Filed accounts are incorrect!

[nigel2008]

Hi,

We are a 2 man limited company. In business just under 2 years. Back in 2014 we filed our first year's accounts with Companies House using the micro entity online system - we qualify in terms of turnover etc to use that option. We also tried to understand what we needed to file with HMRC for Corporation Tax purposes. Both the Companies House and HMRC filings were late and we were fined £375 and £400 respectively.

We are now in the same situation again - but having seen an accountant today who has viewed our accounts online with Companies House we have been told (just based on what I told the accountant today - he has not seen any of our Bank statements etc.) that the accounts are totally wrong - we have misunderstood the terminology and the result is that the micro entity accounts filed make the company look far far more 'healthy' then it is .

The accountant has offered to help us sort things - but he himself has no experience of how to go about changing what has been filed - not what the consequences for the Directors may be!!

Can anyone help? The incorrect accounts were not filed purposefully to mislead - they are wrong because we did not know what to do - and could not afford to pay an accountant. Foolish now I realise.

Can the micro entity and the Corporation Tax return etc. be amended?

If so, how is that done?

What are the implications for the Directors? The accountant has suggested that we could be struck off as Directors!

Any help/advice much appreciated.

N

 

[StevensOnln1]

Get the amended accounts produced and send them to Companies House. Highly unlikely that you could be banned from being a director, it very rarely happens and there would have to be an investigation first, following by court proceedings. That's never going to happen over someone mistakenly filing incorrect accounts.

 

[Scalloway]

All you need to do is get a competent accountant (which your present accountant doesn't seem to be) to prepare the accounts and tax return correctly. Companies House and HMRC have procedures for this.

https://www.gov.uk/annual-accounts/corrections-and-amendments
https://www.gov.uk/company-tax-returns/making-changes

 

[john1989]

The advice you have received so far does not put your accountant in a good light.

The accountant may be able to deal with the corrections by the way of Prior Year Adjustments in your next set of accounts that are due to be filed.

You won't be struck off as directors.

 

[UK Contractor Accountant]

It just goes to show trying to do something yourself that a Qualified Accountant has studied and trained for years for to do just does not pay.

It will cost you more in Accountancy fees trying to get the matter sorted than it would in the first place if you engaged a suitable qualified Accountant at the start.

 

[nigel2008]

Many thanks for all the replies. I must state that my fellow Director and I submitted the erroneous information ourselves - unintentionally - we did not use an accountant. That is the problem! We tried as lay people to understand the terminology for the various figures that are required - but got it all wrong!

It is now that we are going to use an accountant going forward that the errors have been spotted and we must therefore file amended accounts.

Lesson is being learned - an expensive one! We thought that as the way our business operates all would be simple - we have no borrowings whatsover, we supply goods to customers that we order from third party suppliers and which are immediately despatched (so no stock at any time), We take money from customers, pay suppliers and pay ourselves and that is it! We work from home so have no rent, rates etc to pay. We don't have company vehicles. Our turnover is such that we are also not VAT registered.

Although we have fines to pay for the Corporation Tax return, we won;t have any CT to pay as we have not made a profit - will let the accountant advise on that, but I think we have just about broke even when (if I am correct - which based on current performance I may not be!!) looking at income vs expenditure.

N

 

[UK Contractor Accountant]

Preparing company financial statements is not a easy task, having to comply with UK GAAP which includes Financial Reporting Standards and as well as Companies Act requirements.

There is also the wrath of tax legislation to grips with before you can even arrive at the corporation tax liability and deferred tax liabilities.

Companies House/HMRC have not helped the situation by putting the skelton accounts format on their wesbites for DIY'ers to use who in most cases severely under estimate the task.

 

[Energise Accounting]

An expensive mistake as john has mentioned I would not have much faith in your current accountant, if he dose not know how to do the job make sure he or she is insured. Otherwise you are asking for more trouble and expense.

 

[David Griffiths]

Given that the accountant hasn't even seen the company records, I'd take his comments with a pinch of salt, particularly if based on micro accounts which give next to no detail. Can you quantify exactly how much the error is?

Companies House will only be interested in you re-filing the accounts if the originals do not comply with the Companies Act in some way. The most practical way of dealing with this is to prepare the second year accounts incorporating the errors as prior year adjustments and file them with restated comparatives.

Not all of your dates stack up - you say that you've been in business for under 2 years, yet you filed accounts in 2014. How have you not filed the second accounts in 2015? Are they late as well? If they are the Companies House penalties will be doubled. Or were the 2014 accounts made up for an abnormally short period?

Picking up £775 of fines shows that trying to do the accounts yourself was a false economy, compounded by them being wrong. Don't make it worse by engaging somebody who doesn't have the knowledge to correct things properly and who might create unnecessary work by refiling accounts that don't actually need refiling.

Of course those are only general observations, as it's not possible for anybody to give proper advice without the full facts (even though the accountant that you have spoken to feels able to do so) His assertion that you might be struck off as directors is utter tosh.

 

[myfairworld]

The reason people pay accountants their rather large (to put it politely) fees, is simply because a properly qualified accountant DOES know exactly what to do in the situation you are in. I look at my accountant's life style and ask myself why I am subsidising it, then when I have a problem and he is amused that I even think it is a problem and assures me he'll sort it, I remember why I am subsidising it. The accountant you've just engaged doesn't sound too promising, find another, swallow hard and pay their bills and let them take the strain, that's what accountants are for.

 

[nigel2008]

Thank you for your reply David. The error is that we erroneously believed that the funds which my fellow Director and I personally put into the business was capital - rather than, as I am now informed, were in fact a Director's loan which is very much different to capital. The micro accounts therefore appear that the company is worth several thousands pounds - whereas in fact I am informed that has we have not made a profit, the company is all but worthless.. So, in short, it is a big discrepancy.

N