Thursday, 3 December 2015
Why HMRC data cannot be trusted.
We have been saying this for while. The data that HMRC hold on companies is not accurate. Filed Accounts and Annual Returns for SMEs are often fictitious.
Here's a classic example.
Bnktothefuture is an outfit we have mentioned before. We know they are liberal with the truth so it was a fair bet that their accounts wouldnt stack up. However we didnt expect the errors to be so blatantly obvious.
Taking its 3 years of accounts filed at Companies House to date, it should be easy to follow their progress. The way this works is that they only have to file a brief balance sheet annually and this is presented with the previous year's BS in the opposite column - sort of acts as an anchor from the start of the year to the end of the year.
What BTTF have done is move the anchor point each year so that whatever picture they want to paint comes out. So the filed original accounts for 2012/13 when they appear on the filed accounts the following year have substantial changes and so on to 2015. The original filing is not corrected to reflect these changes so we have a total mess.
This means that all of the accounts for this company are complete nonsense and its anyone's guess what the real accounts would say.
Of course this only matters because with the new Equity Crowdfunding, the information from HMRC on companies can be essential for making credible judgements.
The liberalisation of SME reporting was intended to ease the burden and expense of red tape. No auditing required, only basic balance sheet details wihtout notes are filed. It does make sense providing the SME's dont abuse it. It was never intended to work with ECf however.
Its impossible for HMRC to check all these annual accounts and the evidence is very plain that they dont. We are free wheeling down the hill towards the cliff.