Self Assessment and Mr Tax Man

[obseen16]

Hey fellas,

does anyone here do their own tax stuff, ive been doing my own self assessments for the past 3 years (when i set up self employed)

just wondered if anyone has ever had the tax man on their case regarding their self assessments if you have done them yourself. ive never had an accountant although i did visit one and showed them how im keeping the books but wasnt earning very much at the time so couldnt really afford his rates.

also what do you guys claim for as expenses, i personally claim for anything i think is "work related" i.e stationary, computer tools etc.

my main concern is this year i have invoiced out quite a half decent amount but my taxable earnings seem to only just be over the tax free line (think the line is 6.4K?) everything is put through the books but just looks weird to me.

anyone else been here or wondering the same thing as me?

Cheers guys

 

[gaspastemania]

To be honest your a bit daft doing your own tax teturn , if you get any issues or if they ask you to open your books what are you going to do??Accountants have a governing body (like gas safe) so i would advise to get your hand in your pocket and get an accountant .What you need to remember is that HMRC officers do it as full time occupation and are good at it ,no matter how good you think your own self assesment is they can find holes in it can end up costly experience by simply not having an accountant.

My advice get an accountant and let them sort it all !!

 

[obseen16]

Cheers gaspastemania. might start looking into getting an accountant this year. what sort of ££ are we looking at for an accountant to cook eh hem i mean do my returns.

 

[dontknowitall]

The more expensive they are the better they cook.

A few hundred. Impossible to say as it's a little like comparing architect or lawyer prices.

 

[johnnyplumb]

I think if your unluck enough to get called in by the I.R, then they will almost always find something wrong with your books, Accountant or no Accountant. when you take out your liability insurance you can get an add on policy which covers legal fees to fight your case with the I.R. i think it is called DAS LEGAL . alot of people just pay the amount they ask for because it costs too much to fight them, so extra policy is worth taking out.

 

[cr0ft]

Personally I've done my own tax for 3 years. I trade as a limited company and so have to have a separate bank account. If you spend a little bit of time reading up on the HMRC website then it's not beyond the realms of any plumber. With some of the good software out there at the moment (I won't advertise the one I use but they do a free trial, PM me if interested) it really is just a case of entering the financials from your receipts and classifying them in terms of what type of expense they are. The software then does the rest for you, including VAT returns if you are registered.

My tax returns (both of them) took me 3 hours to complete last year and I certainly don't see the point in paying for a book-keeper to enter my receipts. I want to know the financials of my business inside out.

Obseen16, it sounds like you have a good understanding of the financials of your business to be honest. I think, like me, you've probably got the shock that I did in my first full year of doing my accounts. I was charging out at £150 a day and worked a good chunk of the year. Despite this I made very little profit. The 3 main reasons where: -

1.) I had no system to control how much I was purchasing and selling for. Quite often I would just pluck a sale price for an item out of the air on the job. Usually I would tell the customer what they wanted to here and in many cases I was actually selling materials for a loss.
2.) All those materials you maybe don't charge out on jobs soon add up. I'm thinking gas bottles, flux, solder, jigsaw blades and any other consumables. Now I build an extra few pounds in on materials for each job to cover these.
3.) I wasn't charging enough. If you want to earn £35,000 per year which I would consider a fair wage for a self-employed plumber (after all places round here are offering up to £24k to be employed) you need to be charging around £180 a day, assuming 6 weeks holiday a year and a 5 working day week. Well you do based on the outgoings in my business anyway. Don't forget that in our trade you have a lot of outgoings to cover.

Sorry if I'm preaching to someone who already knows this but I learnt all of this pretty quickly when I started to investigate why my turnover was high but my profit wasn't. Hope some of it helps.

 

[cr0ft]

Sorry, I should add, I have spent a lot of time chasing around suppliers and buying fittings etc in bulk from wholesalers instead of merchants to get the very best deals. I then sell all of these on at retail prices to customers and because I'm buying so many fittings at once can make 50-60% profit on them. This adds up to a lot of profit each year. There are some good deals out there on the web if you look around a bit.

 

[mutley racers]

Where do you buy your materials in bulk croft?

 

[cr0ft]

Hi mate, it was from a local supplier not a national merchant. They did me special rates if I ordered over £1k of fittings etc at once. Shipped straight from the manufacturer to my house. I'm now looking for the same deal locally as I've just moved.

Always worth negotiating lots with the local merchants, a lot of them seem to be feeling the pinch at the moment and if you can commit to decent sized stock orders you can save a lot. Then you just need a large van/garage to store it in of course!

 

[mutley racers]

Great. The only thing i would worry about with having that in the garage is, the pikey's getting hold of it.

 

[cr0ft]

Yup. It costs a wee bit more but you can get it covered on your public liability and a lot of household insurers are (suprisingly) fine with re-imbursing you for stolen stock. LV covers your business stock in your garage if it's broken into.

Not to mention all the time you save not having to run back and forward to merchants for that elusive part.