Help - SOA and surplus for IPA?

alastairq

I think the issue is, the definition of 'income'?

Assuming the expenses directly related to work can be offset against tax [is that right?}...then it appears to me the 'income' part needs to be downsized to a level that reflects the average expenditure directly due to work, over the year.

[gawd, don't I sound like one of those wizzkid hi-flying young managerial types who really haven't a clue?}

How does a self-employed person actually calculate 'income'?

Is it a pre-determined figure?

An average?

Or does the OR scan the business accounts on a regular basis, deducting business expenditure, leaving what's left as 'income'?

In this instance, I would suggest the business expenditure is averaged out over the year.....I think this will leave a much lower monthly income....

It would seem the OR is simply trying to find out over a period of time exactly what the OP's actual 'income' [after expenses] is....and an IPA ensures this figure is calculated on a month-by-month basis....sadly this means the OP will be 'under the financial thumb' for longer....and the forecast income rise will result in IPA payment.

[not necessarily a bad thing for the OP.....remember, a payment under IPA will only occur if there is a surplus that month. Whilst such a system seems counter-productive to the OP regarding rewards for hard work...it is only for 3 years from IPA, and really ought to be considered by the OP as a 'sprat to catch a mackerel?' Once the IPA 3 year period ends, the career path then continues upwards...and then, of course, the rewards really kick in?]

What the OP should have done is initially calculated all work-related expenditure, deducted from commission, then quoting 'income' as whatever is left.


Maybe this dispute should go to Court?

Then both parties will have the opportunity to view the OP's financial situation more effectively....where the situation can be explained better?

Remember, a Judge is impartial....the OR is in just the same position as the BR.


Of course, it always appears to the individual that, if the Judge, having weighed up the presented evidence, then finds in favour of the other party....the Judge is 'biased' or 'stupid'......simply because one party's argument and evidence hasn't been accepted as fully as the other's? [often down to advocacy difficulties?]

After all, nobody takes a dispute as far as a Court if they don't passionately believe they are right, do they?

[discounting, of course, when a party uses a Court to achieve an end, knowing the other party won't show? Regardless of the veracity of their argument?]

Grandadto2

As explained, the car expenses are through the business. Partner does not have an income. Average wage over last 6 months is £1600

kepar

So why have you got your income as £2000?

Grandadto2

because it is flexible. One month I had £3000 the next I had £1200

Grandadto2

This is a fairly new business and I don't really know the potential "income" or "expenses" yet. I suggested doing 6 monthly accounts. This would still fall in the bankruptcy so any IPA could be enforced but this falls on deaf ears

alastairq

but did you not state, business expenses then need to be deducted from that 'income?'

These need to be aligned to the 'business', not 'personal' income.

If you are paying for hotels, etc in pursuit of your business, then these need to be separated entirely from 'personal' income.

So the 'income' portion of the SOA should reflect prior deductions for the business expenses.


Regarding the variation in income month-by-month?


In total, the OR will have discovered a surplus.....hence the seeking of an IPA....

But by supplying individual, monthly pay records, IPA payments can be varied to suit.

[IPA payments need not be a 'fixed' amount each month.....but it is coincidental if they are all the same]

Grandadto2

I don't know what the expenses for the month are until the month has ended - and they vary every month. There has NEVER been a surplus - I have NEVER had enough to service my business expenses and my allowable personal expenses - the personal expenses have always had to suffer.

JCS1

On paper, you have a surplus of £300 a month, so I can understand where the IP is coming from.

I suspect the issue is your self employment. Is your income on the SOA the money received less all business expenses? If not then this will distort your figures

Grandadto2

The business expenses take up the surplus and some. I have proved this but to no avail. Just gonna go and stick my head in oven in frustration

JCS1

Your income needs to be less business expenses, so if you earn £2,000 a month less expenses of £300 your income on your SOA should be £1,700.

Do you have any P&L's yet to show this?