Where to put Tax payments in S/A return??

Artaxerxes

billymadbiker wrote: »

What I am trying to get a direct Yes or No on is weather the amounts that I pay the tax man should then be included in box 3.33 on that years tax return? - this is what I was told to do by hmrc and have been doing.

If No, where do I put these amounts when filling in the return? Or just leave the figures off completly as already suggested by some replys?

No. And I assume you're doing your 09/10 return? I haven't seen 'box 3.33' since the 2006/07 return.

Unless you like paying too much tax I suggest you don't put personal tax payments in box 33 on page SEF 2, as they will be subtracted from your allowable expenses, and you will therefore pay more tax. As has been pointed out enough times, it is not a business expense.

They are drawings, so if entered anywhere the correct place for them is box 97, page SEF 5.

Suggest you get yourself an accountant. The cost will be partly offset by the amount of extra tax I suspect you are paying.

'Whether', not 'weather', by the way.

billymadbiker

ok,
Now I am not even sure I am making 'payments on account'
If I submitted my tax return (for 2009-2010) tonight I would, after submission, get 2 amounts showing, one due payment by the 31 Jan (a week or so) and another in July.

Regarding my issue, This is what was written (word for word) in the letter I recived after my investgation a few years ago..
"...the amounts entered as staff costs appear to be the total of your own payments for income tax repayments and national insurance contributions. These are not an allowable expense and as such should not have been claimed as expenses, Therefore additional duties payable on these amounts are shown on the attached sheet. In future your own tax repayments would be entered into box 3.33 on the return as disallowable employee costs."

Problem is, after the investigation I had an extra £12k bill, So, as they started chasing me up for it I paid them using a credit card.
A verbal conversation with hmrc when doing the return for the following year confirmed I should not declare the £12k (that came from the credit card) as 'income/part of my turnover', that neither the repayments toward the credit card or the intrest charged by the credit card are expenses (rather, If I drew money from the business to pay this debt I should include it in the same box 3.33 as it was a personal drawing). So, The £12k that I used to pay the outstanding tax owing was included on my return hence it was then classed as profit hence I got charged 20% tax on it.

Half of that seems fair enough, I had underpaid tax by £12k. But then I get charged a second lot of tax as the £12k I used to repay then got taxed as it is part of my profit.

Obviously a visit to the accounts is the next step as I have been adding an extra 20k or so over the last few years..

billymadbiker

p.s, box 3.33 may well have gone, the only paper info I have to hand is the 'guide to filling in your tax return' (for y/e April 2004)
As I have done it online since then they have never sent a paper return or the help book that used to come with it!

Artaxerxes

IF the personal tax payments were included as a business expense then yes, box 33 was correct (as it then all cancels out). But that treatment is completely unnecessary. A sensible Inspector would have told you to leave the lot out completely - what you have quoted is slightly misleading and, by the sounds of it, you've stopped including the tax payments as a cost, but continued disallowing it.

Hope you get it sorted going forwards and get all that money back.

heretolearn_2

oh for goodness sake, go and pay an accountant a couple of hundred quid to do your return. You are making a pigs ear of it, your OH can't be bothered if she is actually an accountant and not just some sort of accounts clerk, you're just digging yourself into deeper and deeper holes here.

billymadbiker

So, for future information:
Year 1
I turn over £50k
I have costs of £25k
I make a profit of, and get taxed on £25k
I spend £20k personally on sweets and put £5k under my bed
I get a bill for £4800 of tax.

Year 2
I pay my tax bill of £4800
I turnover £50k
I have £25k costs
I make a profit of £25k

As , at the start of year 2, I paid £4800 to cover my previous years tax bill what exactly do/should I do with this figure on my year 2 tax return?
Should I still pay tax on the £25k profit even though I have used £4.8k of it to pay tax bills?

Artaxerxes

billymadbiker wrote: »

So, for future information:
As , at the start of year 2, I paid £4800 to cover my previous years tax bill what exactly do/should I do with this figure on my year 2 tax return?
Should I still pay tax on the £25k profit even though I have used £4.8k of it to pay tax bills?

As answered in post #23. Ignore it if you don't include a balance sheet, box 97 if you do (but this makes no difference for tax).

Yes. YOUR DRAWINGS ARE IRRELEVANT FOR TAX PURPOSES.

CLAPTON

you pay the tax for year 1 out of year 1 profits.. i.e it reduces your take home pay even if you get a 9 months to pay it

and no the tax for year 1 isn't a business expense for year 2

Mikeyorks

You really need 'face to face' with an accountant. It will pay you in the long run ....... and even in the short term as it looks as though you've been overstating profits in years since the investigation.

Your basic problem stems from using a single account and then attempting to account for both business and personal expenses within it. If you had an account for business and an account for personal use ...... it would become much clearer. But an accountant is essential ..... even if only to give you a template for getting back to DIY.

On your last post ...... the tax always comes out of your personal account. You can't pay it from within the business ...... and your hybrid account is simply causing you confusion

billymadbiker

I am not trying to claim it as a business expense in any way, shape or form.
Problem is, I started in self-employment (sole-trader) on the 10th of April (say, 2000)(year 1)
I did not file my first tax return until the december of December 2001.
I then paid tax on all the profit I had made in 2000-2001.
As I did not know how much tax would be owing until I filed the return I did not make my first tax payment until Dec 2001.

When I completed my second tax return in Dec 2002 this covered the period 01-02 when I had made that tax payment. As (I thoguht) advised by hmrc, I put the sum drawn from the business (to pay the bill) into box 3.33.

Was this the wrong thing to do and will I have over paid much if it was?