I have a client who told me he had withdrawn £100 from his Business Bank account and then gave £50 to a man to drive a van! Yep - no more info other than that, no invoices, no van driver's name! Hmmmmm!!!
How would I process this through his books?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
If there's no invoice then it never happened so straight to drawings for the £100.
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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.
I did think of doing that but wondered if was being a bit mean, mwah haha! Wasnt sure if I should have pressed even harder for info. He thinks he can bend the rules a bit though - not putting things through CIS cos the subbie's 'dont want to' or the subbies start saying his bill will go up by 20% if they do use CIS. Ive told him he is likely to be caught and fined and that he is helping them evade tax. Oh to be a book-keeper!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
handling business owners does at times feel the equivalent of trying to control a class of four year olds!
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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.
I did think of doing that but wondered if was being a bit mean, mwah haha! Wasnt sure if I should have pressed even harder for info. He thinks he can bend the rules a bit though - not putting things through CIS cos the subbie's 'dont want to' or the subbies start saying his bill will go up by 20% if they do use CIS. Ive told him he is likely to be caught and fined and that he is helping them evade tax. Oh to be a book-keeper!
This might not necessarily be true (the evading tax bit). Unless the subbies are actually being paid in cash. They might just genuinely want to avoid the paperwork associated with the Construction Industry Sceme. They are still paying the tax at the end of the year. The CIS deduction is basically just a payment on account of the tax. I don't know what happens in reality (so should probably shut my mouth) but a main contractor (in my opinion) should only become liable for the tax (and penalties/interest etc) if the sub-contractor cannot meet their own tax obligations at the end of the year. So in summary, they might not be evading tax, just delaying it until the last possible minute.
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Never buy black socks from a normal shop. They shaft you every time.
In practice the contractor has a legal obligation to pay the tax on a monthly (or quaterly basis if below £1500pm) basis. Very strict regulations and high fines for contractors who dont follow the rules and they have to sign disclaimers each month. My private opinion is that the subbie should just get on with paying their own tax like the rest of us have to, but unfortunately it is because of the past history of tax evasion in that type of industry that this system is in place. Also worth mentioning that you dont have to process payments in cash to avoid tax - its so very easy to avoid it even with full paper trails, although once HMRC do an inspection then they could be found out (but even then not all of the time!!) I reckon at some point the entertainment industry might go down a similar road, especially if the number of bankruptcies increase due to failure of non-payment of tax, although I think we might be years off that one just yet.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
