Following a consultation earlier this year we’ve made some changes to our Terms of Business. The majority of responses were positive; there were some questions, and some objections – the objections were in same cases around not understanding filing obligations.
A new clause 10g (10 refers to preparation of accounts) states:
g. Where you submit accounting information to us which you subsequently advise is incorrect, and we have to amend and re-issue approval accounts and/or draft tax returns, then a supplementary fee of £100+vat may apply for processing the changes. This will be invoiced at the time of processing the changes and will be subject to our 14 day credit terms.
Clause 20, deadlines, has been changed to relax the deadline for getting accounts information to us to 30 September each year for unincorporated businesses and Self Assessment returns, and to 6 months after the year end (i.e. 30 September for 1 March) for companies. This harmonises previous deadlines at the end of May, July and August and provides longer to clients.
However where accounts or tax information is submitted after that deadline a £100 Late Processing Fee will apply.
DEADLINES AND LATE PROCESSING FEE
The new clause 20 reads:
a. In order to meet statutory filing deadlines for business accounts, we require business books and records from you no later than:
~ 30 September after tax year end (5 April) for partnerships / sole traders
~ 6 months after year end for companies / LLPs (i.e. 30 September for 31 March year ends)
Where business books and records are received after the deadline:
~ we will make every effort to complete accounts in time for statutory deadlines but cannot guarantee to do so
~ if statutory deadlines are met then a supplementary fee of £100+vat from us will apply, which will be invoiced when the accounts are sent to you and subject to 14 day credit terms
~ if statutory deadlines are not met then the supplementary fee will not apply and we accept no responsibility for penalties from HMRC / Companies House
b. In order to meet statutory filing deadlines for individual Self Assessment returns we require personal tax information from you no later than:
~ 30 September after tax year end (5 April) in the form of a completed Self Assessment Questionnaire and any supporting paperwork
Where tax information is received after this deadline:
~ we will make every effort to complete returns in time for statutory deadlines but cannot guarantee to do so
~ if statutory deadlines are not met we accept no responsibility for penalties from HMRC
c. Other deadlines will apply for services like VAT returns and Bureau Payroll. We will notify clients individually of these deadlines.
The rationale behind this change is that many of our clients are missing these deadlines, but we are and we are still completing business accounts and tax returns on time. This creates work flow pressures within the firm, especially in November / December leading up to the 31 December filing deadline for limited companies with 31 March year ends – this last year, despite the 31 August deadline for 31 March year ends, we were still receiving books and records well into December and completing them before the Christmas break.
The existing deadlines were there for valid reasons around workflow management in the past, but on review we feel they need amending to better align them with practice. To this end we are relaxing them slightly to 30 September/5 months rather than 31 August/4 months and introducing a supplementary fee to both encourage records to be submitted on time and to cover the additional costs of working to short deadlines with late records.
Most of our clients have 31 March / 5 April year ends, and this means time scales will now be as follows:
~ Companies / LLPs with 31 March year ends – deadline to Companies House 31 December, (£150 statutory penalty if one month late, £375 if up to three months late – both doubled if late two years in a row). Deadline for records to us 30 September, or a £100 supplementary fee applies. (HMRC deadline for Companies is the following 31 March, but as Corporation Tax is due 1 January in practice the Companies House deadline also applies)
~ Sole traders / partnerships – deadline to HMRC 31 January after tax year end with Self Assessment. Deadline to us 30 September, or £100 supplementary fee applies.
In some cases records come to us so late that even pulling out all stops we cannot meet statutory deadlines; in this cases, thankfully rare, the supplementary fee will not apply but we will not accept responsibility for HMRC or Companies House penalties.
ACCOUNTS AMENDMENT FEE
The rationale behind this is to deal with situations where we prepare accounts and related returns based on information you’ve given us, but you subsequently change the information. Examples would be:
~ you tell us transactions listed in an excel sheet are incorrectly classified
~ you tell us that information has been missed, eg a bank account or year end debtors / creditors
~ you give us an instruction around the treatment of something, and then change this – eg instruction around year end dividend / retained profit mix, subsequently changed after you receive the accounts.
The supplementary charge is intended to cover the time in not only amending accounts, but also in re-issuing them, re saving masters, updating ibxrl reports, updating tax computations, updating working papers, updating quality control checklists
This supplementary charge will not apply where:
~ something is unclear in your records and will simply query it during accounts preparation
~ you are unclear about something and ask us for advice / to check it
~ we send a set of draft accounts for discussion / query with a list of points to address
~ we have processed something incorrectly and you ask us to change it.
In essence the supplementary charge will only apply where something is black and white in the information you give us, and you then ask us to make a change.
One of the biggest problem areas we have is when clients give us an instruction around dividend / retained profit mix, which we act on, but this is then changed when they realise the impact on personal tax bills, Tax Credits or Child Benefit – we are happy to make changes in those circumstances, but there is a more work involved than people might realise, hence the supplementary fee. We have already had an informal policy of charging for such changes, utilising the “fair use” element of our service specification, however we are now planning to include this charge expressly in our terms of business.