Starting a business - Understanding Audits

[banja]

The whole thing is a mystery.

My first tax return I expected to have to list capital expenses but all that is required is a figure. Plus there's no exact explanation of what you can and can't claim for, or what proportion of things you can and can't claim for.

It's all hinted at in the notes, but basically you're left to guess. Which isn't ideal if (whoever it is that does it) decides to inspect you.

As happened with my friend, they disagreed with his travelling expenses, which as I say he had to try and work out himself, and subsequently he was given an extra bill.

 

[Vonhelmet]

The whole thing is a mystery.

My first tax return I expected to have to list capital expenses but all that is required is a figure. Plus there's no exact explanation of what you can and can't claim for, or what proportion of things you can and can't claim for.

It's all hinted at in the notes, but basically you're left to guess. Which isn't ideal if (whoever it is that does it) decides to inspect you.

As happened with my friend, they disagreed with his travelling expenses, which as I say he had to try and work out himself, and subsequently he was given an extra bill.

There's loads of information on the HMRC website which is generally fairly usable. Failing that, get an accountant/tax adviser...

 

[Wicksta]

Oh, and the GNU public license isn't for commercial ventures unless I'm mistaken?

You are mistaken! No companies would be using Linux (full name GNU/Linux) if that was the case.

 

[Vonhelmet]

You are mistaken! No companies would be using Linux (full name GNU/Linux) if that was the case.

It has a handful of random restrictions on it - can't be used to develop nuclear weapons, I think? - but other than that it's fine.

 

[Pudney]

You are mistaken! No companies would be using Linux (full name GNU/Linux) if that was the case.

Aah, fair enough, I know tax and audit better than I know linux and gnu!

 

[banja]

A friend who is in the same industry as me was 'inspected' or audited (by whom I don't know) where he had to show evidence of all his accounts. He said it took ages and was a nightmare.

That would be an audit performed by accountants.

So this audit would have been done on behalf of the HRMC?

 

[Pudney]

So this audit would have been done on behalf of the HRMC?

No. An audit report is made to the shareholders as they are the ones who accountants are contracted by to perform the audit. In essence the audit gives the owners (i.e. shareholders) greater confidence that the directors (those who run the company) are performing their duties in a competent and legally correct manner.

The audit of financial statements also indirectly helps stakeholders. This can include employees and creditors (including HMRC). Although third parties (such as HMRC) may place reliance on a statutory audit, the accountants aren't actually performing the audit on their behalf. The accountants also don't actually have a duty of care to these third parties either.

 

[Xandos]

I work in the creative industry, and right or wrong it seems like everyone pirates.

Have a copy of Gimp installed, say you use that, job done?

 

[Deleted member 651465]

If you register under a quality scheme such as ISO 9001:2008, then a company (such as BSI) will visit you a few times a year to check you are maintaining the quality management system to their liking.

If you say Photoshop is essential to the product or production process then they may ask to see the proof of purchase.

 

[Vonhelmet]

So this audit would have been done on behalf of the HRMC?

Once the accounts are done, a company has to file a tax return with HMRC based on those accounts. This is done on a self assessment basis i.e. the company - or their tax adviser with the company's approval - produces the return themselves and submits it to HMRC. HMRC review the return and decide whether anything seems amiss or lacking, and then have the option to open an enquiry, at which point they'll ask some questions and try to get more info from the company to back up the position in the return.