Hi. I currently help my mom who is a foster carer (classed as self employed) do her tax return as she is not very computer literate.
Now I have been asked by my cousin if I can help with hers? I am unsure what to say? Is this a good idea? Is it legal to do so? Would I need MLR? Dont want to dip my toes into something im not ready for.
Tia
-- Edited by Muzzy2kuk on Saturday 25th of February 2017 10:13:56 AM
As far as I am aware you are allowed to help someone fill in their Tax Return as long as you are not getting paid to do so, what sort of business does your cousin have?
If it is a fairly straight forward return why not just sit down with them and fill it out together.
Cheers
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
That was the plan sit down with her and defo not taking any money from her. Childrens entertainer so parties etc. Should just be income from parties minus expenses for parties i'd imagine.
Hi Lee
You don't need MLR if there is no payment in cash or other kind of consideration, ie you do her tax return for free and she does one of your children's parties for free.
But, I often say on here and other forums, don't get involved in doing such for friends or family if you are not qualified as its a sure fire way to fall out when they have a tax inspection and get fined for something that is incorrect. I've seen it happen.
Don't forget it's a set of accounts to be done as well as the tax.
That said, this one will have (I'm guessing) nothing in the way of items to disallow, so no depreciation, capital allowances calcs, coffees and food they have tried to put through, etc so should be quite straight forward given the nature of the work they do. But it's a cash based business generally and so an easy one for HMRC to pick up for possible future inspections. So assuming they have fully receipted each job they have done it will be easy enough and assuming you use the cash basis for reporting and her financial year end is effectively the tax year end. NB ensure all expense is wholly and exclusively for work purposes.
__________________
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
Thanks for the advice I will have a frank chat with her and explain some of the points you have presented me with, and see where we go from there.
Only one point expense wise I can imagine being difficult. I know she is leasing a car/van and uses it mainly for work but does have some personal use. Will I have to apportion the expense, and can you do that for the lease payment and the fuel, tax etc.
-- Edited by Muzzy2kuk on Sunday 26th of February 2017 06:49:03 PM
1)Is it an operating lease? Ownership will not shift to your friend/client?
2)Is it a car, or is it a van? What are the emissions? If the emissions are =>131g/km a reduction of what is allowable is required against the lease charge.
Yes only claim for the business use, private usage must not be claimed.
3)How small, or even how big is the party business? Are there bouncy castles? Insurance against injuries? DBS Checks etc etc.
4)Cash based accounting or accruals?
1 - 4 will save you a headache if you can find the answers before you begin.
And as a bonus prize - any other income?
P.S
Sounds like an ideal first client. But I would say get MLR cover as soon as possible due to the fact it 'could' be something that you overlook when you have the ball rolling proper.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Hey thanks for the reply. The car/van is a nissan nv200 combo diesel apparently will have to look into emissions etc. Also ownership will not be taken.
Turnover is small 5k last year probably 10k this year I would estimate. Has all liability insurance, dbs checks etc.
No other income apart from parties.
Will sort MLR but not looking to pursue clients until I am qualified and confident. Thanks again for the help. Notice your in wolverhampton same as me.
-- Edited by Muzzy2kuk on Sunday 26th of February 2017 08:55:31 PM
Hey thanks for the reply. The car/van is a nissan nv200 combo diesel apparently will have to look into emissions etc. Also ownership will not be taken.
Turnover is small 5k last year probably 10k this year I would estimate. Has all liability insurance, dbs checks etc.
No other income apart from parties.
Will sort MLR but not looking to pursue clients until I am qualified and confident. Thanks again for the help. Notice your in wolverhampton same as me.
-- Edited by Muzzy2kuk on Sunday 26th of February 2017 08:55:31 PM
That's cool, you should join in with the Wolves / Dudley AAT branch meetings.
The reason for mentioning insurance and such is that if your friend is using the accruals basis you'll need to look into accruing X and prepayments of Y - if applicable.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Care re travel between home and work! So essentially that might actually negate most of the travel expenses you can claim.
Also is it a van or a car? Care re what you think versus what HMRC actiually say. Can't put my hand on the link just now as its on my PC caves and I'm not near my PC.
Should it be car costs or mileage? Assuming there is any scope left after my first point!
If they have no other income what are they living off? Will this impact on tax credit claims?
__________________
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
Care re travel between home and work! So essentially that might actually negate most of the travel expenses you can claim.
Also is it a van or a car? Care re what you think versus what HMRC actiually say. Can't put my hand on the link just now as its on my PC caves and I'm not near my PC.
Should it be car costs or mileage? Assuming there is any scope left after my first point!
If they have no other income what are they living off? Will this impact on tax credit claims?
Isn't it, or wasn't it something along the lines of if the rear axle can carry 1 tonne or such. I could be totally mis-remembering.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Young girl still living with parents, no other income obviously still gets a bit of help from mom and dad.
So if car expenses such as mileage and fuel may not be able to be claimed, will double check this. Can the money paid for the lease be claimed as an expense or at least a percentage?
Edited: Been doing a bit of reading and if I have deciphered it correctly I may be able to do 45ppm for business miles only up 10000 miles then it goes down after that. which covers all car costs and is simpler than the calculations to do with tax, insurance etc.
Also any vehicle over 130g emissions has a 15% deduction to what you can claim. I think lol.
-- Edited by Muzzy2kuk on Sunday 26th of February 2017 09:42:06 PM
-- Edited by Muzzy2kuk on Monday 27th of February 2017 05:02:16 PM
