Sole Proprieter Tax Return advice

markdirect

Hi

Can anybody advise on the following
Ist Year Accounts Return

Capital Invested 11k, Capital Introduced up to April 5th 2007 , £1760.00
Commenced taxi service properly mid August 2006. I want to report 12 months accounts from Aug 1st year to 1st Aug year_next etc..

How would this be done based on the following.

First licenced to trade on the 14th/08/2006 . Trading 14th/Aug/2006 thereon
Invested a total of 12.5k capital in business between July 06 and Apr 07
Spent a total of 9.5k between July 06 and Apr 07 on a taxi vehicle and equipment. These being Capital Assets
Income from services provsion to 5th Apr 2007 = 8.5k
Expenses incurred business only for the same period = 9.3k = loss = 0.8k
Shortfall made up with capital invested to maintain +ve balance

What the best way to organise to make use of tax allowances and my personal allowances

Why can't I claim 50% FYA on my taxi vehicle (89% business 11% private use) for the first year
How can I set my annual business year period from Aug 1st to Aug 1st. This being period I pay most of my annual fixed costs between
How can I take out the capital invested over 5 years, without it being treated as income.
If I had to use part of this capital as income to cover personal use how must this be reported so I do not have to pay tax on it .what records needed

I earned 2k during tax year which must be taken into consideration for tax . I dont want to combine with business income as not the case.

If I was licenced to trade on the 17th Aug 2006 . What should my basis period be and accounting periods

many thanks for any pointers

talkinpeace

What does your accountant say?

markdirect

Hi

Unfortunately I cannot afford that luxury yet.

talkinpeace

Sorry but I think you can and should.

A reputable local accountant will sit down with you and work out the best way round everything, based on your records in front of them.
I'd be surprised if their bill came in at over £400 and they would easily save you that.

I am anonymous and would not risk my letters (FCCA) by giving detailed personal advice to other anonymous people.

Murdina

I agree that an accountant would be a good idea. For what it is worth though, you do not need to concern yourself about capital invested/drawings if you are a sole trader (not a limited company or partnership) wanting to work out his taxable profits, since you are taxed on profits made by the business irrespective of what you pay in or take out.
You can also limit a capital allowance claim - you do not have to claim the full FYA, or indeed any FYA - you can carry it forward.
And re this 2k you mention - well what is it? It's a question of law and fact what goes into your taxable profits, not a choice. Is it anything to do with the business, or income from some other source?
It can be really easy for the novice to get themselves in a mess with self-assessment - another reason to try an accountant. Once you have got past the first year or so, you may be able to dispense with the accountant and do it yourself.

mrkbrrws

The first basis period is 14/8/06 (commencement) to 5/4/07. Your accounting period can be whatever you want, but if you're doing the Tax Return yourself you keep things simpler by using the period to 5/4/07 and years ending 5 April thereafter.

Also note that your Tax Return must include all taxable income in the year ended 5 April 2007, including employments, interest and dividends etc.

Assuming no other taxable income you appear to have a trading loss for 2006/07 which could be carried back if you paid tax in previous tax years or carried forward against future trading profits.

If you are unsure, then I would also suggest that you get professional advice.