Bookkeeping, VAT returns, submission under MTD

Bookkeeping can take up a significant amount of time for a business. Time that can be spent building and changing that business into the direction the directors want it to go.

Bookkeeping can also be more complex than you think. Many accounts staff and even qualified bookkeepers are unaware of the specific VAT implications for their business.

A common example is the input VAT recovery on business entertaining expenditure. This is generally blocked. Many businesses incorrectly recover VAT on business entertaining. Sometimes the mistake occurs because of the understanding of the term business entertaining. Normally business entertaining will be any provision of hospitality. Staff entertaining is treated differently to customer entertaining.

You are able to claim the VAT on the cost of your Christmas party or Christmas meal but if you also pay for the guest of any employee you would not be able to claim the VAT on the guest portion of the cost. VAT can also be claimed on trivial gifts up to £50.

If anyone attends your Christmas meal or Christmas party who is not an employee of your business the cost of that social entertainment for that person is not an allowable business expense and cannot have VAT claimed on the expense either.

If you provide a Christmas gift to your customers its value must be less than £50 and it must advertise your business. It must not be food, drink or tobacco unless that is your business.

There are many other VAT nuances that need to be considered in different (sometimes very simple) businesses. Outsourcing your bookkeeping can pay dividends in the long run.

Many bookkeepers do not reconcile the VAT account to the VAT return. One may assume that they should always agree. The VAT account can quite often disagree with the VAT return – sometimes for legitimate reasons such as cash accounting. Sometimes for concerning reasons such that a previous period posting was made and not picked up the new period VAT return. The VAT reconciliation should be carried out every VAT return so that when an unexplained difference arise you can get to the bottom of it and quickly.

Similarly the net wages and PAYE control accounts should be reconciled regularly.

Basic bookkeeping might always include a bank reconciliation. But sometimes the bookkeeping package “reconciled” balance does not agree to the trial balance and this does not come to light until the end of year accounts.


You can outsource your payroll very cost effectively.

We will be happy to run your payroll whether it is for 1 or 200 people.

Auto-enrolment has complicated the payroll process recently. Calculating the amount of employee pension deduction within the payroll system for the employee and the employer can be more complex than you think. The percentage may apply to band earnings or total earnings. The pension percentage will change over time and you need to be happy that you are making the right changes at the right time. Some pension schemes will allow tax relief in the pay scheme and others will not. Clearly it is crucial that you know which is correct. For example the NEST pension can be set up in either way. In the earlier NEST pensions set up the deductions were made after giving tax relief. So initially only 0.8% of bank earnings were deducted from the employee but 1% of band earnings were contributed by the employer.

Another common problem for employers is making sure that the payment to the employee is made on or before the RTI submission to HMRC. Penalties are now in place for employers who pay their employees before the RTI submission. The payslip and payroll date should be the date of the employee payment. Getting this wrong could be costly.

We have experience of processing payrolls with employees who suffer a deduction arising from an attachment to earnings. This can also be a complex area.

We will normally process the payroll based on information provided by you and then email the payslips to you for distribution to the employees. We will prepare the P60 at the end of the tax year and P45s throughout the year for you. We will provide the employee starter checklist for your employee to complete when they commence work. We will also prepare your P11d for the provision of benefits in kind such as a car or medical insurance. If we feel that the tax code the employee is on is incorrect we will consult with you, the employer.

If you are considering outsourcing your payroll please make contact and we can have a free initial consultation.

Accounting and Business Advice Services

  • 1
  • "I can highly recommend my accountant"
    Mike Comber 1812 Associates Ltd
  • 1
  • 2

Go To Top