Professional Contractors Group Leeds 26 th March Freelance Tax and Accountancy Update

Paul Silver-Myer 8 Durweston Street, London W1H 1EW Tel: Mob: General compliance and preventative advice Best practice for your contractor business The dos and donts of record keeping How to build a mutually beneficial relationship with your accountant

3 But before we start ….. is the glass half full or half empty?

4 Or rather, are you fearful or are you greedy?

General compliance and preventative action Comply or Die file your accounts on time pay your tax on time meet all your statutory obligations You are the director and so charged, and privileged, with the responsibility of running your company properly and legally 5

Which cases do HMRC pick to investigate? flashing red security light large steering wheel lock keys left in the ignition 6

Another way of putting it, is with the total number of possible cases available for investigation by HMRC, will you raise your head above the parapet and allow yourself to become a sacrificial lamb? 7

FRED

Formation set-up No £1 Companies No minor shareholders >>> minimum wage An innocuous name Capitalise your assets Have a company secretary Be professional by respecting formation – amateurs leave a messy trail 10

Letterhead Sales invoices Business cards Pay a salary to your Secretary Use the PCG logo Bee in Business 11

Do you have the right to substitute? Do you have the right to control how you do your work? Do you have the right to turn work down? Know where you stand – have a contract review 12

CONTRACT FOR SERVICES [self-employment] CONTRACT OF SERVICE [employment]]

The dos and donts of record keeping

DO keep all your records for your four main tax returns - Corporation Tax [CT600] - VAT [1/4 returns] - PAYE [P35 – RTI] - Self Assessment [tax return] [beware - dont spend the Revenues money before the due date!]

DO make sure your records are - accurate - up to date - complete [and available for immediate inspection!]

DO you need to record your financial transactions - assets - liabilities - income - expenditure [just like we all do with our household accounts!]

DO all these transactions are available from analysing your - bank statements - [petty] cash receipts - credit card statements [otherwise how would you know if you have become the victim of identity fraud?]

DO and personally you need to evidence your income for your tax return employment [P60 / P45 / P11D] dividend [vouchers] bank interest [tax deduction certificates] rental property foreign income capital gains social security benefits pension [and dont forget to keep the documentation for claiming tax relief on pension premiums and charity donations]

DO also, if appropriate keep, or self-create, documentation following receipt of an exceptional item inheritance windfall gift lottery or betting win

DO keep accounting records in a legible format for - six years [at least] but also keep all your original source documentation - dividend vouchers - bank interest certificates

WHAT IF ? Your records are lost, stolen or destroyed? - recreate them as best as you can - and tell HMRC via ticking the estimated box

What about a lack of… ? Sales invoices – think business expense receipts – think personal

WHAT IF I DONT ? Business Records Checks HMRC assumption: inadequate records = inadequate tax return HMRC assumption: inadequate tax return = inaccurate tax paid penalties = up to £3,000

Are you easy pickings for HMRC – low hanging fruit? 25

26 Before we end ….. So is, for you, the glass half full or half empty?

Fear and Greed the art is to hold the tension between - inaction and action - others and yourself - paralysis and over confidence