Querying Accountants Tax Return and 19th April 2021 HMRC C19 Support- taxable or not taxable?

textbook

Before I submit my return

Class 4 NICs due £492

Class 2 NICs due  £158

Profit-  £15,035

Grants received-  £2119 (according to accountant)

Net business profits   £12,916

Turnover  £22272

Total expenses-  £9,356

Total taxable income-    £15,035 


On the 19th April 2021 got HMRC C19 Support-   is this taxable?   I'm not sure if it was a payment to everyone given tax credits or just payment from council because I had covid.  If tax credits then not taxable   if covid then taxable (according to accountant).   Anyone know which this is?
My main issue is turnover including grants is £22 thousand approximately according to myself but I believe she's added grants onto turnover and made a mistake.   I guess I need to add all income and grants again to check this?

Also if taxable income is below  £12,570  (If get it to that, do I just pay class 2 NICs and not class 4 NICs), will this still give me the same state pension?

Dazed_and_C0nfused

I think you need to be more specific about what the grants actually were.

Class 4 is essentially just an extra tax, it doesn't give any entitlement to benefits or State Pension.

Class 2 is key for State Pension.

Jeremy535897

The class 2 limit for 2021/22 was £6,515. The class 4 limit was £9,568. All covid 19 grants for the self employed (the £10,000 property based grant and SEISS, plus any other local authority grants) are taxable, and so was the £500 payment under test and trace:
https://www.gov.uk/government/publications/test-and-trace-support-payment-scheme-claiming-financial-support/claiming-financial-support-under-the-test-and-trace-support-payment-scheme

"Test and Trace Support Payments are taxable. If you’re employed, you’ll pay tax on the payment if you go over your tax-free personal allowance. Your tax code will change to collect the tax. You will not pay National Insurance contributions on the payment. If you’re self-employed you must report the payment on your Self Assessment tax return."

textbook

Regarding the £500  just googled it and it's related to tax credits , to quote them- 

  The payment is non-taxable and will not affect your benefits. You do not need to declare it as income for Self Assessment tax returns or for tax credit claims and renewals.

https://www.gov.uk/guidance/new-one-off-500-payment-for-working-households-receiving-tax-credits



That's their first mistake  taxing me on that.  The SEISS grants are taxable, shall I go through all my figures and grants myself to check the figures?   

What's the link for me to submit my own tax return?

Shall I refuse to pay accountant (only £190) or haggle for lower price if more mistakes become evident?

The accountant put  £22272 for total turnover not including grants, i got exact same figure including grants.  I'm guessing she's added grants twice?  Missed out one grant and added a tax credit payment which should not've been included.  

accountant put

Net profit for tax purposes (64)   £12,916

Total expenses £9356 (31) (I worked out -£9796)- has she decided somethings aren't tax deductable or messed up?

Self employment Income Support Scheme Grant(70.1)-  £2119 when it should be -  £1619.00+ £1619 = £3238

Total taxable profits(76)-  £15,035   ( I was around £12,300 roughly)


What's the national insurance payment on e.g. £12,100 profit?

Dazed_and_C0nfused

How did your accountant even know about a non taxable grant 🤔

[Deleted User]

If the 22272 includes the grant of 2119, as the op states, it appears to me to have been included twice. 22272 less expenses of 9356 is indeed 12916. The 2119 has been added again to the 12916 to get 15035?

The Class 4 NIC on 15035 is £492.

As an aside £190 is outrageously cheap for an accountant- sometimes one gets what one pays for.

textbook

Couple of things-  my expenses (from my bank statement) as I worked it out to be-   £ 9804.81 or £9796.92  (I'll double check it) BUT clearly different to accountants figures!!!!   These are from the things I've purchased but the accountant put- in box (31)  £9356,   WHY  such a difference?    Do they actually check every receipt?  There may be few receipts missing, possibly in myfro flat.  Have they missed out expenses missing a receipt?

 I'm thinking of re submitting the tax return with higher figure for expenses.   If I fill in the form will I have to add in difference figures into different categories  e.g. phone fax, and stationery, car, van, wages.   This could be troublesome because I guess I'll have to categorise each expense?   Is this easy?

This may be a good opportunity for me to learn how to do a tax return and just do it myself in the future.

What's the link for me to submit my own tax returns?

[Deleted User]

textbook said:

Couple of things-  my expenses (from my bank statement) as I worked it out to be-   £ 9804.81 or £9796.92  (I'll double check it) BUT clearly different to accountants figures!!!!   These are from the things I've purchased but the accountant put- in box (31)  £9356,   WHY  such a difference?    Do they actually check every receipt?  There may be few receipts missing, possibly in myfro flat.  Have they missed out expenses missing a receipt?

 I'm thinking of re submitting the tax return with higher figure for expenses.   If I fill in the form will I have to add in difference figures into different categories  e.g. phone fax, and stationery, car, van, wages.   This could be troublesome because I guess I'll have to categorise each expense?

What's the link for me to submit my own tax returns?

Might be a bit late in the day! Maybe better to sit with your accountant for the completion of 2021/22.  To whom do you pay wages? 

No need to categorise - three entries -  turnover, expenses, profit. What methodology is used for the car and van- mileage allowance only or actual costs? If the latter, has capital allowances been claimed? 

Are all of the expenses allowable?
Presumably you are using the cash basis?

Pennywise

To echo what others have said £190 is ridiculously cheap, especially as it seems you've not done any book-keeping, so you're expecting the accountant to do the book-keeping as well as the tax return!  Are they even qualified?  A lack of book-keeping by you does cause a lot of doubt/confusion for the accountant as they're basically having to guess things, especially when there's no document to match a particular transaction.  Did you at least provide them with paperwork or screenshots etc of the covid grant documentation you received to help them determine what type they were, or did you mark the covid grants on the bank statements etc - it's quite possible they have included the grant in turnover as it wasn't clear on the bank statement that it was a grant - that may be why it's ended up being duplicated.

textbook

Pennywise said:

To echo what others have said £190 is ridiculously cheap, especially as it seems you've not done any book-keeping, so you're expecting the accountant to do the book-keeping as well as the tax return!  Are they even qualified?  A lack of book-keeping by you does cause a lot of doubt/confusion for the accountant as they're basically having to guess things, especially when there's no document to match a particular transaction.  Did you at least provide them with paperwork or screenshots etc of the covid grant documentation you received to help them determine what type they were, or did you mark the covid grants on the bank statements etc - it's quite possible they have included the grant in turnover as it wasn't clear on the bank statement that it was a grant - that may be why it's ended up being duplicated.

I printed out the bank statement with all the money coming in and money coming out.-  the grant is written  HMRC SEISS GRANT on statement no accompanying paperwork but surely the bank statement with figures is enough?   The bank statements are there, the receipts are filed monthly- the cash is in monthly order and then there's a section with more on.  Should I do more?  Not sure

textbook

purdyoaten2 said:

textbook said:

Couple of things-  my expenses (from my bank statement) as I worked it out to be-   £ 9804.81 or £9796.92  (I'll double check it) BUT clearly different to accountants figures!!!!   These are from the things I've purchased but the accountant put- in box (31)  £9356,   WHY  such a difference?    Do they actually check every receipt?  There may be few receipts missing, possibly in myfro flat.  Have they missed out expenses missing a receipt?

 I'm thinking of re submitting the tax return with higher figure for expenses.   If I fill in the form will I have to add in difference figures into different categories  e.g. phone fax, and stationery, car, van, wages.   This could be troublesome because I guess I'll have to categorise each expense?

What's the link for me to submit my own tax returns?

Might be a bit late in the day! Maybe better to sit with your accountant for the completion of 2021/22.  To whom do you pay wages? 

No need to categorise - three entries -  turnover, expenses, profit. What methodology is used for the car and van- mileage allowance only or actual costs? If the latter, has capital allowances been claimed? 

Are all of the expenses allowable?
Presumably you are using the cash basis

I don't pay anyone a wage!  That confused me.   

Petrol  is purely the amount paid- it's pretty obvious on the bank statements e.g. shell £103  etc  I don't work it out from mileage.


Not sure all the expenses are allowable e.g. I put a physio invoice through but I'm not sure that's allowable. Would they not include something if there's no receipt?  Do they really check every receipt? questionable expenses-  ebay/amazon?giffgaff phone cost/mountain warehouse- clothes/vistaprint .

I'd like to practice putting the expenses into the right category so I can do it myself next year.

Accountant used the following categories with me-

costs of goods bought for resale or goods used

wages, salaries and staff costs

car, van and travel

phone, fax and  stationery

accountancy, legal and other professional fees

other business expenses

Is it easy to categorise?




What do you mean using the cash basis?  Sorry didn't understand that.


If categorising expenses becomes too complicated, I could trust the accountant's figures and just alter the turnover figure.  That would be simpler, what do you think?

Also appears NIC Class 2 has gone up- I worked out if my profit was £11700 I'd still pay £360 in class NIC, but last year this was much cheaper.