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Silly Digits


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VAT Returns
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I have a client who gives me paperwork/invoices in dribs and drabs.  Each quarter I have to always go back to him and request missing bank statements/invoices etc.

Hence the VAT return is always late to HMRC.  I always remind him in plenty of time to get me all the paperwork.  Emails listing the paperwork I require etc.

What I would like to know is when you have clients like this, do you always make sure that you have all the bank statements reconciled before sending in the VAT return.

I would in most cases have the sales invoices, but not all the bank statements, so I can very rarely tell if the invoices have been paid. (On cash accounting scheme)
And the client cannot usually remember what had & had not  been paid by the end of the quarter.

Would you refuse to forward the VAT return until all the satisfactory paperwork had been received?

Sorry for the moan, but driving me mad, just wonder how others get on in this situation.  The client is not huge, just very messy.

Thanks

 





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RobH


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Think we all have some of these clients. Maybe time to scare your client a little, explain that he has a responsibility to submit accurate vat returns, although genuine mistakes can be made and corrected in the next quarter, should the client have a vat inspection, the inspector would not have a lot of confidence in him if 'corrections; are being made quarter after quarter ad potential interest/surcharges could be imposed.

Maybe you could give him a checklist of things you need each month or maybe you could suggest you give him your 'gold' service that some clients use and for an adddittional fee you will come to his place and collect everything you need??

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Shamus


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I echo Robs comments.

Its common practice to have a letter of engagement, drafted by you, from the client company to you, signed by the client. That details the clients responsibilities in relation to the companies books.

It seems a common misconception amongst clients that when they have a bookkeeper or Accountant the responsibility for the companies books is somehow divested.

It isn't!

The directors of the company are responsible for the companies books no matter who it is that does them.

If you have a letter of representation from the client then in court they cannot deny that they knew their responsibilities (ignorance is not a defense anyway!).

A good link to take the directors responsibilities from per the companies act (2006) is :

uk.accaglobal.com/documents/directors'_duties.doc

The work of a bookkeeper or accountant is covered by the supply of goods and services act (1982) which basically states that you will have the skills necessary to perform the work for which you are hired and you will perform your work diligently and in a competent manner.

Whilst the VAT may be lenient for the odd discretion, continued late filing will at best result in a fine but may also result in a visit.

Good luck with this one,

Talk soon,

Shaun.



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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.
Peasie


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Shamus wrote:

Whilst the VAT may be lenient for the odd discretion, continued late filing will at best result in a fine but may also result in a visit.

They are lenient. You have to be late with two consecutive returns for them to start anything. Then if you are late within the next year (?) they can impose a surcharge on you. The first surcharge is 2%. If you are late again within that period (which will by then be extended) the surcharge is upped to 5%. If the surcharge is under £400 you escape again - but the next time the surcharge is upped to 10% and there is no escape.

(?) not to sure when the year begins or does it matter as is the period (if you escape the surcharge) not extended till the end of the year anyway. I think my English stopped making sense after "they are lenient".

 



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RobH


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Hi Peasie,

I think you can get away with being late once every four quarters, ie once you submit late, you need to submit on time the next four quarters before your slate is wiped clean....but I always suspect a little black mark goes against your name!

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Peasie


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Thanks for clarifying that. I still think in theory you can get away with four late returns depending on the amount of VAT due. As they won't issue a surcharge under £400 as long as the VAT due is under £7999 you can escape.

1st one late - nothing
2nd one late - warning
3rd one late - should be 2% (but the VAT due would have to be over £20,000)
4th one late - should be 5% (but the VAT due would have to be over £8000)
5th one late - 10%

Or does the 2% apply to the second one late?

By the time you get to four late returns I think the VATman will be quite interested in your business anyway - as you say - a little black mark.

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Never buy black socks from a normal shop. They shaft you every time.

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RobH


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That's interesting Peasie, I wasn't aware of the thresholds. Still best to get them in on time!

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Rob
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Silly Digits


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Thank you for your replies. I do send my clients a letter of engagement with price and terms and summary of the work undertaken.

My letter of engagement is very basic, if anyone has a good template, I would be very grateful.

Also, how do you get on if a client doesn't sign your terms and conditions. Does anyone have a clause in their letter of engagement that covers this??

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