Tax Return for Self-employed


R

Ronald Raygun

Martin said:
Wow - what about on the flat, and have you tried going up hills...?
We've got plenty of hills in Scotland, laddie. But what goes up must
come down. And yes, it's averaged. Whenever I refuel I never just
buy a round sum's worth, but always fill up, and reset the trip counter.
Occasionally I divide the price paid by the number of miles and I
tend to get about 8p. Actually it's probably nearer 7p. It usually
involves some cross country runs and works out a bit more on the few
occasions I've been driving exclusively in town since the last fill-up.
I get 16p to 17p - but obv that's petrol.
Must say I was surprised when the fuel cost per mile went down when
I changed from 1.2l petrol to 2l diesel.
Mine is coming up and will be the wrong side of £500 with no extras.
That's for a large-ish "quality / exec" (not my description...) car -
franchised
dealer charges £80 + vat per hour. Interestingly, the rate drops for
"older" cars - apparently to attract the non-"company car" business.
I go to a local non-affiliated garage.
What - for a heavy-ish (presumably) diesel?
Peugeot 206, basically a hatchback, not that heavy, but it's nice to
have a 2l engine in it, so I can feel I could have some boy racer
moments if the mood should take me.
Where do you get them,
From the cheerful chap at the corner shop in Lauriston Place.
and do they last 24k? I couldn't shoe a mini for that.
It had 44k miles when I got it and 89k now 3.5 years later.
I replaced 2 tyres 2 years ago (presumably 26k miles ago and they
still have a fair bit of tread left -- the next MOT will tell) and
the other 2 just last month, so *those* must have lasted at least
45k but they may well have been "better" ones, so it's difficult
to say. But at £38 for a 185 65 R14, who cares if you have to
replace them as frequently as every 24k?
Are you questioning Ins ?
No, I'm alleging that your example is too extreme to be compatible
with a car worth only £6k.
Are you assuming max NCD, owner-only dirver,
SD+P use only?
Yes, except that SDP-only cover is incompatible with *any* business
use. :) Luckily, many policies throw in use in connection with the
policyholder's business.

This is probably quibbling beyond what is reasonable, but if the
insurance is significantly more expensive to allow other drivers,
then the excess cost can't really be a bona fide business expense,
can it? Not even 70% of it. I mean, if owner-only is £200 and
plus spouse is £50 more (if spouse helps out with the business
and does some of the business miles, there can be no question of
disallowing any of the £50), but if adding teenage son (who doesn't
do any business miles) as named driver for the first time adds
£1000 to the premium, you can't really justify £700 as an extra
business expense, can you? On the other hand, I suppose an "any
driver" extension might be OK on the grounds that you might want
to let an employee drive it.
 
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M

Martin

Ronald Raygun said:
Martin wrote:

I go to a local non-affiliated garage.
I used to, too, but they're not best equipped to do less popular cars, which
all seem reliant on regularly updated s/ware,
From the cheerful chap at the corner shop in Lauriston Place.
And does £38 include balancing, new valve, disposal of old, vat etc?
No, I'm alleging that your example is too extreme to be compatible
with a car worth only £6k.
Ah - you need to look at what happens to omv of "expensive, thirsty" cars
after the first 3 or 4 years...!

Re. insurance - yes, I'm aware of all that but the figures I gave is not
untypical. Probably more if no NCD.

Anyway, that's all missing the point which was that 40p option may not be
the best in every situation, and making careless assumptions is not in the
client's interest, nor what she's paying for.
 
R

Ronald Raygun

Martin said:
And does £38 include balancing, new valve, disposal of old, vat etc?
Yep. And all his overheads, like giving the traffic wardens cups of
tea so they don't ticket you when you're waiting outside.
Anyway, that's all missing the point which was that 40p option may not be
the best in every situation, and making careless assumptions is not in the
client's interest, nor what she's paying for.
Agreed, well, sort of. If/when at the end of the day, having weighed up
all the options after having done a great deal of research at the client's
expense, it ends up too close to call, not forgetting that the closer it
is to call, the more detailed research is required, one needs to question
the value for money the client is getting out of your answer, and whether
she might not have been better off with the sweeping generalisation.

Don't forget that it's also administratively simpler to count business
miles and just pay for them than it is to count business miles to arrive
at a percentage use figure and then to tot up all expenses and split them
up using said figure, and what if she pays for the maintenance services
with a business cheque and for fuel with her personal credit card? She'll
be needing your services to sort it all out, which may cost her more than
the tax she might save.
 
M

Martin

Ronald Raygun said:
Yep. And all his overheads, like giving the traffic wardens cups of
tea so they don't ticket you when you're waiting outside.


Agreed, well, sort of. If/when at the end of the day, having weighed up
all the options after having done a great deal of research at the client's
expense, it ends up too close to call, not forgetting that the closer it
is to call, the more detailed research is required
Understandable assumption, but not true IME. When it's close, you know
therre's little to be gained by spending excessive time to refine things.

Also, over the years, you (well, I) end up with all manner of little calc
tools which make the checking very quick an simple.
, one needs to question
the value for money the client is getting out of your answer, and whether
she might not have been better off with the sweeping generalisation.
Indeed. And that's what good accountants do constantly. After all, repeat
business is rather important.
Don't forget that it's also administratively simpler to count business
miles and just pay for them than it is to count business miles to arrive
at a percentage use figure and then to tot up all expenses and split them
up using said figure
How do you arrive at "drawings" for the BS unless you tot up all this stuff?
and what if she pays for the maintenance services
with a business cheque and for fuel with her personal credit card? She'll
be needing your services to sort it all out, which may cost her more than
the tax she might save.
I refer the hon gent to the answer I gave a short paragraph ago...

Your argument about balancing time &/or money spent on precision in accounts
applies to everything - not just motoring (ignoring compliance issues for
the moment). The trap, therefore, is taking the laissez-faire thing so far
that client loses out big-time.
 
R

Ronald Raygun

Martin said:
Understandable assumption, but not true IME. When it's close, you know
therre's little to be gained by spending excessive time to refine things.
Ah, but you won't know it's close enough not to bother with the
detailed research, until you've already done most of it. :)
How do you arrive at "drawings" for the BS unless you tot up all this
stuff?
If you work out mileage money instead of keeping all the car-related
invoices and receipts, then there is no need to tot up and apportion
all the car-related expenses. You can just throw away all the receipts
and treat any payments that might have come out of the business account
as drawings.

If you do go for the actual costs basis, you could still treat all
bill payments from the business account as drawings, until you make
the final annual reckoning, tot them all up as if you'd paid everything
personally (which in effect you would have done) and charge 70% of it
to the business (which could simply become just one double entry to
DR motor expenses and CR capital introduced (to negate prior drawings)).
I refer the hon gent to the answer I gave a short paragraph ago...
The "what if" was rhetorical. There is no conceptual difficulty in any
of this, it's just a question of minimising the amount of tedium involved.
Your argument about balancing time &/or money spent on precision in
accounts applies to everything - not just motoring
Indeed. It's just that with motoring it's relatively easy to see
what the administrative implications are going to be.
The trap, therefore, is taking the laissez-faire thing so
far that client loses out big-time.
Of course.
 
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M

Martin

Ah, but you won't know it's close enough not to bother with the
detailed research, until you've already done most of it. :)
Not true, IME. It's a peculiar combination of experience, instinct and
(dare I say) serendipity. I guess it's the reward for those early days when
I did do detailed stuff without a benefit emerging. By way of example, you
saw some figures and said "XJ12". I see "XJ12" and the "probable" figures
leap out...
If you work out mileage money instead of keeping all the car-related
invoices and receipts, then there is no need to tot up and apportion
all the car-related expenses. You can just throw away all the receipts
and treat any payments that might have come out of the business account
as drawings.
I realise that, but you'd be surprised (or not ATCMB) how often such a
payment turns out to be business, but client had forgotten. Even a petrol
receipt from 400 miles up north (or down south, in your case) which throws
up a forgotten legit business trip, accom, subsist, etc...

It's all down to approach, attitude, conscience, care, instinct, experience,
balance ... in fact, loads of things - except, maybe, the text-book!

Works for me, works for my clients... :)
 

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