A few Self-Assessment questions..

vee-licious

Hi, I am currently trying to get my boyfriend's tax returns up to date and, quite frankly his record keeping skills are shocking!

I have never done this before so I am trying to get my head around it all and have spent weeks researching and trying to find things relevant to our situation.

He is a self-employed carpenter (sub-contractor, CIS) and is sent out to various construction sites which change on a daily basis.
Where is his work base? He writes invoices, takes calls, keeps tools, manages the business etc in a dedicated room at home and goes straight from there to the relevant site each day he has work available. When claiming mileage, is it allowable to claim all mileage from the office (home) to the site or only if he has to visit multiple sites a day?
Should he be claiming £4 per week for office costs in the home?

He also has a lot of tools which have never been claimed for and there are no receipts that I can find at the moment. What should I do about these? I have read about AIA / capital allowances but that is making me feel like my head is gonna explode!

The other issue is the fact that he has (VERY) incomplete records of previous years, I don't even have access to full bank statements or CIS slips. For some years, I have maybe 3 months of statements at most :eek: Also, he has had periods without work, which again, I have no proof of! And don't even start on expenses. How am I supposed to come up with a yearly total? This is seriously stressing me out, but there is no point burying my head in the sand, I have to try to get it sorted.

I apologise for the seriously long post, but as you can see I have a lot of things to get sorted, so if you have experience or knowledge of how to deal with any of the issues I have written about, please reply and help me out, I would really appreciate some advice! *fingers crossed*

richbeth

Hi,
I can't help with details of the specific trade but mileage can be claimed from home and is the total mileage travelled to places of work.

However, I would strongly recommend you speak to an accountant as they will be able to complete the tax return for a fee and their advice may well deliver savings which cover their cost. You will learn from this and it may put you in a position to do next years. When my wife first became self employed we baulked at the accountancy cost but it has been worth every penny and then some. they have save us quite a few thousand pounds every year.

Also, note that their are legal requirements to keep paperwork if you're self employed and these things can come back to bite you. e.g. I would guess that you'll struggle to claim for tools etc without receipts. You could just get him a box and ask him to put everything in that :-)

Good luck,
Richard

chrismac1

This sort of stuff is in fact pretty normal in this sector. In fact, were it not for this I don't think they'd have their own personal (very penal) tax system called CIS!

Moving on to your specific points, plus others:

1. I guess he is several years behind. If 2010-11 is one of these, this is prioirity! Just get a tick in the box "return submitted" somehow. He'll be liable for over £2k in fines by the end of August if not.

2. The "place of business" query is highly topical due to the Olympics, there have been 3 tax cases in 2011 and 2012 that I know of just from that. I am confident you can sustain a case that his normal place of business is his home, hence all trips from there on business are claimable.

3. Tools - again common. I ask to see clients' tools in these circumstances. Then value them. I make a note within the tax return that this has been done. HMRC never read these, even before they come out to start an enquiry, so if there is an enquiry you are off to a good start - "I told you all about this, look here is a printout of the tax return where I did it!"

4. Incomplete records. Firstly, if he does not have a sequentially numbered receipts book, buy one and make sure he uses it.

5. Does he have a bank account where most or all of the business takings go? If so, ask the bank for statements. If they decline, invite them to reconsider unless they want you to get them via a Data Protection Act request at which point if you listen carefully you'll hear a bum squeaking!

6. CIS statements - first tell your boyfrend that a CIS statement showing £500 tax deducted is as valuable as ten £50 notes, and invite him to look after them with the care he looks after £50 notes. (Which in my experience of the sector is a great deal of care, they design their back pockets specially to handle these.)

7. See if he can remember who he worked for, then ask them for copy statements. They are required to have them for the past 6 years under tax laws. I've always found reputable contractors to be very helpful, unlike banks you don't even have to mention the Data Protection Act once.

Back to the first point. Get something in the box for 2010-11 NOW. Even if it is a ball park estimate. Say it is an estimate in the notes and re-submit when you have better numbers. Stop the penalties bleeding now, this will be much easier than letting them clock up then trying to get them cancelled.

For earlier years it is less of a big deal. The odds are he is due refunds from all those CIS statements, so any fines and penalties will come off as soon as you press "submit". Not so for 2010-11, the system has changed from being too lenient on guys like your boyfriend to being way too harsh.

vee-licious

Thank you so much for your replies, this gives me a good place to start. He now has a nice new shiny box to keep all of this year's receipts in, I refuse to get in this mess again!

I am trying to order bank statements and find contact details for companies he has worked with to see what info that gives me.

At the moment, one of the years only has 4 month's of CIS slips. It is so frustrating! I have just calculated the average monthly wage and tax using these then multiplied it by 12 but I feel that this is not good enough, so I have not put these on a tax return yet because of this.

What is even more frustrating is that HMRC have details of the tax paid but they wont give them to me, so I just feel a bit stuck, how am I supposed to conjure numbers out of thin air?

Again I want so say thanks for taking the time to read my panicked ramblings and for the helpful advice :cool: xx

chrismac1

Your point on HMRC is well made. They penalise the CIS contractor £100 for every month late on these electronic submissions - so that is £1,200 if you are 12 months late with one. Yet refuse to release this data to the individuals conerned, it's one of the biggest bugbears with accountants who deal with HMRC CIS.

In the circumstances you have 3 options:

1. Get HMRC to behave decently - 5% chance.
2. Get the returns from his contractor - 80% chance.
3. Failing that, if there is a net amount in the bank statement and no materials, then add 25%. So £800 net means £200 tax and £1,000 sales to account for. If there were materials, this element has zero deduction.

You have to come up with the best number with the information available. In your shoes, I would have no hesitation in adding a note along these lines:

"8 months of CIS sales have been estimated from the data available. HMRC staff refused a request to provide the information on the missing returns, this request was made at 10am on 17 July 2012 to Mrs. Sitting on her finger of the Timbuctoo tax office.

NWA

If I need my house rewired I get an Electrician, If I need my car serviced I go to a Mechanic, if I need a haircut i go to the barbers. You may think you are saving money by doing it yourself but in my experience (I am an accountant dealing primarily with CIS clients) this is not the case. Get proper help from someone who knows what they are doing.

LurkerTurnedPoster

chrismac1 wrote: »

WHOLE POST SUMMARISED BY ME AS.
Moving on to your specific points, plus others:
1. I guess he is several years behind. If 2010-11 is one of these, this is prioirity!
2. The "place of business" query
3. Tools - again common.
4. Incomplete records.
5. Does he have a bank account
6. CIS statements
7. See if he can remember

Wow. I was worried for VeeLicious, but reading that I now have hope for her after she has read your excellent post.

LurkerTurnedPoster

NWA wrote: »

If I need my house rewired I get an Electrician, If I need my car serviced I go to a Mechanic, if I need a haircut i go to the barbers. You may think you are saving money by doing it yourself but in my experience (I am an accountant dealing primarily with CIS clients) this is not the case. Get proper help from someone who knows what they are doing.

I would put the wheels in motion for everything ChrisMac advised, such as getting bank statements, big shiny receipt box, CIS details as remembered where possible by boyfriend and come to an accountant like you say. One with CIS experience. If there are fines totting up it could save money just on that.

I wouldn't try to negociate a muddle like that with the HMRC, I'd try to detail the muddle as much as possible, hand it to an accountant, and ask them to negociate with the HMRC.

mumof2nanof2

I would personally get an accountant, there are plenty out there who charge a reasonable rate for sole trader year ends, plus their fee is tax deductable as an expense. For reasonable rates check out the AAT website.