1 Month Tax Return - Self Employed

Discussion in 'Managing Your Business' started by M.K Cleaners.co.uk, Sep 3, 2012.

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  1. M.K Cleaners.co.uk

    M.K Cleaners.co.uk Grand Master
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    Tranquillity Tax

    UNIVERSAL CREDITS

    The Universal Credit (UC) is the replacement for tax credits and will be launched during 2013.

    The draft regulations have been released for consultation and low and behold the Chartered Institute of Taxation and the Low Income Tax Reform Group and others have already sent in their objections to the proposals.




    Why have they objected, simply you can’t rely on Government departm
    ents (DWP) to get these things right.

    One of the areas of concern relates to the self-employed and the method of accounting reporting. A self-employed individual will have to report earnings over ‘assessment periods’ of one month starting from the date the claimant becomes entitled to UC. To put this into context, when completing a tax return, your ‘assessment period’ is 12 months!! So in effect the DWP want self-employed individuals to do the equivalent of 12 tax returns!! There is also a seven day time period to report those earnings, nigh on impossible in my experience. We are all going to need bookkeepers!

    The final point I am going to make is with regard to the method of accounting. The DWP want self-employed earnings to be computed on an adjusted cash basis. This method is at odds with the General Accepted Accounting Policy (GAAP) which is normally used to compute trading profit for tax purposes and the simplified cash basis that is being introduced next year. So you may have differing accounting procedures for UC and tax, wonderful!!

    I must stress the proposals are draft and the Government and DWP might see the errors of their ways!!

    Normally I would tell you to give me a shout if you have any queries, however, I am as much in the dark as you are when it comes to UC, no doubt one day I will have to get my head round it.

    For all other tax queries, I am happy to help.




    This was from my accountant, Hes post stuff like this on facebook all the time.
     
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  2. nearlyclean

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    Thanks that's really informative. Could effect a lot of families with children who rely on tax credits to top up their income. I suppose doing monthly accounts would be a bit of a pain at first and could become tricky where a customer hasn't paid for 3 months and then pays for 6 months worth could really throw a spanner in the works
     
  3. M.K Cleaners.co.uk

    M.K Cleaners.co.uk Grand Master
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    Am I right in sayine self employed and limiyed company are different. That could be the way round it. Although I dont have a clue about the disadvantages of it
     
  4. M.K Cleaners.co.uk

    M.K Cleaners.co.uk Grand Master
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    [background=rgb(237, 239, 244)]HMRC has a very good PAYE tool which enables you to do your own payroll with no cost, there are limitations but these van be easily overcome. So paying a salary to family members is still a very good planning tip. Make sure the salary paid can be justified and is comensurate to the level of duties performed.[/background]

    [background=rgb(237, 239, 244)]He added this too, got my attention [/background]
     
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