We have been appointed by several medical legal report writers who, until recently, have been preparing their accounts on a cash basis rather than an accruals basis. One of the writers was recently subject to a Revenue enquiry. The Inspector did make him aware of the fact that, although the recently filed self-assessment returns reflected income on a receipts basis and that they would be accepted without prejudice, the client must prepare his accounts on an accruals basis.
We have been appointed by several medical legal report writers who, until recently, have been preparing their accounts on a cash basis rather than an accruals basis. One of the writers was recently subject to a Revenue enquiry. The Inspector did make him aware of the fact that, although the recently filed self-assessment returns reflected income on a receipts basis and that they would be accepted without prejudice, the client must prepare his accounts on an accruals basis.
Each client charges £200 per report and writes approximately 100 reports every month, grossing them £250,000 per annum. All their work, which is mostly personal injury claims, is normally provided by two sources - solicitors and insurance companies. They would either be sent a medical history of the person, or the injured party would attend in person. The report would then be prepared and sent to the two sources.
The problem starts when it comes to payment for these reports. My clients have no way of knowing when the solicitors or insurance companies will pay up. In some cases the payment has been made in twelve months, but in most of the cases it could take up to three or four years. I am assuming that just because payment is received late, there is no way it can be regarded as contingent. In other cases, the work is passed down by intermediaries and my client would not be paid until the intermediaries are paid.
As readers can imagine, my clients are quite upset and feel they should be given a 'pass' from preparing their accounts on an accruals basis and be allowed to continue preparing them on a receipts basis.
In the real world, such 'passes' are a myth, but I wonder if there are any wizards who could suggest a spell to turn them into reality?
(Query T16,024) - The Gambler.
