Do self-employed people HAVE to claim all expenses?

smurfitlee

Couple of points - £30 isn't the sum total of my expenses for a year, but the amount I would save from the tax bill. My expenses are genuinely tiny.

And this: "The point of the OP’s post seems to be that his business expenses have increased quite significantly and he is considering not claiming them in order to artificially inflate his income for the purposes of applying for a mortgage."

Absolutely not - the point of the post was to make sure I wasn't doing anything remotely dodgy. I am about as likely to try to commit fraud as I am to go paragliding, no appetite for risk whatsoever. I'd just never considered applying for a mortgage before and always assumed that not claiming expenses was to my detriment rather than the taxman's so they wouldn't be worried about it, and I only considered the mortgage aspect of it this year.

sodamnfunky

Pennywise wrote: »

That's a very naive and dangerous assumption to make. A client of mine was under investigation by HMRC for three years - the enquiry has just been closed with absolutely no additional tax due - not even a penny, though no apology either for wasting my client a lot of time and money. The tax inspector used every trick in the book - once he found the business accounts were basically sound and there was nothing obvious in them, he found a minor flaw in the record-keeping which he exploited to launch an enquiry into the personal tax and financial affairs of the proprietors. He ended up going back 6 years for both business and personal affairs - every time he hit a brick wall, he just found another minor issue to exploit, thus opening up more avenues of enquiry. He clearly got a thought into his head that they were on the fiddle and although he couldn't find any evidence, he was like a dog with a bone and wouldn't give up. Client was represented by a leading tax investigation consultant and we went to the commissioners a couple of times to apply for their direction to close the enquiry, but the inspector was proved to be right every time when he found a minor issue to exploit. It cost the clients thousands in professional fees to prove his innocence and he was close to a nervous breakdown - he is still under the GP for depression. The way I work and my advice to clients is to keep your head down - the last thing I do on every client is a "sanity check" - I put the file away for a day or two, then come back to it cold and take an impartial look at everything - I make sure it all looks sensible and there are no inconsistencies or anything that looks strange - if anything stands out, I either change it's presentation or make sure that I write an explanation as to why. My advice to the OP would be either to claim the expenses properly, or if not, to at least make a note on the tax return "additional information" section to explain why he isn't making a claim.

I didnt mean that they would walk and and take a look and say oh thats fine, I understand there would be questions etc and they may well probe deeper.

I guess what I meant was that everything is recorded and I keep all my reciepts and bank statements etc, and I dont earn vast amounts of money, just enough for a reasonable lifestyle I am a sole trader and I bought a cheap van for £1200, which has been recorded in the relevant section of my return.