Self employed: can I claim for materials bought before business start date?

KG

I have just registered as self employed for a jewellery making business which I started in April of this year.

Much of the materials I used in the first few months were those collected over the last few years from trips to bead shops, etc. I don't have many of the receipts for the materials, but am pretty sure I have some from the beginning of the year, before I was officially registered as self employed.

I also took a course in March in specific jewellery-making techniques in order to prepare for self employment.

My question is - can I claim for the materials and course even though they were purchased before I was registered as self employed?

Thanks

KG

Horace

You could claim for the course and possibly for materials purchased prior to setting up but not for beads etc purchased years ago. You need to keep all receipts. You can also claim for courses that you do as part of your professional development now that you are self employed.

fengirl_2

You can include in your accounts any materials for which you have receipts - if you are investigated, HMRC will only allow for expenditure which can be evidenced.
I have to disagree on the course fees. These are not allowable when they are to learn a new skill, only to keep exisiting skills up to date. For instance a lawyer specialising in property law could include fees for a course up update him on new legislation, but not for a course on divorce law.

duncan303

can I claim for the materials and course even though they were purchased before I was registered as self employed

You should be able to claim for the training course if you can demonstrate that it was directly related to the enhancement of the business, as it appears you have done so.

may I suggest the importance of getting into the strict habit of obtaining receipts for everything that you wish to include as a business expense. These receipts need to be clear and describe the items purchased.
The receipts are just as important as the purchase because without a receipt you pretty much will have to forget trying to claim. Watch out for till receipts that do not describe goods ie if you would have to write on them so that you can remember what they are for, then ask for a written receipt. Do you have a receipt that exactly describes the training course.?

Consider at the time of purchase what class of expense the purchase is, these need to be split in to goods purchased for resale (stock) and plant which is the machinery, tools equipment necessary to manufacture your product. Try to purchase them as separate transactions if you can, it makes your bookkeeping sooo much easier. As for expenses pre-registration I agree with Horace and would reaffirm that you need to ask yourself the question when you purchased the beads did you purchase them intending to resell them, or, were they for your own use. If the latter I would not consider attempting to claim them. However the pliers that you purchased (plant) that you will be bringing into the business I would suggest that these could be included as legitimate setting up costs because they are necessary for the manufacture process. (as long as you have kept the receipt J )



HMRC eventually gets round to all of us one day, and you need to show proof of the expenses you have claimed. You are only required to keep your books six years; I keep mine considerably longer for my own protection. Keep receipts dry and out of direct sunlight and sources of heat as soon as you practically can.

IMHO: HMRC view that claiming of expenses is a privilege not a right, although this is probably not strictly true the attitude has served me very well over the years.


Furthermore, if in doubt call HMRC they are very helpful and will clarify and authorise your queries, much safer than any of my rambling opinions and suggestions.

HTH


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duncan303

fengirl wrote: »

I have to disagree on the course fees. These are not allowable when they are to learn a new skill, only to keep exisiting skills up to date.

I have to agree with you on this, I believe that you are correct and I have made a mistake. sorry.

At the time of the course you cannot have enhanced the business because it was not formed at the time.


I 'll get my coat


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pitkin2020

yes and no...you can claim for many things prior to your business opening that may not have been purchased for the business but are now going to be used by the business...for example you bought a home pc, sometime later you start a business and the computer will be used within the business, you value the pc at its current value (if no receipt) and that can be claimed for.
With regards to the beads you may be able to claim for them i think the time scale is 2 years prior to starting the business, and you dont need a receipt, as it was bought prior to the business starting but the value has to be accurate, you cant say each bead is worth £500 when they were only a £1 each.
Courses are claimable expenses if they are to help with the business, which you may be asked to prove, so for instance as you are going to making jewelery anything relating to that is fine so is anything business related, but you couldn't claim for an electricians course for example as its non related.

TBH go and see your local qualified accountant rather than taking advice from a forum (as good as it may be), he/she will tell you exactly what you can and cant claim, they will save you money and there fee is tax deducatable, for a small business your accountancy fees would be no more than £300 for the year,

pitkin2020

as for receipts HMRC dont expect receipts for everything, it makes it easier for you as the business to prove you have bought it with a receipt, but you will have times when you buy things and there will be no receipt. Ebay traders who buy things from carboots will not have receipts for most of their purchases, but those purchases still have to be accounted for.
You should always get a receipt if you can as it will help should you get investigated you wont have to prove your purchase was actually purchased i.e showing them and the value is reasonable for the item

duncan303

Accountants might be ok for some things, but the IR helpline is cheaper (0845 so maybe even FREE) just prefix dial 141.

This is MSE after all


How does one account for VAT on a carboot purchase?


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pitkin2020

you cant claim vat on carboot purchases as they have already had the vat paid on the item when it was originally purchased.

Yes IR is free but a good accountant is usually worth more than his fee in what he saves you making sure you claim for every expense you can claim for

duncan303

pitkin2020 wrote: »

you cant claim vat on carboot purchases as they have already had the vat paid on the item when it was originally purchased.

mmmm?

doesn't everybody claim and charge back down the chain?

you still have to account for VAT on your outputs don't you?


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Horace

Before you can claim vat you need to be vat registered and that is not required until your business takes in £67K - you can register voluntarily, again the HMRC can advise you on this.

For instance, I pay vat on goods and services but I cannot claim vat because I am not vat registered, nor do I charge vat.