Hi, some input required, re a potential 1st client. My driving instructor is getting a divorce and previosly had her books done by her brother in law. Now divorcing so he's not wanting to do them for her. He hasn't done them regularly this year and she couldn't tell her solicitor what her income is so far this year, not good as we are now six months in to the tax year and the brother in law still has the paperwork for previous months to July. She VAT registered on his advice in May even though she's well below the threashhold. She has just had her first VAT return which covers July to September. The only expenses she has are the petrol receipts for her leased AA car and the invoices from the AA. Can any of her household expenses be claimed also if she is using a room of her house to run the business from. Also her income from her driving lessons and the VAT return, my understanding is that all figures shown on a VAT return should have VAT receipts, output and input. So does she have to produce a sales invoice for every lesson she takes, or is it ok to count the lessons contained in her diary and multiply by the cost per lesson? Hope this is clear. Please advise me. Sandra
Hi, some input required, re a potential 1st client. My driving instructor is getting a divorce and previosly had her books done by her brother in law. Now divorcing so he's not wanting to do them for her. He hasn't done them regularly this year and she couldn't tell her solicitor what her income is so far this year, not good as we are now six months in to the tax year and the brother in law still has the paperwork for previous months to July. She VAT registered on his advice in May even though she's well below the threashhold. She has just had her first VAT return which covers July to September. The only expenses she has are the petrol receipts for her leased AA car and the invoices from the AA. Can any of her household expenses be claimed also if she is using a room of her house to run the business from. Also her income from her driving lessons and the VAT return, my understanding is that all figures shown on a VAT return should have VAT receipts, output and input. So does she have to produce a sales invoice for every lesson she takes, or is it ok to count the lessons contained in her diary and multiply by the cost per lesson? Hope this is clear. Please advise me. Sandra
Hi Sandra, if you look on the hmrc website it's say that you can claim about £3 per week for use of the home for business. See link below.
With regards to the receipts to her customer, she should give a Invoice detailing the Vat no of her business and a break of the amount made up in the cost, i.e. net amount, vat amount and total amount etc. if the customer asks for one
Hi, some input required, re a potential 1st client. My driving instructor is getting a divorce and previosly had her books done by her brother in law. Now divorcing so he's not wanting to do them for her. He hasn't done them regularly this year and she couldn't tell her solicitor what her income is so far this year, not good as we are now six months in to the tax year and the brother in law still has the paperwork for previous months to July. She VAT registered on his advice in May even though she's well below the threashhold. She has just had her first VAT return which covers July to September. The only expenses she has are the petrol receipts for her leased AA car and the invoices from the AA. Can any of her household expenses be claimed also if she is using a room of her house to run the business from. Also her income from her driving lessons and the VAT return, my understanding is that all figures shown on a VAT return should have VAT receipts, output and input. So does she have to produce a sales invoice for every lesson she takes, or is it ok to count the lessons contained in her diary and multiply by the cost per lesson? Hope this is clear. Please advise me. Sandra
Don't forget that ,if it is a leased car and she uses it for private use as well, she can only claim half the vat back from the lease invoice. She also has to apportion the vat on the fuel to allow for private useage. Also there is any vat paid on her invoices, business cards, advertising and phone. Does she pay the AA a franchise fee and is there vat on that?
As for the vat registration. If her turnover is going to be consistently below the threshhold, I would question her being registered. It could make her uncompetitive in the market place. She should check with the AA to see if they would recommend her being vat registered this early in the business. It may well be worth her while seeking advice from an experienced VAT accountant.
Personnally, after 5 years of working with VAT, I would say that there is no advantage with being VAT registered if your turnover is currently below the £68,000 threshhold and looks like it will remain there. I have previously dealt with driving instructors and have never recommended registration. The current threshhold of £68k equals £1300 a week turnover. If the average lesson price is £20 then your client needs to be doing 65 lessons a week to need to register. I don't think there are that many driving instructors who do that many lessons a week for 52 weeks a year.
-- Edited by farmergiles on Sunday 27th of September 2009 09:34:55 AM
-- Edited by farmergiles on Sunday 27th of September 2009 09:40:33 AM
Don't forget that ,if it is a leased car and she uses it for private use as well, she can only claim half the vat back from the lease invoice. She also has to apportion the vat on the fuel to allow for private useage. Also there is any vat paid on her invoices, business cards, advertising and phone. Does she pay the AA a franchise fee and is there vat on that?
Hi Farmer Giles, I have a client who has purchased a work van on finance, am I correct in thinking that he can claim the whole vat amount as he has paid for this part? and when it comes to his fuel receipts I can put through the whole cost as it is a work van, until it reaches the threshold limit, i.e. the allowed set amount he is allowed to claim for.
-- Edited by lor on Sunday 27th of September 2009 04:29:44 PM
-- Edited by lor on Sunday 27th of September 2009 04:30:45 PM
If the van is solely and exclusively for business use then you can claim it all back, regardless of whether they are under or over the vat threshhold level.
