HMRC check. - The Book-keepers Forum (UK)

Surprised · Member

HMRC check.

Shamus · Forum Moderator & Expert

I've seen it before where HMRC ask for sums which are totally out of line with turnover.

Things to question here.

Was the amount demanded a round number of £9000?

Is this your first year of trading?

Are you an IR35 type personal service company whose been trying to use IR35 compliant contracts? (I think the best use for those is as a Kleenex replacement!).

Are you an online trader? (seemingly HMRC flavour of the month at the moment).

The likelihood is that the demand is a feeler/frightener and the real sum will be determined at the meeting. However, if they think that you have been doing anything untoward then you may also be hit with interest, penalties and surcharges on the amount that you owe... They also use those as frighteners in order to get you to pay what they want quickly.

I had one case where someone was chased for a debt of £3k and the interest, penalties and surcharges turned that into £15k! Worst part was that they didn't even owe the £3k!!!! (That one was pretty much won with the final settlement being less the £300 which to my mind was largely due to HMRC feeling that they had to get something for their efforts).

As mentioned in the posts above you really need to get an accountant involved and talking to HMRC on your behalf.

On the matter of what HMRC can ask for... Basically they have a right to demand to know absolutely everything.

If they conclude that you have done nothing intentionally untowards then they can go back six plus one years but if they conclude that you have in some way acted fraudulently then they can go right back to the start of your business although such is rare where the return is unlikely to justify their expense.

To reiterate the main point from the above... We can't help you on the site as we don't have access to your books and other information so get a good accountant involved immediately as even a chartered accountant is unlikely to set you back anywhere near £9k. (I'm assuming that you really don't owe that money. If you do then involving an accountant will set you back the accountants fee's plus the £9k).

kind regards,

Shaun.

p.s. edited due to a gramatical error (so bad that even I spotted it!)

-- Edited by Shamus on Thursday 29th of March 2012 10:26:31 PM

nautica · Veteran Member

Hi

H.R.M.C can ask for what ever info that will help to sort out your tax .so by not working with then they my see this as you not cooperating with them .and having something to hide.

If they are saying you need to pay £9.000 more in tax then they must be going on what you have sent them on your SA form. I dont know if this is your first year and if you have done your own accounts not saying you dont know what you are doing my be you could get a good Bookkeeper to have a look over your Accounts . it could be you are not calming for all that you can . Like any assets you my not have clamed your AIA

Like i say i am not saying you dont know what you are doing but you my just need a bit of help

Martyn

gbm · Guru

I would suggest you get help - it may be possible that you could sort this out on an internet forum, but I would imagine it would be easier and less stressful if you go and see a local accountant. £9k is a lot of money, in very rough terms it could mean that you've understated your earnings by £30k, although I think it may include payments on account, which you may not have been expecting.

Surprised · Member

Thanks a lot guys for your responses.

Well, after checking my business account for the year I have made some non business related transfers into and out of my account and the inspector counted that for income and for ....???
I just do not like the fact he automatically suggest that whatever I put into my account is business related income.
So, some of that extra amount is my own money transfered from personal account - probably not wise thing to do I know. Refer to this please.

Also do I pay tax on friend/girlfriend giving me money or when me giving money to them?

I also have to say I could not even remember some of the small transactions on that account which you will not approve as acceptable I guess...

Please tell me more.

Surprised.

(p.s. Shaun thanks for your really good response please refer to above)

Don Tax · Expert

Hi, providing you've recorded the private deposits, say on an automated transfer or a paying in book, there is nothing wrong with introducing monies from your girlfriend or other non business source.

If the Inspector has had access to such records, I would politely, but robustly draw his attention to the taxpayers charter : -

http://www.hmrc.gov.uk/charter/

If you haven't kept good records on these transactions then yes, it probably wasn't wise. Can your girlfriend or others show simultaneous withdrawals ?

As for transfers out of your account, these may account for some or all of your cash expenses and drawings. For the small transactions, I take it you've no proof of purchase, but if they are things that you have obviously incurred, then stick to your guns.

I reitterate everyone elses comments though, that you should get professional help.

Surprised · Member

Thanks Don Tax.

I accept what you are saying to get professional help but:
I actually had an accountant for that year but he was, say politely, not very good. It is only now due to HMRC check I realize what he was NOT telling me. Because of that I feel I do not know enough regarding income tax matters and all chemistry of it.
I would need someone to explain things to me but where to find right person and accountant in the same time?

I live in London any name anyone?
Or maybe someone from good people here?

Thanks.

S.

Don Tax · Expert

Your prior accountant might be the most cost-effective solution especially if he prepared the year of HMRC enquiry. He knows your records and in his defence, his remit wouldn't include teaching.

You could try posting a "London Accountant required for Investigation" or similar thread on this board, or ask friends if they can recommend anyone. In the absence of personal recommendation you might try these : -

http://www.find-uk-accountant.co.uk/

http://www.findyouraccountant.co.uk/

I've not used the sites but an ally won't do you any harm.

best wishes

Surprised · Member

Don Tax,

Do not get me wrong but:
If I pay MONEY to an accountant is he not expected to work for me in best possible way he or she can? Is he not supposed to tell me what is good thing to do and where f.e. I can claim money back?

Everybody please:
Am I wrong to expect that?
Is community of accountants already corrupted as nearly every business in UK including HMRC?

Any relevant response welcome.

Thank you anyway for all who responded and will responde.

Still very Surprised.

Surprised · Member

I mean who will respond. :)

Thanks

SvS.

Don Tax · Expert

I'd try to focus on the present rather than nearly every business in the UK. You have a potentially crippling financial crisis on your hands so presuming this post isn't a spoof :-
how are you going to respond to HMRC attempting to tax non-business income?

Have the Revenue raised any other questions with your records.

Peasie · Expert

Spamkebab wrote:
To be honest Shaun, apart from being lost for words, my tiny mind was thinking "how the hell did this kid get a license?"

They'll give a license to anyone these days. I know someone that passed their driving test over 4 years ago and he still hasn't reverse parked in between two cars. It wasn't needed for the driving test. He doesn't drive that much - in the 1,571 days he's had his car he's only driven 9,724 miles. He spent £1577.11 putting 1438.68 litres of unleaded petrol into the car.

EDIT : I think I used the American spelling of a word. That HAD to be changed. How did I manage to spell it wrong - it was the last word of what I quoted.

-- Edited by Peasie on Tuesday 3rd of April 2012 05:31:34 PM

Shamus · Forum Moderator & Expert

Hi Surprised,

there are too many variables involved for a siimple answer.

Was the accountant qualified (There are a lot who are not as the term accountant is not protected in law despite the protestations of the industry to the government to resolve this discrepancy). Anyone can call themselves an accountant but if qualified they will have relevant letters after there name on their correspondence.

Was the accountant privvy to all of the information that they would have needed to advise you differently to the way thayt you have been advised?

You say that they were not very good but you don't qualify that statement.

Was the accountant working for you at the time of the discrepancy or did the discrepancy occur prior to appointment of the accountant in which case the issue may be lost in brought forwards figures.

You still haven't told us to what the HMRC demand relates, just that they want the money. Without going into too much detail are you able to enlighten us any further?

A good accountant will try to keep you on the straight and narrow and ensure that you run your business as efficiently as possible. However, in many cases the only time that there is any contact with the accountant is at the year end to produce financial statements from client records which may not (intentionally or unintentionally) tell the whole story.

When you sign the accounts you are confiirming that you agree with the contents as you as director of the company, not the accountant is responsible for ensuring that the accounts give a true and fair view of your businesses affairs as at the accounting date.

If an accountant is hired to file your business accounts he has no responsibility for anything beyond your business. For example, if you sold a second house privately that has no relationship to the work that they have done for your business.

I do not know the facts of this case but it has to be born in mind that accountants are not mind readers and can only go on the information that they are provided.

kind regards,

Shaun.

Spamkebab · Expert

I should really spend less time on my mind reading and astral planing techniques and really concentrate on my accountancy/bookkeeping studies, maybe even give up the mind reading as having been married for nigh on 20 years now i still don't know what she's thinking.

Neil.

Shamus · Forum Moderator & Expert

20 years... All to the same woman... You think that there would be an award ceremony or something!

Hi Neil.

Where've you been matey. The posts have been staying (relatively) on peist for the past few days so you've been missed wink .

Spamkebab · Expert

I can tell the kids are off school lol.

I've been busy with studies, i sat the Financial Statements exam last Thursday and have realised that i need to up my study technique a couple of gears. I've wrote the exam off to experience as it is the first AAT exam i have taken which has written tasks. Theres a slight chance of a pass but i'm ok with a fail as it has given me a great insight as to what to expect from now on. That's the only downfall of studying solo, of course i have the mocks to go at but what are the chances of me getting the same written questions in a real exam?

I wrote the first exam off at level 3 as well but luckily passed each exam first time. I treat it as £50 to go and see what is going to be expected of me, obviously i give it my best while i'm in there but it takes the edge off (and nerves away) the exam if i don't expect too much of myself, some may see this as a costly excercise but i've saved a few bob with the whole distance learning and as far as i can see, the text books don't prep you 100% for a real exam.

My woman is also my best friend, i hope everyone lands a partner like i have at least once in their life.

A medal would be nice too.

Neil.

Shamus · Forum Moderator & Expert

Yep, it's school hols so am at home on the site.

Don't think that there's anything wrong with your exam approach and don't write it off just yet. I've had a couple of surprise passes (and too many surprise fails!).

If you have failed (I hope that you haven't) do old ACCA paper F7 papers as practice for the resit. It's using a sledgehammer to crack a nut but you will pass.

Note that because financial reporting standards are always moving for that paper I would get the current Kaplan ACCA F7 Exam kit which has updated versions of old papers rather than download the free papers as they were actually sat from the ACCA website.

Just a suggestion but as it will only set you back £18 or less it's cheaper than another retake.

all the best,

Shaun.

Spamkebab · Expert

Nice suggestion Shaun. I'll be sure to buy that.

The actual statements part i am happy with, in fact i was highly disappointed that i wasn't asked to complete a statement of cashflows. The IFRSs i am confident with, it was the other stuff contained in the module. I could have kicked myself with the last question (which is where i'm assuming it all went wrong) about the 4 cost methods. I had read my text just before the exam and that was the part i was reading. Mind just went blankety blank during the exam.

Ah well i have a life to attend to lol.

It's good to see you on the forum a lot more, i look forward to the kids being off school. If i'm not posting it don't mean i'm not reading!

Neil

P.S was the OP a wind up?

Shamus · Forum Moderator & Expert

Spamkebab wrote:
P.S was the OP a wind up?

I don't think so.

there's an expectations gap between what the general public believe that accountants and auditors do and what they actually do.

Many people when they go to an accountant somehow feel that they are divesting themselves of responsibility where the reality is that they are bringing in a professional to ensure that the information that they have is prepared and presented correctly.

If an accountant is approached to prepare / compile the annual statements then that's the job that they will do and any business advice that falls out of that they will as a value added service pass on to the client.

However, it is not the role of an accountant employed only to compile financial statements to work in a position equivalent to the financial controller of the entity unless they have agreed to fulfil such a position.

The OP doesn't give enough detail about the situation for us to make an informed judgement about the scenario so I'm adverse to holding the accountant as being the party at issue here.... That's not to say that they're not but we generally deal in quantitative rather than qualitative input and there isn't enough information given to quantify this scenario.

Oops, just went off on one...

If you've been reading the threads hope that you enjoyed me getting on my high horse about the cloud issue again.

Spamkebab · Expert

Sometimes i wonder how you manage to seat yourself upon that horse, it is so high lol.

Always a good read and no matter how serious you become, my coffee usually comes out my nose.

Shamus · Forum Moderator & Expert

I think that sometimes my dry sense of humour comes accross as more serious than I actually am.

The Nescafe nasal spray is definitely the reaction that I'm mostly going for wink

Spamkebab · Expert

I have been nicknamed "House" by one of my old fellow co-workers because of my sarcastic wit. It was pointed out to me that i rarely gave a straight answer and often answered with some form of sarcasm. People do tend to ask the dumbest questions.

I had this kid come into work last week, he said "i've got a Fiat Punto and it's not running right" he had walked in and left the car at home apparently. So i said, right and how can i help you? he said "how much will it be to fix it?"

I looked at him and said, flippin eck i don't even know what colour it is yet!

He looks me dead in the eyes and goes "it's green".

1 nil to him.

Spamkebab · Expert

OOoooooh, just had a call from a recruitment agency about an interview, apparently i'm qualified enough for the job........

Apparently, i'm just not experienced enough.

I'm halfway there.

Shamus · Forum Moderator & Expert

lol.

Your slipping Neil.

it should have been "Green, oh dear, that's one of the more expensive colours to fix... Just can't get the parts for the green one's".

Shamus · Forum Moderator & Expert

Go Neil.

Excellent news.

Just tell us where the family of the interviewer lives and we'll arrange a guaranteed sucess for you!

Spamkebab · Expert

To be honest Shaun, apart from being lost for words, my tiny mind was thinking "how the hell did this kid get a license?"

It's a scary world we live in, my friend lol.

But yeah, you're right, maybe i should have uttered something along those lines...inbetween sobs.

Shamus · Forum Moderator & Expert

so approximately 30.7 miles per gallon at an average of 1.10 per litre equates to an average of about 16p per mile.

don't you just love discussions between accountant types!

Peasie · Expert

Shamus wrote:
so approximately 30.7 miles per gallon at an average of 1.10 per litre equates to an average of about 16p per mile.

don't you just love discussions between accountant types!

That's what I have as well......based on the information passed on to me by this un-named person.

Year	Litres	Cost	Cost per litre	Miles	Miles per litre	Gallons	Miles per gallon	Cost per mile	Start	End	Days	Miles/Day
2007	264.95	266.38	1.005	1691	6.38	58.28	29.01	0.158	12 Sep 2007	31 Dec 2007	110	15.4
2008	502.60	530.38	1.055	3580	7.12	110.56	32.38	0.148	31 Dec 2007	31 Dec 2008	366	9.8
2009	253.57	250.06	0.986	1849	7.29	55.78	33.15	0.135	31 Dec 2008	31 Dec 2009	365	5.1
2010	181.94	215.14	1.183	1106	6.08	40.02	27.64	0.195	31 Dec 2009	31 Dec 2010	365	3.0
2011	235.62	315.14	1.338	1498	6.36	51.83	28.90	0.210	31 Dec 2010	31 Dec 2011	365	4.1
2012	43.86	60.04	1.369	261	5.95	9.65	27.05	0.230	31 Dec 2011	03 Apr 2012	94	2.8
Total	1438.68	1577.11	1.096	9724	6.76	326.11	29.82	0.162	4.3		1571	6.2

Spamkebab · Expert

God, i'd love to go for a pint with you two lol

Surprised · Member

Well what you would suggest?

All non-business money incoming are:

My own money from selling car £10k

Girlfriend £4k

Friend £5k

They can both provide proof (bank statement)

Again: Am I taxed for putting my own money in or my girlfriends and friends?

How do I treat paying my bussiness car on hire purchase agreement? I paid£373 monthly for it.

Thanks.

P.S.

AND I DO think it was wind up.

Basicaly if I would run my business as THE accountant done for me I would hardly have any issue with HMRC because my income would be bellow taxable minimum. Nothing against anyone here of course!

S.

Shamus · Forum Moderator & Expert

HMRC will want to know the source of the funds coming into your bank account.

You state that the money is from a girlfreind and a freind.

They will then want to know where they got the money from to give to you to ensure that they are not laundering the money on your behalf.

They will then want to see evidence of where the £10k came from.

All financial transactions need to be evidenced to prove that they were not the result of illegal acivities.

You will need to show who bought your car from you, how you originally purchased your car, where the funds came from to purchase the car.

If everything can be proven to be legitimate and all funds accounted for as being sourced from legitimate means then you have nothing to worry about and HMRC will back down.

If you are paying HP on behalf of your business then you are loaning money to the company at a rate of £373 per month. That money will be credited to the capital introduced breaking the link between the money and what it was used for by the company.

Again, HMRC will be interested in the source of such money which you need to show came from legitimate sources.

There are rigid laws and regulations in place to prevent money laundering and tax evasion with the onous being on the taxpayer to prove the legitimacy of the source of funds.

As stated in my first post you need to get a professional involved. They will need to know answers to all of the questions that they know HMRC will ask.

You didn't state previously whether it was you who called time on your accountants or whether the termination of the arrangement was the other way around?

I hope that the problem is resolved quickly and to the benefit of all parties involved but I'm affraid with so little to go on there is very little that we can do to help with the main issue, only specific questions (such as the question about the £373).

Good luck and kind regards,

Shaun.

Surprised · Member

Hi Shamus,

Thanks for your response.
Well I have to say for record it was me who terminated contract with THE accountant because by now I simply know he was rubbish looking for £150 for 10 minutes work - and these are real numbers.

Anyway,
I am not that disorganized as it might look, but back in that year it was lot going on and I simply did not have time to carefully sort out all invoices and incomes and expenses so I gave it to THE accountant to sort it out. He did not, simple as that.

All right let us move on then shall we?
I will check again all my records and if there is something I do not understand I will post it.
To be honest after looking at my records with full attention it does not seem to be such a big deal (another reason to be suspicious regarding accountants?)

Anyway thanks all good accountants for help.

SvS.

Surprised · Member

And Shamus just for fun check number of viewing for this post :).

S.

Shamus · Forum Moderator & Expert

Surprised wrote:
And Shamus just for fun check number of viewing for this post

Hi S,

looks as though you're becoming famous wink

its the title "HMRC check" which is always the nightmare of every business owner even when they've done absolutely nothing wrong.

Even the new, improved, "cuddlier" HMRC with a customer charter can still be a very, very frightening beastie that assumes guilt until proven otherwise.

Surprised · Member

Hi S,
out of curiosity, do you know what makes HMRC to check a business?
I will tell you why I am asking:
I have a customer and yes he/she is kind of shares trader and quite big gun in it. Shortly before I received letter from Money Extractors he/she (to protect privacy) shared with me (we have quite good relationship and/or he/she was concern about me?) a letter of same nature.
Do you know whether they simply check everybody associated by bank transfers with a person being checked?
Or what is it?

I will be back soon with some more relevant questions regarding my accounts.

S.

Surprised · Member

And number of viewings is more than 500!!!

Not pleasant thing that Money Extractor business indeed!
Knowing they spend our money in millions on not working IT and Boris table lamp makes me think about my human rights!

S.

Spamkebab · Expert

Boris table lamp?

Shamus · Forum Moderator & Expert

Hi,

Like Neil, don't understand the Boris table lamp comment?

As for your other post.

HMRC check due to association with companies suspected of fraud by themselves, due to tipping off, due to working in an industry currently being investigated (currently the main ones are self employed tutors and online sellers through sites such as Ebay), and also a random element.

It used to be that inspectors had a free hand to inspect whichever companies that they felt needed investigation but nowdays inspections are based on being told by the computer which entities need investigation based on various sources of information including, but not (even remotely) restricted to your returns to HMRC.

If fraud is suspected then everyone associated is likely to be investigated and all unexplained transfers of funds will be tracked back to their source. Not simply where the money came from but where the people who transfered the money got it from and so on back to a legitimate (or not) source.

Surprised · Member

Hi guys,

Fist Boris lamp:
I was listening to LBC radio - excellent station to find out what is going on and out in this nice (really) country with occasional Money Extracting problems- and they had Boris to explain his expenses. One of his expense bought from public money was table lamp for £85 or so and he was not able to explain it so he attacked K.L. for his expenses and tax avoidance - there was lot more envolved than just table lamp of course. I just used that as illustration for M.E. asking to explain everything common man but "ruling class" seems to get away with anything anytime.

Now, dear online friends:

I am quite ignorant regarding tax paperwork and I do want to understand exactly this:

I bought a van absolutely essential for my business.
Cost £20 000 bought in 2010 new.

How do I correctly book keep it? What and how much I can deduct? Please exact explanation! Like to your child.
I am not Boris!

Thanks.

Surprised · Member

Sorry again in details:

Van
Bought 2010 new
Cost: £20 000
Deposit paid £3000
Monthly instalments: £373
Current value approx. £15 000

How exactly do I do it?

SvvS

Shamus · Forum Moderator & Expert

The rules around capital allowances are complex and this short introduction should be viewed as just that, an introduction for you to gain a brief overview understanding before your accountant or advanced level bookkeeper (such as IAB or ICB level IV) gives you specific advice for your exact circumstances.

The van would have been able to be put into your main pool for writing down at 20% per annum.

Annual investment allowance is available for items purchased in that year but I'm assuming that you did not have £20k of profits to write the van off against (as it was your first year).

For reporting purposes, in the year of purchase you recognise an asset of £20k and write this down to the residual value over the useful economic life of the asset. (say five years).

Assuming that in 5 years the van will have an estimated residual value of £5k you would (using the straight line method) write off £3k per annum via depreciation throught the P&L each year.

The laibility for the debt is seperate. you need to recognise amounts falling due within 12 months and amounts falling due over longer periods seperately.

The liability would be for £17k being reduced by £3k which will have come from the company bank balance.

The £373 includes a capital and an interest element.

The capital is something that you owe, the interest is a fiance charge that you may owe dependant upon the wording of the credit agreement.

The interest paid each year is shown in finance charges and the capital element reduces the liability over the period. It is unlikely that this will equate to the depreciation amount as you are depreciating £15k but servicing a liability of £17k (or possibly more if the interest is capitalised at the start of the agreement as some agreements are giving no reduction in interest payable for early settlement).

Actually, looking at your figures they don't seem to be enough so I'm assuming that the HP is either over five years rather than the normal 4 or there is an end of term bubble payment.

All in all you need to look at the actual agreement to detemin the approximate breakdown of capital and finance charges over the period. The interest is likely to be front loaded meaning that in the first couple of years at leats you will be paying more interest than capital.

Your financial statements need to represent the facts of the situation and they also need to balance (which is why finance charges need to be treated seperately).

Remember than financial reporting and tax reporting are quite seperate.

For tax purposes you can either write off the whole amount of the van in the year of purchase through the AIA if you have the profits against which to allocate it or add the van to the general pool and write off at 20% per year.

Note that depreciation is a financial reporting not tax concept and has no bearing on tax computations.

Capital allowances are available only on the original purchase cost, not the interest charges which are an expense of the business.

I'm sure that I've not done a very good job of explaining capital allowances and AIA and really it's something that you need to understand from the horses mouth. So here's an HMRC webpage that you may find useful on this subject (there are plenty of examples on this one making it one of the easier pages to follow) :

http://www.hmrc.gov.uk/helpsheets/hs252.pdf

Hope that helps. As I say though, this is a short introduction, written quickly to a complex area. You really need to involve a competent local professional with access to all of your books and records to sort out your financial affairs.

kindest regards,

Shaun.

Surprised · Member

Hi Shaun,

I want to thank you for taking this level of effort I appreciate it a lot.
I can see now that proper book keeping envolves a lot!
Do you know some book keeper in London or do you want a job maybe?

Thanks.

S.

Shamus · Forum Moderator & Expert

Hi S,

you really need someone local and unfortunately I'm a couple of hundred miles away from you.

Alfred of Balcom services is London Based and he posts on the site quite a bit. He's a member who seems to give sound advice and I've never had to question anything that he's written on the site so could be worth dropping him a line at info@balcom.co.uk

Alternatively the site has a find a bookkeeper facility. All of those listed will be members of the BKN network. Unfortunately the list of bookkeepers doesn't give any indication as to the experience of the advertisers so it's difficult to judge how good the service is that you will receive.

The best way to find good help is still by word of mouth from fellow business owners who are happy with their bookkeeper / accountant.

Another approach would be to advertise on the site for a London Bookkeeper. But emphasise that you need someone experienced as your situation has hit problems with HMRC that need to be resolved.

Expect to pay between £15 and £25 per hour. More if the person is a qualified accountant rather than a qualified bookkeeper.

Sorry that I can't help you directly but hope that Alfred or someone else closer to you is able to,

kind regards,

Shaun.

Alfred · Senior Member

Thanks again Shaun for the mention I read this post when it was first entered but it seems to have gotten bigger in the short time I have been away, I have replied to his email but don't know if he has found someone else. Will see if I can help if he gets back to me.

Shamus · Forum Moderator & Expert

No problem Alfred,

Fingers crossed you will be able to quickly resolve S's immediate issues with the tax demand and misunderstanding of capital allowances, etc. and this will turn into a long term gig for you,

kindest regards,

Shaun.

Peasie · Expert

Peasie wrote:
Shamus wrote:
so approximately 30.7 miles per gallon at an average of 1.10 per litre equates to an average of about 16p per mile.

don't you just love discussions between accountant types!
That's what I have as well......based on the information passed on to me by this un-named person.
Year Litres Cost Cost per litre Miles Miles per litre Gallons Miles per gallon Cost per mile Start End Days Miles/Day
2007 264.95 266.38 1.005 1691 6.38 58.28 29.01 0.158 12 Sep 2007 31 Dec 2007 110 15.4
2008 502.60 530.38 1.055 3580 7.12 110.56 32.38 0.148 31 Dec 2007 31 Dec 2008 366 9.8
2009 253.57 250.06 0.986 1849 7.29 55.78 33.15 0.135 31 Dec 2008 31 Dec 2009 365 5.1
2010 181.94 215.14 1.183 1106 6.08 40.02 27.64 0.195 31 Dec 2009 31 Dec 2010 365 3.0
2011 235.62 315.14 1.338 1498 6.36 51.83 28.90 0.210 31 Dec 2010 31 Dec 2011 365 4.1
2012 43.86 60.04 1.369 261 5.95 9.65 27.05 0.230 31 Dec 2011 03 Apr 2012 94 2.8
Total 1438.68 1577.11 1.096 9724 6.76 326.11 29.82 0.162 4.3 1571 6.2

I've only just noticed that the figures for 2012 have not been included in the totals when I inserted the row into the table. I wondered why it was never reaching 10,000 miles.

Surprised · Member

Hello again everybody!
How have you been?
I have been busy with my accounts and that is why I have another question:

How do I calculate Class 4 NIC for self employed sole trader?

I know I know you said to get profesional help but it would not be me to let go now!

Sorry Alfred not ready for you yet! :)

Thanks.

Will keep you posted with outcome!!!

Shamus · Forum Moderator & Expert

Best thing would be to start with this page :

http://www.hmrc.gov.uk/working/intro/class4.htm

Feel free to follow up with specific questions but for an overview always best to go straight to HMRC.

Wella · Expert

The 2009/2010 class 4 Ni lower limit was £5715, and the rate was 8% therefore the Ni due is (10000 - 5715) x 8% = 4285 x 8% = £342.80

Edit to add tax rate and limit:

The tax free allowance was £6475, and the basic rate rate tax was 20%

(10000-6475) x 20% = 3525 x 20% = £705

Total payable by Jan 2011 £1047.80 (plus, as it is over £1000, a payment on account of £523.90 in Jan, and again in July)

Please note this is not a tax computation, and only given as an example calculation.

HTH

-- Edited by Wella on Tuesday 8th of May 2012 01:38:39 PM

Surprised · Member

Hi Shamus,

Thanks. I did check the link and it is 9% of my annual income.
Good (too much anyway).

Now would you know how much it was for 2009/10 tax year?

And am I right that tax rate after personal allowance was 17.5% for that year?

Please help with this example:

It is year 2009/2010
Income 10 000.
How much tax is due?

Thanks.

And Shamus: Cool picture!