Can anyone help?

Shepsgirl

I have a problem i havent come across before and dont know how to deal with it. My friend asked me to have a 'quick' look at her tax return for her. Fair enough.
BUT!

She doesnt have any sales invoices!

She said she wrote one out for her clients in a duplicate book but when she was paid threw the duplicate away!!!!!!!!!! She also didnt have bank statements but that one is easily solved. How will she prove her sales? Yes, the amount paid into the bank is one way but she doesnt always pay all of it into the bank (She is self employed btw) she keeps as drawings. Can anyone help me?

Anne Boleyn

Sales

Hi Shepsgirl

Firstly, please explain to your friend the necessity of keeping all records pertaining to her business, this includes sales invoices/receipts, expenses receipts, bank statements etc.

I had a client who destroyed his bank statements after 2 months and assumed there wouldn't be a problem.

Does your friend keep a diary of appointments? Can she reconstruct her weeks with help from this. Does she keep a mileage log which would help with journeys undertaken? What sort of business is she in? If she has set prices again this could help. If it is retail then will probably be trickier with different prices for everything.

I don't think it will be easy or quick but try to reconstruct as much as possible. Is it a new business? Is there also a problem with expenses?

Don't forget to charge a decent fee for your time.

Post again with a little more information, if you would like further input.

sdv

Shepsgirl wrote: »

.........

She doesnt have any sales invoices!

............. How will she prove her sales? Yes, the amount paid into the bank is one way but she doesnt always pay all of it into the bank (She is self employed btw) she keeps as drawings. Can anyone help me?

A classic case of incomplete records!

presumably you will have all the purchase and expense invoices.

ask your client what profit margins is she working at?

you can also get information on the profit margins from the internet on the expected margins of any given business sector.

don't forget to take into account the closing stock figure to arrive at the cost of purchase, add your profit margin on that and hey presto!...........................you are there

Shepsgirl

Incomplete records! OMG! now there are two words that i havent heard since my studying. LOL

Thank you both for replying I shall use both suggestions and get as much info as I can. Unfortunatly, as she is a friend and i am doing this for her as a favour, I'm not charging her. But it does mean i can Gibbs slap her for being an idiot and make sure she keeps everything for next year.

Shepsgirl.

Monsoon

Shepsgirl wrote: »

But it does mean i can Gibbs slap her for being an idiot and make sure she keeps everything for next year.

Yep, slap her upside her head! At least make her buy you a drink. Or ten

She has to keep records for 6-7 years. If the tax man comes a-knocking, he could well slap her with a higher tax bill because she can't prove her income.

Hopefully that will kick her into getting it right!

As others have said, work from what you've got and then produce sensible workings (and keep them!) of how you get to your final figures. As long as you have been logical, consistent and sensible, a reasonable tax inspector should be happy, but she must take more care in future.

Note of caution - do get some kind of letter of engagement in place even though you're doing it for free. Sometimes 'friend' jobs can come back to bite you in the butt. Sad but true.