Hobby business - how do I find a good accountant?
Discussion
I've been doing a hobby business for a few years, it's probably covered my costs but I haven't kept any accounts at all. I'm interested in expanding it but I've got no idea if it's feasible, being able to offset costs against my day job's tax would be handy but I'm a little nervous of screwing it up so would like to take some advice. I've got no intention of jacking in the day job for the moment.
Bearing in mind the tiny financial turnover how do I find an accountant that knows that size of business and can help me? I don't know anyone in a similar business that I can ask and I don't want to just stick a (digital) pin in the Yellow Pages.
Bearing in mind the tiny financial turnover how do I find an accountant that knows that size of business and can help me? I don't know anyone in a similar business that I can ask and I don't want to just stick a (digital) pin in the Yellow Pages.
HMRC doesn't recognise a "hobby" as a "business" unless it is making profits - in which case it isn't a hobby, but a business.
If an operation is a hobby and therefore is losing the hobbyist money (as most hobbies do after all), then HMRC will not allow any such losses top be offset against other income.
It looks likely (subject to further refinements) that very small activities (Gross Income under £10,000) may be removed from the need to return anything to HMRC - if the new Making Tax Digital rules actually come into place as planned.
If an operation is a hobby and therefore is losing the hobbyist money (as most hobbies do after all), then HMRC will not allow any such losses top be offset against other income.
It looks likely (subject to further refinements) that very small activities (Gross Income under £10,000) may be removed from the need to return anything to HMRC - if the new Making Tax Digital rules actually come into place as planned.
sumo69 said:
I am happy to have a no-obligation chat over a coffee - I act for a few people on here and we are not too far apart geographically.
Drop me a PM if you wish to progress this after the bank holidays.
David
Thanks, I'll do that.Drop me a PM if you wish to progress this after the bank holidays.
David
Simpo Two said:
If you want to make your hobby legit then a decent bookeeper would be all you need - £200pa.
But can you offset tax from your hobby business against your PAYE job?
Dunno, but that's what I'd like to know. Plus any other pointers that might be useful. I understand that the rest of the job is just bookeeping though.But can you offset tax from your hobby business against your PAYE job?
Eric Mc said:
HMRC doesn't recognise a "hobby" as a "business" unless it is making profits - in which case it isn't a hobby, but a business.
If an operation is a hobby and therefore is losing the hobbyist money (as most hobbies do after all), then HMRC will not allow any such losses top be offset against other income.
It looks likely (subject to further refinements) that very small activities (Gross Income under £10,000) may be removed from the need to return anything to HMRC - if the new Making Tax Digital rules actually come into place as planned.
I used the term hobby business as it's recognised by most people, I know the man in the bowler hat sees it as one or the other which is why I need some help going from one to the other.If an operation is a hobby and therefore is losing the hobbyist money (as most hobbies do after all), then HMRC will not allow any such losses top be offset against other income.
It looks likely (subject to further refinements) that very small activities (Gross Income under £10,000) may be removed from the need to return anything to HMRC - if the new Making Tax Digital rules actually come into place as planned.
I'd heard about the new rules which would certainly cover (many times over) my current income but I would be happier talking it over.
The "new rules" won't come in until 5 April 2018 at the earliest. There has been quite a large kick back against many of the proposals of Making Tax Digital so there is a chance not all of its provisions will be implemented - at least not as early as 5 April 2018.
HMRC should be making some sort of announcement early this month and things MIGHT be clearer then.
HMRC should be making some sort of announcement early this month and things MIGHT be clearer then.
Under the current rules, HMRC will need to be notified if the activity starts generating profits. They aren't so worried if it is making losses (as obviously, those would be in the taxpayer's favour).
The basic rule is, if you are engaged in an activity in which the purpose is to make a profit, you are trading and should notify HMRC within 30 days of commencing that trade.
In reality, they are not concerned too much if someone misses that fairly strict deadline. Obviously, if someone has set up a proper full scale trading activity and HMRC hasn't been notified they are less likely to be lenient when it comes to late notification penalties. But on the whole, they are not too harsh in this particular area.
The basic rule is, if you are engaged in an activity in which the purpose is to make a profit, you are trading and should notify HMRC within 30 days of commencing that trade.
In reality, they are not concerned too much if someone misses that fairly strict deadline. Obviously, if someone has set up a proper full scale trading activity and HMRC hasn't been notified they are less likely to be lenient when it comes to late notification penalties. But on the whole, they are not too harsh in this particular area.
If you allocated all the normal costs and allowances that you are entitled to claim against your "hobby" you would probably find it was actually losing money - in which case HMRC would not be that worried if you didn't do anything in regards top reporting it.
HOWEVER, having trading losses to offset against other income can result in you being able to reclaim tax you have already paid - so maybe making a loss isn't such a bad thing.
I have a couple of clients who are engaged on activity which hovers in this "hobby" area. One chap promotes small scale boxing events. Some years, it makes very small profits - some years it makes very small losses. I do return it for him as he has a more serious self employment which does need to be returned anyway. HMRC has never queried the boxing promotion activity.
I had another client who ran an antiques business - almost always at a loss. HMRC tried to block the offset of the loses claiming it was obviously a hobby and not a trade. I was able to argue successfully that it was a bona fide trade so he did get his loss reliefs. That was a long time ago now and I'm not so sure HMRC is as switched on or as investigative as they were 10-15 years ago.
HOWEVER, having trading losses to offset against other income can result in you being able to reclaim tax you have already paid - so maybe making a loss isn't such a bad thing.
I have a couple of clients who are engaged on activity which hovers in this "hobby" area. One chap promotes small scale boxing events. Some years, it makes very small profits - some years it makes very small losses. I do return it for him as he has a more serious self employment which does need to be returned anyway. HMRC has never queried the boxing promotion activity.
I had another client who ran an antiques business - almost always at a loss. HMRC tried to block the offset of the loses claiming it was obviously a hobby and not a trade. I was able to argue successfully that it was a bona fide trade so he did get his loss reliefs. That was a long time ago now and I'm not so sure HMRC is as switched on or as investigative as they were 10-15 years ago.
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