I have just taken on a new client, he ahas landed me with all 2010-11 receipts and told me he pays 254 rent per month and earns 300 a week after expenditure. I gave no bank statements etc and he has told me he wants the receipts prepared and in an order to back up his tax return.
I have decided to simply list receipts in individual accounts, aswell as a rent paid account and the calculate total expenditure. Then work out his income that way. I then show him his income less expenditure equalling net income. Nothing fancy, just standard spreadsheets. I have put a declaration at the bottom of each summary to say 'all figures calculated based upon those declared true, and wholly and exclusively for business purpose, by.....' and a blank for him to sign.
Could I have done this any other way?
Please help!
To cover yourself, I would make the signed statement a little more blunt. " I declare that my takings for the year were x x x x x "
In most cases, he should supply a sample of some bank statements at the very least. If he's thrown every single one away, then I would ask him to obtain copies from the bank -- it's surprising what he will find in the bottom draw when faced with bank fees.
If he turns up with no bank statements next year, he may be more trouble than he's worth.
Ah ok, then in that case, yes nightmare. Burger vans are always traumatic! Strictly speaking he should be keeping a record of his takings each day, and as Tim says he must be paying most of them into the bank so there is some evidence out there for you to see. He is a prime target for an investigation.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
He pays for all of his expenses in cash! So I wouldn't think much goes through the bank. He is a friend of my husbands and I don't wont to see no to him, but need be sure that if I do this for him I am also covered. I think your right Tim that I real declaration is needed, I will amend the summaries before I hand them back and also take copies for myself.
As for this current year, I think he's going to have to change the way he keeps his records if I'm to continue working for him.
Is there a minimum requirement that books are maintained to a minimum standard, or is it down to the individual? Obviously not everyone uses bookkeepers or accountants, so therefore methods vary?
Hi Stacey. Where there is no till then for the takings to be acceptable they must be kept contemporaneously - at the time. He doesn't have to record every sale though - just closing balance less opening balance add any cash removed or banked - this is his daily takings figure which he should write down along with his cash carried forward.
Maybe he doesn't pay for any business items through the bank but its handy for you to know what is being deposited. I'd strongly recommend he keeps a separate bank account.
He has absolutely no records for his sale. I have now made him buy a till so future is not an issue. His accountant gave him nothing after 2009-10 so there is nothing to start from. How do I justify the income he is claiming?
Is this the guy with £300 after expenses. If so then that's a good start and the onus is on him because he's got no other record. Just add the cash expenses to the say 48 weeks x £300 and ask him what he generally takes out for himself and add those too.
That will give you a takings figure and you can think critically if the amount taken for himself is sufficient to live on. I've made a recent posting about what access to other household income he may have - tax credits, spouse earnings and savings etc. Having considered this, you should start to be more confident about the takings.
Then as Gillyfleur said, get 64-8 authorisation and request a copy of the previous tax return. You can then compare with your figure for this year. With a bit of luck there will also be a balance sheet on it.
I sometimes still worry about these jobs after 29 years so you're not alone. Had a newly ordained vicar last year who had been a taxi driver and had to do somersaults with his figures before I was satisfied. I tend cease any worry after the Return has been filed.
best wishes, and let me know if any of that is unclear. Tim
-- Edited by Don Tax on Friday 15th of July 2011 10:50:05 AM
