For anyone using FreeAgent

Discussion in 'Accounts & Finance' started by MyAccountantOnline, Feb 12, 2020.

  1. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    12,943 2,406
    I've just started using FreeAgent as another system to offer our clients and have spent the last few days fully testing it and am very impressed. However a word of warning for anyone relying on it to provide an accurate Corporation tax estimate - be careful!

    The system isn't set with the correct tax rates and as such it may well be understating the amount of Corporation tax you need to set aside, and consequently over stating the retained profits which can be used to pay a dividend which could result in illegal dividends being paid.

    You can, and I do suggest you enter a journal to correct the tax to be set aside.

    I have raised this issue with FreeAgent support - it is something they are aware of and have told me they will change this once the latest tax rates are confirmed but it does concern me that I suspect many users will be unaware of this.
     
    Last edited: Feb 12, 2020
    Posted: Feb 12, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #1
  2. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    To add to the above when you do correct the tax to set aside with a journal entry it doesn't filter through to the Corporation tax summary on the Corporation tax tab but it does show correctly in the profit and loss account.
     
    Posted: Feb 12, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
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  3. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

    1,192 239
    I’m currently seeing rates of 19% up to 1 April then 17% so the rates appear to be correct now.

    There are other reasons why corporation tax might not be accurate for example, it doesn’t support small pools rate for corporation tax so if you’ve fully written off an asset pool when it dropped below £1000 in your accounts it will still remain in FreeAgent with WDA every year and there’s no way to remove it.
     
    Posted: Feb 14, 2020 By: TheCyclingProgrammer Member since: Jul 15, 2014
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  4. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    I think you will find Boris scrapped the 17% rate reduction.

    Dominic told him to do it.
     
    Last edited: Feb 14, 2020
    Posted: Feb 14, 2020 By: UK Contractor Accountant Member since: Sep 18, 2013
    #4
  5. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

    1,192 239
    Posted: Feb 14, 2020 By: TheCyclingProgrammer Member since: Jul 15, 2014
    #5
  6. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,785 808
    it's coming - was in the November Budget until the Budget was scrapped.

    The NHS need the extra money.

    It was an election pledge so I cant see him renegading on it now.
     
    Posted: Feb 14, 2020 By: UK Contractor Accountant Member since: Sep 18, 2013
    #6
  7. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,785 808
  8. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    12,943 2,406
    Just checked one of my clients now and the rates do seem to be set at 19% to 31/3/20 and 17% from 1/4/20 which may or may not change? I too understand that the tax calculation can be incorrect as it doesn't enable you to write-off the capital allowances pool.

    It is a shame when you correct the tax reserved by a journal that it doesn't feed through to the tab showing the tax due.

    I must say all credit to FreeAgent support as they do seem to take on board all comments very quickly indeed.
     
    Posted: Feb 14, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #8
  9. Karimbo

    Karimbo UKBF Ace Free Member

    1,766 180
    Wow really? I use freeagent with a business with a lot of assets. Should i be worried?
     
    Posted: Feb 17, 2020 at 8:55 AM By: Karimbo Member since: Nov 5, 2011
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  10. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

    1,192 239
    Its only a problem if you had an opening asset pool that you claimed write down allowances on until it was below £1k then you claimed the small pool allowance on the balance.

    If you are talking about new assets bought in the business lifetime on which you claimed capital allowances it’s fine.

    Between the small pools thing, deferred tax calculation and rounding differences my CT is usually accurate to within £50 or so, it’s good enough as a forecast. If FreeAgent ever want to offer CT submissions though, it’s needs some work.
     
    Posted: Feb 17, 2020 at 9:15 AM By: TheCyclingProgrammer Member since: Jul 15, 2014
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  11. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    12,943 2,406
    I think the important thing is to use the calculation as a guide only rather than rely on it to accurately calculate the exact tax due.

    If you do want to amend it to show the exact tax you can do it as a journal but bear in mind it doesn’t seem to update the tax on the summary just the accounts.
     
    Posted: Feb 17, 2020 at 9:21 AM By: MyAccountantOnline Member since: Sep 24, 2008
    #11
  12. Karimbo

    Karimbo UKBF Ace Free Member

    1,766 180
    Phew thanks.

    I was worried that balance sheet would just keep deprecating equipment indefinately, even past £0 BV. Everything in the accounts is newly added to the business after freeagent. I used freeagent from company formation - no transfers from prior use.
     
    Posted: Feb 17, 2020 at 10:35 AM By: Karimbo Member since: Nov 5, 2011
    #12
  13. Newchodge

    Newchodge UKBF Big Shot Free Member

    13,146 3,413
    Tou have a great deal moe trust than I do!
     
    Posted: Feb 17, 2020 at 10:42 AM By: Newchodge Member since: Nov 8, 2012
    #13
  14. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

    1,192 239
    There's no issue with depreciation - once an asset is fully depreciated it won't keep doing it - but it will keep including WDA on any asset pools in the corporation tax calculation. Because this is always a fixed percentage the asset pool balance will never reach zero.
     
    Posted: Feb 17, 2020 at 11:23 AM By: TheCyclingProgrammer Member since: Jul 15, 2014
    #14
  15. Energise Accounting

    Energise Accounting UKBF Ace Full Member

    1,028 167
    This is why i never considered freeagent. Clients will start to rely on the estimate and take it as gospel.
     
    Posted: Feb 17, 2020 at 11:32 PM By: Energise Accounting Member since: Sep 24, 2014
    #15
  16. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    12,943 2,406
    It really is worth looking at Energise Accounting I’m really impressed with it. It’s one of the best I’ve seen lately and have spent quite sometime testing the main systems again over the past few weeks. I see no issue with clients / users accepting the tax is an estimate in advance of the year end accounts and tax return being completed.
     
    Posted: Feb 18, 2020 at 8:54 AM By: MyAccountantOnline Member since: Sep 24, 2008
    #16
  17. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,785 808