Self employed expenses

workclothes

Thank You all for your help and perspectives.

chrismac1

By all means go along to a Business Link course. But this will not enable you to run a limited company properly. Until recently I reckon about 5% of my clients could seriously have filed limited company accounts properly. This is now less than 1%.

Not only do you need a good understanding of corporation tax and basic company accounts law - which is where the 5% came from. Now all company tax returns MUST be filed using online using XBRLi software. Pdfs are thrown out of Court. So as a minimum you'll need software compatible with this. Seriously, pay the accountancy fees and spend the time developing your business, at the beach, whatever. From a standing start you have a mountain to climb with limited company accounts AND serious consequences if you mess it up.

Phil_rich

Thanks for the input, chrismac1 you have confirmed what I thought, its too much work for me so I will seek a good accountant.

Thanks
Phil

malc_b

chrismac1 wrote: »

Now all company tax returns MUST be filed using online using XBRLi software. Pdfs are thrown out of Court. So as a minimum you'll need software compatible with this. Seriously, pay the accountancy fees and spend the time developing your business, at the beach, whatever. From a standing start you have a mountain to climb with limited company accounts AND serious consequences if you mess it up.

This is NOT accurate! HMRC provide online software to fill in corporation tax returns, just like they do with self assessment returns. If you have simple affairs and know what you need to enter, or have a crib sheet, then it is no harder than self assessment.

And CTax software is a pdf! You download a pdf and fill it in offline and then finally submit it. This pdf handles all the XBRLi for you. It might be easier to opt for a package when the dust settles, just to save entering data twice but it's not that much work to copy figures from the method you use day to day (excel?) to this pdf. As a small company you only have to submit abbreviated accounts so only a few boxes are mandatory.

My tip would be to avoid "capital" purchases and/or take advantage of the large yearly write-off allowed (5k? 1k?) to get rid of "capital" in that year. That simplifies the CTax form.

The change to XBRLi for a small ltd co filing CTax online is invisible. Last year I used HMRC software, this year I use HMRC software, just different software. Of course I didn't like it since it meant my crib sheet was out and I had to work out a new one. And I had to enter more data but the principle is not that different. I certainly didn't have anything to do with XBRLi or even know what that meant.

But, I wouldn't don't use an accountant, at least in the first years. However, shop around and find one you trust and are comfortable with. The best one I found told me I didn't need an accountant :-). Of the two previous, one was not professional IMO, at least not to my standards, the other wanted me to pay him my CTax and then he would forward it on to HMRC - yeah right. That got sticky as he didn't submit the return until the last minute. Never forget, YOU are responsible for submitting returns and for accurate returns. Your accountant isn't it. It's you that gets the fine.

chrismac1

Fair enough up to a point. But in my view anyone using HMRC software for filing anything is just plain nuts. Here is the reason.

I have just over 100 clients. Of these, 2 have had the experience - on 2 separate occasions each - where a tax return submitted by me online - in one case CIS, in another self-assessment - was some weeks or months later deleted from the HMRC database.

At which point the clients were fined £100 for each "late" filing, so £200 each. At which point they called me to ask what the hell was going wrong. I rang HMRC to be told "These returns have never been submitted, the fines stand." I replied "I submitted these returns using Taxcalc / Able Internet, the data and timestamps from the HMRC database were .........."

At which point commonsense broke out and the fines were cancelled. Had I been using the HMRC software, in my view there is no way I could contest the fines unless I had printed or taken a PDF of the date and timestamps from the software. I reckon about 50% of my clients who submit their own payroll etc. do this DESPITE these warnings from me, so it's probably much less than 50% for the wider population, many of whom are naive enough to trust HMRC to get things right.

pleasedelete

Just looked and cHild benefit for 3 children is actually £2449 a year and so as you currently pay 40 per cent we can assume that your income after expenses puts you in the bracket.

You will be very significantly better off now and more so in 2013 with a limited company with both you and wife as employees and shareholders and neither will pay 40 per cent unless your profit rises enormously.

malc_b

chrismac1 wrote: »

Fair enough up to a point. But in my view anyone using HMRC software for filing anything is just plain nuts. Here is the reason.

I have just over 100 clients. Of these, 2 have had the experience - on 2 separate occasions each - where a tax return submitted by me online - in one case CIS, in another self-assessment - was some weeks or months later deleted from the HMRC database.

At which point the clients were fined £100 for each "late" filing, so £200 each. At which point they called me to ask what the hell was going wrong. I rang HMRC to be told "These returns have never been submitted, the fines stand." I replied "I submitted these returns using Taxcalc / Able Internet, the data and timestamps from the HMRC database were .........."

At which point commonsense broke out and the fines were cancelled. Had I been using the HMRC software, in my view there is no way I could contest the fines unless I had printed or taken a PDF of the date and timestamps from the software. I reckon about 50% of my clients who submit their own payroll etc. do this DESPITE these warnings from me, so it's probably much less than 50% for the wider population, many of whom are naive enough to trust HMRC to get things right.

I would have thought that any business, even any individual, would always take offered receipts. My experience is that I'm always offered to print or save what is submitted. And if I'm not happy with that I print from the web page too. HMRC also emails to say xxx has been received, where xxx is online VAT, online PAYE, or online Ctax.

I would agree that HMRC website etc. is not the best. We all know that if we watch the news. Hence it stands to reason to keep records. I just print to pdf and save the pdf. Having said that I've never had problems with Ctax, or VAT submissions. I did have an issue once with PAYE where it had a bug and I couldn't submit but they fixed that before the due date so I was able to submit in time. I had notified HMRC of the bug and kept records of that so any fine could be contested. That was a few years back though, and only the once.

IMO HMRC software is the safest route. I would have though HMRC is the most used so the most tested. But if there is a bug then it's their fault. Using 3rd party software means HMRC can still fine you. I've never had submitted returns deleted.

Tebheag

Find a tax person not just an accountant so many people these days have done courses and are suddenly specialised in doing tax. Would highly recommend going Ltd and employing your wife as long as she is doing work. Pay yourselfs the min but make sure your are in the NI threasehold for pensions etc also will cover your wife for SMP if your ever had a 4th child. As another poster said you will have to have all the invoices made out to your company name to be able to claim them as business expense. You could always get your wife to look into it, it all takes time but is so easy these days as so many help lines etc are available.
Good luck

chrismac1

HMRC is the MOST likely software to have a bug, because they are jobsworths (not all, but a lot of them) with no commercial incentive to sort out bugs, no proper testing, and so on. I network with a lot of professional accountants, very few - less than 5% - use HMRC software.

I am glad malc_b mentioned PAYE, I forgot about one client's 2009 payroll year-end - well before she became a client. The software from HMRC had a bug which stopped her from submitting on time. Their helpdesk confirmed this, she took no proper records of this call or her submission attempts and filed late. £100 penalty and no, despite many efforts I could not get her off the fine.

malc_b

chrismac1 wrote: »

HMRC is the MOST likely software to have a bug, because they are jobsworths (not all, but a lot of them) with no commercial incentive to sort out bugs, no proper testing, and so on. I network with a lot of professional accountants, very few - less than 5% - use HMRC software.

I am glad malc_b mentioned PAYE, I forgot about one client's 2009 payroll year-end - well before she became a client. The software from HMRC had a bug which stopped her from submitting on time. Their helpdesk confirmed this, she took no proper records of this call or her submission attempts and filed late. £100 penalty and no, despite many efforts I could not get her off the fine.

It sounds like the same bug I saw, but I found they fixed it the day before the deadline. I had of course sent messages via email and got replies to the same. I was getting a bit frantic and so was taking all precautions. I could prove I was not at fault. One of lives expensive lessons is to always keep records, always note times, dates, names of phone conversations, etc..

Also, it's not a question of which software is the most reliable. At the end of day it has to go into HMRC. If software X does not submit to HMRC whose fault is it? X or HMRC? Doubtless X will blame HMRC and vice versa. I don't want to be in the middle of that. It's a no win situation unless I can prove who is to blame.

As for accountants not using HMRC well they wouldn't need to would they. Accountants don't get the fine so they can choose what software is easiest to work with. :cool: