What kind of evidence do you need to deduct from tax?
Discussion
Technically, I am self employed, and basically I don't want to pay any tax at all, and would like to deduct everything I spend money on as business expenses, which I honestly believe that they are. For example utility bills, rent, and council tax (as I wouldn't live here if I had a choice), books as I need them to keep entertained, restaurant and bar bills as I need to eat and feel it is good psychologically to have a pleasant life, also any money that I save should really be considered not saving but an insurance expense incase I fail at what I am doing.
What kind of evidence do I need for my claims?
What kind of evidence do I need for my claims?
To be tax deductable, the expenses must have been incurred "wholly and exclusively for the purpose of the trade".
They must pass that test.
The Revenue requires you to be able to prove that such expenses were:
a) actually incurred
and
b) were for the purpose of the trade
Evidence of expenditure would be
original invoices
cheque stubb details
bank statements
credit card statements
The Revenue will never agree that 100% of domestic costs are claimable against the business. They are, however, willing to allow an element of domestic costs against business profits provided
a)some or all of the business is operated or administered from your home
b) you have worked out a fair and equitable method of apportioning your domestic costs between business and private
What is "fair and equitable" is not defined anywhere in the tax legislation but the Revenue will let you know if they think the portion you have claimed is fair or not.
"Entertainment" of clients and customers , even if incurred "wholly and exclusively incurred for the purpose of the trade" is never an allowable cost.
They must pass that test.
The Revenue requires you to be able to prove that such expenses were:
a) actually incurred
and
b) were for the purpose of the trade
Evidence of expenditure would be
original invoices
cheque stubb details
bank statements
credit card statements
The Revenue will never agree that 100% of domestic costs are claimable against the business. They are, however, willing to allow an element of domestic costs against business profits provided
a)some or all of the business is operated or administered from your home
b) you have worked out a fair and equitable method of apportioning your domestic costs between business and private
What is "fair and equitable" is not defined anywhere in the tax legislation but the Revenue will let you know if they think the portion you have claimed is fair or not.
"Entertainment" of clients and customers , even if incurred "wholly and exclusively incurred for the purpose of the trade" is never an allowable cost.
Retard said:
Technically, I am self employed, and basically I don't want to pay any tax at all, and would like to deduct everything I spend money on as business expenses, which I honestly believe that they are. For example utility bills, rent, and council tax (as I wouldn't live here if I had a choice), books as I need them to keep entertained, restaurant and bar bills as I need to eat and feel it is good psychologically to have a pleasant life, also any money that I save should really be considered not saving but an insurance expense incase I fail at what I am doing.
What kind of evidence do I need for my claims?
My rule is that if I don't have a receipt or other documentary evidence of the expenditure I don't claim it. That is especially true of anything with a VAT element as I had a VAT inspection this year and he knew exactly what to look at/for.What kind of evidence do I need for my claims?
I keep a log book of all of the business miles I do, and a book where I log all postage (and I put the receipts in). I do keep a blank receipt book too, but only to get a receipt if the other person can't give me one of theirs. I would have thought HMRC would eat up receiopts written from my own book and you need the VAT number anyway if you want to reclaim the VAT.
I also keep an eye on what I am spending in the various cateories (admin, premises, travel, motor, subsistence, accomodation, vehicles, postage, insurance, capital ( ICT and other) this year compared to last as I know HMRC might investigate if that chances too much (does that apply to self employed?).
I won't say I don't post the odd letter on gthe company and have the odd coffee but I have learned not to take liberties with HMRC, especially if you are 'low hanging fruit' as I think I am. As I run a non-cash business (all payments are by BACS) and in a professional job and work from home my accountant warned me that HMRC might decide see me as an easy target to pick on me to hit their targets for inspections and visits ratrher than the local scrap metal dealier with a nasty fog, dirty officves and an even nastier, dirtier attitude.
As some one said, a good accountant will put you right and make sure you are not taking liberties.
VAT is much more "invoice" based regarding evidence than Income Tax or Corporation tax.
For IT and CT, ANY evidence of the expenditure will be considered as evidence although original invoices are the best evidence you can have. Proof of payment, such as an entry on bank statement or a credit card statement will usually be allowed - especially if the type of payment being made is "normal" or the business.
For IT and CT, ANY evidence of the expenditure will be considered as evidence although original invoices are the best evidence you can have. Proof of payment, such as an entry on bank statement or a credit card statement will usually be allowed - especially if the type of payment being made is "normal" or the business.
The tax treatment of food supplied to staff (including directprs of limited companies) can be very tricky.
If the canteen supplies food at "normal" restaurant proces then the employees will not be raxed on a benefit in kind. The running costs of the canteen will be an allowable business cost for the business but, onbviously, the business would be taxed on any profits generated by the canteen.
If the business operates a subsidised canteen for its staff, the cost of running the canteen WOULD be allowed as a business cost but the staff (and directors if a limited company) may be taxed personally on the benfit in kind of receiving cheap food and meals from their employer. There are massive variation in how these BIKs are applied (or not) and it is often down to individual arrangements made between the business and its PAYE office.
If the business is operated as a sole tradership or partnership, the business can initially put through the costs of running the canteen as part of its business costs. However, the taxable profit of the business would need to be adjusted to take into account food consumption of the proprietors.
If the canteen supplies food at "normal" restaurant proces then the employees will not be raxed on a benefit in kind. The running costs of the canteen will be an allowable business cost for the business but, onbviously, the business would be taxed on any profits generated by the canteen.
If the business operates a subsidised canteen for its staff, the cost of running the canteen WOULD be allowed as a business cost but the staff (and directors if a limited company) may be taxed personally on the benfit in kind of receiving cheap food and meals from their employer. There are massive variation in how these BIKs are applied (or not) and it is often down to individual arrangements made between the business and its PAYE office.
If the business is operated as a sole tradership or partnership, the business can initially put through the costs of running the canteen as part of its business costs. However, the taxable profit of the business would need to be adjusted to take into account food consumption of the proprietors.
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