Self employed tax question

Jput

I am a registered self employed musician, and my question is regarding declaring cash payments on professional engagements. 
I work for several different bands/ensembles. Some engagements I invoice and am paid via Bacs, others do not require an invoice and are paid in cash, therefore there is no paper trail.
I know all income needs to be declared, cash or otherwise, and I have always done so. But I am aware that when an engagement is paid in cash without an invoice/paper trail, other band members may be dishonest and choose not to declare some of their earnings.  

My question is, were I to be investigated, what details would HMRC require about each engagement? Usually I list client name ( and often a location, as I declare mileage as a business expense). But in doing so, to what extent am I incriminating clients, and by association, the other band members? Or would the audit be unlikely to go into that level of detail - if I give a name and a fee, and label it 'cash payment', would they simply accept that and ask no more questions?

Any info is much appreciated. 
 

Car1980

You create an invoice for every transaction and declare it all at the end of the year. How it was paid or whether you handed over the invoice doesn't really matter. Other people's affairs aren't actually your concern.

And chances of HMRC ever looking into you are actually incredibly tiny.

Jput

Thanks for the reply. 

Out of interest, do you mean the chance of being audited is tiny, or are you talking about the level of detail they would investigate? 

sheramber

Jput said:

I am a registered self employed musician, and my question is regarding declaring cash payments on professional engagements. 
I work for several different bands/ensembles. Some engagements I invoice and am paid via Bacs, others do not require an invoice and are paid in cash, therefore there is no paper trail.
I know all income needs to be declared, cash or otherwise, and I have always done so. But I am aware that when an engagement is paid in cash without an invoice/paper trail, other band members may be dishonest and choose not to declare some of their earnings.  

My question is, were I to be investigated, what details would HMRC require about each engagement? Usually I list client name ( and often a location, as I declare mileage as a business expense). But in doing so, to what extent am I incriminating clients, and by association, the other band members? Or would the audit be unlikely to go into that level of detail - if I give a name and a fee, and label it 'cash payment', would they simply accept that and ask no more questions?

Any info is much appreciated. 
 

Whether they requjire an invoice or not you should be issuing one and keep a copy.

That is your audit trail. - booking, invoice, payment.

What they do with invoice is not your concern

What other band members do is their affaor and not  any concern of yours.

uknick

Jput said:

Thanks for the reply. 

Out of interest, do you mean the chance of being audited is tiny, or are you talking about the level of detail they would investigate? 

I know of some who have been renting out property for years, never declared the income and HMRC have never been in contact with them.

But, on the other hand I know of people who have been asked to fill in self assessments because their bank interest income now exceeds the allowable de minimus.

The difference being HMRC get told about bank interest through bank feeds and have to do nothing to issue the self assessment.  But, to find out about errant landlords they have to do some investigative work.  Low hanging fruit?

Jput

Thanks again for the replies.

Perhaps I have framed my question in the wrong way. The hypothetical scenario I am concerned about is as follows:

I have invoiced and declared all of my cash engagements, so I have a clear audit trail. I am then audited by the inland revenue, and they want to see details and proof of what cash gigs I've done, which would possibly include emails/texts naming my employer and other band members for that gig. But there is a possibility other band members have chosen not to declare this hypothetical cash gig - in the event of a detailed HMRC investigation, would I not risk incriminating them by association?

I fully understand that technically this is not my concern, as long as I have done everything correctly and by the book. But nonetheless, is the above situation a likely scenario, or have I misunderstood the way that HMRC investigations are conducted?

BoGoF

If this is a regular thing then there is an argument that each band is a partnership and should be completing partnership tax returns showing each members share of the profit but that would really depend on the relationship with the 'hirer' - are the paying a lump sum to someone to then divvy up or paying the individual musician directly.

Car1980

Jput said:

Thanks again for the replies.

Perhaps I have framed my question in the wrong way. The hypothetical scenario I am concerned about is as follows:

I have invoiced and declared all of my cash engagements, so I have a clear audit trail. I am then audited by the inland revenue, and they want to see details and proof of what cash gigs I've done, which would possibly include emails/texts naming my employer and other band members for that gig. But there is a possibility other band members have chosen not to declare this hypothetical cash gig - in the event of a detailed HMRC investigation, would I not risk incriminating them by association?

I fully understand that technically this is not my concern, as long as I have done everything correctly and by the book. But nonetheless, is the above situation a likely scenario, or have I misunderstood the way that HMRC investigations are conducted?

Bear in mind that every transaction that ever occurs leads to another person or business and that leads onto another person and so on in a massive spider web. HMRC could follow them all up if they really wanted to, but would end up needing hundreds of HMRC staff, years of time and the cost outlay would be far more than any tax they'd hope to recoup.

Cash is a legitimate way of paying - it's the lack of declaration that is the issue. But that is out of your control and not your responsibility. Think of every landlord in the country - they'd get pretty shirty if a tenant started asking if they were declaring their rent payments to HMRC!