Help with self assesment

phunkyphantom22

Hi

Am hoping someone on here may be able to help me out - a friend of mine is a self employed hairdresser and needs to complete her 06/07 self assesment form by 31.01.08.

She has not been sent a tax return form and does not have her unique tax payer reference either.

She worked as an employee in a salon Apr - Dec 06 and was self employed for rest. As an employee, she had the standard allowance and paid standard rate income tax and NI.

Do you think she has not been sent a form because she does not need to complete it for 06/07?

Would the tax and NI on profits Jan - Mar 07 be paid in next years?

I hope so as it's all a bit of a nightmare - she only has about 1 or 2 payslips and is missing a lot of bank statements for this period.

Advice anyone?! :001_smile:

deanshepherd

I suspect she has not been sent a Tax Return because she has not told HMRC that she is now self-employed!

There is a £100 penalty for late notification so you should warn her about that one. If you submit a printed Tax Return now then that will count as notification.

Tax and NI on profits from Jan - Mar will be payable at the end of this month.

Dean

Presumably, she will have a P45 from here final employment? Use that for the return.

Regards

Dean

phunkyphantom22

Hi there,

She has told them she is self employed - she did that when she first started - and is aware of the fine, just a bit unorganised! :001_smile:

We're going to do it online, but she needs this unique tax payer reference to do so.

She did have a P45, but lost it! :001_rolleyes:

All she has as proof of income is her bank statements showing when she made a deposit - is this good enough? I will obviously only deduct expenses for which she has a valid receipt.

Then I think she is going to have to pay the full % and NI on the profit, as there is no way of proving any allowance she is entitled to etc

Dean

Deposits to a bank account won't be sufficent. You need to know the gross pay and the amount of tax deducted to complete the tax return correctly, hence needing a P45 or P60.

Regards

Dean

peugeot

The Revenue will be able to provide the details of her employment income.

Best wishes
Steve

deanshepherd

Dean wrote: »

Deposits to a bank account won't be sufficent. You need to know the gross pay and the amount of tax deducted to complete the tax return correctly, hence needing a P45 or P60.

Regards

Dean

I think the poster means for the self-employed work, rather than the wages. However, in my experience, most hairdressers get paid in cash and rarely will it all get banked. It is therefore very unlikely that bankings alone will show the income she earned.

As Steve says, HMRC will have the PAYE details if you can squeeze it from them. It will probably be easier just to get a copy of the P45 from her former employers though.

peugeot

You're going to have a problem here if the hairdresser has not kept any records because like Dean says, cash based businesses rarely bank the full takings as they pay money out daily for cash expenses, keep cash till floats and then bank any surplus monies at the end of the week. Usually the bankings only ever form part of the weekly takings.

If your client has got absolutely no other means of substantiating the income, then I think the only way to arrive at the overall sales figure would be to do a complete cash account starting with cash bankings and work backwards by adding back the cash receipts paid from takings, add back drawings, cash wages etc etc. This should then give you the sales figure.

Best regards (and good luck)
Steve

phunkyphantom22

Thanks for all your help guys.

As far as she has told me, she has banked all her takings - but I think she also has her appointments book to back it up.

If I create a spreadsheet showing all the appointments and money paid, then deduct all the receipts that she has to get to the profit - will this suffice for the inland revenue?

If we complete it online, does she have to send the back-up in too or just keep records in case they investigate?

Will they be happy if she says that she has not accounted for her tax allowance and is paying the full whack tax on her profit because she hasn't kept her payslips etc? I don't want her to get into trouble.

peugeot

phunkyphantom22 wrote: »

Thanks for all your help guys.

As far as she has told me, she has banked all her takings - but I think she also has her appointments book to back it up.

If I create a spreadsheet showing all the appointments and money paid, then deduct all the receipts that she has to get to the profit - will this suffice for the inland revenue?

Yes I think that should be fine. Judgement and materiality in these circumstances has to be of some relevance.

phunkyphantom22 wrote: »

If we complete it online, does she have to send the back-up in too or just keep records in case they investigate?

No just send in the return and keep all the records in case an enquiry is opened.

phunkyphanton22 wrote: »

Will they be happy if she says that she has not accounted for her tax allowance and is paying the full whack tax on her profit because she hasn't kept her payslips etc? I don't want her to get into trouble.

Ask the Revenue to give you the details of her income. The return has to be done as accurately as possible. If the Revenue won't speak to you ask your client to ring them and give her the gross pay and tax deducted from the P45.

Kind regards
Steve

phunkyphantom22

Thanks Steve.

I don't think they'll talk to me - will ask her to ask them about it, but it's taken her this flipping long to request her form & ref no! I told her to do it in Aug! :ohmy:

Sure we'll get it sorted though....

peugeot

Have your client sign a 64-8 which will allow you to talk to HMRC on his/her behalf. It's not worth lodging one for this return but it will help you next time round.

Best wishes
Steve