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Do I need to add tax?


peterjones 12 4.0k 1 United Kingdom
18 Feb 2012 7:34PM
I am led to believe that HMRC select about 10% of tax returns for potential enquiry/ investigation pa; that does not mean that they enquire into the said 10%; I suspect if a set of accounts seems balanced and within their parameters they will probably put it back from whence it came.

HMRC do read forums such as these in fact some epz members almost certainly are HMRC employees.

You might be OK in Canada but if HMRC examines Ebay activity and fail to see an individual registration of self employment he/she may hear from them sometime in the future.

Finally that pleasant elderly lady who asks you for your business card may well be from the fraud department of HMRC.

Peter.

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Focus_Man 4 481 631 United Kingdom
19 Feb 2012 8:28AM

Quote:Vat registrationj is voluntary but HMRC monitor those with low turnovers as sometimes they are used sleepers for later fraudulent activity, so you can expect interest in your activities at some point, but generally6 you would be regarded as low risk and therefore an inspection might not occur for several years. Smile


If your turnover exceeds the stipulated amount (I do not know the current level because I have been retired 6 years) then it is compulsory.
cats_123 e2
10 4.2k 25 Northern Ireland
19 Feb 2012 9:51AM

Quote:Vat registrationj is voluntary but HMRC monitor those with low turnovers as sometimes they are used sleepers for later fraudulent activity, so you can expect interest in your activities at some point, but generally6 you would be regarded as low risk and therefore an inspection might not occur for several years. Smile

If your turnover exceeds the stipulated amount (I do not know the current level because I have been retired 6 years) then it is compulsory.

I was merely responding to your earlier post "I doubt if you would be allowed to be VAT registered if you were only selling a few prints, but I am not really sure"...of course if you exceed the threshold, then it's compulsory Smile
thewilliam 6 4.8k
19 Feb 2012 10:33AM
I've learned that it pays to keep my nose clean because I never know who knows whom.

To echo Peter's point about the HMRC investigator in plain clothes, we have a few HMRC staff as Cherubs and Emma's Diary customers. Last time I helped She-who-must-be-obeyed set up her stall at a wedding fair, one of my HMRC customers was at work with her team. They were collecting business cards from all the stalls and a team member was in a corner, using her laptop, checking whether the businesses were registered.

When they discovered a business that wasn't registered, they'd pose as prospective customers. The first seemingly innocent question was often, "how long have you been doing this?" and if the answer was longer than 90 days, the trader became a target.

When talking with prospects, how many newbies would admit that they'd only photographed a couple of weddings or even none at all? Their experience is likely to be inflated and the tax demand rises accordingly
Focus_Man 4 481 631 United Kingdom
19 Feb 2012 1:32PM

Quote:I've learned that it pays to keep my nose clean because I never know who knows whom.


Couldn't agree more. I registered 3 businesses when I was made redundant, 'engineering consultancy' as mentioned before, 'Photography' and 'coroporate entertainment' - actualy organising golf days for customers at my own golf club (well not mine but the one where I had membership).

I worked at all three initially and so had to combine accounts, eventually the enginering became so busy that the corporate entertainment went by the way-side, but remained registered. The same applied to photography but to a much lesser extent, so l carried on producing both work and accounts.

My VAT audit raised all these issues so it proved wise to declare everything, as had i done otherwise I would have been in the proverbial.

So I agree, if you are producing work for anybody I feel it worthwhile to be open and honest and to maintain rough accounts initially in case the business grows. My accountant told me to do this at first as small amounts of work could be classed as 'market research' so see if a business is viable and you apparenetly don't need to register at that point. However, keeping a check on all income and outgoings means that is your business takes off you already have evidence of expenditure to offset income.

HMRC do not mess about, only receipts can be used as evidence of expenditure.
mikehit e2
5 7.1k 11 United Kingdom
19 Feb 2012 3:36PM
I think the key thing when working with IR/HMRC is to be up front and open - not only does it keep you on the right side, but you can earn a lot of kudos points which are very helpful should you have a problem. If they think you are pulling the wool over their eyes you are on a hiding to nothing - their assumption is you owe them money unless you can prove otherwise (as william descrbibed) and that can be very expensive (as well as extremely stressful).
fraser 10 631 14 Scotland
20 Feb 2012 12:31PM
Many thanks for all your comments and advice. They've all been useful and a little bit frightening at times. I think in this particular case things are fairly straightforward, but I gues if I'd like to earn a little bit of money from my photography I'd best be up-front with HMRC.

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