Groups of companies/ subsidiaries

Monsoon

This could equally go in the CPD section, but hey ho...

Last time I ever did anything with groups of company/ subsidiaries, etc was my level 4 exams... 6 years ago. They don't tend to come up at work, so I don't need to know. However, one of my clients has now asked about them, and I want to keep them as a client, so probably should study it more and stop running away from it.

Any recommendations of where to start? I'm not very enthusiastic about the accountancy side of it, but would very much like if anyone can point me to a resource where I can not only refresh myself on what needs doing with the accounting, but also (and more interestingly, to my mind) the taxation implications.

Ta!

Steve Collings

Hi

I wrote an article on the AccountingWEB Guide to Consolidated Financial Statements for their AWEB Guides To series.

Hopefully that'll be a good starting point for you???

Best wishes

Steve

Monsoon

Thanks Steve. One thing I've never gotten is who the consolidated accounts are prepared for. Submission to CoHo? HMRC with the CT600? Or just for the members of the company? I'm pretty sure there are some exemptions from preparing group accounts too, I think... This type of accounting really isn't my 'thing'! Thanks for the starting point, great help

Steve Collings

You only have to prepare consolidated accounts for medium-sized and large groups, so I think you may be OK because medium-sized groups need to be audited. Small groups of companies are exempt from the requirement under the Companies Act to prepare group a/cs. You submit consolidated a/cs to Companies House.

Regards
Steve

Monsoon

Thanks, that makes a bit more sense

So if Monsoon Ltd wholly owns A, B and C Ltd, who submits the consolidated accounts? Monsoon Ltd? Or do they all submit the same set (surely not?). I would have thought A, B and C submit their own accounts and the holding company submits consolidated?

Heh, I really am clueless with this topic....

Steve Collings

Monsoon Ltd would prepare its own individual financial statements and then produce consolidated financial statements which would include Monsoon Ltd results and A, B and C Ltd results. Each subsidiary would also produce its own individual financial statements. Monsoon Ltd would then submit its own individual a/cs to Co Ho and the consolidated a/cs as well.

Regards
Steve

Dean

Monsoon wrote: »

the taxation implications.

Group relief
Consortium relief
Associates

This is covered in paper 3: Business Tax higher skills. I think it's now papers 4 Corporate Tax?

You might be better off having a look through the Tolley's Tax Guide if you're not due to do this paper.

Regards

Dean

Monsoon

Thanks Steve, that makes a lot more sense!

Dean - thanks for the pointers. I did VAT as my option instead of BTHS; I was considering buying the text book anyway for CPD and you've now convinced me! I will indeed peruse good old Tolley's too.

Monsoon

Ironically, it was group accounts that made me go "sod that, I'll do VAT instead"

Dean

Monsoon wrote: »

Ironically, it was group accounts that made me go "sod that, I'll do VAT instead"

At least direct tax has logic; VAT is just a stupid tax!

Regards

Dean

Dean

Dean wrote: »

At least direct tax has logic; VAT is just a stupid tax!

Regards

Dean

This might have come out wrong on reflection! Sorry, I'm not saying you are stupid!

To justify:

Hobnob biscuit = food = exempt
Chocolate hobnob = confectionary = standard rate

Stupid tax!

All of the problems surrounding VAT revolve around input tax. My solution is to charge 7% VAT on everything!

"Why" I hear you ask. Well being on everything it fulfils the political vote because there will be winners and loosers. Yes I'm hitting children! Well they say the next generation will have to pay our debt so, start um young I say!

7% is just unlogically so it wins that vote too!

Regards

The Chancellor

Monsoon

No problem, I didn't take it the wrong way

I know what you mean about VAT, but at the time I was choosing my module, I thought a better knowledge of VAT would serve me in practice far more than knowing about the taxation of groups of companies etc (and the other bits in BTHS I mostly know anyway). It was good logic at the time....

Also, I do like VAT in a way. I agree, it's stupid, but the quirks interest me.