HMRC's Electricians Tax Safe Plan - Help!

oldtimer · Mar 12, 2012

Remember in the tax world there is no such thing as "too low to be taxed" because if there was then instead of a customer paying you £1000 they could pay you 200 times at £5 because say someone set the too low to be taxed threshold to a £5 plus it woild not be us they would have a problem with it would be with some smart a%$%% accountant who would try to get around it I remember 30 years ago when a company got away with paying their staff a bonus with gold sovereigns saying they had a face value of sixpence or 2.5p in new money the revenue argued that it was the actual gold value or its worth and anyway althogh technically the revenue is not going to chase you for helping your mate move house when he buys you a couple of pints and a curry they are just making sure there is no loopholes for someone to use it on an industrial scale.

egginyourface · Mar 12, 2012

If you want to do well in the game of life and move up you gotta pay tax

Thats how the game goes

Cash or cheque it all goes through the books...

oldtimer · Mar 12, 2012

I agree because the majority pay by electronic banking it is just not worth it

electromonkey · Mar 15, 2012

It's a strange one this. If you consider how many redundancies are being made in the public sector, you wouldn't think they'd have the resources to be sifting through what would be a phenomenal amount of paperwork to say for example cross reference a spark's accounts with electrical works that they have notified to their LABC.

The best and easiest advice an accountant has given me in relation to tax is this. Every month, the first £500 profit I make is mine. Any profit after that, 1 third is for the tax man.

In my very first year of trading, I used an accountant. That accountant managed to cock up my books and a friend of mine's too along with plenty of others. He got struck off from one of the financial bodies as a result but it didn't stop HMRC from writing to me asking for more money!

DurhamSparky · Mar 16, 2012

received my paperwork, binned it

oldtimer · Mar 16, 2012

electromonkey said:
It's a strange one this. If you consider how many redundancies are being made in the public sector, you wouldn't think they'd have the resources to be sifting through what would be a phenomenal amount of paperwork to say for example cross reference a spark's accounts with electrical works that they have notified to their LABC.

The best and easiest advice an accountant has given me in relation to tax is this. Every month, the first £500 profit I make is mine. Any profit after that, 1 third is for the tax man.

In my very first year of trading, I used an accountant. That accountant managed to cock up my books and a friend of mine's too along with plenty of others. He got struck off from one of the financial bodies as a result but it didn't stop HMRC from writing to me asking for more money!

As sole trader who is not VAT registered I do my own books it is not hard to I complete a daily spreadsheet(s) then at the end of the month transfer it over to a spreadsheet that tells me how much tax and NI I have to pay.Plus you are spot on about putting aside a third which is fine if you have self discipline if not then you will constantly chase your tale as you tend to borrow your tax reserve.

It not complicated ie if you have a tax code of say 720L then you can earn £7200 before tax or £600 a month so if you made £1600 profit in a month then put aside 35% of £1000 = £350 and then get on with your life and at the end of the year you have a little left over after you have paid the bill . Anyway it works for me and as I have said before its not worth it

electromonkey · Mar 16, 2012

I do my own accounts too. Like you said, It isn't difficult.

There's a trade off between having an accountant who you will need to pay but who will find ways of getting you to pay less tax and paying more tax but not paying an accountant. Either way, you end up paying out!

oldtimer · Mar 16, 2012

electromonkey said:
I do my own accounts too. Like you said, It isn't difficult.

There's a trade off between having an accountant who you will need to pay but who will find ways of getting you to pay less tax and paying more tax but not paying an accountant. Either way, you end up paying out!

I would also add that when I employed an accountant years ago he would not tell me his bill until he seen my accounts or in other words he was shaking me down and he sorted it out in 30 minutes because I did all the work for him so you are correct it is a trade off and I would rather pay £100 extra on tax than pay him £600.

Also a bit advice for anybody running a business if you have a professional approuch to your business then do the same with your accounts ie keep a folder put all your receipts in chronological order make a simple spread sheet(s) that you can fill in daily ie Purchase,Bank,Sales,Milage
and then a monthly total sheet that calculates your running tax bill. Plus never trust a PC as far as yiou can throw it so every 2 week back up your accounts files and every month your business files onto a memory stick. So at the end of the tax year in a couple of weeks time you just fill in the boxes or you could...................................

Leave your receipts lying around the dash or floor of your van then dig through a drawer in the house for bank statements then get fed up chuck them all in a box hand them over to an accountant who will hand them to a bookeeper who will have to sort them out and then charge you £800 plus vat for doing it. Plus this will not help HMRC if they decide to audit you hiding behind "I am a very disorganised person" will not wash instead they will say well we are and here is a £2000 tax bill and £1000 fine for not being so.

moggy1968 · Mar 16, 2012

it's not a question of wether you break the rules or not. Even if you play exactly by the book an investigation is a nightmare. 1-2 days of your time plus additional accountancy fees, and they will find something if only to justify their existance!
There is, I think, an element of scaremongering in this, a bluff to get people to 'fess up with just enough investigations to keep people on their toes.
I have heard they target certain accountants customers if possible problems look likely (i.e. if your returns are regularly late)

Guest111 · May 25, 2012

I was told they target small businesses as they either can,t afford or don,t know how to fight it,say a large multinational owes 2 million in tax it could cost HMRC as much to recover it ,dont forget accountants costs are business expenses! So if they chase enough small businesses they still get their 2 million back no hassle and they are happy.

oldtimer · May 25, 2012

I think it is a question of keeping the pressure on they dont want it to go the same way as Greece where no one paid taxes and everything was put on the credit card also they have software that can highlight problems so for example the average electrician will pay £xx for stationary £xx for phone/internet £xx for materials the sytem then works out the percentages and thats fine but if they see any out of balance accounts then want to have a further look. The thing is if you keep good transparent records that can be audited great but if you go abroad 3 times a year a brand new car in the drive and your records show you only earned £xx amount then they dont have to prove anything the onus is on you to prove how you earned and payed for everthing .

Guest111 · May 25, 2012

oldtimer said:
I think it is a question of keeping the pressure on they dont want it to go the same way as Greece where no one paid taxes and everything was put on the credit card also they have software that can highlight problems so for example the average electrician will pay £xx for stationary £xx for phone/internet £xx for materials the sytem then works out the percentages and thats fine but if they see any out of balance accounts then want to have a further look. The thing is if you keep good transparent records that can be audited great but if you go abroad 3 times a year a brand new car in the drive and your records show you only earned £xx amount then they dont have to prove anything the onus is on you to prove how you earned and payed for everthing .

Totally agree there,pity they don,t do the same with drug dealers,there,s a bloke near here had all top of range cars doesnt work for a living yet nobody bothers to ask how he affords them (we all know)yet the working man has a bit more than the powers that be think he should and they jump all over him.