Where can I find information???

Re:Where can I find information???

Also, does anyone know how much training expenses one can put through as an expense, when you're a self employed bookkeeper?

Re:Where can I find information???

Just to add to what Sheelagh's said about the HMRC website, I agree completely that searches turn up all sorts of random out-of-date information, but I have found that the best place to start (instead of using the search facility) is to click on 'Practitioner zone' on the home page, then on 'Manuals' in the library section, then 'Business income manual' under 'b', then BIM40000.
That gives some clear indications of what can and can't be claimed, however having looked at it now there doesn't appear to be anything on telephones. The rules on telephones used to be that the revenue took the view that anyone working from home would have a landline anyway and therefore the cost of the line rental was not 'wholly and exclusively for the purpose of the business' and therefore only an appropriate amount for the cost of the calls cost be claimed. However, things have obviously changed now and many people don't need a landline any more as they just use their mobile. I look at each client individually and claim what seems reasonable. For example I've got a client who runs a website for a living (it's a bizarre business that I'll not go into, but when he's working he's on the internet 100% of the time), and therefore I claim 90% of his broadband costs, however i'd not put that through for a client who occasionally uses the internet for their business.

That's interesting about the milage - I never knew that you could only use the 40p/25p if your turnover was less than the VAT threshold - what are you meant to do after that? keep all petrol receipts and work out what % is business? Or are the rates just lower after that?

So far as training's concerned I've spoken to the revenue about that a few years ago and yes, 'enhancing' your knowledge/skills is allowable but learning new ones is not.

jodie

ps: I've just re-read my post and want to point out that the client I referred to isn't doing anything rude to make a living, in case you were wondering! it's all perfectly legal and decent!

Re:Where can I find information???

I just had a call back form HMRC and had a few things claified for me, so I thought I would post it so that others can find it out:



1. I have read BIM45850 - Specific deductions: Losses but require further information. Last September, I purchased a computer (for £300) for business purposes through Ebay. The computer did not arrive, and I did not receive a refund. The woman responsible was arrested but not prosecuted due to lack of evidence. I have not been able to afford to take her to court.
Can I put this down a s loss for that period?

No, this cannot be included in the accounts because, it would have been capital expenditure, and therefore appear in the balance sheet and be depreciated to spread the cost, however, it does not exist and therefore does not appear in the balance sheet, and therefore cannot be depreciated.


2. I’ve been reading the pages regarding training and revenue and capital expenditure. I believe that my training towards becoming a certified bookkeeper with the ICB and an accounting technician with the AAT is capital expenditure as they are the acquisition of new skills as oppose to updating existing skills. After reading BIM35660 - Capital/revenue divide: intangible assets: proprietor's training courses, which states
“Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills, which they lack, it brings into existence an intangible asset that is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by ICTA88/S74 (f).”
Does the amount spent on the training courses remain in the Balance Sheet then as ‘intangible fixed assets’? Or do I just pay for my training out of my drawings from the business? If they remain in the Balance Sheet, can I get capital allowances on them? Can books relating to these courses be put through, and can other books relating to updating of skills be put through the business?

Training that provides new skills must be paid for out of drawings and not appear in the balance sheet. Enhancing existing skills and completing examinations to bolster a reputation is classed as revenue expenditure.


3. After reading BIM40401 - Receipts: Government Support for new businesses: New Deal: tax treatment, and BIM40405 - Receipts: Government Support for new businesses: Business Start up scheme: tax treatment, which states
“New Deal payments made to self employed participants are part of any trading profits that they make and are chargeable to income tax and Class 4 NICs. However there is no liability to Class 2 NICs for their period of participation in the New Deal.”
Does this mean that the money I have received from the benefits office in the form of Council tax and housing benefits, and job seekers allowance, are all part of income in the business? And if so, is it only for the period of test trading (6 months) or for any period spent on benefit and being self employed?

Benefits payments, e.g. housing and council tax benefit are not classed as taxable income, however a one off grant would be.

5. After reading CA23510 - PMA: Cars: Outline: meaning of car and qualifying hire car, and BIM47702 - Specific deductions: Travel & subsistence: use of vehicle mileage rates from 6 April 2002. the latter states:
“Capital Allowances
If a taxpayer uses the mileage rate basis then they cannot claim capital allowances in addition. This is because the payment rates already contain an element to allow for depreciation.”
Does this mean that if a car is owned by the business and mileage rate is used, you cannot depreciate of use capital allowances on that vehicle, where as if you had put down specific petrol and miles cost down, you could also put down the cost of services, repairs, MOT etc, and depreciation or capital allowances?

The mileage allowance is supposed to be a fairly generous way of taking into account not only fuel, but wear and tear, services, repair, MOT etc. therefore the CA cannot be utilized aswell and the car cannot appear in the balance sheet.
However, if you are going to put the car into the balance sheet and wish to depreciate it, and charge revenue expenditure for services and MOT’s etc, then you must use actual mileage and mpg of that vehicle.


6. With regards Capital Allowances, could you send more information regarding this as I have only ever studied depreciation and so am ill informed on this matter. It is the same as depreciation just termed differently.

Also with regards the tax return and the year end:
Can you jsut decide what year end to have? What is a basis period?

You can just decide it. With regards your partner who began trading in Jan 2005. He can choose his year end to be April 5th. Therefore he must compete an 04/05 tax return for this period (Jan to Apr 5th).
On the next tax return (05/06) he will have to put down not only the 12month period, but also his basis period, these must be shown separately. There will be 'overlap' and he will be taxed twice. When he decides to cease trading eventually the overlap will be sorted out, which is why it is adviable to make the year end april 5th an then no more overlap will occur each year.

Re:Where can I find information???

I see, the penny may have just dropped.

So, basically, depreciation is done 'internally' and methods chosen by the business owners, as to how much use the asset will provide the business with etc. And then for tax return purposes, the depreciation is added back, and capital allowances are worked out accordingly?
Does this mean that each year there are effectively two sets of accounts; one for the HMRC and one for the owners?

Re:Where can I find information???

Thank you so much, I've been stressed out and mistified for the last 2 days, and that's totally clarified it! Thank you!