I have been approached by someone to do some bookkeeping, he a sole trader - mobile mechanic, started this year (sorry I don't have a lot of info - will be meeting him this week to discuss further)
He has not registered yet, i am aware he has 3 months to do this and may face £100 fine if he doesn't register.
My question is, he has said that a lot of his equipment/tools he has bought over the years as he was doing mechanic work on his own cars etc as a hobby and now uses them in the business.
Therefore he won't have receipts for a lot of the tools and equipment. How do I go about recording these or do i get him to make an estimate of worth?
I am not sure of how much paperwork he has been keeping since he started trading, but I have a gut feeling not a lot!
Just have 3 months to notify HMRC that has started trading. Needs to complete a CWF1 which will get him in the self assessment system and register him for Class 2 NIC.
Re the tools owned previously to starting business needs to give you a detailed list of what he has with an estimate of what each is worth. If there is anything substantial amongst what he gives you then may look into that further to verify value but if not would just take his estimate and go from there. Dont get AIA only normal CAs.
He is obliged to keep the necessary paperwork which any sole trader has to keep in order to support his accounting records eg bank statements, cheque stubs, pay in books, sales invoices, purchase invoices etc.
Just a wee update regarding the 3 months to register as self employed. They did away with this over a year ago, you now need to register immediately.
Kris
Hi Kris
Agree with what you have said but I have been seeing some very conflicting advice on HMRC website, and if I was starting out would probably fall foul of that.
Extracts from HMRC
"Self Employment and Class 2 NIC
There is a very similar penalty for Class 2 National Insurance that we will apply if you do not tell us that you have to pay Class 2 NIC because you have become self-employed. Anyone who starts self employment after 6 April 2009 must tell us by 31 January following the end of the tax year, or we will charge them a failure to notify penalty."
It's best if you register with HMRC as soon as your circumstances change. The latest you should register is by 5 October after the end of the tax year for which you need a tax return. The tax year runs from 6 April one year to 5 April the next.
If, for example, you have tax to pay on rent from a property in the 2011-12 tax year, you need to let HMRC know by 5 October 2012.
If you register late you may have to pay a penalty."
