what records to keep for self employed GP

mister_t

Mrs T is about to start working as a locum GP. What kinds of records do we need to keep to make the next tax return easier and/or to save on tax?

As a start we would assume full receipts for all work cariried out and receipts for all purchases for items needed for the job (e.g. liability insurance), along with records of the car use. Should all the incoming and outgoing money be accounted in any special way (P&L?) or will a simple spreadsheet suffice.

Are there any other things that can be offset?

I would welcome your thoughts

Mr T

telly-addict

There is no need to produce a profit and loss account, as long as your spreadsheet is detailed enough to provide an analysis of the various expenses, if required by the Inland Revenue.

Basically a self employed person needs to keep the records for 6 years: it is 5 years from the 31 January filing deadline for that return:

y/e 5 April 2005, filing deadline 31 January 2006, records kept until 31/1/11

Here's the IR guidance of what to keep:

http://www.hmrc.gov.uk/pdfs/sabk4.htm

I used to do quite a few doctors' tax returns. Off the top of my head you need to include:

• subscriptions to BMA, GMC, Medical Defence Union premiums etc
• mileage records - keep a detailed record from where to where. Presumably your wife's base will be at home, which makes it simpler, but wise to keep a note if mileage is likely to be high
• cost of medical journals/training courses
• cost of equipment/specialist clothing
• telephone : mobile and landline
• use of home as office - proportion of costs relating to home use - just don't use that room solely for business, as it can affect Principal Private Residence relief on sale

The main thing is to keep it organised so that if the Revenue query a particular figure you can give a detailed breakdown.

Keep personal and business bank accounts separate for clarity.

Presumably she is going to work to a 5 April year end? She can choose whatever she wants but it makes it easier if it ties in with the tax year end.

If she is not used to paying tax after the year end, it could be worthwhile setting aside some money each month so she isn't stung by a big bill on 31 Jan after the year end. Once she has been self employed for a year she will probably need to make payments on account on 31 Jan and 31 July which will spread it out.

She needs to register as self-employed within 3 months of commencement to avoid a £100 fine. Form CWF1 will ensure she is also registered for Class 2 National Insurance contributions (currently £2.10 a week). She will also have to pay Class 4 contributions with her income tax on 31 Jan - 8% on £4895-32,760, 1% on anything above this.

As the supply of medical services by a registered practitioner is exempt for VAT she doesn't need to register for VAT. All expenses that she sets against her income however should include VAT, she is entitled to claim the full amount.

mister_t

Thanks for the very detailed and useful reply Mr Addict. We will definately have a look at the site mentioned.

Thanks.

telly-addict

mister_t wrote:

Thanks for the very detailed and useful reply Mr Addict. We will definately have a look at the site mentioned.

Thanks.

No problem - Mrs Telly-Addict.