Tax enquiry

stinkboy

I am a partly retired london taxi driver and have been for the past 30 years. I returned my self assessment as usual but have had a letter back stating their intention to enquire into my expenses part of my tax return. I have the following expenses: £19230 for motor expenses, £13205 of which is taxi hire and I have all the invoices for this which is fine. Secondly £6,025 which is the amount I spend on fuel, this falls into two categories, fuel for work 3 days a week, 12 hours a day of £3,474 which I have receipts for and £2551 which is for my journeys in and out of London, I understand I am not allowed to claim for expenses getting to and from work, however, I do regularly find work going in the direction of home, so whilst the total may not be allowed, surely I can claim for part of this figure? I do have receipts for all of this. The second query is General Admin £4460 which I pay to my wife, she keeps all my accounts, does all admin, goes to the bank, valets my cab etc. However the revenue want to know how I arrived at this figure and how much time per day/week she spends on duties and what I do on my days off to maintain my business? Apart from these I do not claim for any expenses at all, I would like to know if there are any other expenses I can claim and how to go about responding to the IR without losing any more money to them? Any help greatly appreciated as I feel out of my depth and can't afford an accountant?

fengirl_2

First of all, I would reconsider engaging an accountant - they would be used to investigations by the Revenue and be able to field questions and negotiate on your behalf. Some popele can find these things a bit stressful. Secondly, I wouldn't be thinking about other things I could claim at this stage as HMRC will be looking to increase your tax liability, not reduce it.
I think you should just reply to their queries in as straightforward a way as you can at this stage. You seem to have good records and I assume you have costed out your wife's pay and do actually pay her. Don't try and be clever and jsut answer what you are asked. I suspect this has been picked up as your takings will appear low and expenses high - but HMRC won't know you only work 3 days a week and that you rent your cab at this stage.

Ste_C

Concentrate on ensuring you can justify every expense and make sure your records are in order.

The money you pay to your wife will come under a lot of scrutiny so make sure you can justify paying her what you do.

I don't want to scare you but I think you're very brave facing a tax investigation on your own. They aren't particularly pleasant, especially if you get a nasty inspector. HMRC are starting to investigate a lot more and in the next year they'll be announcing new rules. They've been trying to claw back as much missing tax as they can in the last few years, and given the state of the economy and the fact they missed out on billions of tax this year in comparison to last year they're going to start looking to get it back wherever they can.

You might not feel an accountant is affordable right now. But if you can get a consultation with an accountant it might be worth paying them for an hour or 2 of their time to guide you and to check your records over as they'll know what the inspector will be looking for.