My client has recently given me his 2011.12 accounts and needs his SA return filed asap to meet the deadline, but have come across a few things that I am unsure of and would be a great help if anyone else has come across or can advise on what I should do!
He is self employed and VAT registered. I have come across income from a company that do 'self billing' and when I asked him for copies of these sales invoices he said he hasn't got them and he said that there is no VAT on these payments. I thought that all sales would be vatable?! what should i do with regards to this income and for VAT purposes?!
There a number of missing receipts, and obviously because of this cannot claim the VAT so do i put these through as drawings?
Also, I am doing the year 2011.12, he has informed me today that his 2010.11 accounts were never finalised with his previous bookkeeper, so nothing was ever filed for this year. He has a vehicle that he purchased in the 2010.11 year, so in theory he would claim the AIA on this on the first year, how do I go about dealing with this!?
I may have to find an accountant to go over these accounts as it has got so complicated!!
Also, he is a courier, what are the rules in what he can claim subsistence wise, he buys a lot of choccie and crisps and drinks when out on the road, a few sandwiches, can he claim all of this?!
If VAT registered then self billing invoices will have VAT on them. So need to be adjusted for VAT. I would put through as income and adjust 1/6 as output VAT.
If no receipts then cant claim the VAT or the expense. So gross amount goes to drawings.
If hasnt submitted 2011 return then this will need to be submitted. Would make sense to do this first in case any knock on effect to 2012 return.
In his line of business then some subsistence cost is reasonable. There isnt anything as far as I am aware of a fixed daily amount that can be claimed but i would total it up and providing is reasonable then would allow it. For talking sake I would say £200-£300 is reasonable or £4-£6 per week. He would of course need to have receipts to support.
Hi Sarah, tell him it's double time the second half of January :)
1) You really need to see evidence that these sales are zero or exempt. If you know the gross amount AND they are Vatable then warn him he will falsely pay income tax on VAT (which he will also subsequently be foreced to pay over).
2) You can request a copy of a missing invoice after an input has been claimed but if you're not certain that VAT has been incurred then you're right to steer clear.
3) The full AIA may be very handy in offsetting late filing penalties, interest and surcharges for 2010.11. Find out the part-exchange value or sale price of a previous vehicle. Without completing 2010.11 you really have little choice but to do a back of an envelope estimate of any AIA that might be left over to c/f and claimed, if appropriate in 2011.12
4) Any subsistence should be documented in a contemporaneous record and if you have any particular instance of doubt, add back in the profit computation. EG. receipt for chocolate bar bought in the evening near home may be for a child.
The amount of subsistence will depend on how much he is away from home. I use a rule of thumb of 30 miles but I don't think this is set in stone. On a five day week he could conceivably prove that incurs £1000 a year but make sure you see a good sample of invoices.
