Reporting Information Within The Organisation - Week 5 Flashcards
Ethical behaviour also applies in relation to VAT and payroll as well as general accounting. The AAT Fundamental Ethical Principles below should be applied:
- Professional behaviour
- Professional competence and due care
- Confidentiality
- Integrity
- Objectivity
It is important to act in good faith and exercise care in relation to facts or information presented on behalf of clients or employers when dealing with HMRC, and according to the …
AAT Code of Professional Ethics
Where can you find information on GDPR if data protection is part of your day-to-day responsibilities?
Information Commissioner’s Office website.
When working as part of a team or preparing documentation for a client you should communicate…
The appropriate time limits for submitting returns and making payments so that all parties are aware of the deadlines. Information should be accurate and information received from clients should be treated as confidential and follow GDPR
What is CPD?
Continuing Professional Development. It is the term used to describe the learning activities accountants and accountancy professionals engage in to develop and enhance their abilities.
No matter what level of qualification or experience you have you must maintain up to date and relevant knowledge.
CPD activities can include:
- Webinars
- Training courses
- Shadowing colleagues
- Reading journals
- Internet/websites
However, it is important to recognize when a query is beyond your current experience or expertise to avoid making any errors and should be referred to a line manager
Updates and finding information
As part of the CPD, the effects of any relevant new legislation should also be communicated to all appropriate persons. Changes in legislation and regulation can be found:
- On the HMRC government website
- Information from accountancy practices
- Communications direct from HMRC
- Through attending CPD events
- Speaking with colleagues and other professionals.
It is also important that any accounting software is also regularly updated for changes in VAT and Payroll legislation
Tax evasion
Falsely reclaiming input tax/understating output tax or payroll taxes, obtaining bad debt relief or obtaining a repayment to which the business is not entitled
Illegal
Tax avoidance
- Using the legislation to minimise your tax burden
- legal
Process for seeking advice on VAT legislation
A) Check the HMRC website
B) Telephone the VAT helpline - with VAT registration number and postcode
C) Write to HMRC - preferably by email
You should always keep a record of any communication with HMRC
Control visits
HMRC officers may visit a VAT-registered business to determine whether their VAT records are correct and up to date.
They are entitled to do the following activities:
A) Question the business owner, or the person responsible for keeping the VAT records
B) Examine the business records
C) Check the VAT return is accurate
D) Watch business activity
The officer will need to contact the business owner in writing at least seven days before the visit
Maintaining up-to-date tax knowledge: Legislation changes
Legislation changes can be found:
- On the HMRC and government websites
- In direct communications with HMRC
- In technical circulars within accountancy firms
- In specialist journals
Maintaining up-to-date tax knowledge: Changes in practise
Changes in practise may be identified by:
- Attending continual professional development (CPD) briefings
- Reading relevant journals
- Meeting other professionals
If the VAT rate changes, in general or just for a specific product, then IT systems …
will need to be updated for the new rates.
Income tax and national insurance thresholds and allowances generally change _____ so payroll software will require updating for this
One per year
Factors that should be considered when communicating with clients
- Communication should be timely - payment of tax may have a significant effect on a business’s cash flows and therefore prompt information, especially of unexpected liabilities, is essential
- Advice should be accurate - technical issues over which a tax adviser is uncertain should be referred to a line manager before being communicated to a client
- When acting as a tax agent, the client’s authorisation is required to submit information(returns or responses to enquiries) to HMRC. ultimately the client is responsible for the information being provided and should be aware of this
- When information is communicated, security measures are necessary in order to ensure compliance with the General Data Protection Regulation (GDPR) and the fundamental ethical principle of confidentiality
Can a VAT return be submitted early?
Yes
Once a VAT return is completed …. And then submitted electronically to HMRC
Reviewed and signed off by the authorized person or agent
VAT return payment sent to HMRC is usually to the same timescale as the submission. The exceptions are:
- The Annual Accounting Scheme
- If a Direct Debit has been set up, then HMRC will take the money three working days after the last submission date
Accounting software creates the VAT return based on…
The accounting data that is input. It will process the data from all the prime books of entry, including cash book, petty cash book and any journals.
VAT return authorisation to submit:
If the return needs no adjustments, then you may be authorised to submit this return yourself.
Journals for any capital items, leases and other non-standard items should be reviewed and any errors should be corrected and confirmed by the manager.
Discovery of current and previous period errors and omissions
Any current errors discovered can be corrected before the VAT Return is submitted.
Previous period errors and omissions are also corrected in the current VAT return subject to certain conditions.
Any errors should be investigated, and no corrections made without written consent from your manager.
How are errors corrected in the VAT return?
The net value of errors is added to VAT due on sales and other outputs for tax due to HMRC, or to VAT reclaimed in the period on purchases and other inputs for tax due to the business
If the error is above the reporting threshold, or made on purpose, it cannot be corrected in the VAT return. HMRC must be notified instead.
An effective way of communicating the effect penalties(for late/non submissions or payments) will have on a business would be to…
Calculate how much the potential penalties would cost.
Confronted with an actual cost often changes management behaviour and guarantees compliance.
If a VAT Return isn’t submitted on time, HMRC will issue…
A ‘VAT notice of assessment of tax’ which will state how much HMRC think is owed.
This, along with the time limits and penalties, must be communicated with management and the significance of it understood.
How does HMRC communicate changes in VAT rate?
In as many ways as possible:
- email
- letter
- television and radio
- HMRC website
- social media
Changes businesses are required to notify HMRC of:
Changes in their operations that affect their VAT status:
- Name, trading name or address
- Partnership members
- Agent’s details
- Business activity
Notification to HMRC must be within 30 days
For changes in bank details, 14 days’ notice must be given
Repeated lateness of payment(payroll, PAYE) may encourage HMRC to perform a…
Payroll audit, which will be thorough and inconvenient.
The consequences of late payment(PAYE) should be communicated to…
Your manager and all effort should be made to conform with all the deadlines
