I am in the process of filling out my client's tax return, and I am just curious that when I calculate his annual mobile phone bill and petrol receipts I have not missing anything.
I have calculated the annual sum of his mobile phone bill less the tax, but do I give him the 'benefit of the doubt' that he has not used the phone for personal use or do I take a percentage off for personal use?
In regards to the calculation of his petrol receipts again do I give him the 'benefit of the doubt' that he has not used the car for personal use or do I take a percentage off for personal use?
With the latter one I think you might say do a BIK calculation, but what would you do?
I just want to get my calculations right for HMRC, but at the same time not question my client's use of both sources of equipment because he could question my belief in his honesty with his expenses.
Do I give him the 'benefit of the doubt' and trust him or produce calculations and see his reaction and any future conquences he may impose on me.
The impression my client gives is a hard one and , this is the threatening bit, from the outset he said any mistakes or problems that occur with HMRC, even though I am NOT a tax agent for him, is solely down to me; is this true?
To claim the petrol the client must have kept a mileage log which will detail the business mileage. If not then non of it is allowable.
Have you confirmed that it is not more beneficial for your client to claim mileage rather than putting the travel costs through the business?
The mobile phone costs would be allowed in their entirety provided personal usage is not significant. Why are you reducing the tax? Is the client VAT registered?
The client signs their accounts taking on all responsibility for the contents which they hired you to prepare for them.
If you feel threatened by a client bundle all of their documentation up, put it in their hands and tell them to go elsewhere. No amount of fee income is worth it.
Also, the client seems under the impression that by using your services they are divesting themselves of all responsibility. If a client comes to the table with that attitude best to cut them loose before wasting time on them.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
If not VAT registered then the VAT forms part of the bill rather than being seperated out so the P&L would be inclusive of the VAT charge.
This makes things 20% more exensive for non VAT registered but conversely not making their own services 20% more expensive to their clients.
HTH,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Re the personal use of motor and phone, ask them, dont guess. Get them to confirm business/personal use split eg 90/10, 80/20 75/25 etc.
If ltd company generally unless has low CO2 emmission you are better keeping car out of business and recharge for business miles at 45p for first 10k miles and 25p thereafter. If car owned by ltd co then if any personal use then BIK based on list price and CO2 emission. Also a fuel benefit if private fuel paid by co not reimbursed.
At the end of the day it is called self assessment (not accountant assessment) as the client is agreeing to what is being submitted being fair representation of events.
As Shaun says, no matter how tempting to keep client, dont be bullied by them, they will only end up causing you more grief and time than they merit and wil probably start looking at fee level going forward.
Hi David, my view, and I know others will disagree, is if you get the client to tell you the split and sign something to say this is true and accurate then it's their problem if they lie. I also get clients to sign the form I work out their use of home allowance to say the figures provided are true and accurate.
The client signs the self assessment, and sometime we just need to trust what they say. Going forward I'd get him to keep a log, but you are where you are.
One other thing to consider is how he has claimed for travelling expenses before, mileage or actual costs? Unless he has changed vehicle, you have to stick with what as been done previously.
My client is a sole trader. So if I get him to give me a monthly percentage ratio; this is acceptable to calculate his vehicle fuel allowance?
David
Being a sole trader there is two ways to calculate motor costs
1. Claim all motor costs eg petrol, repairs, insurance, MOT, road tax etc then only allow business %.
2. Claim 45p/25p per business mile
Though as Ruth says if they have already claimed motor costs in previous year you have to use that basis until they change vehicle.
The above is also subject to the turnover level of business as if over VAT threshold when buy the vehicle then cant use the mileage option. You have to claim all motor costs and only allow business element.
I have to advise caution to some of the sentiment of this thread related to the client signing the self assessment therefore we can divest ourselves of much of the resonsibility for the content.
We sign self assessments as agents acting on behalf of our clients which lends credibility to the figures.
HMRC have picked up on the fact that such is not always the case which has led to the Agent View program which in the event of returns that do not properly represent the facts we could win investigations of all of our clients plus lose our agent status.
To the best of my knowledge the agent view pilot is currently postponed but it is coming as surely as RTI and investigations will not stop at the current return.
My view is that we always had a responsibility to save our clients from themselves but now rather than such being based purely upon our ethical stance it is underpinned by a real financial threat to our businesses.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I'm not saying once the client signs the form we are absolved of all ills. But there comes a time when the relationship with a client has to be based on trust and if they say thats what they pay who are we to argue. We cant prove every reciept was really a business purchase, or that they are not understating sales etc. sometimes we need to use trust and best guesses.
When it comes to clients getting a sniff of paying slightly less tax I think that my experiences in this business are making me a little jaundiced in my view of the honesty of my fellow man (or woman).
I think that if a client was determined to hide income or expenditure then we have little hope of finding it and certainly as we represent the client spending a lot of time trying to find fault will (a) not enamour one to the client and (b) not be a part of the service that they would be looking to pay for (and our time comes with a price tag).
However, I have found that by questioning things that the client does not expect you to question they seem less inclined to try and hide or omit anything the second time around.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Absolutely Shaun. I'm sorry if my comments came across otherwise. Clearly you should pick, but if a client sticks to it then I get them to sign the form to say it's true and accurate. There's really 2 reasons, the first is so that if they deny during any investigations thats what they said I have it in black and white, and secondly while it's easy to lie verbally when one needs to sign something suddenly the lie becomes real.
