Income & Expenditure Statement?

BHB

Hi everyone, sorry but I've not looked at the forum for a while as I've been busy with flyers and business cards, but require some input. I think that I'm just about to get my first client. Sole Trader, driving instructor, VAT registered, 1st VAT return due by 31st October. She was advised to VAT register by her brother in law who was doing her bookkeeping. Car leased from AA includes all expenses, petrol receipts only other expenditure. Uses weekly diary to record lessons paid for in cash. Am I correct in thinking that all that is required is a simple income and expenditure statement with a VAT column and is the diary sufficient to record income or as she is VAT registered is something further required. Hope you can help.

Sandra

deanshepherd

Is turnover over the threshold?

I've never seen a sole-trader driving instructor that is (unless it is a driving school with a number of drivers) and certainly not one working for AA.

Sounds like a bad decision to me.

BHB

Thanks for the reply Dean, she is self-employed, AA Franchise,and is no where near the threshold. She pays the AA a weekly amount and any Pupil Intro Fees, they reimburse her for lessons if they have been paid direct to the AA by the learner driver. She charges £20 per hour per lesson and also did so before she was VAT registered, therefore she will now get the £20 less the VAT and I think she will end up out of pocket, am waiting for her AA invoice/statements to make a start. Already have the petrol receipts.

deanshepherd

I would get that VAT registration cancelled asap. I suspect some bright spark recommended it so she could claim back VAT on all her costs not realising she is going to be giving away 15% of her income in the process.

BHB

I've read some of your previous posts Dean and it seems your first client was a driving instructor, way back. Any pointers you can give me would be most appreciated.

Sandra

deanshepherd

Yes, it was in fact my own driving instructor who 'worked for' BSM at the time.

I've never seen a driving instructor make much money so, yes, keep it as simple as you can for them. If at some point she ditches the AA and gets her own vehicle then you might want to have a quick read of the Bourne v Auto School of Motoring (Norwich) Ltd tax case.

The Revenue's Business Economic Notes number 23 also make an interesting read.

Oh, and sack the brother-in-law!

mc25

I definately agree with dean, for how much money she is making its now worth to be VAT registered at all. Good luck

BHB

Thanks for your replies, the brother in law is already sacked as she is getting divorced and he doesn't want to do her bookkeeping now. Only problem is that he has all her previous paperwork, her solicitor is trying to get it back for her. Another problem is that she did tell me that this quarter was her 1st VAT return but in the envelope is a VAT - Notice of Assessment of Tax letter for the period covering 11th May to 30th June, as this is not a full quarter I am assuming that that was the 1st period.They have assessed the amount due as £1. She also tells me that she's never paid any income tax as her brother in law always fiddled it for her. It's not looking good is it. I believe she has worked as a driving instructor for 4 years.

Sandra