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Professional Contractors Group Leeds 26 th March 2013

Professional Contractors Group Leeds 26 th March 2013. Freelance Tax and Accountancy Update. General compliance and preventative advice Best practice for your contractor business The do’s and don’ts of record keeping How to build a mutually beneficial relationship with your accountant.

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Professional Contractors Group Leeds 26 th March 2013

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  1. Professional Contractors Group Leeds 26th March 2013 Freelance Tax and Accountancy Update

  2. General compliance and preventative advice • Best practice for your contractor business • The do’s and don’ts of record keeping • How to build a mutually beneficial relationshipwith your accountant Paul Silver-Myer 8 Durweston Street, London W1H 1EW Tel: 020 7486 0541 Mob: 07855 632 871

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

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

  5. 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

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

  7. 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?

  8. Best practice for your contractor business is therefore to be homogenised ... like Homepride Fred FRED

  9. Or would you rather stand out from the crowd?

  10. 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

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

  12. Know where you stand – have a contract review • 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?

  13. CONTRACT OF SERVICE [employment]] PERSONAL SERVICE MASTER/SERVANT MOO CONSISTENCY INTENTION CONCURRENT EQUIPMENT ACTUAL W P TERMINATION FINACNIAL RISK B2B HOME CONTRACT FOR SERVICES [self-employment]

  14. The do’s and don’ts of record keeping

  15. 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 - don’t spend the Revenue’s money before the due date!]

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

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

  18. 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?]

  19. DO and personally you need to evidence your income for your tax returnemployment [P60 / P45 / P11D]dividend [vouchers]bank interest [tax deduction certificates]rental propertyforeign incomecapital gainssocial security benefitspension [and don’t forget to keep the documentation for claiming tax relief on pension premiums and charity donations]

  20. DO also, if appropriate keep, or self-create, documentation following receipt of an exceptional iteminheritancewindfallgiftlottery or betting win

  21. 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

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

  23. What about a lack of… ?Sales invoices – think businessexpense receipts – think personal

  24. WHAT IF I DON’T ? Business Records ChecksHMRC assumption: inadequate records = inadequate tax return HMRC assumption: inadequate tax return = inaccurate tax paidpenalties = up to £3,000

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

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

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

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