First Self Assessment for Mobile DJ

Mre_3

Hi All,

In August 2009 I started a part time mobile DJ business along side my full time employment. It is now time to fill in the tax return and I must admit... tax is definitely taxing!

I have made a loss due to large start-up costs and I can’t really afford to use an accountant for hundreds of pounds. I was hoping that if I post enough information on here, some kind person may be able to help out!

Ok, so my circumstances are as follows:

Full Time Employment 2009-2010: Pay for year: £28294.20 … tax deducted: £4363.00

Part Time DJ Business 2009-2010:

• I’ve taken £5,620.00 from the work I have done
• I’ve spend £12,901.13. This breaks down as follows:
  • Music CDs: £4396.66
  • General Expenses (such as advertising, website, stationery, PLI etc.): £835.70
  • New Van: £6,560
  • Fuel costs for Van: £549.87
  • New Lighting: £558.90

I have obviously made a large loss due to start-up costs but I simply don’t know how to fill in the tax return to make sure that things work out least costly. (I do intend carrying on next year by the way). I can see things mentioned on the online form like Capital Allowance and Annual Investement Allowance and I’m not sure where the above expenses fit. Can anyone clarify how the above expenses should be claimed? Also, I see the section about off-setting losses against another income or carrying forward or backward. This doesn't make any sense at all to me?!

I’ve been paying National Insurance on a weekly basis by direct debit so think I am eligible for this back. Can anyone confirm this and if so, how do I go about getting this back?

Many thanks for taking the time to read this.
Mre.

Mahmood_Reza

Construct a statement of business profits - ie business income - business costs (ignore money taken out for personal use). Van = plant, you can potebtially claim 100% of this if it is exclusively for business use.
If a loss arises then 3 main options: (a) offset against 09-10 income (salary) and get a tax refund; (b) carry back to prior years(s) and get tax refund (if tax previously paid) + possible repayment supplement; (c) offset against any future profits from the DJ business.
The type of claim will deoend on a number of circumstances and also that HMRC accept the claim, and that your part-time DJ business meets any commercial activity testr.
Ref NIC, complete an exemption form, try and recover the Class 2 NIC (best of luck).
I suggest that you contact an accountant, they should justify any fee - shop around.

Mre_3

Hi Mahmood, thanks for the reply. My worry is the three main options which you talk about for when a loss has been made. I am worried that if I choose the wrong way I will end up out of pocket in the long run. Do you think it is worth paying for professional advice on this?

Thanks.

Gertie_Walker

Because of this question and your other many queries, I think you ned an accountant.

Mahmood_Reza

Mre wrote: »

Hi Mahmood, thanks for the reply. My worry is the three main options which you talk about for when a loss has been made. I am worried that if I choose the wrong way I will end up out of pocket in the long run. Do you think it is worth paying for professional advice on this?

Thanks.

I may be biased, but I would definitely say yes - they should justify the fee.

GARDINER

This is what I think -

General Expenses (such as advertising, website, stationery, PLI etc.): £835.70 = fully allowable against DJ income
Fuel costs for Van: £549.87 = fully allowable against DJ income if mileage relates solely to business use
Music CDs: £4396.66
New Van: £6,560
New Lighting: £558.90 ... all are allowable under HMRC Annual Investment Allowance (as long as the van is solely for business use - note cars are not included).
In respect of the fuel for the van consider that it isn't just the cost of the fuel that you can claim - the correct and statutory basis is to claim 40p for the first 10000 miles and 25p thereafter.
In view of your salary I would claim the loss against 2009/10 general income.

harryhound

In respect of the fuel for the van consider that it isn't just the cost of the fuel that you can claim - the correct and statutory basis is to claim 40p for the first 10000 miles and 25p thereafter.

Don't you have to make a decision to account for the van on actual expenses OR claim 40p a mile which is set at that level to cover the write off of the capital cost ?

Music CDs: £4396.66

Don't DJ's use MP3 files on a laptop these days?

chrismac1

On the basis of your post I think you are smart enough to do the tax return without making a big howler.

Claim the loss relief against your earned income, you'll get a tax refund - but beware, this increases your risks of an inspection.

Claim your actual costs of the van if it is 100% business use and don't forget to include road fund licence, repair & maintenance costs and insurance. KEEP ALL YOUR INVOICES - and this includes petrol station chits even if you do go for the 40 pence per mile option

If you went to an accountant with this, it's about as easy as a tax return ever gets. Assuming no other sources of income or other complexities, £200 + VAT fixed price would be my quote - but if you are in a big city you could expect to pay more.

Whichever way you go, the better your records are the better things will be. If you do your own and get inspected you'll survive it without a bill. If you go to an accountant you'll have made it easy for him / her to sort out accounts and tax return for you.

chrismac1

One last thing....

Assuming many of your costs here are start-up costs, and that going forward you'll be making profits, you're almost certainly better off choosing 30 April as your year-end for your accounts.