I need a sounding board||

SusieQtips
SusieQtips Registered Posts: 65 ? ? ?
Is there anyone on here that would have the time and patience to act as a sounding board for me??

A young lad who is working at my place of work, set up on his own in Feb 2011 and has had a friend helping him to do his books (simplex D) he was very nervous about completing his tax return as he has relied on the friend to complete his books and the lad knows nothing about accounting or tax.

He asked me if I would look at them for him to see that what he was putting on his return, was correct and to see if he was claiming for all that he could. As I have had no practical experience since qualifying I thought it would be good experience for me and agreed.

I've realised it's totally different learning the theory, than seeing it in real life and I'm struggling with some really simple things that I hoped someone on here would help me with.

I have tried to set up an excel spreadsheet for him, with cash/bank in/out columns and then a column for each expense, is this the best way of doing it?

1. He did his 1st set accounts from Feb 2011 to 3rd April 2011 and then from 4/4/11 - 1/4/12. Does this matter for the tax year, will HMRC treat it as 6/4/11-5/4/12?

2. To claim for use of home as office is there a set weekly figure/formula used? He has used the formula of 7 rooms in his rented house and is claiming 1/7th of all bills.

3. He doesn't have a separate bank account for his business use, would it be better for him if he did?

4. When he started up in Feb 2011 he purchased a diesel car to enable him to travel for work which he paid £8,000 for and used it until Nov 2011 when he purchased a van, he kept the car for his personal use. Am I right in thinking that I credt the capital account with £8k then debit it with the value of the car when he took it out of the business? How do I know what the value of the car was at the time, is there a set percentage used for depreciation on cars? I assume it is better to use reducing balance?

5. I can see that he has taken quite a lot of depreciation off his income for this, am I right in thinking he can only claim the writing down allowance for this car and it is time apportioned for hmrc?


6. I thought that his tax return for April 11 - April 12 didn't need to be submitted online until January 2013 but hmrc asked him to complete a return in April 2011 and again in January 2012.

7. Will he have to pay overlap tax on the period Feb 11 - April 11?

I know this may sound very basic and simple but this is my first attempt at the real world.

Many thanks

Comments

  • paulstafford
    paulstafford Registered Posts: 126 ? ? ?
    I think your best bet may be to suggest your friend appoints a MIP accountant directly. There is a lot on info I would need to know about the business/personal circumstances of your friend before trying to help out.
  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    I agree, I think it's best you refer your friend to a MIP but perhaps ask them if you can assist to gain some experience.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    What they said.

    Also, Simplex D is MINGING - just saying ;)
  • SusieQtips
    SusieQtips Registered Posts: 65 ? ? ?
    Firstly thank you for taking the time to reply to my post and I totally agree with what you say. I may have given the wrong impression, I am not trying to be an accountant, I am trying to gain some practical experience and doing it on a voluntary basis.

    I gained my MAAT but do not get the opportunity to put it into practice in my current job and needed some practical experience, otherwise my qualification would be wasted. I approached a local accountant and he advised me that the best way to start was to do some book-keeping and accounts for family and friends, to try and do as much as I was able to and then I could go to him and he would check them and mentor me using the accounts I had produced.

    The young lad had intended to go and see an accountant but agreed I could do this with his accounts as we both thought we would get something out of it.

    I was trying to do as much as I could before going to the accountant, partly because I didn't want him to think I didn't know anything and to gain experience for myself. I was producing his book-keeping on an excel spreadsheet (as I agree with you Monsoon the Simplex D is minging), then was going to produce his accounts and draft a tax return form for the accountant to go through with me.

    Like I stated this was my very first attempt and doing it in the real world is totally different than learning form text books, which showed me that I do need to get some practical experience. I thought if I could do 1 person's books/accounts voluntary on a regular basis it would give me practical experience and keep me up to date with legislation etc,

    An AAT mentor is really for someone wanting to start as an MIP, I really just want to gain some practical experience and then keep that up to date, do you think this is the best way to go about it? I would appreciate any comments.
  • Ellabobbin
    Ellabobbin Registered Posts: 92 ? ? ?
    Hello,

    I was in a very similar position, I gained my qualification but whilst I have accounting experience it is not relevant to the real world - I work in education and the work is very different to that needed to be a competent MIP.

    What I did was to look in the MIP directory and I wrote to 5 MIPs who live not more than 10 miles from me. I admit I am very lucky in that I have flexible hours and I was able to free up a whole day in order to offer to work for free in exchange for that valuable experience.

    2 MIPs responded and I have been working with 1 of them since November, learning as you so rightly said that it is very different in the real world, and loving every minute - I have found my niche! I was always paid from the start although that was never my intention!

    I now am in the position that I am able to make the jump from my cosy, but not stimulating, job in education finance to more hours in practice....

    I am also studying for my ATT, having done both the level 4 tax modules I thought it would be a simple top up, but have to say we only scraped the very surface of what there is to know...

    Good luck!!
  • SusieQtips
    SusieQtips Registered Posts: 65 ? ? ?
    Ellabobbin wrote: »
    Hello,

    I was in a very similar position, I gained my qualification but whilst I have accounting experience it is not relevant to the real world - I work in education and the work is very different to that needed to be a competent MIP.

    What I did was to look in the MIP directory and I wrote to 5 MIPs who live not more than 10 miles from me. I admit I am very lucky in that I have flexible hours and I was able to free up a whole day in order to offer to work for free in exchange for that valuable experience.

    2 MIPs responded and I have been working with 1 of them since November, learning as you so rightly said that it is very different in the real world, and loving every minute - I have found my niche! I was always paid from the start although that was never my intention!

    I now am in the position that I am able to make the jump from my cosy, but not stimulating, job in education finance to more hours in practice....

    I am also studying for my ATT, having done both the level 4 tax modules I thought it would be a simple top up, but have to say we only scraped the very surface of what there is to know...

    Good luck!!

    Hi Ellabobbin

    Thank you for your reply, it was very helpful.

    It has assured me that I am perhaps going about this in the best way possible and that I'm not going to know everything. Your situation sounds very appealing and it has inspired to think that this is something I may like to work towards, (if I could find 1 day a week paid working with an MIP/Accountant and reduce my hours in my ‘cosy but not stimulating’ current job).

    Once I find my feet doing this, I think I would like to do ATT as I enjoyed the tax modules the most from the AAT course.

    Thank you once again for your help and inspiration.
  • peaman
    peaman Registered Posts: 123 ? ? ?
    Would you still like answers to your questions?

    I can answer them, but it will take me around 20 minutes to draft the message.
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