certificate from them? Or are they not as strict as the other chartered bodies?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
apologies, thanks for clearing that up (MLR) I know it is covered as part of the CIMA MiP Certificate, which I will be looking at obtaining as I would need this to charge for my services.
Although I do know that if you are providing your services for free then CIMA do not expect you to comply with MiP regs, but the MLR bit has me concerned.
I will definitely seek advice on that, thanks.
With regards to the case in hand - thanks for the feedback, I am happy to proceed on this basis.
To be honest if it was a business expense claim I was asked to review in industry if it did not have a receipt I would not be reimbursed from the company funds.
I am trying to give him some general advice in terms of getting organised, separate bank accounts, recording transactions etc but it will be a hard task.
I have also said this is a one-off to help him get organised, he does not have access to a PC/Lap top, which I cannot comprehend.
Thanks again, I think I am going to sleep on this for now, however I really appreciate the advice.
thanks for the response, I have taken that advice on board and I have emailed CIMA to see what their stance/advice is in relation to MLR.
CIMA's website states that as long as you are not charging then you are OK to provide services. Again I am clarifying this.
It is my intention to produce the income & expense, sort out the paper work that is there and pass it back to him to file with HMRC.
I appreciate the comments on the paper work and expenses and once I have a full list of what is missing I can then ask him to get copies etc.
It is the income that worries me to be honest as I suspect there is more than the bank statement shows, although as yet I cannot prove this, however the living expenses included on the bank statements may help to tease this out.
Hopefully I will get to the bottom of this, it is proving a very valuable learning experience (nothing like my ATT studies so far ).
Thanks again for you help Im off to get some sleep but I will keep checking back as it has been very useful so far.
Hi Dave
Every day is a school day in this job!! You will no doubt find that you learn more trying to unravel the messes created by clients than you ever could doing the theory.
On the income side it's worth looking at his diary if he has one. His mobile phone messages and texts should remind him what jobs he did and he can advise what he was paid in cash etc (he may need some encouragement to supply that info). HMRC would use such tools and anything else at their disposal.
I would be encouraging him to use a 2, or better still 3, part receipt book. No excuses for not having a PC and therefore not being able to do invoices.
Always good to tell clients what the fines and penalties can be for lack of proper records and the rest.
Hopefully you have/will have a wander round the forum and join us in future discussions. Always good to have new folk on board. Good luck with the ATT.
Apologies for the typos. On small phone and vainly not wearing my glasses. Plus I skim read and then type too fast hence the odd (!) spelling faux pas.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
CIMA's website states that as long as you are not charging then you are OK to provide services. Again I am clarifying this.
It is the income that worries me to be honest as I suspect there is more than the bank statement shows, although as yet I cannot prove this, however the living expenses included on the bank statements may help to tease this out.
So, you suspect money laundering (tax evasion is money laundering. Purposfully avoiding declaring income is tax evasion) but because you are not charging for it under CIMA you do not need to be registered?.... That doesn't ring right to me?
Whether we charge is to a large extent immaterial in that if a third party looks to us expecting a professional service in the knowledge of a professionalbody association then regardless of whether or not we charge are we not acting in the capacity of accoutants and as such need cover under Anti Money Laundering... And by association also PII.
A court of law would see you as an accountant and you have the knowledge that the client is not fully declaring their income so you are putting your future in grave jeapardy for no return.
A liuttle known fact is that someone's mate down the pub giving them tax advice for no charge can be found guilty under MLR... Now consider the courts view of a professional accountant helping someone, even when they do not charge for it.
The general rule of law is that you are responsible for what you knew, what you ought to have known and what you ought to have done about it. (unlike contract law which emphasises consideration as a key element of a valid contract).
Welcome to the forum Dave. Sorry, first reply and it's disagreeing with the published stance of your professional body (I have been known from time to time to disagree with professional bodies on here, lol).
Hope that you enjoy postng here and look forwards to some heated technical debates,
kindest regards,
Shaun.
__________________
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.
To be honest I do not suspect Money Laundering, rather he may potentially have forgotten to tell me about something. Perhaps once I give his memory a jog.............
When you refer to registration do you mean with CIMA or another Anti Money Laundering Organisation?
Either way I have asked CIMA for guidance on this.
To be honest I am not overly enamoured with CIMA in many respects but it my current body, I was formerly a member of the AAT but I let that lapse two years ago as I did not want to pay two sets of fees, I am also currently a student member of ATT (which I thought was good value for the 5 year membership)
I dont think the prof bodies will provide the full support that you might be expecting given you are not paying a MIP fee. So then its down to you to ensure you are abiding my the law.
You could possibly look to get a practice certificate with the AAT, but then bear in mind you would most likely need to give up the CIMA membership (from what you said) and then cannot use such an affiliation in any kind of advertising (assuming its the same as other bodies). Maybe one of our CIMA members can advise on that, although Ive not seen one that Im aware of on here for a while.
One of the reasons possibly Shaun has mentioned the suspicion of Money Laundering was due to your ''I suspect there is more than the bank statement shows'' line. You dont need to know, to report, you only need to suspect. Then you have a duty to report and failure to do so can lead to severe penalties. It is your responsibility in that regard, whether or not you hold a practice licence. Problem you have is that there is no documentation by way of invoices, but hence why I suggested you look at other means to ascertain the position in the first instance, but it does sound like there are grounds for a report.
You mentioned doing income and expenses. I assume you are actually producing accounts? Have you advised on the most appropriate year end/any tax mitigation exercises as it is. What about such as fixed asset register and the tax adjustments for the usual?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Whether we charge is to a large extent immaterial in that if a third party looks to us expecting a professional service in the knowledge of a professionalbody association then regardless of whether or not we charge are we not acting in the capacity of accoutants and as such need cover under Anti Money Laundering... And by association also PII. Makes a lot of sense, given his mate wouldnt be asking for Dave's help if Dave had been a solicitor for eg.
A court of law would see you as an accountant and you have the knowledge that the client is not fully declaring their income so you are putting your future in grave jeapardy for no return.
A liuttle known fact is that someone's mate down the pub giving them tax advice for no charge can be found guilty under MLR... Now consider the courts view of a professional accountant helping someone, even when they do not charge for it.
The general rule of law is that you are responsible for what you knew, what you ought to have known and what you ought to have done about it. (unlike contract law which emphasises consideration as a key element of a valid contract). Fair point also. Plus lets face it the world is getting more litigious by the day on the back of such. It goes back to the ethics argument as well, which some prof bodies dont seem to bother teaching, although I do understand the like of AAT and Chartered Bodies do and are indeed focussing on increasingly.
kindest regards,
Shaun.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks for the feedback CIMA, AAT and ATT do need indeed have ethics sections.
I am still awaiting a reply from CIMA to my email, I tried to call them yesterday but after holding for ten minutes I had better things to do.
I think there is nothing stopping you holding say a practice certificate with AAT but be a member of CIMA, you would however not be allowed to say you were practicing under the CIMA banner and vice versa. Although I would be more than happy for anyone to correct me on this.
The problem I have is that by nature as Accountants (and in my experience) we are generally sceptical of what a people tell us be it in industry or I guess the private sector. My very fist FD at Pfizer used to pressure test most of the figures you presented to her, not necessarily out mis trust, just a force of habit. However, the upshot of this was you began to think like that, it did make sure you were on top of your game with costings, analysis etc. However, I digress.
I admit the lack of invoices is a problem, but I am pleased to say have his work diaries which I am detailing and cross referencing.
I have also spoken to a local accountant who is ex HMRC and has about 40 years experience of this type of thing, to be honest I was hoping he would take him off my hands, sadly this is not the case. He did agree to mentor me as he has a wealth fo experience in dealing with this type of client.
The client is a self employed/sole trader (plasterer) very little in the way of fixed assets, only a Van which he has had for a while so I will be looking at writing down allowance for that and possibly some tools.
I was thinking of accounting on the cash basis, as I think this will be easier for him to get his head around going forwards.
For 17/18 he had part year PAYE (April/May) and effectively started as self employed in June, so for June to March I will be producing Accounts up to the point he can complete his self assessment return. I have advised him verbally of the penalties etc and also things like, buy a PC (there is no phone line to his house so he only has web access via his phone), start raising invoices or in the very least a receipt book and also to open a bank account to use for business purposes.
Once I have his records in order I will be pulling together an email detailing and guiding him on his responsibilities and potential consequences.
I think there is nothing stopping you holding say a practice certificate with AAT but be a member of CIMA, you would however not be allowed to say you were practicing under the CIMA banner and vice versa. Although I would be more than happy for anyone to correct me on this.
Hi Dave
ACCA dont allow you to go past TB even if you held a FULL practice licence as a MAAT. even if you only hold student membership with ACCA. even if you make absolutely no reference whatsoever to ACCA. Reg8 for anyone else reading this.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
thanks for the feedback, I am still awaiting CIMA's reply, they promise to try within 72 hours but the last time I emailed them it took months! So I won't be holding my breath.
Finally an answer from CIMA, they state I am able to do this provided I am not paid for the work in anyway.
On another note I have been experiencing problems signing in, this is in relation to the certificate from this website. It appears to have been resolved, was anyone else suffering?
Finally an answer from CIMA, they state I am able to do this provided I am not paid for the work in anyway.
On another note I have been experiencing problems signing in, this is in relation to the certificate from this website. It appears to have been resolved, was anyone else suffering?
Hi Dave
Good to hear that you had a reply from CIMA
Yes there was a problem with the site but all sorted now, it wasn't just you
).
