Self Employed Expenses

Rachel_M

I am self employed and run events. I charge £20 per head for them. Some of my events are also sold through a 3rd party. They make their money by charging £25 per head - they then give me £15 per head. So, in effect, I'm paying them £5 per head for each booking (the difference between what I can sell them for myself and what they give me).


Is there a case for claiming the £5 per head as a business expense, as it is what I'm paying the agency (albeit indirectly).

Hope this isn't too confusing! Please just ask if you want any clarification

Rachel

CLAPTON

it would seems to me you charge them £15 per head

Rachel_M

Yes, I can see that. My question, though, is can I claim the £5 per head difference between what I get for selling the events myself (£20 per head)and what they pay me for exactly the same event (£15 per head) as a business expense?

MrRedundant

No you cannot.

Surely it has a lesser effect though as if you sell at a lower price your tax bill will be less anyway.

Rachel_M

Oh ok. Just wondered as my other option is to hire a freelance sales person to do the job. They would obviously invoice me for their services - which would be an expense! It seems unfair that I can't claim for someone doing the same job for me (the agency!).

This has all arisen as my business is growing so quickly, I can't keep up. So haven't got the time at the moment to train someone

CLAPTON

well logically if you sell at £20 a head but incur £5 expenses (by employing some-one)
that is exactly the same at selling at £15

so you can't claim you sell at 15 AND have 5 expenses
but if you claim 20 then you could logically claim 5 expenses but that gives you the same 15

Mikeyorks

Rachel_M wrote: »

This has all arisen as my business is growing so quickly, I can't keep up.

I trust you have a better eye on your accounts - than your logic?

You sell directly at £20 or indirectly at £15. Your overheads (advertising / booking / admin etc) are presumbly commensurately lower on the latter than they are on the former? So there is a trade off.

Be cautious of creative accounting ..... otherwise your embryonic business could suffer a major setback if HMRC are provoked into an active interest.

Rachel_M

All I am asking is why I can claim paying someone privately to do the job as an expense - whereas I can't (it seems) claim for the agency doing exactly the same thing! I take on board everything about marketing admin, etc - but whoever does it is doing EXACTLY the same thing. Most of the events come via my website.

CLAPTON

Rachel_M wrote: »

All I am asking is why I can claim paying someone privately to do the job as an expense - whereas I can't (it seems) claim for the agency doing exactly the same thing! I take on board everything about marketing admin, etc - but whoever does it is doing EXACTLY the same thing. Most of the events come via my website.

because your income is £15 and that's what your are taxed on

if you want to say your income is 20 but your costs are 5 then it means your net profit is 15 and that's what you will be taxed on

you are taxed on the net profit which is £15

Suewre

When you pay someone privately to do the job, if you receive £20, then pay them £5, you claim the £5 as an expense, and so £15 is classed as income for your company, as this is what you have received at the end of the transaction.

When you go through an agency, you only receive the £15, so £15 is classed as income for your company. The only way you could claim the £5 as an expense, is if they gave you £20, and you gave them £5 back - but that ends up exactly the same, it is just more complicated.

There is no difference in the amount of income your company gets and the tax incurred between the two scenarios of 1) receiving £20 and paying someone £5, and 2) receiving £15.

Rachel_M

It's not the actual money difference I'm talking about - I actually wouldn't pay a private person as much. They would be paid per event, rather than per head.
However, thanks Sue - you've given me a lovely clear answer to my question :j.