About fourteen months previously the company had some cash flow problems and thought the best way to deal with them was to cut back on their overheads or as we refer to in the business, non-value adding activities and unfortunately for this company, that included the management accounting & reporting!

Obviously, the reduced overheads left the company in a better position but they weren’t able to tell because they didn’t have up-to-date management reports. Now, don’t get me wrong on this, the client were by no means stupid. They were senior qualified professionals with multiple years of business experience behind them but this doesn’t mean that they were management accounting experts!

After finishing the meeting I felt compelled to write this article as it really brought home to me the value of the management accounting and management reporting work that I do. The non-value adding activities have some value after all!

The point is that year end financial statements are produced months after the end of the financial year. Therefore, the reports produced are history. The value of the information from them will only cause heart ache or vanity from a director’s point of view. If the company had continued to invest in their management accounting and management reporting structure, they could have tackled the problems within days of them happening. If corrective action was taken, they would have reduced the loss and possibly produced a profit. After all, isn’t that what they are employed to do?!

The reason why I’m writing this article is as follows, I have been a practicing accountant for over eight years and every year I am baffled by the amount of people that come to me in a panic on or around the 31st Oct, needing to complete their tax returns from the previous year. Yes, you read correctly, from the previous year!

This means that the 31st Oct 2010 is the deadline for all worldwide incomes to be declared to the Revenue Commissioners for the year ending 31st December 2009. Therefore, you have ten months to get your act together.

Then why, I hear you ask do people wait until the last minute?? Possibly tax planning? We’ll deal with this in another article but other than this scenario, there really is no point in hanging around waiting on the 31st Oct to come. If anything can be said, it would be prudent to meet with your accountant or tax adviser and complete your tax return so you know exactly where you stand. You won’t have to pay the balance over until the 31st Oct but at least you’ll know how much you have to pay and if you are short of a few shillings then you’ll have time to plan and decide how you are going to pay the balance.

Moral of the story – don’t leave it until the last minute!

In summary, it’s simple:

• 31st Oct 2010 – deadline for the 2009 period.
• 31st Oct 2010 – deadling for preliminary tax payment for 2010.
• See your tax advisor / accountant now.
• Know your liability (if any) now.
• Budget towards final payment on the 31st Oct 2010.

One lunch time while sitting down to have a well deserved cup of freshly ground coffee, my phone rang. I answered it and I started a conversation with a young man who was obliviously uncomfortable with the whole idea of dealing with a tax advisor. Let’s call him ‘M’!

M had come to me as a referral from existing income tax client. He owned an investment property and didn’t know how to deal with the tax situation. He searched on the internet and visited all the chat rooms and got a list of different answers as long as his arm. The pinnacle came when a colleague from work, some years older than himself heard about his situation and informed him that, “he’d have to pay a bucket load of tax…” Of course, this response led him to a number of sleepless nights until a friend (my client) gave him my number and told him to go and have a chat with me.

The above is a classic situation of numerous phone calls that I receive. Where people have worried themselves and missed numerous hours of sleep worrying about a situation that can be rectified (almost!) by a phone call to a friendly tax advisor or accountant. The hardest thing is making that call!

The solution

M’s situation was no different to any other person possessing an investment property and after a friendly chat over the phone, I could hear his spirits lifted. We arranged to meet that afternoon. I told him exactly what needed to be done and the information that I would need to complete his income tax computation and his income tax return. The work was started the minute the information was received and the computation was completed by the following morning. We had one more meeting listing his exact liabilities (it actually turned out that he was due a rebate!), we signed off and the income tax return was filed with the Revenue Commissioners. M left my office as a new man. So why did he leave the situation run for so long? The answer is probably fear. He feared receiving an income tax bill and he probably thought the situation would go away, but it doesn’t. The liability remains and it won’t go away. Therefore, make the call and get it sorted.

“Can I complete my own income tax return?”

Yes, why not? But I don’t recommend it! I wouldn’t try to write my own taxation software package, even though I know how it works. I would simply just buy it. I know that it will work correctly and if it doesn’t, I know that I’ll have the support there when I need it. The same goes for your tax returns. Get proper advice and get it done correctly. If anything, it will give you peace of mind knowing that it’s completed correct.